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HomeMy WebLinkAboutFebruary 17, 2004 Agenda AGENDA CITY OF DENTON CITY COUNCIL February 17, 2004 After determining that a quorum is presem, the City Council of the City of DeNon, Texas will convene in a Work Session on Tuesday, February 17, 2004 at 4:00 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: Receive a report, hold a discussion and give staff direction regarding DeNon Municipal Electric's (DME's) status as a non opt-in emity in retail electric deregulation. Receive a report, hold a discussion and give staff direction regarding approval of a residemial renewable electric rate schedule RG. 3. Receive a report, hold a discussion and give staff direction regarding the annual audit. Requests for clarification of consent agenda items listed on the consent agenda for today's City Council regular meeting of February 17, 2004. 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 Governmem Code, as amended, as set forth below. 1. Closed Meeting: Consultation with the City Attorney - Under TEXAS GOVERNMENT CODE Section 551.071. Discuss status of litigation styled Ugwuh v. City of Denton, Cause No. 2002-41462-362 currently pending in the 362nd District Court of Denton County, Texas. Consider and discuss status of litigation styled Ortegren, et al. v. City of Denton, Cause No. 2002-30205-211, currently pending in the 211th District Court of Denton County, Texas. Deliberations regarding economic developmem negotiations - Under TEXAS GOVERNMENT CODE Section 551.087 and Consultation with the City Attorney - Under TEXAS GOVERNMENT CODE Section 551.071. Deliberate and discuss commercial or financial information received from a business prospect and offers of financial or other incentives to the business prospect for the purposes of economic development negotiations with Fastenal Company, a Minnesota Corporation, regarding the construction of a facility to house regional headquarters, manufacturing, and distribution operations to be located generally near the intersection of City of DeNon City Council Agenda February 17, 2004 Page 2 Airport Road and Corbin Road within the City of DeNon. Also, receipt of legal advice from the City Attorney on matters in which his professional responsibility to the City Council requires private legal consultation. 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 MEETING OR EXECUTIVE SESSION AS AUTHORIZED BY TEX. GOV'T. 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 Demon City Council on Tuesday, February 17, 2004 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: 1. PLEDGE OF ALLEGIANCE U.S. Flag Texas Flag "Honor the Texas Flag -- I pledge allegiance to thee, Texas, one and indivisible." 2. PROCLAMATIONS/PRESENTATIONS A. Proclamations/Awards B. Recognition of staff accomplishments 3. CITIZENS REPORTS Receive citizen reports from the following: 1. David Wieland regarding a proposed apartmem developmem for Demon. 2. Petrina Washington regarding responsible and responsive governmem. 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 Consem 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 Consem Agenda (Agenda Items A-L). This listing is provided on the Consem Agenda to City of DeNon City Council Agenda February 17, 2004 Page 3 allow Council Members to discuss or withdraw an item prior to approval of the Consem Agenda. If no items are pulled, Consent Agenda Items A-L below will be approved with one motion. If items are pulled for separate discussion, they will be considered as the first items following approval of the Consent Agenda. mo Consider adoption of an ordinance of the City Council of the City of DeNon, Texas authorizing the City Manager to execute a professional services agreement with Wolfe, Tidwell & McCoy, LLP, for professional legal services relating to litigation styled Ugwuh v. City of Denton, Cause No. 2002-41462-362 curremly pending in the 362nd District Court of Denton County; authorizing the expenditure of funds therefor; and providing an effective date. Bo Consider adoption of an ordinance authorizing the City Manager to execute change order three to the contract between the City of Denton and Huitt-Zollars Inc.; providing for the expenditure of funds therefore; and providing an effective date (Ordinance No. 2001-375; PSA 2685 - Professional Services Agreemem for Design of Solid Waste Facilities awarded to Huitt-Zollars, Inc. in the amount of $202,900, Change Orders One and Two in the amoum of $85,200, and Change Order Three in the amoum of $38,300 for a total amoum of $326,400). Co Consider adoption of an ordinance awarding a contract for the purchase of a CASE 590 loader/backhoe as awarded by the State of Texas Building and Procuremem Commission; providing for the expenditure of funds therefor; and providing an effective date (File 3137 - Loader/Backhoe for Street Departmem awarded to Equipmem Support Services in the amoum of $60,935.24). Do Consider adoption of an ordinance of the City of DeNon, Texas authorizing the City Manager to execute an agreemem for professional legal services with the law firm of Booth, Ahrens & Werkemhin, P.C., a Texas professional corporation for legal services pertaining to numerous listed water and wastewater issues; regulatory activities; and other related matters affecting the interests of Denton, Texas; authorizing the expenditure of funds therefor; providing for retroactive approval of the agreement; and providing an effective date. mo Consider adoption of an ordinance of the City of DeNon, Texas authorizing the City Manager to execute an agreemem for Professional Legal Services with the Law Offices of Jim Boyle, PLLC. for professional legal and lobbying services related to interim matters preceding the 79th Regular Texas Legislative Session pertaining to the City of Denton/Denton Municipal Electric; authorizing the expenditure of funds therefor; providing for retroactive approval thereof; and providing an effective date. Fo Consider adoption of an ordinance of the City Council of the City of DeNon, Texas providing for the addition of the Collection and Transportation Services Permit (Schedule SWP) to the schedule of rates for solid waste service comained in Ordinance No. 2003-351; providing for re-titling, replacemem and amendmem of §24-69 of the City of DeNon Code of Ordinances; providing for the amendmem of §24-70 of the City of DeNon Code of Ordinances; providing for a repealer; providing for a severability clause; and providing an effective date. City of Demon City Council Agenda February 17, 2004 Page 4 Go Consider approval of a resolution of the City of Demon, Texas, authorizing the submission of a gram application to the Criminal Justice Division of the Office of the Governor, State of Texas, requesting funding for the Denton Teen Court Program for Juveniles; and providing an effective date. Ho Consider adoption of an ordinance of the City of Demon, Texas approving and authorizing the Mayor to execute an Interlocal Ambulance Agreement between the City of Demon and Demon County for Ambulance Services; and declaring an effective date. Consider adoption of an ordinance of the City of Demon, Texas approving and authorizing the Mayor to execute an Interlocal Fire Protection Agreement between the City of Denton and Denton County for Fire Protection Services; and declaring an effective date. Jo Consider approval of an exaction variance of Section 35.20.2(L.2.) of the Code of Ordinances concerning perimeter paving. The 0.197-acre parcel is located on the southwesterly corner of Margie Street and McCormick Street. The property is located in a Dowmown Residemial 2 (DR-2) zoning district. A single-family residence exists and multifamily is proposed. The Planning and Zoning Commission recommends approval of the partial variance (7-0). (V03-0021) Ko Consider adoption of an ordinance by the City of Demon abandoning and vacating a portion of street right-of-way to the City of Denton, Texas recorded in Clerk's File No. 2003-R0018777 of the Real Property Records of Demon County, Texas, being part of the H.H. Haygood Survey, Abstract No. 517; and providing an effective date. (Coumry Club Village, Phase l-A, Partial Right-of-Way Abandonmem) Lo Consider adoption of an ordinance ordering an election to be held in the City of Demon, Texas, on May 15, 2004, and, if a runoff election is required, on June 19, 2004, for the purpose of electing Council Members to Places 5 and 6 and electing a Mayor to Place 7 of the City Council of the City of Demon, Texas, designating voting places and appoiming election officials, providing for bilingual notice of the election, ordering that an electronic voting system be used, making additional provisions for the conduct thereof, providing an open meetings clause, and providing for an effective date. 5. PUBLIC HEARINGS mo Hold the first of two public hearings to consider the voluntary annexation and service plan for approximately 80.3 acres of land generally located north of Pockrus Page Road, west of Swisher Road, and south of Edwards Road in the southeastern section of the City of Demon Extraterritorial Jurisdiction (ET J). (A03-0002, Village of Carmel Annexation) Bo Hold the first of two public hearings to consider the voluntary annexation and service plan for approximately 19.51 acres of land generally located north of City of DeNon City Council Agenda February 17, 2004 Page 5 Pockrus Page Road, east of Mayhill Road, and south of Edwards Road in the southeastern section of the City of DeNon Extraterritorial Jurisdiction (ET J). (A03-0003, Flowers Baking Company Annexation) Hold a public hearing and consider adoption of an ordinance amending Sub-Chapters 3 (Procedures), 16 (Subdivisions), 17 (Environmemally Sensitive Areas), and 22 (Gas Well Drilling and Production) of the Developmem Code associated with gas well drilling and production. (SI03-0024, Gas Well Amendments) Consider adoption of an ordinance amending the Developmem Review Fee Schedule to add fees for Watershed Protection Permits, gas well inspections, and tree mitigation associated with gas well development. (SI04-0001, Fee Schedule Amendments) Hold a public hearing and consider adoption of an ordinance regarding the rezoning of approximately 6.6 acres from Neighborhood Residemial 2 (NR-2) zoning district to Neighborhood Residemial 4 (NR-4) zoning district. The property is located approximately 350 feet south of Paisley Street, between Audra Lane and Mack Drive. Applicam proposes single-family uses. The Planning and Zoning Commission recommends approval (6-1). [Super majority vote required for approval.] (Z03-0030, Laurel Oaks DevelopmenO 6. ITEMS FOR INDIVIDUAL CONSIDERATION Consider approval of a resolution of the City of DeNon, Texas calling a public hearing to consider establishing a Reinvestment Zone VII for Fastenal Company; and declaring an effective date. B. Consider appointments to the Council Ethics Committee. C. Consider nominations/appoimmems to the City's Boards and Commissions. Consider appoimmem of an ad hoc Council Appoimee Performance Review Committee. New Business This item provides a section for Council Members to suggest items for future agendas or to request information from the City Manager. Items from the City Manager 1. Notification of upcoming meetings and/or conferences 2. Clarification of items on the agenda Possible Cominuation of Closed Meeting under Sections 551.071-551.086 of the Texas Open Meetings Act. City of Demon City Council Agenda February 17, 2004 Page 6 Ho 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 Demon, Texas, on the day of ,2004 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: February 17, 2004 DEPARTMENT: ACM: Electric Utility Howard Martin, 349-8232 SUBJECT Receive a report, hold a discussion and give staff direction regarding Demon Municipal Electric's (DME's) status as a non opt-in emity in retail electric deregulation. BACKGROUND Demon Municipal Electric (DME) must deal with many differem and complex issues as it moves into the future. The complexity of the issues facing DME makes it impractical to address all of them in one presentation. The attached report, which discusses the options and impacts of DME's participation in retail electric deregulation, is the first of several reports designed to provide Demon Council members with the background they will need to develop outcomes for DME. This report will be followed by (1) a report that will discuss the issues facing the DME transmission and distribution system and the impact of those issues on DME's base rates, and (3) a report that will discuss the proposed changes in the Electric Reliability Council of Texas (ERCOT) wholesale power market and the options DME has for procuring energy for delivery to Denton citizens. Each of these reports will be presented to the Public Utilities Board so that the Board may provide any input it desires to the Council on the issues presented. OPTIONS 1. The Council may direct the development of a Resolution directing DME to prepare to opt in to retail electric deregulation. 2. The Council may choose to take no formal action. If the no action option is chosen, DME will remain an opted out of retail electric deregulation. RECOMMENDATION At this time, the lowest cost option for Denton citizens is for DME to remain an opt out entity. PRIOR ACTION/REVIEW (Council, Boards, Commissions) The Public Utilities Board received this presentation at its January 26, 2004 meeting and indicated that they agreed with the recommendation. FISCAL INFORMATION As discussed in the attached report. EXHIBITS: 1. Report Respectfully submitted: Sharon Mays Director of Electric Utilities RETAIL ELECTRIC DEREGULATION SHOULD DENTON MUNICIPAL ELECTRIC OPT IN? January 29, 2004 EXHIBIT 1 Back~round Under Senate Bill 7 (SB7), only Texas' investor-owned utilities (ENergy, Texas New Mexico Power, Reliant Energy, TXU Electric, TXU SESCO, Southwestern Public Service Company, and American Electric Power's subsidiaries including Cemral Power & Light, Southwestern Electric Power Company and West Texas Utilities) were required to reorganize their companies imo separate functions and, beginning on January 1, 2002, to provide their retail customers with the option to choose the company that sells them electric energy. The deregulated retail electric market was designed around three distinct sets of organizations with three distinct functions: 1. A generation company, which comrols all generation assets and can sell wholesale energy anywhere within the state to wholesale energy purchasers. Generation companies may not sell energy to retail customers. 2. A transmission and distribution company, which is responsible for installing, maintaining and operating the transmission and distribution wires and other facilities that deliver energy to retail customers. Transmission and distribution companies in the retail deregulated world are allowed to have only limited direct contact with retail customers. The area a transmission and distribution company serves is defined by its certificated service area, as determined by the Public Utility Commission of Texas (PUC). Retail electric customers cannot choose the transmission and distribution company that will serve them. The same local electric transmission and distribution company that served the customer before retail electric deregulation continues to deliver the energy a retail customer purchases from the deregulated retail energy market over the same poles and wires that were used before retail deregulation. The costs associated with that delivery continue to be a part of the customer's bill. Transmission and distribution rates are not deregulated. The PUC regulates all transmission rates. The PUC regulates the distribution rates of privately owned transmission and distribution companies. City Councils regulate the distribution rates of municipal utilities. 3. A retail electric provider (REP) that "reMs" transmission and distribution facilities from local transmission and distribution companies, buys energy from generation companies, packages those products, and resells them to retail customers. REPS are the single point of contact for their retail customers on most issues, including billing concerns and reporting of outages on the transmission and distribution system serving the retail customer. A competitive REP is not obligated to serve any customer that requests its service. EXECUTIVE SUMMARY Initial Decision Senate Bill 7 gave the city council of each city served by a municipal utility the authority to determine if and when its municipal utility would opt in to retail electric deregulation. Senate Bill 7 also states "The decision to participate in customer choice by the adoption of a resolution is irrevocable." In April 2001, the DeNon City Council deliberated this issue and chose not to have Denton Municipal Electric (DME) opt in to retail electric competition. What Have Others Done? In Texas no municipal utilities have opted in to retail electric deregulation or expressed any imemion of doing so. Three cooperatives (San Patrico, Nueces, and Pedernales) are discussing the possible acquisition of some service territory from opted in entities. They have indicated that they will opt in for only these areas if acquisitions that they are pursuing are successful. To date these acquisitions have not occurred and the PUC has indicated that they will not approve the acquisitions unless each entire cooperative service territory opts in. As of September 30, 2003, ERCOT records indicate that six REPs serve 95% of the total meters eligible for retail electric competition. Two of these six REPs are the former TXU and Reliant entities serving their former regulated service territories under a regulated "price to beat" rate. The remaining four REPs are new REPs competing to get retail customers to switch from their former service providers. These "competitive" REPs serve approximately 12% of the eligible residemial meters, 15% of the eligible small non-residemial meters, and 54% of the eligible large non-residemial (industrial) meters. These statistics support the opinion expressed by many experts that large industrial customers, with their attractive load profiles, have realized the most benefits from retail electric deregulation. What Are the Options for DME Today? In considering the future of DME in a restructured marketplace, the City Council has three obvious options. The first option is to maintain DME's present status as the sole provider of transmission, distribution, and energy services to all of the retail customers within its service territory (opt out). The second option is to open DME's service territory to competition (opt in). Implementation of this option will require a minimum of two years. The third option would be to sell the entire electric utility. If the Council chooses to have DME opt in to retail deregulation, it would then have to choose between two additional options. DME could be the transmission and distribution provider for all presem and future customers in its certified service area but would not function as an REP (sell energy). This would require Denton citizens and businesses to purchase their electric energy from REPs available in the area and willing to serve them. DME could be the transmission and distribution provider for all presem and future customers in its certified service area and the Retail Energy Provider (REP) for those customers who chose to purchase their energy from Demon Municipal Electric (DME). DME could also compete for energy customers outside of its certified service area if the Council chose to allow DME to do so. Under either opt in option, DME would develop a rate that would recover the costs necessary for the safe and efficient operation of its existing transmission and distribution facilities and for expansion of those facilities to serve new customers. This transmission and distribution rate would be charged to all present and future electric customers in DME's certified service area whether their energy needs were served by DME or another REP. All other charges from DME and the customer's chosen REP's would be added to DME's transmission and distribution rate to determine the customer's total cost per KWh for retail electric service in DME's service territory. None of these options will protect Denton electric customers from energy price increases that result from the rules and operation of the deregulated wholesale electric market. Under both opt in options and the opt out option: 1. DME customers or the City will be obligated to pay DME's share of the fixed costs of operating the Gibbons Creek generation unit and the TMPA Gibbons Creek debt service. 2. DME will be required to provide service to "undesirable customers" either by providing Provider of Last Resort (POLR) service at a cost that is likely to be higher than POLR service in the surrounding area or spreading the cost of serving those customers across DME's other customers. 3. DME customers will be required to pay the cost of the 20% university subsidy umil September 1, 2007. 4. Consideration should be given to communicating the issues regarding retail electric deregulation to DME customers through a more aggressive advertising program. 5. Council will need to consider carefully how the policy guidelines it sets will effect DME's ability to maimain competitive rates and quality service and how the level of DME rates will impact economic development in Denton. Under both opt in options, Denton citizens will: 1. Pay higher transmission and distribution costs to support the systems and personnel changes required to operate in an opt in environment. 2. Be exposed to cash flow problems and other expenses associated with Electric Reliability Council of Texas (ERCOT) retail software system errors and upgrades. 3. Lose the ability to communicate concerns directly with City employees, Public Utility Board members, and Council members. 4. Either pay increased taxes or experience reduced City services as a result of some level of reduced ROI and franchise fee revenue paid by DME to the General Fund or pay a less competitive transmission and distribution rate as a result of the Council maintaining the DME ROI and franchise payments at their present level. 5. Face the risk that the uncertainty regarding how the Council may be able to "reasonably determine" Gibbons Creek "stranded cost" could force the City to find funds other than DME revenue to pay a significant amount of the TMPA Gibbons Creek obligation. 6. Never be able to return to opt out status. Under the transmission and distribution only opt in option: 1. DME customers will not receive the benefit from the use of the low cost Gibbons Creek generation unit coal fired energy. 2. Economic development incentive electric rates will not be available for use in attracting new industries to Denton. 3. DME will not be able to exit the energy service business completely as a result of the university subsidy requirement, through September 1, 2007, and the likelihood that it will have to provide POLR service. 4. Estimates are that Denton retail electric customers will pay more for their electric service to competitive REPs (10.1 cents/KWH to 10.8 cents/KWH) than they would pay ifDME remains an opt out entity (9.6 cents/KWH). This is due largely to avoiding the significant increase in operating expenses caused by opt in requirements. 5. Depending on the method used to determine Gibbons Creek "stranded cost", the City may have to find other revenue sources to cover over $500 million of that "stranded cost". Under the transmission, distribution, and energy opt in scenario: 1. DME customers will be exposed to potentially higher transmission costs for any energy delivered to them from the Gibbons Creek generation unit. 2. Assuming DME loses no customers, DME's retail rate is estimated to be higher (10.3 cents/KWH) than its estimated opt out retail electric rate (9.6 cents/KWH). This is due largely to the increase in operating expenses caused by opt in requirements and the increase in advertising expenses required to compete with the sophisticated advertising programs of its competitors. 3. DME's retail rate is estimated to be higher (10.3 cents/KWH) than the estimated range of competitive REP rates (7.4 cents/KWH to 8.1 cents/KWH). This estimated REP rate is lower than the competitive REP rate in the transmission and distribution only scenario solely because 2.7 cents/KWH of the 3.4 cents/KWH total Gibbons Creek fixed and debt service costs have been shifted from the competitive REPs to the DME energy cost. 4. DME's higher opt in retail electric rate will cause it to lose customers, therefore becoming unable to pay its share of the uncompetitive Gibbons Creek debt service without raising its rates higher. This "death spiral" will ultimately force DME into the transmission and distribution only scenario with the risks described above. Under the sell the entire utility option: The combination of TMPA contract and debt restrictions, uncertainty regarding the level of "stranded cost" recovery, the potential loss of $3.6 million in annual ROI and franchise fee contributions to the General Fund, and a significant negative General Fund impact from loss of DME transfer funds combine to make the option of selling the entire electric utility not in the best interest of Denton citizens and, as a practical matter, impossible to achieve. Conclusion At this time, the lowest cost, least risk option for Denton citizens is for DME to remain an opt out entity. Although there are many risks and uncertainties associated with opting in to retail electric deregulation, the largest issue is the City's ability to pay its TMPA Gibbons Creek obligations. These costs will be paid by the citizens of Demon in some fashion. Opting in will not make them disappear. All it might do is shift them from electric rates to other areas such as City fees and property taxes. Aside from the TMPA Gibbons Creek costs, DME's energy rates are competitive. However, opting in to retail electric deregulation adds costs to the transmission and distribution rate that all electric customers in Denton must pay, regardless of what company they purchase their energy from. RETAIL ELECTRIC DEREGULATION SHOULD DENTON MUNICIPAL ELECTRIC OPT IN? Initial Decision Senate Bill 7 gave the city council of each city served by a municipal utility the authority to determine if and when its municipal utility would opt in to retail electric deregulation. In April 2001, the DeNon City Council deliberated this issue and chose not to have DeNon Municipal Electric (DME) opt in to retail electric competition. The Council considered several issues in those deliberations: Status of the Market Rules and Systems Senate Bill 7, which became effective September 1, 1999, required that retail competition begin on January 1, 2002. During the 15 month period between passage of the legislation and the mandated market open date, there was a major effort by the electric industry stakeholders (investor owned utilities, municipal utilities, cooperatives, power marketers, independem power producers and retail electric providers) and the Electric Reliability Council of Texas (ERCOT) to draft market rules that would govern the manner in which ERCOT would manage the operation of the restructured wholesale and retail electric markets. That compressed time period did not allow sufficient time to properly analyze the impact of, and the interaction between, the many new market rules, to develop and test the complex software systems required to implement the new rules, and to install all the required metering and telemetry. This created many problems in the market rules and the ERCOT software, which managed the electric system and provided financial settlement for retail and wholesale market participants. Those problems caused, and are still causing, problems in both the wholesale and retail electric markets. The operation of the wholesale and retail markets has been continually refined to alleviate the problems stemming from a "rush job" to set up a competitive market. These problems, the uncertainty caused by the ever-changing market design, and the potential cost of the constant changes to DME technology that would be required to keep up with these changes were a concern for the Council. The ability of Denton citizens to easily perform retail transactions in the manner they have become accustomed to was another concern of Council in 2001. At the time Council was considering the opt in/out choice, development of the software to handle retail transactions was significamly behind schedule. The ability to properly develop these systems was in question. Additional Opt In Costs, Budget Schedules, and ERCOT System Limitations Since the market rules were not yet completed, it was impossible to accurately determine the full implications and costs associated with opting in. Therefore, the data associated with opting in that was needed for FY01/02 budget preparation could not be completely quantified. These costs included substamial hardware and software changes and staffing increases DME and other City departments would have been required to make if the Council had chosen to opt in on January 1, 2002. Even if the financial information had been available, it would not have been possible for DME to function as an opt in entity at the beginning of retail deregulation because ERCOT had indicated that its software systems would not be able to accept any municipal utilities or cooperatives until 12 to 18 months after retail deregulation began. Financial Impact on General Fund In FY2000, DME comributed Return on Investmem (ROI) and Franchise Fees of approximately $6 million dollars to the General Fund. This paymem provided approximately 12% of the General Fund budget for that fiscal year. DME's ROI and Franchise Fee contributions are presently being calculated as 7.5% of the revenue collected by DME. A loss of DME revenue resulting from DME customers switching to new REPs could have meant a lower level of support for General Fund functions, potemially requiring either increases in other municipal fees and taxes to replace this shortfall or a reduction in General Fund services. The Uncertainty of Value to DME Customers of Opting In At the time the Council was discussing the opt in issue, California was experiencing extremely high energy prices resulting from the state's implementation of retail electric deregulation. The only citizens who spoke before the Council when the opt in issue was being deliberated referenced the California experience and requested the Council to take a "wait and see" position. Finality of the Decision SB7 put the decision of when or if a municipal utility opted in to retail electric deregulation in the hands of its city council. A key provision of the law is that "The decision to participate in customer choice by the adoption of a resolution is irrevocable." Once the DeNon City Council chooses to have DME opt in to retail electric deregulation, the Council can not decide to return DME to its opt out status, even if the experiences in the competitive market shows the decision to opt in was a mistake. The City Council, in its April 3, 2001 decision, desired to take a "wait and see" attitude in order to be sure that any opt in decision would benefit all Denton electric customers and be a good decision for the City as a whole. What Have Others Done? In Texas no municipal utilities have opted in to retail electric deregulation or expressed any imemion of doing so. Three cooperatives (San Patrico, Nueces, and Pedernales) are discussing the possible acquisition of some service territory from opted in entities. They have indicated that they will opt in for only these areas if acquisitions that they are pursuing are successful. To date these acquisitions have not occurred and the PUC has indicated that they will not approve the acquisitions unless each entire cooperative service territory opts in. As of September 30, 2003, ERCOT records indicate that six REPs serve 95% of the total meters eligible for retail electric competition. Two of these six REPs are the former TXU and Reliant entities serving their former regulated service territories under a regulated "price to beat" rate. The remaining four REPs are new REPs competing to get retail customers to switch from their former service providers. These "competitive" REPs serve approximately 12% of the eligible residemial meters, 15% of the eligible small non-residemial meters, and 54% of the eligible large non-residemial (industrial) meters. These statistics support the opinion expressed by many experts that large industrial customers, with their attractive load profiles, have realized the most benefits from retail electric deregulation. What Are the Options for DME Today? In considering the future of DME in a restructured marketplace, the City Council has three obvious options. The first option is to remain an opt out utility. The second option is to open DME's service territory to competition (opt in). The third option would be to sell the entire electric utility. If the Council chooses to have DME opt in to retail deregulation, they would then have to choose between two additional options. As an opt in entity, DME could become a transmission and distribution only provider or DME could become both a transmission and distribution provider and an energy provider. Under the transmission and distribution provider only scenario, DME would be the transmission and distribution provider for all present and future customers in its certified service area but would not function as an REP (sell energy). This would require DeNon citizens and businesses to purchase their electric energy from REPs available in the area and willing to serve them. Under the transmission, distribution, and energy provider scenario, DME would be the transmission and distribution provider for all present and future customers in its certified service area and the REP for those customers who chose to purchase their energy from DME. DME could also compete for energy customers outside of its certified service area if the Council chose to allow DME to do so. None of these options will protect Denton electric customers from energy price increases that result from the rules and operation of the deregulated wholesale electric market. Remain an Opt Out Entity Under this scenario, DME will remain the sole provider of transmission, distribution, and energy services to all of the retail customers within its service territory. It will be "business as usual". There will be no concerns over lost customers, lost revenues or negative impacts on General Fund contributions as long as DME remains opted out. However, since the DeNon City Council comrols the opt out/in decision and the Council is elected by the citizens of Denton, it is actually the citizens of Denton who will ultimately decide if DME opts in to retail deregulation. If DME is not able to maintain electric rates that are competitive with the rates offered by other REPs or if citizens become confused by the slick ad campaigns of competitive REPs, they can elect Council members who will choose to opt in. If, after examining all the complex issues related to retail electric deregulation and its effect on Denton, a decision is made by the Council that it is not in the best interest of the City for DME to opt in to retail electric deregulation, the Council will need to consider carefully how the policy guidelines it sets will affect DME's ability to maimain competitive rates and quality service. The Council will also need to consider a public education effort to provide citizens information on the complex issues surrounding the pros and cons of participation in retail electric deregulation both for the City and for themselves. Opt In to Retail Electric Deregulation - General Considerations There are a number of considerations that are common to both an opt in transmission, distribution, and energy service scenario or to an opt in transmission and distribution only scenario. · Transmission and distribution rate increase due to opt in operating requirements As the transmission and distribution provider, DME would develop a rate that would recover the costs necessary for the safe and efficient operation of its existing transmission and distribution facilities and for expansion of those facilities to serve new customers. This transmission and distribution rate would be charged to all present and future electric customers in DME's certified service area whether their energy needs were served by DME or another REP. All other charges from DME and the customer's chosen REP would be added to DME's transmission and distribution rate to determine the customer's total cost per KWh for retail electric service in DME's service territory. There are new requirements that would become effective if DME chose to opt into competition. These requirements affect Customer Service, Electric Metering, and Technology. Customer Service is the most dramatically affected department. The first major change is to Customer Service hours of operation. To function as a billing agent in the deregulated retail electric market, the City would be required to provide 24 hour a day, seven days a week customer service support for its electric customers. To accomplish this, 28 additional Customer Service staff members are required. These positions would be additional from line employees dealing directly with customer needs. Behind the scenes, there would be increased billing and reporting requiremems. Retail customers who choose a different REP have the option to receive a consolidated bill containing DME's transmission and distribution charges and the REP's energy usage charges or separate bills from the City for the transmission and distribution charge and the REP for the energy charge. Once meters are read, DME has three business days to provide the REP an electronic pre-bill statement for each REP customer. If DME is the billing agent for the REP, when DME receives payment from the customer for energy provided by the REP, DME has five days to transfer the energy usage dollars collected to the REP. At the same time remittance is made, DME must provide a collection report to the REP detailing the amoums billed and collected. To handle the increased billing, reporting and verification required, six additional staff members are needed. Upgrades to the Harris software and supporting hardware will be required. One of the systems implemented to accomplish deregulation was the Texas Standard Electronic 10 Transaction (SET). SET is a detailed, standardized list of fields and codes used in the electronic interchange of customer information between an REP, Transmission and Distribution Service Provider (TDSP) and ERCOT. Each customer transaction, whether it be a switch from one REP to another, a request for a meter test, outage notification, change of billing name or address, must be submitted through ERCOT using SET. To accomplish this, it is necessary to upgrade Harris to support the SET transactions, program in the codes and fields, upgrade the number of Harris licenses and install, test and maintain an interface to the ERCOT transactional database. Additionally, communications tests between the City's billing system and all REP's who choose to offer energy service in DME service territory must be performed and certified by ERCOT. Once this system is in place, Customer Service will be required to keep up with the constant changes made in this system, which will result in some level of ongoing cost that cannot be predicted. To date, these changes have been almost continuous, very complex, and time consuming for the TDSPs. Technology Services provides the technical support for the Harris system. With the need for 24/7 support and the installation of high availability, redundant systems, support staffing is inadequate. To provide proper coverage, two additional technical support positions would be required in Technology Services. Each customer switch from one REP to another requires a separate meter read. As the transmission & distribution service provider, DME would be responsible for dispatching a meter division employee to make these meter reads. Additionally, it is required that the meter reading schedules for meters serving customers of an REP be submitted to the REP on a yearly basis. This schedule can be altered with 20 days notice but does not offer flexibility in cases of short-term staff shortages. For example, if several meter readers become ill, the meters still have to be read on the scheduled dates. To handle the increased meter reads, inflexible read schedules, and to process and submit the meter data for billing purposes in the required timeframe, it is estimated that five additional staff members are needed in the Metering Department. Three positions would be meter- reading personnel. Two positions would be responsible for collecting and handling the meter data. These new positions and system upgrades are estimated to cost approximately $4 million dollars the first year and approximately $3 million annually thereafter. These costs would become part of the DME transmission and distribution charge and would add approximately 0.36 cents per KWh to each customer's bill. For the average residential customer, this translates to an annual payment of approximately $50 per year for the ability to choose a REP. Every customer on the DME transmission and distribution system would pay the additional 0.36 cents/KWh regardless of which REP they purchase their energy from or whether they actually save any money on their energy purchases. Since the decision to opt in is irrevocable, this cost, and any subsequent changes to this cost, would become a permanent part of the DME transmission and distribution rate. 11 There will also be increased workload for the City Accounting division in the form of additional cash management and accounting entries. No estimates of the cost of this impact are available at this time. There is also the potential that DME could be required to collect and provide to ERCOT data on the load profiles of its various customer classes. It is clear that the amount of reports DME will have to provide to ERCOT and the PUC will increase significantly. No estimates of the cost of these impacts are available at this time. · City budget development schedule In planning to develop a transmission and distribution rate that would allow deregulated retail electric service to begin in Denton, the City's budgeting schedule must be taken into consideration. The City Charter requires that the City's budget be presented to City Council by July 31. The formal preparation of DME's budget begins in February, followed by review and approval by the Public Utilities Board, which is completed in June, in order for the DME budget to be integrated into the full City budget. Council then reviews and approves the City budget in the August/September period for the upcoming fiscal year beginning October 1. DME's transmission and distribution rate development will be impacted by the up front costs associated with the decision to opt into competition. The overall budgeting process will be effected by the revenue impacts to both DME and the City of an opt in decision. These costs and revenue impacts would need to be included in any budget preparation and approved by the Public Utilities Board and Council before DME could actually begin opt in operation. For example, if Council were to approve an opt in decision in January of 2004, from a fiscal perspective, it could not begin before the beginning of the FY05. From a practical perspective, the necessary budgetary quality cost estimates for required changes and additions to software and hardware systems could not be obtained in time to be included in the FY05 budget preparation process, making FY06 (beginning October 1, 2005) the earliest possible opt in date. · Gibbons Creek obligations The contract that the City signed when it became a member of the Texas Municipal Power Agency (TMPA) placed an absolute obligation on the City to collect revenues sufficient to pay all fixed operating costs and debt service costs associated with the existing coal fired generation unit now operating at Gibbons Creek. DME can choose not to schedule any energy out of the unit, thus avoiding the variable costs (such as fuel and rail transportation) associated with actually producing energy but all other costs associated with the unit must be paid. Effectively, there is no way Denton can eliminate its TMPA Gibbons Creek participation and the associated fixed cost and debt service obligations. The Gibbons Creek generation unit is financed with tax-exempt debt. Use of such debt is limited to governmental entities for financing facilities used solely for the benefit of governmental entities. The Internal Revenue Service (IRS) places a number of very restrictive limits on how tax 12 exempt debt and the products and services that are supported by facilities funded by the use of tax exempt debt can be used. These restrictions include a refinancing limit of three times on any tax exempt debt and strict limits on how energy produced by a generation plant financed with tax exempt debt can be sold to non governmental entities. In order for any entity to fully assume Denton's TMPA membership obligations for the existing Gibbons Creek generation unit, the TMPA debt would have to be refinanced. The cost of such a refinancing would be substantial. Also, because most of the existing long term debt has been refinanced three times, all of the TMPA member cities would have to use taxable, higher interest debt if new debt was issued. It is unlikely that this would be acceptable to the other TMPA members. It is highly unlikely that any emity taking over Demon's Gibbons Creek obligations would be willing to pay more than today's market value for the asset. The debt costs associated with the Gibbons Creek unit are much higher than competitive debt costs for a coal generation unit of similar age. Furthermore these high costs have been "back end loaded". Rather than paying off the debt associated with the unit on a level rate throughout its life, previous TMPA Boards chose to refinance the debt and push much of the debt repayment obligations to the back end of the debt payment schedule. As a result of this decision, the debt service for the Gibbons Creek unit began to climb rapidly in 2002. The debt service will continue to increase every year until 2008, when it will "top oft" and remain at a level that causes the overall rate for energy from the existing Gibbons Creek generation unit to be well above competitive rates for a coal fired generation unit of its age. Depending on the cost of natural gas assumed, the total fixed and energy cost for the existing Gibbons Creek generation unit is also above that same total cost estimated for a market competitive gas fired generation unit in Texas. Excluding fixed operating and debt service costs, which must be paid regardless of whether the generating unit produces any energy, the energy cost from Gibbons Creek is less expensive than energy from gas fired generation units. Since the ability to sell Gibbons Creek energy on the open market is severely limited by IRS rules, it makes sense for DME to utilize as much of its right to Gibbons Creek energy as possible to serve Denton customers. Recovery of Gibbons Creek "stranded cost" When retail electric deregulation was enacted by the Texas Legislature, the Legislature recognized that there were generation units, in particular nuclear units, that had been built by regulated electric utilities, with the approval of the Public Utilities Commission, which would not be competitively priced when compared with the new gas fired combined cycle generation units now being built in Texas. The Legislature made provisions to deal with this problem in Senate Bill 7. The difference between the total fixed cost and energy cost of a generation unit built prior to retail electric deregulation and those same costs for the new combined cycle gas fired generation units is referred to in the electric industry as "stranded cost". The situation that Denton faces with the existing Gibbons Creek generation unit, although resulting from a different set of circumstances than what occurred in the regulated electric utility environmem, qualifies as a "stranded cost". 13 There are two provisions in Senate Bill 7 that address Denton's ability to recover its Gibbons Creek "stranded cost". Section 40.055 of the Bill gives the Demon City Council the "exclusive jurisdiction" to: "(3) reasonably determine the amoum of the municipally owned utility's stranded investment; (4) establish nondiscriminatory transition charges reasonably designed to recover the stranded investment over an appropriate period of time, provided that recovery of retail stranded costs shall be from all existing or future retail customers, including the facilities, premises, and loads of those retail customers, within the utility's geographical certificated service area as it existed on May 1, 1999;" Section 40.059(c) of Senate Bill 7 also allows the Council to set the Gibbons Creek "stranded cost" at $141 million, which is the "stranded cost" level calculated in a specific PUC 1998 report. However, although Council has "exclusive jurisdiction" to determine the amoum of DME's "stranded cost", any such determination could be challenged in the courts. The courts would then rule on whether the challenged "stranded cost" was "reasonably determined". In determining the reasonableness of the Council's determination, the court would review the methodology and logic used by the Council in determining the challenged "stranded cost". It is very likely that the courts would consider how the methodology applied by the Council to determine "stranded cost" compares to the "industry standards" for such calculations. In Texas this has typically been the total fixed and energy production costs of the "stranded" generation unit versus the cost of building and producing energy from a gas fueled combined cycle generation plato. In either opt in scenario, DME is at risk to lose revenue due to loss of energy customers to competitive REPs. In order to attempt to assure that DME would maintain the financial ability to meet its obligation to TMPA to pay its portion of Gibbons Creek fixed cost and debt service, the Council will have to set a "stranded cost". The method of"reasonably" calculating that "stranded cost" could vary depending on which opt in scenario is selected. Senate Bill 7 specifies that any stranded cost be recovered as a "transition charge" added to the transmission and distribution cost for customers in DME's certified service area. It is important to remember that Denton's share of the Gibbons Creek generation unit fixed and debt service costs must be paid, regardless of what decisions the City Council makes regarding the future of DME. · Cash flow risk In the deregulated electric market ERCOT acts as the financial settlement clearinghouse for the retail market. Through a software system referred to as the Texas Standard Electronic Transaction (SET) system, it keeps track of which REP is serving every opted 14 in metered load in the ERCOT region at any given time, receives all metering data related to these customers from TDSPs, and passes the metering data on to the appropriate REP. To date, this has been a cumbersome and problematic system that has resulted in problems such as delayed and erroneous billings to customers and delays in establishing electric service to buildings when a customer moves in. This has caused a dramatic increase in the number of customer complaints and requests for assistance in rectifying billing errors to the PUC. Even when the system is operating at peak efficiency, the best the system will be able to do is maintain a two-day response to retail customer requests. When this system does not function dependably REPs cannot bill their customers accurately and they do not have the proper information to determine how much "rent" they owe TDSPs for use of their transmission and distribution systems. This results in both REPs and TDSPs being unable to accurately report their financial performance. It also impacts each entity's cash flow in a manner that can result in the need to retain larger amounts of working cash, which increases operating costs. Although ERCOT and the impacted entities have worked hard over the last two years to significantly reduce the problems with the systems, the fact remains that these are very complex software and communication systems that are exchanging and manipulating massive amounts of information. Some problems with such a process are inevitable. As an opt out entity, DME's only exposure to this problem is the ERCOT cost for its retail software, which is spread among all load serving entities in ERCOT and will be paid by DME regardless of its opt in/out status. However, if DME opts in to retail electric deregulation, it should expect some level of negative impact on its revenue stream as a result of inevitable system errors. The costs to monitor data accuracy, move through dispute resolution when problems occur, and maintain sufficient working cash to cover expenses while errors are being corrected are impossible to predict but they will occur. Responsibility to function as Provider of Last Resort (POLR) In a deregulated retail electric market a REP can choose the customers it wishes to serve. An REP has no obligation to serve any customer that requests service from it. If a REP accepts a customer and that customer does not pay their bill, the REP can drop that customer and refuse to serve them in the future. Since this elimination of the absolute obligation to serve all customers had the potential to leave some Texas electric customers with no one willing to serve them, Senate Bill 7 established the concept of a POLR. Every area that opts in to retail electric deregulation must have a POLR who is obligated to accept the customers no other REP wants or customers of an REP that goes out of business, until those customers can find another REP. The PUC is responsible for finding an entity that will act as this POLR in the areas it formerly regulated and has the ability to order an entity to serve as a POLR if no "volunteers" are found. It is also responsible for setting the rates the POLR may charge. This rate has been very high since the POLR is accepting the responsibility to serve all the poor credit risk and undesirable customers no one else wants. It has also been difficult for the PUC to find entities willing to serve as a POLAR. Thus far, TXU is providing POLR service in Reliant's former service area and Reliant is providing POLR service in TXU's former 15 service area. Reliant and TXU are the only entities providing POLR service in ERCOT. The rule that sets out POLR responsibilities is presently under review by the PUC. Senate Bill 7 places the responsibility for finding a POLAR for the DME certified service area and setting that POLR's rate on the City Council. If the Council cannot find an entity willing to serve as the POLR, Senate Bill 7 requires the existing municipal utility to serve as the POLR. The implications of this requirement are different for each of the DME opt in scenarios. · University subsidy Section 36.351 of the Utilities Code requires that four-year state universities, upper-level institutions, and Texas state technical colleges or colleges be given a 20% reduction in the cost of their electric service. Senate Bill 7 requires that any entity providing discounted electric service as specified by Section 36.351 of the Utilities Code on December 31,2001 must continue to provide that discounted electric service until September 1, 2007 "at a total rate that is no higher than the rate applicable to the university, institution, or college on December 31,2001 ." DME provides this 20% discount to TWU and UNT. At the present time, DME is incurring an annual loss of approximately $1.3 million as a result of this mandated discount and will continue to incur a loss until September 1, 2007. In either opt in scenario this loss could not be recovered in DME's transmission and distribution rate. Although both TWU and UNT would be free to select other energy providers if DME opted in to retail electric deregulation, it is highly unlikely they would be able to find a supplier that would match the 20% discount they receive from DME. · Customer contact Once DME opts in to retail electric deregulation, all retail electric customers in its certified service territory are required to deal only with the REP they choose. Even though Customer Service may be acting as the billing agent for an REP, all billing questions, turn on and turn off requests, etc. must be directed to the REP. Similarly, all physical service concerns such as reporting of outages must be done through the REP. The REP will then relay those issues to the appropriate area within DME and relay any responses from DME back to the customer. This requirement will have the potential to reduce the quality and speed of service some citizens receive. While such restrictions may be relatively transparent to customers of large utilities such as TXU and Reliant, who are used to dealing with recordings and representatives who can do little other than accept information, it could become problematic in Denton. Denton citizens are used to being able to raise their concerns directly with DME employees, who they see on the streets everyday, and with the City executive staff, Public Utility Board members, or Council members. 16 · Advertising If DME opts in to retail electric deregulation, DME customers will see a significant change in the way they purchase their energy and interact with DME. Council will need to consider the level and type of advertising that will be required to communicate with Denton citizens regarding this important issue. The cost associated with this advertising will vary depending on the opt in scenario chosen. · Loss of General Fund revenue Each opt in scenario creates the risk of loss of revenue to the City General Fund. In fiscal year 2004, DME is forecast to transfer approximately $6.6 million to the General Fund in Return on investment (ROi) and franchise fees, accounting for over 10% of the General Fund budgeted revenues. These payments include a franchise fee payment of approximately $3.8 million and a ROi transfer of approximately $2.8 million. At present, both franchise fees and ROI are calculated on a percentage of DME revenue collected. The franchise fee is 4% of DME's total revenue, which is identical to the franchise fee charged other electric providers providing service in the City (CoServ and Oncor). ROi is 3.5% of DME's revenue, with the ECA rate fixed at 2 cents. The 2 cent ECA ROI cap was set to limit the impact of climbing natural gas rates on Denton citizens. If the electric utility serving a city joins retail electric deregulation, Senate Bill 7 sets a city's electric utility franchise payment for any year at a level equal to the total franchise fee revenue received by the city from that electric utility during 1998, divided by the total kilowatt hours delivered by that electric utility during 1998 to retail customers located within the city, times the total kilowatt hours delivered during the specified year or at a rate negotiated between the City and that electric utility. If DME's fiscal year 2004 franchise fee payment were calculated by using its 1998 payments, it would be approximately $3 million, a reduction of $800,000. ifDME opts in to retail electric deregulation, franchise fee payments would be recovered in the DME transmission and distribution rate paid by all REPs selling energy to retail customers in DME's certified service area. The ROI payment is a payment in lieu of property taxes for physical plant owned by City Utilities. The ROi payment made by City utilities to the City General Fund is capped by the City Charter at 6% of the fixed asset value of the each utility. However, there is a recent court decision regarding the City of Corpus Christi that may invalidate the 6% cap on the grounds that it conflicts with Section 1502.059 of the Government Code. Under the present calculation method of 3.5% of DME revenue collected, DME is paying approximately 4% of its fixed asset value in ROI payments. 6% of DME's present fixed asset value is approximately $4 million. If DME opts in to retail electric deregulation, loses revenue as a result of the loss of customers, and continues to calculate its ROI payments at the same percentage of revenues used today, the ROI revenue transferred to the General Fund will decrease. Competing REPs will not be a source for replacement of 17 the lost General Fund revenue. REP's have no physical plan on which they would pay property tax and are exempt by law from paying franchise fees. The Council could recover some or all of this loss by either raising the perceNage of revenue paid or returning to calculating the ROI payment as some percentage of DME's fixed asset value. To date, the ROI calculation method has been applied uniformly across all City utilities. However, it appears that the Charter would allow ROI to be calculated differeNly for each utility. If the Council chose to maiNain a uniform calculation across all utilities, a decision to adjust DME's ROI payment calculation would also impact the Water and Wasetwater utilities. Under the uniform calculation scenario, a return to use of a perceNage of fixed asset value for all utilities would place a significaNly higher financial burden on the Water and Wastewater utilities due to their high fixed asset value relative to their revenue. DME ROI payments would be recovered in the DME transmission and distribution rate paid by all REPs selling energy to retail customers in DME's certified service area. A reduction of DME franchise fees and ROI will result in less support for General Fund functions. The Council would have two options for handling that loss of General Fund revenue: (1) reduce services, and/or (2) increase property taxes. In considering how to address loss of franchise fee and ROI General Fund revenue from DME, Council will need to consider the impact of its decisions on economic developmeN in Denton. While it is true that franchise fees and ROI payments can be passed on to all DME transmission and distribution customers, regardless of which REP they purchase their energy from, by passing a noncompetitive level of these fees on to Denton retail electric customers, the DME transmission and distribution rate may be higher than the transmission and distribution rate in surrounding areas. This could cause the overall electric cost paid by Denton residents and businesses to be higher than that paid elsewhere, which could result in a negative impact on economic developmeN in DeNon. This would be largely an issue related to ROI payments since the ROI paid by DME is likely to be higher than the property tax payments made by private transmission and distribution providers in other cities. For franchise fees, surrounding transmission and distribution eNities (such as TXU) will be paying the Senate Bill 7 defined rate. Uncompetitive franchise fee rates would only become an issue if the Council chose to "negotiate" a higher franchise fee payment from DME than the Senate Bill 7 defined rate. Schedule A decision for DME to opt in to retail electric deregulation will require a minimum of 2 years to implement. Once the decision is made, the budgetary impacts will have to be refined and included in the next available fiscal year budget. Additional personnel will have to be hired and trained. Software upgrades/changes will have to be purchased, installed and tested. The communication tests and ERCOT certification of DME's ability to properly interface with the Texas SET process occur on set schedules established by ERCOT and the existing market participants. After a decision to opt in is made and DME completes all required upgrades and personnel additions, DME will have to wait 18 for the next scheduled imerface testing process before it will be able to actually begin operation as an opt in entity. These testing processes typically occur every three or four months. · Rate comparisons The projected retail electric rates paid by DeNon citizens under the differem scenarios of retail electric deregulation are an important part of this analysis. Unfortunately, obtaining the data necessary to make such comparisons is very difficult in the deregulated environment. In the former regulated environment, rates charged to all customer classes, and the data used to develop them, were a matter of public record, either from the PUC in the case of regulated private electric utilities or through open record requests from municipal utilities. That is no longer the case. The only way to get actual rate and terms of service data is to ask each individual REP. Deregulated REPs have no obligation to make any of their rates or terms of service public. In fact, they have no obligation to charge all members of a customer group the same rate. They can charge two businesses located adjacem to each other in a strip mall differemly if they choose. The PUC makes residemial rate comparison data available on their Texas Choice website. However, this data provides only total rate data for different areas of Texas. It does not separate the transmission and distribution rates charged by local TDSPs from the energy rate, and any other rates, added on top of the local transmission and distribution rates by the competitive REPs serving in that area. It also does not reflect the fact that there may be differem terms and conditions for service from differem REPs. For example, similar to cellular phone service, what may appear to be a low cents/kwh rate may also require the customer to sign a contract with that REP for a long time period or to sign a contract that contains penalties for going over or falling below some set consumption limits. Competitive REP rates may also contain block rates with different charges for differem levels of usage. In addition, what an REP offers in another service territory is not indicative of what prices would be in the DME service area. The basic economic laws of supply and demand in each area will determine prices in that area. Since, in either opt in scenario, all customers in DME's certified service territory will pay the same transmission and distribution rate, any savings realized by Denton retail electric customers in a competitive market over what they are paying today will have to come from the energy and other charges an REP, other than DME, offers. In areas open to competition, the REP associated with the utility who was the sole provider in an area prior to retail electric deregulation is referred to as the affiliated REP. For example, TXU's REP serving in TXU's certified service area would be the affiliated REP for that area. The affiliated REPs in each area charge a "price to beat" rate covering both the transmission and distribution and energy components of their service. Senate Bill 7 set this price. The only variable portion of the "price to beat" rate is a fuel factor whose componems are defined and regulated by the PUC. Per Utilities Codes Section 39.202(1), this fuel factor is adjusted to cover significam changes in the market price of natural gas and purchased energy used to serve retail customers. Therefore, the "price to 19 beat" fuel factor for affiliated REPs is comparable to the ECA rate DME charges its customers. A comparison of the DME ECA rate as of January, 2004 to that of the three largest utilities in ERCOT shows: DME First Choice TXU Energy Reliant Energy 3.20 cents/KWh 4.17 cents/KWh 4.29 cents/KWh 4.97 cents/KWh However, these rates appear not to be representative of the energy charges Denton customers may see. Information obtained regarding the retail energy rate Reliant charges its REP customers in the former TXU area show that rate as 3.90 cents/KWH, over a cent lower than the "ECA" rate their affiliated REP charges retail customers in their former service territory. Another method to develop an estimate of what rates Denton retail electric customers may have available for electric service from competitive REPs under the opt in scenarios is to determine the opt in transmission and distribution rate, stranded cost recovery rate, and any other rates DME would charge all REPs competing in its certified service territory and add the energy rates presently being charged by competitive REPs serving retail customers in the former TXU service area to those DME rates. However, this is easier said than done since, as explained above, the energy rates are not typically shown separately from transmission and distribution rates on bills or publicly available data. For purposes of this analysis, the TXU "price to beat" fuel factor rate was subtracted from the TXU total residential "price to beat" to determine the approximate transmission and distribution rate being charged to competitive REPs by TXU. This estimated transmission and distribution rate was then subtracted from the publicly available residential rates for four REPs that are presently competing in the former TXU service area. The REPs were chosen because they have a fixed rate rather than more complex block rates. The result of this calculation was: Reliant 3.90 cents/KWH (from published data) Entergy 3.55 cents/KWH Direct Energy 3.85 cents/KWH Gexa 3.58 cents/KWH ACN Energy 5.73 cents/KWH ACN Energy is typically the high cost provider in areas they serve. Therefore their results were eliminated and the data from the remaining four REPs (Reliant and the remaining three calculated energy values) were averaged to arrive at a competitive REP energy rate of approximately 3.7 cents/KWH. Another method to obtain an estimated competitive REP energy rate is to average the PUC published rate for 1000 KWH of residential usage for all nonrenewable REPs serving the DFW area and subtract the estimated TXU transmission and distribution rate. That calculation yields an competitive REP energy rate of approximately 4.4 cents/KWH. 20 In order to assure a fair comparison of DME's opt out rate against the estimated competitive REP rates, two adjustments must be made to DME's existing rates. First, since the present power purchase contract with Constellation will end before DME could begin operation as an opt in entity, the Constellation rates have been replaced with rates based on an average of the FY 2003 market clearing prices for energy in ERCOT. Second, the present use of the Rate Stabilization Fund to mitigate the impact of DME's rising debt has been removed. None of the comparison rates for the opt in scenarios include the utilization of the rate stabilization funds. These adjustments result in an estimated average annual DME opt out residential rate of 9.6 cents/KWH. For the reasons discussed above, estimating rates used in comparisons of opt in/out options requires the application of a number of assumptions. Therefore, it is not appropriate to consider the estimated rates as the exact rate that will occur. However, the relative level of one estimated rate to another is informational. If two rates are close to the same value, it is safe to assume that the two rates will probably be "competitive". Opt in - Transmission and Distribution Only Issues specific to the transmission and distribution only scenario are: · POLR considerations Under this scenario, the City Council will be responsible for providing a POLR for retail electric customers in DME's certified service area. Unlike the PUC, who has the authority to order an entity to provide POLR service if it is unable to find a "volunteer", if the Council is not able to find a "volunteer", Senate Bill 7 requires that DME provide the service. Based on experience to date, it is likely that DME would have to provide POLR service. If forced to perform as a POLR for its certified service area, DME would not be able to completely exit the energy service business. DME would be left with the responsibility for providing energy for a small group of the worst possible customers. The cost of such a service would be extremely high. It is likely to be higher than other POLR rates because DME would continue to pay the entire overhead related to remaining in the wholesale energy purchase business but would only be able spread it over a smaller group of customers than the other POLRs operating in ERCOT. · University subsidy It is highly likely that both TWU and UNT would choose to remain DME energy customers in order to maintain their state mandated 20% rate reduction. If they chose to do so, DME would be required to serve them until September 1, 2007. It is unclear how DME would recover the $1.3 million per year loss it incurs serving the universities under this scenario. DME could not include this cost in its transmission and distribution rate. The Council could attempt to pass this cost through to REPs as another "stranded cost", although this does not fall under the intent of stranded cost recovery established by Senate Bill 7 and could be challenged in court. 21 · Economic development incentive rates DME presently provides a discounted Industrial Development Rate to new businesses coming to Denton that meet certain criteria. Economic development incentive electric rates will not be available for use in attracting new industries to Denton. DME will be required to provide transmission and distribution service to all REPs at a nondiscriminatory rate. Since it will not be functioning as a REP under this scenario, DME will not be able to provide energy to industries considering locating in Denton. · Advertising If DME will no longer provide energy to its customers, it will be necessary to develop an educational program for Denton citizens well before the change is made so that they are prepared to select new suppliers. Since this would be a one-time occurrence, the costs for such a campaign have not been included in any rate comparison analysis. · Recovery of Gibbons Creek "stranded cost" If DME is no longer in the business of providing energy to its customers, except possibly for a small class of POLR customers and the universities, it will no longer have any use for most of its share of the output of the existing TMPA Gibbons Creek generation unit. However, it will still be required by its contract with TMPA to pay its share of that unit's fixed operating costs and debt service. Under those circumstances, the Gibbon's Creek "stranded cost" could be considered to be all costs DME was required to pay in accordance with its contract with TMPA. These costs would total approximately $655 million over the next 15 years or approximately 3.4 cents/kwh added to DME's transmission and distribution rate. That cost may be offset to a limited degree by any revenues DME could obtain by selling energy from the unit in the deregulated wholesale market. However, the manner in which that energy could be sold would be severely limited by the IRS regulations resulting from the unit's tax-exempt debt. In the event this interpretation of "stranded cost" was successfully challenged in court on the grounds that it does not follow the "industry standard" methodology for "stranded cost" determination, the City would either have to find another method to provide the $514 million difference between the $655 million and a value that would probably be no more than $141 million or move to the opt in transmission, distribution and energy service scenario and hope that DME could retain sufficient customers to make up the difference. · Loss of General Fund revenue Based on 2004 budget projections, if DME no longer provided energy to its customers, its revenues would be reduced by $ 71 million. If ROI continued to be calculated as 3.5% of DME revenues, ROI payments would be reduced by approximately $1.5 million. This could be recovered by changing the 22 calculation method for DME's ROI as described above. However, if the 6% of fixed asset value ROI cap established by the Charter is found to be valid, only approximately $1.2 million of the loss could be recovered, based on 2004 fixed asset value figures, leaving a shortfall of approximately $300,000. Franchise fees would be reduced by approximately $800,000 if calculated in accordance with the methodology shown in Senate Bill 7. Council could choose to "negotiate" with itself for a higher franchise fee payment. · Rate comparisons Under this scenario, the total rate DME would pass on to all competitive REPs serving residential retail electric customers in the DME certified service area is assumed to include: (a) A transmission and distribution rate with 0.36 cents/KWH hour added to recover the increased costs associated with expenses related to providing systems and support of opt in operation (b) Continued collection of existing levels of ROI and franchise fees. (c) A Gibbons Creek stranded cost recovery of 3.4 cents/KWH for recovery of the total fixed cost and debt service obligations of the TMPA contract. (d) A university discount stranded cost recovery of 0.12 cents/KWH to recover the cost of continuing to serve the universities at a subsidized rate until September 1, 2007. A competitive energy rate of 3.7 cents/KWH to 4.4 cents/KWH is then added to the DME transmission, distribution, and stranded cost rate to obtain a total estimated competitive REP retail rate of 10.1 cents/KWH to 10.8 cents/KWH. This total rate is comparable to an adjusted opt out DME average annual rate of 9.6 cents/KWH, which is below the estimated range of rates Denton customers would pay competitive REPs if DME opted in and provided only transmission and distribution service. The full cost of the TMPA Gibbons Creek obligations is included in both the estimated competitive retail rate and the DME opt out rate. The cost savings between the low end of the estimated competitive REP retail rate range and the DME opt out rate is largely due to the extra operating expenses associated with opting in that would be avoided if DME did not opt in. Opt in - Transmission, Distribution, and Energy Service Issues specific to the transmission, distribution, and energy service scenario are: · Unbundling If Council directed DME to opt in to retail electric deregulation under this scenario, it could also choose to allow DME to compete, as an REP, for energy customers outside of DME's certified service area. However, ifDME began to compete as an REP outside of 23 its certified service area, by law DME would become subject to customer protection rules that apply to all REPs and a code of conduct developed by the PUC for municipal utilities and cooperatives. This code of conduct states that, pursuant to PURA §40.055 and §41.055, it is the discretion of the governing body of the municipal utility or cooperative to determine whether to unbundle any energy-related activities, and whether to do so structurally or functionally. To functionally unbundle, the DME energy sales function would be considered a competitive function and would become a separate competitive division from the transmission and distribution function of DME. Each employee in the organization would be assigned to one of these functions. The transmission and distribution function must implement safeguards the commission determines are adequate to preclude employees of a competitive function from gaining access to confidential information that would allow for an unfair competitive advantage. Any activities between employees of different functions would have to logged and reported to the PUC on an annual basis and support provided by one function for another paid for on a fair and reasonable level. Also, any activity that may result in the exchange of confidential or proprietary information, including but not limited to, information relating to the connection of customers to DME's transmission or distribution systems, proprietary customer information, and information about DME's transmission or distribution system, operations, or plans for expansion would have to be logged and reported to the PUC. Because of DME's small size, many of its employees perform several different tasks. These multiple tasks would cross the boundaries of the REP and transmission and distribution functions on a daily basis. It would be probable that employees would find themselves required to log and report "conversations" they had with themselves. The record keeping, reporting and compensation requirements of this option would be impractical, cumbersome, time consuming, and expensive. To structurally unbundle, DME's transmission and distribution business unit's office space must be physically separate from the office space of its competitive REP. Also, its transmission and distribution business unit must maintain separate books of accounts and records from those of the competitive REP. No confidential information can be shared between the functions. There can be no sharing of employees. Each function must remain completely separate. This would mean lower efficiency and higher costs for DME as a whole since each function would need to acquire additional employees to replace those no longer providing cross-functional services. If the City Council chose not to unbundle, a confusing subset of the reporting and other requirements would apply to DME. Interpreting and managing these requirements would reduce efficiency and increase costs. There is also a risk that, because these requirements are so poorly defined, DME would be subject to constant challenges by the PUC staff. The higher costs associated with whatever method is applied to DME would be passed on to customers through a combination of the transmission and distribution and energy charges. 24 The customer protection rules are currently under review by the PUC. They may impact a number of DME practices such as credit requirements and deposits, bill payment and adjustment, disconnection of service, electricity facts labeling, complaint handling, and reporting requirements. These items could also create higher costs that would be passed on to customers. Loss of Pre-assigned Congestion Rights (PCRs) In the ERCOT transmission system, several major transmission lines are subject to periodic overloading, referred to as congestion. These transmission lines are considered Commercially Significant Constraints (CSCs). It is ERCOT's responsibility to relieve or avoid congestion. To accomplish this, ERCOT instructs generators on either end of a congested CSC to modify their output levels. Generators on the receiving end of the CSC will be instructed to raise their generation output while those on the sending end will be instructed to reduce their output. This reduces the overall energy flow across the overloaded transmission line and relieves the congestion. Under the ERCOT market rules, all generators receiving instructions that will relieve the congestion, whether they increase or reduce generation, are paid for their performance at levels determined by the market prices set by the generators on either end of the congested CSC. These payments, called zonal congestion costs, are charged, on a load ratio share basis, to the load serving entities in ERCOT (REPs, municipal utilities, and cooperatives) within the zones receiving power over the congested CSC. Loads can protect themselves against high congestion costs by purchasing financial hedges referred to as Transmission Congestion Rights (TCRs). TCRs guarantee that the TCR holder will receive a payment equal to its directly assigned congestion costs for a quantity of scheduled flow equal to the amount of TCRs purchased. TCRs are purchased through an auction process administered by ERCOT. Set quantities of congestion rights, limited by the capacity of each CSC, are auctioned for each CSC, with the rights going to the highest bidders. The TCR hedging process works for REPs serving loads in the restructured market since there is no longer a direct tie between the generators and REPs. A REP can choose to purchase from any independent generator in ERCOT to serve its load, thus avoiding the cost associated with the purchase of TCRs over a congested path, if it desires to do so. However, this is not the case for DME and other opt out utilities. These utilities own remote generation facilities or have long term power supply contracts with remote generation facilities (such as Gibbons Creek). They are obligated to pay for costs associated with those plants and need to be assured of the ability to deliver energy from those plants to their customers. The right to move this energy to these utilities' loads over CSCs had to be protected. To accomplish this, the PUC provided opt out utilities, which had committed to such ownership or obligations prior to the adoption of Senate Bill 7, pre-assigned congestion rights (PCRs) at a reduced cost (presently 15% of the cost of the auction price for TCR's for a specific CSC). These PCR rights are guaranteed to the utility as long as it does not opt in to retail electric competition. Once it has opted in, the PCRs are lost and any congestion rights needed must be purchased at full price through the TCR auction process. If the transmission path between Gibbons Creek and DFW becomes congested, the risk of having to bid for TCRs in the auction and either 25 having to pay for them at full price or do without them would increase the cost of energy delivered from Gibbons Creek to Demon. This increased cost would become part of the DME energy rates. Adding additional costs into the energy rates will make DME less competitive and result could result in lost customers. · POLR considerations Under this scenario, the City Council would be responsible for providing a POLR for retail electric customers in DME's certified service area. Unlike the PUC, who has the authority to order an emity to provide POLR service if it is unable to find a "volumeer", if the Council is not able to find a "volunteer", Senate Bill 7 requires that DME provide the service. Based on experience to date, it is likely that DME would have to provide the service. Today, the bad debt costs and other costs associated with providing service to the customers likely to be assigned to a POLR are spread over the remaining DME customers. Requiring DME to continue this practice by spreading these costs over its other energy customers would place DME at a competitive disadvantage as it attempted to compete for retail energy customers against REPs who were not carrying these costs in their energy rates. In order to for DME to compete on a level playing field with other REPs, DME would need to establish a separate, higher, POLR energy rate for "problem" customers. University subsidy It is highly likely that both TWU and UNT would remain DME energy customers in order to maintain their state mandated 20% rate reduction. This would either cause the $1.3 million per year loss DME incurs to serve these universities to be spread over other DME energy customers, making it more difficult for DME to maintain competitive energy rates against REPs that do not have to provide such subsidies, or the Council could attempt to pass this cost through to REPs as another "stranded cost". This type of government mandated cost does not fall under the intent of stranded cost recovery established by Senate Bill 7 and could be challenged in court. DME could not include this cost in its transmission and distribution rate. Advertising Based on what has occurred in other areas of the state when retail deregulation was implemented, if DME opts in to retail electric deregulation it is very likely that Denton will be inundated with advertising campaigns from other competitive REPs at the beginning of the opt in period, followed by a slightly reduced but steady ongoing campaign. The level and quality of advertising that can be expected to occur would be similar to that being done today in the areas surrounding Demon (and to limited degree in Demon) by emities such as Reliam. It will probably include television and radio ads on major stations, whose viewer level and advertising rates are high, as well as sophisticated direct mailings. Up from rebates may also be used. The statistics and rate comparisons used in these advertisemems, while "technically" correct, will be deceptive and will gloss over much of the "fine prim" behind the offers. 26 In order for DME to compete effectively, it will need to advertise in a similar manner. The cost of such a campaign is estimated to increase DME expenses by $1.5 million annually or 0.14 cents/KWh. Recovery of Gibbons Creek "stranded cost" Under this scenario DME would be competing with other REPs for energy service to customers. Providing it is relatively successful in that effort, DME would continue to have a need for the energy output from Gibbons Creek that it is entitled to under its contract with TMPA. This would place the Gibbons Creek "stranded cost" in the more traditional category of the difference between the Gibbons Creek fixed and energy costs and those same costs for the new gas fired combined cycle units now being built in Texas. That value fluctuates depending on the price of natural gas. The higher the price of natural gas assumed in the calculation, the smaller the "stranded cost". In this scenario, the best alternative for the Council would probably be to adopt the $141 million value established by Section 40.059(c) of Senate Bill 7 as the Gibbons Creek "stranded cost" that DME could recover as an addition to its transmission and distribution rate. Since this value was developed during a period when gas prices were lower than they are today, the $141 million would probably minimize the level of Gibbons Creek noncompetitive debt service cost DME would have to include in its energy rate. Spread over 15 years, this would result in approximately 0.7 cents/KWH added to DME's transmission and distribution rate. Council could attempt to justify a higher level of stranded cost in order to improve DME's ability to compete against other REPs that are able to buy all their energy at competitive market rates. However, such an effort would be subject to a challenge in the courts from REPs or DME customers. It is unlikely that a "stranded cost" based solely on the level required to make DME's energy completive would withstand such a challenge. · Loss of General Fund revenue Under this scenario, the impact on the General Fund revenue would be based on both the method chosen by the City Council for calculation of the franchise fees and ROI and the amount of energy sales lost by DME to competitors. As discussed in the previous scenario, franchise fees would be reduced by approximately $800,000 if calculated in accordance with the methodology shown in Senate Bill 7. However, Council could choose to "negotiate" with itself for a higher franchise fee payment. If ROI continued to be calculated as 3.5% of DME revenues, ROI payments would be reduced in proportion to the amount of energy sales lost by DME to competitors. Hopefully, this reduction would be less than the loss under the transmission and distribution only scenario. Large industrial customers are the most likely customers to be lost because they are the most attractive customers for competitors to acquire. If 15% DME's industrial load is lost to competitors, under the 3.5% of revenue ROI calculation, 27 ROI payments would be reduced by approximately $150,000. A loss of 5% of residential customers and 5% of commercial customers would reduce ROI payments by approximately $100,000. As discussed above, the Council could recover ROI loss by changing the method for calculating DME's ROI, up to the possible limitation of 6% of fixed asset value set by the Charter. Rate comparisons Under this scenario, the total rate DME would pass on to all competitive REPs serving residential retail electric customers in the DME certified service area is assumed to include: (a) A transmission and distribution rate with 0.36 cents/KWH hour added to recover the increased costs associated with expenses related to providing systems and support of opt in operation (b) Continued collection of existing levels of ROI and franchise fees. (c) A Gibbons Creek stranded cost recovery of 0.7 cents/KWH for recovery of $141 million of Gibbons Creek stranded cost over 15 tears. (d) A university discount stranded cost recovery of 0.12 cents/KWH to recover the cost of continuing to serve the universities at a subsidized rate until September 1, 2007. A competitive energy rate of 3.7 cents/KWH to 4.4 cents/KWH is then added to the DME transmission, distribution, and stranded cost rate to obtain a total estimated competitive REP residential retail rate of 7.4 cents/KWH to 8.1 cents/KWH. This rate is lower than the competitive REP rate in the transmission and distribution only scenario solely because 2.7 cents/KWH of the 3.4 cents/KWH total Gibbons Creek fixed and debt service costs have been shifted from the competitive REPs to the DME REP energy cost. Assuming that DME does not compete for customers outside it's service territory and does not lose any customers to competitive REPs, DME's total estimated opt in residential rate under this scenario would be approximatelyl 0.3 cents/KWH. The DME REP energy rate under this scenario contains: (a) The remaining 2.7 cents/KWH of Gibbons Creek fixed cost and debt service costs not covered by the $141 million stranded cost included in the transmission and distribution rate paid by all REPs. (b) Market based energy rates forecast to cover all energy requirements above the energy supplied by Gibbons Creek. (c) A 0.14 cents/KWH cost for additional advertising expense. (d) A 0.2 cents/KWH cost for the total existing DME load ratio share of ERCOT transmission fees. However, based on the price spread between these estimated rates, it is unlikely that DME would be able to retain all of its existing customers. To the extent that DME's higher rate caused it to lose customers to competitive REPs, it's energy rate would have 28 to increase to cover the impact of spreading the 2.7 cents/KWH of Gibbons Creek fixed and debt service costs over the fewer remaining customers, triggering a "death spiral" of more lost customers, followed by even higher rates followed by an additional loss of customers, etc. until DME had no energy customers. At that point, Council would either have to raise the stranded cost recovery factor to the 3.4 cents/KWH level shown in the transmission and distribution only scenario or find another source of funds to pay the remaining Gibbons Creek costs. This would either leave Denton customers with the potential of paying 10.1 cents/KWH to 10.8 cents/KWH to competitive REPs, which is higher than the adjusted opt out DME average annual rate of 9.6 cents per KWH, or require the Council to raise the remaining $514 million from other sources. Under either of those options, the citizens of Denton would end up with higher overall costs than the 9.6 cents/KWh they would have faced if DME had remained an opt out entity. Sell the Entire Electric Utility · TMPA contract restrictions The contract between the City of Denton and TMPA pledges the revenue of each member utility for payment of the debt service for the debt issued by TMPA for construction and operation of the existing Gibbons Creek generation unit. It also requires each TMPA member to pay its share of the fixed operating expenses of that generation unit. The contract also states that no TMPA member city can sell their distribution system without the permission of the other member cities. Since the contract requires that the remaining member cities must take over the debt service obligation of any member city that defaults on their debt service obligation, the distribution system sale restriction assures all the TMPA member cities that each member city will have a method to earn the revenues needed to meet their debt service obligations. It is highly unlikely that the remaining TMPA member cities will allow Denton to sell its electric utility unless they can be assured that Denton has available the means to meet its financial obligations to TMPA without the electric utility. Denton would need slightly more than $400 million to meet the existing debt service obligation alone. There is approximately $59 million in DME's Rate Stabilization Fund, leaving a balance of $341 million that would have to be raised to cover the debt service obligation. While it is difficult to estimate what Denton might receive from a sale of the electric utility, given the fact that DME's present fixed asset value is approximately $69 million, it is very likely that all proceeds from a sale would have to be dedicated to cover the TMPA debt service obligation. Under the TMPA contract, Denton would also continue to be obligated to pay its share of the fixed costs of operating the existing generation unit until the unit's debt is paid off in 2018. Today's estimates are that that obligation would be in excess of $200 million. It is possible that remaining TMPA member cities would accept some or all of the fixed cost obligations for Denton's portion of the Gibbons Creek generation unit in return for the use of the associated energy or allow another governmental entity to join TMPA and assume those obligations, providing Denton continued to pay its share of the 29 noncompetitive level of debt service. It may even be possible to get some value from the remaining TMPA members or another governmental entity for Denton's portion of the Gibbons Creek generation unit. However, there is no assurance that this would happen. The tax-exempt status of the plant severely limits Denton's options in this area. Based on the "stranded cost" recovery language in Senate Bill 7, it is likely that the Council would retain the ability to recover some amoum of Gibbons Creek "stranded cost" as a rate added to the transmission and distribution cost of the purchaser of the DME system. However, the risk associated with how a court may interpret what "reasonably" determined "stranded cost" means would remain. If a court applied "industry standard" methodology to the calculation of"stranded cost", all DME's Gibbons Creek fixed operating cost obligations could be recovered from other emities, and the approximately $59 million in DME's Rate Stabilization Fund was applied toward the remaining obligations, DeNon would still be left with approximately $200 million in debt service obligations (assuming a maximum "stranded cost" recovery of $141 million). A portion of this obligation could be covered with the proceeds from the sale of DME. Any remainder would have to be raised from DeNon citizens through fees and/or taxes. · Loss of General Fund revenue In this scenario, the City would lose the ROI and franchise fee paymems from DME. The franchise fee paymems should be replaced by paymems from whoever purchased the DME system. The level of those payments would be determined by the Senate Bill 7 1998 franchise fee calculation. Senate Bill 7 specifies that, if a new electric transmission and distribution provider emers a city, the city may determine the per kilowatt-hour franchise fee paymem for that emity by using rates that had been charged in surrounding communities in 1998. It seems reasonable that Denton could use the rate based on DME's 1998 franchise fee to set the franchise fee rate for the new entity. It is unlikely that the new owner would voluntarily negotiate with the City to pay a higher franchise fee than that required by Senate Bill 7. Therefore, based on current budget figures, the loss of revenue to the General Fund for franchise fees would be approximately $800,000. A new owner would pay property tax to the City rather than ROI. Based on today's property tax rate of 0.54815 ceres per $100 of property value and a DME book value of approximately $69 million, the new owner's property tax paid to the City would be approximately $39,000. Based on the 2004 budgeted DME ROI paymem of approximately $2.8 million, the loss of revenue to the General Fund for ROI would be approximately $2.76 million. Under this scenario, there would be an additional impact on the General Fund. In 2004, the DME budget calls for DME to transfer approximately $3.15 million in funds to pay for customer billing, support services, economic developmem, and technology upgrades. Although it would appear a simple matter to eliminate the individuals providing the support that would no longer be required, this reduction would, in reality, not be so clear- cut. For example, the position in Human Resources that supports DME for advice on 30 employee issues also supports 6 other departments. Because of its size, DME pays for a significant amount of the expenses associated with this position. Without DME's contribution, either this position would have to be eliminated entirely or the General Fund would have to make up the lost revenue so that the other divisions would continue to receive the same level of support. This scenario would be repeated in other areas of the General Fund. DME's transfers also provide some level of funding for the senior managemem of a number of General Fund functions. There would also be other areas where investmems in systems have been made that would not decrease. Customer Service is one example. Even without DME, the majority of this area's functions would cominue and the significam investmem in software systems to support billing would not be reduced. The number of radio users would decrease substamially, leaving the police, fire and other field service and utility departmems with fewer users over which to spread the fixed costs of the system. The number of computers and phones would decrease significamly, leaving the remaining users with fewer users over which to spread the cost of the infrastructure supporting these functions. · University subsidy If the DME system were sold before September 1, 2007, unless Denton was able to obtain relief from its obligation from the Legislature, any purchaser of the DME system would have to provide the mandated university subsidy. This would reduce the sale price of the system by the amount required to offset the loss. Conclusion At this time, the lowest cost, least risk option for Denton citizens is for DME to remain an opt out entity. Although there are many risks and uncertainties associated with opting in to retail electric deregulation, the largest issue is the City's ability to pay its TMPA Gibbons Creek obligations. These costs will be paid by the citizens of DeNon in some fashion. Opting in will not make them disappear. All it might do is shift them from electric rates to other areas such as City fees and property taxes. Aside from the TMPA Gibbons Creek costs, DME's energy rates are competitive. However, opting in to retail electric deregulation adds costs to the transmission and distribution rate that all electric customers in Denton must pay, regardless of what company they purchase their energy from. 31 ACRONYM DEFINITIONS CSCs - DME - ERCOT IRS - PCRs - POLR - PUC - REP- ROI - SB7 - SET - TCRs - TDSP - TMPA - Commercially Significant Constraints Denton Municipal Electric Electric Reliability Council of Texas Internal Revenue Service Pre-assigned Congestion Rights Provider of Last Resort Public Utility Commission Retail Electric Provider Return on Investment Senate Bill 7 Texas Standard Electronic Transaction Transmission Congestion Rights Transmission and Distribution Service Provider Texas Municipal Power Agency 32 AGENDA INFORMATION SHEET AGENDA DATE: February 17, 2004 DEPARTMENT: ACM: Electric Utility Howard Martin, 349-8232 SUBJECT Receive a report, hold a discussion and give staff direction regarding approval of a residential renewable electric rate schedule RG. BACKGROUND Overview The residential renewable electric rate will provide Denton Municipal Electric customers the chance to support generators of cleaner energy that provide electricity to the ERCOT power grid. The rate will initially be offered to single phase residential customers only, with expansion to the three phase residential and small commercial sectors in early 2005. The rate structure is based on the existing residential R2 rate schedule. As shown in Attachment 1, the rate will consist of a S/month facility charge, a S/KWh energy charge and a S/KWh energy cost adjustment. Facility Charge The facility charge will be $7.73 per 30 days, the same as the existing R2 rate. Energy Rate The residential renewable electric rate will be based upon a non-variable and variable components as discussed below with provisions for quarterly adjustments to account for overages and shortfalls in cost collection. Non-variable Costs The non-variable portion of the draft rate uses the energy charges from the existing residential R2 rate schedule, including the summer and winter seasonal block rates. Variable Costs The variable costs in the residential renewable electric rate are based on the fluctuating cost of energy provided to customers under the rate. There are two options available to DME to acquire renewable energy to meet our customer's needs. The first is to purchase energy from renewable sources in the ERCOT market. The second is to acquire non-renewable energy through the Transition Power Agreemem (TPA) and offset this energy with Renewable Energy Credits (RECs). If renewable energy is available in the market, this energy would be purchased to supply the needs of customers opting for the renewable rate. The amount of renewable energy purchased would be based on momhly projections. if sufficiem renewable energy is not available in the market and/or to true-up projected versus actual consumption, DME would purchase non-renewable energy under the TPA and use RECs to offset the energy consumed by renewable energy customers. RECs are bought and sold through a market administered by ERCOT. The credits are designed to allow utilities not directly owning or purchasing capacity using renewable energy technologies to purchase RECs in lieu of capacity from renewable energy technologies. The cost for RECs in the market has varied between $12 to $18 per MWh ($0.012 to $0.018 per KWh). Recouping the cost of purchased renewable energy and/or RECs will be done through the Renewable Cost Adjustment similar to the existing Energy Cost Adjustment rate. initially, the adjustmem will be set at $0.047/KWh based on an amicipated ECA of $0.032/KWh and the average REC cost of $0.015/KWh. Like the existing ECA, the Renewable Cost Adjustment will be reviewed in the last month of each quarter in the fiscal year to account for any differences between the actual cost of renewable energy and the cost adjustment revenues collected. Promotional Efforts To promote the renewable electric rate, beginning in mid-May 2004, a promotional and sign up campaign will commence. This effort will be conducted using TV and radio spots, bill stuffers, print ads, flyers, the DME website, as well as other mediums. The effort will work to educate DME customers about the rate, tout its benefits to the environment, instruct on how and where to sign up, and generally work to garner interest in the initiative. Sign ups will be allowed throughout the promotional period with the rate becoming effective starting on the customers first full billing cycle in October 2004. The promotion of the rate will focus heavily on the university studems living in DeNon. Customer Participation Based on information from other utilities offering renewable energy rates, it is expected that approximately 2% (1.87%) of residential customer base will participate in the renewable energy program. This equates to approximately 550 customers. Customer Cost As shown in Attachment 2, based on average residential usage patterns, a customer choosing the residential renewable electric rate would pay around $0.015/KWh more for electricity than if they selected the residential R2 rate. This translates to about $190 per year more than on the single phase R2 rate. RECOMMENDATIONS DME recommends approving the new residential renewable electric rate schedule RG, which will be available to DME customers in October 2004. EXHIBITS 1. Renewable Energy Service Rate Schedule (RG) 2. Rate Comparisons Respectfully submitted: Glenn Fisher Assistant Director of Electric Utilities SCHEDULE RG RESIDENTIAL RENEWABLE ENERGY SERVICE RATE (Effective 10/01/04) APPLICATION Applicable to any customer for single-phase electric service used for residential purposes in an individual private dwelling or an individually-metered apartment, supplied at one point of delivery and measured through one meter. Not applicable to resale service in any event, nor to temporary, standby, or supplementary service except in conjunction with the applicable rider. NET MONTHLY RATE: Comprised of the following two (2) charges and cost adjustment: WINTER SUMMER Billing Months of November through April Billing Months of May through October · Facility Charge: $7.73 / 30 days $7.73 / 30 days · Energy Charge: All KWh First 3,000 KWh All Additional KWh · Cost Adjustment: 4.34¢ / KWh Variable, see below 5.61¢/KWh 6.21 ¢/KWh Variable, see below MINIMUM BILLING: Facility Charge. TYPE OF SERVICE: The City will supply single-phase service at sixty (60) cycles and at any standard voltages available from the City's distribution system through one standard transformation. Where service of the type desired by the customer is not already available at the point-of-service, special contract arrangements between the City and the customer may be required in advance. EXHIBIT 1 PAYMENT: Bills are due when rendered, and become past due if not paid within fifteen (15) calendar days from the date of issuance. SPECIAL FACILITIES: All services which require special facilities in order to meet the customer's service requiremems shall be provided, subject to the special facilities rider. PRORATION OF UTILITY BILLS: Billing for the Facility charge shall be based on twelve (12) billings annually and prorated for longer or shorter billing periods using the following formula: Formula: Actual days in reading period × Customer Facility Charge 30 days ENERGY CHARGE: Billing for the energy charge shall be based on actual KWh consumption during the billing period. Formula: KWh in rate block x Rate per KWh in rate block RENEWABLE COST ADJUSTMENT (RCA): By choosing the RG rate schedule, Demon Municipal Electric (DME) customers will be supporting cleaner renewable energy sources in the ERCOT power grid. The availability of electricity generated by renewable resources will vary hour-to-hour. DME will rely on system power from the grid to serve our customers' minute-by-minute consumption. By utilizing renewable energy credits or attributes from specific facilities, DME will ensure that electricity from renewable resources equal to your annual electricity usage is delivered to meet your energy needs. The Renewable Cost Adjustmem shall be a charge per KWh of energy consumed at a customer's meter. The momhly energy charges shall be increased or decreased by an amoum equal to "X" ceres per KWh, to be known as the Renewable Cost Adjustmem. The Renewable Cost Adjustmem shall be computed during the last momh of each fiscal year quarter (December, March, June and September) to be applied within the following quarter. The City shall in no case change the Renewable Cost Adjustmem more than once in any three (3) month period. The Renewable Cost Adjustmem shall be calculated using the following formula: Renewable Cost Adjustment = (Renewable energy credit and/or purchased energy cost shortfall or overage for current quarter + Projected renewable energy credit and/or purchased energy cost for next quarter) / Projected KWh sales for next quarter In the event that actual plus estimated cumulative costs of renewable energy credits and/or purchased energy are greater than or less than the actual and projected renewable energy revenues by $100,000 or more during the next quarter, the Director of Electric Utilities or his/her designate shall recalculate the Renewable Cost Adjustment and, with Public Utilities Board approval, may establish a Renewable Cost Adjustment that collects or returns such difference during the next three month period. Such change in the Renewable Cost Adjustment shall be applied during the next three-month period. S:\Our Documents\Ordinances\04\DME-Residential Renewable Energy Service Rate-2004.doc AGENDA DATE: DEPARTMENT: CM/DCM/ACM: AGENDA INFORMATION SHEET February 17, 2004 Legal Department Herb Prouty, City Attorney SUBJECT: Consider a an ordinance of the City Council of the City of Denton, Texas authorizing the City Manager to execute a professional services agreement with Wolfe, Tidwell & McCoy, LLP for professional legal services relating to litigation styled Ugwuh v. City of Denton, Cause No. 2002-41462-362 currently pending in the 362na District Court of Denton County; authorizing the expenditure of funds therefore; and providing an effective date. BACKGROUND: This is an employment discrimination case. Scheduling deadlines have placed this case in line for jury trial less than one month after the trial of a major wrongful death case that this office is handling in-house. This, an unusually high in-house trial schedule for the year, plus the potential for uncapped damages and attorney fees in this case, leads us to the recommendation that this case would be best handled by outside counsel. The law firm of Wolfe, Tidwell & McCoy has consistently provided outstanding legal services at a very affordable cost. The firm has an over 15-year record for handling cases for the City without defeat, and has successfully represented the City of Denton in very similar employment discrimination cases. Their fees are consistently at or below the fees charged by Denton law firms. OPTIONS: 1. Pass the ordinance to authorize execution of the agreement. 2. Decline to pass the ordinance to authorize execution of the agreement. FISCAL INFORMATION: The agreement caps legal fees in this matter at $35,000, and the agreement would need to be modified to exceed that figure. NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS AUTHORIZING THE CITY TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT WITH WOLFE, & MCCOY, LLP, FOR PROFESSIONAL LEGAL SERVICES RELATING TO STYLED UGWUH F.. CITT OF DENTON, CAUSE NO. 2002-41462-362 CURRENTLY PENDING IN THE 362ND DISTRICT COURT OF DENTON COUNTY; AUTHORIZINg THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE.I / WHEREAS, the City Council deems it necessary, appropriate, and in the public interest to engage the law firm of Wolfe, Tid provide professional legal services rel No. 2002-41462-362, currently pendin. WHEREAS, the City has previc of Wolfe on numerous occasions, and services agreements with the City re, Wolfe's considerable expertise ofrelev WHEREAS, City staff has repo the hereinabove described professional perform the specialized legal services v~ WHEREAS, Chapter 2254 of tl Services Procurement Act," generalb. professional services on the basis c professional services on the basis of d and for a fair and reasonable price; and is appropriately qualified under the pro for the City; and WHEREAS, the City Council funds to be used for the procurement the Professional Services Agreement; N THE COUNCIL OF THE CITY OF D[ SECTION 1: That the recit incorporated herewith as part of this or( SECTION 2: That the City Services Agreement with Wolfe, Tidw~ to litigation styled Ugwuh v. City of De [anager is hereby authorized to execute a Professional 11 & McCoy, LLP, for professional legal services relating ~ton, Cause No. 2002-41462-362 currently pending in the 0yell & McCoy, LLP ("Wolfe"), of Sherman, Texas, to ting to litigation styled Ugwuh v. City of Denton, Cause in the 362na District Court of Denton County; and usly retained and engaged the professional legal services Wolfe has operated under numerous other professional ;arding legal representation, which have demonstrated mt issues concerning the City; and ted to the City Council that there is a substantial need for services, and that limited City staff cannot adequately ith its own personnel; and te Texas Government Code, known as the "Professional ' provides that a city may not select a provider of f competitive bids, but must select the provider of .~monstrated competence, knowledge, and qualifications, the City Council hereby finds and concludes that Wolfe visions of the law to be retained as outside legal counsel tas provided in the City budget for the appropriation of [ the foregoing professional legal services, as set forth in OW, THEREFORE, NTON HEREBY ORDAINS: ations in the preamble are tree and correct and are iinance. 362nd District Court of Denton Count' Agreement attached hereto and incorpo: in substantially the form of the Professional Services :ated herein by reference. SECTION 3: That the award of this Agreement is on the basis of the demonstrated competence and qualifications of Wolfe, Tidwell & McCoy, LLP and the ability of Wolfe, Tidwell & McCoy, LLP to perform th~ professional legal services needed by the City for a fair and reasonable price. / / SECTION 4: That the expenditure of funds as provided in the attached Professional Services Agreement is hereby SECTION 5: That this and approval. shall become effective immediately upon its passage PASSED AND APPROVED the day of ,2004. EULINEBROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY By: APPROVED HE~, CITY ATTO] NEY 2 CONTRACT FOR PROFESSIONAL LEGAL SERVICES STATE OF TEXAS COUNTY OF DENTON § This AGREEMENT, made and entered into this the ~ day of , 2004, by and between Wolfe, Tidwell & McCoy, L.L.P., 123 North Crockett Street, Suite 100, Sherman, Texas 75090, hereinafter referred to as "Consultant", and the City of Denton, a Texas municipal corporation, 215 East McKinney, Denton, Texas 76201, hereinafter referred to as "City". WITNESSETH WHEREAS, the City finds it necessary to employ outside legal counsel to perform professional legal services regarding litigation styled Ugwuh v. City of Denton, Cause No. 2002- 41462-362, filed in the 362na District Court of Denton County, Texas; and WHEREAS, the Consultant is willing to perform such services in a professional manner as an independent contractor; and WHEREAS, the City desires to engage the Consultant to render the professional services in connection therewith, and the Consultant is willing to provide such services; NOW, THEREFORE, in consideration of the promises and mutual obligations herein, the parties hereto do hereby mutually AGREE as follows: 1. SCOPE OF SERVICES The Consultant shall perform the following services in a professional manner working as an independent contractor not under the direct supervision and control of the City: Services to be provided: The Consultant shall evaluate the relevant facts and circumstances and shall advise the City, by written opinion, with respect to its options and the legality of such options, regarding researching and responding to requests for legal services. Consultant shall also consult, as requested, with the City Manager, the City Attorney, and any other designated City staff respecting any and all aspects of the services to be performed under this Agreement. 3. The Consultant shall perform all the professional services required in a timely fashion, and shall complete same in compliance with schedules established by the City through its City Attomey, through discussions with the Consultant, as appropriate to carry out the terms and conditions of this Agreement. 2. TERM This Agreement shall be for a term of 20 months, beginning effective February 1, 2004 and ending on October 30, 2005. This Agreement may be sooner terminated in accordance with the provisions hereof. Time is of the essence of this Agreement, and the Consultant shall make all reasonable efforts to complete the services set forth herein as expeditiously as possible during the term of this Agreement, and to meet the schedules established by the City, through its City Attorney, or as the progress of this matter may require. 3. COMPENSATION AND METHOD OF PAYMENT go The Consultant shall charge the following fees for its professional services hereunder, based on the following fees for its professional services.hereunder, based on the following hourly billing rates for the attorneys and support staff involved in this matter: Attorneys $135/hour Paralegals $ 60/hour Attorney time will be billed at one tenth (. 1) hour minimum billing increments. Bo The Consultant will try to reduce costs whenever feasible by utilizing qualified principals, associates, paralegals, and law clerks. The Consultant shall bill the City through the submission of itemized invoices, statements, and other documentation, together with supporting data indicating the progress of the work and the services performed on the basis of monthly statements showing hourly rates indicating who performed the work, what type of work was done, and descriptions and/or details of all services rendered, along with specific description and supporting documentation, if available, respecting any reasonable and necessary out-of-pocket expenses incurred. Co Consultant estimates and the City agree that all charges for the legal services hereunder, including reasonable out-of-pocket expenses, shall not exceed thirty-five thousand dollars ($35,000), and Consultant agrees to notify the City and seek a modification of the agreement should the total fees exceed such amount. Do The City shall either pay directly or reimburse the Consultant, as the case may be, for reasonable and necessary actual out-of-pocket expenses, including but not limited to, long- distance telephone, telecopier, reproduction, overnight courier, on-line research, and travel. All copies will be charged at the rate of ten cents ($0.10) per copy for copies made within Consultant's offices, with as much photocopying as possible being done by outside vendors at bulk rates or by the city to reduce costs if bulk copying is necessary. The parties agree that there will be no charges for outgoing telecopies or incoming telecopies. Whenever feasible, City encourages cost savings by the use of computer files in Microsoft Word or Adobe Acrobat formats, attached to e-mail transmissions. Contract For Professional Legal Services - Page 2 Eo The parties anticipate invoices or statements for services will be generated on a monthly basis and that said invoices or statements will be sent on or about the ~ day of each month. The City shall make payment to the Consultant within 30 days of the satisfactory completion of services and receipt of an itemized invoice or statement. All reimbursable expenses, including, but not necessarily limited to travel, lodging, and meals shall be paid at the actual cost, pursuant to the terms, conditions, and limitations hereinabove set forth. All invoices and bills shall be approved for payment by the City Attorney. F. It is understood that the Consultant shall work with the coordination and general supervision of the City Attorney or the Senior Assistant City Attorney/Litigation Chief. Go All notices, billing statements and invoices shall be made in writing and may be given by personal delivery or by mail. Notices and invoices sent by mail shall be addressed to: Jerry E. Drake, Jr., Senior Assistant City Attorney/Litigation Chief, 215 E. McKinney, Denton, Texas 76201. When so addressed, the notice, invoice, and/or payment shall be deemed given upon deposit in the United States Mail, postage prepaid. In all other instances, notices, invoices, and/or payments shall be deemed given at the time of actual delivery. Changes may be made in the names and addresses of the responsible person or office to whom notices, invoices, and/or payments are to be sent, provided reasonable written notice is given. 4. PROFESSIONAL COMPETENCY The Consultant agrees that in the performance of these professional services, Consultant shall be responsible for the level of competency and shall use the same degree of skill and care presently maintained by other practicing professionals performing the same or similar types of work. For the purpose of this Agreement, the key persons who will be performing most of the work hereunder shall be Clark McCoy. However, nothing herein shall limit Consultant from using other qualified and competent members of its firm to perform the services required herein. All legal opinions and other legal documents prepared or obtained under the terms of this Agreement are instruments of service and the City shall retain ownership and a property interest therein. If this Agreement is terminated at any time for any reason prior to payment to the Consultant for work under this Agreement, all such documents prepared or obtained under the terms of the Agreement shall upon termination be delivered to and become the property of the City upon request and without restriction on their use or further compensation to the Consultant. 5. ESTABLISHMENT AND MAINTENANCE OF RECORDS Full and accurate records shall be maintained by the Consultant at its place of business with respect to all matters covered by this Agreement. Such records shall be maintained for a period of at least three years after receipt of final payment under this Agreement. Contract For Professional Legal Services - Page 3 6. AUDITS AND INSPECTION At any time during nolTnal business hours and upon reasonable notice to the Consultant, there shall be made available to the City all of the Consultant's records with respect to all matters covered by this Agreement. The Consultant shall permit the City to audit, examine, and make excerpts or transcripts from such records, and to make audits of contracts, invoices, materials, and other data relating to all matters covered by this Agreement. 7. ACCOMPLISHMENT OF PROJECT The Consultant shall commence, carry on, and complete any and all projects with all practicable dispatch, in a sound, economical and efficient manner, and, in accordance with the provisions hereof and all applicable laws. In accomplishing the projects, the Consultant shall take such steps as are appropriate to ensure that the work involved is properly coordinated with related work being carried on by the City. 8. INDEMNITY AND INDEPENDENT CONTRACTOR RELATIONSHIP A. The Consultant shall perform all services as an independent contractor not under the direct supervision and control of the City. Nothing herein shall be construed as creating a relationship of employer and employee between the parties. The City and Consultant agree to cooperate in the defense of any claims, actions, suits, or proceeding of any kind brought by a third party which may result from or directly or indirectly arise from any negligence and/or errors or omissions on the part of the Consultant, or from any breach of the Consultant's obligations under this Agreement. In the event any litigation or claim is brought under this Agreement in which City is joined as a part, Consultant shall provide suitable counsel to defend City and Consultant against such claim; provided however, that the Consultant shall have the right to proceed with competent counsel of his own choosing. The Consultant agrees to defend, indemnify and hold harmless the City and all of its officers, attorneys, agents, servants, and employees against any and all such claims to the extent of coverage by Consultant's professional liability policy. The Consultant agrees to pay all expenses, including but not limited to attomey's fees, and satisfy all judgments that may be incurred or rendered against the Consultant's professional liability insurance policy. Nothing herein constitutes a waiver of any rights or remedies the City may have to pursue under either law or equity, including, without limitation, a cause of action for specific performance or for damages, a loss to the City, resulting from Consultant's negligent errors or omissions, or breach of contract, and all such rights and remedies are expressly reserved. B. Consultant shall maintain and shall be caused to be in force at all times during the term of this Agreement, a legally binding policy of professional liability insurance, issued by an insurance carder approved to do business in the State of Texas by the State Insurance Commission, which cartier must be rated by Best Rated Carriers, with a rating of "A-" or higher. Such coverage shall cover any claim hereunder occasioned by the Consultant's negligent professional act and/or error or omission, in an amount not less than $500,000 combined single limit coverage occurrence. In the event of change or cancellation of the policy by the insurer, the Consultant hereby covenants to immediately advise the City Contract For Professional Legal Services - Page 4 thereof; and in such event, the Consultant shall, prior to the effective date of change or cancellation, serve a substitute policy furnishing the same coverage to the City. The Consultant shall provide a copy of such policy and the declarations page of the existing policy to the City through its City Attorney, simultaneously with the execution of this Agreement. 9. TERMINATION OF AGREEMENT A. In connection with the work outlined in this Agreement, it is agreed and fully understood by the Consultant that the City may cancel or indefinitely suspend further work hereunder or terminate this Agreement at any time upon written notice to Consultant, Consultant shall cease all work and labor being performed under this Agreement. Consultant may terminate this Agreement by giving the City 30 days written notice that Consultant is no longer in a position to continue representing the City. Consultant shall invoice the City for all work satisfactorily completed and shall be compensated in accordance with the terms of this Agreement. All reports and other documents, or data, or work related to the project shall become the property of the City upon termination of this Agreement. B. This Agreement may be terminated in whole or in part, in writing, by either party in the event of substantial failure by the other party to fulfill its obligations under this Agreement through no fault of the terminating party. Provided, however, that no such termination may be effected, unless the other party is given [1] written notice (delivered by certified mail, return receipt requested) of intent to terminate, and not less than 30 calendar days to cure the failure; and [2] an oppommity for consultation with the terminating party prior to termination. C. Nothing contained herein or elsewhere in this Agreement shall require the City to pay for any work which is unsatisfactory or which is not submitted in compliance with the terms of this Agreement. 10. ALTERNATE DISPUTE RESOLUTION The Consultant agrees that, if necessary, it will use its best efforts to resolve any disputes regarding the Agreement through the use of mediation or other forms of alternate dispute resolution set forth in Chapter 154 of the Texas Civil Practice and Remedies Code (V.A.T.C.S.). 11. ENTIRE AGREEMENT This Agreement represents the entire agreement and understanding between the parties, and any negotiations, proposals, or oral agreements are intended to be integrated herein and to be superseded by this written Agreement. Any supplement or amendment to this Agreement to be effective shall be in writing and signed by the City and the Consultant. Contract For Professional Legal Services - Page 5 12. COMPLIANCE WITH LAWS The Consultant shall comply with all federal, state, and local laws, rules, regulations, and ordinances applicable to the work covered hereunder as they may now read or hereafter be amended, including but not limited to the Texas Disciplinary Rules of Professional Conduct. 13. GOVERNING LAW For the purpose of determining place of agreement and law governing same, this Agreement is entered into in the City and County of Denton, State of Texas, and shall be governed by the laws of the State of Texas. Venue and jurisdiction of any suit or cause of action arising under or in connection with this Agreement shall be exclusively in a court of competent jurisdiction sitting in Denton County. 14. DISCRIMINATION PROHIBITED In performing the services required hereunder, the Consultant shall not discriminate against any person on the basis of race, color, religion, sex, national origin or ancestry, age, or physical handicap. 15. PERSONNEL A. The Consultant 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 have any contractual relations with the City. Consultant shall inform the City of any conflict of interest or potential conflict of interest that may arise during the term of this Agreement, in accordance with Consultant's responsibilities under the Texas Disciplinary Rules of Professional Conduct. B. All services required hereunder will be performed by the Consultant or under its direct supervision. All personnel engaged in work shall be qualified and shall be authorized or permitted under state and local laws to perform such services. 16. ASSIGNABILITY The Consultant 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 vmtten consent of the City thereto. 17. SEVERABILITY All agreements and covenants contained herein are severable, and in the event any of them, with the exception of those contained in sections headed "Scope of Services", "Independent Contractor Relationship," and "Compensation and Method of Payment" hereof, shall be held to be invalid by any court of competent jurisdiction, this Agreement shall be inteapreted as though such invalid agreements or covenants were not contained herein. Contract For Professional Legal Services - Page 6 18. RESPONSIBILITIES FOR CLAIMS AND LIABILITY Approval by the City shall not constitute nor be deemed a release of the responsibility and liability of the Consultant for the accuracy and competency of its work; nor shall such approval be deemed to be an assumption of such responsibility of the City for any defect in any report or other documents prepared by the Consultant, its employees, officers, agents and consultants. 19. MODIFICATION OF AGREEMENT No waiver or modifcation 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 parties hereunder, unless such waiver or modification is in writing, duly executed as aforesaid; and, the parties further agree that the provisions of this section will not be waived as herein set forth. 20. CAPTIONS 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. 21. BINDING EFFECT This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors, and assigns where permitted by this Agreement. IN WITNESS HEREOF, the City of Denton, Texas, has caused this Agreement to be executed in duplicate originals by its duly authorized City Manager, and Consultant has executed this Agreement through its duly authorized undersigned parmer, dated this the __ day of ,2004. CITY OF DENTON BY: MICHAEL A. CONDUFF, CITY MANAGER Contract For Professional Legal Services - Page 7 ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: Y WOLFE, CLARK & MCCOY, LLP BY: CLARK MCCOY Contract For Professional Legal Services - Page 8 AGENDA DATE: DEPARTMENT: ACM: AGENDA INFORMATION SHEET February 17, 2004 Materials Management Kathy DuBose, Fiscal and Municipal Services Questions concerning this acquisition may be directed to Charles Fiedler 349-8948 SUBJECT Consider adoption of an Ordinance authorizing the City Manager to execute change order three to the contract between the City of Denton and Huitt-Zollars Inc.; providing for the expenditure of funds therefore; and providing an effective date (Ordinance No. 2001-375; PSA 2685- Professional Services agreement for Design of Solid Waste Facilities awarded to Huitt-Zollars, inc. in the amount of $202,900, Change Orders One and Two in the amount of $85,200, and Change Order Three in the amount of $38,300 for a total amount of $326,400. CHANGE ORDER INFORMATION Change Order Three in the amount of $38,300 is for construction management services provided by Huitt-Zollars, inc. during the "punch list" phase of this project and for corrections of deficiencies identified during the project close out process. The primary deficiency identified was the HVAC system requiring additional balancing, testing, and adjusting to operate properly. The Attachment 1 letter offers a more detailed explanation of the project situation. PRIOR ACTION/VIEW (COUNCIL, BOARDS, COMMISSIONS) Council approved PSA 2685 on October 2, 2001. Change Order One in the amount of $67,200 for construction management was approved by Council on May 14, 2002. January 2003, staff approved Change Order Two for additional construction management services in the amount of $18,000 bringing the PSA total to $288,100. RECOMMENDATION We recommend that Change Order Three to Professional Services Agreement 2685 (PSA 2685) to Huitt-Zollars, Inc. in the amount of $38,300 be approved for a total agreement amount of $326,400. PRINCIPAL PLACE OF BUSINESS Huitt-Zollars, Inc. Denton, TX Agenda Information Sheet February 17, 2004 Page 2 ESTIMATED SCHEDULE OF PROJECT This project is essentially complete and any remaining services should be wrapped up within thirty days. FISCAL INFORMATION This change order will be funded from project number 660002583.1360.40100. Attachment 1 :Letter from Huitt-Zollars, Inc. 1-AIS-PSA 2685 ChangeOrder 3 Respectfully submitted: Tom Shaw, C.P.M., 349-7100 Purchasing Agent At tachmemt 1 A.~gust 28, 2003 Mr. Charles Fielder, Director Engineering City.of Denton Cil3, Hall East 601 E. Hieko~, Street Denton, TX 76209 DENTON'SOLID WASTE FACILITY ItZI PROJECT NO. 034)787.02 Dear Charles: The construction phase services by Huitt-Zollars for the Solid Waste Facility were o~tlin'ed ia om' De¢~nber 2001 and January 2003 proposal letters. These letters reflected con.stmction'dmti0~s llmt were scheduled to end in December 2002, then subse~luently erd(.mded into mid-Mamh 20.03. The original fee for the December 2002 completion was $67,2001 ~e January' 2003 proposal increased.our fee $18,000 'for additional services through mid-March 2003. 'll~e increases re,utted ha a total: fee of $85200 for construction phase services. Both proposals corresponded to completion dates indicated :by ' ~he contractor. As stated in our January 2003 .letter, ihe con, actor in the construction meetings:indicated an emily March completion. Based on h~formafion provid~ by the core,factor, the substantial completion inspection was s~heduted for Feb.rua~; 24, 2003 with the dem~nstrafiorv~tmining to be conducted February 27, 2003. As di~ussed sevemi times in cons~uetion meetings, the construction should be complete before t. he punch list activities and ail systems must be wo~ng properly before demonstration and minlng'eanbe' performed. The February 24 inspection was conducted, although the v~er was cold and icy. During.the process~ a ptmch list was generated attd numerous items were noted as ir~comptete~ The demonsmation scheduled for February 27 did not occur and was Inter scheduled for March 1 I. During March several trips were made to fumher document completion of the cor~'maction,'particularty related to mechanical issues. To dare, the mechanical systems have not conformed to the.contract documents and therefore, have not been accepted. This ~s due to a wide variety of issues., including failures of parts of the system, controls.being incomplete, in.complete testing and balancing, and incorrect installation of system components.. The system does. provide cooling, bm several events have that indicate the total system installation and start-up activities are incomplete and unreliable. Additionally, there are other less critical, yet problematic, items that need to be addressed. These .ineiUde, but are not limited to, landscape/drainage, door hardware and electrical issues~ These issues have ~bee.n the subject of documented discussions and have not been completely remedied. Based on corrumim~ents made by the contractor, Huitt-Zollars proposed the extewion ofth~ construction phase servic~ through mid-March. As noted above, this amount was for a total of $85~200~ Both the. City and Huitt-Zollars ~e of the betiefthat the project would be complete the first week of March.. However, as indicated, the efforts to complete the project have continued and are, as of this date, not yet HSp~oj~030?gT0t \¢omtmctien phase\C^ ~p~op¢ poepo~al ~2703.dc~ . Mr. Charles Fielder August 27, 2003 Page 2 finished. We t~el that the origi~ml scope of our.proposals address the schedule through the week ending March 8, 2003. After that date, the activities of Huitl-Zoltars have .been in response to issues not yet completed or raised in additional final walk-through activities and associated ptmch lists. Through the w~k ending March 8, 2:003, we expended '$8Z...707 agak~st a budget of $85,200. Through June 28, 2003 our total.cost is $103;527. We have been ~raeking all activities after March $ separately. To'dare Huitt-Zollars has billed and the City has paid, $85,200; Leaving an outstanding balance of $:I8,327. As we disc:ussed on August t 2, 2003, uhe constructiou effort is not'yet complete. We indicated that, 'in our opinion, the additional efforts beyond March.8 were necess~,- and provide value to the City in assisting you in reaching completion and acceptance of the project, beyond the ori~nal expectation of both Huitt-Zoltars and the City~ There will ibc additional effort to' bring this project to closure. It is mucertain what measures wilt be r~uimd to complete the project. We recommend an additional $20,000 bo.budgeted to cover professional services' time to coordinate with the contractor and sub-contractors on behalf of the City. This is in addition to the $t 03,527. We therefore propose increasing the aufl~oriz~ arnount of the con~-uetion phase services to $123,500. Your at~ention to the status ofthls issue is appreciated. We have prepared admft invoice that includes all efforts through June 28, 2003, I have atta.ehed a copy fbr your reference. Although this invoi.ee will bring the project to current status, we believe addi.tio~al tasks wilt be required as stated above. Sincerely, HUITT-ZOLLARS~ INC. J. Charles T..Aldredge, P.E. Vice Pr~ident C: F. Chasta/n F[?,{r~oj~030?g?Ol\~nstruction 'ph~q~\CA up,cope potpo~a1092703.~o¢ ORDINANCE NO. AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE CHANGE ORDER THREE TO THE CONTRACT BETWEEN THE CITY OF DENTON AND HUiTT-ZOLLARS iNC.; PROViDiNG FOR THE EXPENDITURE OF FUNDS THEREFORE; AND PROVIDING AN EFFECTIVE DATE (ORDINANCE NO. 2001-375; PSA 2685-PROFESSIONAL SERVICES AGREEMENT FOR DESIGN OF SOLID WASTE FACILITIES AWARDED TO HUiTT- ZOLLARS, INC. iN THE AMOUNT OF $202,900, CHANGE ORDERS ONE AND TWO iN THE AMOUNT OF $85,200, AND CHANGE ORDER THREE IN THE AMOUNT OF $38,300 FORA TOTAL AMOUNT OF $326,400. WHEREAS, on October 2, 2001 by Ordinance No. 2001-375, the City awarded a Professional Services Agreement to Huitt-Zollars, inc., in the amount orS $202,900 for Professional Services for the design of the Solid Waste Facilities for Preliminary Design Phase, Final Design Phases and Construction Phase; WHEREAS, the Staffhaving recommended, and the City Manager having recommended to the Council that a change order be authorized to amend such contract agreement with respect to the scope of work and an increase in the payment amount, and said change order fees under the proposed contract are fair and reasonable and are consistent with and not higher than the recommended practices and fees published by the professional associations applicable to the Provider' s profession and such fees do not exceed the maximum provided by law; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The Change Order No. Three, increasing the amount of the professional services agreement between the City and Huitt-Zollars, inc., which is on file in the office of the Purchasing Agent, in the amount of Thirty Eight Thousand Three Hundred and 00/100 ($38,300) Dollars, is hereby approved and the expenditure of funds therefore is hereby authorized in accordance with said change order. The total purchase order amount increases to $326,400. SECTION 2. That this ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of .,2004 EULiNE BROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY BY: AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: ACM: February 17, 2004 Materials Management Kathy DuBose, Fiscal and Municipal Services Questions concerning this acquisition may be directed to Keith Gabbard 349-7144 SUBJECT Consider adoption of an Ordinance awarding a contract for the purchase of a CASE 590 loader/backhoe as awarded by the State of Texas Building and Procurement Commission; providing for the expenditure of funds therefore; and providing an effective date (File 3137- Loader/Backhoe for Street Department awarded to Equipment Support Services in the amount of $60,935.24). FILE INFORMATION This contract is for the acquisition of a four-wheel drive, 95-horsepower, diesel-powered loader/backhoe. It replaces a similar unit that Fleet Services has determined to be no longer economical to repair. Lifetime repairs on the existing unit exceed $40,000 and additional repairs are pending. The new unit is powered by a 95-horsepower diesel engine that has been certified to meet the requirements of the Environmental Protection Agency Section 213 of the Clean Air Act as a Tier II rated engine for non-road application. RECOMMENDATION We recommend award of this item to Equipment Support Services in the amount of $60,935.24. PRINCIPAL PLACE OF BUSINESS Equipment Support Services Euless, Texas ESTIMATED SCHEDULE OF PROJECT Delivery can be made 21 days after receipt of the order. FISCAL INFORMATION Funding for this item will come from Certificate of Obligation bond money issued for the purchase of street repair equipment in 2002-2003. The project number is 350090441.1355.3010. Agenda Information Sheet February 17, 2004 Page 2 Respectfully submitted: Tom Shaw, C.P.M., 349-7100 Purchasing Agent Attachment 1: Price Quote from Equipment Support Services 1 -AlS-File 3137 At:t:ach]nent 1 2019 Airport Frwy Tom D. Shaw, C.P.M. City o£ Denton 901-B Texas Street Denton, Texas 76201 Euless, Texas 76040 817-283-2844 January 21, 2004 Pursuant to our recent telephone conversation, here are the Commodity Codes for the CASE 590 Super M Loader/Backhoe on the TBPC contract award for Class 765-A1: Base Machine 765-87-10120-5 Loader/Backhoe (Case 590 SM) ..... $48,375.24 Published Options 765-87-10123-9 24" Backhoe Bucket .............. $ 640.00 765-87-10129-6 Extendahoe ...................... $ 2,866.00 765-87-10131-2 ROPS Cab with Heat and A/C ....... $ 4,449.00 Unpublished Options Four-Wheel Drive ............................... $ 6,256.00 Ride Control ................................... $ 997.00 AM/FM Radio ................................... $ 432.00 Flip Stabilizer Pads ............................... $ 385.00 DEDUCT- Ether Start, Auxiliary Hydraulics, Outside Mirrors, License Plate Holder, Fire Extinguisher, Strobe Light, and Special Paim ..................................... ($3,465.00) NET COST ................................ $60,935.24 Thank You for the opportunity to be of service. If you have any questions, please call me. Jim Rose 817-602-8322 jrose ~esscorp.net cc: Keith Gabbard ORDINANCE NO. AN ORDINANCE AWARDING A CONTRACT FOR THE PURCHASE OF A CASE 590 LOADER/BACKHOE AS AWARDED BY THE STATE OF TEXAS BUILDING AND PROCUREMENT COMMISSION; PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFORE; AND PROVIDING AN EFFECTIVE DATE (FILE 3137-LOADER/BACKHOE FOR STREET DEPARTMENT AWARDED TO EQUIPMENT SUPPORT SERVICES IN THE AMOUNT OF $60,935.24). WHEREAS, pursuam to Resolution 92-019, the State Purchasing Building and Procuremem Commission has solicited, received and tabulated competitive bids for the purchase of necessary materials, equipmem, supplies or services in accordance with the procedures of state law on behalf of the City of DeNon; and WHEREAS, the City Manager or a designated employee has reviewed and recommended that the herein described materials, equipmem, supplies or services can be purchased bythe City through the Building and Procuremem programs at less cost than the City would expend if bidding these items individually; and WHEREAS, the City Council has provided in the City Budget for the appropriation of funds to be used for the purchase of the materials, equipmem, supplies or services approved and accepted herein; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. That the numbered items in the following numbered purchase order for materials, equipmem, supplies, or services, shown in the "Purchase Orders" listed hereon, and on file in the office of the Purchasing Agem, are hereby approved: FILE NUMBER VENDOR AMOUNT 3137 Equipmem Support Services $60,935.24 SECTION 2. That by the acceptance and approval of the above numbered items set forth in the attached purchase orders, the City accepts the offer of the persons submitting the bids to the Building and Procuremem Commission for such items and agrees to purchase the materials, equipmem, supplies or services in accordance with the terms, conditions, specifications, standards, quamities and for the specified sums comained in the bid documems and related documems filed with the Building and Procuremem Commission, and the purchase orders issued by the City. SECTION 3. That should the City and persons submitting approved and accepted items set forth in the attached purchase orders wish to enter into a formal written agreement as a result of the City's ratification of bids awarded by the Building and Procurement Commission, the City Manager or his designated representative is hereby authorized to execute the written contract which shall be attached hereto; provided that the written contract is in accordance with the terms, conditions, speci- fications and standards contained in the Proposal submitted to the Building and Procurement Commission, quantities and specified sums contained in the City's purchase orders, and related documents herein approved and accepted. SECTION 4. That by the acceptance and approval of the above numbered items set forth in the attached purchase orders, the City Council hereby authorizes the expenditure of funds therefor in the amount and in accordance with the approved purchase orders or pursuant to a written contract made pursuant thereto as authorized herein. SECTION 5. That this ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this day of ,2004. EULINE BROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY BY: 3-ORD-File 3137 AGENDA INFORMATION SHEET AGENDA DATE: February 17, 2004 DEPARTMENT: ACM: Utility Administration Howard Martin, 349-8232 SUBJECT Consider adoption of an Ordinance of the City of DeNon, Texas authorizing the City Manager to execute an agreement for Professional Legal Services with the Law Firm of Booth, Ahrens & Werkenthin, P.C., a Texas Professional Corporation for legal services pertaining to numerous listed water and wastewater issues; regulatory activities; and other related matters affecting the interests of Denton, Texas; authorizing the expenditure of funds therefor; providing for retroactive approval of the agreement; and providing an effective date. BACKGROUND Water rights issues in Texas are becoming increasingly more complex and water related legislative issues will cominue to be a major part of the legislative agenda this session. Booth, Ahrens & Wremham, P.C. (BAW) has provided legal services to the City of DeNon on water rights issues in the past and is familiar with our existing water rights and water supply contracts with Dallas and the UTRWD. They are recognized experts in this area and do not have existing client relationships that could result in a conflict of interest in representing the City of Denton in water rights issues. BAW is located in Austin and has frequent access to and involvement with the TCEQ staff. This provides a distinct advantage to the City of Denton since they can obtain and distribute information and file records quickly and efficiemly. Expanding water supplies in Texas is a major legal and administratively complex challenge for all parties involved. One area that has evolved over the past several years relates to the water appropriation rights for wastewater discharges. Over that past two years, many cities and water supply agencies have attempted to claim ownership of wastewater plant discharges and have applied for water appropriation rights to the TCEQ based upon their claim of ownership of these wastewater discharges. The proposed agreemem would provide for timely legal advice and representation on water permit applications filed by other entities through the TCEQ that might encroach or conflict with water rights held by the City of DeNon in Lake Lewisville and Lake Ray Roberts. Once a water right permit application has been declared administratively complete by the TCEQ, the City of DeNon would receive written notice and would have a 30 day time limit to respond if it wanted to protest the application and/or request a public hearing. Staff and BAW have idemified the following items as areas where professional services would be required during the FY 2004 time period: General Scope of Services would include representing the City in matters related to its water rights, water supply and water system, as well as general services related to legislative and regulatory matters affecting those rights, supply and services. Specifically, we have also identified the following continuing matters: --Denton's protest of TRA reuse application. (This matter will involve either working with TRA to resolve potential issues and withdrawing the protest, or pursuing contested case.) --Denton's issues with UTRWD, including contract and withdrawal of protest. Although the primary disputes with UTRWD have been recently settled, there are several matters remaining to be resolved, including monitoring the changes that UTRWD makes to its application and any draft permit that may be prepared by the TCEQ. We also will need to formally withdraw Denton's protest. --Denton's interests related to Dallas' and Irving's pending reuse applications. Denton has protested Dallas' application and we will need to negotiate and withdraw that protest or pursue it. --Possible renegotiation of Dallas contracts. --Possible Denton application for reuse. --Monitor environmental-flow application issues that threaten supply in the Trinity River Basin, including Galveston Bay application. Although we and the other various parties have been successful before the TCEQ Commissioners relevant to dismissal of a similar application in the Guadalupe Basin, the TCEQ staff is having an "internal disagreement" regarding disposition of the additional applications. Also, the Galveston Bay application continues to be a threat to the Trinity River Basin to the extent that the TCEQ's disposition of the applications is being appealed. --Monitoring and reporting on legislative developments that affect the City's water interests. We are not yet advised regarding what issues will be sent to interim study by the House and Senate Natural Resource Committees, although we anticipate that both Committee will commence their meetings prior to June 30 of next year. Also, legislation passed this session expressly calls for both a study of how to meet environmental needs in the basin and water-conservation goals and strategies. We anticipate that the initiatives from these studies will affect Denton's water interests, and particularly with regard to reuse and water rights amendments. --Monitoring and reporting on legal and regulatory developments that affect the City's water interests. There are several issues of interest that may be presenting themselves with regard to this issue during the coming year. The TCEQ's water rights advisory group has requested TCEQ staff to put reuse on its agenda. Also, outside initiatives are being made to revise the TCEQ's reclaimed water rules for non-industrial uses. With regard to court cases, we have been working on a letter regarding a pending water reuse appeal that would affect matters covered in our draft reuse report and have previously provided information to the City on issues such as discharge permitting for interbasin and other water supply transfers. This could also include legal representation for Denton on any other water, service, or environmental issues that may arise. The proposed agreement would provide water related legal services and regulatory update information over the next twelve months. The fees would be based upon an hourly cost plus direct expense. There is no retainer and billing would only be for services requested and rendered. The proposed agreement recommended by staff would have a maximum cap amount of $ 50,000 and any additional expenditure would need to be presented to the Public Utilities Board (PUB) and City Council (CC) for review and approval. Staff feels that this would not be needed over the next twelve months unless we had to request a contested case hearing on water rights permit applications. If this occurred, the proposed agreement would provide for initial representation during a critical time period and allow ample time to advise the PUB and CC on the specific issues and obtain authorization for additional funding before significant funds were dedicated towards this effort. The Public Utilities Board and City Council previously approved a similar PSA agreement with BAW (on June 17, 2002 and July 16, 2002) for a identical not to exceed amount of $ 50,000. The funds from this contract have now been exhausted and the proposed PSA should cover anticipated expenses through the remainder of FY 2004. OPTIONS 1. Approve the professional services proposal for the legal representation requested by staff as submitted. 2. Recommend desired changes to the proposal for consideration by staff and request renegotiations with Booth, Ahrens & Werkenthin, P.C. 3. Reject the agreement and attempt to perform this work with City legal staff. 4. Cease to participate in TNRCC water rights permit applications that impact the City of Denton. RECOMMENDATIONS Staff recommends approval of the professional services proposal as negotiated by staff and submitted by Booth, Ahrens & Werkenthin, P.C. PRIOR ACTION/REVIEW (Council, Boards, Commissions) The Public Utilities Board voted unanimously to approve the PSA with Booth, Ahrens & Werkinthin, P.C. at their January 12, 2004 meeting. FISCAL INFORMATION The Water Administration Division has existing funds available in the FY 2004 O & M Budget to cover the proposed agreement. EXHIBITS 1. Ordinance 2. Proposed PSA agreement with BAW. 3. PUB Meeting Minutes Prepared by: Timothy S. Fisher, P.E. Assistant Director of Water Utilities Respectfully submitted: Howard Martin Assistant City Manager, Utilities ORDINANCE NO. 2004- AN ORDINANCE OF THE CITY OF DENTON, TEXAS AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT FOR PROFESSIONAL LEGAL SERVICES WITH THE LAW FIRM OF BOOTH, AHRENS & WERKENTHIN, P.C., A TEXAS PROFESSIONAL CORPORATION. FOR LEGAL SERVICES PERTAINING TO NUMEROUS LISTED WATER AND WASTEWATER ISSUES; REGULATORY ACTWITIES; AND OTHER RELATED MATTERS AFFECTING THE INTERESTS OF DENTON, TEXAS; AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR; PROVIDING FOR RETROACTIVE APPROVAL OF THE AGREEMENT; AND PROVIDING AN EFFECTWE DATE. WHEREAS, the City Council deems it necessary and appropriate and in the public interest to engage the Law Firm of Booth, Ahrens & Werkenthin, P.C., a Texas Professional Corporation ("BAW"), of Austin, Texas, to provide professional legal services pertaining to representation of the City of Denton, Texas pertaining to numerous listed water and wastewater issues; regulatory activities; and other related matters; and WHEREAS, the City has previously retained the professional legal services of BAW as the City's outside legal counsel respecting water and wastewater issues and has operated under a previous Agreement for Professional Legal Services, approved by the Council in 2002, and signed by the City Manager, regarding water and wastewater-related legislative issues, as well as other issues, which have demonstrated BAW's expertise of relevant issues concerning water rights; and WHEREAS, the City staffhas reported to the City Council that there is a substantial need for the hereinabove described professional services by Denton Municipal Utilities, and that limited City staff cannot adequately perform the specialized legal services and tasks, which are wholly centered in Austin, Texas, with its own personnel; and WHEREAS, Chapter 2254 of the Texas Government Code, known as the "Professional Services Procurement Act," generally provides that a city may not select a provider of professional services on the basis of competitive bids, but must select the provider of professional services on the basis of demonstrated competence, knowledge, and qualifications, and for a fair and reasonable price; and the City Council hereby finds and concludes that BAW is appropriately qualified under the provisions of the law, to be retained as outside legal counsel for the City, specifically Denton Municipal Utilities, respecting this engagement; and WHEREAS, the City Council has provided in the City budget for the appropriation of funds to be used for the procurement of the foregoing professional legal services, as set forth in the Agreement for Professional Legal Services; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: EXHIBIT 1 SECTION 1. That the recitations in the preamble are true and correct and are incorporated herewith as a part of this Ordinance. SECTION 2: That the City Manager is hereby authorized to execute an Agreement for Professional Legal Services with the Law Firm of Booth, Ahrens & Werkenthin, P.C., Austin, Texas for professional legal services pertaining to the matters hereinabove described, in substantially the form of the Agreement for Professional Legal Services attached hereto and incorporated herewith by reference. SECTION 3: That the award of this Agreement is on the basis of the demonstrated competence and qualifications of the law firm of BAW, and the ability of BAW, to perform the professional legal services needed by the City for a fair and reasonable price. SECTION 4: That the expenditure of funds as provided for in the attached Agreement for Professional Legal Services is hereby authorized. SECTION 5 That as to the payment of fees and expenses, and authority to represent the City, the Agreement for Professional Legal Services is hereby ratified and retroactively approved, and shall be effective from and after May 1, 2003. SECTION 6: That except as provided in Section 5 hereinabove, this ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of ,2004. EULINE BROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY By: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY By: ",~ . S:\Our Documents\Ordinances",04\BAW-UTRWD and TCEQ Matters-Water Utilities-2003 PSA.doc STATE OF TEXAS § COUNTY OF DENTON § AGREEMENT FOR PROFESSIONAL LEGAL SERVICES THIS AGREEMENT, made and entered into this __ day of ., 2003, effective as of May 1, 2003, by and between BOOTH, AHRENS & WERKENTHIN, P.C., a Texas Professional Corporation (hereinafter "Consultant"), with Michael J. Booth, President, having full authority to execute this Agreement on behalf of the Firm, 515 Congress Avenue, Suite 1515, Austin, Texas 78701; and the CITY OF DENTON, TEXAS, a Texas Municipal Corporation, 215 East McKinney Street, Denton, Texas 75201 (hereinafter "City"), with Michael A. Conduff, City Manager, having full authority to execute this Agreement on behalf of the City. WITNE~$ETI-I: WHEREAS, the City deems it necessary and in the public interest to employ legal counsel to continue to provide professional legal services to the City with respect to: (1) protection of the City's important water interests as affected by the filed plan and project of the Upper Trinity Regional Water District ("UTRWD") for re-use of Lake Chapman and Lake Lewisville water, as well as other related matters before the Texas Commission on Environmental Quality ("TCEQ"), or such other successor agency as the TCEQ may be changed to; (2) the City's possible protest of the TRA reuse application; (3) the City's issues with respect to the UTRWD, including monitoring, contract issues and withdrawal of the City's protest of the UTRWD reuse application pending at TCEQ; (4) evaluate the City's interests relating to Dallas' and Irving's pending reuse applications at TCEQ; (5) possible renegotiation of applicable Dallas contracts; (6) possible consideration of the City's application for reuse at the TCEQ; (7) monitor environmental flow application issues that threaten supply in the Trinity River Basin, including the Galveston Bay application; (8) monitoring and reporting regarding any legislative developments that affect the City's water interests; (9) monitoring and reporting on legal and regulatory developments that affect the City's water interests; and (10) such other water, service or environmental issues that may arise, in which Consultant does not have a conflict of interest; and WHEREAS, the Consultant is willing to perform such legal services in a professional manner as an independent contractor; and has competently and efficiently performed services for the City over the past year in connection with its earlier engagement; and the City has selected Consultant on the basis of demonstrated competence and qualifications necessary to perform the needed services; and WHEREAS, the City desires to engage the Consultant once again to render the professional services in connection therewith, for a fair and reasonable price; consistent with, and for the fees set forth in Section llI hereof; and the Consultant is willing to provide such services; Page 1 EXHIBIT 2 NOW, THEREFORE, in consideration of the promises and mutual obligations herein, the City and Consultant do hereby mutually AGREE as follows, to wit: I. Scope of Services: The Consultant shall perform the following services in a professional manner working as an independent contractor not under the direct supervision and control of the City: A. Services to be provided: Consultant shall represent the City regarding the professional services specifically described in the first "Witnesseth" paragraph set forth on page 1 hereof; and chosen by the Assistant City Manager of Utilities, or his designees, including without limitation, the professional and legal services with regard to submitting pleadings and comments if directed to do so, reviewing and monitoring said proceedings, filing pleadings and responses, filing briefs, attending any hearings and other proceedings in relationship to those matters instructed to do so by the City, and to consult with the City through its Denton Municipal Utilities staff with regard to all filings, uncontested and contested hearings, and other issues related to these matters. It is recognized that it is unknown at the present, how much time and professional effort will necessarily be expended on the above- described items. To the extent possible, this engagement shall also cover legal services rendered on behalf of the City at the Texas legislature respecting interim matters and preparation for the upcoming legislative session to the extent that Consultant does not have a conflict of interest. Specifically, the following activities will include (without limitation) the course and status of pending legislation, reporting events to the City, making recommendations thereon, and presenting the City's position to legislators, as directed. The parties recognize the possibility of entering into another Professional Services Agreement concerning that indefinite part of the engagement, as it is too early to tell, with any predictability, what action, or agenda the City will wish to follow, and how much of the $50,000 in fees will remain for that portion of the engagement. o To consult with the Assistant City Manager for Utilities, the Director of Water Utilities, the Assistant Director of Water Utilities, the Assistant City Attorney for Utilities, and/or other designated administrative personnel or staff regarding any and all aspects of the professional services to be performed, including legal research, analysis, and advice with respect to such matters. This will include coordinating activities with the Assistant Director of Water Utilities, the Assistant City Attorney for Utilities and their respective staff to efficiently perform the services required and to preserve the Attorney/Client privilege, work product, and all other applicable exceptions to the discovery or disclosure of documents produced by the City and the Consultant under the Scope of Services hereinabove. Page 2 of 9 The Consultant shall perform all the services required by this Agreement in a timely fashion, and shall complete them in compliance with schedules established by the City through its Assistant City Manager of Utilities as appropriate, to carry out the terms and conditions of this Agreement. Term: This Agreement shall be approved as retroactively effective as of May 1, 2003 or such later date as the previous professional services agreement's funds entered into by the parties hereto, were exhausted. This Agreement shall terminate either upon the completion of the professional services provided for herein; or upon the exhaustion of all professional fees provided for hereunder; or on December 31, 2004, whichever event shall first occur. This Agreement may be sooner terminated in accordance with the provisions hereof. Time is of the essence of this Agreement. Consultant shall make ail reasonable efforts to complete the services set forth herein as expeditiously as possible during the term of this Agreement, and to meet the schedules established by the City, through its Assistant City Manager of Utilities, or his designee. Compensation and Method of Payment: mo The Consultant shall charge the following fees for its professional services provided to the City hereunder, based upon the following hourly billing rates for the attorneys and support staff involved in this matter: Staff Hourly Rate (through 12/31/03) After 12/31/03 Michael J. Booth $210 Carolyn Ahrens $195 Wil Galloway, Associate $190 Ross Richard-Crow, Associate $150 $235 $215 $190 $160 The Consultant has adopted a fee structure ranging from $150 to $235 per chargeable hour, depending upon the individual involved and his or her level of experience and expertise. From time-to-time, the Consultant may assign other attorneys to some aspect of the case, with the view that Consultant will use the lowest hourly rate qualified and available attorney for any particular matter. The Consultant also utilizes briefmg clerks or legal assistants to perform those tasks not requiring the time of an attorney. Briefing clerks and/or legal assistants time is billed at the reasonable rates, depending upon the experience and level of education possessed by the bfiefi g clerk or legai assistant. Consultant agrees that all charges for the legai services hereunder, including expenses as set forth in Section III.C. below, shall not exceed $50,000. The Consultant shall bill the City through the submission of itemized invoices, statements, and other documentation, together with support data indicating the progress of the work and the services performed on the basis of monthly statements, showing hourly rates indicating who performed the work, what type of work was done, and descriptions and/or details of all services rendered, including a daily, and an entry-by-entry reflection of billable time spent on this Page 3 of 9 engagement, along with specific description and supporting documentation, if available, respecting any reasonable and necessary out-of-pocket expenses incurred by Consultant in performing the professional services provided for under this Agreement. Professional fees shall be billed in minimum one-tenth (1/10) hour increments. Co Fo Additionally, the City shall either pay directly or reimburse the Consultant, as the case may be, for reasonable and necessary actual out-of-pocket expenses itemized on the monthly statement. These expenses include, but are not limited to, long- distance telephone, fax, reproduction charges, postage, overnight courier, and transportation and travel charges. All copies will be charged at the rate of fifteen cents ($.15)per copy for copies made within Consultant's offices, with as much photocopying as possible being done by outside vendors at bulk rates or by the City to reduce costs if bulk copying is necessary or appropriate. The parties anticipate that invoices or statements for professional services will be generated on a monthly basis and that said invoices or statements will be sent to the City by Consultant on or about the 15th day of each month. The City shall make payment to the Consultant within thirty (30) days after receipt of an appropriate itemized invoice or statement. To the extent that any fees or expenses are disputed by the City, the City shall notify Consultant within thirty (30) days after its receipt of the invoice or statement, and shall otherwise pay all undisputed amounts set forth in the invoice or statement within thirty (30) days after its receipt of the invoice or statement. All invoices or statements shall be a reviewed by the Assistant Director, Denton Water Utility, or his designee; and shall then be reviewed and approved for payment by the Assistant City Attorney for Utilities. Any sums due and payable more than sixty (60) days after the fee bill is received by the City, and not protested or disputed as allowed above, shall bear interest at the rate of eighteen percent (18%) per year, until paid in full. It is understood and agreed that the Consultant shall work under the coordination and general supervision of the Assistant City Manager of Utilities, or his designee. All notices, invoices, statements, and payments shall be made in writing and may be given by personal delivery or by mail. As to notices: to Michael A. Conduff, City Manager, City of Denton, 215 East McKinney Street, Denton, Texas 76201 or to his designee. As to invoices, statements, or payments: to Michael S. Copeland, Assistant City Attorney for Utilities, Utility Administration Department, at the same address, as to the City; and to Carolyn Ahrens, Esq. of Booth, Ahrens & Werkenthin, P.C., 515 Congress Avenue, Suite 1515, Austin, Texas 78701, as to the Consultant. When so addressed, the notice, invoice, statement and/or payment shall be deemed given upon deposit of same in the U. S. Mail, postage prepaid. In all other instances, notices, invoices, statements, and/or payments shall be deemed given at the time of actual delivery. Changes may be made in the names and addresses of the responsible person or office to which notices, invoices, statements and/or payments are to be sent, provided reasonable notice is given. Page 4 of 9 IV. Professional Competency: Vile vmo mo Consultant agrees that in the performance of these professional services, Consultant shall be responsible to the level of competency and shall use the same degree of skill and care presently maintained by other practicing professionals in the State of Texas performing the same or similar types of work. For the purpose of this Agreement, the key persons who will be performing most of the work hereunder shall be Carolyn Ahrens and Michael Booth, Shareholders. However, nothing herein shall limit Consultant from using other qualified and competent members of the fm-n to perform the services required herein if such delegation is reasonably appropriate and properly protects the City's interests. Any agreements, ordinances, notices, instruments, memoranda, reports, letters, and other legal documents prepared or obtained under the terms of this Agreement are instruments of service and the City shall retain ownership and a property interest therein. If this Agreement is terminated at any time for any reason prior to payment to the Consultant for work under this Agreement, all such documents prepared or obtained under the terms of the Agreement shall upon termination be delivered to and become the property of the City upon request and without restriction on their use or further compensation to the Consultant. Establishment and Maintenance of Records: Full and accurate records shall be maintained by the Consultant at its place of business with respect to ail matters covered by this Agreement. Such records shall be maintained for a period of at least three years after receipt of final payment under this Agreement. Audits and Inspection: At any time during normal business hours and upon reasonable notice to the Consultant, there shall be made available to the City all of the Consultant's records with respect to ail matters covered by this Agreement. The Consultant shall permit the City to audit, examine, and make excepts or transcripts from such records, and to make audits of contracts, invoices, materials, and other data relating to all matters covered by this Agreement. Accomplishment of Project: The Consultant shall commence, carry on, and complete this professional engagement with all practicable dispatch; in a sound, economical and efficient matter; and, in accordance with the provisions hereof and ail applicable laws. In accomplishing the projects, the Consultant shall take such steps as are appropriate to insure that the work involved is properly coordinated with any related work being carried on by the City. Independent Contractor Relationship and Liability_ Insurance: mo Consultant shall perform ail services as an independent contractor not under the direct supervision and control of the City. Nothing herein shall be construed as creating a relationship of employer and employee between the parties. The City and Consultant agree to cooperate in the defense of any claims, action, suit, or proceeding of any kind brought by a third party which may result from or directly Page 5 of 9 or indirectly arise from any negligence and/or errors or omissions on the part of the Consultant or from any breach of the Consultant's obligations under this Agreement. Nothing herein constitutes a waiver of any rights or remedies the City may have to pursue under either law or equity, including, without limitation, a cause of action for specific performance or for damages, a loss to the City, resulting from Consultant's negligent errors or omissions, or breach of contract, and all such rights and remedies are expressly reserved. Consultant shall maintain and shall be caused to be in force at all times during the term of this Agreement, a legally binding policy of professional liability insurance, listed by Best Rated Carders, with a rating of "A-" or above, issued by an insurance carrier approved to do business in Texas by the State Insurance Commission. Such coverage shall cover any claim hereunder occasioned by the Consultant's negligent professional act and/or error, act, or omission, in an amount not less than $1,000,000 combined single limit coverage per occurrence. In the event of change or cancellation of the policy by the insurer, the Consultant hereby covenants to immediately notify the City in writing thereof; and in such event, the Consultant shall, prior to the effective date of change or cancellation, serve a substitute policy fmTfishing the same or higher amount of coverage. The Consultant shall provide a copy of the declarations page of such policy to the City through its Assistant City Manager of Utilities, simultaneously with the execution of this Agreement. IX. Termination of Agreement: In connection with the work outlined in this Agreement, it is agreed and fully understood by the Consultant that the City may cancel or indefinitely suspend further work hereunder or terminate this Agreement at any time upon written notice to Consultant, Consultant shall cease all work and labor being performed under this Agreement. Consultant may terminate this Agreement by giving the City fifteen (15) days written notice that Consultant is no longer in a position to continue representing the City. Consultant shall invoice the City for all work satisfactorily completed and shall be compensated in accordance with the terms of this Agreement. All reports and other documents, or data, or work related to the project shall become the property of the City upon termination of this Agreement. Bo This Agreement may be terminated in whole or in part, in writing, by either party in the event of substantial failure by the other party to fulfill its obligations under this Agreement through no fault of the terminating party. Provided, however, that no such termination may be affected, unless the other party is given [1] written notice (delivered by certified mail, return receipt request) of intent to terminate, and not less than thirty (30) calendar days to cure the failure; and, [2] an opportunity for consultation with the terminating party prior to termination. Page 6 of 9 XlVo XVe Nothing contained herein or elsewhere in this Agreement shall require the City to pay for any work which is unsatisfactory or which is not submitted in compliance with the terms of this Agreement. Alternate Dispute Resolution: The Consultant and the City agree that, if necessary, they will use their best efforts to resolve any disputes regarding the Agreement through the use of mediation or other forms of alternate dispute resolution set forth in Chapter 154 of the Texas Civil Practices and Remedies Code (V.A.T.C.S.). Entire Agreement: This Agreement represents the entire agreement and understanding between the parties and any negotiations, proposals, or oral agreements are intended to be integrated herein and to be superseded by this written Agreement. Any supplement or amendment to this Agreement, in order to be effective, shall be in writing and signed by the City and the Consultant. Compliance with Laws: The Consultant shall comply with all federal, state, local laws, rules, regulations, and ordinances applicable to the work covered hereunder as they may now read or hereafter be amended, including but not limited to the Texas Disciplinary Rules of Professional Conduct. Governing Law: For the purpose of determining place of agreement and law governing same, this Agreement is entered into in the City and County of Denton, State of Texas, and shall be construed in accordance with, and governed by the laws of the State of Texas. Venue and jurisdiction of any suit or cause of action arising under or in connection with this Agreement shall lie exclusively in a court of competent jurisdiction sitting in Denton County, Texas. Discrimination Prohibited: In performing the services required hereunder, the Consultant shall not discriminate against any person on the basis of race, color, religion, sex, national origin or ancestry, age, or physical handicap. Personnel: mo Consultant represents that it has or will secure at its own expense all personnel required to perform the services required under this Agreement. Such personnel shall not be employees nor have any contractual relations with the City. Consultant shall inform the City of any conflict of interest or potential conflict of interest that may arise during the term of this Agreement, in accordance with Consultant's responsibilities under the Texas Disciplinary Rules of Professional Conduct. All services required hereunder will be performed by the Consultant or under its direct supervision. All personnel engaged in work shall be qualified and shall be licensed, authorized, or permitted under state and local laws to perform such services. Page 7 of 9 XVIe Assignability: The Consultant 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 thereto. Severability: All agreements and covenants contained herein are severable, and in the event any of them, with the exception of those contained in sections headed "Scope of Services", "Independent Contractor Relationship", and "Compensation and Method of Payment" hereof, shall be held to be invalid by any court of competent jurisdiction, this Agreement shall be interpreted as though such invalid agreements or covenants were not contained herein. Responsibilities for Claims and Liability. Approval by the City shall not constitute nor be deemed a release of the responsibility and liability of the Consultant for the accuracy and competency of its work; nor shall such approval be deemed to be an assumption of such responsibility of the City for any defect in any report or other documents prepared by the Consultant, its shareholders, associates, employees, officers, or agents in connection with this engagement. Modification of Agreement: 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. 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 parties hereunder, unless such waiver or modification is in writing, duly executed as aforesaid. The parties further agree that the provisions of this article will not be waived as herein set forth. Captions: 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. Binding Effect: This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors, and assigns, where permitted by this Agreement. IN WITNESS HEREOF, the City of Denton, Texas has executed this Agreement in four (4) original counterparts by and through its duly authorized City Manager; and Consultant has executed this Agreement by and through its duly authorized undersigned Shareholder; dated this the day of ., 2004, but effective as of May 1, 2003. CITY OF DENTON, TEXAS A Texas Municipal Corporation By: Michael A. Conduff, City Manager Page 8 of 9 ATTEST: JENNIFER WALTERS, CITY SECRETARY By: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY By: BOOTH, AHRENS & WERKENTHIN, P.C. A Texas Professional Corporation By: ATTEST: By: ~~ NOTICE TO CLIENTS The State Bar of Texas investigates and prosecutes professional misconduct committed by Texas attorneys. Although not every complaint against or dispute with a lawyer involves professional misconduct, the State Bar of Texas Office of General Counsel will provide you with information about how to file a complaint. For more information please call 1-800-932-1900. This is a toll-flee call. 0357_031208_De ntcnAgmtFnal.doc Page 9 of 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 CITY OF DENTON PUBLIC UTILITIES BOARD MINUTES January 12, 2004 After determining that a quorum of the Public Utilities Board of the City of Demon, Texas was presem, the Public Utilities Board convened imo an Open Meeting on Monday, January 12, 2004, 2003, at 9:00 a.m. in the Service Cemer Training Room, City of Demon Service Cemer, 901-A Texas Street, Denton, Texas. PRESENT: John Baines, Bill Cheek, Yolanda Guzman, George Hopkins, Charldean Newell, Dick Smith and Don White (Board Member John Baines excused himself from the meeting at 11:45 a.m.) EX OFFICIO MEMBERS Michael Conduff, City Manager Howard Martin, ACM/Utilities EXCUSED: CONSENT AGENDA The staff recommends each of these items, and approval thereof will be strictly on the basis of the staff recommendations. Approval of the Consem Agenda authorizes the Assistam City Manager for Utilities or his designee to implement each item in accordance with the staff recommendations. Listed below are bids or purchase orders to be approved for paymem under the Consem Agenda. (Agenda Items 1, 2, 3 & 4). Detailed information is attached to each Consem Agenda item. This listing is provided on the Consem Agenda to allow Public Utilities Board Members to discuss or withdraw an item prior to approval of the Consent Agenda. 4) Consider approval of a Professional Services Agreement (PSA) with Booth, Ahrens & Werkinthin, P.C. for legal representation related to water rights issues in an amount not to exceed $50,000. ITEMS FOR INDIVIDUAL CONSIDERATION: Board Member Bill Cheek asked that Consent Agenda Item #4 be pulled for discussion of the legal agreement. Tim, Fisher, Assistam Director of Water Utilities, informed the Board that Booth, Ahrens & Werkimhin (BAW) has, in the past, provided legal services to the City regarding water rights issues and is familiar with the City's existing water rights and water supply comracts with Dallas and the UTRWD. BAW is located in Austin and has frequent access to and involvement with the TCEQ staff, thus providing a distinct advamage to the City of Denton since they can obtain and distribute information and file records quickly and efficiemly. Cheek asked for an explanation of the desired changes referred to in Option 2, on page 3 of the cover memorandum. Fisher responded that the options would include cease to participate, negotiate the fees based upon hourly cost plus direct expenses, and the billing would be limited Page 1 of 2 EXHIBIT 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 to services requested and rendered. The proposed agreement would also provide a maximum cap amount and any additional expenditures would be presented to the Public Utilities Board and City Council for review and approval. Cheek than asked if BAW would provide the City with monthly reports. Fisher explained that during the legislative session, BAW typically provides a series of 12-15 reports, which primarily concern committee activities, but they would also include water conservation issues. Martin also explained that BAW understands the issues important to the City and keeps staff apprised of such. Baines asked what happens to the unused portion of the purchase order. Fisher informed the Board that the funds remain in the purchase order and are rolled over into the following year. Cheek moved to approve the professional services proposal, with a second from Baines. The motion was passed unanimously. PUBMINSFINAL 11204 Page 2 of 2 AGENDA INFORMATION SHEET AGENDA DATE: February 17, 2004 DEPARTMENT: ACM: Electric Utility Howard Martin, 349-8232 SUBJECT Consider approval of an ordinance of the City of Demon, Texas authorizing the City Manager to execute an agreement for Professional Legal Services with the Law Offices of Jim Boyle, PLLC. for professional legal and lobbying services related to interim matters preceding the 79th Regular Texas Legislative Session pertaining to the City of Denton/Denton Municipal Electric; authorizing the expenditure of funds therefor; providing for retroactive approval thereof; and providing an effective date. BACKGROUND The following background information was provided to the Public Utilities Board and City Council in August of 2003: The Texas Legislature mandated a Texas wholesale electric market in which any generation resource can sell any amount of energy it desires to any load within Texas, regardless of the ability of the existing electric transmission system to handle the resulting energy flows on that transmission system. This inevitably results in periods during which specific transmission lines are loaded beyond their capacity to safety transport the energy, a condition referred to as transmission congestion. When this occurs, ERCOT is tasked by the TPUC with idemifying new transmission projects that need to be constructed to relieve the congestion and local Transmission/Distribution Service Providers (TDSPs) are required to build the idemified projects and recover those costs through filing with the TPUC for a Transmission Cost of Service (TCOS) rate that is uplifted to all customers in ERCOT through a uniform charge assessed on all TDSPs in ERCOT on a load ratio share. The TDSPs in turn pass these costs to customers through their wire use charges. There are three major flaws in this system. The first is that generators no longer have any incentive to build new facilities in locations where adequate transmission to support their project already exists because they do not have to pay for the cost of transmission upgrades caused by their project. Left unchecked, this process will ultimately result in Texas electric customers paying for an extremely expensive transmission system, raising the overall cost of electric energy in the state. The second is that completion of new transmission projects to relieve transmission congestion usually takes several years, in the interim some method must be used to ration the limited amount of transmission capacity among those desiring to use it. The third is that there are some areas where it will never be possible to build the additional transmission projects needed to relieve the congestion. The DFW metropolitan area is an example of such an area. It is virtually impossible, with any technology known today, to build several high voltage transmission lines and their associated support facilities (substations, etc.) into the heart of cities such as Dallas or Fort Worth. However, that is what is required in order to relieve the transmission congestion that exists today in those areas. In order to implement the Legislative mandates, the various market stakeholders in ERCOT developed a method to ration transmission capacity in constrained areas that was put into effect in 2001. The process identifies Commercially Significant Constraints (CSCs), which are defined as "a transmission constraint that limits the free flow of energy within the ERCOT market to a commercially significant degree". Generators are then grouped into Congestion Management Zones that are geographical areas defined such that each generator within the boundaries of the zone has a similar effect on the loading of the CSC transmission facilities between congestion zones. When a CSC becomes overloaded, ERCOT pays generators in the zone on one end of the overloaded CSC to reduce their output while simultaneously paying generators in the zone on the other side of the CSC to increase their output until the overload is relieved. The amount of the payments is usually determined through a bidding process. The cost of making these payments is then allocated to the entities whose schedules caused the original congestion. ERCOT also auctions off hedging rights on identified CSCs. The revenues from this auction then go to offset costs allocated to those who have bought the hedging rights for that CSC's congestion relief. However, not all transmission congestion occurs on CSC's. There is often transmission congestion on transmission lines within a Congestion Management Zone. This "local congestion" is usually caused by transmission system configurations that no longer adequately support the electric load growth in an area rather than by wholesale market activity. "Local congestion" congestion is not significant enough to be considered a CSC but it also must be relieved by raising and lowering generation of specified generating units and these generators are also both paid for that service. Under the present system, the cost of relieving "local congestion" is uplifted to all loads in ERCOT on a load ration share basis. The DFW area "North Zone" experiences a significant amount of "local congestion" for which there is little hope of relief from construction of new transmission or new generation. Close to $72 million of "local congestion" costs have been experienced in the DFW area this year alone. The TPUC, under what many believe is some amount of influence from Pat Wood, former Chairman of the TPUC, now Chairman of the Federal Energy Regulatory Commission, has now decided that a different system of transmission management should be implemented in Texas. Some economists believe that this different type of system will provide some level of incentive for generators to locate new projects in areas that do not cause transmission congestion. The system, referred to as Locational Marginal Pricing (LMP), is an extremely complex nodal pricing system that will be very expensive to implement. Some estimates have been as high as $300 million for all parts of the Texas market (ERCOT and stakeholders) to implement such a system. The portion of this cost to change the ERCOT system will be passed through to all loads in ERCOT, including the customers of DME. The success of this system in areas where it has been implemented has been questionable, especially when its costs are considered. However, despite consistent comments by a number of wholesale market stakeholders and consumers representatives questioning the wisdom of implementing such a system, the TPUC has pressed forward. This rush into an LMP type system has been made without adequate cost benefit analysis on the part of the TPUC. Furthermore, implementation of an LMP type system will result in the high DFW local congestion costs being allocated to only electric customers in the DFW area. As discussed above, DFW has almost no way to economically remove its local transmission congestion costs absem some major, unforeseen technological breakthrough. Imposition of an LMP type system in ERCOT will make DFW a much higher cost energy area than other parts of Texas, with the obvious negative impacts on DFW economic health and growth potential. The overall cost to DME customers of implementing an LMP type system combined with potentially large negative impact on the DFW area economy are of grave concern. At the time of that presemation, the Public Utilities Board and Council approved comracts with the Lloyd, Gosselink law firm and R .J. Covington Consulting for assistance in represeming DME at the TPUC and in the ERCOT market participam market design process. Since that time DME, together with Garland, Bryan, and Greenville, have actively participated in the wholesale market design process. This process has involved attendance at three to four all day meetings per week in Austin as well as behind the scenes analysis and negotiation with numerous other stakeholders in the process, particularly other municipal utilities and cooperatives. Despite these efforts, the design process has cominued down a path that will shift a significam level of congestion costs omo the DFW area with no plan in place to remove the DFW congestion. The concessions other stakeholders have been willing to consider to assist the DFW municipal utilities and cooperatives in dealing with these cost increases have been very limited, with no guaramee that the TPUC staff will not attempt to reduce or eliminate them once the proposed design is passed from the ERCOT design phase to the TPUC approval phase. These concessions appear to be much less than those that have been provided in other areas of the coumry, where LMP has been implememed or is being considered, to loads with situations similar to DFW. There have been no proposals made that would relieve the impact of the higher costs on the remaining DFW retail customers. It has become clear that DFW concerns will not be taken seriously without the application of political pressure. There are several avenues immediately available to accomplish this: · Provide input to the TPUC Sunset Review process · Provide input to the Imerim Reports of the House Regulated Industries Committee that is studying several electric related topics · Provide input to the Joim Committee on Electric Restructuring · Provide input to the Senate Economic Developmem Committee · Work directly with selected legislators to educate them about the potemial problems for DFW customers resulting from implememation of the proposed nodal market design. If, prior to adoption of a plan by the TPUC, the necessary political pressure can be developed that makes it that any plan that does not adequately address DFW's concerns will not be acceptable, it will be much easier to influence the process than if we are forced to attempt to get the Legislature to overturn a plan that has already been adopted during a full Legislative session. In order to implemem this step in the DME "defense plan" DME will utilize the services of Jim Boyle to assist in presenting DME's issues to the Legislature. Mr. Boyle has served DME in this capacity since 1997 and is already familiar with DME and Demon issues. His services have always been excellem and very cost effective when compared to other individuals who perform such services. Due to the numerous Legislative venues presently available to pursue, his location in Austin and his established relationships with legislators and their staffs will allow the DME position to be actively presented in all possible areas in a cost effective manner OPTIONS 1. Approve the Agreement for Professional Services with the Law Office of Jim Boyle, PLLC for legal and legislative services related to the ongoing Texas Public Utility Commission (TPUC)/Electric Reliability Council of Texas (ERCOT) electric wholesale market design project. 2. Do not attempt to obtain pre-session Legislative support for the DFW concerns. RECOMMENDATIONS DME recommends approval of the Agreement for Professional Services with the Law Office of Jim Boyle, PLLC for legal and legislative services related to the ongoing Texas Public Utility Commission (TPUC)/Electric Reliability Council of Texas (ERCOT) electric wholesale market design project. PRIOR ACTION/REVIEW (Council, Boards, Commission) The Public Utilities Board approved this contract at its January 26, 2004 meeting by a vote of 7 to 0. FISCAL INFORMATION The cost of this Agreement is not to exceed $103,500 for the period from January 1, 2004 through December 31, 2004. EXHIBITS 1. Ordinance 2. Contract 3. PUB Meeting Minutes Respectfully submitted: Sharon Mays Director of Electric Utilities ORDINANCE NO. 2004- AN ORDINANCE OF THE CITY OF DENTON, TEXAS AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT FOR PROFESSIONAL LEGAL SERVICES WITH THE LAW OFFICES OF JIM BOYLE, PLLC. FOR PROFESSIONAL LEGAL AND LOBBYING SERVICES RELATED TO INTERIM MATTERS PRECEDING THE 79TM REGULAR TEXAS LEGISLATIVE SESSION PERTAINING TO THE CITY OF DENTON/DENTON MUNICIPAL ELECTRIC; AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR; PROVIDING FOR RETROACTIVE APPROVAL THEREOF; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City Council deems it necessary and appropriate and in the public interest to engage the Law Offices of Jim Boyle, PLLC ("Boyle"), of Austin, Texas, to provide professional legal services and lobbying services pertaining to representation of the City of Denton, Texas ("City") and its municipal electric utility, Denton Municipal Electric ("DME") regarding interim matters pertaining to the year preceding the 79th Regular Texas Legislative Session; and WHEREAS, the City has previously retained and engaged the professional legal services of Boyle on numerous occasions in the last eight (8) years, and has operated under numerous other Agreements For Professional Legal Services, approved by the City Council, and signed by the City Manager, regarding legislative issues and lobbying services; Denton Municipal Electric issues at the Public Utility Commission of Texas, the Texas Railroad Commission and in the courts; and other engagements which have demonstrated Boyle's considerable expertise of relevant issues concerning the City as well as DME; and WHEREAS, the City staff has reported to the City Council that there is a substantial need for the hereinabove described professional services by Denton Municipal Electric, and that limited City staff cannot adequately perform the specialized legal and lobbying services and tasks, which are wholly centered in Austin, Texas, with its own personnel; and WHEREAS, Chapter 2254 of the Texas Government Code, known as the "Professional Services Procurement Act," generally provides that a city may not select a provider of professional services on the basis of competitive bids, but must select the provider of professional services on the basis of demonstrated competence, knowledge, and qualifications, and for a fair and reasonable price; and the City Council hereby finds and concludes that Boyle is appropriately qualified under the provisions of the law, to be retained as outside legal and lobbying counsel for the City and for Denton Municipal Electric, respecting this engagement; and WHEREAS, the City Council has provided in the City budget for the appropriation of funds to be used for the procurement of the foregoing professional legal services, as set forth in the Agreement for Professional Legal Services; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: EXHIBIT 1 SECTION 1. That the recitations in the preamble are true and correct and are incorporated herewith as a part of this Ordinance. SECTION 2: That the City Manager is hereby authorized to execute an Agreement for Professional Legal Services with the Law Offices of Jim Boyle, PLLC, of Austin, Texas for professional legal and lobbying services pertaining to the interests of the City and of DME in the interim one-year period preceding the 79th Regular Texas Legislative Session as hereinabove described, in substantially the form of the Agreement for Professional Legal Services attached hereto and incorporated herewith by reference. SECTION 3: That the award of this Agreement is on the basis of the demonstrated competence and qualifications of the Law Offices of Jim Boyle, PLLC, and the ability of the Law Offices of Jim Boyle, PLLC, to perform the professional legal and lobbying services needed by the City for a fair and reasonable price. SECTION 4: That the expenditure of funds as provided for in the attached Agreement for Professional Legal Services is hereby authorized. SECTION 5: That this Agreement is ratified, confirmed and effective, and retroactively approved from and after January 1, 2004. SECTION6: That all other provisions of this ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the __ day of ,2004. ATTEST: JENNIFER WALTERS, CITY SECRETARY EULINEBROCK, MAYOR By: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY S:\Our Documents\Ordinances\04 ixJ4~Boyle Interim Legislative PSA-2004-DME Ord.doc 2 STATE OF TEXAS § COUNTY OF DENTON AGREEMENT FOR PROFESSIONAL LEGAL SERVICES THIS AGREEMENT, made and entered into this __ day of , 2004, by and between the Law Office of Jim Boyle, PLLC, with Jim Boyle having full authority to execute this Agreement, 1005 Congress, Suite 550, Austin, Texas 78701, hereinafter referred to as "Consultant", and the City of Denton, Texas, a Texas Municipal Corporation, 215 East McKinney, Denton, Texas 76201, hereinafter referred to as "City." WITNESSETH WHEREAS, the City needs to employ legal counsel to represent the City of Denton, Texas in certain interim legislative and legal matters relating to Denton Municipal Electric before the beginning of the 79th Texas Legislature commencing in January 2005; and WHEREAS, because of the increased level of activities associated with this Agreement, Monte Akers ("Akers"), of the law firm of Bovey, Akers & Bojorquez, LLP, Austin, Texas, will also be working with Consultant, as a Subconsultant, to insure thorough coverage of the objectives of this Agreement; and shall be compensated for his services by the Consultant; and WHEREAS, the City hereby consents to the employment of Akers as Subconsultant to the Consultant, and understands that Consultant will prepare all billing under this Agreement; and WHEREAS, the Consultant is willing to perform such services in a professional manner as an independent contractor; and WHEREAS, the City desires to engage the Consultant to render the services in connection therewith, and the Consultant is willing to provide such services; and NOW, THEREFORE, in consideration of the promises and mutual obligations set forth herein, the parties hereto do mutually AGREE as follows: I. Scope of Services: The Consultant shall perform the following services in a professional manner working as an independent contractor not under the direct supervision and control of the City: A. Services to be provided: Consultant will provide, without limitation, all those services set forth in Exhibit "A," "Scope of Services" incorporated here~vith and made a part of this Agreement for all purposes; EXHIBIT 2 To consult with the Mayor, City Manager, Assistant City Manager for Utilities, Director of Electric Utilities, City Attorney, Utility Attorney and designated administrative personnel regarding any and all aspects of the special services to be performed, including legal research and advice with respect to such matters. This will include coordinating with the Assistant City Manager for Utilities, Director of Electric Utilities, the City Attorney, and their staff to efficiently perform the services required and communicate the City's legislative program or issues to other interested parties or legislators only to the extent necessary to advance the City's legislative agenda. o To provide regular monthly status reports to the City regarding interim legislative issues; and interim reports by telephone and facsimile if there are time-sensitive matters. II. Term: The services of Consultant shall commence January 1, 2004 and continue until the expiration of the term of this Agreement on December 31, 2004. This Agreement may be sooner terminated by either party in accordance with the provisions hereof. Time is of the essence for this Agreement, and the Consultant shall make all reasonable efforts to complete the serv'ices set forth herein as expeditiously as possible and to meet the schedules established by the City, through its Assistant City Manager for Utilities. III. Compensation and Method of Payment: mo The Consultant shall be paid the lump-sum of $8,000 per month fees for each month that this Agreement is in force and effect. Due to the unique and specialized nature of services provided for in the Scope of Services, the City recognizes and agrees that the payment of a monthly retainer fee, rather than an hourly fee, for Consultant's services in the area of work covered by this Agreement is the usual and customary method of compensation for such professional services. It is understood that any and all fees of the Subconsultant shall also be included within this $8,000 per month. Bo In addition, the City shall reimburse the Consultant for all reasonable out-of- pocket expenses incurred in connection with this Agreement at Consultant's cost. For in-house photocopies, Consultant shall charge $0.15 per copy. For in-house faxes, Consultant shall charge $0.25 per page plus telephone charge. Expenses for this Agreement appearing on Consultant's fee bills, shall not exceed $7,500. The total amount of this Agreement shall not exceed $103,500. Co The Consultant shall utilize his best efforts in representing the City's interests, and may, from time-to-time, as reasonably necessary or appropriate, delegate tasks to be performed within the Scope of Work of this Agreement, by utilizing Subconsultant, qualified associates, legal assistants, and paralegals. Assistance provided by Consultant's staff is included in the monthly fee. Consultant shall bill IV. the City through the submission of a monthly invoice and other documentation, including supporting data for all expenses incurred and invoiced. Upon completion of services for a month's work performed hereunder, the City shall make payment to the Consultant within thirty- (30) days of the satisfactory completion of services for the given month's work and receipt of an invoice or statement. The parties anticipate invoices or statements for services will be generated on a monthly basis and that said invoices or statements sha!! be sent to the City on or about the 15th day of each month. All invoices and bills shall be sent directly to, processed by and approved by the City's Utility Attorney and approved for payment by the Director, Denton Municipal Electric. It is understood that the Consultant shall work under the coordination and general supervision of the Director, Denton Municipal Electric. Fo All notices, invoices, and payment shall be made in writing and may be given by personal delivery or by mail. Notices, invoices, and payments sent by mail shall be addressed to: Michael S. Copeland, Utility Attorney, 215 East McKinney Street, Denton, Texas 76201; or to the Jim Boyle, Law Offices of Jim Boyle, PLLC, 1005 Congress, Suite 550, Austin, Texas 78701. When so addressed, the notice, invoice, and/or payment shall be deemed given upon deposit in the United States Mail, postage prepaid. In all other instances, notices, invoices, and/or payments shall be deemed given at the time of actual delivery. Changes may be made in the names and addresses of the responsible person or office to whom notices, invoices, anWor payments are to be sent, provided reasonable notice is given. Professional Competency: The Consultant agrees that in the performance of these professional services, Consultant shall be responsible to the level of competency and shall use the same degree of skill and care presently maintained by other practicing professionals performing the same or similar types of work in the State of Texas. For the purpose of this Agreement, the key person who will be performing most of the work hereunder shall be Jim Boyle. However, nothing herein shall limit Consultant from using Subconsultant or other qualified and competent members of his firm to perform the services required herein, where no harm or detriment will result to the City's interests. Pleadings, motions, orders, notices, instruments, discovery documents, reports, and other legal documents prepared or obtained under the terms of this Agreement are instruments of service and the City shall retain ownership and a property interest therein. If this Agreement is terminated at any time for any reason prior to payment to the Consultant for work under this Agreement, all such documents prepared or obtained under the terms of the Agreement shall upon termination be delivered to and become the property of the City upon request and without restriction on their use or further compensation to the Consultant. V. Establishment and Maintenance of Records: Full and accurate records shall be maintained by the Consultant at his place of business with respect to all matters covered by this Agreement. Such records shall be maintained for a period of at least three years after receipt of final payment under this Agreement. VI. Audits and Inspection: At any time during normal business hours and upon reasonable notice to the Consultant, there shall be made available to the City all of the Consultant's records with respect to all matters covered by this Agreement. The Consultant shall permit the City to audit, examine, and make excerpts or transcripts from such records, and to make audits of contracts, invoices, materials, and other data relating to all matters covered by this Agreement. VII. Accomplishment of Project: The Consultant shall commence, carry on, and complete any and all projects with all practicable dispatch; in a sound, economical and efficient manner; and, in accordance with the provisions hereof and all applicable laws. In accomplishing the projects, the Consultant shall take such steps as are appropriate to insure that the work involved is properly coordinated with related work being carried on in the City. VIII. Indemnity and Independent Contractor Relationship: Ao The Consultant shall perform all services as an independent contractor not under the direct supervision and control of the City. Nothing herein shall be construed as creating a relationship of employer and employee between the parties. The City and Consultant agree to cooperate in the defense of any claims, actions, suits, or proceeding of any kind brought by a third party which may result from or directly or indirectly arise from any negligence and/or errors or omissions on the part of the Consultant, or from any breach of the Consultant's obligations under this Agreement. Bo In the event any litigation or claim is brought under this Agreement in which City is joined as a party, Consultant shall provide suitable counsel to defend City and Consultant against such claim; provided however, that the Consultant shall have the right to proceed with competent counsel of his own choosing. The Consultant agrees to defend, indemnify and hold harmless the City and all of its officers, attorneys, agents, servants, and employees against any and all such claims to the extent of coverage by Consultant's professional liability policy. The Consultant agrees to pay all expenses, including but not limited to attorney's fees, and satisfy all judgments that may be incurred or rendered against the Consultant's professional liability insurance policy. Nothing herein constitutes a waiver of any rights or remedies the City may have to pursue under either law or equity, including, without limitation, a cause of action for specific performance or for damages, a loss to the City, resulting from Consultant's negligent errors or omissions, or breach of contract, and all such rights and remedies are expressly reserved. Co Consultant shall maintain and shall be caused to be in force at all times during the term of this Agreement, a legally binding policy of professional liability insurance, issued by an insurance carrier approved to do business in the State of Texas by the State Insurance Commission, which carrier must be rated by Best Rated Carriers, with a rating of "A-" or higher. Such coverage shall cover any claim hereunder occasioned by the Consultant's negligent professional act and/or error or omission, in an amount not less than $500,000 combined single limit coverage per occurrence. In the event of change or cancellation of the policy by the insurer, the Consultant hereby covenants to immediately advise the City thereof; and in such event, the Consultant shall, prior to the effective date of change or cancellation, serve a substitute policy furnishing the same coverage to the City. The Consultant shall provide a copy of such policy and the declarations page of the existing policy to the City through its Utility Attorney, simultaneously with the execution of this Agreement. IX. Termination of Agreement: In connection with the work outlined in this Agreement, it is agreed and fully understood by the Consultant that the City may cancel or indefinitely suspend further work hereunder or terminate this Agreement at any time upon fifteen (15) days written notice to Consultant. Upon receipt of such notice, Consultant shall cease all work and labor being performed under this Agreement. Consultant may terminate this Agreement by giving the City fifteen (15) days written notice that Consultant is no longer in a position to continue representing the City. Consultant shall invoice the City for all work satisfactorily completed and shall be compensated in accordance with the terms of this Agreement. All reports and other documents, or data, or work related to the project shall become the property of the City upon termination of this Agreement. Bo This Agreement may be terminated in whole or in part, in writing, by either party in the event of substantial failure by the other party to fulfill its obligations under this Agreement through no fault of the terminating party. Provided, however, that no such termination may be effected, unless the other party is given [1] written notice (delivered by certified mail, return receipt requested) of intent to terminate, and not less than thirty (30) calendar days to cure the failure; and, [2] an opportunity for consultation with the terminating party prior to termination. Co Nothing contained herein or elsewhere in this Agreement shall require the City to pay for any work performed by Consultant or by any person performing services under this Agreement at the direction of Consultant, which is unsatisfactory, or which is not submitted in compliance with the terms of this Agreement. X. Entire A~reement: This Agreement represents the entire agreement and understanding between the parties and any negotiations, proposals, or oral agreements are intended to be integrated herein and to be superseded by this written agreement. Any supplement or 5 amendment to this Agreement to be effective shall be in writing and signed by the City and Consultant. XI. Compliance with Laws: The Consultant shall comply with all federal, state and local laws, rules, regulations, and ordinances applicable to the work covered hereunder as they may now read or hereafter be amended, including, but not limited to the Texas Disciplinary Rules of Professional Conduct. XII. Governinz Law: For the purpose of determining place of agreement and law governing same, this Agreement is entered into the City and County of Denton, State of Texas, and shall be governed by the laws of the State of Texas. Venue and jurisdiction of any suit or cause of action arising under or in connection with this Agreement shall be exclusively in a court of competent jurisdiction sitting in Denton County, Texas. XIII. Discrimination Prohibited: In performing the services required hereunder, the Consultant shall not discriminate against any person on the basis of race, color, religion, sex, national origin or ancestry, age, or physical handicap. XIV. Personnel: ao Consultant represents that he has or will secure at his own expense all routine personnel required to perform all the services required under this Agreement. Routine personnel shall not be employees or have any contractual relations with the City. Consultant shall immediately inform the City of any conflict of interest or potential conflict of interest that may arise during the term of this Agreement, in accordance with Consultant's responsibilities under the Texas Disciplinary Rules of Professional Conduct. All services required hereunder will be performed by the Consultant or under his direct supervision. All personnel engaged in work hereunder shall be qualified and shall be authorized or permitted under federal, state and local laws to perform such services. XV. Assignability: The Consultant 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 thereto. XVI. Severabiliw All agreements and covenants contained herein are severable, and in the event any of them, with the exception of those contained in sections headed "Scope of Services", "Independent Contractor Relationship", and "Compensation and Method of Payment" hereof, shall be held to be invalid by any competent court, this Agreement shall be interpreted as though such invalid agreements or covenants were not contained herein. XVII. Responsibilities for Claims and Liability: Approval by the City shall not constitute nor be deemed a release of the responsibility and liability of the Consultant for the accuracy and competency of his work; nor shall such approval be deemed to be an assumption of such 6 responsibility of the City for any defect in any report or other documents prepared by the Consultant, his Subconsultant, his employees, officers, and agents. XVIII. Modification of Agreement: 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. 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 parties hereunder, unless such waiver or modification is in writing, duly executed as aforesaid; and, the parties further agree that the provisions of this section will not be waived as herein set forth. XIX. Captions: 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. XX. Binding Effect: This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors, and assigns where permitted by this Agreement. IN WITNESS WHEREOF, the City of Denton, Texas has caused this Agreement to be executed by its duly authorized City Manager; and Consultant has executed in four original counterparts this Agreement on this the day of ,2004. "CITY" CITY OF DENTON, TEXAS By: Michael A. Conduff, City Manager ATTEST: JENNIFER WALTERS, CITY SECRETARY By: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY 7 ATTEST: "CONSULTANT" LAW OFFICES OF JIM BOYLE, PLLC By: S:\Our Documents\Contracts'x04\Jim Boyle Interim Legislative PSA-2004-DME.doc EXHIBIT "A" SCOPE OF SERVICES Jim Boyle of the Law Offices of Jim Boyle, PLLC ("Consultant") shall provide legal and legislative services for the benefit of Denton Municipal Electric ("DME") during the interim period before the start of the 79~h Regular Session of the Texas Legislature. In connection with the provision of the services listed below, Monte Akers of Bovey, Akers & Bojorquez, LLP will be working with the Consultant to insure thorough coverage of the objectives of this agreement. Consultant will compensate Mr. Akers for his services in connection with this Agreement. Consultant shall be responsible for: Attempting to initiate changes or amendments to the Public Utility Regulatory Act ("PURA") which would benefit DME while PURA and the Public Utility Commission undergo sunset review before the Sunset Advisory Commission. Provide input for the Interim Reports of the House Regulated Industries Committee on the following issues being studied by that Committee. · The process of economic dispatch and determine possible methods to improve the competitive electric utilities market and reduce costs and pollution caused by inefficient power plants. · The reliability of electric utility service and review authority and structure of the Electric Reliability Council of Texas. · The benefits and challenges associated with alternative forms of energy generation technologies, such as wind and hydrogen fuel cells, and what if any state government involvement should be considered. (Joint Interim Charge with Energy Resources Committee.) ° Provide input to the Joint Committee on Electric Restructuring and the Senate Economic Development Committee. The interim charges for these two committees have yet to be announced. Work with area legislators on issues of concern with regard to municipally-owned electric utilities. o Implement programs to educate legislative leaders about potential problems with nodal markets for municipally-owned utilities and electric cooperatives in the DFW area. 6. Other tasks as assigned by the City or DME. S:\Our Documents\Contracts\O4.\Jim Boyle Interim Legislative PSA-Exhibit A-2OO4-DME.doc 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 CITY OF DENTON PUBLIC UTILITIES BOARD MINUTES January 26, 2004 Draft After determining that a quorum of the Public Utilities Board of the City of Demon, Texas was presem, the Public Utilities Board convened imo an Open Meeting on Monday, January 26, 2004, at 9:00 a.m. in the Service Cemer Training Room, City of Demon Service Cemer, 901-A Texas Street, Denton, Texas. PRESENT: John Baines, Bill Cheek, Yolanda Guzman, George Hopkins, Charldean Newell, Dick Smith and Don White (Board Member Bill Cheek excused himself from the meeting at 11:10 a.m.) EX OFFICIO MEMBERS Michael Conduff, City Manager Howard Martin, ACM/Utilities EXCUSED: CONSENT AGENDA The staff recommends each of these items, and approval thereof will be strictly on the basis of the staff recommendations. Approval of the Consem Agenda authorizes the Assistam City Manager for Utilities or his designee to implement each item in accordance with the staff recommendations. Listed below are bids or purchase orders to be approved for paymem under the Consem Agenda. (Agenda Items 1 & 2). Detailed information is attached to each Consem Agenda item. This listing is provided on the Consem Agenda to allow Public Utilities Board Members to discuss or withdraw an item prior to approval of the Consent Agenda. 1) Consider approval of Bid No. 3122 to Utilicor and Badger Meter, Inc for Denton Municipal Electric's ("DME") purchase of additional automatic meter reading (AMR) equipment in an amount not to exceed $84,000. 2) Consider approval of an Agreement for Professional Services with the Law Office of Jim Boyle, PLLC, Austin, Texas for legal and legislative services related to the ongoing Texas Public Utility Commission ("TPUC")/Electric Reliability Council of Texas ("ERCOT") electric wholesale market design project. Board Member John Baines moved to approve Consent Agenda Items #1 and 2, with a second from Board Member Bill Cheek. The motion passed by a vote of 7-0. Page 1 of 1 EXHIBIT 3 AGENDA INFORMATION SHEET AGENDA DATE: February 17, 2004 DEPARTMENT: ACM: Utilities Administration Howard Martin, 349-8232 SUBJECT Consider adoption of an ordinance of the City Council of the City of DeNon, Ttexas providing for the addition of the Collection and Transportation Services Permit (Schedule SWP) to the schedule of rates for solid waste service comained in Ordinance No. 2003-351; providing for re- titling, replacemem and amendmem of §24-69 of the City of DeNon Code of Ordinances; providing for the amendmem of §24-70 of the City of DeNon Code of Ordinances; providing for a repealer; providing for a severability clause; and providing an effective date. BACKGROUND At their meeting of October 21, 2003, the City Council requested the Solid Waste Collection and Transportation Services Permit Rate Ordinance (SWP) be brought back to the City Council during a work session for review and discussion. The SWP rate was presemed and discussed by the City Council during their work session meeting of November 18, 2003. City Council recommendations were incorporated imo the current ordinance. The City of DeNon provides municipal solid waste (MSW) collection, transportation and disposal service to residemial, commercial and industrial customers within the city and in its ETJ as provided under Chapter 24 of the DeNon Code of Ordinances. Those wastes and recyclable materials not serviced by the City will be collected and transported by persons permitted or registered and in compliance with DeMon's Code of Ordinances, Chapter 24, Sections 24-69 and 24-70. SUMMARY The above-referenced ordinances are adopted for the purpose of preserving and protecting the public health, safety and general welfare of the citizens of DeNon. In support of this function, the Solid Waste Department proposes the adoption of the Collection and Transportation Services Permit Rate Ordinance (SWP) to establish fees for the various categories of permits or registrations. The Solid Waste Department wishes to establish new rates that will compensate the City for the permit tee's use of the streets, and program oversight and management. Collection and transportation service providers must obtain permits to collect and transport the following wastes and recyclable materials within the city: · Special Waste · Medical Waste · Hazardous Waste · Restaurant Oil and Grease Waste · Grease Trap Waste · Commercial and Industrial Recyclable Materials · Residential Recyclable Materials · Construction and Demolition (C&D) waste, recyclables, reusables, and discarded C&D materials · Waste and recyclable collection service providers operating in newly annexed areas, or contract service providers for the city The application and permitting requirements, and associated fees included in the proposed Collection and Transportation Services Permit Rate Ordinance (SWP) provide the ability for the City to permit, monitor and recover fees for city services provided in the oversight of this area and use of the City's streets and rights-of-way. The ordinance has an effective date of September 1, 2004. Staff proposes to notify the affected providers of these services several months in advance, and inform them of the rate and effective date (9/1/04). To encourage businesses to expeditiously submit their applications to provide services, staff proposes to reduce the fees for those businesses submitting their applications by August 1, 2004. The applicants would receive thirteen (13) months of service (September 1, 2004 - September 30, 2005) for payment of the annual fees by August 1, 2004. FISCAL SUMMARY The fees charged in the Collection and Transportation Services Permit Rate Ordinance (SWP) provide revenue to fund programs for permitting, monitoring, code enforcement, education, litter abatement, graffiti abatement, environmental crimes, illegal dumping, clean-up projects, street maintenance, as well as city administrative costs. RECOMMENDATION Staff recommends approval of the proposed Collection and Transportation Services Permit Rate Ordinance (SWP). EXHIBITS 1. Collection and Transportation Services Permit Rate Ordinance (SWP) 2. Rate Schedule Respectfully submitted: Howard Martin, ACM Utilities ORDINANCE NO. 2004- AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS PROVIDING FOR THE ADDITION OF THE COLLECTION AND TRANSPORTATION SERVICES PERMIT (SCHEDULE SWP) TO THE SCHEDULE OF RATES FOR SOLID WASTE SERVICE CONTAINED IN ORDINANCE NO. 2003-351; PROVIDING FOR A REPEALER; PROVIDING FOR A SEVERABILITY CLAUSE; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City Council of the City of Denton, Texas, after considering all applicable factors, finds that the following ordinance respecting Chapter 24 of the City of Denton Code of Ordinances is in the best interests of prudent solid waste management, is necessary, and is in the interests of the health, safety, and public welfare of the citizens of the City of Denton, and that the following provisions should be adopted; NOW THEREFORE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION l. That the charges for Solid Waste service, as contained and authorized in Ordinance No. 2003-351, enacted by the City Council on the 21st day of October 2003, are hereby amended to include all rates, charges, and fees that are contained in the new Schedule SWP ("Collection and Transportation Services Permit") which we hereby adopt by this ordinance, effective September 1, 2004. Schedule SWP is attached hereto and is incorporated by reference herewith. ~ That the rates, charges, and fees referenced in SECTION 1 hereinabove, refer to §24-69 and §24-70 of Chapter 24 of the City of Denton Code of Ordinances. SF. CTION 3. That all ordinances or parts of ordinances in force when the provisions of this ordinance became effective which are inconsistent, or in conflict with the terms or provisions contained in this ordinance are hereby repealed to the extent of any such conflict. RECTIONI 4. That if any section, subsection, paragraph, sentence, clause, phrase, or word in this ordinance, or the application thereof to any person or under any circumstances is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this ordinance, and the City Council of the City of Denton, Texas, hereby declares it would have enacted such remaining portions despite any such invalidity. SECTION 5. That this ordinance shall become effective, charged, and applied to all applicable collection and transportation services permits from and after September 1, 2004; and a copy of said provisions, rates, fees, and charges shall be maintained on file in the office of the City Secretary. EXHIBIT 1 PASSED AND APPROVED this the day of ,2004. EULINE BROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY By: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY S:\Our DocumentsXOrdinancesi041C~lection and Transportation Services mermit-SW-2004.doc SCHEDULE SWP COLLECTION AND TRANSPORTATION SERVICES PERMIT (Effective 9/01/04) APPLICATION Any person, emity, or business engaged in the collection and transport of recyclables or waste, including but not limited to municipal solid waste, and those wastes or recyclables the city does not collect and transport, special wastes, and hazardous wastes must possess a current permit issued from the city prior to providing collection and transportation services in the city limits of DeNon. Permits for collection and transportation services include, but are not limited to: · Special Waste · Medical Waste · Hazardous Waste · Restaurant Oil and Grease Waste · Grease Trap Waste · Commercial and Industrial Recyclable Materials · Residential Recyclable Materials · Construction and Demolition (C&D) waste, recyclables, reusables, and discarded C&D materials · Waste and recyclable collection service providers operating in newly annexed areas, or comract service providers for the city The person applying for a permit will make application through the City's Solid Waste Departmem on forms provided for that purpose, and shall pay the required application fees at the time of application. Application fees, vehicle fees, and comainer fees must be paid prior to the issuance of the permit. Fees that are calculated as a percentage of gross revenues will be paid quarterly. All permits are non-transferable and are grained as non-exclusive service permits. Graining permits will be at the discretion of the Director of Solid Waste to meet the needs of the community. The permit applicam must pay all required fees, meet all requiremems contained in the ordinance, and execute a service agreement prior to the issuance of a permit. GRANTING OF PERMIT As a condition of the granting of a permit by the City, permittees agree to execute and comply with all requiremems of a service agreemem, carry specific types and amounts of insurance, submit reports, and timely pay the necessary fees. Following the granting of a permit, permit stickers will be issued by the City and placed on all vehicles operating within EXHIBIT 2 the city limits and on all comainers set within the city limits of Demon. Collection and transportation vehicles operating in the City of Demon, and comainers set in the City of Denton are required to display a current permit sticker. The Director of Solid Waste, or his designee, after reviewing the permit application and conducting any necessary research, may issue the permit, issue the permit with conditions, or deny the issuance of the permit. The Director of Solid Waste shall establish the number of permits to be issued in each materials category. EXCLUSIONS Individuals hauling personal materials, wastes, or recyclables from their primary residence only are exempt from this requiremem. FEES Application fees are payable at the time of application submittal and shall be submitted to the Director of Solid Waste, 1527 South Mayhill Road, Demon, Texas. Application, vehicle, and comainer fees are due and payable prior to the issuance of a permit. Application, vehicle, and comainer fees are non-refundable. Vehicle and comainer fees are non-transferable between vehicles and comainers, and are unit specific. Franchise fees and other fees based on a percemage of gross revenues are due quarterly and require paymem to the Departmem of Solid Waste, City of Demon no later than thirty (30) calendar days following the end of each calendar quarter. Imerest charges, late charges, and penalty charges will accrue for delinquem quarterly paymems. Permits are issued annually and are effective from October 1st or the date of issuance, whichever is later, through September 30th of the following year. This period is the City of Demon's fiscal year. Fees paid are applicable only for the fiscal year for which they are paid, except for the initial year. For those applicants that submit a complete application and fees by August 1, 2004, and for which a permit is granted, their permit term will be from the period of September 1, 2004 through September 30, 2005. Comainer fees apply to each comainer placed by the permittee within the City limits of Denton, except that container fees do not apply to residential refuse carts. Containers are defined as: any refuse comainmem equipmem, which can be lifted and emptied using a special vehicle designed for that use, i.e. which are not emptied manually. Comainer fees are established at $3.00 for each cubic yard of comainer capacity, per comainer, per fiscal year. Comainers will not be placed in a street, alley, or city right-of-way (ROW). All comainers that are placed in a street, alley, or city ROW will be assessed a usage fee of $3.00 per cubic yard of comainer capacity per thirty (30) days. All comainers require a comainer permit fee regardless if the comainer is or is not placed on the ground. Special Waste Collection and Transportation Permit 1. Application Fee: $1,000 annually 2. Vehicle Fee: $1,000 per vehicle annually Bo Medical Waste Collection and Transportation Permit 1. Application Fee: $1,000 annually 2. Vehicle Fee: $1,000 per vehicle annually Co Hazardous Waste Collection and Transportation Permit 1. Application Fee: $1,000 annually 2. Vehicle Fee: $1,000 per vehicle annually Do Restaurant Oil and Grease Waste Collection and Transportation Permit 1. Application Fee: $500 annually 2. Vehicle Fee: $100 per vehicle annually mo Grease Trap Waste Collection and Transportation Permit 1. Application Fee: $500 annually 2. Vehicle Fee: $100 per vehicle annually Fo Commercial Recycling Materials Collection and Transportation Permit 1. Application Fee: $500 annually 2. Vehicle Fee: $1,000 per vehicle annually 3. Container Fee: $3.00 per cubic yard/per container annually Go Residential Recycling Materials Collection and Transportation Permit 1. Application Fee: $500 annually 2. 4% of Gross Revenue from services provided within the city limits Ho Construction and Demolition (C&D) Collection and Transportation Permit a. Large C&D Operators 1. Application Fee: $500 annually 2. Vehicle Fee: $100 per vehicle annually 3. Container Fee: $3.00 per cubic yard/per container annually bo Small C&D Operators This definition is limited to Transporters with no more than three (3) vehicles, including trailers, in which each vehicle does not have a Gross Vehicle Weight Rating (GVWR) of more than 14,000 pounds. Small C&D operators will be charged: 1. Application Fee: $50 annually 2. Vehicle Fee: $50 per vehicle annually 3. Container Fee: $3.00 per cubic yard/per container annually Municipal Solid Waste (MSW) Collection and Transportation Permit Available only to companies that provide solid waste services in newly annexed areas for specific periods of time, or are contract service providers for the city. 1. Application Fee: $500 annually 2. 6% of Gross Revenue from services provided within the city limits RECYCLABLES Recyclables comaining five (5%) percem or more comamination of waste or non- recyclable materials will be considered refuse, and its collection may not be provided by service providers permitted under this ordinance. This refuse will be collected by the City of DeNon. The Director of Solid Waste, or his designee, will make the final determination on whether stored recyclables contain excessive contamination, which may reclassify the materials as a waste, and are not collectible by service providers operating with permits covered under this ordinance. TERM AND RENEWAL All collection and transportation permits shall be valid for the city's fiscal year for not more than one (1) fiscal year from the date of issuance, except for the initial year. Permittees must make a written application for renewal at least sixty (60) days prior to the permit expiration to prevent a possible lapse in permitted services. The renewal application will update the information provided in the initial application. Applications for renewal shall be processed in the same manner as an initial application. All renewal fees are required to be paid prior to the Department of Solid Waste reissuing the permit. REVOCATION OR NON-RENEWAL OF PERMITS If the Director of Solid Waste, or his designee, finds any requiremem of the permit to have not been met, he may at any time assess a penalty, may assess a fine, may revoke the applicable permit, may not renew the applicable permit, and/or may require the person or emity committing any violation or breach of any requiremem of this ordinance to cease operations within the city limits of Denton. S:\Our Documents\Ordinances\04\Schedule SWP-Solid Waste-Rate.doc AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: ACM: February 17, 2004 Fiscal Operations Kathy DuBose, Fiscal and Municipal Services SUBJECT Consider approval of a resolution of the City of Demon, Texas, authorizing the submission of a grant application to the Criminal Justice Division of the Office of the Governor, State of Texas, requesting funding for the Denton Teen Court Program for Juveniles; and providing an effective date. BACKGROUND The City of Denton had been utilizing a Title V grant since 1995 to fund the Denton Teen Court Program. The gram expired on April 1, 2000. In March 2003, the City applied for and has been awarded the grant to partially fund the Teen Court Program. In order to continue this grant for the upcoming fiscal year, October 2004 through September 2005, a resolution from the governing body authorizing the submission of the grant application is required. The Denton Teen Court is overseen by a group composed of persons from governmental and civic imerest organizations covering the full spectrum of the Community. The City of Denton, Denton County, Denton Independent School District, and Texas Woman's University have all actively participated to create and maintain this Program. RECOMMENDATION Staff recommends approving the resolution to continue the Teen Court Program with financial assistance through grant funds. PRIOR ACTION/REVIEW The Juvenile Diversionary Services, Inc. (Teen Court Board of Directors) reviewed and recommended the gram application be forwarded to Council for approval. FISCAL INFORMATION Revenues received by this gram total $15,723 and will provide supplememal funding for the operation of the Teen Court Program. The Program expenditures are included in the Municipal Court budget. Agenda Item February 17, 2004 Page 2 EXHIBITS Teen Court Update Juvenile Diversionary Services of Demon, Inc., 2003-04 Board of Directors Resolution Respectfully submitted: Diana G. Ortiz Director of Fiscal Operations Prepared by: Tom Josey Municipal Court Administrator Teen Court Update The DeNon Teen Court was established as a result of a study done by a community planning task force appoimed by the City Council. This community group consisted of persons from governmemal and community interest organizations. The current administrative oversight group for the Teen Court and two other juvenile programs is Juvenile Diversionary Services, Inc. of DeNon; a non-profit organization dedicated to reducing juvenile crime. They are responsible for direct oversight and policy making. The DeNon Teen Court provides an alternative to the juvenile justice system as a diversionary program for young offenders 10 to 18 years of age charged with Class C Misdemeanor offenses. The early intervention aspect of the Teen Court reduces the likelihood of recidivism or escalation to more serious crimes. The primary goal of teen court focuses on requiring offenders to be accoumable for their actions and accepting their guilt. The Teen Court process allows teens to be judged by their peers which includes determination of the consequences for their behavior. These consequences may be semences off working a number of community service hours, visits to a local youth correctional facility and serving terms of duty as a Teen Court participant. The Teen Court held its first session in September of 1995. Since its first year of operation, 2,069 defendams performed 94,465 hours of community service worth $1,520,605 in free labor to non-profit organizations. Additionally, Teen Court volunteers have donated 17,610 hours of time to the program. The Teen Court program had been funded by a five year Federal grant that expired in 2000. Since the end of the first grant, Denton County and the City of Denton have shared the cost of operation. The continued grant will supply approximately $16,000 toward its operational costs. The Teen Court accepts cases from all areas in DeNon County. The majority of cases are referred from the DeNon Municipal Court. The goal for the year is 600 cases. The program is made possible by donations of personnel time and money from the City of Denton, Denton County Precinct 5 Justice of the Peace, and the Denton Independent School District and the personal time of many volunteers. Teen Court Judges Hon. Barbara Gailey, Presiding Judge Hon. Joe Bridges, Presiding Judge Associate Judges: Elizabeth Parmer, Hon. Robin Ramsay, Steve Mossman, Hon. Mike Bateman and Jason Pierce Sites receiving this labor include Early Childhood Departmem at Texas Woman's University Keep Denton Beautiful Denton Central and South Libraries Denia Recreation Center Boys and Girls Club After School Program North Lakes Recreation Center Martin Luther King Recreation Center Denton Civic and Senior Centers Chisolm Trail RSVP Denton Fire and Police Departments Denton Independent School District DeNon Community Theater Denton County Main Street Association Denton Soccer Association JUVENILE DIVERSIONARY SERVICES OF DENTON, INC. 2003-2004 BOARD OF DIRECTORS Capt Greg Leveling - President Tel: (940) 898-5690 Email: Gre~or~.Levelin~co.denton.tx.us 127 N. Woodrow Lane Denton, Texas 76205 Judge Barbara Gailey -Past President Tel: (940) 390-4848 Email: BarbaraGailey~BarbaraGaile¥.com 3712 N. Elm Denton, Texas 76201 Claudia Brown - 2 nd Vice Pres. Tel: (940) 565-0508 Email: wiferlf~hotmail.com 315 Ridgecrest Denton, Texas 76205 Judge Robin Ramsay - Treasure Tel: (940) 349-8139 Email: robin ramsay~cityofdemon.com 601 E. Hickory Suite D Denton, Texas 76205 Constable Mike Ballard Tel: (940) 458-7663 Email: Mike.Ballard~co.denton.tx.us 209 N. 5~h Street Sanger, Texas 76266 Dr. Todd Porter Tel: (940) 387-0405 Email: chirocpa~msn.com 2317 W. University Dr. Suite B5 Denton, Texas 76201 Linda Salinas Tel: (940) 387-1591 Email: onemercy(~_~msn.com 213 Tanglewood Denton, Texas 76207 Sherry Latham - 1st Vice Pres. Tel: (940) 565-3015 Email: lathams~pdl.admin.um.edu P.O. Box 13467 DeNon, Texas 76203-8788 Donna Rowbotham - 3rd Vice Pres. Tel: (940) 349-8142 Email: dlrowbot~ci _tyofdemon.com 601 E. Hickory Suite D Denton, Texas 76205 Carianne Lovelace - Secretary Tel: (940) 458-5674 Email: carilove2~aol.com P.O. Box 39 Sanger, Texas 76266 Elizabeth Parmer Tel: (940) 565-8556 Email: Lparmer(~_ ~co. dento.tx.us 1450 E. McKinney 3rd Floor Denton, Texas 76205 Matt Marick Tel: (940) 898-5840 Email: Matt. Marick~co.demon.tx.us 210 S. Woodrow Lane Denton, Texas 76205 Monica Broadhurst Tel: (940) 566-8028 Email: monicabroadhurst~hotmail.com 2600 Westheimer Denton, Texas 76210 Shelly Pierce Tel: (940) 566-1020 ext. 100 Email: Spierce~chartercom.com 519 Amy Jo Circle Aubrey, Texas 76227 Coach Johnny Jones Tel: (940) 565-3654 Email: jones~unt.edu P.O. Box 311397 Denton, Texas 76203 Irene Parker Tel: (940) 458-7438 Email: iwparker(~nortexinfo.net 1351 Marrow Road Valley View, Texas 76272 Virginia Gallian Tel: 387-5767 Email: vgallian~dentonisd.org 1119 Ridgecrest Circle Denton, Texas 76205 Savanna Howder -Under 21 Rep. Tel: (972) 294-2354 Email: 941 Amethyst Oak Point, Texas 75068 Jimmie Prince (Currently Deployed USAR) Tel: (817) 491-9387 Email: Jimmie. Prince~t¥c.state.tx.us 3505 Haynes Road Roanoke, Texas 76262 Lisa Cooke Tel: (817) 491-9387 Email: Lisa. C ooke(~_~tyc.state.tx.us 3505 Haynes Road Roanoke, Texas 76262 Joe Erwin Tel: (940)349-8181 Email: JLEwin~cit¥ofdenton.com 601 E. Hickory Denton, Texas 76205 RESOLUTION NO. A RESOLUTION OF THE CITY OF DENTON, TEXAS, AUTHORIZING THE SUBMISSION OF A GRANT APPLICATION TO THE CRIMINAL JUSTICE DIVISION OF THE OFFICE OF THE GOVERNOR, STATE OF TEXAS, REQUESTING FUNDING FOR THE DENTON TEEN COURT PROGRAM FOR JUVENILES; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the Council of the City of Denton finds it in the best interest of the citizens of Denton that the Denton Teen Court be operated for the 2005 year; and WHEREAS, the Council of the City of Denton has authorized the City Manager to apply for, accept, reject, alter, or terminate the grant; and WHEREAS, the Council of the City of Denton has agreed to provide the minimum matching percentage for the said project as required by the Criminal Justice Division grant application; and WHEREAS, the Council of the City of Denton has agreed that in the event of loss or misuse of the Criminal Justice Division funds, the City Council of the City of Denton assures that the funds will be returned to the Criminal Justice Division in full; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY RESOLVES: SECTION 1. That the City of Denton, Texas, certifies that it is eligible to receive a funding allocation from the Criminal Justice Division of the Office of the Governor, State of Texas, for the Denton Teen Court Program. SECTION 2. That the City Council authorizes and directs the City Manager, or his designee, to represent and act on behalf of the City of Denton in applying for and working with the Criminal Justice Division of the Office of the Governor, State of Texas, in regard to such grant application. SECTION 3. That in the event of loss or misuse of any Criminal Justice Division funds awarded by this grant, the City of Denton assures that the lost or misused funds will be returned in full. SECTION 4. That the City Manager, or his designee, shall forward a copy of this resolution to the Criminal Justice Division of the Office of the Governor, State of Texas. SECTION 5. That this resolution shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the __day of .,2004 EULINE BROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY BY: Page 2 AGENDA INFORMATION SHEET AGENDA DATE: February 17, 2004 DEPARTMENT: CM/DCM/ACM: Fire Department Jon Fortune, Assistant City Manager SUBJECT Consider adoption of an ordinance of the City of DeNon, Texas approving and authorizing the Mayor to execute an interlocal ambulance agreement between the City of Denton and Denton County for ambulance services; and declaring an effective date. BACKGROUND The interlocal agreement for ambulance service between the City of Denton and Denton County began in 1980 and provides for emergency medical service to DeNon County within the designated area (see map). Each year a new agreemem and ordinance is presemed to the DeNon City Council for the next fiscal year approving the fee the County will pay to the City of DeNon for service using a County-wide funding formula based on population served, number of ambulance calls in the County area and the rural square miles in the County. The population and mileage figures used are based on numbers obtained from the North Cemral Texas Council of Governments. The total estimated fee of $249,671.01 is based on the funding formula ratios as follows: A fixed readiness sum for population (109,162) based on .5110 per capita for an estimated maximum amoum of $55,778.79. The sum of $351.12 per ambulance run for an estimated maximum amoum of $96,558.99. This sum is based upon the number of runs made in County areas by in fiscal year 2003 (275). o A fixed sum based on $453.37 per rural square mile (214.83) in the agreed operating territory for an estimated maximum amount of $97,333.22. Attached is the 2004 Denton County Ambulance Funding final allocation spreadsheet for the entire County. FISCAL INFORMATION The estimated ambulance fee from the County is $249,671.01, which is less than the last contract amoum of $293,107 due to a reduction in the covered area and the loss of square miles in the County funding formula. The portion of the County comained in the City of Krum and the surrounding Krum EMS District has been removed from the City of Demon's designated service area. That emire area will now receive ambulance service from the newly formed City of Krum Fire Department ambulance program. EXHIBITS County Ambulance Funding Spreadsheet Ordinance Interlocal Cooperation Agreement District Map Respectfully submitted: Ross Chadwick Fire Chief S:\Our Documcms\Ordinanccs\03~ambulancc agmcmcm coun/y.doc ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON, TEXAS APPROVING AND AUTHORIZING THE MAYOR TO EXECUTE AN INTERLOCAL AMBULANCE AGREEMENT BETWEEN THE CITY OF DENTON AND DENTON COUNTY FOR AMBULANCE SERVICES; AND DECLARING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. That the City Council of the City of Demon hereby approves an Agreemem between the City of Demon and Demon County for ambulance services, a copy of which is attached hereto and incorporated by reference herein. The Mayor, or in her absence, the Mayor Pro Tem, is hereby authorized to execute this Agreemem on behalf of the City. SECTION 2. That this ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of ,2004. EULINE BROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY BY: INTERLOCAL COOPERATION AGREEMENT AMBULANCE SERVICE THIS AGREEMENT is made and entered into this ~ day of , 2004, by and between Denton County, a political subdivision of the State of Texas, hereinafter referred to as "COUNTY" and the City of Denton, a mtmicipality, located in Denton County, Texas, hereinafter referred to as "AGENCY". WHEREAS, COUNTY is a duly organized political subdivision of the State of Texas engaged in the administration of county government and related services for the benefit of the citizens of Denton County; and WHEREAS, AGENCY is a municipality, duly organized and operating under the laws of the State of Texas and engaged in the provision of ambulance service and related services for the benefit of the citizens of the district; and WHEREAS, this Contract involves governmental functions that each party individually can perform; and WHEREAS, the amount paid by County for this service is to be made from current revenues available to it and that amount fairly compensates Agenc. y for the services and functions performed ,by, it; ,,and WHEREAS, AGENCY is an owner and operator of certain ambulance vehicles and other equipment designed for the transportation of persons who are sick, infirmed, or injured and has in its employ trained personnel whose duties are related to the use of such vehicles and equipment; and WHEREAS, COUNTY desires to obtain emergency ambulance and related services for the benefit of residents of COUNTY living in unincorporated areas of COUNTY which AGENCY is capable of providing; and FIRE CONTRACT 2003-04 WHEREAS, the provision of emergency ambulance and related services is a governmental function that serves the public health and welfare and is of mutual concern to both COUNTY and AGENCY; and WHEREAS, COUNTY and AGENCY mutually desire to be subject to and contract pursuant to the provisions of Government Code, Chapter 791, the InterlocaI Cooperation Act, and Section 774.003, Health and Safety Code, NOW THEREFORE, COUNTY and AGENCY, in consideration of the mutual promises, covenants, and agreements stated herein, agree as follows: I. TERM The term of this agreement shall be for the period of October 1, 2003 to and through September 30, 2004. II. DEFINITIONS As used herein, the words and phrases hereinafter set forth shall have the meanings as follows: A. "Emergency" shall mean any circumstance that calls for immediate action and in which the element of time in transporting the sick, wounded or injured for medical treatment is essential to the health or life of a person or persons. Whether an emergency, in fact, exists is solely up to the discretion of the AGENCY. For dispatch purposes only, "emergency" shall include, but not be limited to: 1. The representation by the individual requesting ambulance service that an immediate need exists for the transportation of a person from any location within the agreed operating area of AGENCY to a place where emergency medical treatment may be obtained; or 2. The representation by the individual requesting ambulance service that an immediate need exists for the transportation of a person from any location within the agreed operating area of AGENCY to the closest medical facility; FIRE CONTRACT 20034)4 2 B. "Rural area" means any area within the boundaries of COUNTY but outside the corporate limits of all incorporated cities, towns and villages within COUNTY. C. "Urban area" means any area within the corporate limits of an incorporated municil~alitv, town or village within COUNTY. D. "Emergency ambulance call" means a response to a request for ambulance service by the personnel of AGENCY in a situation involving an emergency, as defined above, by an ambulance vehicle. A single response to a call may involve the transportation of more than one person at a time but shall be considered as only one call. III. SERVICES The services to be rendered under this Agreement are the ambulance services normally rendered by AGENCY to citizens of the district in circumstances of emergency but which services wilt now be extended to all citizens of COUNTY residing in the unincorporated areas of COUNTY within the operating territory or jurisdiction of AGENCY as agreed to by AGENCY and COUNTY in this Agreement and as set forth in Exhibit A, attached hereto and incorporated by reference. It is recognized that the officers and employees of AGENCY have the duty and responsibility of rendering ambulance services to citizens of AGENCY and COUNTY. In the performance of these duties and responsibilities, it shall be within the sole responsibility and discretion of the officers and employees of AGENCY to determine priorities in the dispatching and use of such equipment and personnel and the judgment of the officer or employee shall be final. IV. PERFORMANCE OF SERVICES AGENCY shall devote sufficient time and attention to insure the performance of all duties and obligations of AGENCY under this Agreement and shall provide immediate and FIRE CONTRACT 20034)4 3 direct supervision of the AGENCY employees, agents, contractors, sub-contractors and/or laborers engaged in the performance of this Agreement for the mutual benefit of AGENCY and COUNTY. LIAISON OFFICER COUNTY shall designate the County Judge to act on behalf of COUNTY and to serve as "Liaison Officer" between COUNTY and AGENCY. The County Judge or her designated substitute shall devote sufficient time and attention to insure the performance of all duties and obligations of COUNTY under this Agreement and shall provide for the immediate and direct supervision of employees, agents, contractors, sub-contractors and/or laborers of COUNTY engaged in the performance of this Agreement. VI. COMPENSATION COUNTY agrees to pay to AGENCY an estimated fee of $249,671.01 based on a funding formula as follows: 1. A fixed readiness sum based on population based on .5110 per capita of $55,778.79. 2. The sum of $351.12 per ambulance nm for an estimated maximum amount of $96,558.99. This sum is based upon the number of runs made by AGENCY in fiscal year 2003. 3. A fixed sum based on 214.83 rural miles in the agreed operating territory of $97,333.22. The first and third sums are based upon population and mileage figures obtained from the North Central Texas Council of Governments. The second sum is based upon the definition of an ambulance call for purposes of thi~ Agreement. Payment shall not be allowed for any instance in which a patient is not transported. Consistent with the reporting procedures described below, FIRE CONTRACT 2003-04 4 AGENCY shall receive payment for transporting the patient regardless of the service delivery area in which the call originated. Requests for payment shall be submitted on the standardized ambulance transportation reporting form approved and provided by COUNTY. It shall be the responsibility of AGENCY to fully complete the forms and to provide complete and accurate patient information. Requests for payment shall be submitted within five (5) days of the performance of service by AGENCY. Requests not timely submitted shall not be considered for payment. Requests for payment may be submitted by personal delivery, U.S. mail, facsimile, or computer telephone link to the office of the Denton County Fire Marshal. The date of submission shall be the date the fully documented request is received in said office. VII. TERMINATION This Agreement may be terminated at any time by either AGENCY or COUNTY giving sixty (60) days advance notice in writing to the other party. In the event of termination by either party, AGENCY shall be compensated pro rata for all services performed to termination date, together with reimbursable expenses authorized by this Agreement then due and owed. Should AGENCY be overcompensated on a pro rata basis for all services performed to the termination date and/or be overcompensated for reimbursable expenses, COUNTY shall be reimbursed pro rata for all such overcompensation. Acceptance of such reimbursement shall not constitute a waiver of any claim that may otherwise arise out of this Agreement. VIII. FINANCIAL RECORDS AGENCY agrees to make its financial records, relevant to this contract, available for audit and/or review by COUNTY upon request by COUNTY. IX. RESPONSIBILITY OF COUNTY FIRE CONTRACT 2003-04 5 COUNTY shall be responsible for the acts and negligence of all officers, employees and agents of COUNTY engaged in the performance of this Agreement. X. RESPONSIBILITY OF AGENCY AGENCY shall be responsible for the acts and negligence of all officers, employees and agents of AGENCY engaged in the performance of this Agreement. XI. DEFAULT In the event of any default in any of the covenants herein contained, this Agreement may be terminated at the discretion of the non-defaulting party if such default continues for a period often (10) days after notice in writing to the defaulting party of such default and the intention to declare this Agreement terminated. Unless the default is cured, this Agreement shall terminate. XII. GOVERNMENTAL IMMUNITY The fact that COUNTY and AGENCY accept certain responsibilities relating to the rendering of ambulance services under this Agreement as a part of their responsibility for providing protection for the public health makes it imperative that the performance of these vital services be recognized as a governmental function and that the doctrine of governmental immunity shall be, and is hereby, invoked to the extent possible under the law. Neither AGENCY nor COUNTY waives nor shall be deemed hereby to waive any immunity or defense that would otherwise be available to it against claims arising from the exercise of governmental powers and functions. XIV. ENTIRE AGREEMENT This Agreement represents the entire and integrated agreement between AGENCY and COUNTY and written or oral. parties. supersedes all prior negotiations, representations and/or agreements, either This agreement may be amended only by written instrument signed by both FIRE CONTRACT 2003-04 6 XV. LAW OF CONTRACT This Agreement and any of its terms or provisions, as well as the rights and duties of the parties hereto, shall be governed by the laws of the State of Texas. XVI. SEVERABILITY In the event that any portion of this Agreement shall be found to be contrary to law, it is the intent AGENCY and COUNTY that the remaining portions shall remain valid and in full force and effect to the extent possible. XVII. AUTHORITY The undersigned officer and/or agents of are the properly authorized officials and have the necessary authority to execute this Agreement on behalf of AGENCY and COUNTY. By the signature of its duly authorized offici.a! .hereto, the COUNTY assures the AGENCY that the County Auditor has certified that sufficient funds are available within the current County budget to make all payments and meet all the financial obligations of this Contract and these funds are available to pay the obligation when due in accordance with Section 1 t 1.093(c) of the Local Government Code V.T.C.A. EXECUTED in duplicate originals, this the ~ day of 2004. COUNTY: Denton County, Texas 110 West Hickory Denton, Texas 76201 By: Mary Horn Denton County Judge AGENCY: City of Denton 215 E. McKirmey Denton, Texas 76201 By:. Euline Brock Mayor FIRE CONTRACT 20034}4 7 Acting on behalf of and by the authority of Denton County Commissioners Court of Denton County, Texas. ATTEST: BY: Denton County Clerk Cynthia Mitchell Acting on behalf of and by the authority of the City of Denton ATTEST: BY: Jennifer Walters City Secretary APPROVED AS TO FORM: Assistant District Attorney APPROVED AS TO CONTENT: BY: APPROVED AS TO FORM: Herbert L. Prouty City Attorney Denton County Fire Marshal FIRE CONTRACT 2003-04 8 AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: CM/DCM/ACM: February 17, 2004 Fire Department Jon Fortune, Assistant City Manager SUBJECT Consider adoption of an ordinance of the City of DeNon, Texas approving and authorizing the Mayor to execute an interlocal fire protection agreement between the City of Denton and Denton County for fire protection services; and declaring an effective date. BACKGROUND The interlocal agreement for fire service between the City of Denton and Denton County provides fire protection service by the Denton Fire Department to the County areas previously served by the Mayhill-Cooper Creek Volunteer Fire Department and a small portion of the Lake Cities Fire District now adjacem to newly annexed City property in the southwest portion of Teasely (FM 2181) as shown on the attached map. In 2003, Denton County requested that the City of Denton provide fire protection to the designated area due to Mayhill-Cooper Creek's cominuing lack of sufficiem resources to provide a proper response to fire calls. The City Council approved the 2003 comract. The County also requested in 2004 that the City respond to a small area next to the new DISD high school on FM 2181 and Old Alton Road since the City of DeMon's response time to the area is much quicker than Lake Cities Fire Department. This contract will be for a period of one year. FISCAL INFORMATION DeNon County will pay the City of DeNon $10,000 upon execution of the proposed agreemem and reimburse the City for each fire call at the rate of $362.88 per fire call. The annual estimate for the contract is $48,988.80. EXHIBITS Ordinance Agreement District Map Respectfully submitted: Ross Chadwick, Fire Chief S:\Our Documcms\Ordinancos\03\firo protoction agroomcm county.doc ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON, TEXAS APPROVING AND AUTHORIZING THE MAYOR TO EXECUTE AN INTERLOCAL FIRE PROTECTION AGREEMENT BETWEEN THE CITY OF DENTON AND DENTON COUNTY FOR FIRE PROTECTION SERVICES; AND DECLARING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. That the City Council of the City of Demon hereby approves an Agreemem between the City of Denton and Denton County for fire protection services, a copy of which is attached hereto and incorporated by reference herein. The Mayor, or in her absence, the Mayor Pro Tem, is hereby authorized to execute this Agreemem on behalf of the City. SECTION 2. That this ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of ,2004. EULINE BROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY BY: INTERLOCAL COOPERATION AGREEMENT FIRE PROTECTION SERVICES THIS AGREEMENT is made and entered into this day of, ., 2004, by and between Denton County, a political subdivision of the State of Texas, hereinafter referred to as "COUNTY" and the City of Denton, a municipal corporation, located in Denton County, Texas, hereinafter referred to as "AGENCY". WHEREAS, COUNTY is a duly organized political subdivision of the State of Texas engaged in the administration of county government and related services for the benefit of the citizens of Denton County; and WHEREAS, AGENCY is a municipal corporation, duly organized and operating under the laws of the State of Texas and is engaged in the provision of fire protection service and related services for the benefit of the citizens of the district; and WHEREAS, this Contract involves governmental functions that each party individually can perform; and WHEREAS, the amount paid by County for this service is to be made from current revenues available to it and that amount fairly compensates Agency for the services and functions performed by it; and WHEREAS, AGENCY is the owner and operator of certain fire protection vehicles and other equipment designed for the extinguishing of fire and prevention of damage to property and injury to persons from fire and has in its employ trained personnel whose duties are related to the use of such vehicles and equipment; and WHEREAS, COUNTY and AGENCY mutually desire to be subject to and contract pursuant to the provisions of Government Code, Chapter 791, the Interlocal Cooperation Act, and Sections 352.001 and 352.004, Local Government Code, NOW, THEREFORE, COUNTY and AGENCY, for the mutual promises, covenants, agreements and consideration stated herein, agree as follows: I. TERM The term of this agreement shall be for the period of October 1, 2003 to and through September 30, 2004. FIRE CONTRACT 2003-04 1 II. SERVICES The services to be rendered in accordance with this Agreement by AGENCY are the fire protection services normally rendered by AGENCY to citizens of the district but which services will now be extended to all citizens of COUNTY residing in the unincorporated areas of COUNTY within the operating territory or jurisdiction of AGENCY as agreed to by AGENCY and COUNTY in this Agreement and as set forth in Exhibit A. These services are rendered in consideration of the basic funding and the separate per cai1 fee set forth in this Agreement; for the common good and benefit; and to serve the public convenience and necessity of the citizens of COUNTY who are not otherwise protected with respect to fire prevention, extinguishment, safety, and rescue services. The services to be rendered are as follows: A. AGENCY shall make available and provide emergency fire prevention, extinguishment, safety and rescue services within the agreed or specified territory or jurisdiction of the AGENCY; B. AGENCY shall respond to requests for fire protection services made within COUNTY as set out in Exhibit "A" attached hereto and incorporated by reference. C. COUNTY agrees that, in the event a fire in the AGENCY's unincorporated designated area which AGENCY considers to be of incendiary nature and upon request by AGENCY, the County Fire Marshal will dispatch investigation personnel to the fire scene within a response time sufficient to legally maintain and protect all evidence of said fire and will conduct all appropriate investigation and assist in the prosecution of any case of arson. AGENCY shall not be responsible for investigations of suspected incendiary fires in the unincorporated areas, but shall cooperate with the County Fire Marshal in immediately relating all pertinent information possible to the investigator(s). D. COUNTY agrees that the County Fire Marshal may assist in the conduct of appropriate investigations of a fire which AGENCY considers to be of incendiary nature in the AGENCY's incorporated designated area upon request by AGENCY. E. AGENCY shall submit monthly statements on the Texas Fire Incident Reporting System's standardized forms to the Denton County Fire Marshal, 110 West Hickory, Denton, Texas 76201. This form will serve as the billing statement to COUNTY for reimbursement of FIRE CONTRACT 2003-04 2 calls made in the unincorporated designated area. The Denton County Fire Marshal shall provide the forms upon request from AGENCY. F. AGENCY, in the performance of its duties and responsibilities under this Agreement, shall have the responsibility, within the sole discretion of the officers and employees of AGENCY except as otherwise determined by the Denton County Fire Marshal, to determine priorities in the dispatching and use of AGENCY equipment and personnel, and the judgment of any such officer or employee as to any such matter shall be the final determination. III. LIASON OFFICER COUNTY shall designate the County Judge to act on behalf of COUNTY and to serve as "Liaison Officer" between COUNTY and AGENCY. The County Judge or her designated substitute shall devote sufficient time and attention to this Agreement to insure the performance of all duties and obligations of COUNTY and provide supervision of COUNTY's employees, agents, contractors, sub-contractors and/or laborers engaged in the performance of this Agreement for the mutual benefit of COUNTY and AGENCY. IV. PERFORMANCE OF SERVICE AGENCY shall devote sufficient time and attention to insure the performance of all duties and obligations of AGENCY under this Agreement and shall provide immediate and direct supervision of the AGENCY employees, agents, contractors, sub-contractors and/or laborers engaged in the performance of this Agreement for the mutual benefit of AGENCY and COUNTY. V. COMPENSATION COUNTY agrees to pay to AGENCY for the full performance of services as provided in this Agreement the sum of TEN THOUSAND AND NO/100THS DOLLARS ($10,000.00), payable upon execution of this agreement, and the further sum of THREE HUNDRED SIXTY- TWO AND 88/100TH DOLLARS ($362.88) per fire call in the designated unincorporated areas of COUNTY from October 1, 2003 to September 30, 2004. The total of all payments by COUNTY to AGENCY pursuant to this Agreement is estimated to be FORTY EIGHT THOUSAND NINE HUNDRED EIGHTY-EIGHT AND 80/100THS DOLLARS ($48,988.80). FIRE CONTRACT 2003-04 3 COUNTY will make no payment to AGENCY for service provided outside the agreed service district whether by mutual aid agreement or otherwise. AGENCY understands and agrees that payment by the COUNTY to AGENCY shall be made in accordance with the normal and customary processes and business procedures of COUNTY and in conformance with applicable state law. VI. RADIOS COUNTY has provided AGENCY with a STX 800 Mhz radio for the use of AGENCY in carrying out the terms of this contract. The radios will remain the property of COUNTY and will be returned on termination of this agreement. COUNTY reserves the right to reclaim the property at any time for any reason. It is agreed by COUNTY and AGENCY that the radios were provided for in previous contracts between COUNTY and AGENCY. No agreement has been made for any additional radios. VII FINANCIAL RECORDS AGENCY agrees to make available its financial records, relevant to this contract, for audit and/or review as may requested or required by COUNTY. VIII RESPONSIBILITY OF COUNTY COUNTY shall be responsible for the acts, negligence, and/or omissions of all officers, employees, and agents of COUNTY while engaged in the performance of this Agreement.. IX. RESPONSIBILITY OF AGENCY AGENCY shall be responsible for the acts, negligence, and/or omissions of all officers, employees, and agents of AGENCY while engaging in the performance of this Agreement. X. APPLICABLE LAW COUNTY and AGENCY understand and agree that liability under this contract is governed by V.T.C.A. Government Code Chapter 791 and V.T.C.A. Local Government Code Section 352.001 and 352.004. This agreement is made in contemplation of the applicability of FIRE CONTRACT 2003-04 4 these laws to the agreement. Insofar as legally possible COUNTY and AGENCY agree to be bound by the above mentioned statutes as they exist as of the date of this agreement. XI. DEFAULT In the event of any default in any of the covenants herein contained, this agreement may be forfeited and terminated at either party's discretion if such default continues for a period of ten (10) days after notice to the other party in writing of such default and intention to declare this agreement terminated. Unless the default is cured as aforesaid, this agreement shall terminate as if that were the day originally fixed herein for the expiration of the agreement. XII TERMINATION This agreement may be terminated any time, by either party giving sixty (60) days advance written notice to the other party. In the event of such termination by either party, AGENCY shall be compensated pro rata for all services performed to termination date, together with reimbursable expenses then due and as authorized by this agreement. In the event of such termination, should AGENCY be overcompensated on a pro rata basis for all services performed to termination date, and/or be overcompensated reimbursable expenses as authorized by this Agreement, COUNTY shall be reimbursed pro rata for all such overcompensation. Acceptance of such reimbursement shall not constitute a waiver of any claim that may otherwise arise out of this agreement. XIII. GOVERNMENTAL IMMUNITY The fact that COUNTY and AGENCY accept certain responsibilities relating to the rendition of fire protection services under this agreement as a part of their responsibility for providing protection for the public health makes it imperative that the performance of these vital services be recognized as a governmental function and that the doctrine of governmental immunity shall be and it is hereby invoked to the extent possible under the law. Neither AGENCY nor COUNTY waives nor shall be deemed hereby to waive, any immunity or defense that would otherwise be available to it against claims arising from the exercise of government powers and functions. XIV. FIRE CONTRACT 2003-04 ENTIRE AGREEMENT This agreement represents the entire and integrated agreement between AGENCY and COUNTY and supersedes all prior negotiations, representations and/or agreements, either written or oral. This agreement may be amended only by written instrument signed by both AGENCY and COUNTY. XV. LAW OF CONTRACT This agreement and any of its terms and provision, as well as the rights and duties of the parties hereto, shall he governed by the laws of the State of Texas. XVI. SEVERABILITY In the event that any portion of this agreement shall be found to be contrary to law, it is the intent of the parties hereto that the remaining portions shall remain valid and in full force and effect to the extent possible. XVII. AUTHORITY The undersigned officer and/or agents of the parties hereto are the property authorized officials and have the necessary authority to execute this agreement on behalf of the parties hereto, and each party hereby certifies to the other that any necessary resolutions extending said authority have been duly passed and are now in full force and effect. By the signature of its duly authorized official hereto, the COUNTY assures the AGENCY that the County Auditor has certified that sufficient funds are available within the current County budget to make all payments and meet all the financial obligations of this Contract and these funds are available to pay the obligation when due in accordance with Section 111.093(c) of the Local Government Code V.T.C.A. XVIII. SERVICE AREA Acceptance of this contract constitutes approval of the service area set out in attached Exhibit "A". EXECUTED in duplicate originals, this the ~ day of 2004. FIRE CONTRACT 2003-04 6 COUNTY Denton County, Texas 110 West Hickory Denton, Texas 76201 AGENCY City of Denton 215 E. McKinney Denton, Texas 76201 By Mary Horn Denton County Judge By Euline Brock Mayor Acting on behalf of and by the authority of Denton County Commissioners Court of Denton County, Texas. ATTEST: BY: Denton County Clerk Cynthia Mitchell APPROVED AS TO FORM: Assistant District Attorney APPROVED AS TO CONTENT: Acting on behalf of and by the authority of the City of Denton ATTEST: BY: Jennifer Walters City Secretary APPROVED AS TO FORM: Herbert L. Prouty City Attorney Denton County Fire Marshal FIRE CONTRACT 2003-04 7 AGENDA DATE: DEPARTMENT: CM/DCM/ACM: AGENDA INFORMATION SHEET February 17, 2003 Engineering Jon Fortune, Assistant City Manager SUBJECT Consider approval of an exaction variance of Section 35.20.2(L.2.) of the Code of Ordinances concerning perimeter paving. The 0.197-acre parcel is located on the southwesterly comer of Margie Street and McCormick Street. The property is located in a Downtown Residential 2 (DR-2) zoning district. A single-family residence exists and multifamily is proposed. The Planning and Zoning Commission recommends approval of the partial variance (7-0) (V03-0021) BACKGROUND Mr. Jerald Yensan RPLS (representing Mr. Norberto Ruiz, the developer/owner of this property- the Ruiz Addition) has applied for a partial exaction variance of Section 35.20.2(L.2.) (concerning perimeter paving) of the Code of Ordinances regarding relief from costs associated with pavement improvements to McCormick Street. The subject section of the ordinance requires construction improvements along the frontage of the development with City standard depth pavement with curb and gutter. In this area, McCormick Street is currently a paved asphalt 2-lane roadway with occasional curb and gutter. Where there is no curb and gutter, there are also no drainage ditches. There is no curb and gutter along this property's frontage. In mid November 2003, as a result of the City's ongoing sanitary sewer rehabilitation program, the entire width of McCormick Street from Margie Street to Underwood Street was milled (the existing asphalt was removed) and a 3-inch depth new asphalt was relayed (in most instances where utilities are replaced, only the utility trench is patched). The City considers McCormick Street as a residential street. The applicant based the reason for the partial variance request on the full cost for the subject improvements in comparison to the size and type of development. Mr. Yensan has represented other applicants in the past that had residential lots assessed, such that a partial variance was supported by staff and granted by the Planning and Zoning Commission. Mr. Yensan believes that the same criteria provided for the other residential lot's partial variances should apply to this property. A copy of the applicant's letter is attached. It should be noted that the property's owner is agreeing to be responsible for the associated installation of sidewalk, for both Margie Street and McCormick Street, along this property's frontage. City's staff does not agree with the assessment by Mr. Yensan, relative to requiring this developer to be responsible only for the assessment afforded other single family residential lots. In this case, the zoning on this lot allows for up to 6 multifamily units and it is the intent of the owner to develop this property as multifamily, so the typical "one house" fee of $5,400.00 would not apply to this lot. Staff believes that under normal circumstances, the property should be assessed for each unit. Page 1 However, looking at this case from a different perspective, because the City has installed new asphalt for McCormick Street through its sanitary sewer rehabilitation program, staff feels that the property could now be assessed only for the costs that would be required to upgrade McCormick Street to current City standards. Current City street pavement standards for a residential street are 5 inches of asphalt depth with curb and gutter. City staff estimates the cost of the additional 2 inches of roadway thickness (for a 23.5ft pavement width) at $10.45 per linear foot of frontage and curb and gutter at $8.00 per linear foot of frontage. · asphalt- 2 additional inches ---$10.45/linear ft (for 100ft of frontage)- $1,045.00 · curb & gutter .................... $8.00/linear ft (for 100ft of frontage) .... $800.00 · total ............................................................................. $1,845.00 The City Council may approve an exaction variance if the following criterion is met: b) Criteria for variances from development exactions. Where the commission finds that the imposition of any development exaction pursuant to these regulations exceeds any reasonable benefit to the property owner or is so excessive as to constitute confiscation of the tract to be platted, it may recommend approval of variances to waive such exaction's, so as to prevent such excess, to the City Council. Waiver of developmental exactions shall be approved by the City Council. The price the applicant paid for the parcel, or the cost of the proposed building improvements is not a factor in determining reasonable costs. The City Council must decide if the costs associated with the public improvements required by city regulations are reasonable and consistent for the type of development proposed and are proportional to the demand for services created by the development. OPTIONS 1. Approve full variance 2. Approve full variance with conditions 3. Approve a partial variance 4. Deny variance RECOMMENDATION Staff recommends approval of the partial variance for the improvements to McCormick Street, with the condition: · that the resulting developer's payment (because of the City's recent sanitary sewer rehabilitation program causing the repaving of McCormick Street along this property' frontage) is equal to $1845.00, as calculated above. The Planning & Zoning Commission voted 7-0 to recommend approval of the partial variance on January 14, 2004. PRIOR ACTION/REVIEW The Planning & Zoning Commission voted 7-0 to recommend approval of the partial variance on January 14, 2004. Page 2 FISCAL INFORMATION City staff estimates typical installation of 25ft wide pavement with curb and gutter at $75/foot. The required pavement improvement, for approximately 100ft of frontage along McCormick Street would cost an estimated $7,500.00. However, because the City has installed new asphalt for McCormick Street through its sanitary sewer rehabilitation program, staff, in this specific instance, feels that the property can be assessed only for the costs that would be required to upgrade McCormick Street to current City standards. That cost has been calculated at $1,845.00 In accordance with the current ordinance, the fee associated with the costs of construction may be posted with the City in lieu of actual construction. The City maintains this money in an interest bearing account and if the improvements are not complete, under construction or under design within 10 years (of the time of deposit of this money), the City is required to return the money to the payee(s) with interest. ATTACHMENTS 1. Site location map 2. Plat 3. Applicant's letter 4. P & Z minutes Prepared By: David Salmon, Assistant Director Engineering Respectfully submitted: Charles Fiedler Director, Engineering Page 3 _ A ATTACHMENT #1 SITE LOCATION MARGIE / SITE UNBEIEWOOB FANNIN I I II I ..... ~111 II ATTACHMENT #3 APPLICANT'S LETTER lANDMARK, SURVEYORS, INC. August 5, 2003 4238 1-35 North Denton, Texas 76207-3408 (940) 382-4016 Fax (940) 387-9784 landmarksv@aol.com City of Denton, Engineering Department David Salmon, P. E. ttt West McKinney St. Denton, TX 76201 Re: Ruiz Addition variance request Dear Mr. Salmon, Variance is hereby being sought for the Ruiz Addition. The variance being asked for Is for Improvements on McCormick and/or Margle Street. The owner has expressed a willingness to participate i. a partial variance and will support fees In lieu of construction and design. We have submitted sidewalk plans, and I do not know if you want us to lump sidewalk and roads together, or if you want us to build the sidewalk and accept a lesser fee In lieu of road construction. Since. Jer~. S. City of Denton Planning & Zoning Minutes January 14, 2004 The Planning and Zoning Commission convened a regular meeting on Wednesday, January 14, 2004 at 6:30 p.m. in the City Council Chambers at City Hall, 215 E. McKinney. PRESENT: Commissioner Mulroy, Commissioner Strange, Commissioner Watkins, Commissioner Holt, Commissioner Johnson, Commissioner Powell, Commissioner Roy ABSENT: None 3. CONSENT AGENDA: Staff recommended approval of the following items because they met the requiremems of the DeNon Code of Ordinances. Approval of the Consem Agenda includes staff recommendations and authorized staff to proceed with these items in accordance with the City of DeNon Code of Ordinances. The Planning and Zoning Commission reviewed these applications and raised any appropriate questions regarding these items prior to consideration. Exaction variance from Section 35.20.2(L.2) of the Development Code concerning perimeter paving. The 0.197-acre parcel was located on the southwesterly corner of Margie Street and McCormick Street. The property was located in a Dowmown Residemial 2 (DR-2) zoning district. A single-family residence exists and multi-family use was proposed. (V03-0021, Ruiz Addition, Bud Vokoun) Commissioner Johnson moved, Roy seconded to approve the consent agenda. Motion carried 7-0. AGENDA INFORMATION SHEET AGENDA DATE: February 17, 2003 DEPARTMENT: CM/DCM/ACM: Engineering Jon Fortune, Assistant City Manager SUBJECT Consider adoption of an Ordinance by the City of DeNon abandoning and vacating a portion of street right-of-way to the City of DeNon, Texas recorded in clerk's file no. 2003-R0018777 of the Real Property Records of Denton County, Texas, being part of the H.H. Haygood Survey, Abstract No. 517; and providing an effective date. BACKGROUND The currem property owner, Carmen Investmems, Inc. has made application requesting the City abandon a portion of Fairway Drive as part of their Coumry Club Village developmem. The area to be abandoned is a landscaped traffic island located at the entry to the development off of U.S. Hwy. 377. The traffic island contains improvements such as a monument sign, sprinkler system, and landscaping. The traffic island area was initially dedicated as right-of-way to the City during the platting process. With an abandonmem, a right-of-way use agreemem between the City and the developer will not be necessary. OPTIONS Approve the Ordinance, or Denial, or Table for future consideration RECOMMENDATION Staff endorses the approval of the abandonment. PRIOR ACTION/REVIEW None FISCAL INFORMATION None ATTACHMENTS Location Map Ordinance Exhibits Prepared by: Respectfully submitted: Tod J. Taylor Real Estate Specialist Charles Fiedler, Director Engineering Department Country Club Village ROW Abandonment Location of Traffic Island to be abandoned N 1" = 400 ft ORDiNANCE NO. AN ORDINANCE BY THE CITY OF DENTON ABANDONING AND VACATING A PORTION OF STREET RIGHT-OF-WAY TO THE CITY OF DENTON, TEXAS RECORDED IN CLERK'S FILE NO. 2003-R0018777 OF THE REAL PROPERTY RECORDS OF DENTON COUNTY, TEXAS, BEING PART OF THE H.H. HAYGOOD SURVEY, ABSTRACT NO. 517; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, Carmen Investments Inc., has made a request to the City Council of the City of Denton, Texas to abandon a portion of street right-of-way containing approximately 0.165 acre of land and located in Country Club Village, an addition to the City of Denton, Texas, according to the plat thereof and being recorded in clerk's file no. 2003-R0018777 of the Real Property Records of Denton County, Texas and a more particularly described in Exhibit "A" and illustrated in Exhibit "B', attached hereto and made a part hereof by reference (the "Street Right-of-Way"); and WHEREAS, the City of Denton Engineering Department has reviewed the right- of-way abandonment application and determined that the Street Right-of-Way, all of which is located within a traffic island, is not needed for future street purposes; and, WHEREAS, the City Council hereby finds and determines that the Street Right- of-Way is not needed for street purposes and it is in the public interest to abandon the Street Right-of-Way and the City's interests therein to the underlying fee owner, Carmen Investments, Inc. ("Owner"); NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON, TEXAS, HEREBY ORDAINS: SECTION i. The recitations and findings contained in the preamble of this ordinance are incorporated herein by reference. The Street Right-of-Way is hereby permanently abandoned with all of the City's right, title and interests being quit claimed to the Owner. A certified copy of this ordinance may be recorded in the Real Property Records of Denton County, Texas to evidence this abandonment and quit claim] SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of ,2004. ATTEST: JENNIFER WALTERS, CITY SECRETARY EULINE BROCK, MAYOR BY: APPROVED AS TO LEGAL FORM: HERBE~~UTY~ ATTORNEY BY: * ~ ~-~x ~ Page 2 ' EXHIBIT ' A' PROPERTY DESCRIPTION STATE OE TEXAS: COUNTY OF OENTON: BEING a tract of land situated in. t~e HJ~..Haygo~.Sunv.ey, Ab~w~t No. 5i7, City of Dentor~ Denton County, Texas, t~e~ng a port,on of Fa~r~w~/..Or~v.e r.~ght_-.o, oa~ as dedicated by ~he f~flel ptst of COUNTY O J J6 V[q_LA~ PHASEI-& an aaa[[~on ~o ~ne city Dentor~ County, Texas as recorded ~n .Ca~tn~et U, $1.~. 862 of the Plat Records of Tarrant County, Texas ar~ Deing inure ~erticutacly oescriae~ as COM~]~G at a i/2' radar capped set at tre ~tersecti.~..of t~_e_ ~terl~l~e of U~. with the no~i~easterty line at said Fa~way ur~ve [luu' H.U.W. at tn~s THENCE S 61 '09'46' ~ along ~he northeasterly l~e of said Fa',~,~ay, ~D~.ive, _s fl_~s__ _l~nc~.. of 35.50 feet to a po~Yc, from ~hiCn a i/a" rebar cal~ed set bears S 6! 09 46 E, 24i.0~ test; THENCE S 2B'50'i4" H, cleDartfl~g the rm~c~terly t~ne of sa~d Fa~rw.ay. Dri.ve. t~.a .v~rs~. s~.id Fairway D~ive, a distance of 3650 feet to Lhe POINT OF BE~G of the harem~---'m~oeaaascr~e tract of ~ THENCE travePs~ng ~a~d Fairway Drive, as fallows: S 61'09'46' E a ~s~ance of 232.53 feet to the ~o~nt of curvature of a c~-cular curve to the right~ having a radius of 46~0 feet~ 36.90 feet and a c~rd tJ~at bears S 39'0B'~" E, ~.uu me[ co [ne parc o~ c~wa~ u a non co~o~ c~rcu]ar curve to bhe righL ~av~-~ a ra~us po~nt that bears N ~5'~'4~" 48.00 feeb Northwesterly, e~eng se~d curve, hev~g a ce~tra] angle of 44'0255", an arc d~stance af 36.90 feet an~ a chard ~et tm. ars N 83'~'~4" I~, 36~)0 fee~ to t~e po~nt of tangency; N 6~*09'46" ~/, a ~istance of 232.53 feet ~o t~e ~oint of curvature of e c~rcu]ar curve to the right, .hav~'tg a radius of ~.350 feet; Northeasterly, a~.ong sa~(~ curve, r~v~j a sentra! 2a~!~oef f~)O'O0~O", a~ arc d[st~ce of 42,4~_' fee~ and a chorcl that bears N 28'50'~4' E~ feet to the POINT OF BEGT_~ING and co~tain~ng 7.t84 square feet or 0.~65 acre of !and. Bearings are refereed to the f~ra! p!at of Catty C~ Vi!]age. Phese ~-~, rec~ ~n Cab~et U, S~t~de 862 of the P!a~ Records of Oenton County. Texas. (~ 010[}'~ ~ Scale, NONE Sheet OM~.~Neem--~L~e~RS-SUm$YOaS Job NO. ~ I0026 of ~m (s~ ~ Checked ~ J. S ' B. EXHIBIT ' B / / , · /iI / ' / CE ~J_ II I~lr' l. ~' ~)l~, // ,/ R,P,R,D,C.T, / ,/ . ~ .%/ ~ ~-~_ ~ /~;-.'. / Iz.~.,s~.~., / // / -/ // fl' ~~s~ CAEM~ "VEST~NTS, INC. ~~ DATA / ~ ~TA ~ ~NGT~... T~T! m~ ~O ~AR~I Ct 44'02'55~ 48.~' 56.90' 1~.~.¢.2'~ C2 44'02'55' 48.00' 56.90~ 19.42' ~6.~' ~'iI'I4'W ~ 180'00'00' t~.50' 4~ .4.1.'. 27.00' ~~~ Scule, I' = 100' ~~ ~ ~~.~.~ Job No. ~~~f~ Dr~fled~ E .V .... ~ ~ ~ .... L. Checked ~ J.S.B. CURVE DELTA RADIUS LENGTH T~T! CHO~ CHORD ~[ARIN~ ct 44°02,55· 48.00 ~6.90' 19...~.~1.2 '! 5.6.00 S39°0e'18' E C2 44'02'55- 48.00' 56.90' 19.42' 36.00 N85°11'14° W C~ 180'00'00' t:~.50' 42,4,1,', 27.00' N28'50'14' E AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: CM: February 17, 2004 City Manager's Office Mike Conduff, City Manager SUBJECT Consider adoption of an ordinance ordering an election to be held in the City of DeNon, Texas, on May 15, 2004, and if a runoff election is required, on June 19, 2004, for the purpose of electing Council Members to Places 5 and 6 and electing a Mayor to Place 7 of the City Council of the City of DeNon, Texas; designating voting places, appoiming election officials; providing for early voting; providing for bilingual notice of the election; ordering that an electronic voting system be used; making additional provisions for the conduct thereof; providing an open meetings clause; and providing for an effective date. BACKGROUND Approval of this ordinance would formally call the May 15, 2004 City Council election. The ordinance comains all of the provisions necessary to fulfill the requiremems of the Texas Election Code, including election judges and alternate election judges. Respectfully submitted: Jennifer Walters City Secretary ORDINANCE NO. AN ORDINANCE ORDERING AN ELECTION TO BE HELD IN THE CITY OF DENTON, TEXAS, ON MAY 15, 2004, AND, IF A RUNOFF ELECTION IS REQUIRED, ON JUNE 19, 2004, FOR THE PURPOSE OF ELECTING COUNCILMEMBERS TO PLACES 5 AND 6 AND ELECTING A MAYOR TO PLACE 7 OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS; DESIGNATING VOTING PLACES; APPOINTING ELECTION OFFICIALS; PROVIDING FOR EARLY VOTING; PROVIDING FOR BILINGUAL NOTICE OF THE ELECTION; ORDERING THAT AN ELECTRONIC VOTING SYSTEM BE USED; PROVIDING AN OPEN MEETINGS CLAUSE; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION t. That a municipal election is ordered to be held in the City of Denton, Texas, on Saturday, May 15, 2004, such date being a uniform election date as defined in Tex. Elec. Code §41.001, as amended (the "Code"), for the purpose of electing Councilmembers for Places 5 and 6 and electing a Mayor to Place 7. In the event a runoff is required, the runoff election shall be held on Saturday, June t 9, 2004. SECTION 2. That the polling places, which shall be open from 7:00 a.m. to 7:00 p.m, shall be as follows: 1. Voters residing in District No. 1 shall vote at: MARTIN LUTHER KING, JR. RECREATION CENTER 1300 WILSON STREET DENTON, TEXAS 2. Voters residing in District No. 2 shall vote at: FIRE STATION NO. 4 2110 SHERMAN DRIVE DENTON, TEXAS 3. Voters residing in District No. 3 shall vote at: NORTH LAKES RECREATION CENTER 2001 WEST WINDSOR DRIVE DENTON, TEXAS 4. Voters residing in District No. 4 shall vote at: DENIA PARK RECREATION CENTER tOOt PARVIN DENTON, TEXAS SECTION 3. That the election officials for the election and the runoff, if any, shall be as follows: Page 1 For the Central Counting Station: Connie Bell, Presiding Judge; Don Alexander, Manager; and Randie Geistman, Tabulation Supervisor. 2. For District No. 1: Ruby Cole, Presiding Judge and Betty Kimble, Alternate Judge. For District No. 2: Doris Chipman, Presiding Judge and Mary Jo Pickens, Altemate Judge. 4. For District No. 3: Meri Baskin, Presiding Judge and George Spuller, Alternate Judge. For District No. 4: Shirley Sawyer, Presiding Judge and Stanley Sawyer, Altemate Judge. Jennifer Walters, City Secretary, shall conduct early voting under the Texas Election Code. 7. Connie Bell shall be Presiding Judge for the Early Ballot Board. The presiding judge of the Central Counting Station and of each district are authorized to appoint a sufficient number of clerks as necessary to assist them in the election, including bilingual assistants as required by law. The rate of pay for election judges and clerks shall be the maximum amount provided for by State law. SECTION 4. That early voting shall be conducted for the election, and the runoff election if necessary, by the Office of the City Secretary in the Municipal Building at 215 East McKinney Street in the City of Denton, Texas. The polls for early voting by personal appearance shall be open between the hours of 8:00 a.m. and 5:00 p.m. Monday through Friday, commencing April 28, 2004, and ending on May 11, 2004. In addition, early voting shall be held on Saturday, May 1, 2004, between the hours of 10:00 a.m. and 3:00 p.m., at the same location as weekday early voting. SECTION 5. That the Mayor is hereby directed to provide notice of the election, and the runoff election if necessary, in accordance with Sections 4.002 and 4.003 of Texas Election Code and as required by other applicable provisions of the law, the notice to be printed in the Spanish language and the English language. SECTION 6. That an electronic voting system using optically scanned ballots, meeting the requirements of Chapter 124 of the Code, shall be used for said election. Preparation of the necessary equipment and official ballots for the election shall conform to the requirements of the Code. SECTION 7. That City Secretary is authorized to prepare the official ballot for the election and perform every act required by the City Charter and laws of the State of Texas for holding elections. SECTION 8. The election officers named above shall make returns for the election in the manner required by law. The ballots that are properly marked in conformance with the provisions Page 2 of the Texas Election Code for votes cast both during the period of early voting and on the date of the election shall be counted in the manner required by law. SECTION 9. That the manner of holding such election and all questions pertaining thereto shall be governed by the election laws of the State of Texas. SECTION 10. Substantial copies of this ordinance in both English and Spanish shall serve as proper notice of the election and said notice shall be: (a) published at least once in a newspaper of general circulation published within the City, not less than the thirtieth day or later than the tenth day before the election; (b) posted, not later than the twenty-first day before the election day, at a public place in each election district that is in the jurisdiction of the city; (c) posted, not later than the twenty-first day before election day a copy of the notice, which must include the location of each polling place, on the bulletin board used for posting notices of meetings of the City Council of the City; and (d) posted, as may otherwise be required by Tex. Elec. Code §4.003 and other applicable law. SECTION 11. That the City Council has found and determined that the meeting at which this ordinance is considered is open to the public and that notice thereof was given in accordance with provisions of the Texas open meetings law, Tex. Gov't Code ch. 551, as amended, and that a quorum of the City Council was present. SECTION 12. That this ordinance shall become effective immediately upon its passage and approval. PRESENTED, PASSED AND APPROVED on the __ day of 2004, at a regular meeting of the City Council of the City of Denton, Texas, by a vote of___ ayes and __ nos at the regular meeting of the City Council of the City of Denton, Texas. ATTEST: JENNIFER WALTERS, CITY SECRETARY EULINE BROCK, MAYOR BY: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY BY: Page 3 AGENDA DATE: DEPARTMENT: CM/DCM/ACM: AGENDA INFORMATION SHEET February 17, 2004 Planning & Developmem Jon Fortune, Assistam City Manager SUBJECT A03-0002 (Village of Carmel) Hold the first of two public hearings to consider the voluntary annexation and service plan for approximately 80.3 acres of land generally located north of Pockrus Page Road, west of Swisher Road, and south of Edwards Road in the southeastern section of the City of Denton Extraterritorial Jurisdiction (ET J). (Village of Carmel Annexation, A03-0002) BACKGROUND Applicam: Harold Holigan/Rita Beck, Dallas, TX A volumary annexation proceeding is being considered by the City of DeNon for the Village of Carmel. In accordance with the City's annexation policy plan, approved in June 1993, the City will "access on a case by case basis" the annexation of areas in the ETJ when significant developments are proposed. The applicam, Harold Holigan/Rita Beck, has petitioned for the volumary annexation of approximately 80.3 acres of land imo the City. The 80.3 acres to be annexed will be part of a larger mixed-use developmem (186 acres) consisting of single-family homes, loft apartmems, town homes, neighborhood retail, and walking trails. The applicam has also submitted a zoning change application (Z03-0024) for the portions of the developmem that are already within our corporate city limits. City Council approved the zoning change applicam in its November 18, 2003 public hearing by a 7-0 vote. OPTIONS 1. Maimain land area. 2. Delete land area. 3. Amend Service Plan. 4. Deny. RECOMMENDATION Staff recommends that the first public hearing for A03-0002 is held as scheduled, and pending commems received; determine if additional information is needed. Staff recommends that the public hearings proceed as scheduled, finding that: The proposed annexation is exempt from the annexation plan requiremems by virtue of Section 43.052(h)(1) of the Texas Local Governmem Code. Section 43.052(h)(1) requires that the area to be annexed comain fewer that 100 separate tracts of land on which one or more residemial dwellings are located on each tract and will follow the annexation procedures under Subchapter C-i, Chapter 43 of the Local Governmem Code. o The need to manage and coordinate developmem in an orderly manner is a significam city objective that the City of DeNon will pursue. The annexation tract also contains acreage designated as Environmentally Sensitive Area, which have very importam water quality and flood comrol implications. The City of DeNon intends to preserve these areas to act as a natural flood channels, rather than allowing filling of floodplains and paying for expensive concrete-lined channels at a later date. ESTIMATED ANNEXATION SCHEDULE The annexation process will be completed by May 4, 2004 (see Attachmem 4). PRIOR ACTION/REVIEW Application Date 1 st CC Public Hearing September 24, 2003 February 17, 2004 FISCAL INFORMATION Annexation and development of this property will increase the assessed value of the city, county, and school district. It will require no short-term public improvemems that are the responsibility of the city. ATTACHMENTS 1. Service Analysis 2. Location Map 3. Public Notification (Property Owner Notification Map and Property Owner Responses) 4. Annexation Schedule 5. Draft Annexation Service Plan Prepared by: Chris D. Hatcher Planner II Planning and Developmem Respectfully submitted: RLA, AICP Assistam Director, Planning and Developmem ATTACHMENT 1 Police SERVICE ANALYSIS A03-0002 (Village of Carmel) Estimated average response time for this area based on current department conditions: Priority 10 minutes Non-priority 16 minutes Average 1:2 minutes Appropriate average response time in the city based on current department conditions: Priority 5 minutes Non-priority 12 minutes Average 7 minutes If annexed and developed as proposed will additional personnel be needed as a specific result of this proposal? No Will additional equipment and funding be needed to serve this area? No Will a police substation or other facility be needed to serve this area as a result of annexation and development? No 6. Please comment on the cumulative impact of annexation and development. At what population level would another police facility be required? We are currently utilizing all of our available space. There is currently no facility to population ratio being utilized. Is there an accepted facility/equipment to population ratio that can be used for planning purposes? There is no equipment or facility to population ratio currently being used. Is there an accepted officer to population ratio that can be used for planning purposes? Approx 1.4 officers per 1000 in population Additional Comments: We can provide service to this area immediately upon annexation. En.qineerinq and Transportation What existing roads, bridges and other transportation facilities will be impacted by this proposed annexation and development in terms of needed improvements or upgrades? Name and location Pockrus Page Swisher Rd Edwards Rd Internal streets Type of Improvement dev required 25ft of pvmnt/aft sdwlk dev required 25ft of pvmnt/aft sdwlk dev required 25ft of pvmnt/aft sdwlk dev required full width Approximate Cost $95/linft of frontage $95/linft of frontage $95/linft of frontage depends on type proposed &/or per TIA &/or mobility plan Are any of these improvements presently scheduled to be done at state or federal expense? No. If yes, please identify facility and anticipated date improvements will begin. Please list any drainage improvements that may require local funding, and include estimated cost (if no specific improvements can be determined, please make general comments concerning drainage). Will additional equipment and facilities be needed as a specific result of this annexation and development? Possibly. If yes, what type of equipment or facility? Developer participation in Traffic signal at Swisher/Pockrus Page, Swisher/Edwards, Mayhill/Colorado depending on TIA recommendations. 5. Please comment on the cumulative impact of annexation and development. At what population level would additional equipment be required? As recommended by TIA Is there an accepted equipment to population ratio that can be used for planning purposes? No. Fire 1. Fire and Emergency Medical Services can be provided to the area from station(s) # 3&6, located at McCormick and Teasley. Estimated response time. 12 minutes Appropriate response time in the City. 5 minutes Is a new fire station approved in the ClP that could serve this area? Yes. If yes, what is the ClP program year? 05~06. Will a new fire station be requested in upcoming ClP proposals to serve this area? No. If yes, when should this station be operational? Total estimated funding for equipment, employees and/or facilities needed to serve this area strictly based on annexation and proposed development. 3.3 million for the structure and equipment and 1.5 million for annual operating budget per station Please comment on the cumulative impact of annexation and development. At what population level would another fire station facility be required? No. Is there an accepted facility/equipment to population ratio that can be used for planning purposes? No. be used for planning Is there an accepted fire fighter to population ratio that can purposes? 1.5 firefighters per 1000 population. Additional Comments: Strategic fire station placement is developed by response times. is 1.5 mile radius for each fire station. A good rule of thumb Parks and Recreation What neighborhood park and recreational facilities are currently serving this area or are capable of serving this area if annexed and/or developed (federal, state, or local)? None are within the proposed annexation. The closest Denton Parks properties to the proposed annexation area are Briercliff Park, 0.85 miles, Denton Branch Rail Trail, 0.5 miles, and Pecan Creek Preserve Open Space Park, O. 5 miles and South Lakes Park, 3 miles. Current residents will be able to use existing City of Denton parks, facilities and programs. What projects and/or equipment will be needed to adequately serve this area if annexed and/or development based on the parks and recreation master plan or similar standards? The 2000 Denton Park and Recreation Master Plan indicates a need for a Community Park in the general area of the proposed annexation. Service Standards: Neighborhood Parks: 2.5 acres per 1,000 population (to be dedicated at time of development) 5 acres minimum size. (by developer) cost per acre. Community Parks: 3.0 acres per 1,000 population 30 acres minimum How much additional funding will be needed for maintenance if additional park facilities are developed to serve this area? $172,700.00 Service Standard: Based on $3,454 (developed) cost per acre. How many additional personnel would be needed to properly serve this area if annexed and developed? Two Service Standards: 0.5 to 0.7 FTE additional personnel per 1,000 population (depending on type of service) $38,000 per year cost per additional personnel Additional Comments: Denton Parks and Recreation Department will attempt to coordinate placement of park facilities proposed for development by the developer or use funds from the Park Land Dedication requirements to purchase or expand existing parks within the service area of this development Library Estimated additional funding needed strictly based on proposed annexation and development. None. Please comment on the cumulative impact of annexation and development. There will be no immediate impact on library services with this proposed annexation and development. 3. At what population level would another library facility be required? 100,000. Is there an accepted circulation to population ratio that can be used for planning purposes? Accepted average is 8.6 items circulated per capita. Is there an accepted employee to population ratio that can be used for planning purposes? Population per FTE employee is 1 per 4,711 Population per MLS professional librarian is 1 per 21,948. If annexed, can anticipated service demands be met using existing materials, facilities, and personnel? Yes, anticipated service demands can be met. If not, how many additional employees and what type of facilities and materials will be needed to provide services? Solid Waste 1. Is residential solid waste service available to the proposed area for annexation? Yes. 2. Is commercial solid waste service available to the proposed area for annexation? Yes. 3. What is the estimated cost to provide this area with solid waste service? Equipment and Maintenance: Dependent on service level required Personnel: Dependent on service level required What is the typical revenue collected per: Household: $15.00 / 30 days for a 96 gallon cart $2.07 / 30 days for curbside recycling Commercial Business: Dependent on size and service frequency of the container requested. Will additional equipment be needed to serve this area if annexed or developed? Type of Equipment: No Cost of Equipment: Not Applicable Will additional employees be needed to serve this area if annexed or developed? Type of Employees: No Number of Employees: Not Applicable Please comment on the cumulative impact of annexation and development. At what population level would additional equipment be required? Not Applicable. Is there an accepted equipment to population ratio that can be used for planning purposes? No. Is there an accepted employee to population ratio that can be used for planning purposes? No. Water/Wastewater What is the nearest City of Denton water line? Size of water line. 12"on Edwards Rd.(Under Construction Location of water line. 8" on Pockrus Page Rd Distance from proposed annexation, both are adjacent to site What is the nearest City of Denton sewer line? Size of sewer line. two 8" mains {see additional comments} Location of sewer line. Pockrus Page Road Distance from proposed annexation. 600' and 1200' west of annexation site at Pockrus Page Road According to the City of Denton master plan what type of lines and facilities would be required for this area and when are those lines and facilities proposed for construction. Size Year Location Water lines 12" By 2020 Edwards & Swisher Rd. Sewer lines None proposed Are there any City of Denton lines included in the proposed annexation? No water nor sewer 6. Please comment on the cumulative impact of annexation and development. At what population level would additional equipment be required? 18,750 Is there an accepted equipment to population ratio that can be used for planning purposes? One crew per 18,750 population Is there an accepted employee to population ratio that can be used for planning purposes? One employee per 5770 population Additional Comments: Discussions with developer have already resulted in agreement to extend large waterline from the 16" water main along Lakeview Boulevard. There are parallel 21" and 24" sewer mains along part of the west side of the proposed Villages of Carmel development. The development is large enough to warrant connection to this main(s). South of the property there is an oversized 12-inch sewer line on Lakeview Blvd. that flows into the Preserve Lift Station. The Preserve Lift Station was oversized to accommodate flows from the drainage basin within which the proposed area to be annexed lies. Drainaqe 1. What existing roads, bridges and other transportation facilities will be impacted by this proposed annexation and development in terms of needed improvements or upgrades? Name and location Edwards Road Pockrus Page Swisher Road Type of Improvement Perimeter Paving & Drainage Perimeter Paving & Drainage Perimeter Paving & Drainage Approximate Cost Developer Cost Developer Cost Developer Cost Are any of these improvements presently scheduled to be done at state or federal expense? No. If yes, please identify facility and anticipated date improvements will begin. Please list any drainage improvements that may require local funding, and include estimated cost (if no specific improvements can be determined, please make general comments concerning drainage). None. 4. Will additional equipment and facilities be needed as a specific result of this annexation and development? No. If yes, what type of equipment or facility? 5. Please comment on the cumulative impact of annexation and development. At what population level would additional equipment be required? N/A Is there an accepted equipment to population ratio that can be used for planning purposes? N/A Is there an accepted employee to population ratio that can be used for planning purposes? N/A ]0 Electric Utilities 1. What is the distance to, location of, and size of the nearest City of Denton electric line? DME has a main line on the south side of Pockrus Page Road that will be used to provide electric service. 2. What type of lines and facilities would be required to serve this area? DME will build underground lines throughout the development to provide electric service. 3. Are any new lines or facilities proposed for construction to serve this area? DME staff is designing an overhead main line on Edward Roads to serve this property and Timbers Apartments. 4. Are there any potential responsibilities if this area is annexed? Providing electric service and street lighting. 5. Please comment on the cumulative impact of annexation and development. At what population level would additional equipment be required? N/A Is there an accepted equipment to population ratio that can be used for planning purposes? N/A Is there an accepted employee to population ratio that can be used for planning purposes? N/A Additional Comments: Electric service will be provided by DME per commercial and residential requirements as appropriate. ATTACHMENT 2 Location Map NORTH A03-0002 (Village of Carmel) Location Map 12 ATTACHMENT 3 Public Notification NORTH Notification Map 500 ft. o~ Public Notification Date: 200' Legal Notices* sent via Certified Mail: 500' Courtesy Notices* sent via 1st Class Mail: Number of responses to 200' Legal Notice · In Opposition: 1 · In Favor: 0 · Neutral: 0 February 2, 2004 11 40 Scale: None *A copy of the notification list can be picked up at City Hall West, 221 N. Elm Denton TX 76201 13 Property Owner Responses Property Owner Name In favor and Address /Opposed* Comments Guy Wade Willis Opposed Opposed to annexation until City Council passes a tree 5376 Edwards Road ordinance and until I see what is to be built. *A copy of the original notice can be picked up at City Hall West, 221 N. Elm Denton TX 76201 ATTACHMENT 4 ANNEXATION SCHEDULE A03-0002 The Village of Carmel Tuesday, 2/17/04 Tuesday, 3~2~04 Wednesday, 3/10/04 Tuesday, 3~23~04 Tuesday, 5/4/04 City Council conducts first public hearin.q. · Public notice must be no less than 10 days and no more than 20 days before public hearing. [] Annexation Study prepared and available for public review. [] Service Plan prepared and available for public review. City Council conducts second public hearin.q. · Public notice must be no less than 10 days and no more than 20 days before public hearing. Planning and Zoning Commission public hearings - make a recommendation to City Council regarding the proposed annexation and the proposed zonin,q. City Council by a four-fifths vote institutes annexation proceedings. First readinq of annexation ordinance. · Action must be more than 20 days after the second public hearing but less than 40 days from the first public hearing. City Council by a four-fifths vote takes final action. Second readinq and adoption of the annexation ordinance. City Council considers approval of zoning request. · Council action must be more than 30 days after publication of ordinance and less than 90 days after council institutes annexation proceedings (adopts ordinance on 1st reading). 15 ATTACHMENT 5 CITY OF DENTON ANNEXATION SERVICE PLAN A03-0002 (Village of Carmel) i. AREA ANNEXED The annexation area is located in the southeast portion of DeMon's Extraterritorial Jurisdiction and comains approximately 80.3 acres generally located north of Pockrus Page Road, south of Edwards Road, and west of Swisher Road. ii. INTRODUCTION This service plan has been prepared in accordance with the Texas Local Governmem Code, Sections 43.021, 43.065, and 43.065(b)-(o) (Vernon 1999, as amended). Municipal facilities and services to the annexed area described above will be provided or made available on behalf of the City in accordance with the following plan. The City shall provide the annexed tract the levels of service, infrastructure, and infrastructure maintenance that are comparable to the levels of service, infrastructure, and infrastructure maimenance available in other parts of the city with similar topography, land use, and population density. iii. AD VALOREM (PROPERTY OWNER) TAX SERVICES Police Protection, Code Enforcement, and Animal Control Police service, including patrolling, response to calls, and other routine functions, will be provided to the property upon the effective date of the annexation using existing personnel and equipment. Code enforcement and animal comrol services will also be provided to the property upon the effective date of the annexation. Fire Protection Fire protection (within the limits of existing hydrams) and emergency medical services will be provided to the property upon the effective date of the annexation. The estimated emergency response time in this area is 12 minutes, which is similar to responses for surrounding properties within the city limits. The City of Demon will provide emergency medical services ("EMS"). Roads and Streets Roads and streets, which have been properly platted, duly dedicated, and accepted by the City of Denton and/or Denton County shall be maintained by the City of Denton on the effective date of the annexation. Installation and maintenance of street signs, street lighting and traffic control devices will be maimained by the City of Demon on the effective date of the annexation. 16 Parks and Recreation Facilities Parks and recreational facilities in the area to be annexed will begin upon the effective date of the annexation according to the 2000 Parks and Recreation Master Plan. No parks are currently located within the proposed annexation area. DeNon neighborhood park facilities are located within reasonably close distance of the proposed annexation area. Residems of the proposed annexation area will be able to use existing City of Denton park and recreation facilities and programs. Library Services Library services will be made available on the effective date of the annexation on the same basis and at the same level as similar library facilities are maimained throughout the city. Building Inspections and Consumer Health Services Building inspections and consumer health services will be made available on the effective date of the annexation on the same basis and at the same level as similar facilities are maimained throughout the City. Both services are provided on a "cost recovery" basis, and permit fees offset the costs of services delivered. Incomplete construction must obtain building permits from the Building Inspections Department of the City of Denton. Planning and Development Services Planning and developmem services will be made available on the effective date of the annexation. The Planning and Development Department curremly services this property by way of administration of Chapter 34 of the Code of Ordinances, concerning subdivision and land developmem regulations. City Council adopted The DeNon Plan, the city's 1999-2020 comprehensive plan, by Ordinance 99-439 on December 7, 1999. The Future Land Use Plan addresses both land in the city and its ET J, and the subject tracts comain Neighborhood Cemers and 100 year Floodplain/ Environmentally Sensitive Areas. The Denton Plan designates future land uses to manage the quality and quamity of growth by organizing the land use patterns, by matching land use imensity with available infrastructure, and by preserving floodplains as environmemal and open space corridors. The DeNon Plan will be used as a basis for final zoning classifications after the properties are annexed. IV. UTILITY (RATEPAYER) SERVICES A. Solid Waste Collection Solid Waste Annexation Service Plan for A03-0002 (Village of Carmel) 17 The City of DeNon is the exclusive residemial and commercial Solid Waste service provider within DeMon's city limits. The City Ordinance requires Solid Waste services for all residences and commercial businesses located in the City. The City of DeNon Solid Waste Departmem is fully funded through the service fees charged, and receives no funding from city tax revenues. Solid waste refuse collection services will be provided to the newly annexed property immediately upon the effective date of the annexation. To request Solid Waste collection services, please telephone the City of Denton Customer Service Department at 940-349-8210 and submit an application to initiate service. To obtain City of Denton Solid Waste schedule, service, and rate information, please telephone the Solid Waste Customer Relations office at 940-349-8420. Commercial customers are required to complete and submit a Service Agreement to Solid Waste Customer Relations prior to commencing service. Residemial Comainerized Refuse Service Each residemial address will be provided a 96-gallon wheeled refuse cart, which will be serviced one time per week. Residems are required to place their refuse cart(s) at the curb prior to 7:00 a.m. on their collection day. Carts should be placed at the curb for collection no earlier than 6:00 p.m. the evening prior to their collection day. Carts are to be removed from the curb no later than 6:00 a.m. on the day following their collection day. All refuse placed in the cart for collection must be bagged to eliminate wind blown debris and littering. Refuse that is not placed in the cart with the lid closed will not be collected. Additional carts may be provided for an additional momhly charge. Smaller carts are available for a lower momhly charge. Weekly brush service is provided. Residemial Curbside Recycling Service Curbside recycling services are provided to all residemial solid waste service customers. Commercial Refuse Service Each commercial business will be provided with a commercial comainer(s), which are available in a variety of sizes and frequencies of collection, based on the waste generated. All refuse placed in the container for collection must be bagged to eliminate wind blown debris and littering. Refuse that is not placed in the container with the lid closed will not be collected. Refuse placed outside the comainer is subject to code enforcement regulations, including potential fines. 18 Landfill Service The City of DeNon Solid Waste Landfill hours of operation are 7:00 a.m. to 4:00 p.m. Monday through Friday; and 7:00 a.m. to 12:00 p.m. on Saturdays. For information regarding disposal charges, call the Landfill Office at 940-349-7510. Water/Wastewater Facilities Maintenance of water and wastewater facilities in the area to be annexed that are not within the service area of another water or wastewater utility will begin upon the effective date of the annexation using existing personnel and equipmem. Curremly, the majority of the area to be annexed is not provided with water or sewer service. A small public water system, Swisher Road WSC, serves an area east of the annexation area along Swisher Road. Sewage disposal within the Swisher Road WSC area is by private, on-site drainfield systems. A City of Denton waterline exists adjacem to the annexation area. Additional water and sewer lines are located along the boundaries of the annexation area. The City shall provide a level of water and wastewater service, infrastructure, and infrastructure maintenance that is comparable to the level of services, infrastructure, and infrastructure maintenance available in other parts of the city with topography, land use, and population density similar to those reasonably comemplated or projected in the area. Drainage Services Drainage maimenance will be provided to the property upon the effective date of the annexation. The City shall provide a level of drainage services, infrastructure, and infrastructure maintenance that is comparable to the level of services, infrastructure, and infrastructure maintenance available in other parts of the city with topography, land use, and population density similar to those reasonably comemplated or projected in the area. Electrical Services Denton Municipal Electric is certified by the State and is obligated to provide electric utility service to the annexation area should a request be made by a property owner. Electric utility service will be made available on the effective date of the annexation on the same basis and at the same level as similar facilities are maimained throughout the city. DeNon Municipal Electric is the current electric service provider for this site. V. OTHER SERVICES Other services that may be provided by the City, such as municipal and general administration will be made available on the effective date of the annexation. The City shall provide a 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 19 City with topography, land use, and population density similar to those reasonably contemplated or projected in the area. WI. CAPITAL IMPROVEMENTS PROGRAM (CIP) No new construction of additional water, sewer, street, and drainage facilities is contemplated within the annexed area as a result of this annexation because the annexed area on the date of annexation will have a level of full municipal services equal to other areas within the City having similar characteristics of topography, land use, and population density. Thus, no construction of public improvements is contemplated as a result of this annexation that would begin within two and a half (2 ½) years after the effective date of the annexation. The City shall consider construction of other public improvements as the needs dictate on the same basis as such public improvements are considered throughout the City for areas having similar characteristics of topography, land use, and population density. WlI. UNIFORM LEVEL OF SERVICES MAY NOT BE REQUIRED Nothing in this plan shall require the City 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. Will. 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. IX. 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 (Vernon Supp. 2000). 20 AGENDA DATE: DEPARTMENT: CM/DCM/ACM: AGENDA INFORMATION SHEET February 17, 2004 Planning & Development Jon Fortune, Assistant City Manager SUBJECT A03-0003 (Flowers Baking Company) Hold the first of two public hearings to consider the voluntary annexation and service plan for approximately 19.51 acres of land generally located north of Pockrus Page Road, east of Mayhill Road, and south of Edwards Road in the southeastern section of the City of Denton Extraterritorial Jurisdiction (ET J). (Flowers Baking Company Annexation, A03-0003) BACKGROUND Applicam: Flowers Baking Co. of Demon, LLC Demon, TX A volumary annexation proceeding is being considered by the City of DeNon for Flowers Baking Company property. In accordance with the City's annexation policy plan, approved in June 1993, the City will "access on a case by case basis" the annexation of areas in the ETJ when significam developmems are proposed. The applicam, Flowers Baking Co. of Demon, LLC, has petitioned for the volumary annexation of approximately 19.51 acres of land imo the City. The applicam is not proposing to develop the property at this time. OPTIONS 1. Maintain land area. 2. Delete land area. 3. Amend Service Plan. 4. Deny. RECOMMENDATION Staff recommends that the first public hearing for A03-0003 is held as scheduled, and pending commems received; determine if additional information is needed. Staff recommends that the public hearings proceed as scheduled, finding that: The proposed annexation is exempt from the annexation plan requiremems by virtue of Section 43.052(h)(1) of the Texas Local Governmem Code. Section 43.052(h)(1) requires that the area to be annexed comain fewer that 100 separate tracts of land on which one or more residemial dwellings are located on each tract and will follow the annexation procedures under Subchapter C-i, Chapter 43 of the Local Governmem Code. The need to manage and coordinate developmem in an orderly manner is a significam city objective that the City of DeNon will pursue. ESTIMATED ANNEXATION SCHEDULE The annexation process will be completed by May 4, 2004 (see Attachment 4). PRIOR ACTION/REVIEW Application Date November 24, 2003 1 st CC Public Hearing February 17, 2004 FISCAL INFORMATION Annexation of this property will increase the assessed value of the city. public improvements that are the responsibility of the city. ATTACHMENTS 1. 2. 3. 4. 5. It will require no short-term Service Analysis Location Map Public Notification (Property Owner Notification Map and Property Owner Responses) Annexation Schedule Draft Annexation Service Plan Prepared by: Chris D. Hatcher Planner II Planning and Development Respectfully submitted: RLA, AICP Assistant Director, Planning and Development ATTACHMENT 1 Police SERVICE ANALYSIS A03-0003 (Flowers Baking Company) Estimated average response time for this area based on current department conditions: Priority 7 minutes Non-priority 2 minutes Average 9 minutes Appropriate average response time in the city based on current department conditions: Priority 5 minutes Non-priority 12 minutes Average 7 minutes If annexed and developed as proposed will additional personnel be needed as a specific result of this proposal? No. Will additional equipment and funding be needed to serve this area? No. Will a police substation or other facility be needed to serve this area as a result of annexation and development? No. 6. Please comment on the cumulative impact of annexation and development. At what population level would another police facility be required? We are currently utilizing all of our available space. There is currently no facility to population ratio being utilized. Is there an accepted facility/equipment to population ratio that can be used for planning purposes? There is no equipment or facility to population ratio currently being used. Is there an accepted officer to population ratio that can be used for planning purposes? Approximately 1.4 officers per 1000 in population. Additional Comments: We can provide service to this area immediately upon annexation. Eric Parkey, Police Dept. Person to contact if there are questions 1/19~2004 Date En.qineerinq and Transportation What existing roads, bridges and other transportation facilities will be impacted by this proposed annexation and development in terms of needed improvements or upgrades? Name and location Type of Improvement none, developer required Approximate Cost Are any of these improvements presently scheduled to be done at state or federal expense? No. If yes, please identify facility and anticipated date improvements will begin. Please list any drainage improvements that may require local funding, and include estimated cost (if no specific improvements can be determined, please make general comments concerning drainage). As I understand it, Flowers Bakery has no plans to develop the proposed annexation property at this time. The site is mostly agricultural prairie lightly wooded with a larqe pond near the northwest portion of the site. All drainaqe enters the pond and a swale runninq south to north throuqh the property and includes a maior portion of the former Andrews site. This drainaqe exits the property to the north and crosses Edwards Road through a box culvert recently constructed by the City. The property to the north of Edward Road is beinq developed as a Timbers of Denton apartments .qolf course development. Bottom line: No drainaqe infrastructure needs to be constructed by the City in association with this annexation request. Any infrastructure improvements required with future development of this property by the Owner will be the responsibility of the Owned Developer Will additional equipment and facilities be needed as a specific result of this annexation and development? No. If yes, what type of equipment or facility? Please comment on the cumulative impact of annexation and development. At what population level would additional equipment be required? N/A Is there an accepted equipment to population ratio that can be used for planning purposes? N/A Is there an accepted employee to population ratio that can be used for planning purposes? N/A Additional Comments: None. Bud Vokoun, Transportation Ed Witkowski, Drainaqe 01/09/04 Person to contact if there are questions: Fire Date Fire and Emergency Medical Services can be provided to the area from station(s) # 6, located at 3200 block of Teasley Lane. Estimated response time. 5 minutes Appropriate response time in the City. 5 minutes Is a new fire station approved in the CIP that could serve this area? No. If yes, what is the CIP program year? Will a new fire station be requested in upcoming CIP proposals to serve this area? No. If yes, when should this station be operational? Total estimated funding for equipment, employees and/or facilities needed to serve this area strictly based on annexation and proposed development. None Please comment on the cumulative impact of annexation and development. At what population level would another fire station facility be required? 1 per 20,000 Is there an accepted facility/equipment to population ratio that can be used for planning purposes? 1 per:20,000 Is there an accepted fire fighter to population ratio that can be used for planning purposes? 1 per 1,000 Additional Comments: The Denton Fire Department already services this area. Rick Jones 940-349-8860 Person to contact if there are questions 01/09/04 Date Parks and Recreation What neighborhood park and recreational facilities are currently serving this area or are capable of serving this area if annexed and/or developed (federal, state, or local)? None are within the proposed annexation. The closest Denton Parks properties to the proposed annexation area are, Denton Branch Rail Trail, adjacent to site, Briercliff Park, 0.85 miles, and Pecan Creek Preserve Open Space Park, O. 5 miles and South Lakes Park, 3 miles. Since this site is not planned for residential development, the annexation will not have any negative impact on Park and Recreation services. Current area residents will be able to use existing City of Denton parks, facilities and programs. What projects and/or equipment will be needed to adequately serve this area if annexed and/or development based on the parks and recreation master plan or similar standards? N/A. Service Standards: Neighborhood Parks: Community Parks: 2.5 acres per 1,000 population 5 acres minimum size. (by developer) cost per acre. 3.0 acres per 1,000 population 30 acres minimum How much additional funding will be needed for maintenance if additional park facilities are developed to serve this area? N/A Service Standard: cost per acre. How many additional personnel would be needed to properly serve this area if annexed and developed? N/A Service Standards: 0.5 to 0.7 FTE additional personnel per 1,000 population (depending on type of service) N/A cost per additional personnel Additional Comments: Since this site is not planned for residential development, the annexation will not have any negative impact on Park and Recreation services. Bob Tickner, Superintendent of Park Plannin.q and Development Person to contact if there are questions 1-20-04 Date Library 3. 4. 5. Estimated additional funding needed strictly based on proposed annexation and development. $0.00 Please comment on the cumulative impact of annexation and development. The proposed annexation will have no cumulative impact on library services. At what population level would another library facility be required? 90,000 Is there an accepted circulation to population ratio that can be used for planning purposes? Yes. 6.34 per capita Is there an accepted employee to population ratio that can be used for planning purposes? Yes. Masters degreed librarian (MLS) per 1,000 of population or .11 and full-time equivalent staff per 1,000 of population or .462 At what population level would another library facility be required? 90,000 Is there an accepted circulation to population ratio that can be used for planning purposes? Yes. See #4 above Is there an accepted employee to population ratio that can be used for planning purposes? Yes. See #5 above If annexed, can anticipated service demands be met using existing materials, facilities, and personnel? Yes If not, how many additional employees and what type of facilities and materials will be needed to provide services? Additional Comments: None. Eva Poole, Director of Libraries Person to contact if there are questions January 16, 2004 Date Solid Waste Is residential solid waste service available to the proposed area for annexation? Yes Is commercial solid waste service available to the proposed area for annexation? Yes What is the estimated cost to provide this area with solid waste service? Equipment and Maintenance. Dependent on service level required Personnel. Dependent on service level required What is the typical revenue collected per: Household $15.00 / 30 days for a 96 gallon cart $2.07 / 30 days for curbside recycling Commercial Business: Dependent on size and service frequency of the container requested. Will additional equipment be needed to serve this area if annexed or developed? Type of Equipment. No Cost of Equipment. Not Applicable Will additional employees be needed to serve this area if annexed or developed? Type of Employees. No Number of Employees. Not Applicable Please comment on the cumulative impact of annexation and development. At what population level would additional equipment be required? Not Applicable Is there an accepted equipment to population ratio that can be used for planning purposes? No Is there an accepted employee to population ratio that can be used for planning purposes? No Additional Comments: None S. Lebsack 349-8069 Personto contactifthere are questions January 20,2004 Date Water/Wastewater What is the nearest City of Denton water line? Size of water line. 12" Location of water line. South side of Edwards Road Distance from proposed annexation. Adjacent What is the nearest City of Denton sewer line? Size of sewer line. parallel 21" and 24" mains Location of sewer line. through Flowers property Distance from proposed annexation, adjacent or through area According to the City of Denton master plan what type of lines and facilities would be required for this area and when are those lines and facilities proposed for construction. Size Year Location Water lines n/a Sewer lines n/a Are there any City of Denton lines included in the proposed annexation? Parallel 21" and 24" sewer mains 5. Please comment on the cumulative impact of annexation and development. At what population level would additional equipment be required? 18,750 Is there an accepted equipment to population ratio that can be used for planning purposes? One crew per 18,750 population Is there an accepted employee to population ratio that can be used for planning purposes? One employee per 5770 population Additional Comments: The former Andrews Corporation ( now Flowers Food) building is presently served by City of Denton water and sewer. Scott Jordan, P.E. 940-349-8350 Person to contact if there are questions 1 ~20~04 Date Electric Utilities 1. What is the distance to, location of, and size of the nearest City of Denton electric line? The south property has a utility easement with a DME overhead main line. In addition the Pockrus 138 kV / 13.2 kV substation is located across the Rails to Trails from this site. What type of lines and facilities would be required to serve this area? DME would need to build facilities directly involved with providinq electric service to Flower's Food (primary line and transformers). Are any new lines or facilities proposed for construction to serve this area? Additional main lines are planned out of the Pockrus Substaion. The routes of the main lines have not been determined at this time. 4. Are there any potential responsibilities if this area is annexed? N/A 5. Please comment on the cumulative impact of annexation and development. At what population level would additional equipment be required? N/A Is there an accepted equipment to population ratio that can be used for planning purposes? N/A Is there an accepted employee to population ratio that can be used for planning purposes? N/A Additional Comments: DME is talking with Flower's Food about the possibility of DME providing electric service to this site. Bill Bunselmeyer (940) 349-7328 Person to contact if there are questions 1 / 12 / 2004 Date ]0 ATTACHMENT 2 Location Map NORTH A03-0003 (Flowers Baking Company) CANARY LEAFY' BLUE JAY Location Map 11 ATTACHMENT 3 Public Notification NORTH Notification Map Public Notification Date: 200' Legal Notices* sent via Certified Mail: 500' Courtesy Notices* sent via 1st Class Mail: Number of responses to 200' Legal Notice · In Opposition: 0 · In Favor: 0 · Neutral: 0 February 2, 2004 3 4 Scale: None *A copy of the notification list can be picked up at City Hall West, 221 N. Elm Denton TX 76201 12 ATTACHMENT 4 ANNEXATION SCHEDULE A03-0003 Flowers Baking Company Tuesday, 2/17/04 Tuesday, 3~2~04 Wednesday, 3/10/04 Tuesday, 3~23~04 Tuesday, 5/4/04 City Council conducts first public hearin.q. · Public notice must be no less than 10 days and no more than 20 days before public hearing. [] Annexation Study prepared and available for public review. [] Service Plan prepared and available for public review. City Council conducts second public hearin.q. · Public notice must be no less than 10 days and no more than 20 days before public hearing. Planning and Zoning Commission public hearings - make a recommendation to City Council regarding the proposed annexation and the proposed zonin,q. City Council by a four-fifths vote institutes annexation proceedings. First readinq of annexation ordinance. · Action must be more than 20 days after the second public hearing but less than 40 days from the first public hearing. City Council by a four-fifths vote takes final action. Second readinq and adoption of the annexation ordinance. City Council considers approval of zoning request. · Council action must be more than 30 days after publication of ordinance and less than 90 days after council institutes annexation proceedings (adopts ordinance on 1st reading). 13 ATTACHMENT 5 CITY OF DENTON ANNEXATION PLAN FOR A03-0003 (Flowers Baking Company) i. AREA ANNEXED The annexation area is located in the southeast portion of DeMon's Extraterritorial Jurisdiction and comains approximately 19.51 acres generally located north of Pockrus Page Road, south of Edwards Road, and east of Mayhill Road. ii. INTRODUCTION This service plan has been prepared in accordance with the Texas Local Governmem Code, Sections 43.021, 43.065, and 43.065(b)-(o) (Vernon 1999, as amended). Municipal facilities and services to the annexed area described above will be provided or made available on behalf of the City in accordance with the following plan. The City shall provide the annexed tract the levels of service, infrastructure, and infrastructure maintenance that are comparable to the levels of service, infrastructure, and infrastructure maimenance available in other parts of the city with similar topography, land use, and population density. iii. AD VALOREM (PROPERTY OWNER) TAX SERVICES Police Protection, Code Enforcement, and Animal Control Police service, including patrolling, response to calls, and other routine functions, will be provided to the property upon the effective date of the annexation using existing personnel and equipment. Code enforcement and animal comrol services will also be provided to the property upon the effective date of the annexation. Fire Protection Fire protection (within the limits of existing hydrams) and emergency medical services will be provided to the property upon the effective date of the annexation. The estimated emergency response time in this area is 5 minutes, which is similar to responses for surrounding properties within the city limits. The City of Demon will provide emergency medical services ("EMS"). Roads and Streets Roads and streets, which have been properly platted, duly dedicated, and accepted by the City of Denton and/or Denton County shall be maintained by the City of Denton on the effective date of the annexation. Installation and maintenance of street signs, street lighting and traffic control devices will be maimained by the City of Demon on the effective date of the annexation. 14 IV. Parks and Recreation Facilities Parks and recreational facilities in the area to be annexed will begin upon the effective date of the annexation according to the 2000 Parks and Recreation Master Plan. No parks are currently located within the proposed annexation area. DeNon neighborhood park facilities are located within reasonably close distance of the proposed annexation area. Residems of the proposed annexation area will be able to use existing City of Denton park and recreation facilities and programs. Library Services Library services will be made available on the effective date of the annexation on the same basis and at the same level as similar library facilities are maimained throughout the city. Building Inspections and Consumer Health Services Building inspections and consumer health services will be made available on the effective date of the annexation on the same basis and at the same level as similar facilities are maimained throughout the City. Both services are provided on a "cost recovery" basis, and permit fees offset the costs of services delivered. Incomplete construction must obtain building permits from the Building Inspections Department of the City of Denton. Planning and Development Services Planning and developmem services will be made available on the effective date of the annexation. The Planning and Development Department curremly services this property by way of administration of Chapter 34 of the Code of Ordinances, concerning subdivision and land developmem regulations. City Council adopted The DeNon Plan, the city's 1999-2020 comprehensive plan, by Ordinance 99-439 on December 7, 1999. The Future Land Use Plan addresses both land in the city and its ET J, and the subject tracts comain Neighborhood Cemers and 100 year Floodplain/ Environmentally Sensitive Areas. The Denton Plan designates future land uses to manage the quality and quamity of growth by organizing the land use patterns, by matching land use imensity with available infrastructure, and by preserving floodplains as environmemal and open space corridors. The DeNon Plan will be used as a basis for final zoning classifications after the properties are annexed. UTILITY (RATEPAYER) SERVICES A. Solid Waste Collection Solid Waste Annexation Service Plan for A03-0003 (Flowers Baking Co.) 15 The City of Demon is the exclusive residemial and commercial Solid Waste service provider within Demon's city limits. The City Ordinance requires Solid Waste services for all residences and commercial businesses located in the City. The City of Demon Solid Waste Departmem is fully funded through the service fees charged, and receives no funding from city tax revenues. Solid waste refuse collection services will be provided to the newly annexed property immediately upon the effective date of the annexation. To request Solid Waste collection services, please telephone the City of Denton Customer Service Department at 940-349-8210 and submit an application to initiate service. To obtain City of Denton Solid Waste schedule, service, and rate information, please telephone the Solid Waste Customer Relations office at 940-349-8787. Commercial customers are required to complete and submit a Service Agreement to Solid Waste Customer Relations prior to being provided services. Commercial Refuse Services Each commercial business will be provided with a commercial comainer(s). Comainers are available in a variety of sizes utilizing both from load and roll off service. Collection frequencies will be established based on the container size selected and the waste volume generated. The most economical service is obtained by requesting the largest container available for the area, with the least amount of collection services possible. All refuse placed in the comainer for collection must be bagged to eliminate wind blown debris and littering. Refuse that is not placed in the comainer with the lid closed will not be collected. Refuse placed outside the comainer is subject to code enforcemem regulations, including potential fines. Commercial recycling services may be available. Please comact the Solid Waste Recycling Division at 940-349-8054 to discuss the potential for the City to provide commercial recycling services and to obtain recycling rate information. The construction and service requirements provided in the Denton Developmem Plan apply for all new developmem. For specific solid waste questions concerning commercial services or construction issues, please contact the Solid Waste Department at 940-349-8069. Landfill Service The City of Demon Solid Waste Landfill hours of operation are 7:00 a.m. to 4:00 p.m. Monday through Friday; and 7:00 a.m. to 12:00 p.m. on Saturdays. For disposal information and rates, please contact the Landfill Office at 940-349-7510. 16 VI. Water/Wastewater Facilities Maintenance of water and wastewater facilities in the area to be annexed that are not within the service area of another water or wastewater utility will begin upon the effective date of the annexation using existing personnel and equipmem. Curremly, the majority of the area to be annexed is not provided with water or wastewater service. City of Denton water and sewer lines are located along the boundaries of the annexation area. The City shall provide a level of water and wastewater service, infrastructure, and infrastructure maintenance that is comparable to the level of services, infrastructure, and infrastructure maintenance available in other parts of the city with topography, land use, and population density similar to those reasonably comemplated or projected in the area. Drainage Services Drainage maimenance will be provided to the property upon the effective date of the annexation. The City shall provide a level of drainage services, infrastructure, and infrastructure maintenance that is comparable to the level of services, infrastructure, and infrastructure maintenance available in other parts of the city with topography, land use, and population density similar to those reasonably comemplated or projected in the area. Electrical Services Denton Municipal Electric is certified by the State and is obligated to provide electric utility service to the annexation area should a request be made by a property owner. Electric utility service will be made available on the effective date of the annexation on the same basis and at the same level as similar facilities are maimained throughout the city. DeNon Municipal Electric is the current electric service provider for this site. OTHER SERVICES Other services that may be provided by the City, such as municipal and general administration will be made available on the effective date of the annexation. The City shall provide a 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 with topography, land use, and population density similar to those reasonably comemplated or projected in the area. CAPITAL IMPROVEMENTS PROGRAM (CIP) No new construction of additional water, sewer, street, and drainage facilities is contemplated within the annexed area as a result of this annexation because the annexed area on the date of annexation will have a level of full municipal services equal to other areas within the City having similar characteristics of topography, land use, and population density. Thus, no construction of public improvements is contemplated as a result of this annexation that would begin 17 within two and a half (2 1/2) years after the effective date of the annexation. The City shall consider construction of other public improvements as the needs dictate on the same basis as such public improvements are considered throughout the City for areas having similar characteristics of topography, land use, and population density. Vii. UNIFORM LEVEL OF SERVICES MAY NOT BE REQUIRED Nothing in this plan shall require the City 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. Viii. TERM This service plan shall be valid for a term of ten (10) years. service plan shall be at the discretion of City Council. Renewal of the IX. 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 (Vernon Supp. 2000). 18 AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: CM/DCM/ACM: February 17, 2004 Planning Department Jon Fortune, Assistant City Manager SUBJECT - SI03-0024 (Gas Well Amendments) Hold a public hearing and consider adoption of an ordinance amending Sub-Chapters 3 (Procedures), 16 (Subdivisions), 17 (EnvironmeNally Sensitive Areas), and 22 (Gas Well Drilling and Production) of the DevelopmeN Code associated with gas well drilling and production. The Planning and Zoning Commission recommends approval (5-1) with conditions. BACKGROUND ApplicaN: City of DeNon, DeNon TX The original Gas Well ordinance wen iNo effect in December 2001. In November of 2002 at a meeting with representatives of the gas well industry, requests were made to amend the ordinance to allow gas wells by right in the floodplain instead of by a Specific Use Permit (SUP) as the ordinance is now constructed. At the direction of the City Managers office staff began to work with representatives of the gas well industry to craft an amendment that responded to the industry's request. The amendmeNs also include screening, inspection requiremeNs and environmeNal monitoring (AttachmeN 1). For the past few months, staff has been working with represeNatives of the gas well industry, the Planning and Zoning Commission and City Council to bring forward amendmeNs to the ordinance, specifically, to allow gas well developmeN in floodplain fringes (AttachmeNs 6-7). ESTIMATED PROJECT SCHEDULE March 2, 2004: Effective date of the ordinance PRIOR ACTION/REVIEW November 12, 2003: December 3, 2003: January 6, 2004: January 14, 2004: February 11, 2004: Planning and Zoning Work Session Planning and Zoning Work Session City Council Work Session Planning and Zoning Work Session Planning and Zoning Work Session and Public Hearing FISCAL INFORMATION N/A FISCAL INFORMATION The Planning and Zoning Commission recommends approval (5-1, Holt opposed, Mulroy absent) with the following conditions: 1. Add notification of residences within 500 feet twenty-four hours prior to fracing of the well head as a standard requirement for all wells. 2. Revise any inconsistencies in terminology related to "development", "gas well operation" and "drilling". ATTACHMENTS 1. StaffAnalysis. 2. Points of Agreement. 3. Revised Gas Well Development Plat Checklist (underlined items are new text, struck out words are deleted). 4. Watershed Protection Permit Checklist. 5. Draft Ordinance 6. Exhibit A, Subchapter 3 amendments (underlined items are new text, struck out words are deleted). 7. Exhibit B, Subchapter 16 amendments (underlined items are new text, struck out words are deleted). 8. Exhibit C, Subchapter 17 amendments (underlined items are new text, struck out words are deleted). 9. Exhibit D, Subchapter 22 amendments (underlined items are new text, struck out words are deleted). 10. February 11, 2004 Planning and Zoning Commission minutes. Prepared By: RLA, ASLA Assistant Director of Planning and Development Respectfully submitted: Director of Planning and Development ATTACHMENT 1 Staff Analysis Summary_ of Request The following categories reflect the major focuses of the proposed amendments, Gas Well Development in Floodplains: Currently any gas well proposed to be development in a floodplain requires a Specific Use Permit (SUP). An SUP is a discretionary zoning process that requires a great deal of time and energy for both staff and the applicant. Staff was charged to work with representatives from the gas well industry in order to determine if specific regulations could be developed that would minimize the impact of the construction and operation of gas wells in floodplains and thereby allow gas well development in the floodplain by right. Through a number of meetings, points of agreement (Attachment 2) were reached and were utilized as the basis for the proposed changes to Sub-chapter 22 (Attachment 9). One point of agreement is that no development would occur in any floodway. Additionally, no gas well development will occur in a riparian buffer ESA. The proposed amendments would allow gas wells in all floodplain fringe areas. Although the major emphasis of the proposed amendments is on regulation of gas wells in floodplains (Attachment 9, §35.22.5.8), additional regulations have been developed for all gas wells (Attachment 9, §35.22.5) and include monitoring and environmental inspections in the ETJ. Inspection: With the exception of inspections by the Fire Marshall, the original gas well ordinance did not provide for any site inspections. Amendments have been added to the code that will provide for inspection of every well site (Attachment 9), including wells in the ETJ. All sites will be inspected to verify that the sites are being developed as approved, including but not limited to culverts, driveway, pad site and equipment locations, and erosion control and monitored for contaminants (see below). Additional inspections and reviews will be conducted when ESA (stream buffers, floodplain) is impacted. Additionally, a Watershed Protection Permit (Attachment 9, §35.22.5.A.8) will be required prior to approval of a Gas Well Development Plat associated with a well in an ESA. Two additional fees are being proposed (by a separate ordinance) based on the above mentioned regulations: 1. $1,300 for a Watershed Protection Permit (required for a gas well located in a riparian buffer or floodplain. 2. $1,200 for on-site inspection fee for all gas well sites. In addition to those fees, staff will also be proposing a tree mitigation fee of $100 per inch. This fee is associated with the requirements of Subsection 35.22.8.c(iii) (Attachment 9). $100 per inch of tree is an accepted local cost for planting new trees. Environmental Monitoring The potential impact of developing gas wells in and near floodplains on water quality is a major concern to staff. Therefore, part of the inspection fees collected will be utilized to set up an antidegradation water quality-monitoring program (Attachment 9). Screening: All Gas Well SUP's that have been approved near existing residential property have had a screening condition placed on them. Based on that practice a requirement is being added to the code that reads: "All well heads, storage tanks, separation facilities or other mechanical equipment located within 500' of a residential property shall be screened from the residential property with a 6' high solid screen fence, good side facing the residential property and/or a solid vegetative screen. Road Repair: The focus of the original ordinance was to have any damage to roads repaired by the operator that did the damage. With the number of different operators using the same roads, it is difficult to determine which operator did what damage to what road. Staff is proposing to amend the code at a later date to change the focus towards collecting money (based on an assessment for miles of non-state road used) and then the city would be responsible for repairs. Definitions: Additional definitions Subchapter 22 (Attachment 9). (related to the proposed amendments) have been added to Subchapter 3 (Procedures): Subchapter 3 ( Attachment 6) has been revised to add appeals for the Watershed Protect Permit and to add relief provisions related to Gas Wells (§35.3.10). Subchapter 16 (Subdivisions): Subchapter 16 (Attachment 7), specifically §35.16.19 has been revised to include information on the Watershed Protection Permit, procedures for Gas Well Development Plats and standards for approval of a Gas Well Development Plat have also been revised. Subchapter 17 (Environmentally Sensitive Areas) Subchapter 17 (Attachment 8) has been revised to provide cross references to the proposed gas well regulations in Subchapter 22. Checklists: Checklists for all developments are included in the Application Criteria Manual. The checklists are intended to assist developers and design professionals in the preparation of submittals and include the minimum information required to facilitate a complete staff review. Information and documents in the criteria manuals can be updated and modified by staff as procedures and requirements change. Prior to the revisions becoming effective, they must be posted for 30 days. Minor revisions to the existing Gas Well Development Plat Checklist (Attachment 3) are proposed to reflect and clarify existing practices. The Watershed Protection Permit Checklist (Attachment 4) is new and identifies the requirements staff believes are necessary to analyze the potential impact of a proposed gas well on an ESA. Comprehensive Plan Analysis With respect to floodplains and water quality, the underlying policy, identified in the Development Code and Chapter 5 (Environment) of the Denton Plan, is to preserve and protect floodplains to minimize flooding and maximize water quality. Allowing gas wells to be developed hv right in floodplains would be a shift in that policy which is not entirely supported or rejected by the Denton Plan. Below are a number of excerpts from Chapter 5 of the plan with a brief discussion of the impact of the proposed amendments. "The City of Denton recognizes the need to value its environmental resources appropriately. By identifying, protecting, and preserving those areas with significant ecological value, further loss of our natural heritage can be avoided. Minimizing environmental degradation and pollution is an associated priority." (pg. 101) Water Management Goals (pg. 106) · Preserve floodplain areas to improve water quality and maintain floodplain habitat. · Protect the water quality of our water supply reservoirs. Response: The proposed standards intend to mitigate the impact of developing gas wells in the floodplain; however, allowing any development in the floodplain is not true preservation but is development with mitigation. To minimize the impact on or loss of habitat, additional mitigation, of habitat could be required. Environmental Management Policies (pg. 102) · Development policies will emphasize environmental awareness, promote the ethical use of natural resources, and encourage the preservation of native habitat. Response: Although native habitat is not entirely preserved, the proposed amendments do provide standards that allow extraction of gas (a natural resource) with an emphasis on environmental protection. Additionally, the amendments propose that any tree within a floodplain that is cut down will be mitigated. Environmental protection will be an integral consideration in the development of policies concerning economic growth and community development. Response: The major emphasis of the proposed standards is on environmental protection. Appropriate protection measures and management techniques will be used to minimize harmful discharges directly to the environment. Response: The proposed standards (especially the monitoring) intend to minimize harmful discharges to the environment. Additional standards that could be considered include a closed loop system. A closed loop system would minimize the chance of a spill and/or leak from a "mud" pit. This system is not typically used by the industry due to the additional expense required, but is an option that is available. Site-specific pollution control techniques will be based on the environmental significance of the area and the pollution potential of the development. Response: The regulations do increase when a gas well is proposed in an environmentally significant area (floodplain). Environmental mitigation, or lessening of the force or intensity of developments will be considered for development in areas of ecological significance or sensitivity. Response: Mitigation is required for any tree removed in a floodplain. Additional mitigation could be required. Ecosystem Management Goals (pg. 103) Develop conservation and development priorities by: · Requiring proposed developments to protect the natural resources associated with the development site to the greatest extent possible. Response: If gas wells are allowed in the floodplains, the proposed regulations do provide a very high level of protection. Although additional mitigation requiremems could be developed, the policy question that needs to be addressed is how much protection and mitigation is needed to satisfy "to the greatest extent possible" and be confidem that the goals and policies of the Demon Plan are addressed. At the January 6, 2004 Work Session, City Council determined that the proposed regulations provide a level of protection consistent with the intent of the Denton Plan. Recommendation Staff recommends approval of the proposed revisions to the Developmem Code. ATTACHMENT 2 Floodplain Drilling Points of Agreement My comments are based on a meeting between myself, Jim Coulter, Howard Martin, Bob Cates (Lynx Oil), Ray Stevens (Devon energy) and Jay Ewing (Devon Energy) that took place on 11-6- 03 from 8:20 a.m. to 12:30 p.m. The points of agreement listed below were the main topic of discussion for this meeting. My comments, which are located below each point of agreement, reflect pertinent comments / additional considerations that were brought up during the meeting. 1. No drilling in the floodway. No equipment shall be stored in the floodway. This issue was agreed upon by all, and additional topics were discussed. For example, we discussed adding the language of "no pits or pad sites of any kind located in the floodway", and all parties were in agreement with adding this statement. All stream buffers should also have no equipment, pits, or pad sites located within the buffer (50-100 feet from the centerline of the stream on both sites, depending on the size of the drainage basin). There is still a potential issue concerning how we define floodways and floodplains. The oil and gas group indicated that this issue had been discussed with Engineering (Michael Anderson and Dave Salmon) and that the outcome of the discussion was that the currently available FEMA designation of floodplain and floodway would be used unless there is a disagreement. If a disagreement occurs, whichever party has the disagreement (the City or the oil/gas driller) will be responsible for performing the analyses needed to refute the FEMA map. I do not know if these issues were agreed upon as indicated by the oil and gas developers, but these issues must be resolved and written into the final ordinance. 2. No storage tanks shall be located in the floodplain. All agreed that no storage tanks would be located in the 100-year floodplain. There may be instances where the storage tank would be located within the fringe of a 100-year floodplain, but would be on a pad that is raised at least 2.5 feet above the 100-year floodplain level. The oil and gas developers also recommended placing steel containment tanks around all storage tanks to capture any materials that might leak from a tank if it was ruptured. This is apparently a common practice in the industry, and should not present a hardship to oil / gas developers. ESA assessments will be performed in those drilling locations, in identified floodplains and identified ESA areas. (For ESA's in the floodplain, revision to ESA protocol will be necessary) All parties were in agreement with this statement, and the oil / gas developers generally agreed to provide inspection fees to cover the costs of ESA inspections for all sites. We are working on the costs, and have worked out a draft cost allocation sheet for performing Page 1 of 4 ESA assessmems. One issue that curremly remains unresolved is the regulatory mechanism that would allow modifications to the Code. Curremly, the Code allows for modification of ESA map based on the discretion of the Director of Planning and Zoning (see DeNon Developmem Code 35.17.5.C). Applicams may also propose an Alternative Environmemally Sensitive Area Plan, as outlined in DDC 35.17.12. To date, the ESA assessmem process has only been performed on riparian buffers (not undeveloped floodplains). If a riparian buffer was determined to not be an ESA, the Director of Planning and Zoning would use this determination to justify modifying the ESA map to remove the area in question, thus removing the ESA requiremems. This process was needed, since some of the headwater ESAs indicated on the map did not really represem significam environmemal resources. However, undeveloped floodplains have always been imerpreted as being ESAs, and have therefore never been subjected to a review process. It seems, therefore, that the only mechanism within the Code that can be used to modify the regulatory requiremems of an undeveloped floodplain is Section 35.17.12. Any modification of 35.17.12 will require an SUP, which by definition will require a public hearing before both the Planning and Zoning Board and the City Council. Since the SUP process can take an appreciable amoum of time and resources, the oil and gas developers would like to see a process that allows the decision to drill in floodplain areas to be made at the discretion of staff. Whether or not this is possible, or even desirable, is a topic for discussion. However, this issue will need to be resolved before the existing ordinance can be modified. 4. Tree remediation plan will be developed for damage in floodplain & ESA's All parties were in agreemem with this statemem. The oil and gas developers did not think this would be a major issue for them, as they have some flexibility when locating pad sites and should be able to work around most trees. We are curremly working on an ESA assessmem protocol for undeveloped floodplains, which will likely be very tree oriemed. Tree preservation protocol for these areas will likely be more stringem that the protocol set forth in the currem draft tree ordinance for the City of DeNon. There will likely be some form of mitigation if there is no way to design a site without impacting trees. 5. No permitted pits in the floodplain. This seems to be a "non-issue", as most pits are now not permitted, according to the oil and gas developers. The is statement should read "no pits in the floodway, and no pits within the 100-year floodplain except mud circulation pits. If a pit is located in the 100- year floodplain, the developer would have to demonstrate that the construction of the pit would not violate floodplain fill requiremems. Drilling mud pits may be constructed in the floodplain, upon completion of drilling, pits shall be removed within 90 days. All plastic lining associated with pit construction shall be removed prior to closure of pits. Page 2 of 4 All agreed to this statement. The only additional issue to consider is that pits within the 100-year floodplain should be required by the code to have at least two feet from the level of the pit at full capacity and the level of mud within the pit. In other words, mud should not be any closer than 2 feet from freeboard in these pits. 7. Erosion control shall be provided for on all drilling sites located in floodplains, riparian ESA's, and any sites located within 100 ft of water of the U.S. All agreed to this provision. Coulter suggested using compost from Denton's composting operation as an erosion control mechanism. We suggested a compost berm that is at least 1 foot tall and 2 feet wide that surrounded the down gradient sides of the entire pad site. 8. Inspection of well sites for compliance with erosion control and stormwater runoff criteria. All agreed to this provision. The Utilities Department has worked up some preliminary costs for well inspections. The issue to be resolved is the regulatory mechanisms that will be available to the inspector. I would suggest having a mechanism to stop work at the site (maybe through the Fire Marshall's office) and the ability to realistically pursue the environmental damage bond that all oil and gas developers are required to obtain as a part of the permitting process. 9. An antidegradation water quality monitoring program will be conducted to protect water quality. All agreed to this provision. The final form of the monitoring program still needs to be worked out, but the oil and gas developers did not have a problem with being monitored. It is important to realize that ifa water quality problem is detected, it may be hard to determine who is at fault without more intensive monitoring. The Utilities Department has worked up some preliminary costs for the monitoring program, which include both staff time and monitoring equipment. The oil and gas developers recognize the public perception benefits of this monitoring, and agreed that a fee for this service was reasonable. The ultimate dollar amount of this fee still needs to be finalized, and will be determined somewhat by how much monitoring is done, and how often. Monitoring will likely need to be conducted on a very routine basis, as oil and sediment pollutants can move around quickly in the environment. Additional monitoring of the amount of oil contamination in the mud circulation pits will likely be considered. According to the oil and gas developers, it is a common practice to dig a trench around the drilling machinery to capture any stormwater runoff from the site. This runoff can contain oil, diesel, and other hydrocarbons from the machinery used for drilling. We may consider using a measure of Total Petroleum Hydrocarbons (TPHs) or Benzene, Toluene, Ethylene, and Xylene (BTEX) within the pit as a measure of good housekeeping. It seems appropriate to base the regulatory limits of these contaminants for the pits on the regulatory limits set by the TCEQ for the release of water contaminated with these compounds. According to Page 3 of 4 TCEQ regulations, the following are the maximum allowable concentrations for the various compounds: Compound Concentration limit TPH 15 mg/L BTEX 500 ug/L Benzene 50 ug/L From 30TAC 321.131.138 10. Inspections of well sites and water quality monitoring program will be funded through additional inspection fees. All, as outlined above, agreed upon this issue. 11. This ordinance shall apply to wells in the City Limits and ETJ requesting plats to drill in floodplains or ESA's. This issue was agreed upon by all, but Dottie Palumbo in legal is still researching the legalities of applying our ESA ordinances in the ETJ. Page 4 of 4 PLANNING AND DEVELOPMENT DEPARTMENT City Hall West- 221 N Elm - Denton, Texas 76201 voice: (940) 349-8350 fax: (940) 349-7707 www.cityofdenton.com Gas Well Development Plat Checklist Attachment 3 Failure of applicant to provide required information or obtain waiver from DRC Chair constitutes grounds for refusal of plat acceptance for processing, or staff recommendation of denim when application is scheduled for consideration. Please note that this checklist is intended to assist developers and design professionals in the preparation of submittals for DRC review and are generally what is needed to facilitate the review of the gas well development plat. Under special circumstances, additional items may be required through the Development Review Committee process prior to approval. See DRC Submission Date schedule for application submission deadlines. A complete application form, the appropriate fee (as listed on the Development Review Fee Schedule) and a total of twelve (12) copies of the plan (individually folded) are required for each submission. Any person who proposes extraction of gas on a tract of land located within the corporate ~ts or witch Division 1 of thc City's Extraterritorial Jufis&cfion, and is not required by chapter 34 to prepare a preli~naW plat or final plat, shM1 prepare a gas we~ development plat. (1) Gas we~ development plats shM1 be processed in accordance wit TEX. LOC. GOV'T CODE ANN. ~212.041 through 212.050 yernon Supp. 1994) and no new gas development may begin on property until the gas development plat is filed and approved by the city in accordance with such section 34-34. (2) ~ proposed gas development sha~ be in comphance with the Roadway Component of the Mobility Plan. (3) Erosion control is required and shM1 comply with a~ Local, State and FederM requirements. The operator shM1 Ftc a copy of the Storm water Pollution Plan if required by the EPA. (4) Reserve pits closer than 200' of a body of water, creek or floodplMn sha~ be hned to prevent water po~uhon. (5) ...... .A copy of the determination by the Texas Com~ssion on EnvironmentM QuMity of the depth of usable quMityground water. (6) Prior to approvM of a gas development plat or per,t, a Road Repair A~eement, that w~ obhgate the operator to repair damage to pubhc streets including but not h~ted to bridges, caused by the operator (or by the operator's employees, agents, contractors, or representatives) in the performance of any actMty authorized by or contemplated by the approved Gas Well Petit must be executed by the City of Denton. The City manager shM1 have the authority to enter into the Road Repair A~ccment. (7) Prior to approvM of a gas development plat or permit thc rcqMrcd insurance and pcrGrmancc bonds sha~ be Gmardcd to thc Legal Department for review and approval. (8) In addition to thc requirements of Scchon 35.16 (Contents of prch~nary plat, if apphcablc) a gas wc~ development plat sha~: ~ Identify truck routes ..... .to be usc for dchvcW of water. ~ Idcnfi~ location and dimensions of cxishng or proposed driveway(s) to be used. ~ Identify EnvironmcntMly Scnsihvc Areas (ESA's) any proposed floodplain, creek and stream crossings. ~ floodplain, creek and stream crossings, if not at ~adc, sha~ be designed to a 1 O-year storm frequency. ~ floodplain crossings shM1 have no negative affects on surrounding property. A drMnagc study sufficient to substantiate thc above rcqMrcmcnts wi~ be required as part of thc sub~ttal if crossings arc proposed. ~ Show thc location and usc of a~ structures within 500 feet of thc gas well. ~ Identify thc proposed source of water. Page 1 of 3 C:\laholley\Backup 2004\CC Feb 17th\SI03-0024 Gas Well Amendments\3. SI03-0024 Gas Well Amend Checklist.docS: ,City Cmmc~l ~clru~ ,299~ CC ~cln:~ ,92 17 9~ ,SI9~ 992~ ,~ C~ ?/ell Dc:'cl~mcnt PLANNING AND DEVELOPMENT DEPARTMENT City Hall West- 221 N Elm - Denton, Texas 76201 voice: (940) 349-8350 fax: (940) 349-7707 www.cityofdenton.com Gas Well Development Plat Identify and show proposed method of erosion control. Identify the location of proposed lease lines and well locations. [] Label distance between wells and property lines. Checklist Label distance between wellheads and structures within 500 feet of wellheads. Label distance between temporary holding ponds and floodplains. [] Provide typical well site schematics showing layout during drilling and upon completion of drilling. [] Show location of all proposed underground pipelines. As built drawings shall be filed with the City. proposed in public right-of-ways shall require a Right-of-way Use Agreement. [] Identify if pipelines connect with a Gas Distribution System. All pipelines General Requirements [] An application form, thc appropriate fcc (as listed on thc Development Review Fee Schedule) and a tot~ of twelve (12) copies in&viduaHy) folded with name of project in lower right corner. ~ Drawn to sclc: 1" = 50' or 1" = 100' (smaller of larger scale may be accepted o~y if approved by Development Review Com~ttcc Char). ~ Drawn on a sheet size of 18" X 24" or 24" x 36" (smiler of larger sheet size may be accepted only if approved by Development Review Com~ttcc Char). Legend of instruments on thc gas wall development plat - preferred. ~ Thc date, written and grap~c scale, north arrow, proposed name of thc development, key map showing thc location of thc development in relation to existing streets and ~ghways and dates of preparation and revisions. ~ Tide Block contai~ng: Proposed name of thc subdivision or lot on record, acres in platted and unplattcd land and tot~ of those acres, sun-cy and jurisdiction (City of Denton, County of Denton, Texas, for example). The date of a cation; and revision date s, Thc ....... , ....... , ....F .................................. , ~ The name, ~address phone number and emil address of the property owner or owners, ~ner~ owners, ~ner~ lessee and the planners, regfistered engineer, sun-eyor or other representatives processing the gas well development plat. ~ The names of the record owners of contiguous undeveloped lands. Name of the subdivider or developer, record owner or owners and the planners, regfistered engfineer, sun-eyor or other representatives processing the (GWD~) plat. ~ The name of each gas well and its operator's name. ~ Any ciu, or extraterritorial hnes traversing or on the boundaW of the development. ~ Include signature block for the Development Review Com~ttee Ch~rman, the City Secretary. Property owner, a representative responsible for processing the gas well development plat and design professionals must ~so sign the gas well development plat. Boundaries, Acreage, Zoning and Uses The development boundaW hnes, shown by contiguous dark lines of sufficient width to be easily identified. The total acreage within the development, the identification of each existing and proposed type of land use, and the acreage of each use. ~ existing or proposed lots and blocks identified by letter or number witNn the development and the names and lot patterns of contiguous developments, shown by dotted or dashed hnes. ~ The existing and proposed zo~ng of the land to be developed and the zo~ng of adjacent land. ~ The location and identification of ~1 existing b~ldings, paring lots, driveways, and other sig~ficant structures. Page 2 of 3 C:\laholley\Backup 2004\CC Feb 17th\SI03-0024 Gas Well Amendments\3. SI03-0024 Gas Well An, end Checklist.docS: ,City Catmcll Backap ,299q CC Bacln:p ,92 17 9q ,S193 992q ,3 Caa ?/ell Dcvclapmcnt PLANNING AND DEVELOPMENT DEPARTMENT City Hall West- 221 N Elm - Denton, Texas 76201 voice: (940) 349-8350 fax: (940) 349-7707 www.cityofdenton.com Gas Well Development Plat Checklist Utilities [] Identify and show the identification, location and size of all existing public facilities, including water and sanitaW sewer lines and the associated easements that are located within or on the boundaries of the development. [] The identification, location, and size of all existing water and sanitary sewer lines and the associated easements that are proposed to serve the development, showing the location, size, and distance of any existing lines to which connections are proposed. [] Detailed information on the means by which any alternative water or sanitary sewer service is to be provided, such as be wells or septic systems. [] The location and routing of all existing or proposed lines, easements, and facilities for providing electrical services for the development. [] The identification, location and size of all existing gas, petroleum, or similar common carrier easements located within or on the boundary of the development. Streets, Sidewalks and Driveways [] The identification, location and size of all existing streets and street rights-of-way located within the development or adjacent developments. [] The identification, location, and size of all proposed streets, sidewalk and slope rights-of-way which are to serve the development, showing the proposed connection or alignment with existing or proposed streets in adjacent developments. Where there is no adjacent development and there are arterial or collector streets proposed for the development, a key map shall be included to show the proposed future alignment and connection of the arterial or collector streets to the same type of streets in the nearest development. [] The location and width of any existing or proposed driveways that accesses or proposed to access any existing or proposed arterial street located within or on the boundary of the development. [] If a Road Repair Agreement is required, a video documenting the existing road conditions will be required prior to approval of the Road Repair Agreement. Drainage [] The topography of the existing land included within the development and any major changes in topography resulting from development as shown by contour lines of two (2) foot vertical intervals. Upon prior approval of the city en~fineer, different contour intervals may be used. [] The identification, location, and approximate dimensions of all existing and proposed water courses, ponds, detention ponds, ditches, channels, floodway and floodplain boundaries, storm water improvements, drainage easements, or similar natural or man-made drainage facilities or features located within or outside the boundaries of the development that do or will affect or impact stormwater drainage on or across the site. [] Identify and show proposed method of erosion control if applicable (may be accomplished in notes). [] Minimal drainage requirements: [] Label and show any FEMA 100-year floodplain and floodway on the plan. Label and show centerline of any stream, creek, swale, etc. [] Proposed top of drilling pad site elevation. [] Show location, size, length and type of existing and proposed driveway culverts. All culverts shall be RCP or aluminized Type II pipe. [] Provide Drainage area map and supporting calculation per drainage criteria manual for all drainage areas contributing to the proposed driveway culverts and flood plain crossings Page 3 of 3 C:\laholley\Backup 2004\CC Feb 17th\SI03-0024 Gas Well Amendments\3. SI03-0024 Gas Well An, end Checklist.docS: ,City Ct:tn;cH Backup ,299q CC Backup ,92 17 9q ,8193 992q ,3 Cas \VJcll Dcvck:pmcnt Attachment 4 PLANNING AND DEVELOPMENT DEPARTMENT City Hall West - 221 N Elm - Denton, Texas 76201 voice: (940) 349-8350 fax: (940) 349-7707 www.cit¥ofdenton.com Watershed Protection Permit Checklist Failure of applicant to provide required information or obtain waiver from DRC Chair constitutes grounds for refusal of permit acceptance for processing, or staff recommendation of denim when application is scheduled for consideration. Please note that this checklist is intended to assist developers and design professionals in the preparation of submittals for DRC review and arc generally what is needed to facilitate the review of the Watershed Protection Permit. Under special circumstances, additional items may be required through the Development Review Committee process prior to approval. See DRC Submission Date schedule for application submission deadlines. A complete application form, the appropriate fee (as listed on thc Development Rc¼cw Fcc Schedule) and a total of five (5) sets of the plan (indi¼dually Glded) are required for each submission. Any person who proposes extraction of gas within a floodplain, an ESA or within 1200 feet of the flood pool elevation of Lake Ray Roberts or Lake Lewis¼lle within the corporate limits or within DMsion 1 of the City's Extraterritorial Jurisdiction shall prepare a Watershed Protection Permit (kVPP). General Requirements [] An application form, the appropriate fee (as listed on the Development Review Fee Schedule) and a total of five 5) copies indMdually) folded with name of project in lower right corner. [] Drawn to scale: 1" = 50' or 1" = 100' (smaller of larger scale may be accepted only if approved by Development Review Committee Chair). [] Drawn on a sheet size of 18" X 24" or 24" x 36" (smaller of larger sheet size may be accepted only if approved by Development Review Committee Chair). Legend of instruments on the ~Vatershed Protection Permit - preferred. [] The date, written and graphic scale, north arrow, proposed name of the development, key map showing the location of the development in relation to existing streets and highways and dates of preparation and revisions. [] Tide Block containing: Proposed name of the subdMsion or lot on record, acres in platted and unplaned land and total of those acres, survey and jurisdiction (City of Denton, County of Denton, Texas, for example). [] The date of application and revision date(s). [] The name, address phone number and email address of the property owner or owners, mineral owners, mineral lessee and the planners, regfistered engfineer, surveyor or other representatives processing the Watershed Protection Permit. [] The names of the record owners of contiguous undeveloped lands. Name of the subdMder or developer, record owner or owners and the planners, registered engfineer, surveyor or other representatives processing the Watershed Protection Permit (WPP). [] The name of each gas well and its operator's name. [] Any city or extraterritorial lines traversing or on the boundary of the development. [] Identify proposed erosion control practices. Compost berms that are at least 1 foot high and two feet wide, or equivalent erosion control devices, shall be installed so that all portions of the well pad that may drain off-site are contained. [] Identify proposed slopes within the gas well drill sites. No gas well drill sites shall be allowed on slopes greater than ten (10) percent. [] Locate any fresh water well within 500' of the proposed well. No gas well permit will be issued for any well where the center of the well at the surface of the ground is located within 250 feet of an existing fresh water well intended for domestic use. [] Identify proposed waste minimization practices as established by the Railroad Commission. Page i of 3 C:\laholley\Backup 2004\CC Feb 17th\$I03-0024 Gas Well Amendments\4. $103-0024 Gas Well AMEND WPP Checklist.doc Form Updated: 2/2004 PLANNING AND DEVELOPMENT DEPARTMENT City Hall West - 221 N Elm - Denton, Texas 76201 voice: (940) 349-8350 fax: (940) 349-7707 www.cit¥ofdenton.com Watershed Protection Permit Checklist [] Identify Environmentally Sensitive Areas (ESA's) any proposed floodplain, creek and stream crossings. [] Identify any proposed achvity/disturbance (driveway, pipelines, storage tanks .... ) within limits of ESA. [] Field locate any proposed disturbance within the limits of ESA including but not limited to: o Limits of disturbance o Centerline of any proposed driveway or road within the limits of ESA including; · Points of curvature · Points of tangency · 50' stationing [] Tree Inventory, including size (dbh) and species of all trees within 50 feet of any area to be disturbed. o Any request to remove tree(s) shall be accompanied by a letter from a certified geologist or engdneer that indicates why the well site cannot be located to avoid the trees. o Tree mitigation for gas wells located in a floodplain fringe or other ESA shall be required and shall be calculated on a 1:1 replacement value for 100% of the dbh of trees removed from the drill site. Tree mitigation shall be accomplished by planting replacement trees, within a floodplain, on-site or off-site with similar tree species or by payment into a tree fund. Tree mitigation funds that are specific to ESA's will be kept separate from other tree funds and will only be used to either acquire wooded floodplain or riparian property that remains in a naturalistic state in perpetuity, or to purchase conservation easements within riparian or floodplain areas. Funds may be used to purchase, plant, and maintain trees on public property, as long as the public property is within a riparian area or floodplain. o Tree Mitigation funds shall be paid prior to final approval of a gas well development plat in a Flood Fringe or other ESA. [] The topography of the exishng land included within the development and any major changes in topography resulting from development as shown by contour lines of two (2) foot vertical intervals. Upon prior approval of the city engdneer, different contour intervals may be used. [] The identification, location, and approximate dimensions of all existing and proposed water courses, ponds, detention ponds, ditches, channels, floodway and floodplain boundaries, storm water improvements, drainage easements, or similar natural or man-made drainage facilities or features located within or outside the boundaries of the development that do or will affect or impact stormwater drainage on or across the site [] Identify the proposed source of water. [] Identify the locahon of proposed lease lines and well locahons. [] Label distance between temporary holding ponds and floodplains. [] Provide typical well site schematics showing layout during drilling and upon completion of drilling. Boundaries [] The development boundary lines, shown by contiguous dark lines of sufficient width to be easily identified. Utilities [] Detailed information on the means by which an); alternative water or sanitary sewer service is to be provided, such as be wells or septic systems. Page 2 of 3 C:\laholley\Backup 2004\CC Feb 17th\$I03-0024 Gas Well Amendments\4. $103-0024 Gas Well AMEND WPP Checklist.doc Form Updated: 2/2004 PLANNING AND DEVELOPMENT DEPARTMENT City Hall West- 221 N Elm - Denton, Texas 76201 voice: (940) 349-8350 fax: (940) 349-7707 www.cit¥ofdenton.com Watershed Protection Permit Checklist Drainage: [] Minimal drainage requirements: [] Label and show any FEMA 100-year floodplain and floodway on the plan. Label and show centerline of any stream, creek, swale, etc. [] Proposed top of drilling pad site elevation. [] Provide Drainage area map and supporting calculation per drainage criteria manual for all drainage areas contributing to the proposed driveway culverts and flood plain crossings [] Storage tanks or separation facilities, serving one well head, may be placed in the Flood Fringe or ESA under the following conditions: [] These facilities shall be constructed at least 18-inches above the established Base Flood elevation plus the surcharge depth for encroachment to the limits of the floodway having a one-percent chance of being equaled or exceeded in any year. [] A hydrologfic and hydraulic engineering study shall be performed by a Certified Engineer. The study shall be submitted to the Engfineering Department in a technical report for review by the City Engineer or his designated representative. The report shall demonstrate that the proposed facilities will have no adverse impacts on the carrying capacity of the adjacent waterway nor cause any increases to the elevations established for the floodplain. When the Special Flood Hazard Areas (SFHA) on the subject site is designated as "Zone A" on the FIRM Panel, or the SFHA is not identified on the FIRM Panel, the following approximate method may be used to evaluate the impacts from gas well development. A flow rate shall be calculated using procedures set forth in the City of Denton Drainage Criteria Manual. Using Manning's Equation with an estimate of the average slope of the stream, measurements of a single irregular cross-section geometry at the well site, and the 100-year discharge rate, the average vdocity and normal depth may be calculated. Calculations shall be provided for the unaltered existing channel cross-section and for the proposed modified channel cross-section and submitted to the City for review and approval prior to construction within these areas. Page 3 of 3 C:\laholley\Backup 2004\CC Feb 17th\SI03-0024 Gas Well Amendments\4. SI03-0024 Gas Well AMEND WPP Checklist.doc Form Updated: 2/2004 S:\Our Documents\Ordinanees\04\SI03-Gas Well amendments.doc ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON, TEXAS, AMENDING PORTIONS OF SUBCHAPTER 3 (PROCEDURES), SUBCHAPTER 16 (SUBDIVISIONS), SUBCHAPTER 17 (ENVIRONMENTALLY SENSITIVE AREAS, AND SUBCHAPTER 22 (GAS WELL DRILLING AND PRODUCTION). OF THE DENTON DEVELOPMENT CODE, PROVIDING FOR A PENALTY CLAUSE WITH A MAXIMUM AMOUNT OF $2,000.00 FOR VIOLATIONS THEREOF; AND PROVIDING FOR AN EFFECTIVE DATE. (SI03-0024) WHEREAS, pursuant to Ordinance No. 2002-040 the City Council of the City of Denton, Texas adopted the Denton Development Code (the "Development Code"); and WHEREAS, after providing notice and after conducting a public hearing as required by law on February 11, 2004, the Planning and Zoning Commission recommended approval of certain changes to Subchapters 3, 16,17 and 22; and WHEREAS, after providing notice and after conducting a public heating as required by law, the City Council finds that the subject changes to the Development Code are consistent with the Comprehensive Plan and are in the public interest; NOW, THEREFORE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. Subchapter 3 of the Development Code is hereby amended in part as particularly described in Exhibit "A" attached hereto and made part hereof by reference. All other provisions ofsubchapter 3 not inconsistent with the amendment shall remain in full force and effect. SECTION 2. Subchapter 16 of the Development Code is hereby amended in part as particularly described in Exhibit "B" attached hereto and made part hereof by reference. All other provisions of subchapter 16 not inconsistent with the amendment shall remain in full force and effect. SECTION 3. Subchapter 17 of the Development Code is hereby amended in part as particularly described in Exhibit "C" attached hereto and made part hereof by reference. All other provisions of subchapter t7 not inconsistent with the amendment shall remain in full force and effect. SECTION 4. Subchapter 22 of the Development Code is hereby amended in part as particularly described in Exhibit "D" attached hereto and made part hereof by reference. All other provisions of subchapter 22 not inconsistent with the amendment shall remain in full force and effect. SECTION 5. Any person violating any provision of this ordinance shall, upon conviction, be fined a sum not exceeding $2,000.00. Each day that a provision of this ordinance is violated shall constitute a separate and distinct offense. PAGE 1 S :\Our Documents\Ordinances\04kgI03-Oas Well amendments.doc SECTION 6. If any section, subsection, paragraph, sentence, phrase or word in this ordinance, or application there of to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not effect the validity of the remaining portions of this ordinance, and City Council of the City of Denton, Texas hereby declares it would have enacted such remaining portions despite any such invalidity. SECTION 7. This ordinance shall become effective fourteen (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, a daily newspaper published in the City of Denton, Texas, within ten (10) days of the date of its passage. PASSED AND APPROVED this the __day of ,2004. EULINE BROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY PAGE 2 Exhibit A Subchapter 3 Development Code Subchapter 3 - Procedures Sections: 35.3.1 35.4.2 35.3.3 35.3.4 35.3.5 35.3.6 35.3.7 35.4.8 35.4.9 Purpose. Procedures and Application Requirements. Denton Plan Amendment Procedure. Zoning Amendment Procedure. Planning and Zoning Commission Procedure. Board of Adjustment Procedure. Staff Review Procedure. Local Permit Procedure. Religious Freedom Procedures. 35.3.1 Purpose. The purpose of this Subchapter shall be to establish procedures for the processing of planning actions that affect the development and use of property subject to the planning jurisdiction of the City. 35.3.2 Procedures and Application Requirements. All planning actions shall be processed by one of fl~e following procedures: 1. Denton Plan Amendment: requiring action by fl~e City Council after recommendation from fl~e Planning and Zoning Commission. 2. Zoning Amendment: requiting action by fl~e City Council after recommendation from the Planning and Zoning Commission. 3. Planning and Zoning Commission: requiring action by fl~e Planning and Zoning Commission. 4. Board of Adjustment: requiting action by fl~e Board of Adjustment. 5. Staff Review: requiring action by City Staff. 6. Local Permit: requiting action by fl~e Director of Planning and Development. 7. Religious Freedom: requiring action by City Council. Application and Approval Requirements: 1. A record owner or the record owner's agent may file an application for a planning action required by tiffs Chapter. The Director or Building Official may require an applicant to provide documentation of the applicant's authority to file an application. 2. The Director may adopt roles establishing fl~e requirements for any application required under tiffs Chapter. The rules shall be published in fl~e Application Criteria Manual. The rules shall include the information required by fl~e Director or fl~e Building Official to determine if fl~e application is complete. 3. A complete application shall be submitted along wifl~ the application fee. The fees shall be established by fl~e City Council and be published in fl~e Application Criteria Manual. 4. The Director or fl~e Building Official shall disapprove an application and shall not accept an application unless fl~e application is complete. An application is complete if fl~e application contains the information required by the Application Criteria Manual. 5. The applicant may resubmit the application for approval by fl~e Director or the Building Official along wifl~ fl~e resubmittal fee according to fl~e Application Criteria Manual. 3-1 Subchapter 3 Development Code 6. An Applicant may appeal the disapproval of an application to the Board of Adjusm~ent. 35.3.3 Denton Plan Amendment Procedure. A. The following actions shall follow the Denton Plan Amendment Procedure: 1. Consider adoption of a new comprehensive plan or amendment to The Denton Plan. 2. Consider adoption of a new development code. 3. Consider an application for a zoning change that does not confom~ to the Furore Land Use element of The Denton Plan. B. Criteria for approval - Generally: 1. A complete application and fee shall be submitted. 2. The application shall address the impact of the proposed change on the following: a. The Goals and Objectives of The Denton Plan, b. The Furore Land Use element of The Denton Plan, c. The balance of land uses in the City; d. Adequate Public Facility elements of the Denton Plan, and how the proposed change will affect the provision of the services anticipated in The Denton Plan. 3. The actions in Section 35.3.3.A shall be further evaluated under the following factors to balance the interest in promoting the public health, safety, morals, or general welfare against the right to the use of the property in issue: a. The existing land use pattern surrounding the property and the possible impact on existing or furore development or uses that are in accordance with existing regulations; b. The possible creation of an isolated district unrelated to adjacent and nearby districts; c. The population density in order to facilitate the adequate provision of transportation, water, sewer, schools, parks, public convenience, and other public requirements; d. The cost to the City and other governmental entities in providing, improving, increasing or maintaining public utilities, schools, streets and other public safety measures; e. The possible in, pact on the environment, including but not limited to, drainage, soil erosion and sedin~entation, flooding, air quality and water quantity; f. Whether there are substantial reasons why the property cannot be used in accordance with existing zoning or that proposed by the Furore Land Use Map; and g. The action shall be made with reasonable consideration of the character of the district and its peculiar suitability for particular uses, and with a view of conserving the value of buildings and encouraging the most appropriate use of land throughout the City. C. Procedure: 1. Initiation may be made by: a. Recommendation of the City Council. b. Recommendation of the Planning and Zoning Commission. c. Recommendation of the City Manager. 3-2 Subchapter 3 35.3.4 Development Code d. Application by the property owner(s). As outlined in the Application Criteria Manual, the application shall be executed by all property owners, or their authorized agents. 2. If initiated by the property owner, the application must be submitted at least ninety (90) days prior to the first meeting of the Planning and Zoning Commission in January, April, July or October. A public heating shall be held before the Planning and Zoning Commission in accordance with state law. 3. Following the public hearing before the Planning and Zoning Commission, the Planning and Zoning Commission shall make a report and forward the report to the City Council in accordance with the City Charter and state law. 4. A public hearing shall be held before the City Council as required by state law. a. Notice of such heating shall be given by publication in a newspaper of general circulation in the City stating the time and place of such heating, which time shall not be earlier than fifteen (15) days from the date of publication. b. The adoption or amendment of a new comprehensive plan or the adoption of a new development code shall become effective by a sin~ple majority vote of all members of the City Council qualified to vote. c. The adoption of a zoning change that does not confom~ to the Furore Land Use element of the Denton Plan to follow the procedures outlined in Section 35.3.4.C. d. After closing the public heating, the City Council may take action consistent with The Denton Plan. 5. If an application is denied, then the subject property shall not be eligible for resubmittal for twelve (12) months unless the applicant can show a substantial change in circun~stances to justify a resubmittal. Appeals: 1. The City Council decision is a final action and may not be appealed. Zoning Amendment Procedure. The following actions shall follow the Zoning Amendment Procedure: 1. Consider an amendment to the Denton Development Code. 2. Consider an application for a zoning change that confom~s to the Future Land Use element of the Denton Plan, 3. Consider an application for a Specific Use Pemfit. 4. Consider an application for an Exaction Variance from the Subdivision Regulations. 5. Consider an application to expand a Special Exception. 6. Consider an application for an Alternative Development Plan. Criteria for approval - Generally: 1. A complete application and fee shall be submitted. 2. Applications may be approved when the following standards are met: a. The proposed rezoning confom~s to the Furore Land Use element of The Denton Plan. b. The proposed Specific Use Pemfit meets the criteria set forth in Subchapter 6, and confom~s to the purpose and intent of The Denton Plan. 3-3 Subchapter 3 Development Code c. The proposed rezoning or Specific Use Pemfit facilitates the adequate provision of transportation, water, sewers, schools, parks, other public requirements and public convenience. d. The proposed Exaction Variance is appropriate based on a finding that the imposition of the regulation(s) exceeds any reasonable benefit to the property owner or is so excessive as to constitute confiscation of the tract to be platted. e. The proposed Special Exception (or expansion) to the zoning regulations is appropriate based on the character and use of adjoining buildings and those in the vicinity, the number of persons residing or working in such building or upon such land, traffic conditions in the vicinity, and confom~ance of such area to the Zoning Map and The Denton Plan. In granting a special exception the board may designate conditions that, in its opinion, will secure substantially the purpose and intent of this Chapter. A special exception shall only be granted upon a finding that: i The exception is in ham~ony wifl~ tiffs Chapter; ii The public welfare and convenience are substantially served; iii Neighboring property is not substantially injured; iv The exception will not alter essential character of fl~e district and inm~ediate neighborhood; and The exception will not weaken fl~e general purposes of tiffs Chapter. f. Development Plans meet fl~e intent of fl~e Denton Plan and V The proposed Alternative Development Code. Procedure: Initiation of a Zoning Amendment procedure may be made by: a. Recommendation of the City Council. b. Recommendation of fl~e Planning and Zoning Commission. c. Recommendation of the City Manager. d. Application by fl~e property owner, or fl~eir authorized agent. 2. A public hearing shall be held before the Planning and Zoning Commission in accordance with state law. 3. Following the public hearing before the Planning and Zoning Commission, the Planning and Zoning Commission shall make a report and forward the report to the City Council in accordance with the City Charter and state law. 4. A public hearing shall be held before the City Council as required by state law. a. Notice of such heating shall be given by publication in a newspaper of general circulation in the City stating the time and place of such heating, which time shall not be earlier than fifteen (15) days from the date of publication. b. If a proposed amendment has been denied by the Planning and Zoning Commission, such amendment shall not become effective except by a three-fourths (3/4) vote of all members of the City Council qualified to vote. c. If a proposed rezoning of property has been protested in writing by the owners of at least twenty percent (20%) of the area within two hundred feet (200'), such amendment shall not become effective except by a three-fourths (3/4) vote of all members of the City Council qualified to vote. 5. After closing the public hearing, the City Council may take action consistent with The Denton Plan and the Development Code. 3-4 Subchapter 3 35.3.5 Development Code 6. If an application is denied, then the subject property shall not be eligible for resubmittal for twelve (12) months unless the applicant can show a substantial change in circun~stances to justify a resubmittal. Appeals: 1. The City Council decision is final and may not be appealed. Planning and Zoning Commission Procedure. The following actions shall follow the Planning and Zoning Commission Procedure: 1. Consider an application for a Plat. 2. Consider an application for a Hardship Variance from the Subdivision Regulations. Criteria for approval - Generally: 1. A complete application and fee shall be submitted. 2. Applications may be approved when the following standards are met: a. The proposed Plat meets the requirements of Subchapter 16 and state law. b. The proposed Hardship Variance is appropriate based on a finding that unreasonable hardships or difficulties may result from strict compliance with the subdivision regulations or the purposes of the regulations may be served to a greater extent by an alternative proposal. A variance may be approved so that substantial justice may be done and the public interest secured; provided that the variance shall not have the effect of nullifying the intent and purpose of these regulations; and further provided the Planning and Zoning Commission shall not approve variances unless it shall make findings based upon the evidence presented to it in each specific case that: i The granting of the variance will not be detrimental to the public safety, health, or welfare or injurious to other property; ii The conditions upon which the request for a variance is based are unique to the property for which the variance is sought and are not applicable generally to other property; iii Because of the particular physical surroundings, shape or topographical conditions of the specific property involved, a particular hardship to the owner would result, as distinguished from a mere inconvenience, if the strict letter of the subdivision regulations is carried out; iv The variance will not in any manner vary the provisions of The Denton Plan, the Development Code, and the Denton Mobility Plan, except that those documents may be amended in the manner prescribed by law; and Procedure: 1. Initiation of a Planning and Zoning Commission procedure may be made by: a. Recommendation of the City Manager. b. Application by the property owner, or their authorized agent. A public hearing shall be held before the Planning and Zoning Commission in accordance with state law related to residential Replats and Variance applications. A public meeting shall be held before the Planning and Zoning Commission in accordance with state law related to Plats and Alternative Development Plan applications. After closing the public meeting, the Planning and Zoning Commission may take action consistent with The Denton Plan and the Development Code. 3-5 Subchapter 3 Development Code 35.3.6 Appeals: 1. The Planning and Zoning Commission decision on Plats is final and may not be appealed. 2. The Planning and Zoning Commission decision on a Hardship Variance may be appealed to the City Council by the applicant. Board of Adjustment Procedure. The following actions shall follow fl~e Board of Adjusm~ent Procedure: 1. Consider an application for a Variance from fl~e zoning regulations. 2. Consider an application for a Variance from fl~e sign regulations. 3. Consider an application to change, reestablish or tem~inate a Nonconfom~ing Use. 4. Consider an appeal of an Administrative Decision. Criteria for approval - Generally: 1. A complete application and fee shall be submitted. 2. The board may grant a variance from fl~e front yard, side yard, rear yard, lot width, lot depfl~, coverage, minin~un~ setback standards, and landscaping regulations where literal enforcement of fl~e regulations will result in an unnecessary hardship and where the variance is necessary to develop a specific parcel of land, which because of site's shape, size or topograpahy differs from off, er parcels in fl~e sadie district, and fl~at it can not be developed in a manner commensurate wifl~ fl~e development allowed for the off, er parcels. A variance shall not be granted to relieve a self-created or personal hardship or to relieve a purely financial hardship. In granting any variance, the board may designate conditions, which, in its opinion, will secure substantially fl~e purpose and intent of fl~e Development Code. A variance shall only be granted upon a finding fl~at: a. Special circun~stances or conditions apply to fl~e parcel for which fl~e variance is sought, which circumstances or conditions are peculiar to such parcel and do not apply generally to off, er parcels in the same district or neighborhood and that said circun~stances or conditions are such fl~at fl~e strict application of fl~e provisions of tiffs ordinance would deprive fl~e applicant of fl~e reasonable use of such parcel; b. The granting of fl~e variance will not be detrimental to fl~e public welfare or injurious to ofl~er property or in~provements in fl~e district or neighborhood in which fl~e parcel is located; c. The granting of fl~e variance is necessary for fl~e reasonable use of fl~e parcel and fl~at fl~e variance granted is fl~e minin~un~ variance that will accomplish tiffs purpose; and d. The literal enforcement and strict application of fl~e provisions of tiffs ordinance will result in an unnecessary hardship inconsistent with fl~e general provisions and intent of this ordinance and fl~at in granting such variance fl~e spirit of fl~e ordinance will be preserved and substantial justice done. 3. The board may grant a variance from fl~e sign regulations only upon a finding fl~at all of fl~e following exist: a. Due to some unique condition or feature of fl~e parcel which is not generally common to off, er parcels, literal compliance with fl~e sign regulation would cause unnecessary hardship; b. The granting of fl~e variance will not violate fl~e spirit or fl~e intent of fl~e regulations; and c. The condition or feature which creates fl~e need for fl~e variance did not result from fl~e owner's acts. 3-6 Subchapter 3 35.3.7 Development Code 4. The board may authorize the actions described below with respect to nonconfom~ing uses if the actins would not unreasonably increase the impact to fl~e surrounding properties, nor substantially prolong fl~e life of fl~e nonconfom~ing use. Action by fl~e board shall have due regard for the property rights of fl~e person or persons affected and shall be considered in regard to the public welfare, character of fl~e neighboring properties, and fl~e conservation, preservation and protection of property. Based on fl~e foregoing criteria, fl~e board may authorize the following actions: a. The reconstruction and occupancy of a nonconfom~ing structure, or a structure containing a nonconfom~ing use, where such structure has been damaged by fire or off, er causes to fl~e extent of more fl~an fifty percent (50%), but less fl~an fl~e total of fl~e replacement cost of fl~e structure on the date of the damage. b. The enlargement, expansion or repair of a nonconfom~ing structure in excess of fifty percent (50%) of its current value. In such instance, current value shall be established at fl~e time of application for a heating before the board. If such expansion or enlargement is approved by fl~e board, all provisions of fl~e district in which such structure is located shall apply to the new construction on fl~e lot or parcel. A person shall not expand a nonconfomfing use beyond fl~e lot on which fl~e use is located however, the board may allow fl~e person to provide off-street parking or loading spaces on another lot; c. A change of use from one nonconfom~ing use to another nonconfom~ing use, provided fl~at such change is to a use of a more restricted classification. In fl~e event fl~at a nonconfomfing use is changed to a nonconfomfing use of a more restricted classification, fl~e building or structure containing such nonconfom~ing use shall not later be reverted to fl~e fom~er lower or less restricted classification. The board may establish a specific period of tinge for fl~e conversion of fl~e occupancy to a confomfing use; d. To authorize the occupancy of an abandoned nonconfomfing structure. Such action by fl~e board shall have due regard for fl~e property rights of fl~e person or persons affected, and shall be considered in regard to fl~e public welfare and safety, character of fl~e area surrounding such structure, and the conservation, preservation and protection of property. 5. The Board may review and approve, reverse, or modify any staff detem~ination made pursuant to Sections 35.3.7.A.3 and A.4 of this Subchapter. The decision of the board shall be based on the intent of this Chapter. Procedure: 1. Initiation of a Board of Adjustment procedure may be made by: a. Recommendation of the City Manager. b. Application by the property owner or their authorized agent. 2. A public hearing shall be held before the Board of Adjusm~ent in accordance with state law. 3. After closing the public hearing, the board may take action consistent with the Development Code and state law. A concurring vote of six (6) members of the board shall be necessary to reverse an administrative decision of the staff, or to approve an application on any matter upon which the board is required to act under this Chapter. Appeals: 1. The decision of the Board of Adjusm~ent is final and may be appealed pursuant to state law. Staff Review Procedure. A. The following actions shall follow the Staff Review Procedures: 1. Consider an application for Site Design review and other plans required for Site Plan approvals; 3-7 Subchapter 3 Development Code 2. 3. Consider an application for a Minor Plats; Make detem~inations regarding the application and interpretation of standards, criteria, and reqtfirements of this Chapter; and Make detemfinations regarding the appropriate designation for new and unlisted uses based on similar uses that are described. Consider an application for a Watershed Protection pem~it. Criteria for approval - Generally: 1. A complete application and fee shall be submitted. 2. Applications may be approved when the following standards are met: a. The proposed Site Design meets the requirements of The Denton Plan and the Development Code; and b. The proposed Minor Plat meets the reqtfirements of the Development Code and state law. Procedure: 1. Initiation of a Staff Review procedure may be made by: a. Recommendation of the Director of Planning and Development; or b. Application by the property owner or their authorized agent. 2. Within thirty (30) days after receipt of a complete application, the Staff shall issue a written decision to the applicant. Appeals: 1. A Staff decision on Site Design reviews may be appealed to the Planning and Zoning Commission. 2. A Staff decision on Minor Plats is £mal and may not be appealed. 3. A staff detemfination pursuant to Sections 35.3.7.A.3 and A.4 may be appealed to the Board of Adjustment. 4. A Staff decision on a Watershed Protection Pemfit or a Gas Well Development Plat maL_b_e__ap_pealed 35.3.8 to the Planning and Zoning Commission pursuant to law, Home Rule authority and its authority under Tex. Loc. Gov't. Code Chapter 212. Local Permit Procedure. A. Upon application, the Director may allow an application to be processed under preexisting land development regulations iff 1. The applicant can demonstrate that he had a pre-existing, invesm~ent-backed, good faith expectation that he would be pemfitted to commence and complete a specific project under the standards set out in Paragraphs C, D, and E, or 2. The applicant can demonstrate a project in progress pursuant to state law. B. Definition: 1. For the purpose of this subchapter, an "invesm~ent backed expectation" is defined as the expenditure of substantial sun, s of money which cannot be recovered or an irreversible change of position that imposes on the applicant an obligation to expend substantial sums of money in the furore. 3-8 Subchapter 3 Development Code 2. For the purpose of this section, the "date of notice that the revised regulation is in progress" shall be when an amendment is posted on an agenda of fl~e Planning and Zoning Commission in accordance wifl~ state law. C. In considering whefl~er a development expectation may be processed under preexisting regulations, fl~e Director may consider: -5.-1~. Whefl~er fl~ere has been an act of fl~e City or an officer or agency of fl~e City upon which fl~e applicant in good faifl~ has relied to his detriment in a manner fl~at makes it inequitable to enforce fl~e temps of fl~e currently effective development regulations wifl~ respect to fl~e applicant's property. ~2_,_The extent to which fl~e applicant has, prior to fl~e date of notice fl~at the revised regulation is in progress made a substantial commitment of money or resources directly associated with physical improvements on fl~e land such as grading, land balancing, installation of utility infrastructure or off, er public in~provements, or for fl~e design of specific buildings and in~provements to be constructed on fl~e site. g. 3. The extent to which fl~e applicant has secured pemfits for, and commenced or completed, the construction of subdivision improvements and buildings in part but not all of a project fl~at was contemplated to extend over a period of months or years. 0.4. Whefl~er fl~e applicant prior to the date of notice fl~at the revised regulation is in progress has made contractual commim~ents to complete buildings and deliver title fl~ereto or occupancy thereof. ~5. Whefl~er prior to fl~e date of notice fl~at fl~e revised regulation is in progress fl~e applicant has incurred financial obligations to a lending institution, which, despite a fl~orough review of alternative solutions, fl~e applicant will be unable to meet unless he is pemfitted to proceed wifl~ fl~e proposed development. &6. Whefl~er enforcement of fl~e temps of fl~e currently effective development regulations will expose fl~e applicant to substantial monetary liability to flfird persons; or will leave fl~e applicant completely unable, after a fl~orough review of alternative solutions, to earn a reasonable remm on fl~e property. 9:7. Whefl~er the right of fl~e applicant to commence and complete fl~e proposed development may have been processed only with respect to an identifiable and discrete portion of fl~e proposed development. D. An applicant may commence and complete construction of a specific proposed project, or a portion fl~ereof, if fl~e applicant can demonstrate fl~at: 1. He owned the parcel proposed to be developed on fl~e date of notice fl~at revised regulation was in progress wifl~ respect to such parcel and fl~e specific development proposed for fl~e parcel was fl~en lawful and pemfitted. 2. Applying fl~e consideration set out in Paragraph C of tiffs subchapter, fl~e development expectations of fl~e applicant were reasonable and final when fom~ulated and invesm~ent-backed. 3. Requiting that fl~e applicant's property be developed in accordance with fl~e currently effective development regulations will, considering the invesm~ent of applicant prior to the date of notice fl~at rezoning is in progress, deprive fl~e applicant of a reasonable rate of remm on his invesm~ent. In detemfining fl~e reasonableness of fl~e proposed rate of return, fl~e following categories of expenditures shall not be included in fl~e calculations of the applicant's invesm~ent. a. Expenditures for professional services fl~at are unrelated to the design or construction of fl~e improvements proposed for fl~e projected development. b. Expenditures for taxes except for any increases in tax expenditures, which result from governmental approvals or fl~e construction of in~provements on fl~e property of fl~e applicant. c. Expenditures which fl~e applicant has allocated to fl~e particular proposed project but which fl~e applicant would have been obliged to incur as an ordinary and necessary business expense (for 3-9 Subchapter 3 Development Code example, employee salaries, equipment rental, chattel mortgage payments) had the plan for the particular project not been fom~ulated. General Provisions. 1. The fact fl~e property has been or is in a particular zoning classification under tiffs Chapter, or any prior Zoning Ordinance of fl~e City, shall not, in itself, establish fl~at an applicant may proceed to process fl~e application. 2. Any person, fim~, or corporation having an ownership interest in property may file an application for a detemfination of fl~e right to process fl~e application. The application shall contain such off, er infom~ation as fl~e Director may specify to make the detem~ination. 3. A detemfination of fl~e Director with respect to allow a pemfit to be processed under preexisting regulations shall expire and be of no furfl~er force or effect unless construction is actually commenced within one (1) year of fl~e date fl~e detem~ination is made. 4. Any person, fim~ or corporation, having an ownership interest in fl~e property, and claiming a right to commence and complete a specific proposed development who does not file an application for a detem~ination under this subchapter, within six (6) monfl~s of fl~e effective date of a revised regulation shall be deemed to have waived his right to seek such a detem~ination. 5. An applicant may appeal fl~e Director's detemfination within 10 days by filing an application as a Zoning Amendment as outlined in Section 35.3.4. C. 6. A detemfination fl~at a pemfit may be processed under preexisting regulations shall be treated as a special exception to fl~e underlying zoning regulation. 7. No application for local pemfit will be allowed for a Watershed Protection Pemfit. Requests for relief 35.3.9 must be made under Section 35.3.10. Religious Freedom Procedures. 35.3.10 A. A person may clain~ that a provision of the Denton Development Code substantially burdens the person's free exercise of religion. In making such a claim a person shall give written notice to the City by certified mail, remm receipt requested according to fl~e provisions of Texas Civil Practice & Remedies Code ~ 100.001, et. seq. (Vernon Supp. 2001). B. The City Council may grant a waiver or partial waiver of fl~e provisions of the Denton Development Code according to federal or state law to accommodate a person's free exercise of religion. Gas Well Permit Relief Provisions. A. The purpose of this provision allows a detemfination of whefl~er the application of the standards in the Denton Development Code as _applied to a Watershed Protection Pemfit and related development applications would, if not modified or off, er relief grante_d~ constitute a under constitutional standards. B. A property owner or his authorized agent may file an application for relief under tiffs subsection following final decision to deny or conditionally approve an application for a Watershed Protection Pemfit and related .applications within ten C. The Director has the authority to establish requirements for applications in fl~e Application Criteria Manual. No application shall be accepted for filing until it is complete and fl~e fee established by fl~e City Council of the City, of Denton has been paid. D. Upon approval of an application in whole or in part by the City, Council, fl~e Director shall process fl~e Watershed Protection Pemfih and related develQp__lB__e__n_t_:o_p_plications and the Director shall decide fl~e 3-10 Subchapter 3 Development Code applications consistent with the relief granted on the application, including any amendments to applicable standards __app_r_o_v_e_4_b¥_Ci_ty Council. E. A denial of an_application b_y__t_h__e_G_ty Council is a final detemfinafion. F. Criteria for _approval. In deciding whether to grant relief to fl~e ap_~_Le_GLty_ Council will consider whefl~er fl~ere is any evidence from which it can reasonably conclude fl~at fl~e application of all or ~gof fl~e standards governing approval of a watershed protection pemfit under fl~e Development Code will licant of all economically viable use of fl~e land,_b.a~.ed_.~pon fl~e following factors: 1. Whefl~er fl~e .Qperations pr~.posed are consistent wifl~ p.r.Q.te.g.~r!g, fl~e ecol environmental rotection of surface and ground ware sources impacted environmentally sensitive areas. 2. The nature and intensity, of the uses allowed following application of the standards in the Development Code to the watershed protection pemfit and related development applications, in comparison with the nature and intensity of the uses allowed without ap_plication of the standards; 3. Whefl~er fl~e standards of the Develo_pment Code when _applied to fl~e watershed protection p_e_~li_t and related development applications allow an economically viable use of fl~e land; 4. For applications in which it is alleged fl~at fl~ere has been a devaluation of property, whefl~er fl~e adoption or application of standards in this article is fl~e producing cause of any devaluation of fl~e p. ro_p~r~; 5. The extent to which the .applicant's e;~pectations for economically, viable uses have been realized through actual or anticipated development on land or an interest in land ori~lly part of the same tract or parcel as the land for which relief is sought under the application 6. The extent to which applicant has taken advantage of any other relief measures provided by this Code that would result in mi~gafion of economic iglpacts resulfing_£r_Qg!_:0_pplicafion of the standards in this Land Development Cod% 7. The extent to which the owner of the proper~ had actual or constructive notice of regulations or proposed changes in the standards governing watershed protection pemfits; 8. Unique circun~stances exist on the property on which the application is made related to size, shape, area, topography, surrounding conditions and location that do not apply to other proper~ in the vicinity,. 9. Whether there are other alternative well site locations. 10. Any clam for relief pursuant to Tex. Loc. Gov't. Code Chapter 245. G. In ~thg relief under the council may waive or modi~ the standards to be a~dto the watershed protection pem~it or related development applications, and may in, pose reasonable conditions on related development applications in order to implement the relief granted. The council also g!ay initiate an _application for a zoning_glap amendment in order to afford the relief_~a_n___t_e_d~_provided that such application shall be decided in accordance with section 35.3.4~bch:apter 3. In such case, tt~e. council's decision on the application shall not be considered final until the application for the zoning map amendment is decided. The action taken by the council under this section shall not deprive the planning and zoning commission or any responsible official of its final approval authori~ over subdivision plats and other development pemfits. H. No application for local pemfit under Section 35.3.8 will be allowed for a Watershed Protection Pem~it. 3-11 Exhibit B Subchapter 16 Development Code Subchapter 16 - Subdivisions. Sections: 35.16.1 Authority 35.16.2 Purpose. 35.16.3 Jurisdiction. 35.16.4 Application. 35.16.5 Compliance and Enforcement. 35.16.6 Approval of Plat Required. 35.16.7 Lots, Access and Common Areas. 35.16.8 Application and Fees. 35.16.9 Predesign Conference. 35.16.10 General Development Plan. 35.16.11 Preliminary Plats. 35.16.12 Final Plats. 35.16.13 Replat. 35.16.14 Amending Plat. 35.16.15 Minor Plat. 35.16.16 Vacating Plat. 35.16.17 Conveyance Plat. 35.17.18 Development Plats. 35.17.19 Gas Well Development Plats. 35.16.20 Cons truction. 35.16.1 Authority. This Subchapter is adopted under the authority of the constitution and laws of the State of Texas, including Chapters 42, 43 and 212 of the Local Government Code, as amended. 35.16.2. Purpose. This Subchapter is adopted for the following purposes: A. To protect and promote the public health, safety, and general welfare of the community. B. To guide and plan for the furore growth and development of the City by providing for the orderly development of land and for the extension of streets, utilities, and other public in~provements and facilities in accordance with The Denton Plan and the Denton Development Code. C. To insure that all developments provide for the streets, sidewalks, drainage facilities, water and sewer facilities and other public and private in~provements and facilities which are adequate and necessary to serve the development. 35.16.3 Jurisdiction. This Subchapter shall apply to all land and all developments within the territorial jurisdiction of the City of Denton, except as otherwise specifically provided for in tiffs Subchapter. The territorial jurisdiction of fl~e City shall be defined as follows: A. The area within the corporate limits of the City; B. The area within fl~e extraterritorial jurisdiction of fl~e City; and 16-1 Revised Jan 26, 2004 C: ~laholley\ Backup 2004~ CC Feb 17th\ SI03-0024 Gas Well Amendments \ 7 SI03-0024 Gas Well Amend ,(Exhibit B) Subchapterl6 Development C. 35.16.4 Code Any other area to which the provisions of this Subchapter are made applicable in accordance with and as permitted by federal, state or local law. Application. 35.16.5 A. Land Included. Except where otherwise specifically provided for in this Subchapter, all the provisions of this Subchapter shall apply to fl~e following lands located wiflfin the territorial jurisdiction of the City: 1. Any tract of land which has not been recorded by plat in fl~e plat records of Denton County, Texas, and which is intended to be sold, leased, or otherwise subdivided from another tract of land or which is intended or proposed to be used for fl~e purpose of development. 2. Any tract of land which has been recorded as a lot or block by plat in fl~e plat records of Denton County, Texas, prior to and upon which no development has been constructed or placed prior to fl~e effective date of this Subchapter. 3. The division of any previously platted lot into two (2) or more parts. 4. The removal of one (1) or more lot lines of any platted lot so as to permit fl~e combining of two (2) or more contiguous platted lots into one (1) or more new lots. B. Expiration of Dormant Projects. Any general development plan, preliminary plats, final plats, replats, amending plats, conveyance plats or development plats fl~at are dormant according to fl~e provisions of Tex. Loc. Gov't. Code Ann. Section 245.005 (Vernon 1999, as amended) shall expire on May 11, 2004. C. Environmentally Sensitive Areas (ESA) Regulations. The flood plain provisions of Subchapter 17 shall apply to any land wiflfin fl~e extraterritorial jurisdiction of fl~e City. D. Development Standards and Requirements in the Extraterritorial Jurisdiction. 1. The extraterritorial jurisdiction of fl~e City of Denton is classified into two (2) divisions as indicated on fl~e map on file in fl~e Planning and Development Department. a. M1 of fl~e provisions of this Subchapter governing subdivision and development standard for subdivisions wiflfin the city shall apply to all subdivisions and developments within Division 1. b. The subdivision and development standards of fl~e County of Denton, as such standards exist today or as they may hereafter be amended, shall apply to all subdivisions and developments in fl~e extraterritorial jurisdiction comprising Division 2 is not required and such subdivisions and developments must comply only wifl~ development or plat requirements of Denton County and state law. 2. The Planning and Development Department is directed to consider amendments to fl~e regulatory line map whenever fl~e certificate of public convenience and necessity for water and wastewater services is amended by fl~at state or when directed by fl~e City Council. Any amendments shall not be effective until fl~e revised regulatory line map is approved by fl~e City Council. Compliance and Enforcement. It shall be unlawful for any person to begin, continue, or complete any development on any land within the territorial jurisdiction of the City to which the provisions of this Subchapter applies, except in accordance with and upon compliance with the provisions of this Subchapter. 16-2 Subchapterl6 35.16.6 Development Code B. The City shall not issue a building pemfit or certificate of occupancy required by any Subchapter of the City for any land located wiflfin fl~e corporate limits to which tiffs Subchapter applies, until and unless fl~ere is compliance with this Subchapter. C. The City may refuse to authorize or make utility connections on fl~e grounds set forfl~ in Tex. Loc. Gov't. Code Ann. section 212.012 (Vernon 1988 & Supp. 1994), as amended. D. No in~provements shall be initiated until fl~e approval of the City has been given. Disapproval of a final plat by fl~e City shall be deemed a refusal by fl~e City to accept offered dedications shown fl~ereon. Approval of a final plat shall not be deemed an acceptance of fl~e proposed dedications and shall not impose any duty upon fl~e City concerning the maintenance or improvement of any such dedicated parts until fl~e proper authorities of fl~e City have both given fl~eir written acceptance of fl~e in~provements and have actually appropriated fl~e same by entry, use, or improvements. Approval of Plat Required. A. Prior to the subdivision, resubdivision, or development of any land within the City, or its extraterritorial jurisdiction, all plans, plats, and construction plans for public in~provements shall first be approved in accordance with these regulations except as follows: 1. The division of land into two (2) or more parts, other than for purposes of development, if the smallest resulting parcels, tract or site is forty (40) acres or larger in size. 2. Development on a single tract which was subdivided prior to January 1, 1960, and for which extension of streets or public improvements (excluding sidewalks) are not required to support the proposed development. 3. Construction of additions or alterations to an existing building where no drainage, street, utility extension or improvement, additional parking or street access changes required to meet the standards of this Subchapter are necessary to support such building addition or alterations. 4. Dedication of easement or right-of-way by separate document recordable in the County records if approved by City. 5. Cemeteries complying with all state and local laws and regulations. 6. Divisions of land created by order of a court of competent jurisdiction. 7. A change in ownership of a property through inheritance or the probate of an estate. B. No land may be subdivided or platted through the use of any legal description other than with reference to a plat approved by the Planning and Zoning Commission or the Development Review Committee Chaim~an in accordance with these regulations. C. Excepting agricultural leases, no land described in this section shall be platted or sold, leased, transferred or developed until the property owner has obtained approval of the applicable general development plan, preliminary plat, final plat, development plat, or conveyance plat from the Planning and Zoning Commission or the Development Review Committee Chaim~an as required by these regulations. D. No building pemfit or certificate of occupancy shall be issued for any parcel or tract of land until such property has received final plat or development plat approval and is in confom~ity with the provisions of these subdivision regulations, the plat has been recorded, public improvements have been accepted (if applicable), and no private in~provements shall take place or be commenced except in confomfity with these regulations. E. No person shall transfer, lease, sell or receive any part of a parcel before a conveyance plat or final plat of such parcel and fl~e remaining parcel has been approved by the Planning and Zoning Commission or fl~e 16-3 Revised Jan 26, 2004 C: Nlaholley\ Backup 2004N CC Feb 17th\ SI03-0024 Gas Well Amendments \ 7 SI03-0024 Gas Well Amend ,(Exhibit B) Subchapterl6 Development Code Development Review Committee Chairman in accordance with the provisions of these regulations and f-fled with the county clerk. The platting or subdivision of any lot or any parcel of land, by the use of metes and bounds description for the purpose of sale, transfer, lease or development is prohibited. 35.16.7 Lots, Access and Common Areas. 35.~6.8 A. Lot size. The size, width and depth of subdivision lots shall conform to the zoning requirements for the area. B. Access to street. Each lot shall be provided wifl~ adequate access to an existing or proposed public street. Development adjacent to existing public streets shall include fl~e required in~provements in accordance with the city's perimeter street policy. Each residential lot shall have a minimum of fifteen (15) feet of frontage along an existing or proposed public street and each non-residential lot shall have a minimum thirty (30) feet of frontage along an existing or proposed public street except as follows 1. Single Family Residential Private Drive. Up to three (3) single family residential dwelling units may access a public road by means of a flag drive within a private access easement as provided in the Transportation Criteria Manual. Each residential lot shall have a minimum of fifteen (15) feet of frontage on the private access easement. 2. Non-Single Family Residential Private Drive. Non-Single family residential lots within a subdivision or addition that is surrounded by developed property making it unfeasible to provide street connectivity, do not have to abut a public street if such lots have access to a public street by a public access and fire lane easement approved by the City. The easement must be at least 24 feet wide and constructed, marked and maintained to meet the standards for parking lots as contained in the Transportation Criteria Manual and for fire lanes as contained in the Fire Code. The stacking requirements for public streets shall apply to the public access and fire lane easement at the point where it intersects with a public street. In addition, the public access and fire lane easement shall be considered a driveway or curb cut access to the public street for all such lots. Each non-residential lot shall have a minin~un~ thirty (30) feet of frontage on the public access and fire lane easement. B. Facing. Wherever feasible, each lot should face the front of a sin~ilar lot across the street. In general, an arrangement placing facing lots at right angles to teach other should be avoided. C. Common area and facilities. Such area shall be noted on the plat and also have filed with county homeowner's association covenants approved by the city attorney or other arrangements for permanent maintenance of these areas and facilities as may be approved by the Planning and Zoning Commission. Application and Fees. Any person seeking approval of any general development plan, prelin~inary plat, final plat, replats, amending plats, minor plats, conveyance plat, or development plat for any land required by this Subchapter, shall submit an application accepted for filing by fl~e Director of Planning and Development, along wifl~ fl~e applicable fees. No applications for general development plan, prelinfinary plat, final plat, replats, amending plats, minor plats, conveyance plat or development plat shall be accepted for filing unless fl~e application, supporting docun~ents and fees are submitted in accordance wifl~ fl~e Application Criteria Manual. Applicants will be notified of fl~e acceptance or rejection of fl~eir application wiflfin 10 working days of fl~e submittal. The basis of fl~e rejection will be included in the notification. 35.16.9 Predesign Conference. A. Prior to the filing of any plan, plat or proposed development, an applicant shall have a pre-design conference wifl~ fl~e Development Review Committee, unless waived by fl~e Development Review 16-4 Subchapterl6 35.16.10 Development Code Committee chairperson. The purpose of the conference is to allow the applicant and Development Review Committee to review and discuss the proposed development, to make a detemfination of what infom~ation and studies may be required to be submitted during the plat procedures, and to receive or exchange any other infom~ation or take any other action necessary to facilitate processing of the plat application. Each applicant shall submit such infom~ation that may be required by the Development Review Committee and as provided in the Application Criteria Manual. General Development Plan. A. Purpose. The purpose of the general development plan is to provide for review of certain developments for compliance with The Denton Plan, the Denton Development Code, and Infrastructure Master Plans, the compatibility of land uses, and the coordination of improvements within and among individual parcels of land or phases of development, prior to approval of a prelinfinary plat or conveyance plat. B. Application. The Development Review Committee shall detemfine during the predesign conference whether a general development plan or a preliminary plat shall be required in accordance with the purpose stated in tiffs Subchapter. When a development is a portion of a large tract under one (1) ownership, is developed in phases or was not legally subdivided, fl~e developer may be required to submit a general development plan for review and approval by fl~e Planning and Zoning Commission. Generally, a general development plan shall be required for, but is not linfited to, any development which: 1. If the property under consideration is undeveloped, is under one ownership and is greater than twenty (20) acres; or 2. Is to be platted and developed in phases; or 3. Will require off-site road, drainage, or utility connections or in~provements which will have a substantial impact or effect on off, er properties or developments. C. Information required. The general development plan shall contain such infom~ation that may be required by the Development Review Committee which is reasonably necessary to review and detem~ine whefl~er fl~e proposed development and required facilities meet fl~e requirements of tiffs Subchapter and fl~e Application Criteria Manual. D. Standards for approval. The Planning and Zoning Commission shall approve the general development plan if fl~e plan complies with the following statements: 1. Confom~s to infrastructure policies identified in The Denton Plan, and any off, er City infrastructure master plan and fl~e City's current and furore parks and playground facilities:-.,. 2. Confom~s to the extension of fl~e City's infrastructure within fl~e municipality and in its extraterritorial jurisdiction, as identified in The Denton Plan, and any off, er City of Denton infrastructure master plan. 3. Confom~s to any roles adopted under Section 212.002 or as set forfl~ in the Application Criteria Manual. 4. Complies with all City construction standards. 16-5 Revised Jan 26, 2004 C: ~laholley\ Backup 2004~ CC Feb 17th\ SI03-0024 Gas Well Amendments \ 7 SI03-0024 Gas Well Amend ,(Exhibit B) ~\(~ Subchapterl6 Development 35.16.11 Code 5. Complies with all applicable laws and Subchapters. Planning and Zoning Commission Action. The general development plan shall be submitted, along with the applicable fee, in the number and form specified by the Application Criteria Manual. The plan shall be submitted to and reviewed by the Development Review Committee for its recommendation to the Planning and Zoning Commission. No preliminary plat for any portion of the development shall be approved until and unless the required general development plan has been approved by the Planning and Zoning Commission. Expiration of General Development Plans. A general development plan shall become null and void twenty-four (24) months after its approval, unless a prelin~inary plat is approved for all or part of the general development plan. The approved preliminary plat shall extend the expiration date for the remaining portion of the original general development plan for a period of twenty-four (24) months. The applicant may submit written requests for extensions of the general development plan, with no single extension exceeding twelve (12) months. The request shall contain docun~entation showing costs incurred to justify an extension. Preliminary Plats. Purpose and applicability. A prelinfinary plat shall be required for all proposed developments or subdivisions of land, except where otherwise provided for in this Subchapter. The required preliminary plat is intended to provide sufficient information to evaluate and review the general design of the development to insure compliance with The Denton Plan, the Denton Development Code, and the Thoroughfare Plan, and the requirements of this Subchapter. Where a general development plan is required, the preliminary plat shall conform to the approved development plan. Contents of Preliminary Plat. The preliminary plat shall contain such information as may be required by the Development Review Committee which is reasonably necessary to review and determine whether the proposed development and required facilities meet the requirements of this Subchapter and as required by the Application Criteria Manual. Procedure for approval. 1. Submittal. The application, copies of the preliminary plat, and all required studies and analyses, along with any applicable fee, shall be submitted in the form and number specified by the department. An application shall not be considered filed until it has been accepted for filing by the Department. Applicants will be notified of the acceptance or rejection of their application within 10 working days of the submittal. Basis of the rejection will be included in the notification. 2. Development Review Committee review. After the Department has accepted the application for filing the Development Review Committee shall review the preliminary plat for compliance with the requirements of this Subchapter. The applicant shall be afforded an opportunity to meet with the Development Review Committee to receive comments and recommendations on the sufficiency of the plat. The applicant may make any recommended or desired changes, corrections, or modifications. The Development Review Committee shall forward the prelinfinary plat to the Planning and Zoning Commission along with its recommendation. 3. Standards for approval. The Planning and Zoning Commission shall approve the preliminary plat if the plat complies with the following statements: a. Conforms with the general development plan as provided in this Subchapter. 16-6 Subchapterl6 35.16.12 Development Code b. Confom~s to The Denton Plan, its land uses, and its current and furore streets, alleys, parks, playgrounds, and public utility facilities. c. Confom~s to The Denton Plan for the City's furore land uses, extension of the City's roads, streets, and public highways within the municipality and in its extraterritorial jurisdiction, taking into account access to and extension of sewer and water mains and the instrumentalities of public utilities. d. Complies with all applicable sections of the Criteria Manuals. e. Complies with all applicable laws and Subchapters. Planning and Zoning Commission Action. If the preliminary plat does not meet the requirements of this Subchapter, the Planning and Zoning Commission shall disapprove the plat or approve the plat with conditions to insure compliance with the requirements of this Subchapter. If the preliminary plat is disapproved, no further action shall be taken on the application, until and unless a new application and preliminary plat is submitted in accordance with this Subchapter. Expiration of Preliminary Plat. Except for prelinfinary plats filed prior to the effective date of this amendatory Subchapter, a prelintinary plat shall become null and void within twenty-four (24) months after its approval, unless a final plat is filed and approved for all or part of fl~e prelinfinary plat within that time. The applicant may submit a written request, to fl~e commission, for one six (6) monfl~ extension of fl~e prelinfinary plat. The request shall contain documentation showing costs incurred to justify an extension. An approved final plat shall extend the expiration date for the remaining portion of the original prelinfinary plat for a period of six (6) months after fl~e date of approval of fl~e final plat. Approval of a subsequent final plat wiflfin such period shall extend the expiration date for fl~e portion of fl~e original prelinfinary plat for which no final plats have been approved for an additional six (6) months from the date of approval of such final plat. Each extension period for fl~e expiration of fl~e original prelinfinary plat runs from fl~e date of fl~e latest final plat approval. Extension periods are not cun~ulative. If a final plat is not filed and approved during fl~e extension period, fl~e original prelinfinary plat, together wifl~ any unapproved final plat applications or expired final plats, lapse. Final Plats. A. Purpose and Applicability. A final plat of the property to be subdivided or developer is required of all developments to which this Subchapter applies. The final plat is intended to serve as the official recorded map of the property to be developed, showing thereon the boundaries, lots, public streets and easements and other significant public facilities and features which are necessary to serve the development, as required by this Subchapter. For a development to be constructed in phases, the final plat may include only a portion of the land included in the prelinfinary plat and general development plan. The final plat shall confom~ to the approved preliminary plat. B. Land Excluded. l. Where any requirement of tiffs Subchapter is detem~ined in reference to the boundary of the property, such as the requirement to in, prove existing perimeter streets, the final plat may not exclude land which could otherwise be included for the purpose of avoiding the requirement, or if such property is pemfitted to be excluded for good reason, fl~e requirement may still be imposed if compliance wifl~ fl~e requirement is reasonably necessary to serve the property. 16-7 Revised Jan 26, 2004 C: ~laholley\ Backup 2004~ CC Feb 17th\ SI03-0024 Gas Well Amendments \ 7 SI03-0024 Gas Well Amend ,(Exhibit B) Subchapterl6 Development Code 2. In no case shall a final plat exclude land so as to leave a remainder of such size, shape, or location as not to be developable in substantial compliance with the requirements of this Subchapter or any other Subchapter. 3. Where any applicant seeks approval of a proposed plot for land that was subdivided in violation of this Subchapter, state law, or any prior Subchapter, or the development cannot provide adequate street access, street connections, or substantially comply with any other requirement or standard of this Subchapter because of the unlawful subdivision, the Planning and Zoning Commission may refuse approval of the development or plat. Contents of Final Plat. The final plat shall contain such information as may be required by the Development Review Committee which is reasonably necessary to review and determine whether the proposed development and required facilities meet the requirements of this Subchapter and as required by the Application Criteria Manual. 35.16.12.1 A. Construction Plans. Purpose and Applicability. Construction plans shall be submitted to the department for all existing or proposed streets, sidewalks, drainage and utility in~provements, and any other public in~provements that are required or proposed to be constructed, reconstructed, in, proved, or modified to serve the development. Where the final plat is for property being developed in phases, the required construction plans shall include the in~provements specified in the general development plan or prelin~inary plat to serve the phase being platted. The construction plans are intended to provide for the detailed engineering drawings for all improvements required to serve the development. The construction plans shall be kept as a permanent record of the City. Responsibility of Project Engineer. The Professional Engineer representing the applicant is responsible for the accuracy, completeness and conformance to City standards. The purpose of the City review is to ensure conformance to City policies and standards. However, the City review is linfited to facts as presented on submitted plans. The City has no project design or engineering responsibility. The Design Professional certifying the plans is responsible for the accuracy and completeness of the documents submitted for review and actual construction. The City reserves the right to require corrections to actual conditions in the field which are found to be contrary to or omitted from submitted plans. Contents of Construction Plans. The construction plans shall include such information as may required by the Development Review Committee which is reasonably necessary to review and determine whether the proposed development and required facilities meet the requirements of this Subchapter and as required by the Application Criteria Manual and all City construction standards. 35.16.12.2 A. Processing Procedure for Final Plat and Construction Plans. Submittal. The application and copies of the final plat and construction plans, along wifl~ any applicable fee, shall be submitted in fl~e form and number specified in the Application Criteria Manual. Development Review Committee Review. The Development Review Committee shall review fl~e final plat and construction plans for compliance wifl~ fl~e requirements of tiffs Subchapter. The applicant shall be afforded an opportunity to meet wifl~ fl~e committee to receive its comments and recommendations on fl~e sufficiency of the plat and plans, so as to allow fl~e applicant to make any recommended or desired changes, corrections, or modifications. Upon completion of fl~e review process, if the construction plans have been approved by fl~e Director of Engineering, fl~e Development Review Committee shall forward fl~e final plat to fl~e Planning and Zoning 16-8 Subchapterl6 Development Code Commission along with its recommendation unless approval by the Development Review Committee is allowed by this Subchapter and as pemfitted by law. Standards for Approval. The Planning and Zoning Commission shall approve the final plat if the plat complies with the following statements: 1. Confom~s to The Denton Plan, its land uses, and its current and future streets, alleys, parks, playgrounds, and public utility facilities. 2. Confom~s to The Denton Plan for the City's furore land uses, extension of the City's roads, streets, and public highways within the municipality and in its extraterritorial jurisdiction, taking into account access to and extension of sewer and water mains and the instnm~entalities of public utilities. The final plat confom~s with the General Development Plan and/or the prelinfinary plat. of public in~provements of City 4. Complies with the provisions for dedication and construction construction standards. 5. Complies with all applicable laws and Subchapters. Planning and Zoning Commission Action. The Planning and Zoning Commission shall take action on the final plat as required by law at a regularly scheduled meeting held within thirty (30) days of the date the final plat and construction plans for which approval is requested is submitted to the deparm~ent, unless the applicant requests and consents in writing to waive any time deadline for action upon the plat. If the final plat meets all the requirements of this Subchapter, the Planning and Zoning Commission shall approve the plat. If the plat does not meet the requirements of this Subchapter, the Planning and Zoning Commission shall disapprove the plat. Certification by Engineer. Sealed engineering plans showing details of streets, sidewalks, culverts, bridges, stom~ sewers, drainage improvements, water mains, sanitary sewers, other required public improvements, and all engineering details, other than buildings, of the proposed subdivision shall be submitted to the Development Review Committee along with the final plat of subdivision. Such plans shall be prepared by an engineer registered in the State of Texas, and shall confom~ to the standard specifications of the City (North Central Texas Council of Governments Standard Specifications for Public Works Construction, as amended by City) relating to such in~provements. Expiration of Final Plat and Plans. An approved final plat which has not been filed in the appropriate records of Denton County within two (2) years of its approval shall be considered null and void unless an extension is granted by the Planning and Zoning Commission for good cause 35.16.12.3 Recordation of Final Plat. Upon approval of the final plat by the Planning and Zoning Commission or the Development Review Committee, whichever is applicable, and the construction plans by fl~e City Engineer, fl~e applicant shall submit an execution package in accordance wifl~ fl~e Application Criteria Manual. The City Engineer shall file in fl~e plat records of Denton County fl~e final plat upon submission of the execution package, recording fees, developer contracts, bonds, and any other applicable fees. 16-9 Revised Jan 26, 2004 C: Nlaholley\ Backup 2004N CC Feb 17th\ SI03-0024 Gas Well Amendments \ 7 SI03-0024 Gas Well Amend ,(Exhibit B) Subchapterl6 Development Code 35.16.13 Replat. A. Replat Required. Unless otherwise expressly provided for in this Subchapter, a property owner who proposes to replat any portion of an approved final plat, oflmr than to amend or vacate the plat, must first obtain approval for the replat under tim same standards and by the same procedure prescribed for the platting of land by flmse regulations. B. Replatting Without Vacating Preceding Plat. A replat of a subdivision or part of a subdivision may be recorded and is controlling over the preceding plat without vacation of that plat if the replat is submitted in accordance with Tex. Loc. Gov't. Code Ann. sections 212.014 (Vernon 1988) and 212.015 (Vernon 1988 and Supp. 1994), as amended. C. Replatting a Portion of a Lot. Replatting a portion of a recorded lot is not pem~itted. D. Procedures. An application for replat shall follow the Planning and Zoning Commission procedures detailed in Subchapter 3. 35.~6.~4 Amending Plat. The Chaim~an of the Development Review Committee may approve an amending plat pursuant to Tex. Loc. Gov't. Code Ann. section 212.016 (Vernon Supp. 1994), as amended. The Chaim~an of the Development Review Committee at his discretion may refer the amending plat to the Planning and Zoning Commission. The Chaim~an of the Development Review Committee shall not disapprove an amending plat but shall refer such plat to the Planning and Zoning Commission if he recommends disapproval. 35.16.15 Minor Plat. The Chaim~an of the Development Review Committee or the Planning and Zoning Commission may approve a minor plat pursuant to Tex. Loc. Gov't. Code Ann. section 212.00065 (Vernon Supp. 1994), as amended. The Chaim~an of the Development Review Committee at his discretion may refer the minor plat to the Planning and Zoning Commission. The Chaim~an of the Development Review Committee shall not disapprove a minor plat but shall refer such plat to the Planning and Zoning Commission if he recommends dis approval. 35.16.16 Vacating Plat. The property owner of the tract covered by a plat may vacate the plat pursuant to Tex. Loc. Gov't Code Ann. section 212.013 (Vernon 1988). The Planning and Zoning Commission shah approve the petition for vacation on such temps and conditions as are reasonable to protect public health, safety and welfare. As a condition of vacation of the plat, the Planning and Zoning Commission may direct the petitioner to prepare a revised £mal plat in accordance with these regulations. Regardless of the Planning and Zoning Commission's action on the petition, the property owner or developer will have no right to a refund of any monies, fees or charges paid to the City nor to the remm of any property or consideration dedicated or delivered to the City except as may have previously been agreed to by the Planning and Zoning Commission. 35.16.17 Conveyance Plat. A. Purpose. 16-10 Subchapterl6 Development Code A conveyance plat may be used solely for fl~e purpose of subdividing land and the recording of same, or recording a single existing lot or parcel created by off, er means. A conveyance plat may be used to convey fl~e property or interests fl~erein; however, a conveyance plat does not constitute approval for development of fl~e property. A conveyance plat is an interim step in the subdivision of land and shall contain a notation fl~at indicates fl~at no development is intended. Applicability. A conveyance plat may be used in lieu of a final plat to record fl~e subdivision of property, provided fl~at no portion of fl~e development is intended for inm~ediate development. Filing. No final plat processed and approved in association wifl~ a conveyance plat shall be fried without fl~e concurrent filing of the associated approved conveyance plat. 35.16.17.1 A. Effect of Approval. Conveyance plat approval and acceptance by the City does not relieve the owner from obligations, including fees, required by other sections of this or any other Chapter of the City Code pertaining to the improvement of the property or extension of services as required to make the property suitable for development. B. Neither reservation nor dedication of right-of-way shall relieve the property owner from any obligation for street construction or assessments associated with public street improvement programs. Easements for access, utilities and drainage may be recorded on conveyance plats. C. No building pemfits shall be issued nor development beg/n, nor pem~anent utility service provided for land which has only received approval as a conveyance plat. This infom~ation shall be set forth in bold type on the plat. D. A conveyance plat may be vacated, replatted or superseded in total or in part by fl~orough compliance wifl~ fl~e procedures and requirements of tiffs Subchapter. 35.16.17.2 Conveyance Plat Requirements. A. Application. The property owner shall submit an application for a conveyance plat, together with other supporting documents and fees, to the director in accordance with the requirements of the Application Criteria Manual. Conveyance plats that qualify as minor plats may be approved by the Chaim~an of the Development Review Committee. A conveyance plat shall contain such infom~ation that may be required by the Development Review Committee which is reasonably necessary to review and detem~ine whether the proposed development and required facilities meet the requirements of this Subchapter and as required by the Application Criteria Manual. B. Standards for Approval. The Planning and Zoning Commission shall approve the conveyance plat if the plat complies with the following statements: 1. Reservation of rights-of-way. Conveyance plats must identify any furore rights-of-way for public thoroughfares and streets specified on the City's thoroughfare plan. The identification of the right-of- way does not grant any right or interest in the property to the City or other entity. The final alignment may be adjusted upon final platting in order to meet engineering design standards. 2. Dedication of rights-of-way. Dedication of right-of-way shall be required where a conveyance plat is used to record the remainder of a tract created by the final platting of a portion of the property. The required right-of-way dedication shall be limited to that which is necessary to provide access to the 16-11 Revised Jan 26, 2004 C: ~laholley\ Backup 2004~ CC Feb 17fl~\ SI03-0024 Gas Well Amendments \ 7 SI03-0024 Gas Well Amend ,(Exhibit B) Subchapterl6 Development Code property proposed for final plat approval and to complete mm lanes, intersections and transitions in road pavement width resulting from development of property proposed for final plat approval. Approval Procedure. 1. Conveyance plats shall be approved provided they comply with all reqtfirements of this Subchapter. The Planning and Zoning Commission must approve, approve with conditions that insure compliance with the reqtfirements of this Subchapter or deny a conveyance plat no later than flfirty (30) days from fl~e date of application. A conveyance plat qualifying as a minor plat shall be reviewed and acted upon by fl~e Development Review Committee. Signing and filing. After fl~e approval of the conveyance plat by fl~e Planning and Zoning Commission or Development Review Committee, fl~e property owner or his engineer shall submit filing fees and fl~e required nun~ber of copies for filing to fl~e City for filing wifl~ fl~e county. Having submitted all copies and fees, fl~e owner may request a delay of filing for up to one hundred eighty (180) days from fl~e date of approval. Any conveyance plat which has not been filed wifl~ fl~e county wiflfin one hundred eighty one (181) days of fl~e date of approval shall be void. Prior to filing with fl~e county, fl~e property owner may wifl~draw and void a conveyance plat. Any conveyance plat withdrawn or voided must be resubmitted under current regulations and procedures and reapproved by fl~e Planning and Zoning Commission or Development Review Committee and filed wifl~ fl~e county. Prior to filing, fl~e chairperson of fl~e Planning and Zoning Commission or fl~e Development Review Committee, whichever is applicable, shall sign fl~e conveyance plat. The City engineer shall forward one (1) copy of fl~e recorded conveyance plat to fl~e property owner. 35.16.18 Development Plats. A. Any person who proposes new development of a tract of land located with the corporate linfits or within fl~e City's extratemtorial jurisdiction, and is not required by tiffs Subchapter to prepare a preliminary or final plat, shall prepare a development plat in accordance with elements required for preliminary and final plats by tiffs Subchapter unless: 1. The development is excepted under section 35.16.7; or 2. The development is an addition or alteration to existing development which after development would result in development no less complying wifl~ fl~e code of Subchapters fl~an before fl~e development. C. Development plats shall be processed in accordance with V.T.C.A., Local Government Code ~ 212.041 fl~rough 212.050 (Vernon Supp. 1994) and no new development may begin on property until fl~e development plat is fried and approved by fl~e City in accordance with such sections. D. Development plats shall be labeled "Development Plat for Addition." E. If improvements have not commenced as required by fl~e Development Plat, an approval for a Development Plat shall expire two (2) years from the date fl~at fl~e Development Plat is approved by fl~e Planning and Zoning Commission. 35.16.19 Gas Well Development Plats. Plats Required Any person who proposes drilling and gas production of natural gas on a tract of land located within the corporate lin~its or within Division i of the City's Extraterritorial Jurisdiction, and icqs not required by this Subchapter to prepare a preliminary plat or final plat, shall prepare a Gas Well Development Plat. X~There any portion of land to be included within the area to be platted is located within a floodplain, an ESA or within 1200 feet of the flood pool elevation of Lake Ray Roberts or Lake Lewisville, a separate plat shall bc...p.repared for such area. The .applications may be submitted and reviewed t.<)gether. 16-12 Subchapterl6 Development Code Gas Well Development Plats in Areas Subject to Flooding No Gas Well Development Plat shall be approved for land located within a floodplain, an ESA or within 1200 feet of the flood pool elevation of Lake Ray Roberts or Lake Lewisville until a Watershed Protection Pemfit and ecific Use Pemfit or application for relief pursuant to Subsection 35.3.10. have been first approved. Denial or conditional approval of the applicable Watershed Protection Pemfit or petition for review shall constitute grounds for denial or conditional approval of the Gas Well Development Plat for such land. Procedures Gas Well Development Plats shall be processed and approved in accordance with Tex. Loc. Gov't Code Ann. ~212.041 through 212.050 (Vernon 1999) and no new natural gas development may begin on property until the Gas Well Development Plat is fried and approved by the City in accordance with this Subchapter. Standards for &p_proval Gas Well Development Plats shall confom~ to the following standards: ~1. All proposed gas well development shah be in compliance with the Roadway Component of the Mobility Plan. &.2. Erosion control is required and shall comply with all local, state and federal requirements or as required by the Watershed Protection Pemfit or Gas Well Development Plat. The operator shall file a copy of fl~e Stom~water Pollution Plan if required by fl~e EPA. 43. Reserve pits closcr thanwifl~in 200 feet of a bod~r, creek or floodplain, lakc, crcck or strcmm shah be lined to prevent water pollution. g4. Wifl~ the exception of vehicular access, no gas well development or activity is allowed in fl~e FEMA designated 100-year floodway. Drilling within a Flood Fringe or other ESA shown on the Map adopted by fl~e City is allowed under fl~e restrictions set forfl~ in Subsection 35.22.5(A)8.devdop~en* 5. Where tree mitigation is reqN.~.O,...pursuant to a Watershed Protection Pem~it,....~¥ funds due shall be paid prior to final approval of a Gas Well Development Plat. 6. At fl~e gme of pem~it for property inside city limits; p_Prior to approval of a Gas Well Development Plat or Gas Well Pemfit, a Road Repair Agreement that will obligate operator (or by the operator's employees, agents, contractors, subcontractors or representatives) in the perfom~ance of any activity authorized by or contemplated by the approved Gas Well Development Plat, must be executed by the City of Denton. The City Manager shall have the authority to enter into the Road Repair Agreement. A Road Repair Agreement is not required if access to the well site is fl~rough an entrance off~ffrom a State Highway. 7. The Gas Well Development Plat shah provide for ade ublic facilities, which may include water supply, access roads, drainage, erosion control and other necessary, supporting facilities identified on the Plat. The design, location, and arrangement of all driveways and required parking _s_paces shallprovide for the safe and convenient movement of vehicular and pedestrian traffic without adverse ublic or adjacent developments. ~.8. In addition to the requirements of Section 35.16.11 (preliminary plat), if applicable, a Gas Well Development Plat shall: 16-13 Revised Jan 26, 2004 C: ~laholley\ Backup 2004~ CC Feb 17th\ SI03-0024 Gas Well Amendments \ 7 SI03-0024 Gas Well Amend ,(Exhibit B) Subchapterl6 Development Code a. Identify truck routes and access points. b. Identify Environmentally Sensitive Areas (ESA's) including floodplains and any proposed floodplain, creek and stream crossings. i All floodplain, creek and stream crossings requiring the use of a culvert shall be designed to a 10-year stom~ frequency. ii All floodplain crossings shall have no negative affects on surrounding property. iii A drainage study sufficient to substantiate i and ii will be required as part of the submittal if crossings are proposed. c. Show the location and use of all structures within 500 feet of the wellhead. d. Identify the proposed source of water and any other public utilities required. e. Identify and show proposed method of erosion control. f. Identify the location of proposed lease lines and well locations. i Label distance between wells and property lines. ii Label distance between wells and structures within 500 feet of wells as measured from the property line. iii Label distance between temporary holding ponds and floodplains. g. Provide typical well site schematics showing layout during drilling and upon completion of drilling. h. Show location of all proposed underground pipelines. As built drawings shall be filed with the City. All pipelines proposed in public right-of-ways shall require a Right-of-Way Use Agreement. The City Manager shall have the authority to enter into a Right-of-Way Use Agreement. i. Identify if pipelines connect with a Gas Distribution System. Expiration of Gas Well Development Plat. 1. A Gas Well Plat requiring a Watershed Protection Pemfit shall expire on the earlier of the below two (2) year expiration date or upon the expiration of a Watershed Protection Pemfit. 2. If improvements have not commenced as required by the Gas Well Development Plat, an approval for a Gas Well Development Plat shall ears from the date that the Gas Well Development Plat is approved. The applicant may submit a written request for one six (6) monfl~ extension of fl~e Gas Well Development Plat prior to fl~e expiration date. The request shall contain docun~entation showing costs incurred to justify an extension. 3. Following expiration of a Gas Well Development Plat no furfl~er gas well drilling and production shall be allowed on fl~e land sublect to fl~e expired plat. 35. ~6.20 Construction. Improvements related to plat approvals shall comply with the following. 35.16.20.1 Pre-construction Phase Procedures and Requirements. Prior to beginning construction of public in~provements the City Engineer shall schedule a preconstruction conference between the owner/applicant and applicable City deparm~ents. Representatives of public and franchise utilities shall be notified and maybe required by the City to review the proposed improvements to be made and the requirements of this Subchapter. 16-14 Subchapterl6 Development Code 35.16.20.2 A. Development Contract Required. For all developments in which streets, drainage facilities, water or sewer lines or other improvements are to be constructed and dedicated or conveyed to fl~e public, a development contract is required to ensure proper construction and completion of fl~e in~provements and payment is made. The developer shall submit fl~e development contract, along with all required documents in conformity with all City construction standards. 35.16.20.3 Construction, Inspection, and Acceptance. The construction, inspection of construction, and acceptance of public in~provements after completion shall be approved by the City Engineer if the construction conforms to the requirements of all City construction standards. 35.16.20.4 Cost of Improvements and City Participation. The applicant shall make all required improvements, at his expense, according to City regulations, without reimbursement by the City, except for certain reimbursable costs as provided in Sections 35.21.9 and 35.21.10. 35.16.20.5 Subdivider to Extend Mains and Streets to Subdivisions. If the existing City mains and/or streets are not within or adjacent to a subdivision, the developer shall construct the necessary extension as specified in this Subchapter. These mains or streets shall be constructed in accordance wifl~ fl~e master plan of fl~e City. These facilities shall be in public easements, secured and paid for by fl~e developer. Such easements must be recorded as required by law before service is extended to fl~e subdivision. 35.16.20.6 Plat Required Before Issuance of Building Permits. A building permit shall not be issued for any property unless a final plat is recorded for that property. 16-15 Revised Jan 26, 2004 C: ~laholley\ Backup 2004N CC Feb 17th\ SI03-0024 Gas Well Amendments \ 7 SI03-0024 Gas Well Amend ,(Exhibit B) Exhibit C Subchapter 17 Development Code Subchapter 17 - Environmentally Sensitive Areas. Sections: 35.17.1 35.17.2 35.17.3 35.17.4 35.17.5 35.17.6 35.17.7 35.17.8 35.17.9 35.17.10 35.17.11 35.17.12 35.17.13 Purpose. Application. Environmentally Sensitive Areas Review. Environmentally Sensitive Area Classifications. Official Maps. Developed Floodplain Development Standards. Undeveloped Floodplain Development Standards. Riparian Buffer and Water Related Habitat Development Standards. Upland Habitat Development Standards. General Design and Improvement Standards. Clustering Standards Development Incentive Standards. Alternative Proposals. 35.17.1 Purpose. This Subchapter is adopted for the following purposes: A. Manage and protect environmentally sensitive areas wiflfin fl~e City as well as detail such areas fl~at have been previously identified in The Denton Plan. B. Protect fl~e natural and ecological resources fl~at are essential elements of the City's healfl~ and commtmity character and which provide irreplaceable plant and wildlife habitat; C. Establish a development framework for fl~e City fl~at is respective of private property rights, while encouraging fl~em to be used responsibly for fl~e benefit of fl~e entire commtmity; D. Preserve and enhance fl~e City's distinctive community character and quality of life by ensuring fl~at its natural and built environments are consistent wifl~ fl~e commtmity vision and values embodied in The Denton Plan. E. Establish regulations fl~at confom~ to the requirements of fl~e state and federal government regarding air quality, water quality and environmental protection. F. This subchapter is adopted pursuant to authority vested under fl~e City's charter, and Tex. Loc. Gov't Code_,__C_!~4p_t_e_x_s__2_!j_, 212 and 401 35.17.2 Application. A. The standards of this Subchapter shall apply to all land and all development within the within the corporate linfits of fl~e City, except as otherwise specifically provided for in this Subchapter. B. The floodplain standards of tiffs Subchapter shall apply to all land and all development within the extraterritorial jurisdiction of fl~e City. C. The type of regulation applicable to fl~e land depends upon fl~e classification in which fl~e land is placed, as provided in tiffs Chapter. If fl~ose regulations conflict wifl~ off, er regulations of this Subchapter, the more stringent of fl~e two regulations shall apply. 17-1 Subchapterl7 Development Code 35.17.3 Environmentally Sensitive Areas Review. A. Review Required. Environmentally Sensitive Areas Review is required for all development except for the following. Application for an Environmentally Sensitive Area Review can be made in conjunction with a Site Review required under Subchapter 13. 1. Property fl~at does not contain any environmentally sensitive areas as depicted on fl~e City's Environmentally Sensitive Areas Map. 2. Grading, filling, cutting or off, er earth-moving activity on any lot involving less fl~an fifty (50) cubic yards; 3. Activities such as ordinary maintenance and landscaping operations, individual home gardens, repairs, and additions or minor modifications of a single-family dwelling, except as required by fl~e Development Code. 4. Development of single-family homes at a density of one home for 2 acres or more shall be pemfitted and shall be subject to fl~e following restrictions: a. The home shall not be located in the Environmentally Sensitive Areas. b. Clustering is required where more fl~an one home is pemfitted within a development in order to preserve the greatest extent of the Environmentally Sensitive Areas. c. The dwelling shall be in compliance wifl~ all other development regulations. d. Septic tanks, septic tank drain fields, and off, er fom~s of on-site wastewater tream~ent shall not be built within the Environmentally Sensitive Areas. 5. The applicant can demonstrate to fl~e Director of Planning and Development's satisfaction fl~at fl~e subject property contains no Environmentally Sensitive Areas. B. Completed Application Required. A completed application for Environmentally Sensitive Areas Review shall contain fl~e following: 1. A plan containing fl~e following infom~ation: a. Locations and extent of all Environmentally Sensitive Areas as defined in tiffs Subchapter. Mapping of Environmentally Sensitive Areas shall be based on the Denton Environmentally Sensitive Areas Map and fl~e text of tiffs Subchapter, but may also be supplemented by gafl~efing and reviewing docun~entation such as: field verification, Section 404 wetland pemfit delineation, aerial photography, FEMA reports fl~at delineate and identify Environmentally Sensitive Areas. b. A detem~ination, by fl~e U.S. Am~y Corps of Engineer or a qualified environmental scientist wifl~ a delineation certified by the Corps, of the presence or absence of jurisdictional wetlands and waters of the U.S., and an indication of fl~e location of any jurisdictional wetlands. c. Culverting or bridges and associated land disturbances in confom~ance wifl~ fl~e Drainage Criteria Manual. d. Building envelopes for new or redevelopment parcels fl~at include concept plans for fl~e buildable area. 2. Additional plans and studies as required in fl~e applicable sections of tiffs Subchapter. C. Criteria for Approval. The following criteria shall be used for fl~e management and protection of Environmentally Sensitive Areas: 17-2 Subchapterl7 35.17.4 Development Code 1. Environmentally Sensitive Area Standards. The Director of Planning and Development shall approve the proposed development when the Applicant demonstrates the land development activity is in compliance with the requirements of this Subchapter for floodplains, Riparian Buffers, Water Related Habitat, and Upland Habitat and all other federal, state or local laws. The applicant shall meet the following requirements: a. The Environmentally Sensitive Areas have been properly identified and indicated on the required plan. b. The land disturbing activity will not cause damage to Environmentally Sensitive Areas located on property adjacent to the areas of disturbance. c. The land disturbing activity is in compliance with the requirements of this Subchapter and Subchapter 18. d. If jurisdictional wetlands are detem~ined to be present by the U.S. Am~y Corp of Engineers or a wetland delineator certified by them, a Section 404 Pemfit or Letter of Pemfission from the Corps shall be required before approval of the Environmental Review. 2. The specific delineation of the Environmentally Sensitive Area will be detemfined as part of the review by the Director of Planning and Development based on the best available data. Expiration. The Environmentally Sensitive Area Review approved by the Director shall expire one year after the date of approval unless the applicant has made application for a £mal plat for the development. The Environmentally Sensitive Area review shall expire when final plat approval expires. Credit. Any Environmentally Sensitive Area tl~at is protected may be used towards meeting tl~e Landscape and Tree Canopy requirements contained in Subchapter 13, tl~e Parkland Dedication and drainage requirements. Environmentally Sensitive Area Classifications. The following are used to define the classifications of land areas, their constraints to building and land disturbing activity on them, and that comprise the Environmentally Sensitive Areas Map: A. Developed Floodplain. Any area defined as a floodplain within the FEMA 100-year floodplain. These areas have typically been channelized or the land within these areas has been graded, filled, or otherwise disturbed. B. Undeveloped Floodplain. Areas within the FEMA 100-year floodplain, or other floodplain that is undeveloped and in its natural state. C. Riparian Buffers. Areas identified as 100 feet from the stream centerline for streams draining a basin of greater than one square mile, and 50 feet from any streams that drain areas of one square mile or less. It also includes any areas identified as riparian through any Am~y Corps of Engineers Section 404 Pemfit Process. D. Water Related Habitat. Areas designated for wetland, tree and understory preservation and including significant stands of predominately native water related habitat. These areas include wetlands. 17-3 Subchapterl7 Development E. 35.17.5 Code Upland Habitat. Areas, a minimum often acres is size, that contain remnants of the eastern Cross Timbers Habitat. Official Maps. 35.17.6 A. Environmentally Sensitive Areas Map. The official map fl~at identifies areas identified as Environmentally Sensitive Areas. B. Environmentally Sensitive Areas Map Amendments. Substantial amendments of tim map shall follow the Zoning Amendment Procedure detailed in Subchapter 3. The map may be updated administratively when specific information for a parcel is available delineating fl~e areas and field verified by tim Director of Planning and Development. C. Map Applicability. For any application for an Environmentally Sensitive Areas Review, tim delineation of those areas on tim site map, as approved by tim Director of Planning and Development, shall supercede tim Denton Environmentally Sensitive Areas Map in determining what areas are subject to fl~e requirements of tiffs Chapter as applied to a proposed development. D. Text Applicability. The text of tiffs Subchapter, including de£mitions, describes and regulates tim protected areas shown on fl~e City Environmentally Sensitive Areas Map as a reference. E. Field Boundary Delineation. The boundaries of all environmental areas shall be clearly marked in fl~e field for the duration of fl~e land disturbing activities on fl~e property. The boundaries shall be marked as identified in fl~e Site Design Criteria Manual. Developed Floodplain Development Standards. Development within the Developed Floodplains as identified on the Environmentally Sensitive Areas Map shall comply wifl~ Subchapter 35.19 Drainage. Gas well drilling and production wiflfin developed floodplains shall comply with Subchapter 35.22 (Gas Well Drilling and Production). 35. ~ 7. 7 Undeveloped Floodplain Development Standards. The following uses and activities are allowed in the Undeveloped Floodplain and are in addition to the restrictions for development of floodplains contained in tiffs Subchapter. Site disturbance shall be delineated on fl~e completed application for Environmentally Sensitive Areas review: A. Permitted Uses and Activities. The following permitted uses and activities are allowed if in compliance wifl~ fl~e Drainage code: 1. The planting of any new trees or vegetation. 2. Restoration or enhancement of floodplains, riparian buffers, water related habitats, upland habitats, wetlands and strean~s as required by federal and state standards. 3. The placement of public or private utility facilities such as sewer, storm water, water, electricity, gas, or off, er utilities as long as installation will not have a negative impact on environmentally sensitive areas and when adequately flood proofed. 4. Measures to remove or abate nuisances, or any off, er violation of federal, state or local law. 17-4 Subchapterl7 Development Code 5. Parking lots, subject to the limitations on fill and surface material and constructed of pervious materials. 6. Parks, open space, recreational uses, trails, walkways and bike paths. 7. New stom~ water pre-treatment facilities. 8. Routine repair and maintenance of existing structures, roadways, driveways, utilities, and accessory uses. 9. Agricultural activity pemfitted through NWP 40, Agricultural Activities or any other pem~it as required by FEMA or Section 404 pursuant to the Clean Water Act. 10. Any action taken by federal, state, or local officials in an emergency to mitigate an existing or potential hazard. 11. The construction of a private driveway. 12. Gas well drilling.......a!!d._production shall comply, wifl~ Production. Prohibited Uses and Activities. The 1. Subchapter 35.22 Gas Well Drilling......a!!d following prohibited uses and activities are not allowed in undeveloped floodplains: Uncontained and contained areas of hazardous materials. Handling or processing areas for the receiving and storage of hazardous waste. Hazardous waste and solid waste landfills. 2. Land disturbing activity not authorized by a Corp Section 404 Pem~it or Letter of Pemfission and by the Director as part of the environmentally sensitive area review. 3. Any new structures or additions, including garages and carports, and storage sheds located within the area mapped as Undeveloped Floodplain. 4. Tree and understory vegetation removal except as allowed by Subsection 35.22.5.A. 8(c). Standards for Fill in Undeveloped Floodplains. The following are standards for fill in the undeveloped floodplain: 1. Filling of any floodplain of a stream that drains more than one square mile is prohibited unless the fill on any lot is less than 50 cubic yards or 300 cubic feet per acre, whichever is greater. Up to 15% of the floodplain valley storage may be filled if the stream drains less than one square mile in area pursuant to this Subchapter and federal law. 2. Excavation to balance fill shall be located on the same parcel as the frill unless it is not reasonable or practicable to do so. In such cases, the excavation shall be located in the same drainage basin and as close as possible to the fill site, so long as the proposed excavation and fill will not increase flood impacts for surrounding properties as detemfined through hydrologic and hydraulic analysis. 3. Fill and other material imported to the lot shall be lin~ited to the following: a. Poured concrete and other materials necessary to build pemfitted structures on the lot. b. Aggregate base and paving materials. c. Pervious materials as allowed in Subchapter 13, Site Design Standards. d. Plants and other landscaping material. 4. If additional fill is necessary beyond the pem~itted amounts in (1) above for sites with streams that drain an area greater than one square mile, then fill materials must be obtained from cutting or excavation only to the extent allowed to create an elevated site for pemfitted land disturbing activity. 5. Adequate drainage shall be provided for the stability of the fill. 17-5 Subchapterl7 Development Code 6. Fill to raise elevations for a building site shall be located no closer than pemfitted to the Environmentally Sensitive Areas in order to reduce the impact of that fill on the adjacent areas. D. Culverts and Bridges. Culverts or bridges of any waterway or creek identified on the official maps adopted pursuant to this Subchapter must be designed by an engineer. Stream crossings shall be designed to the standards of the Drainage Subchapter, or where no floodway has been identified, to pass a one-hundred (100) year flood without any increase in the upstream flood height elevation. The engineer shall consider in the design the probability fl~at fl~e culvert will be blocked by debris in a severe flood and accommodate expected overflow. Fill for culverts and bridges shall be kept to fl~e minin~um allowed, but is exempt from fl~e limitations in section (A) above. 35.17.8 Riparian Buffer and Water Related Habitat Development Standards. The following uses and activities are allowed in the Riparian Buffer and Water Related Habitats and are in addition to tim restrictions for development in tiffs Subchapter. Site Disturbance and shall be delineated on tim completed application for Environmentally Sensitive Areas review: A. Permitted Uses and Activities. The following uses and activities are allowed in Riparian Buffer and Water Related Habitats and shall be delineated on tim completed application for Environmentally Sensitive Areas review: 1. Up to 10% of tim area may be disturbed for private yard structures including but not limited to: gardens, yards, trails, and clearings, but which are no closer fl~an 25 feet from tim stream bank or riparian buffer. No disturbance is pemfitted in delineated wetlands. 2. Repair, replacement or improvement of utility facilities where: a. The disturbed portion of tim Environmentally Sensitive Area is restored; and, b. Non-native vegetation is removed from tim Environmentally Sensitive Area and replaced wifl~ vegetation from the City Native Plant List. 3. Additions, alterations, rehabilitation, or replacement of existing structures fl~at do not increase fl~e existing structural footprint in fl~e Riparian Area or Water Related Habitat Area where tim disturbed portion of tim area is restored using native vegetative cover. 4. Stream, wetland, riparian and upland enhancement or restoration projects; 5. Agricultural activity, including buildings and structures is pemfitted outside of the environmentally sensitive areas, unless otherwise pemfitted fl~rough NWP 40, Agricultural Activities or any other pemfit as required by FEMA or Section 404 or as allowed in this Subchapter. 6. Routine repair and maintenance of existing structures, roadways, driveways, utility facilities, accessory uses and oflmr development. 7. Measures to remove or abate nuisances, or any oflmr violation of State statute, administrative rule, or City Code of Ordinances. 8. Any action taken by fl~e City in an emergency to mitigate an existing or potential hazard. 9. Gas well drilling..ar!.d._production within .~parian buffers and water related habitats shall comply wifl~ Subchapter 35.22 Gas Well Drilling and Production. B. Prohibited Uses and Activities. The following uses and activities are not allowed in Riparian Buffers and Water Related Habitats: 1. Land disturbing activity not authorized by a Corp Section 404 Pemfit of Letter of Pemfission and by the Directors as part of the ESA review. 17-6 Subchapterl7 35.17.9 Development Code 2. Uncontained and contained areas of hazardous materials handling areas for the receiving and storage of hazardous waste. 3. Any structures, including storage sheds, garages and carports, located within the area mapped as Riparian Buffer and Water Related Habitats. Upland Habitat Development Standards. The following uses and activities are allowed in the Upland Habitat and are in addition to the restrictions for development within this Subchapter. Site disturbance shall be delineated on the completed application for Environmentally Sensitive Areas review: A. Permitted Uses and Activities. The following uses and activities are allowed in Upland Habitats and shall be delineated on the completed application for Environmentally Sensitive Areas Review: 1. Residential development shall be designed to retain a contiguous fifty percent (50%) tree canopy, which shall remain predominantly in its natural state. Non-residential development may remove any or all of the Upland Habitat. 2. Selective prtming by a qualified and licensed tree surgeon is allowed to remove up to one-quarter of the canopy for the purposes of a trees health. 3. Clustering of development in fl~ese areas shall be utilized to mininfize in, pact to fl~e natural environment. Clustering shall be designed to maintain a contiguous forested area. 4. Agricultural activity, including buildings and structures is permitted outside of fl~e environmentally sensitive areas, unless otherwise permitted fl~rough NWP 40, Agricultural Activities or any other permit as required by FEMA or Section 404, or as allowed in tiffs Subchapter. 35.17.10 General Design and Improvement Standards. The design and improvement of environmentally sensitive areas shall be in accordance with the following standards: A. These areas shall be linked to existing or planned open space or conserved areas to provide an overall open space system. B. These developments shall be arranged in order to maximize access and utilization of the environmentally sensitive areas by residents of fl~e development and fl~e City. C. These developments shall comply wifl~ fl~e open space plans and requirements of fl~e City. D. The unbuildable site area shall be placed either in a lot or lots fl~at incorporate a permanent conservation easement, restrictive covenants, or such other legal n~echanism to allow for the long term conservation of said areas. Such legal n~echanism shall limit any future land disturbing activity or construction within fl~e environmentally sensitive areas and shall mn wifl~ fl~e land and be binding upon all successors and assigns of fl~e current owner. The unbuildable site area may be incorporated into lots of over 1/2 acre in size. 35.17.11 Clustering Standards. Residential units or non-residential floor area ratio of a site may be clustered within the buildable areas of that site provided the following standards are met: A. Clustered density or floor area intensity may be transferred to contiguous lots under common ownership. Clustering from one development site to another development site is prohibited. 17-7 Subchapterl7 Development Code 1. 2. B. A general development plan shall be used to designate all areas of common ownership. A general development plan may be used to allocate fl~e transfer of density between lots under common ownership prior to fl~eir being sold. The minimum two acre size requirement for clustering contained in Subchapter 5 is not applicable to properties impacted by an Environmentally Sensitive Area. 35.17.12 Alternative Environmentally Sensitive Area Plans. An applicant may propose an Alternative Environmentally Sensitive Area Plan which meets or exceeds fl~e objectives of fl~e Denton Plan and this Subchapter but does not meet fl~e standards of tiffs Subchapter. The Alternative Environmentally Sensitive Area Plan provides fl~e option to address fl~e regulations fl~rough a flexible discretionary process reviewed by fl~e Planning and Zoning Commission utilizing fl~e Alternative Development Plan review process outlined in Subchapter 3. 17-8 Exhibit D Subchapter 22 - Gas Well Drilling and Production Sections: 35.22.1 35.22.2 35.22.3 35.22.4 35.22.5 35.22.6 35.22.7 35.22.8 35.22.9 35.22.10 35.22.11 35.22.12 35.22.13 35.22.14 35.22.15 35.22.16 35.22.17 Purpose. Definitions. Gas Well Drilling and Production "By Right". Gas Well Drilling and Production by Specific Use Pemfit or Planned Development Zoning District; Application and Requirements. Standards for Gas Well Drilling and Production. DRC Recommendations for Specific Use Pemfits and Planned Development Zoning Districts. Gas Well Pemfit Required. Insurance and Indemnification. Security. Review of Application for Gas Well Pemfit. Periodic Reports. Notice of Activities. Amended Gas Well Pemfits. Transfer of Gas Well Pemfits. Inspection Remedies of fl~e City: Enforcement, Right of Entry,. 35.22.1 Purpose. The drilling and production of gas within the corporate lin~its and its Extraterritorial jurisdiction ~TJ) of the City necessitate reasonable regulations to prevent mm~inent--ddestmction of property,_protect--and-watersheds within the City of Denton and its ETJ, prevent or injury to persons,_ rand, and ensure that production*o---n~ak-e--these activities confom~ to the Denton Plan and development regulations. This Subchapter implements reasonable regulations to protect the health, safety, and general welfare of the public and to accomplish the orderly and practical development of mineral resources. This subchapter is adopted pursuant to authority vested under the City Charter and Tex. Loc. Gov't Code, Chapters 211,212 and 401. 35.22.2 Definitions. M1 technical industry words or phrases related to the drilling and production of gas wells not specifically defined shall have fl~e meanings customarily attributable flmreto by prudent operators in industry. For the purposes of this Subchapter, the following definitions shall apply unless the context clearly indicates or requires a different meaning. Abandonment. "Abandonment" as defined by the Railroad Commission and includes the plugging of the well and restoration of the drill site as required by this Subchapter. Cathodic protection. An electrochemical corrosion control technique accomplished by applying a direct current to the structure that causes the structure potential to change from the corrosion potential to a protective potential in the inm~unity...r~gion. The ~q~ired cathodic protection current is .~_~pp.!i~.d...b.y sacrificial anode materials or by an ~1pressed current system. Contaminant. Any substance capable of caus but not limited to smoke--ors, fumes, acids, alkalis, toxic chemicals, liquids or gases, drilling fluids including muds, or other irritants. Drilling. Any digging or boring of a new well to develop or p~oduee-----gasproduce gas or to inject gas, water, or any other fluid or substance into the earth. Drilling means and includes the re-entry of an abandoned well. Drilling does not mean or include the re-entry of a well that has not been abandoned Drill Site. The area used for drilling, completing, or re-working a well. 22-1 Subchapter 22 Development Code Exploration. Geologic or geophysical activities, including, but not limited to surveying and seismic exploration, related to the search for oil, gas, or other sub-surface hydrocarbons. Fracturing. The use of sfim~ants ~jected into a gas well to spht or fracture fl~e fom~afion to improve the producfivi~ of fl~e gas well. Gas. Gas or natural gas, as such temps are used in tim ~es, re~lations, or fom~s of the Ra~road Commission. Gas Well. ~y well dfi~ed for fl~e production of gas or classified as a gas well under fl~e Texas Natural Resources Code. Gas Well Permit. A Gas Well Pemfit applied for and issued or denied under tiffs Subchapter authorizing tim d~hng, production, and operation of one or more gas wells. Hazardous Materials Management Plan. The hazardous materials management plan and hazardous materials invento~ statements required by tim Fire Code. ~ner. A continuous !ay~r of matefials~zynfl~efic or natural, beneafl~ md on fl~e sides of a_pj~ that restricts fl~e downward and lateral release of fl~ds. New Well. A new well bore or new hole estabhshed at the ~o~d surface and shall not ~clude fl~e re- work~g of an exis~g well fl~at has not been abandoned. Oil and Gas Inspector. ~ inspector desi~ated by the City of Denton fl~at is responsible for evaluating fl~e impacts of exploration, development, and production of off and/or gas we~s. Responsibilities include environmenta~y sensitive areas review, erosion control ins.p.~g, ri~g., monitofin& and evalua~g....C~g!pliance wifl~ federa!,....~.t, ai~, and local relations. Operation Site. The area used for development and production and all related operational activities of gas aher dfi~g activities are complete. Operator. For each well, fl~e person listed on fl~e Railroad Commission Fom~ W-1 or Fom~ P-4 for a gas well. Permit. ~y written license ~anted by the City of Denton for fl~e exploration, development, md production 9_f_gas we~s issued_pursuant to ~es and relations of tiffs Subsection. Petroleum Specialist. A person familiar wifl~ and educated ~ fl~e oil and gas indust~ who has been retained by the Gty. Railroad Commission. The Railroad Commission of Texas. Re-wor~ng. Re-completion or re-ent~ of an existing well wifl~ fl~e exis~g bore hole or by deepening or sidetrack operations which do not extend more fl~an one hundred fihy (,150) feet from fl~e exis~g well bore, or replacement of well hners or cas~.,. ~pud: The first ~e fl~e dfi~ bit enters the.~o~d for ga.~ well dfilhng..aad...production. Tank. A conta~e~, covered or ~covered, used ~ conjunction with fl~e d~g...~.L.producfion of.ga.~ or off, er hydrocarbons for holding._~.r sto~g fl~ds. Technical adhsor. Such ~a(s) familiar wifl~ and educated ~ fl~e oil and or fl~e law as it relates to oil and gas matters who may be retained from t~e to ~e by fl~e City of Denton. Well. A hole or bore to any horizon, fom~afion, or strata for fl~e pu~ose of producing oit; gas, or off, er hquid hydrocarbons. 22-2 Subchapter22 35.22.3 Gas Well Drilling and Production "By Right". Development Code A. The drilling and production of gas within the corporate linfits of the City shall be permitted by right within the Rural Residential (RD-5), Rural Commercial (RC), Neighborhood Residential i (NR-1), Neighborhood Residential 2 (NR-2), Regional Center Commercial Neighborhood (RCC-N), Regional Center Commercial Downtown (RCC-D), Employment Center Commercial (EC-C), Employment Center Industrial (EC-1), Industrial Center Employment (IC-E) and Industrial Center General (IC-G) Zoning Districts provided fl~at no residential structure or place of assembly, institution or school exists no closer fl~an five hundred feet (500') from the wellhead or within a previously platted residential subdivision where one or more lots have structures and provided fl~at tim drilling and production of gas meets tim following requirements: 1. All applicable standards forth in Section 35.22.5, Standard Conditions for Gas Well Drilling and Production. 2. An approved Gas Well Development Plat and a Road Repair Agreement are on file wifl~ fl~e Director. 3. A Gas Well Permit has been issued by tim Fire Marshal. 4. A Watershed Protection Permit for wells located in the Flood Fringe or other ESA's B. The drilling and production of gas within the corporate linfits of the City shall be permitted by right within fl~e Rural Residential (RD-5), Rural Commercial (RC), Neighborhood Residential i (NR-1), Neighborhood Residential 2 (NR-2), Regional Center Commercial Neighborhood (RCC-N), Regional Center Commercial Downtown (RCC-D), Employment Center Commercial (EC-C), Employment Center Industrial (EC-1), Industrial Center Employment (IC-E) and Industrial Center General (IC-G) Zoning Districts if the property owner of a residential structure within two hundred and fifty feet (250') to five hundred feet (500') of the wellhead agrees in writing and provided that the drilling and production of gas meets the requirements of Section 35.22.3.A. 1. through. 3 and other requirements of this subchapter. C. A gas well permit shall automatically terminate, unless extended, if drilling is not commenced within one year from the date of the issuance of the permit. A_p__e_m_~_i_t_n2ay be extended for an additional six months erator and proof fl~at the re~atory standard of the recj~ed permit for such location has not changed. D. A watershed protection permit shall automatically terminate, unless extended, if spudding is not commenced within six monfl~s from fl~e date office issuance office permit. A permit may be extended for an additional three months k~p~211.....application and if no revision to the .ga.~ well drilling....a!gd....production regulations is in process. A permit may be extended for an additional three months upon application, under the same criteria for the first extension. The gas well permits required by this Subchapter are in addition to, and are not in lieu of, any permit that rovision of this Code or ;~y_a_n_y_o_t!_~__e_r_governmental 35.22.4 Gas Well Drilling and Production by Specific Use Permit or Planned Development Zoning District; Application and Requirements. No person, acting for himself or acting as an agent, employee, independent contractor, or servant for any person, shall engage in drilling or production of a gas well within the corporate limits of the City without first obtaining either a Specific Use Permit as required by this Subchapter or unless permitted within a Planned Development Zoning District unless drilling is permitted by righ* -pu~suamright pursuant to Section 35.22.3. &_.Specific Use Permit shall be required to va~ the standards under Subsection 35.22.5. 22-3 Subchapter22 Development Code B. An application for a Specific Use Pemfit or Planned Development Zoning District for the drilling and production of a gas well shall be filed by tim person having legal authority. That person is presumed to be fl~e record owner, mineral owner, or tim duly authorized agent of eiflmr tim record owner or fl~e mineral owner. The Chaim~an of tim Development Review Committee (DRC) may require an applicant to submit infom~ation of authority to file an application. C. The Chaim~an of tim DRC has the authority to establish requirements for applications in fl~e Application Criteria Manual. No application shall be accepted for filing until it is complete and fl~e fee established by tim City Council of the City of Denton has been paid. Incomplete applications shall be returned less a fee for processing detem~ined by tim Director of Planning and Development. D. No application for a Gas Well Development Plat, Gas Well Pem~it, Watershed Protection Pem~it or any 35.22.5 other _application for drilling_aB_al_production of_gas_ within the gj_~ linfits shall be ap_proved outfig[Kt__o_r conditionally! a Specific Use Pemfit or Planned Development District authorizing such use first has been approved. Denial or conditional approval of a Specific Use Pemfit or Planned Development District for gas well drilling and production shall be grounds for denial or conditional approval of any other to such use for the same land. Standards for Gas Well Drilling and Production. The drilling and production of a gas well ..... ...... within city linfits or the .C.i_~j.~...~J...shall include the following standards: 1. r-^~:~...t,..,..~ ....... ----:*~ *~,.~ Development Plat.Development Permits Required. No drilling or production of a gas well shall begin until fl~e following pemfits have been approved:a Gas We!! a. A Gas Well Development Plat that has been _ap_p_r_o_z_e__d__:~y the Chaim~an of the DRC is on file with the Deparm~ent that confom~s to the requirements of Subsection 35.16.19~ Gas Well Development Plats. ' .... , A Gas Well Pem~it has been issued by the City Fire Marshall in accordance with Subsection 35.22.7 and Subsection 35.22.10. c. A Watershed Protection Pemfit for land within fl~e Flood Fringe_ or off, er ESA has been a~ed by the Chaim~an of the DRC pursuant to Subsection 35.22.5.A.8.A Road Rcpair d. No pemfits shall be approved for gas well drilling and production on any land located within the 100-year floodway or wiflfin 1200 feet of fl~e flood pool elevation of Lake Ray Roberts or Lake Lewisville. unless fl~e ~erty owner has first applied for and received approval of fl~e City Council for Specific Use Pemfit pursuant to Subsection 35.22.4.A. or apply for relief pursuant to Subsection 35.3.10. On-site requirements. a. A secured entrance gate shall be required. Street lighting shall be required pursuant to Section 26-76 of the Utility Code of the Code of the City of Denton, Texas or the sign identifying the entrance to fl~e drill site or operation site shall be reflective. 22-4 Subchapter22 Development Code b. Fences shall not be required on drill sites during initial drilling, completion, or re-work operations as long as 24 hour on site supervision is provided. Once 24-hour _s__u_pervision has ceased,_a]! drilling features including ~torage pits shall be fenced to prevent access. c. Fences located on operation sites mustshall remain locked at all times when no one is present. d. No refining process, or any process for fl~e extraction of products from gas, shall be carried on at a drill site or operation site, except fl~at a dehydrator and separator may be maintained on a drill site or operation site for fl~e separation of liquids from gas. Any such dehydrator or separator may serve more fl~an one well. Gas Processing Facilities shall require a Specific Use Pemfit. e. Pem~anent weatherproof signs reading "DANGER NO SMOI~NG ALLOWED" in a minimun~ of four inch (4") lettering shall be posted at the entrance of each drill site and operation site. The sign shall include fl~e development or operating company that is currenfly re_s_ponsible for the_ga_s_~_e_l!_opjah fl~e Railroad Commission Well Identification Number and fl~e American Petroleum Institute number for tim well, tt~e_phone number for emergency services (911), tim number for tim operator, and any ofl~erfl~e well designation required by tim Railroad Commission in two inch (2") lettering. f. No person shall place, deposit, or discharge (or cause or pem~it to be placed, deposited, or discharged) any oil, naphtha, petroleum, asphalt, tar, hydrocarbon substance, or any refuse, including wastewater or brine, from any gas operation or tim contents of any container used in connection with any oit or gas operation in, into, or upon any public right-of-way, stom~ drain, ditch or sewer, sanitary drain or sewer, any body of water, or any private property within tim corporate limits or fl~e Extratcr~to~a! iufisdicfionET~[_of fl~e City. of Denton. g. All production equipment on an operation site shall be painted and maintained at all times, including pumping units, storage tanks, buildings, and structures. h. All electric lines to production facilities shall be located in a manner compatible to those already installed in fl~e surrounding areas or subdivision. i. All fire suppression and prevention equipment required by any applicable federal, state, or local law shall be provided by the operator, at the operator's cost, and maintenance and upkeep of such equipment shall be the responsibility of the operator. j. No operator shall excavate or construct any lines for the conveyance of fuel, water, or minerals on, under, or through the streets or alleys or other land of the City without an easement or right- of-way license from the City, at a price to be agreed upon, and fl~en only in strict compliance wifl~ fids Subchapter, wifl~ off, er ordinances of the City, and with fl~e specifications established by fl~e Engineering Department. k. The digging up, breaking, excavating, tunneling, undemfining, breaking up, or damaging of any public street or leaving upon any public street any earth or off, er materials is prohibited. Construction activities or deposition of any materials or objects creating an-~¢ obstruction within linfits of public right-of-way or easements are;---is- prohibited unless fl~e operator has first obtained written pemmsion approval from fl~e Engineering Deparm~ent and, if applicable, has filed a , and fl~en only i.~.in compliance wifl~ specifications established by fl~e deparm~ent. 1. No Gas Well pemfit shall be issued for any well to be drilled within any of the streets or alleys of fl~e City and/or streets or alleys shown by fl~e Denton Plan, 1999-2020 and no street shall be blocked or encun~bered or closed due to any exploration, drilling, or production activities unless prior consent is obtained by fl~e City Manager, and fl~en only temporarily. m. Pit liners shall be designed, constructed~ and installed to prevent any migration of materials from fl~e pit into adjacent subsurface soils, ground water, or surface waters at any time during fl~e life of fl~ep_i_t All lined pits shall adhere to fl~e liner standards set forfl~ __b_¥ fl~e Railroad Commission. 22-5 Subchapter22 Development Code n. All well heads, storage tanks, separation facilities or other mechanical equipment located within 500' of an _adjacent residential prop_e_r_~ and not wiflfin a floodplain shall be screened from residential proper~ wifl~ a 6' !ligh solid screen fenc%good side facing tim residential 3. Operations and equipment practices and standards. a. Adequate nuisance prevention measures shall be taken to prevent or control offensive odor, fumes, dust, noise and vibration. b. Directional lighting shall be provided for the safety of gas well drilling and production operations and shall be provided so as to not disturb or adversely affect adjacent developments. c. The operator shall at all tin~es comply with the rules and regulations of the Railroad Commission including but not linfited to all applicable Field Rules. d. Internal combustion engines may be used in drilling operations if they have mufflers that will reduce noise to not more than 90 decibels at any point 300 feet from the boundary of the drill site or operation site. Only electric motors shall be used for the purpose of pun~ping gas wells. e. There shall be no venting of gas into the open air in residential areas except as allowed by the Railroad Commission and as approved by the Fire Marshal. f. Vehicles, equipment, and machinery shall not be placed or located on a drill site or operation site (or on any public street, alley, driveway, or other public right-of-way) in such a way as to constitute a fire hazard or to unreasonably obstruct or interfere with fighting or controlling fires. g. Only Light Sand Fracture Technology or technologies approved by the Fire Marshal in accordance with the Fire Code City shall be used to fracture stimulate a well. h. Fracing operation shall be scheduled to occur during daylight hours unless the Operator has notified fl~e Fire Marshal fl~at fracing will occur before or after daylight hours to meet safety requirements. i. Air, gas, or pneumatic drilling shall not be pemfitted. 4. Storage tanks and separators. a. An operator is allowed to construct, use, and operate such storage equipment and separation equipment as shown on the typical well site, typical drilling pad, and typical pad site locations on fl~e approved Gas Well Ddevelopment ~plat approvcd by t~c C!~ai~an of fi~c DRC. b. The use of centralized tank batteries is pemfitted as shown on the applicable Gas Well Development Plat. c. No gas well development is allowed in the FEMA designated 100-year floodway or within 1200 feet of tim flood pool elevation of Lake Ray Roberts or Lake Lewisville. No meters~ storage tanks~ d. No storage tanks or separation facilities shall be placed in the Flood Fringe or other ESA except ~~-u-nde-rin accordance with Subsection 35.22.5(A)8.fioodplaLn 22-6 Subchapter22 Development Code ........ , ............... s ..... , ,~ average vclociW ~ Flow lines and gathering lines. a. Each operator sha~ place an identi~ing si~ at each point where a flow l~e or gaflm~g line crosses a pubhc street or road. b. Each operator shall place a wam~g si~ Gr l~es caring H2S (Hydrogen Sulfide) gas as req~red by fl~e Railroad Commission. c. ~1 flow hnes and gafl~efing l~es wiflfin tim co,orate l~its of tim City (excluding Ci~ u~i~ l~es and franchise distribution systems) fl~at are used to trmsport oil, gas, and/or water sha~ be l~fited to fl~e max~ allowable operating pressure applicable to tim pipes instated and sha~ be installed wifl~ at least the min~ cover or backfill specified by tim ~efican National Safe~ Institute Code, as amended. d. Structures sha~ not be b~lt over flow l~es or gaflm~g hnes. Additional safety and enhronmental requirements. a. The d~hng and production of gas and accessing fl~e gas well site shall be ~ compliance wifl~ all state and federal environmental re~lafions. Noga~ well development or acfiG~ is a~owed FEMA desi~ated 100-year floodway. D~hng wiflfin ~ood ' n~:~ or F~ge .... p ...... ofl~er ESA shown on fl~e Map adopted by the Ci~ is allowed under the restrictions set forfl~ in Section ....... vv~ and Section 35.22.5(A).8.,.and st'aP not occur w:fi~:~ ~--: ......... n.. c~:,:..~ b. Erosion control practices sha~ be conducted for all g~s wells. Compost bem~s fl~at are at least foot high md ~o feet wide~ or eq~valent erosion control devices~ shall be ~sta~ed so that all potions of fl~e we~ pad fl~at may dra~ off-site are contained. Dama~ resulting from sedimentation and/or erosion sha~ be repaired immediately. ~c. Gas we~s may have a target location or bottom-hole location fl~at is ~der fl~e floodway~_an Environmentally Sensitive Area ~SA) or wifl~ 1200 feet of fl~e flood pool elevation of lake Ray Roberts or L~e Lewisvi~e when fl~e gas we~ is dfi~ed directiona~y from a location outside ~e ~w~tnny o~o~uv~ Arca.such areas. ~d. Each well sha~ be equipped wifl~ an automated valve fl~at closes fl~e well in fl~e event of an abnom~al change ~ operating pressure. A~ wellheads shall conta~ an emergency shut og valve to fl~e well distribution line. &e. Each storage tank shall be eq~pped wifl~ a level control device fl~at wi~ automafica~y activate a valve to close fl~e well ~ fl~e event of excess liq~d acc~afion in fl~e tank g ~1 storage tanks sha~ be anchored for stabile: ~g: A~ stora~_ tanks sha~ be _g~N~ped wifl~ either steel or concrete seconda~ containment including!N~g wifl~ an imperious material. The seconda~ containment system sha~ be of a sufficient height to contain one md one-half (1 Vz) t~es fl~e contents of fl~e largest tank accordmce with the Fire Code. Drip pots sha~ be provided at pump out connections to cont~n fl~e ii. quids from fl~e stora~, tank.)2! stora~ *~1.o okM1 k ..... :~a ...:*k ..... 22-7 Subchapter22 Development Code h. Outdoor storage areas shall be equipoped with a secondary containment system designed to contain a spill from the largest individual vessel. If the area is open to rainfall, secondary, containment shall be designed to include the volume of a 24-hour rainfall as detemtined by a 25- year stom~ andprovisions shall be made to drain accumulations of ground water and rainfall. fi. Tank battery facilities shall be equipped wifl~ a remote foam line and a lighming arrestor system. g~j, A Hazardous Materials Management Plan shall be on file with fl~e Fire Marshal. Any updates or changes to this plan shall be provided to the Fire Marshal within 3 working days of the change. All chemicals and/or hazardous materials shall be stored in such a manner as to prevent, contain, and facilitate rap_id remediafion and cleanup__o__f__a_n_¥ accidental __spLll_,__l_e_ak~ or discharge__ of a hazardous material. Qoperator shall have all material safety data sheets ~SD$S) for all hazardous materials on site. All applicable federal and state regulatory requirements for the proper labeling of containers shall be followed, revention actions shall be required and include, but are not limited to, chemical and materials raised from the wooden pallets), bulk storage, instatitlation and maintenance of secondary containment systems, and protection from stom~ water and weather elements. h;k. Ail wells shall be abandoned in accordance with the rules of the Railroad Commission; however, all well casings shall be cut and removed to a depth of at least ten feet (10') below the surface unless the surface owner submits a written agreement otherwise. Three feet (3') shall be the minin~un~ depth. M. No structures shall be built over an abandoned well. m. No gas well drill sites shall be allowed on slopes greater than ten (10) percent. jm. No salt-water disposal wells shall be located within the City of Denton. k:o. Lining the reserve pit shall be required if the reserve pit is within two hundred feet (200)' of a body of water, creek, or floodplain. p,. emfit will be issued for ally well where fl~e center of fl~e well at fl~e surface of fl~e ground is located wiflfin 250 feet of an existing fresh water well intended for domestic use. shall always be maintained at least 2 feet below the r. Fencing shall be installed to restrict access to a reserve pit or off, er open water reservoir utilized in gas well drilling operation at a drilling site within fl~e corporate limits of fl~e City, except as provided in Section 35.22.5, C.2.c. s. Drip_pans and off, er containment devices or oil absorb~g materials shall be_placed or installed underneath all tanks~ containers~_p~p~= lubricati fuel and chemical storage tanks, system valves, connections, and any off, er areas or structures fl~at could potential leak, discharge, or spill hazardous liquids, senti-liquids, or solid waste materials, including hazardous waste ins mechanical removalprocesses fl~at is made natural material. t. After fl~e well has been completed, or plugged and abandoned, fl~e operator shall clean and repair all damage to public property caused by such operations wiflfin thirty (30) days. u. After any spill, leak or malfunction, fl~e operator shall remove or cause to be removed all waste materials from affected b_y__s_ug_tx__s_pi_ll__, leak or malfunction. Clean- up operations shall be~ll inm~ediate!y: 22-8 Subchapter22 Development Code v. The drill site shall at all times be kept free of debris, pools of water or other liquids, contaminated _s__o_il__,___w_e__e_d_s_,~_b__m__s_t2~ trash or other waste material outside fl~e drill site wiflfin a radius of one hundred (_i_~_Q) feet around tanks and ~du_c~gwells within the leased prope~y,. Drilling mud and reserve pits shall adhere the following req_uirements i The ~ ofpi~ used in drilling 9perations shall be specified at the time of p~_m_1ir~g: The oil and gas inspector may perfom~ a contamination assessment for any reserve pit, compl.~_ti2~_.Z work-over mud circulation pi:t, washout pit, or water condensate pit, The following concentrations for contaminants will be used to detemfine if contamination exists within any materials in fl~e pits: _.C_.o.~pound Concentration limit TPH 15 mg/L BTEX 500 ug/L Benzene 50 ug/b From 30TAC 321.131.138 If concentrations exceeding these values are detecte4,_~!_e___o_perator shall remove, cause to be removed~ or otherwise remediate contaminants, to the satisfaction of fl~e oil and gas. inspector. Cleanup operations shall begin immediately. Cleanup activities that do not begin within 24 hours of notification by fl~e oil and gas inspector shall be considered a violation of tiffs Subchapter. ii Only freshwater-based mud systems shall be pemfitted. Saltwater-based mud systems and oil-based mud systems are prohibited. iii Chloride content of fluids held in reserve pits may not exceed 3,000 milligrams per liter. iv No metal additives may be added to any drilling fluids. v All fluid produced from the well during completion of production shall be held in enclosed containers while stored on fl~e property,. vi Ail fluids shall be removed ("de-watering") from the reserve pits within 30 days of completion of drilling~perations. vii The pi~ and its contents shall be removed from fl~e premises within nine~)~ays. after completion of fl~e well; provided, however, fl~at fl~e pemfittee may apply for a 90 day extension from such requirements based on showing of good cause, necessity, to maintain said p. iL. inclement weather, or other factors. The Ci eriod of time shorter fl~an the 90-day extension set out herein. x. No eration shall be pemfitted within twelve hundred (~00) feet of fl~e flood pool elevation of Lake Ray Roberts or Lake Lewisville. y. The provisions of 35.22.5(A)6 shall apply bofl~ within the corporate linfits of fl~e City of Denton and wiflfin the ETJ of fl~e City of Denton. _________Supplemental drilling. a. Supplemental drilling to deepen or directional drill an existing well shall be conducted in accordance wifl~ fl~e conditions for fl~e applicable Specific Use Pemfit or Planned Development Zoning District or underlying zoning classification that pemfits gas development by right. The operator shall provide fl~e Fire Marshal a copy of additional Railroad Commission pemfits fl~at allow drilling to a deeper depfl~. b. Supplemental drilling to deepen or directional drill an existing well shall be conducted in accordance with fl~e approved Gas Well Pemfit for the well on file wifl~ fl~e Fi~e-Ma~s-batCity. Watershed Protection Requirements for Wells located in Flood Fringe or other ESA's. 22-9 Subchapter22 Development Code The standards in this subsection are intended to mininfize adverse impacts on areas within in the Flood Fring_e___O_L~_S__&, reduce flood damage_, and lessen fl~e potential for contaminating surface water a. Prior to location of aay_ga~ well Gas Wells !ocatcd in fl~e Flood Fringe or ESA,~e proper~ owner or applicant shall first obtain approval of an application fl~at meets the criteria of fl~e Application Criteria Manual shall-for a Watershed Protection Pemfit and shall comply wifl~ tim provisions of Subsection 35.22.5.A. and shall be located outside these areas whenever practicable to minin~ize adverse in, pacts on these areas, reduce flood damage, and lessen the potential for contaminating surface water or any water supply. A Watershed Protection Pemfit containing an ESA assessment of fl~e drill site shall be submitted to fl~e DRC _by_ fl~e Watershed Protection Deparm~ent and/or the Floodplain Administrator for all riparian buffer and floodplain ESA's prior to the approval of a gas well development plat. i If a 0parian buffer is designated as "fair" to "excellent" E rotective stream buffer widfl~ as specified in Subchapter 17 of fl~e Denton Development Code shall ii Within all areas excep~ unstudied floodp.!ai.r~., if the stream is desigr~ated as a .!.'..poor" ESA~esignated widfl~ of fl~e protective stream buffer 'shall be decreased by either 50- percent or to fl~e linfits of fl~e floodway whichever is greater, but in no instance shall fl~e protective stream buffer widfl~ be decreased below 25-feet measured each direction from the centerline of the existingchannel. iii Drill sites shall not be located within _a__n_y__d_e_s_jgnated ESA riparian buffer. c. The Watershed Protection _p__e_~xi_t__a_pplication shall contain fl~e following infom~ation and such infom~ation as may be required by the Development Review Committee which is reasonably necessary, to review and detemfine whefl~er the proposed development and required facilities meet fl~e requirements of tiffs Subchapter and as re lication Criteria Manual. The infom~ation fl~at is required for fl~e Watershed Protection pemfit shall include, but not be linfited to: i A tree inventory, plan shall be submitted. ii Any request to remove tree(s) shall be accompanied by a letter from a certified geologist or engineer fl~at indicates why fl~e well site cannot be located to avoid fl~e trees. iii Tree mitigation for gas wells located in a floodplainS? or other ESA shall be required and shall be calculated on a 1:1 replacement value for 100% of the dbh of trees removed from the drill site. Tree mitigation shall be accomplished by planting replacement trees, within a floodplain, on-site or off-site with similar tree species or by payment into a tree fund. Tree mitigation funds that are .~.pecific to ESA's will be .k~p.t....~.~.parate from other tree funds and will only be used to either acquire wooded too fl~at remains in a naturalistic state in perpetuity,, or to purchase conservation easements within riparian or floodplain areas. Funds may be used to purchase, plant, and maintain trees on is wiflfin a ~parian area or floodplain. iv Tree Mitigation funds shall be p_aid__prior to final approval of a ga~ well development plat in a Flood Fringe or off, er ESA. d. Storage tanks or separation facilities, serving one well head, may be placed in fl~e Flood Fringe or ESA under fl~e following conditions: i. These facilities shall be constructed at least 18-inches above the established Base Floo~d elevation plus the surcharge depth for encroachment to the linfits of the floodway having a one-percent chance of being equaled or exceeded in any year. 22-10 Subchapter22 35.22.6 Development Code ii. A hydrologic and hydraulic engineering study shall be performed by a Certified Engineer. The study shall be submitted to fl~e Engineering Department in a technical report for review by fl~e City, Engineer or his designated representative. The report shall demonstrate that tim proposed facilities will have no adverse impacts on tim carrying capacity of tim adjacent waterway nor cause any increases to tim elevations established for the floodplain. Wtmn the Special Flood Hazard Areas (SFHA) on fl~e subject site is designated as "Zone A" on tim FIRM Panel, or fl~e SFHA is not identified on fl~e FIRM Panel, fl~e following approximate method may be used to evaluate the impacts from gas well development. A flow rate shall be calculated using procedures set forfl~ in tim City of Denton Drainage Criteria Manual. Using Manning's Equation with an estimate of the average slope of the stream. measurements of a single irregular cross-section geometry at the well site, and the lO0-year discharge rate, the average velocity and normal depth may be calculated. Calculations shall be provided for the unaltered existing channel cross-section and for the proposed modified channel cross-section and submitted to the City for review and approval prior to construction within these areas. e. If evidence from water quality monitoring efforts indicates fl~at contamination is occurring from g_a_s__w__e_l!_s_,,_fi!_e___o_perator shall remove_, cause to be removed~ or otherwise remediate contamination, as re~re_dby fl~e oil and gas i~spector including but not linfited to Waste Mininfization Practices established by fl~e Railroad Commission. Cleanup operations shall begin immediately. f. No more fl~an ten (10) percent of the floodplain, wiflfin fl~e linfits of fl~e gas well development plat, may be filled. g. The provisions of 35.22.5(A)6 and 35.22.5 (A)8 shall apply bofl~ within fl~e corporate linfits of fl~e City of Denton and within fl~e ETJ of fl~e City of Denton. Drilling and production of gas wells shall comply wifl~ all federal, state, and local laws applicable to gas well drilling, production and operations. DRC Recommendations for Specific Use Permits and Planned Development Zoning Districts. A. The Department shall forward all applications for Specific Use Permits and Planned Development Zoning Districts to the DRC for review. The DRC shall review each application within 30 days after filing and shall make recommendations regarding the applications to the Planning and Zoning Commission and City Council. A copy of all recommendations shall be provided to the operator. The DRC may make recommendations regarding any aspect of the proposed gas well development including, but not linfited to, recommendations with respect to the standards set forth in Section 35.22.5. B. In connection with its review of an application for a Specific Use Permit or Planned Development Zoning District for the drilling and production of gas wells, the DRC may determine that it is necessary to hire a petroleun~ specialist to assist the DRC in reviewing the application. If such a determination is made, the DRC will provide the operator a written "scope of work" that the DRC proposes for such specialist. The DRC and the operator will attempt to agree upon the "scope of work"; however, the decision of the DRC shall control. If required by the specialist, the operator will provide a retainer; otherwise, the operator will pay for the services of the specialist after they are rendered. All work perforated by the specialist shall be itemized on a daily basis (including a description of the work and the an~ount of time spent), and such itemization shall be provided to the operator with each request for payment. C. The DRC has the authority to establish guidelines to use in making recommendations for Gas Well Permits or by Specific Use Permit or Planned Development Zoning Districts. Guidelines shall be placed in the Application Criteria Manual. 22-11 Subchapter22 35.22.7 Gas Well Permit Required. Development Code 35.22.8 A. Any person, acting for himself or acting as an agent, employee, independent contractor, or servant for any person, shall not engage in tim drilling and production of gas wells within tim corporate limits of tim City without first obtaining a Gas Well Permit issued under this Subchapter. ...... a o~, ..... ~, .............. s ......... or a ......... t' .............. s mu c wells.The Charter, Tex. Loc. Gov't Code Chapter 211 and the provisions of Subchapter 35.5 of the Denton Development Code. B. When a Gas Well Permit has been issued covering a well, the permit shall constitute authority for drilling, operation, production, gathering of production, maintenance, repair, re-working, testing, site preparation consisting of rigs or tank batteries, plugging and abandonment, and any other activity authorized by this Subchapter associated with drilling or production by the operator and their respective employees, agents, and contractors. A Gas Well Permit shall also constitute authority for the construction and use of all facilities reasonably necessary or convenient in connection therewith, including gathering lines and discharge lines, by the operator and its respective employees, agents, contractors and subcontractors. C. A Gas Well Permit shall not be required for exploration for gas. Exploration of gas means geologic or geophysical activities, including, but not limited to surveying and seismic exploration, related to the search for oil, gas, or other sub-surface hydrocarbons. D. Any well that has been annexed into the City shall be required to meet the requirements of this Subchapter and shall apply for a Gas Well Permit on the effective date of the annexation. Any well that has obtained a Gas Well Permit issued by the Fire Marshal prior to the effective date of this Subchapter shall provide all information required for Gas Well Permits under this Subchapter unless the information has been previously provided to the Fire Marshal. Gas Well Permits issued by the Fire Marshal prior to the effective date of this Subchapter shall comply with the following requirements: 1. Standards for Gas Well Drilling and Production requirements of Section 35.22.5. 2. Insurance and Security requirements of Section 35.22.8 and Section 35.22.9. 3. Periodic reports as required by Section 35.22.11. 4. Road Maintenance Agreement unless already provided. 5. Notice of Activity requirements of Section 35.22.12. E. A Gas Well Permit shall not, however, constitute authority for the re-entering and drilling of an abandoned well. Re-entry and drilling of an abandoned well shall require a new Gas Well Permit. F. Applications for Gas Well Permits shall be in writing, shall be on forms provided by the Department, shall be signed by the Operator, shall include the application fee, shall include a copy of the applicable Specific Use Permit or Planned Development Zoning District or Development Plat, and shall include the information required by the Application Criteria Manual unless such information has been previously provided to the City. Insurance and Indemnification. The operator shall provide or cause to be provided fl~e insurance described below for each well for which a Gas Well Permit is issued, such insurance to continue until fl~e well is abandoned and fl~e site restored. The operator may provide fl~e required coverage on a "blanket basis for mtfltiple wells". Such coverage shall be approved by fl~e Risk Manager for fl~e City of Denton. A. General Requirements. Indemnification and Express Negligence Provisions. 22-12 Subchapter22 Development Code 1. Each Gas Well Pemfit issued by fl~e City~M-arsh-at shall include fl~e following language: Operator does hereby expressly release and discharge, all clain~s, demands, actions, judgments, and executions which it ever had, or now have or may have, or assigns may have, or clain~ to have, against fl~e City of Denton, and/or its deparm~ents, it agents, officers, servants, successors, assigns, sponsors, volunteers, or employees, created by, or arising out of personal injuries, known or unknown, and injuries to property, real or personal, or in any way incidental to or in connection wifl~ fl~e perfom~ance of fl~e work perforated by fl~e operator under a gas well pemfit and fl~e operator caused by or arising out of, fl~at sequence of events which occur from fl~e operator under fl~e Gas Well Pemfit and work perforated by fl~e operator shall fully defend, protect, indemnify, and hold ham~less fl~e City of Denton, Texas, and/or its deparm~ents, agents, officers, servants, employees, successors, assigns, sponsors, or volunteers from and against each and every claim, demand, or cause of action and any and all liability, damages, obligations, judgn~ents, losses, fines, penalties, costs, fees, and expenses incurred in defense of fl~e City of Denton, Texas, and/or its deparm~ents, agents, officers, servants, or employees, including, without limitation, personal injuries and deafl~ in connection fl~erewifl~ which may be made or asserted by Operator, its agents, assigns, or any flfird parties on account of, arising out of, or in any way incidental to or in connection with fl~e perfom~ance of the work perforated by fl~e Operator under a Gas Well Pemfit and, fl~e Operator agrees to indemnify and hold ham~less fl~e City of Denton, Texas, and/or its deparm~ents, and/or its officers, agents, servants, employees, successors, assigns, sponsors, or volunteers from any liabilities or damages suffered as a result of claims, demands, costs, or judgments against fl~e City and/or, its deparm~ents, it's officers, agents, servants, or employees, created by, or arising out of fl~e acts or omissions of fl~e City of Denton occurring on fl~e drill site or operation site in fl~e course and scope of inspecting and pemfitting fl~e gas wells INCLUDING, BUT NOT LIMITED TO, CLAIMS AND DAMAGES ARISING IN WHOLE OR IN PART FROM THE SOLE NEGLIGENCE OF THE CITY OF DENTON OCCURRNG ON THE DRILL SITE OR OPERATION SITE IN THE COURSE AND SCOPE OF INSPECTING AND PERMITTING THE GAS WELLS. IT IS UNDERSTOOD AND AGREED THAT THE INDEMINITY PROVIDED FOR IN THIS SECTION IS AN INDEMNITY EXTENDED BY THE OPERATOR TO INDEMNIF'F AND PROTECT THE CITY OF DENTON, TEXAS AND/OR ITS DEPARTMENTS, AGENTS, OFFICERS, SERVANTS, OR EMPLOYES FROM THE CONSEQUENCES OF THENEGLIGENCE OF THE CITY OF DENTON, TEXAS AND/OR ITS DEPARTMENTS, AGENTS, OFFICERS, SERVANTS, OR EMPLOYEES, WHETHER THAT NEGLIGENCE IS THE SOLE OR CONTRIBUTING CAUSE OF THE RESULTANT INJURY, DEATH, AND/OR DAMAGE. LIABILITY FOR THE SOLE NEGLIGENCE OF THE CITY IN THE COURSE AND SCOPE OF ITS DUTY TO INSPECT AND PERMIT THE GAS WELL IS LIMITED TO THE MAXIMUM AMOUNT OF RECOVERY UNDER THE TORT CLAIMS ACT. 2. All policies shall be endorsed to read "this policy will not be cancelled or non-renewed without 30 days advanced written notice to tim owner and tim City except when fids policy is being cancelled for nonpayment of premiun~, in which case 10 days advance written notice is required". 3. Liability policies shall be written by carriers licensed to do business in Texas and with companies with A: VIII or better rating in accordance wifl~ tim current Best Key Rating Guide, or wifl~ nonadmitted carriers fl~at have a financial rating comparable to carriers licensed to do business in Texas approved by the City. 4. Liability policies shall name as "Additional Insured" the City and its officials, agents, employees, and volunteers. 5. Certificates of insurance mustshall be presented to tim City evidencing all coverage's and endorsements required by this Section 35.22.8, and tim acceptance of a certificate without the required linfits and/or coverage's shall not be deemed a waiver of rinse requirements. 6. Claims made policies will not be accepted except for excess policies or unless otherwise provided by this Subchapter. Required Insurance Coverage's. 22-13 Subchapter22 35.22.9 Development Code 1. Commercial General Liability Insurance. a,h. Coverage should be a minimum Combined Single Limit of $1,000,000 per occurrence for Bodily Injury and Property Damage. This coverage mustshall include premises, operations, blowout or explosion, products, completed operations, blanket contractual liability, underground property damage, broad fom~ property damage, independent contractors protective liability and personal injury. Ri. Environmental Impaim~ent (or Seepage and Pollution) shall be eiflmr included in tim coverage or written as separate coverage. Such coverage shall not exclude damage to the lease site. If Environmental Impaim~ent (or Seepage and Pollution) Coverage is written on a "clain~s made" basis, tim policy muscshall provide fl~at any retroactive date applicable precedes the effective date of the issuance of the pem~it. Coverage shall apply to sudden and non-sudden pollution conditions resulting from tim escape or release of smoke, vapors, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste material or other irritants, contaminants or pollutants. 2. Automobile Liability Insurance. Minin~un~ Combined Single Linfit of $500,000 per occurrence for Bodily Injury and Property Damage. Such coverage shall include owned, non-owned, and hired vehicles. 3. Worker's Compensation Insurance. In addition to tim minimum statutory requirements, coverage shall include Employer's Liability lin~its of at least $100,000 for each accident, $100,000 for each employee, and a $500,000 policy linfit for occupational disease, and tim insurer agrees to waive rights of subrogation against tim City, its officials, agents, employees, and volunteers for any work perforated for the City by the operator. 4. Excess (or Umbrella) Liability Insurance. Minin~um linfit of $10,000,000 covering in excess of the preceding insurance policies. 5. Control of Well Insurance. a. Minin~un~ limit of $5,000,000 per occurrence. b:j. Policy shall cover fl~e Cost of controlling a well fl~at is out of control, Re-drilling or Restoration expenses, Seepage and Pollution Damage. Damage to Property in fl~e Operator's Care, Custody, and Control wifl~ a sub-linfit of $500,000 may be added. Security. A. A security instrtm~ent that covers each well ~shall be delivered to the Fire Marshal before the issuance of fl~e Gas Well Pemfit for fl~e well. The instrun~ent mustshall provide fl~at it cannot be cancelled without at least thirty 30 days' prior written notice to fl~e City and, if fl~e instrument is a perfom~ance bond, fl~at fl~e bond cannot be cancelled without at least ten 10 days' prior written notice for non-payment of premiun~. The instrument shall secure fl~e obligations of fl~e operator related to fl~e well to: 1. Repair damage, excluding ordinary wear and tear, if any, to public streets, including but not linfited to bridges, caused by fl~e operator or by fl~e operator's employees, agents, contractors, subcontractors or representatives in the perfom~ance of any activity authorized by or contemplated by the Gas Well Pemfit; 2. Comply wifl~ tim insurance and security provisions set forfl~ in Section 35.22.8 and Section 35.22.9; and 3. Pay frees and penalties imposed upon tim operator by tim City for any breach of tim Gas Well Pem~it. B. The security instrument may be in tim fom~ of an irrevocable letter of credit or payment bond issued by a bank or surety approved by tim City. The instrument shall mn to tim City for the benefit of fl~e City, shall become effective on or before the date tim Gas Well Pemfit is issued, and shall remain in effect until tim well is abandoned and the site restored. 22-14 Subchapter22 Development Code C. A certificate of deposit may be substituted for the letter of credit or payment bond. The certificate shall be issued by a bank in Denton County, Texas, shall be approved by the City, shall be payable to the order of tim City to secure tim obligations of tim operator described above, and shall be pledged to fl~e bank with evidence of delivery provided to tim Director of Planning and Community Development. Interest on tim certificate shall be payable to tim operator. D. The security instnm~ent may be provided for individual wells or on a "blanket" basis for multiple wells. The amount of the security shall be a minimum of $50,000 for any single well and a minimum of $100,000 for multiple wells on a "blanket" basis. E. The security will tem~inate when the Gas Well Pemfit is transferred, wifl~ respect to tim operator- transferor and if fl~e operator-transferee provides replacement security fl~at complies wifl~ this section, when tim well is abandoned and tim site restored, and when the Fire Marshal consents in writing to such tem~ination. F. An appeal of fl~e detem~ination of tim amount of security required under tiffs Subchapter may be made to the Planning and Zoning Commission for recommendation to the City Council for final detem~ination of fl~e amount of security. 35.22.?0 Review Of Permi and Production. A. All applications for Gas Well Pemfits shall be filed with the Deparm~ent who shall inm~ediately forward all applications to tim DRC for review. Incomplete applications shall be returned to tim applicant, in which case fl~e City shall provide a written explanation of tim deficiencies if requested by tim applicant. The City shall retain a processing fee detemfined by tim Director. The City may remm any application as incomplete if fl~ere is a dispute pending before tim Railroad Commission regarding tim detem~ination of fl~e operator. No Gas Well Pemfit shall be approved under tiffs Section unless tim property owner or ap_plicant first receives __approval of a _Specific Use Pemfit or Planned Development req~reds a Watershed Protection Pemfit and a Gas Well Development Plat. Denial or conditional approval of any such applications shall be grounds for denial or conditional approval of fl~e Gas Well Pemfit. B. The DRC shall review each application wiflfin 15 days after acceptance for filing and shall detem~ine whefl~er fl~e application includes all of fl~e infom~ation required by this Subchapter, whefl~er fl~e application is in confom~ance wifl~ fl~e applicable Gas Well Development Plat, applicable Specific Use Pemfit or Planned Development Zoning District and whefl~er the application is in confom~ance wifl~ fl~e insurance and security requirements set forth in Subsection 35.22.8 and Subsection 35.22.9 of c.a..t. ..... The DRC shall forward a written report regarding its detem~ination to fl~e Fire Marshal and Oil and Gas Inspector, wifl~ a copy provided to fl~e operator. C. The Fire Marshal shall review fl~e application and fl~e written report of fl~e DRC and shall issue the Gas Well Pemfit after receiving fl~e DRC report within 10 days unless he detem~ines fl~at fl~e application is incomplete or fl~at fl~e application is not in confom~ance with fl~e applicable Gas Well Development Plat, applicable Specific Use Pemfit, Planned Development Zoning District. The Fire Marshal may employ a technical advisor under the Fire Code. D. The Fire Marshal may condition fl~e release office approved Gas Well Pemfit upon fl~e operator providing the security required by Subsection 35.22.9 of ~&is ....... t,L~. and upon the operator entering into a Road Repair Agreement fl~at will obligate fl~e operator to repair damage excluding ordinary wear and tear, if any, to public streets, including but not linfited to, bridges caused by fl~e operator or by fl~e operator's employees, agents, contractors, subcontractors or representatives in the perfom~ance of any activity authorized by or contemplated by fl~e approved Gas Well Pemfit. E. The failure of fl~e DRC or fl~e Fire Marshal to review and issue a Gas Well Pemfit wiflfin fl~e time linfits specified above shall not cause fl~e application for the pemfit to be deemed approved. F. Each Gas Well Pemfit issued by fl~e Fire Marshal shall: 22-15 Subchapter22 ]2I. Development Code 1. Identify the name of each well and its operator; 2. Specify tim date on which tim Fire Marshal issued each pemfit; 3. Specify tim date by which drilling mus~shall commence on at least one well covered by fl~e pemfit otherwise tim pemfit expires (such date shall not be less fl~an one year after tim date of issuance). A one year extension of time may be granted if existing conditions are fl~e same; 4. Specify fl~at if drilling is commenced on at least one well covered by tim pem~it before the pem~it expires, tim pem~it shall continue until fl~e wells covered by the pemfit are abandoned and the site restored; 5. Incorporate, by reference, tim insurance and security requirements set forth in Subsection 35.22.8 and Subsection 35.22.9 oft!~is Subc!~aptcr; 6. Incorporate, by reference, the requirement for periodic reports set forth in Subsection 35.22.11 of Subeh-ap*e~--and for Notice of Activities set forth in Subsection 35.22.12; 7. Incorporate the full text of the release of liability provisions set forth in Subsection 35.22.8.5.A--o-f-d~i~s- Subct~apter; 8. Incorporate, by reference, the conditions of the applicable Watershed Protection Development Plat; :a~d_ applicable Specific Use Pemfit or Planned Development Zoning District; 9. Incorporate, by reference, the infom~ation contained in the pemfit application; 10. Incorporate, by reference, the applicable rules and regulations of the Railroad Commission, including the applicable "field roles"; 11. Specify that no drilling operations (including the construction of internal private access roads) shall commence until the operator has provided the security required by Subsection 35.22.9. 12. Contain the name, address, and phone number of the person designated to receive notices from the City, which person mustshall be a resident of Texas that can be served in person or by registered or certified mail; and 13. Incorporate by reference all pemfits and fees required by the Fire Code. The decision of the Fire Marshal to deny an application for a Gas Well Pemfit shall be provided to the operator in writing within 10 days after the decision, including an explanation of the basis for the decision, if requested by the operator. The operator may appeal any such denial to the Construction Review Board. If an application for a Gas Well Pemfit is denied by the Fire Marshal, nothing herein contained shall prevent a new pemfit application from being submitted to the City for the same well. Watershed Protection Pemfit. Applicabili~ Sequence of Pemfits and Effect 1. Any person, acting for himself or acting as an agent, employee, independent contractor, or servant for any person, shall not engage in the drilling and production of gas wells within any floodplain or ESA within the corporate lin~its or extraterritorial jurisdiction of the City. without first obtaining_a Watershed Protection Pem~it issued under this Section. 2. No application for a Gas Well Development Plat or Gas Well Pemfit shall be approved until a Watershed Protection Pemfit has first been approved for the land in the floodplain or ESA. If an application for a Gas Well Development Plat or Gas Well Pemfit is submitted with an application for a Watershed Protection Pemfit. the time for lication shall commence to run from the date the Watershed Protection Pemfit is finally decided. 3. Approval or conditional approval of a Watershed Protection Pem~it authorizes the applicant to seek approval for a Gas Well Development Plat or Gas Well Pemfit. 4. All applications for Watershed Protection Pem~its shall be filed with the Deparm~ent, who shall immediately forward all applications to the DRC for review. Incomp.!.e.te.......applicafions shall be 22-16 Subchapter22 35. 22.1 ~ Development Code returned to the applicant, in which case the City shall provide a written explanation of the deficiencies if regl~!g_e__applicant. The City_ shall retain a pr_o___c__e_s__s_'_mg fee detem~ined hy fl~e Director. The City may remm any application as incomplete if fl~ere is a dist~_u_l_e___pe~ding before fl~e Railroad Commission regarding fl~e detemfination of fl~e operator. No application shall be deemed accepted for filing until fl~e application is complete. 5. The DRC may attach such conditions to approval of a Watershed Protection Pemfit as are necessary, to assure that fl~e requirements of Subsection 35.22.5 are met. 6. Each Watershed Protection Pemfit the DRC shall: a. Identi~ the name of each well sub b. Spegi~ fl~e date on which fl~e Pemfit was issued; c. Income by reference all applicable standards of appro~a!; and d. Income by reference all applicable conditions of approval. 7. The following standards lication for a Watershed Protection Pemfit: a. For land inside the City, all conditions in~ ecific Use Pemfit or a Planned Development District for fl~e land subject to fl~e Watershed Protection Pemfit. b. Standards in Section 35.22.5(A)6 and 35.22.5(A)8. 8. The applicant may appeal fl~e denial or conditional approval of a Watershed Protection Pemfit on gr_o_~d_s__p_e~_t:0_'_m__'_m_g to fl~e standards in Subsection E to fl~e Planning and Zoning Commission wiflfin ten (!~) calendar days of fl~e decision by fl~e DRC. The Commission shall decide the a~~ying fl~e standards made applicable to fl~e pemfit by Subsection E 9. The applicant may file a petition for review pursuant to Section 35.22 on grounds therein specified to fl~e City, Council within ten (10) calendar days of fl~e decision by fl~e DRC. The Council shall decide the petition based upon the criteria in Section 35.22. 10. An approved Watershed Protection Pemfit shall iration of an approved Gas Well Development Plat for fl~e same land. Periodic Reports. A. The operator shall notify the Fire Marshal of any changes to the following infom~ation inm~ediately, wiflfin one business day after the change occurs. 1. The name, address, and phone nun~ber of the operator; 2. The name, address, and 24-hour phone nun~ber of the person(s) with supervisory authority over drilling or operations activities; 3. The name, address, and phone number of the person designated to receive notices from the City, which person mustshall a resident of Texas fl~at can be served in person or by registered or certified mail; and 4. The operator's Emergency Action Response Plan including "drive-to-maps" from public rights-of- way to each drill site. B. The operator shall provide a copy of any "incident reports" or written complaints submitted to fl~e Railroad Commission or any off, er state or federal agency within 30 days after fl~e operator has notice of fl~e existence of such reports or complaints. C. Beginning on December 31st after each well is completed, and continuing on each December 31st fl~ereafter until the operator notifies the Fire Marshal fl~at fl~e well has been abandoned and fl~e site restored, fl~e operator shall prepare a written report to fl~e Fire Marshal identifying any changes to fl~e 22-17 Subchapter22 35.22.72 Development Code infom~ation fl~at was included in fl~e application for tim applicable Gas Well pemfit fl~at have not been previously reported to the City. Notice of Activities. A. Any person who intends to re-work a well using a drilling rig, to fracture stimulate a well after initial completion, or to conduct seismic exploration involving explosive charges shall give written notice to tim City at least 10 days before the activities begin. B. The notice shall identify where tim activities will be conducted and shall describe tim activities in reasonable detail, including but not limited to fl~e duration of fl~e activities and fl~e time of day fl~ey will be conducted. C. The notice taus*shall also provide the address and 24-hour phone number of the person conducting the activities. D. The person conducting fl~e activities will post a sign on fl~e property giving fl~e public notice of fl~e activities, including fl~e name, address, and 24-hour phone number of fl~e person conducting fl~e activities. E. If fl~e City detemfines that an inspection by fl~e Fire Marshal is necessary, fl~e operator will pay the City's customary charge for fl~e inspection. 35.22.13 Amended Gas Well Permits. A. An operator may submit an application to the Fire Marshal to amend an existing Gas Well Pemfit to commence drilling from a new drill site fl~at is not shown on (or incorporated by reference as part of) the existing pemfit, to relocate a drill site or operation site fl~at is shown on (or incorporated by reference as part of) fl~e existing pemfit, or to otherwise amend the existing pemfit, for land subject to tim same ap_proved Gas Well Develo_pment Plat. B. Applications for amended Gas Well Pemfits shall be in writing, shall be on fom~s provided by fl~e signed by fl~e operator, and shall include fl~e Deparm~ent of Planning and Development, shall be following: 1. 2. 3. The application fee as set by City ordinance; A description of the proposed amendments; Any changes to the infom~ation submitted wifl~ the application for fl~e existing Gas Well Pemfit (if such infom~ation has not previously been provided to the City); 4. Such additional infom~ation as is reasonably required by the Fire Marshal to demonstrate compliance with tim applicable Development Plat, applicable Specific Use Pem~it or Planned Development Zoning District; and 5. Such additional infom~ation as is reasonably required by fl~e Fire Marshal to prevent inm~inent destruction of property or injury to persons. All applications for amended Gas Well Pemfits shall be filed wifl~ fl~e Deparm~ent of Planning and Development, and tim deparm~ent shall inm~ediately forward all applications to tim Fire Marshal for review. Incomplete applications may be returned to tim applicant, in which case the City shall provide a written explanation of tim deficiencies; however, tim City may retain a processing fee as detem~ined by the Fire Marshal. The City may remm any application as incomplete if flmre is a dispute pending before the Railroad Commission regarding tim detem~ination of fl~e operator. If fl~e activities proposed by tim amendment are not materially different from the activities covered by tim existing Gas Well Pemfit, and if tim proposed activities are in confom~ance wifl~ fl~e applicable Watershed 22-18 Subchapter22 Development Code Protection Pemfit, Development Plat, applicable Specific Use Pemfit; or Planned Development Zoning District, then tim Fire Marshal shall approve tim amendment within 10 days after the application is filed. E. If the activities proposed by fl~e amendment are materially different from tim activities covered by tim existing Gas Well Pemfit, and if tim proposed activities are in confom~ance wifl~ fl~e applicable Watershed Protection Pemfit, Development Plat, applicable Specific Use Pemfit or Planned Development Zoning District, titan tim Fire Marshal shall approve fl~e amendment within 30 days after tim application is filed. If, however, tim activities proposed by tim amendment are materially different andQ.r, in tim judgment of fl~e Fire Marshal, might create a risk of inm~inent destruction of property or injury to persons fl~at was not associated wifl~ the activities covered by fl~e existing pemfit or fl~at was not otherwise taken into consideration by fl~e existing pemfit, tim Fire Marshal may require tim amendment to be processed as a new Gas Well Pemfit application. F. The failure of the Fire Marshal to review and issue an amended Gas Well Pemfit within fl~e tinge lin~its specified above shall not cause tim application for tim amended pemfit to be deemed approved. G. The decision of tim Fire Marshal to deny an amendment to a Gas Well Pemfit shall be provided to fl~e operator in writing within 10 days after tim decision, including an explanation of tim basis for tim decision. The operator may appeal any such denial to tim City Council. 35.22.14 Transfer of Gas Well Permits. A Gas Well Pem4t----m-ayPemfit may be transferred by the operator without the consent of the City if the transfer is in writing signed by both parties, if the transferee agrees to be bound by the temps and conditions of the transferred pem~it, if all infom~ation previously provided to the City as part of the application for the transferred pemfit is updated to reflect any changes, if the transferee provides the insurance and security required by Section 35.22.8 and Section 35.22.9. The insurance and security provided by the transferor shall be released if a copy of the written transfer is provided to the City. The transfer shall not relieve the transferor from any liability to the City arising out of any activities conducted prior to the transfer. 35.22.15 Inspection. A. The Fire Marshal and/or the oil and gas inspector shall have the authority to issue any orders or directives required to carry out the intent and purpose of this Subchapter. Failure of any person to comply with any such order or directive shall constitute a violation of this Subchapter. B. The Fire Marshal andfor the oil and ~ector shall have the authori¢ to enter and ins~ premises covered by the provisions of this Subsection to detemfine compliance with the provisions of this Subsection and all applicable laws, rules, regulations, standards, or directives of any local state or federal authority~ C. The oil and ga~....~!!.~pector shall conduct periodic inspections of all wells pemfitted under this Subchap.!e.r, 35.22.16_5Remedies of the City. If an operator (or its officers, employees, agents, contractors, subcontractors or representatives) fails to comply with any requirement of a Gas Well Pemfit (including any requirement incorporated by reference as part of the pem~it), the Fire Marshal or oil and g_ax_~_s_pector shall give written notice to the operator specifying the nature of the alleged failure and giving the operator a reasonable time to cure, taking into consideration the nature and extent of the alleged failure, the extent of the efforts required to cure, and the 22-19 Subchapter22 Development Code potential impact on the health, safety, and welfare of the community. In no event, however, shall the cure period be less than 30 days unless tim alleged failure presents a risk of imminent destruction of property or injury to persons or unless the alleged failure involves the operator's failure to provide periodic reports. The Fire Marshal or oil and gas inspector may issue a Stop Work Order under tim Fire Code. B. If tim operator does not cure fl~e alleged failure wiflfin tim time specified by the Fire Marshal and/or oil and gas inspector, tim Fire Marshal and/or oil and gas inspector may notify tim Railroad Commission and request fl~at tim Railroad Commission take appropriate action (wifl~ a copy of such notice provided to fl~e operator), and the City may pursue any other remedy available trader this Subchapter. C. If the operator does not cure the alleged failure within the time specified by the Fire Marshal and/or oil and gas inspector, the Fire Marshal and/or oil and gas inspector may upon recommendation of the Construction Advisory Board: 1. Recommend to the City Council that the Gas Well Pemfit be suspended until the alleged failure is cured; or, 2. If the operator fails to initiate and diligently pursue a cure recommend to the City Council that the Gas Well Pemfit be revoked. D. The decision of the Fire Marshal and/or oil and gas inspector to recommend suspension or revocation of a Gas Well Pemfit shall be provided to the operator in writing at least ten (10) days before any action by fl~e City Council unless fl~e all resent a risk of inmfinent destruction of persons7 E. If a Gas Well Pemfit is revoked, the operator may submit an application a new Gas Well Pem~it for the same well. 35.22.17~6Enforcements, Right of Entry. A. The Fire Marshal and the oil and ~ inspector isarc .... t.~.z,~a .......... are authorized and directed to enforce this Subchapter and the provisions of any Gas Well Pemfit. Whenever necessary to enforce any provision of this Subchapter or a Gas Well Pemfit, or whenever there is reasonable cause to believe there has been a violation of this Subchapter or a Gas Well Pemfit, the Fire Marshal and/or oil and ga~5_~_s_p__e_c_t~r, or therehis designated representative, may enter upon any property covered by this Subchapter or a Gas Well Pemfit at any reasonable tinge to inspect or perfom~ any duty in, posed by this Subchapter. If entry is refused, the City shall have recourse to every remedy provided by law and equity to gain entry. B, It shall be unlawful and an offense for any person to do the following: 1. emfitted by the temps of a Gas Well Pemfit issued under this Subchal2lc.r; 2. fail to comp.!y...~i_t!!...~r!.y conditions set forth in a Gas Well Pemfit issued under this Subchap.~r;...~r 3. violate any_provision or ~e.qoirement set forfl~ under tiffs Subchapter. C. The enforcement and ~!~ provision under Subsection 35.1.10.4 shall apply to a violation of this Subchapter 22-20 Subchapter22 Development Code 22-21 DRAFT P&Z MINUTES FOR FEBRUARY 11, 2004 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER POWELL: Item 5B, I'll try to get the microphone where it works, and we're going to hold a public hearing and consider making a recommendation to the City Council regarding amendments to Subchapters 22, gas well drilling and production; 16, Subdivisions, 17, Environmentally Sensitive Areas; and number 3, Procedures of the Development Code related to gas well production in flood plain fringe. Mr. Reichhart. MR. REICHHART: Thank you. This topic has come before the Planning and Zoning Commission at four workshops including tonight's workshop and at City Council in one workshop. Staff has been working with the gas well industry for a number of months. As you know, currently in our regulations, to drill a gas well in a flood plain requires a Specific Use Permit. And we were charged to see if we could come up with requirements or regulations, that that would then be allowed by right if those regulations were met. The majority of the changes are to Subchapter 22 of the gas well drilling. The other chapters are to correspond with the proposed requirements of Subchapter 22. In tonight's workshop -- work session, the topic of a closed loop system was raised. And the one thing I didn't mention, I failed to mention regarding the PLANNING AND ZONING MEETING FEBRUARY 11, 2004 1 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 new regulations is that we now require two foot of free board in the reserve pit. And that will be inspected as part of the routine inspections. We believe that the reserve pit that did breach, it wasn't in the flood plain, but there were a number of factors that we believe were associated with that. One, it was located right in a swale where water was going to accumulate. Now, with the field inspections, we can verify that. A lot of times those smaller swales won't show up on the topography map, and you just don't -- we don't see them. So that was one. The second we do believe that the water in that reserve pit was allowed to get up closer to the top of that reserve pit and then during that rain event breached the top and then broke out. So we now have the two-foot requirement and with those inspections, that we will have routine inspections, we will be monitoring that, also. Secondly, tonight it was mentioned that there were potentially some other breaches possibly in the County. And the only thing I want to mention regarding that, according to the Railroad Commission Rules regarding de-watering a reserve pit, one legal way to de-water a reserve pit, is to take a bulldozer and break it open and just let it spill out into the -- onto the land. Our PLANNING AND ZONING MEETING FEBRUARY 11, 2004 2 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 regulations do not allow that. So I don't know if they were breaches or if it was a controlled -- if you want to call it a controlled breach. I have no idea of knowing what those circumstances were. Additionally, tonight and we've heard throughout this conversation that we've had is regarding staff's ability to be able to monitor this, either manpower or professional credentials, if you will, to monitor that. Also, tonight, Dr. Banks with the City is here and he will be able to respond to those comments. And, additionally, as we go through those questions -- more environmental issues would be -- should be directed towards Dr. Banks. With that, I think right now, the best thing -- I mean, -- and to categorize, we are looking to allow gas wells in the floodway fringe. It's not the floodway. It's not in any riparian buffer area. It is on the fringe. There is mitigation associated in the ordinance regarding if there is tree removal, that that has to be mitigated. And then, finally, one of the bigger, maybe two is that this now will extend into the ETJ for water quality and every well site will be inspected a minimum of four times during the operation of a well site. And those are vast improvements over the existing regulations. PLANNING AND ZONING MEETING FEBRUARY 11, 2004 3 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 With that, I'd like to turn this over to Dr. Banks to answer some of the environmental issues that have raised, if you don't mind. COMMISSIONER POWELL: I do mind. I want to ask you a question and maybe there's some other questions here. MR. REICHHART: Yes, sir. COMMISSIONER POWELL: And then we'll get wherever you want to go. MR. REICHHART: That's fine. COMMISSIONER POWELL: You said it is two foot free board? MR. REICHHART: Right. COMMISSIONER POWELL: What was it before? MR. REICHHART: If I recall, and I believe it was 18 inches, but the problem was it was never inspected. COMMISSIONER POWELL: Ail right. And give us a practical example of tree mitigation. What does that really mean? MR. REICHHART: Either the -- a tree survey is required with the watershed protection permit that is now required if you're drilling in the ESA. With that we'll get the diameter of all the trees that will be coming out, so we'll know the total quantity of trees per PLANNING AND ZONING MEETING FEBRUARY 11, 2004 4 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 inches. And for example, there's 12 inches of trees coming out, three four-inch trees. They would either have to plant the 12 inches of trees on the property, minimum two-inch size. If there isn't the ability to plant on-site, they would be able to mitigate off-site, and plant it within that watershed. In lieu of that, they would have to pay into a tree fund which then the City has the ability to either purchase additional flood plain for additional mitigation, buy plant material to plant in marginal flood plain areas, if you would, or a stream buffer area that doesn't have the vegetation that really does the environmental qualities, so then we would be able to use that, those funds to re-vegetate other areas. That is the tree mitigation required. Any tree that comes out we have to get the same amount of tree back or a dollar amount paid to the City. COMMISSIONER POWELL: And then one more question, mostly for the audience, being as this is watched on TV or cable, whatever. Government workers, me included, tend to use a lot of abbreviations. What's an ESA? MR. REICHHART: Area. Environmentally Sensitive PLANNING AND ZONING MEETING FEBRUARY 11, 2004 5 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER POWELL: Thank you. Now, we'll go -- unless there's more questions from us up here, we'll go with the rest of your program. MR. REICHHART: Thank you. DR. BANKS: Good evening. At this point, I guess, we can just open up questions that there may be concerning some of the environmental issues, and I will attempt to address those. COMMISSIONER POWELL: Anybody have any? COMMISSIONER ROY: I wander if we should hold our discussion until after the public hearing. COMMISSIONER POWELL: That's up to the people up here, whatever you folks decide. COMMISSIONER ROY: I would be interesting, I think, to hear what the public has to say. COMMISSIONER POWELL: Sounds like we have an agreement on that. So we will hold you in abeyance, sir, if we could. DR. BANKS: Okay. COMMISSIONER POWELL: And I'll open the public hearing, and we have three scheduled speakers. First one I have, and I may be pronouncing this wrong, it's either Baen or Bean, John Bean. MR. BAEN: John Baen. COMMISSIONER POWELL: PLANNING AND ZONING MEETING Thank you. Baen, thank you, sir. FEBRUARY 11, 2004 6 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. BAEN: Yes, sir. I'm a professor at the University of North Texas. I'm not being paid to be here. COMMISSIONER POWELL: Into the microphone and give us your address, sir. MR. BAEN: I live at 621 Baen Lane in Jack County. I'm a professor at the University of North Texas. I understand I have three minutes; is that right, sir? COMMISSIONER POWELL: Yes, sir, unless you can talk us out of more. MR. BAEN: Ail right, sir. Well, right here -- does this show up here, by chance? COMMISSIONER POWELL: Yes, sir, it does. MR. BAEN: It does not? COMMISSIONER POWELL: It does. MR. BAEN: Okay. This week we have a drama going on that is completely associated with what you guys are talking about. This belongs to a friend of mine. This is 80 acres of land, the Davis tract just west of town. I congratulate the City in approving this site right here because it's the least destructive to this entire 80 acre tract of land. This is Western Boulevard that's supposed to be coming in here. But what I am very distressed was that they were told they could not put this gravel road to this site PLANNING AND ZONING MEETING FEBRUARY 11, 2004 7 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 anywhere close to this flood zone, or partial flood zone or 500-year flood plain. In the meantime, I've got a subdivision plat that I've superimposed for two and three acre employment center type uses in the future. And this is just absolutely a shame. In the meantime when the permit was approved, there was not a permit approved for a frack tank, so to speak, that was dug this morning that's 200 feet by 200 feet that is 200 yards from the well site. So for, number one, that's my number one pet peeve. And real quickly -- I'll go really, really quickly. Any questions about that right there? It's just a shame that this road couldn't be right here because it could have preserved all of these lots, it -- diagonally. I'm not sure who approved it or who didn't approve it, but the landowner is really, really upset. And I don't blame him one bit. If it was your grandmother's land or your land, you would want to preserve that. COMMISSIONER POWELL: Sir -- MR. BAEN: I mean, it's just a matter of -- yes, sir. question here. COMMISSIONER POWELL: You're just not on MR. BAEN: Okay. Here is the flood plain right here. I wish you could put a road on -- within the PLANNING AND ZONING MEETING FEBRUARY 11, 2004 8 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 100-year flood plain because a pickup truck going through there. The other deal real quickly, I have a copy for everyone here is that the economic issues of being in the flood plain or not in the flood plain, I have one gas well, I've put in here a million dollars. They go on the tax roll at about two million dollars. At a tax rate of three percent per gas well, it would actually be and I have copies of this for the entire council here. At any rate to make a long story short, the same two acres that could be on the fringe of the flood plain or within the 500-year flood plain or whatever, you could put four home sites that would generate $875,000.00 over a present value discounted at five percent. Instead of having the well site, you could put the four homes there, or you could put 20 units per acre and generate that much tax present value over the next 50-year present value today. Industrial, you could generate that much tax. Commercial and retail such as the one next to the Outback Steakhouse that was put in there, if that would have been moved back, it would have generated that much, whereas in the flood plain you can still have all of these things on any two-acre drill site and have the highest and best use be on the edge of the flood plain. PLANNING AND ZONING MEETING FEBRUARY 11, 2004 9 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I believe the flood plain's highest and best use is gas drilling. And then after they're finished it's still open space. I don't think the roads have to be disturbing the soil and I think they do absolutely no harm whatsoever. Yes, sir. COMMISSIONER POWELL: Time is up. MR. BAEN: Yes, sir. COMMISSIONER POWELL: sir. Thank you very much, MR. BAEN: You bet. COMMISSIONER POWELL: I have Mr. Bob Cates. Mr. Cates, if you'd give us your name and address, sir? MR. CATES: Yeah. Bob Cates, 4226 1-35 North here in Denton. COMMISSIONER POWELL: Thank you, sir. MR. CATES: I am president of Links Oil Company and I'm also Chairman of the Denton Chamber of Commerce Gas Well Development Review Committee. We've worked approximately a year and a half with City Staff to come up with these ordinance recommendations. To my knowledge, the only point of contention at this point is the closed loop system. We have not been able to get a good reason to use one. I feel like through all of the presentations we've made over the last year, including pit analysis, an engineer report PLANNING AND ZONING MEETING FEBRUARY 11, 2004 10 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 on what happens if a pit does spill, which all of that information has been provided at earlier times, that I think if we can get past that area, that we will be in agreement with these with the City. So I do speak in support of these changes. COMMISSIONER POWELL: I'm a little confused about you being in support or not in support of a closed loop system. MR. CATES: I am not in support of a closed loop system. I'm in support of the ordinance that is written and before you. COMMISSIONER POWELL: Thank you. Questions of this gentleman? None here, sir. Thank you. Mr. Ewing, Jay Ewing. MR. EWING: Jay Ewing with Devon Energy at 306 Highway 380 in Bridgeport, Texas. I'm also a member of the subcommittee with the chamber that has worked with the staff. And as Mr. Cates stated, we've worked a year and a half and used a lot of staff time, and we do appreciate their time in allowing us our input, and feel very strongly that we have a very strong ordinance as written that one has provided some additional monitoring and inspections by the City, which I think protects the City's interest and protects the flood plain in the case of wells being drilled there. PLANNING AND ZONING MEETING FEBRUARY 11, 2004 11 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The monitoring inspections will go on with all wells no matter where they're drilled whether they're in the City limits or the ETJ. So we are strongly in favor of the ordinance and feel like you do have a strong ordinance as it has been rewritten. Just address the closed loop system again, we don't feel that it's a necessity, primarily with the monitoring inspections that's going on. That's taken care of the potential hazards. The biggest concerns you've got and what staff allows with inspection is basically the engines and the lubricating oil and the diesel that's a part of that which they're provisions for drip pans, secondary containments for all of those containers. So we feel like we can have a safe environmentally friendly operation within the flood plain. I would just reiterate on the closed loop system. From an industry standpoint, we feel like having the reserve pit and not -- allows us some safety precautions and some safety backup that we can maintain this well and control this well, and not have the potential for a greater loss due to a well control problem that you will lose with the use of a closed loop system. Again, I appreciate the time and opportunity we've had to work with staff. And they have put in a lot of hard work and I will say that they are PLANNING AND ZONING MEETING FEBRUARY 11, 2004 12 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 very well qualified and they are looking at the things that are important to the environment, whether it be with oil and gas industry or standard service use development. Thank you. COMMISSIONER POWELL: Stay with us. I think Mr. Roy has something he wants to ask you. COMMISSIONER ROY: Yes, Mr. Ewing. There was a suggestion that there were two, I guess, recent cases of reserve pit failures, containment failures; do you know anything about those cases or is there anybody here that you believe knows about those cases, and can provide us some detail? MR. EWING: The only failure that I'm aware of is the one we've discussed previously that occurred here within the City. COMMISSIONER ROY: And the facts of that were -- would you tell me again? MR. EWING: The facts of that -- Mr. Cates has that a little better than I do, I think, but the bottom line is through inspections, through a third-party environmental company, their final inspections and cleanup found no damage occurred as a result of the breach of the reserve pit. COMMISSIONER ROY: What caused the breach, it just got too high? PLANNING AND ZONING MEETING 13 FEBRUARY 11, 2004 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. EWING: My understanding is that the fluid within the reserve pit was allowed to come too high, too close to the top of that reserve pit wall. There was a rain event that carried that fluid over the top of the wall and as you start moving fluid across the top of that wall, then you're going to lose that wall and that's what occurred here. That's my understanding. COMMISSIONER ROY: Thank you. COMMISSIONER POWELL: Thank you, sir. Mr. Bill Coleman would also like to speak in support and then after him, Mr. Jerry Stokes. If you'd be prepared, Mr. Stokes. MR. COLEMAN: My name is Bill Coleman with Coleman Associates Land Surveying, 300 North Elm, here in Denton. I have previously recently appeared before this Commission representing gas well development in the town. One of the things that I would like to say is that I have watched the development of this ordinance. I have reviewed it and it will eliminate a lot of the problems that I experience in dealing with Dr. Banks and the oil and gas people. I am between the middle of these folks and that's my job to resolve these. I think this ordinance goes a long way to resolving a lot of the pressures that we deal with in trying to get a good workable solution PLANNING AND ZONING MEETING FEBRUARY 11, 2004 14 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that is agreeable to all parties. All of the landowners continually say why can't we put that well down in the flood plain? Why can't we put that well down in the flood plain? The only answer we have is, you can't do it in the City of Denton. But they can do it other places. I understand. But you can't do it in the City of Denton. The gas well -- excuse me, the gas well people do this for a living. They're very good at it. Occasionally, there are accidents. There's accidents in any industry, things go wrong. But for the most part, it's been my experience and I was raised with it, that they do a good job, that people are professional and they -- that's what they're out to do. It's in their best benefit to save -- it saves money in the long run to put a good quality location in which includes proper free board, et cetera. So that's the limits of my discussion. COMMISSIONER POWELL: Thank you very much. MR. COLEMAN: I'm in favor of it. COMMISSIONER POWELL: Thank you. Mr. Stokes, if you'd come forward and give us your name and address, sir. MR. STOKES: Jerry Stokes, 4304 Chimney Rock Court, Colleyville, Texas. My company name is Mid-Continent Geological. I've been involved in drilling PLANNING AND ZONING MEETING FEBRUARY 11, 2004 15 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 several wells in the Denton area. And I am very much so in support of the -- what we're talking about here tonight. But the problem that I deal with in dealing with landowners and placement of wells in relationship to the flood plains, getting closer to the flood plains would alleviate a lot of the problem that we have with using usable land to the best of their interest, taking away from land that is out away from the flood plain where they can build houses in further development of their land. But I'm also opposed to the closed loop system. It is more of a burden on us as far as drilling the wells, added economical costs and the safety factor there of not having the reserve pit to use in the process of drilling the well. COMMISSIONER POWELL: Thank you very much, sir. I don't have any cards in opposition. Is there anybody here that would like to speak in opposition? This is a public hearing. If not, I'll close the public hearing and request from members of this Commission, discussion or a motion? Mr. Johnson, you're up first, sir. COMMISSIONER JOHNSON: I'm going to assume that everybody that spoke in favor has read through the proposed ordinance and in addition to being in favor of drilling in a flood plain is in agreement with the PLANNING AND ZONING MEETING FEBRUARY 11, 2004 16 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ordinance that has been proposed; is that right? Okay. I do have a question. There is one area in here where we talk about trees that would be removed in a riparian area. We're also working in the City of Denton on a Tree Ordinance. It is possible that the requirements in this Ordinance and the Tree Ordinance could conflict. If that were to happen would that be a problem or would we adjust this ordinance or would we just have two different requirements? COMMISSIONER POWELL: I'm going to go to staff or legal on that one. MS. PALUMBO: We looked at that issue. And the second paragraph of the proposed Tree Ordinance is going to be rewritten to say the more stringent ordinance applies. So we would look at the provisions of the Gas Well Ordinance and then also the Tree Ordinance. And if the Tree Ordinance was more stringent, the gas well operators would have to comply with that. COMMISSIONER JOHNSON: Okay. Thank you. And the other one is, this ordinance is written to apply to wells drilled in the ETJ, in a flood plain area in the ETJ, right, but it does not apply to wells drilled in the ETJ that are not in the flood plain area, right? MS. PALUMBO: That's correct. It applies to -- in the ETJ only to wells that are within the flood PLANNING AND ZONING MEETING FEBRUARY 11, 2004 17 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 fringe or the riparian areas. me if I'm wrong. DR. BANKS: MS. PALUMBO: correct. And Dr. Banks can correct That is correct. And he is saying that is COMMISSIONER JOHNSON: Okay. So we don't intend to and I know that this deals with flood plain only, but -- so we have no intention in the City of applying any different rules to other wells in the ETJ not in the flood plain area other than what we do today? MS. PALUMBO: That's correct. COMMISSIONER JOHNSON: I also have a couple of other comments that I've got that are basically correcting verbiage and stuff like that that I'll forward separately. They don't change the meaning of anything, so, I'll just get them to you, Larry. COMMISSIONER POWELL: Mr. Roy. COMMISSIONER ROY: There is a perception, at least on some in the City that citizens -- one of the citizens, anyway, that the Tree Ordinance as it currently stands excludes drilling operation. And I haven't seen the latest version of the Tree Ordinance. So what you have just said is different from what at least on the street, people are thinking. MR. REICHHART: PLANNING AND ZONING MEETING We have now specifically FEBRUARY 11, 2004 18 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 added drilling and the -- any of the pipes associated with the drilling are subject to the Tree Preservation Ordinance or this, whichever is more stringent. COMMISSIONER ROY: Okay. Continuing on the tree a little bit, it says any tree that's removed. MR. REICHHART: Correct. COMMISSIONER ROY: Okay. So I guess a tree Mesquitewe. MR. REICHHART: It could be a Hackberry, a COMMISSIONER ROY: But a tree is a tree. mean, we had some discussion on what was a tree and what was a bush and so, you know, when it just says any tree that is removed, is that really clear what we're talking about? on? MR. REICHHART: We believe it is. COMMISSIONER ROY: Okay. Should I continue COMMISSIONER POWELL: Yes, sir. You've got the floor. COMMISSIONER ROY: Okay. In the new ordinance, you have added the off added screening requirement in the words. MR. REICHHART: Correct. COMMISSIONER ROY: And put it in the body PLANNING AND ZONING MEETING FEBRUARY 11, 2004 19 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of the ordinance, but for the life of me, I could not find the notification requirement about the fracking operations, the 500 feet prior to fracking operations, that that be added in. Why wouldn't we add that in the ordinance rather than continuing to have to add it in? MR. REICHHART: The specific request from Council was to add the screening and, you know, that could be a -- that is probably a good recommendation that any -- for any operation in the City, any resident within 500 feet be notified 24 hours in advance. That would be an easy add. COMMISSIONER ROY: Can somebody keep a record of these as we go through them, please? Thank you. MR. REICHHART: We do also have verbatim minutes being taken. COMMISSIONER ROY: I'll rest a minute. COMMISSIONER POWELL: Any other discussion here? Oh, Ms. Holt. Excuse me. I didn't see your name up here. COMMISSIONER HOLT: I guess this is for Dr. Banks. DR. BANKS: Yes, ma'am. COMMISSIONER HOLT: Do you feel that we in this community with the people drilling, with the staff, that we have done everything possible to protect our PLANNING AND ZONING MEETING FEBRUARY 11, 2004 20 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 watershed? DR. BANKS: I think that we have done everything possible taking into consideration other ordinances that are in effect in other areas around, taking into account the current regulations that we have on that industry, and what we are proposing as more stringent regulations. I cannot sit up here and tell you that we have a zero risk situation. We do not, and it should not be perceived as a zero risk situation. What we have done is attempted through the adoption of our inspection and through the adoption of the standards that we're enforcing to make the risk as minimal as we can. That is hopefully going to accomplish the goals of what you're asking. I don't know that -- if someone literally had to answer your question completely, I don't know if anyone could ever say that we've done everything that we possibly can to protect our water supply. I think that we have done, produced a good ordinance that is capable of protecting the water supply in terms of risk management. And hopefully will accomplish those goals as we work through the process. COMMISSIONER HOLT: And have the Waste Minimization Standards been moved? DR. BANKS: I'm sorry? PLANNING AND ZONING MEETING FEBRUARY 11, 2004 21 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER HOLT: Have the Waste Minimization Standards been moved? DR. BANKS: Moved within the ordinance itself? COMMISSIONER HOLT: Uh-huh. DR. BANKS: I believe that they have. COMMISSIONER HOLT: From the standard -- DR. BANKS: Yes. Do you want to comment? MR. REICHHART: Yes, they have. They have been moved. The issue -- it was almost an open-ended statement that there wasn't any criteria to say when you would or would not use the Waste Minimization Standards. What we have done, we have moved them after a spill event or after -- not a spill event, but after any event if one of the chemical levels got too high or something like that that we could require additional mitigation, one of those is the Waste Minimization Standards that we would then be able to utilize. So the assumption is nothing is wrong until we find it and then we will add additional requirements. And I understand, you know, why -- do it before or do it after, because the question is, well, when are you going to require Standard X? When are you going to require Standard Y? Who is going to require it? Who's -- you know, who's determination? And we felt that after the PLANNING AND ZONING MEETING FEBRUARY 11, 2004 22 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 event -- I mean, if there is an issue -- one of them, maybe there's the diesel is leaking or something like that and there's a -- we do have the contamination and we can require then, you know, that the pillow sponging effect to clean that area up or additional cleaning. The idea, I would think, is that we can monitor and track that and if there is something that's always being required, then we make that a requirement. It's almost like our ADP process. You know, assuming that we've got the requirements correctly, we find that we're always changing something to meet the noise or, you know, notification for fracking prior to the drilling, we make that a condition of the requirements. COMMISSIONER HOLT: But in this case, it's too late. MR. REICHHART: In this case -- well, it depends on what the event is, I would think. COMMISSIONER HOLT: Well, if there's an event -- MR. REICHHART: If it's a minor, it's a clean-up -- no, because it could be very minor that it's a clean-up event and then now you're going to have -- you're going to put an additional pillow around this so if it keeps leaking we'll be able to absorb that liquid, something like that as opposed -- I mean, if they have a PLANNING AND ZONING MEETING FEBRUARY 11, 2004 23 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 breach, yes, it's too late to do anything about it. But, theoretically, we've been out there inspecting to find if the levels are too high or if there's something wrong that needed to be fixed. COMMISSIONER HOLT: Okay. And do you feel we -- do you and Dr. Banks together, feel that we have the staff to do this to be able to monitor this? DR. BANKS: I do believe that we have the staff and the capabilities in order to accomplish these goals. One of the aspects of this particular proposal is the addition paid for by the inspection fees of an oil and gas inspector. That will give us a staff member who is dedicated to this issue completely and will be out performing these inspections, performing the monitoring activity. The water utilities department has been in the business of doing inspections for quite some time. We do industrial pre-treatment inspections for large industries that discharge materials into our waste water system. We also have a very extensive watershed monitoring program that has been going on within the City now for a number of years and has produced a lot of good data that has allowed us to analyze the status of our water quality, determine where those impacts are coming from and has allowed us to begin to make efforts towards cleaning up some of the PLANNING AND ZONING MEETING FEBRUARY 11, 2004 24 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 existing problems. So I cannot think of a watershed that exists currently that has a level of monitoring that we currently have at the City of Denton. And I'm very proud of that. That has been something that our staff within the Watershed Protection Department has worked very hard on in conjunction with other researchers to get to that status. So we do, in my opinion, have the expertise and have the ability to be able to accomplish these goals. COMMISSIONER HOLT: Thank you. COMMISSIONER POWELL: Any other questions? I've been reminded or I reminded myself that I have not closed the public hearing and I will do that, and then we will go to Mr. Roy with another question. COMMISSIONER ROY: Thank you. I count at least four places in the ordinance where it talks about no permits approved or activity within the 100-year floodway or within 1,200 feet of Lake Ray Roberts and Lake Lewisville. But there's one that seems to have some additional worry. And I'm on page 22-2, paragraph D, down at the -- toward the bottom of the page, if you could get that out. It says no permits in a floodway or near Lake Ray Roberts unless the property owner has first applied for and received approval from the City Council for an SUP. PLANNING AND ZONING MEETING FEBRUARY 11, 2004 25 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Now, I thought that we just said absolutely nothing is going to be done in the floodway and nothing is going to be done within 1,200 feet. Now, why do we have this "unless" in here? MR. REICHHART: It is still a property rights issue. There may be a circumstance where we would get a takings claim if we did not allow it in a floodway, that's all they had. What we're identifying is that by right, you cannot go in the floodway. I mean, right now, it's like -- right now in the flood plain, it requires the SUP. What we've done is narrowed that area to legally give them the ability to at least make a presentation to do that and maybe Dottie can expand on it a little bit, too because there might be an area within 1,200 feet of Lake Ray Roberts that it is -- there is techniques or something they can do to get a gas well in there and meet the concerns that we have about being in the floodway within 1,200 feet of that water supply. MS. PALUMBO: And that's correct. For the case where they come in and they say that they can't extract those minerals and they have some kind of technical data showing that they have to drill at a certain location, that may be 1,200 feet from the lake or within the floodway. And at that point, I believe the ordinance allows us to hire a technical expert to look at PLANNING AND ZONING MEETING FEBRUARY 11, 2004 26 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 their data and, you know, develop a set of criteria to allow them to do that. COMMISSIONER ROY: It appears that it allows them to go directly to the City Council for that rather than coming through us. MR. REICHHART: It's the SUP process. It gets approved by City Council. The process is public hearings at P & Z. You make a recommendation, you know, for approval or denial with, you know, conditions. Then the approval is City Council, but it's the same process for the Specific Use Permit similar to the gas well that we heard earlier. COMMISSIONER ROY: Okay. Thank you. COMMISSIONER POWELL: Any other questions of Mr. Reichhart? Mr. Roy still has the floor. COMMISSIONER ROY: There are several references to no development, no activity, no drilling, and they use -- and those words are interchanged throughout the document. I'm a little bit concerned that there may be some difference of interpretation about no development within the floodway or no drilling makes sense, that's pretty clear. But the word no development or no activity, there's about three or four references to that. Would it be useful to either define what PLANNING AND ZONING MEETING FEBRUARY 11, 2004 27 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you mean by development because it's not defined in the definitions? At one time we had a -- in the old ordinance we had a definition of development. That has been struck. MS. PALUMBO: I believe that definition of development is in the City, the Denton City Code under the definition section and that's why we took it out because it's already in the Code. MR. REICHHART: That's correct. COMMISSIONER ROY: But that does not really apply to gas wells -- MR. REICHHART: No, it does. COMMISSIONER ROY: -- because gas well development is clearly different than a typical development. MR. REICHHART: No. What the -- the definition for development -- I mean, the definitions we have in this Subchapter 22 are specific just to gas wells, like the fracking or spudding or reworking. Any other definition is in the main body of the Code. COMMISSIONER ROY: Well, okay. Let me be very specific then on Page 22-9, Paragraph X, no gas well operation, here's yet a different word that's been added in to the standards. We've got development, operation, activity and drilling. That's four times it's mentioned in here PLANNING AND ZONING MEETING FEBRUARY 11, 2004 28 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 about no drilling, no operation, no development, what do you mean by gas well operation? You see there. I know what that means, of course, but it just seems like if we don't go through here and be clear on these -- make that all one word and make sure that word is -- drilling everybody understands, I think. And you're not going to have an operation unless you drill there, so -- MR. REICHHART: Theoretically, you could drill outside the floodway fringe and still impact the floodway with your development, either with your mud pit, if you will, or reserve pit or, you know, any of the other operations and we can do that. We can go through this ordinance and check for clarification of either -- use one terminology if we need to provide a definition. For the purpose of this ordinance, here's what we mean by something else. That's a fairly easy fix to go through and make sure there's consistency throughout the ordinance to make sure the intent is clearly identified. COMMISSIONER ROY: I think it would be very useful to do that. MR. REICHHART: That's fine. COMMISSIONER ROY: Because I think I understand it, but it's not real clear. I'll continue unless someone -- COMMISSIONER POWELL: You've got the floor, PLANNING AND ZONING MEETING FEBRUARY 11, 2004 29 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Mr. Roy. Keep at it. COMMISSIONER ROY: Okay. The revised ordinance says no gas well permit should be issued for any well where the center of the well at the surface of the ground is within 250 feet of an existing fresh water well intended for domestic use. That's something new added here. That's a good point. I got a call today from someone who said they knew of an instance of two fresh water wells that had been put out of commission ostensibly by a gas well drilling. Are you aware of those cases in the City limits? MR. REICHHART: No, sir. COMMISSIONER ROY: That hasn't been purported back to City staff? MR. REICHHART: No, sir. COMMISSIONER ROY: Okay. And remind me again where we got the 250 foot number. DR. BANKS: That was through a -- I'm sorry. That was a survey of ordinances around in this area as well as extending into Oklahoma. The numbers ranged from no mention of setbacks from wells all the way up to, I believe, 300 feet was the maximum. We arrived at that number through our surveying of those ordinances. And in choosing a number that we felt was adequate for our PLANNING AND ZONING MEETING FEBRUARY 11, 2004 30 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 particular aquifers, which are relatively slow moving, and also seemed to be a number that was at the high end of what we found in the survey of other ordinances that address that issue. COMMISSIONER ROY: And are you familiar with the supposed cases of wells being contaminated here in Denton? DR. BANKS: I am not. COMMISSIONER POWELL: They may have been outside the city limits. Just a thought, sir. COMMISSIONER ROY: Perhaps, this one is for you, Dr. Banks, it says drill sites shall not be located within any designated ESA riparian buffer. I guess the intention of that is that not only there would be no drilling in that area, but there will be nothing there; is that correct? DR. BANKS: That is correct. COMMISSIONER ROY: No tanks, no separators or anything? DR. BANKS: That is correct. COMMISSIONER ROY: I'm going to rest a minute while I flip through some pages, Mr. Chairman. COMMISSIONER POWELL: Any other questions or discussion? I feel that when -- if there's no other discussion here, then when Mr. Roy is finished, we'll be PLANNING AND ZONING MEETING FEBRUARY 11, 2004 31 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ready for a motion one way or another. I am reluctant to challenge a fellow Commissioner. COMMISSIONER ROY: Okay. If I may. COMMISSIONER POWELL: Surely. Go ahead. COMMISSIONER ROY: I'm on Subchapter 17. I don't see a page number -- yeah, 17-6. We've added an item 9 in this and it goes back to my just previous question. It says gas well drilling and production within riparian buffers and water-related habitats shall comply with such and such chapter. Now, I thought we just said a moment ago that we weren't going to allow it any way or in any form in the riparian buffer, but here again, it says it can be done in accordance with this subchapter. MR. REICHHART: The issue -- there are mapped riparian areas, and Dr. Banks, correct me if I'm wrong. There are mapped riparian areas that are, in fact, not riparian areas. We will go out and do an inventory and that area may come off the map and drilling could be done. So even though it's mapped that way, we typically refer back to the subchapter that the regulation applies to because there's other issues besides thou shalt not drill in a riparian area; is that correct? DR. BANKS: That's basically -- yeah. COMMISSIONER ROY: I guess I'm not real PLANNING AND ZONING MEETING FEBRUARY 11, 2004 32 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 sure what you just said. MS. PALUMBO: MR. REICHHART: areas. poor. Can I take a stab at it? Sure. MS. PALUMBO: There's two types of riparian One is fair to excellent and the second one is And the poor riparian area doesn't really serve a purpose for our -- to filter out anything that would get into the water supply. And so we have those mapped, but there's a debate as to whether or not they are a riparian area, so we have, through this ordinance developed a process to make that determination. And if it is a poor area then it really doesn't serve any purpose other than it might just be a swale in a cow pasture and it should be taken off the map because it's not really designed for what we're -- MR. REICHHART: The only correction I would have on that, we've had that technique for a number -- for over a year now where we developed a system, a ranking system, because it's not only flood plain issues. There's other riparian buffer areas that people have come up and said, this just doesn't make sense. There's nothing here. We go out and there's a rating system that we go through. And if it rates out as you're correct, there is no buffer, or if it's a poor, you might be able to mitigate it up to the excellent where, you know, right now we're saying good PLANNING AND ZONING MEETING FEBRUARY 11, 2004 33 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to excellent, good, fair -- fair, good to excellent, you don't touch it. You stay away from it. COMMISSIONER ROY: I guess -- maybe it's semantics or such, but, you know, in one -- at least two or three places it says you cannot do it and then this place it says you can. MR. REICHHART: It doesn't say you can. It says the requirements are embedded in Subchapter 22 with regards to gas well drilling in the riparian buffer. It just relates you back to these new regulations that we're developing. Otherwise, there would be a litany of -- the exact same litany of requirements that the way to determine it is through the watershed protection permit, we'll go out and inspect it, we'll do a report. We'll report back and here's the results. COMMISSIONER ROY: Maybe I've just misunderstood what you said. It says here, if you're going to drill in -- if you want to drill in the riparian buffer area, you go back to Chapter 35.22. to 35.22, it says you can't do it. MR. REICHHART: Right. COMMISSIONER ROY: Okay. So the bottom line is you can't do it. MR. REICHHART: You can't do it, correct. COMMISSIONER ROY: Okay. Thank you. PLANNING AND ZONING MEETING FEBRUARY 11, 2004 34 If you go back 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER POWELL: Thank you, Mr. Roy. Any other comments, discussion at this stage of the game here? Then, I guess I'm ready for a motion if anybody is willing to step forward and make one. Mr. Watkins. attention. Your name is up here. COMMISSIONER WATKINS: Mr. -- I'm sorry, I should pay If I might, I'll make a motion and we'll see if it gets a second. If it does, I'd have a statement following. I would like to make a motion that we pass this to the City Council with our approval. COMMISSIONER JOHNSON: COMMISSIONER POWELL: a second to pass it as is, correct? Second. We have a motion and And now you wanted to make a statement and then I'll go to Mr. Roy and Ms. -- COMMISSIONER ROY: Excuse me, if I may, may I suggest a friendly amendment? We had a couple of changes that I think we -- I believe we all agreed should be in there. COMMISSIONER WATKINS: That's fine. COMMISSIONER ROY: And one was the -- to build in the fracking notification and also to clear up the cases of the terminology differences that are throughout this, the development, the drilling, the operation terminology. PLANNING AND ZONING MEETING FEBRUARY 11, 2004 35 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER WATKINS: That would be fine. I have no problem with that. COMMISSIONER ROY: Thank you. COMMISSIONER POWELL: seconder doesn't either. COMMISSIONER JOHNSON: And I assume the Well, yeah, and I'll add another one, too, is that our approval of this should not prohibit cleanup of typos and things like that which are not substantive. COMMISSIONER WATKINS: COMMISSIONER POWELL: Exactly. Okay. Mr. Roy, then you're satisfied at this stage of the game. Vicky, go. COMMISSIONER HOLT: I have an amendment. I want to see if it will fly. Closed loop drilling system should be used in the drilling in the flood plain or ESA area. If this system is not appropriate for the site, a variance could be applied for. COMMISSIONER POWELL: Okay. We have an amendment to the motion and I'll generalize it adding a closed loop probability, closed loop unless otherwise varied. And we'll go with your wording. I'm just trying to synopsize it. We're going to have to -- do we have a second on this amendment? COMMISSIONER JOHNSON: the amendment? PLANNING AND ZONING MEETING 36 Well, did you accept FEBRUARY 11, 2004 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER POWELL: She didn't say friendly amendment. She said amendment. COMMISSIONER HOLT: No, just amendment. COMMISSIONER POWELL: I don't care if it's friendly or not. It's up to you, folks. COMMISSIONER JOHNSON: I'm not clear. Have we amended the motion or is that what we're discussing now is whether you accept the amendment to the motion? COMMISSIONER POWELL: Yes, we are. COMMISSIONER WATKINS: Of Commissioner Holt's motion? COMMISSIONER POWELL: Yeah, if you want it to be a friendly amendment then you're going to have to accept that, that way we don't have to vote on it. That's what it amounts to. COMMISSIONER WATKINS: I would a little rather have it as a separate motion. COMMISSIONER POWELL: We have a separate amendment then at which case we need a second to that amendment. COMMISSIONER JOHNSON: Well, don't we have to vote on the first one? COMMISSIONER POWELL: No, sir. The other one was a friendly amendment that went along with it. COMMISSIONER JOHNSON: Okay. PLANNING AND ZONING MEETING FEBRUARY 11, 2004 37 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER POWELL: We need a second on this amendment by Ms. Holt. Seeing no second, the amendment dies for lack of a second. about the motion on the floor? COMMISSIONER WATKINS: Any other discussion I would. Mr. Chairman, this has been worked on for some months now. I would like to commend the staff for all of the work that they have done, legal as well as the citizens that have poured time into this. I don't think there's any disagreement on this panel about our want for clear, pure water in Denton nor do I think that the people that worked on this have any doubt about that. It is time to move it on and I personally would like to say, not critically, I have no idea that this is a way that it will wind up. It's written by humans and there will be things that will need to be changed. Perhaps, the closed loop system. I am personally not opposed to that, but that's not in here now and I would like to get this on to the Council so that we can get some sort of regulation and open this up to the expiration. With that, I'll hush. Thank you, sir. COMMISSIONER POWELL: We have further discussion from Mr. Roy. COMMISSIONER ROY: Yes, I'd like to make a statement as well. Our existing ordinance allows drilling in the flood plain with an SUP, but as I recall, there PLANNING AND ZONING MEETING FEBRUARY 11, 2004 38 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 have been no SUPs approved, so we really haven't wrestled with this. The proposed change allows drilling by right only in the flood fringe, but it adds new requirements, new inspections and monitoring. And we are extending control over the ETJ flood area. The proposed change also prohibits development in any floodway or riparian buffer ESA. Again, development is only allowed in the floodway fringe. Now, the P & Z requested the assistance of an outside expert to ensure that the proposed changes were stringent enough to protect our water quality in the environment. This recommendation was not accepted by the Council. Further, Council is on record that the proposed regulations are consistent with the intent of the Development Code. City staff has explained to us in detail how they propose to ensure the protection of our water supply and they have essentially certified to us on several occasions that they are -- they have full confidence that they have the capability and the staff to monitor and control this concern. Staff has included an important safeguard in the proposed revised ordinance and that's the six-month limitation on the watershed protection permit. And I guess, finally, the staff is recommending approval of this ordinance. PLANNING AND ZONING MEETING FEBRUARY 11, 2004 39 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Now, it may seem common sense not to allow any development in any portion of the flood plain, but the considerable financial incentives for the City and for many of our citizens to institute an ordinance that has enough teeth and enough safeguard to allow some flexibility. So I'm at the point, myself, where I don't think we, as P & Z, have much further value to add to the ordinance so I will support the motion on the floor. Thank you. COMMISSIONER POWELL: Ms. Holt, your name was up there a little bit. Did you take it off? COMMISSIONER HOLT: Yes. COMMISSIONER POWELL: Thank you. As acting Chairman, and I do want to add one thing. I think it's important that we remember that apparently most of these wells if they're drilled will go in agricultural areas. And it is my understanding that existing agricultural areas presently do a lot of damage to our water system, fertilizers, and whatever they have to use, runoff and we have no control over that. And this ordinance doesn't do anything about that. So I don't think we're doing any harm that relates to what's already being done. And with that, I will hush. And if there is no more discussion, I'll call for a vote. Motion passes 5-1. PLANNING AND ZONING MEETING FEBRUARY 11, 2004 40 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (COMMISSIONER HOLT VOTING IN OPPOSITION.) COMMISSIONER POWELL: And I believe that was the last item of the night. We'll call it a night. Thank you very much. (Meeting adjourned.) PLANNING AND ZONING MEETING FEBRUARY 11, 2004 41 AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: CM/DCM/ACM: February 17, 2004 Planning Department Jon Fortune, Assistant City Manager SUBJECT - SI04-0001 (Fee Schedule Amendments) Consider an ordinance amending the Developmem Review Fee Schedule to add fees for Watershed Protection Permits, gas well inspections, and tree mitigation associated with gas well development. BACKGROUND Applicam: City of DeNon, DeNon TX Staff has been working with representatives of the gas well industry to craft amendments to Subchapter 22 (Gas Well Drilling and Production). Those proposed amendmems (See SI03- 00024) included the addition of a Watershed Protection Permit, inspections of all gas well sites and tree mitigation for any loss of trees located in a floodplain. Each of the proposed fees (Attachmem 2, and below) have been developed by both staff and represematives of the gas well industry. The proposed fees and an analysis of each fee is provided below. [] Watershed Protection Permit: $1,300.00 per well site. The proposed amendments to Subchapter 22 require any person who proposes extraction of gas within a floodplain, an ESA or within 1200 feet of the flood pool elevation of Lake Ray Roberts or Lake Lewisville in the city and ETJ to obtain a Watershed Protection Permit (WPP) prior to approval of a Gas well Developmem Plat. Although gas well developmem will be allowed in floodplain fringe areas, it is not allowed in riparian buffers that area designated as ESA's. As part of the permit procedure, staff will conduct field assessments to determine ESA impacts from the proposed activities. The information required as part of the permit will also allow staff to analyses hydrological impacts of the proposed activity and to identify the amount of tree mitigation, if any, that is required. [] Gas well site inspections: $1,200.00 per well With the exception of inspections by the Fire Marshall, the original gas well ordinance did not provide for any site inspections. Amendments have been added to the code that will provide for inspection of every gas well site including wells in the ETJ. All sites will be inspected a minimum of four times to verify that the sites are being developed as approved, including but not limited to culverts, driveway, pad site and equipmem locations, and erosion control and be monitored for contaminants. [] Gas well site re-inspections: $400.00 per visit The typical inspection fee assumes four site visits. If a problem arises or if a site is not code compliam additional inspections may be required. The proposed fee is imended to cover the anticipated costs associated with each additional inspection associated with a documemed problem. Tree mitigation: $100.00 per inch The proposed amendments to Subchapter 22 include tree mitigation for gas wells located in a floodplain fringe or other ESA. The mitigation will be calculated on a 1:1 replacement value for 100% of the dbh (diameter at breast height) of trees removed from the drill site. Tree mitigation can be accomplished by planting replacement trees, within a floodplain, on-site or off-site with similar tree species or by payment into a tree fund. Tree mitigation funds that are specific to ESA's will be kept separate from other tree funds and will only be used to either acquire wooded floodplain or riparian property that remains in a naturalistic state in perpetuity, or to purchase conservation easements within riparian or floodplain areas. Funds may be used to purchase, plant, and maintain trees on public property, as long as the public property is within a riparian area or floodplain. The proposed fee is an accepted local cost for planting new trees. ESTIMATED PROJECT SCHEDULE N/A PRIOR ACTION/REVIEW None FISCAL INFORMATION The costs associated with the amendments to Subchapter 22 will be paid by individual gas well applicants. The costs are intended to cover staff time and have been agreed upon by both city staff'and representatives of the gas well industry. RECOMMENDATION Staff recommends approval of the proposed fee schedule. ATTACHMENTS 1. Draft Ordinance. 2. Exhibit A - Revised Development Review Schedule. Prepared By: ~A~rry R/_h. hart; RLA, ssista~t Director of Planning and Development Respectfully submitted: Director of Planning and Development S:\Our Documents\Ordinances\04WEESCHedule,doc ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON, TEXAS, AMENDING THE SCHEDULE OF FEES CONTAINED IN ORDINANCE 2002-041 BY ADOPTING A NEW SCHEDULE OF FEES AS AUTHORIZED BY THE DENTON DEVELOPMENT CODE FOR THE CITY OF DENTON, TEXAS, FOR FLING APPLICATIONS FOR REVIEW, APPROVAL, GRANT OR ISSUANCE OF PLATS, PLANS, LICENSES, CERTIFICATES, VARIANCES, SPECIAL EXCEPTIONS OR DESIGNATIONS REQUIRED BY THE SUBDMSION RULES AND REGULATIONS AND ZONING REGULATIONS OF THE CODE OF ORDINANCES; PROVIDING FOR A REPEAL OF ALL ORDINANCES IN CONFLICT HEREWITH; PROVIDING A SEVERABILITY CLAUSE; PROVIDING A SAVINGS CLAUSE; PROVDING FOR PUBLICATION; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. That Ordinance 2002-041 is hereby amended by the adoption of the Development Review Fee Schedule set forth in Exhibit "A", attached hereto and made a part hereof for all purposes and authorized to be imposed for the filing of applications, review, approval, grant or issuance of plats, plans, permits, licenses, certificates, variances or designations required by the Subdivision Rules and Regulations and Zoning Regulations set forth in the Denton Development Code. SECTION 2. That this ordinance shall repeal everyprior ordinance in conflict herewith, but only insofar as the portion of such prior ordinance shall be in conflict; and as to all other sections of the ordinance not in direct conflict herewith, this ordinance shall be and is hereby made cumulative except as to such prior ordinances or portions thereof as are expressly repealed hereby. SECTION 3. If any section, subsection, paragraph, sentence, phrase or word in this ordinance, or application there of to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not effect the validity of the remaining portions of this ordinance, and City Council of the City of Denton, Texas hereby declares it would have enacted such remaining portions despite any such invalidity. SECTION 4. This ordinance shall become effective immediately after its passage and approval, and the City Secretary is hereby directed to cause the caption of this ordinance to be published twice in the Denton Record-Chronicle, a daily newspaper published in the City of Dentorg Texas, within ten (10) days of the date of its passage. PASSED AND APPROVED this the __ day of ,2004. EULINEBROCK, MAYOR PAGE 1 S:\Our Documenls\Ordinances\04WEESCHedute. doc ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY PAGE 2 Exhibit A PLANNING AND DEVELOPMENT DEPARTMENT City Hall West - 221 N Elm - Denton, Texas 76201 voice: (940) 349-8350 fax: (940) 349-7707 www.cityofdenton.com Development Review Fee Schedule (Approved February 1 7, 2004) 1 Pre-design Conference (Mandatory unless waived by DRC Chairman) $250 (credited toward other fees) SF & 2F: $200 + $6 / lot 2 Preliminary or Final Conveyance or Development Plat Gas Wells: $200 + $6 / acre All Others: $200 + $10 / acre Residential: <10 lots: $200 + $6/lot 3 Preliminary or Final Plat Residential: >10 lots: $300 + $10/lot Nonresidential: $300 + $15 / acre 4 Amending Final or Amending Preliminary Plat / Replat $250 5 Minor Plats $300 + $6 / acre 6 Extension of Time for Plat $100 7 Vacation of Plat $250 8 General Development Plan $100 + $15/acre 9 Variance to Subdivision Regulations $250 per variance 10 Annexation Petition $750 11 Historic Landmark Designation $65 0 - 5 acres: $1,500 5 +- 25 acres: $2,000 12 Comprehensive Plan Amendment 25 +- 50 acres: $3,000 50 + acres: $4,000 + $10 / acre 13 Specific Use Permit $1,500 + $65 / acre 14 Minor Amendment to Specific Use Permit $250 + additional $100 if processed administratively 15 Extension of Time for Specific Use Permit $250 16 Site Plan Review (including landscaping and architectural review) $0.03 per square foot of proposed building with a $50 Minimum and not to exceed $1,500 0 - 5 acres: $850 5 +- 25 acres: $1,250 17 Zoning Change (includes PD Concept Plans) and Alternative Site Plan 25 +- 50 acres: $2,000 50 + acres: $2,000 + $10 / acre 18 Special Exception requiring City Council action $ 500 19 Planned Development District: Detailed Site Plan $1,000 + $25 / acre 20 Planned Development District Detailed Site Plan Minor Amendment $$250 + additional $100 if processed administratively 21 Planned Development District Detailed Site Plan Time Extension $250 22 Zoning Verification Letter $ 25 per site 23 Right-of-Way or Easement Abandonment $150 per lot 24 Board of Adjustment $250 per variance 25 Public Hearing Legal Notice for Property Owners within 200 feet Current Postal Rate for Certified Mail + $.055 - each 26 Public Hearing Courtesy Notice for Residents within 500 feet Current Postal Rate for First Class Mail - each 27 Public Hearing Sign - 2'X3' for road frontages of 45 or less mph $65 each 28 Public Hearing Sign - 3'X4' for road frontages of 45+ mph $100 each 29 Publication Fees Annexation - $350 Zoning - $70 0 - 5 acres: $1,500 5 +- 25 acres: $2,000 30 Zoning Plan (related to Interim Ordinance) 25 +- 50 acres: $3,000 50 + acres: $4,000 + $10 / acre 31 Project Plan (related to Interim Ordinance) $1,000 + $25 / acre 32 Design Plan (related to Interim Ordinance) $1,000 + $25 / acre 33 Watershed Protection Permit $1,300 per well 34 Gas Well Inspection Fee $1,200 per well 35 Gas Well Re-inspection Fee $400 per visit 36 Tree mitigation as required per § 35.22.8.c.iii $100 per inch NOTE: The fees for items #'s 25, 26, 27 and 28 will be collected at least five days in advance of mailings and sign postings. Failure to pay fees will result in removal from scheduled agenda. AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: CM/DCM/ACM: February 17, 2004 Planning and Development Department Jon Fortune, Assistant City Manager SUBJECT - Z03-0030 (Laurel Oaks DevelopmenO Hold a public hearing and consider adoption of an ordinance regarding the rezoning of approximately 6.6 acres from Neighborhood Residential 2 (NR-2) zoning district to Neighborhood Residential 4 (NR-4) zoning district. The property is located approximately 350 feet south of Paisley Street, between Audra Lane and Mack Drive. Applicant proposes single- family uses. The Planning and Zoning Commission recommends approval (6-1). (Super majority vote required for approval.) BACKGROUND Applicant: Karen Mitchell Fort Worth, TX The applicant is requesting to rezone the property for single-family use. Based on the current NR-2 zoning designation, approximately 13 dwelling units are allowed. If the request to rezone to NR-4 is approved, the owner could subdivide the property into approximately 26 single-family lots. The property is bordered by Neighborhood Residential 4 (NR-4) zoning districts to the north, east and south. The property to the north is platted and developed for single-family use (Mack Addition). The properties to the south and east are zoned Neighborhood Residential 4 (NR-4) and are developed for single-family use (Summerwind Addition). The property to the west is zoned Neighborhood Residential 2 (NR-2) and is not platted and is undeveloped. A neighborhood meeting was held on December 10, 2003, at the Martin Luther King, Jr. Recreation Center. The neighboring residents and property owners expressed concerns regarding potential increased traffic, platting issues, potential development design, preservation of existing tress, and future plans for the undeveloped adjoining property. A summary of the issues discussed during the meeting is provided in Attachment 5. Public notification and property owner responses are provided in Attachment 3. As of this writing, staff has received 18 written responses in opposition and 1 neutral from property owners within 200 feet of the subject site. Currently, 22.4% of the land within 200 feet of the subject property is owned by people in opposition to the request. As opposition is over 20%, City Council must approve the rezoning request with a super majority vote OPTIONS 1. Approve as submitted. 2. Deny. 3. Postpone consideration. 4. Table item. RECOMMENDATION The Planning and Zoning Commission recommends approval (6-1). ESTIMATED PROJECT SCHEDULE The subject property is not platted. Preliminary and final plats are required prior to issuance of building permits. PRIOR ACTION/REVIEW The following is a chronology of Z03-0030: February 3, 2004, City Council approved continuance of Z03-0030. December 17, 2003, Planning & Zoning Commission approved (6-1) a request to rezone approximately 6.6 acres from Neighborhood Residential 2 (NR-2) zoning district to Neighborhood Residential 4 (NR-4) zoning district. A Neighborhood meeting was held December 10, 2003 (Attachment 5). December 4, 2002, Planning & Zoning Commission denied (7-0) a request (Z02-0047) to rezone approximately 18.5 acres, commonly referred to as 700 & 702 Audra Lane, from Neighborhood Residential 2 (NR-2) zoning district to Neighborhood Residential Mixed Use 12 (NRMU 12) zoning district (Attachment 6). Ordinance 2002-040, adopted February 2002, placed the subject property in the Neighborhood Residential 2 (NR-2) zoning district and land use classification. Prior to the adoption of the Development Code (Ordinance 2002-040), the property was zoned Agricultural. The property has not been platted. ATTACHMENTS 1. Staff Analysis 2. Maps 3. Public Notification (Property Owner Notification Map) 4. 200' Property Owner Responses 5. Neighborhood Meeting Summary 6. Planning & Zoning Commission Meeting Minutes from December 4, 2002 (Z02-0047) 7. Planning and Zoning Commission Meeting Minutes from December 17, 2003 8. Draft Ordinance Prepared by: Chris Fuller Planner I Respectfully submitted: Kelly Carpenter, AICP Director of Planning and Development ATTACHMENT 1 Staff Analysis Summary_ of Zoning Request The applicam is requesting to rezone approximately 6.64 acres from Neighborhood Residemial 2 (NR-2) zoning district to Neighborhood Residemial 4 (NR-4) zoning district. The requested zoning change would allow the applicam to subdivide the property according to NR-4 lot size standards. The existing neighboring subdivisions, Mack Addition and Summerwind Addition, were approved and developed within the SF-7 zoning district prior to the adoption of the currem Developmem Code (Ordinance 2002-040). The SF-7 zoning district required a minimum lot size of 7,000 square feet. Adoption of Ordinance 2002-040, the currem Developmem Code, placed both the Mack Addition and Summerwind Addition in the Neighborhood Residemial 4 (NR-4) zoning district and land use classification. Based on 26 single-family lots, the proposed NR-4 zoning request will provide a density that is compatible with the existing neighborhoods. Existing Condition of Property The subject property is primarily vacam, with some single-family residences and is not in a flood plain. Adjacem Zoning North: Neighborhood Residemial 4 (NR-4) zoning district South: Neighborhood Residemial 2 (NR-4) zoning district East: Neighborhood Residemial 4 (NR-4) zoning district West: Neighborhood Residemial 2 (NR-2) zoning district There are single-family residemial uses adjacem to the northern boundary of the subject property (Mack Addition Subdivision), as well as to the east and south (Summerwind Addition Subdivision). The property to the west of the subject property is not platted and is primarily vacant. Comprehensive Plan Analysis The site is located in an "Existing Neighborhoods/Infill Compatibility" future land use area. New development in this district should respond to existing developmem with compatible land uses, patterns and design standards. The plan recommends that existing neighborhoods within the city be vigorously protected and preserved. Housing that is compatible with the existing density, neighborhood service, and commercial land uses is allowed. The DeNon Plan defines compatibility as: "The characteristics of differem uses or activities or design which allow them to be located near or adjacem to each other in harmony ... Compatibility does not mean "the same as." Rather, compatibility refers to the sensitivity of developmem proposals in maimaining the character of existing developmem" (p. 188). The surrounding developed properties consist of single-family lots similar to those proposed by the applicam. The request to rezone the subject property is compatible with the Future Land Use Plan (Neighborhood Cemers) and with the surrounding zoning designations. The proposed zoning change is in compliance with the DeNon Plan. Development Review Analysis Transportation Access to the property is limited to Audra Lane. A traffic impact analysis will not be required for a single-family use or duplex use that produces less than 1,000 trips per day. The proposed subdivision could result in 26 dwelling units or 260 vehicle trips per day. Access and Connectivity The site will be accessed by Audra Lane. If approved, the new lots will be required to provide connectivity to the adjacent property to the west. Public Infrastructure The city tile maps show a 6" water main along Longmeadow Street to near the south property line and an 8" water main along the east side of Audra Lane. The city tile maps show an 8" sewer main along Longmeadow Street to near the south property line and a 15" sewer main along the median of Audra Lane. Development Code / Zoning Analysis The Neighborhood Residential 2 zoning district allows a maximum density of 2 dwelling units per acre. The Neighborhood Residential 4 zoning district allows a maximum density of 4 dwelling units per acre, which are permitted in the form of detached and duplex units. Attached single-family dwelling units (i.e. townhomes) are allowed only with approval of a Specific Use Permit. The chart below illustrates the difference between the two zoning districts. Limitations for each use are explained below the chart. Single Family Dwellings P P Accessory Dwelling Units SUP (L1) SUP L(1) Attached Single Family Dwellings N SUP Dwellings Above Businesses N N Live/Work Units N N Duplexes N L(3) Community Homes for the Disabled P P Group Homes N N Multi-Family Dwellings N N Maximum Density, dwelling units per acre 2 4 Minimum Side Yards for Non-Attached Buildings 10 feet 5 feet Limitations: L(1): Accessory dwelling units are permitted, subject to the following additional criteria: 1. The proposal must conform to the overall maximum lot coverage and setback requirements of the underlying zone. 2. The maximum number of accessory dwelling units shall not exceed 1 per lot. 3. The maximum gross habitable floor area (GHFA) of the accessory residential structure shall not exceed 50% of the GHFA of the primary residence on the lot, and shall not exceed 1000sq. ft. GHFA. 4. One additional parking space shall be provided that conforms to the off-street parking provisions of this Chapter. L(3): In part of a subdivision of 2 acres or more, up to 2 units may be attached by a common wall if the lots which contain the attached structures do not abut the perimeter lot lines of a subdivision, the individual common wall units are on separate lots designed to be sold individually, and they comply with the Subchapter 13. Additionally, units must have the appearance of a single-family residence from the street. The limitations listed above regulate the specifics of each use allowed within the zoning district. Any proposed developmem on this site is required to be in compliance with the site design standards of the Developmem Code. An approved site plan for the proposed developmem will be required prior to the issuance of any building permit. Staff Findings The existing neighboring subdivisions, Mack Addition and Summerwind Addition, are curremly designated as Neighborhood Residential 4 (NR-4) zoning districts. The average lot size of the single-family lots adjacem to the northern boundary of the subject property is approximately 9,820 square feet (Mack Addition Subdivision). The average lot size of the single-family lots adjacem to the east is approximately 8,750 square feet, while the average lot size of the single- family lots adjacem to the south is approximately 10,790 square feet (Summerwind Addition Subdivision). Based on 26 single-family lots, the proposed NR-4 zoning request could provide a density that is comparable with the Mack Addition and Summerwind Addition subdivisions. The proposed zoning change is compatible with the existing neighborhoods and with the imem of the DeNon Plan. Staff Recommendation Based on the above findings, staff recommends approval of the requested zoning change. ATTACHMENT 2 Location/Zoning Map NORTH Land Use Map II Note: Highlighted parcels currently zoned NR-4. ATTACHMENT 3 Notification Map NORTH Scale: None Public Notification Date: November 7, 2003 200' Legal Notices* sent via Certified Mail: 50 Number of responses to 200' Legal Notice: · In Opposition: 18 · In Favor: 0 · Neutral: 1 Percent of land within 200' in opposition: 22.4% As opposition is over 20%, City Council must approve the rezoning request with a super majority vote *A copy of the notification list can be picked up at City Hall West, 221 N. Elm Denton TX 76201 ATTACHMENT 4 200' Property Owner Responses Property Owner & Address Kathy Hootman 2000 Paisley Doris Morgan Owens 509 Mack Drive Corinia & Kevin Maxson 1904 Paisley Connie Bell 807 Mack Drive Gertrude Slavin 613 Mack Drive Thelma Jackson 2019 Longmeadow Ct. Morelle Miller 704 Audra Lane Stephen Moors 2014 Longmeadow Court Michael Steinel 705 Mack Drive Kelley Reese 2008 Paisley Ken Cryder 414 Mack Drive Support / Neutral / Oppose Neutral Oppose Oppose Oppose Oppose Oppose Oppose Oppose Oppose Oppose Oppose Comments As long as this cannot lead to apartments School already overloaded (Lee); Traffic, no traffic light at Mack, cannot pass at 8am or 3pm; Visual Privacy, backyard; Sneaky and pushy methods used by Dallas (illegible) trying to slip this by at a busy season when people are sick and can't get to meetings. The Developer is only trying to rezone part of the land so that if it passes, he can rezone the rest for apartments. That would make it where most of Mack & Paisley would not be included in the 200' buffer zone, making way for apartments. Drainage, Density, Traffic Too much traffic already using Mack Drive to enter McKinnev Street No Comment Too many apartments in the area - Private property owners in the area already fighting too much traffic. Change to NR-4 will increase traffic. Want to preserve the neighborhood. Oppose because of impact on neighborhood regarding traffic, school, development. Unknown number of houses or duplexes planned now and in the future. Distrust of developer, by previously trying to rezone and now requesting rezoning on smaller piece of property. Concern for ingress and egress that could adversely affect homes on cul-de-sac. The developer/owner has given no assurance to the neighborhood as to the ukimate plan for this entire parcel. Issues of access, drainage and compatibility with existing residents are unresolved. Glad to see Single-Family use. Would prefer less density. Believe strongly the entire vacant lost should be rezoned together to preserve the integrity of the neighborhood. I don't like the idea of apartments near my house and the way he (the developer) is trying to whittle down his opposition by doing one tract at a time. Alan & Brenda Atkinson Oppose We live on a cul-de-sac and do not want our 2006 Longmeadow Court street opened up into the subject property. 8 Jennifer Nistler & Justin Quinn 513 Mack Drive William Calfee 701 Mack Drive Joel & Esmeralda Diaz 2004 Paisley Oppose Heather & Jason Pitzer 2009 Longmeadow Court Elizabeth Bator 517 Mack Drive Eric Kartchner 2018 Longmeadow Court Cathy Huller 2000 Longmeadow Court Oppose Oppose Oppose Oppose Oppose Oppose We are against the possibility of having 4 homes per acre in our backyard. The developer did not convince us that this wouldn't be the situation. No plan was discussed at the neighborhood meeting. Also, the entire property and what will take place on the other parcels of land also needs to be addressed. We are against the request. Although the property is surrounded on three sides by NR-4, I believe that the higher density property to the West offsets this and this property should be developed according to NR-2 designated requirements. There is a reason why the City planners recommended the NR-2 designation originally. We don't want our property taxes to increase, our property value to decrease. We moved here to the neighborhood because the neighborhood was peaceful and we feel safe and we enjoy living here. Find somewhere else to build and leave our neighborhood the way it is. We have enough traffic on our streets as it is. Prefer to keep the number of houses to 2 per acre because of overcrowding of neighborhood and school I know that the owner of this property has the right to develop it. But this land should be used for single-family homes for the following reasons: preserve the integrity of our neighborhood; not add too much to the already stressed out roads here; safety, as a single woman I am concerned about multiple units behind my house. Paraphrased: Concern regarding future development on adjacent property Added congestion (traffic) to an area already overloaded; developer will most likely build multiple family housing on the remaining 2 sections adding: increased crime rate & noise. ATTACHMENT 5 Neighborhood Meeting Summary The Planning Departmem encourages applicams who are pursuing a rezoning request to convene a neighborhood meeting to promote dialogue among the applicam and neighboring residems & landowners. Z03-0030 Laurel Oaks Developmem December 10, 2003 Staff opened the meeting by providing a brief summary of the case and imroduced Karen Mitchell as the represemative preseming on behalf of the property owner. Mrs. Mitchell, along with Greg Mitchell, presemed the proposal to rezone the property. The meeting concluded with a question and answer period from the audience. In Attendance: Planning Staff: Chris Fuller; Wes Morrison Property Owner Representatives: Karen Mitchell; Greg Mitchell Approximately 25 City of DeNon Citizens Planning & Zoning Commissioner Johnson The following issues were discussed during the meeting: 1. Platting issues (sewerage, drainage) 2. Increased traffic in area 3. Home size, lot layouts, platting issues/land use concerns 4. Preservation of existing trees 5. Rezoning public hearing process 6. Location of access to property 7. Ownership of properties 8. Future rezoning of adjoining property 9. Lack of obligation to fulfill proposed developmems 10 2 3 7 8 lO 13 114 16 17 15 19 20 2! 23 24 25 coMMISSIONER APPLE: we're going tO reconvene our mining. We're going to reconvene our meeting and begin with Iteaaa No. 13 which is a public he~ring, bis. Willis with the Planning staff will present and I'll open the public hearing. MS. WILLIS: Oood evening, Commissioners. ?iffanie Willis, Case Manager here before you representing Item No. 13 on your Agenda, Saddle Creek, address at 700 and 702 Audra Lane. The straight zoning case request before you, we have -- COMMISSIONER APPLE: EXCUSe me, sir. If you could take your phone call outside tile chamb~s. MS. WlUUS: I'll b~in again. Thank you. COMMISSIONER APPLE: Thank you, Ms. Willis. MS. WILLIS: The case before you this evening is 700 and 702 Audra Lane. 700 and 702 Audra Lane 16 is before you tonight. The straight zoning change 17 request, the applicant is Rober~ Russell with PC^LET 18 Corporation, is proposing a straight zoning change from 19 20 NR-2 zoning classification to NRMU-12. On your screen, please view the site. 21 Notice that adjacent to the north, south, and east are 22 existing single-family standard established dwelling 23 units, and there to tl~e west community mixed use is the 24 Mack Park multi-family attached apartment units. Again, 25 Page 122 i multi-family development is proposed at this property. 1 2 Currently, the property is mostly vacant. 2 3 The specific su~ested land use analysis 3 4 provided by the applicant at the time of application 5 suggests that they will build 256 multi-family dwelling 6 units. As you see on your backup, page 7, the site 6 7 proposes compact, possibly increasing the transient 7 8 population; thus, setting a criteria for performance 8 9 standards there on Audra Lane. 9 10 The requested zoning change allows for 222 10 11 units based on the proposed, zoning for ~mx.~-12 according 11 12 to the Development Code'. 222 units are allowed according 12 13 to the Development Code based on the proposed NRMU42 13 14 zoning classification· 14 15 Before you on the screen, photos looking 15 16 down Audra Lane toward the McKinney Avenue. We see 16 17 anchoring McKinney are commercial uses coming back toward 17 18 Audra Lane. This is immediately as you approach the site 18 19 here below is prercy nmch vacant. To the west, south is 19 20 the conwnunity mixed use general which houses the Mack Park 20 21 Apartments. Other than that, this site is bordered by 21 22 ~22 established single-family homes. ' ' 23 As identified in thc map and your backup, 23 24 the notification xvas provided to addresses identified on 24 25 the Denton tax role. A total of 237 or more public 25 PLANNING AND ZONING COMMISSION 12/4/2002 Attachment 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 4 5 Page 123 notices were provided via the mailing. Those notices were for 200 and 500 foot. The slide before you shows the future land use, the existing land uses, existing neighborhoods, infil~ compatibility. The plan reco~mnends that the existing neighborhoods within the City vigorously protect and preserve neighborhoods. Multi-family units that are compatible with the existing densities, nei~borhood service, cmranercial, and other land uses are allowed. The Comprehensive Plan encourages diversity of housing stock and increased density would definitely limit the sprawl. Before you the applicant is requesting to gO from NR-2 residential zoning to the NRMU-12 residential zoning classification. Excuse me. As you can see, NRMU-12 iS hmnediately to the south of this particular site. I would like to return to our notification map and indicate at this time we have received 12 additional responses in opposition to this zoning change to date since the response or the written, typewritten information provided in your backup. We also have received one letter in favor of this zoning change request, person addressed at 708 Audra Lane. Currently, the opposition for this property is at or above 52 percent of the residents that responded to the 200-foot notification. In conclusion, a zoning change would allow Page 124 new construction and extend the multi-fmnily use into existing single-family neighborhoods. This concludes my presentation. COMMISSIONER APPLE: Thank you. I believe we have a couple of questions. Commissioner Powell. COMMISSIONER POWELL: The map that's up there now, please if you could describe to me, define for me the colors. MS. WILLIS: Before yOU, Commissioner Powell, the gold is definitely our site and then the adjacent areas in red would be the areas of properties that are in opposition. The grayed out areas, excluding 701, we did receive an opposition position on that case today short of 4:00 o'clock today, they are in opposition and counted in the 20 percentile area according to the Code. And this would definitely, the 52 percent, this amount of opposition will definitely trigger a super-majority vote subject thne this case goes to City Council. MR. SALMON: what do the gray properties represent? MS. WILLIS: The gray properties. COMMISSIONER POWELL: Blue, whatever that is there. M§. WILLIS: They arc just shadowing, Page 121 -Page 12~ Attachment 6 misses. 1 showing that they're within the 200-foot area. However, 2 at the time that we created our map had not provided a 3 decision. 4 COMMISSIONER POWELL: SO there was no 5 response from those at that time. 6 MS. WILLIS: That's correct except for -- 7 MR. REICHHART: They're just shaded to show 8 that they were within the 200-foot but we have not 9 received a response. 10 MS. WILLIS: Except for the 701. 11 COMMISSIONER POWELL: I understand. 12 MS. WILLIS: Except for the 701 property. 13 Again, we did share with you that we did receive 14 additional responses within the 200-foot but they're after 15 the typewritten was provided in your backup. 16 COMMISSIONER POWELL: Thank you very much. .17 MS. WILLIS: Yes, sir. 18 MR. REICHHART: And there are a couple of 19 properties that we received opposition from that aren't 20 identified on here. So, I mean, this isn't an up-to-date, 21 but there's over 50 percent opposition right now. 22 COMMISSIONER POWELL: It'S as up-to-date as 23 you could do it. I understand. Thank you. 24 MR. REICHHART: There are a couple of 25 Page 126 1 COMMISSIONER APPLE: Thank you. 2 Commissioner Watkins. 3 COMMISSIONER WATKINS: Thank you, Madam 4 Chair. Ms. Willis, on page 3 of our backup, I read on the 5 middle para,apb the majority of the properties located 6 within 500 feet of this property are rental, multi-family 7 type dwelling units. Is that not an error judging by the 8 map that's on the screen? 9 MR. REICHHART: Yes. 10 COMMISSIONER WATKINS: Just sLmply to make 11 clear. Thank you very much. 12 COMMISSIONER APPLE: commissioner Roy. 13 COMMISSIONER ROY: YOU stated that the 14 maxh,num units that could be built on this properD' is 222 5 under the NRMU designation. The applicant, as I read in 16 my backup, has a significantly higher number than that. 17 So tonight we are not considering that issue. We are only 18 considering the NRMU; is that correct? 19 MS. WILLIS: That is correct. Tonight 20 before ~ou is a straight zoning change, NR-2 residential, 21 proposed NI~MU-12 zoning change request. Yes, sir. 22 COMMISSIONER ROY: Thank you. 23 COMMISSIONER APPLE: There are no more 24 questions. Thank you. 25 MS. WILLIS: Tharlk you. 1 2 3 4 5 '6 7 8 9 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 . Page 127 COMMISSIONER APPLE: IS the applicant present? MR. RUSSELL: Yes, ina'am. My nalne is Robert Russell. I'm at 6231 Berry Hill in Dallas, Texas. · . We have applied for a zoning change on this property. It's approximately 18 and a half acres. And as Tiffanie has just told you, it's bordered by single-family and multi-family to the west and south, as well as Mack Park which is there below us to the south. The property is heavily wooded. And in the plan thru we have proposed with the City, we have kept approximately 75 percent of the trees that are there. We feel like that that's an important part of the property and we've attempted to keep as many of those trees as possibly. A lot of them are over 50 years old and those are all tagged and marked on a survey for us. This property is very close to the employment government center that you see down Audra Lane and on the south side of McKinney Avenue where the new govenmlent centers are located. As well as on McKinney Avenue, there's also the Food Lion at the corner that's being turned into government offices, as well. This area is going to continue to need additional housing. It's an area that has, we believe, high use for housing for the government center that's coming and is akeady in place. Page 128 1 They also have the occupancies of the properties there 2 located nearby remain rather high and we feel that there 3 is a need for additional housing in that area. 4 This housing is not subsidized. We feel 5 that multi-family is the best use for the property because 6 of its relatively small size and because there's only one 7 entry into the property and that is off of Audra Lane. 8 There is not a flow-through street. 9 The property was zoned Agricultural until l0 the Plan was taken in earlier this year. It's my 11 understanding that it was, along with several other 12 properties, defaulted at sac. ^nd we believe that the 13 best, as t said, we believe that the best use of the 14 property is multi-famiiy. We also agree with Ms. Willis' 15 calculation of 222 units and that would be thc maximtml we 16 would ask for. 17 We've had a neighborhood meeting in 18 September. We had excellent turnout and we had excellent 19 suggestions from the neighborhood and we have attempted to 20 respond to those comments and complaints and suggestions 21 in the following manner. We're down to 222 units which we 22 believe is correct. We have changed the plan to have only 23 r~vo-story buildings. We do not have any three-stou 24 buildings. 25 One of the bi~egest complaints that we heard Page 125 - Page 12 ?LANNING AND ZONING COMM][SSION 12/4/2002 Attachment 6 1 was that we were too close to the single-family homes at 2 the back of the property along Paisley and Mack. as well 3 as Lon~mneadow, and we have proposed to increase the buffer 4 zone from ten feet to 25 feet along those three sides. In 5 addition to that, we would provide an eight-foot fence. 6 The eight-foot fence would be moved eight feet, at least 7 elg.ht feet on to our property and our residents and their 8 peus could not get in that eight-foot buffer zone between 9 the fence and the neighborhood. That would cut down on 10 noise, trash, having pets at your backyard, and having 11 people in the back. 12 One of the other things that was suggested 13 was that the trash pickup was a problem on properties like 14 this because they're conunercial and sometimes their trash 15 is emptied in the middle of thc night. And we have 16 suggested and would go to a compactor system where we 17 would pick up our own trash with a maintenance man and 18 bring it to the front of the property so it would be the 19 furthest point away from the residents. Thank you. 20 COMMISSIONER APPLE: Thank you. Is there 21 anyone in the audience who would like to speak in support 22 of this Agenda item? 23 Mm sMrr~{: I would. I live at 706 -- 24 COMM£SSIONER APPLE: YOur name, sir? 25 MR. sMrm: David Smith. Page 130 1 COMMISSIONER APPLE: Yes, sir. 2 MR. SMITH: And like he says, we've got 3 nice apartments already. They don't bother us and I've 4 owned the property ever since 1981 there and it's been in 5 my wife's family, all the property since early '50's or 6 the late '40's. My wife's, like I said, family owned the 7 property. Like he says, I've got no gripes about the 8 apartments and I'm the only house that's facing the 9 apartments. So all the rest of them is the back of the 10 apartments, their house. But like I said, my house does 11 face right in the very center of it. Thank you. 12 COMMISSIONER APPLE: Thank you, sir. Is 13 there anyone else who wishes to speak in support? t have i 14 a number of cards that wish to speak in opposition. Eric 15 Janssen. 16 MR. JANSSEN: Thank you, Madam Chairwoman 17 and Commissioners. I appreciate being here tonight. Eric 18 Janssen, I live at 413 Fox Creek Court, within 500 feet. 19 .. There's a couple of pertinent facts that I 20 placed on the letter before you. And I know that them 21 arc several different ~oups here this evening, all very 22 interested, and most have been able to stay this late, who 23 also are opposed to rezoning this property NRMU-12. I[ I 24 could ask all those opposed to please stand, I'd ~25 appreciate it. ?LANNING AND ZONING COMMISSION 12/4/2002 Page 131 I COMMISSIONER APPLE: If' you'd please 2 address the Cmmnission. 3 MR. JANSSEN: Yes, ma'am. I'm sorry. 4 COMMISSIONER APPLE: Thank you. 5 MR. JANSSEN: There are homeowners who back 6 up to The Fountains AparUuents which were akeady zoned 7 NP~'~U-~a and these apartments were built directly behind 8 these homes. There's a speaker here for that group. 9 There are speakers here who abut this site on all sides 10 who would like to speak. There's a representative of the 11 Lee Elementary P-fA who would like to speak, a teacher from 12 the PTA. ~ don't know if the D£SD is here tonight. And 13 then there are a fe~v more other homeowners in the area. 14 Each one has a unique perspective on the issue and they 15 would each appreciate three minutes, while at the same 16 time trying to make the meeting go as quickly as possible. 17 If I may point out a couple of things 18 regarding the staff report. As the developer did mention, 19 there were 85 people who showed up on just a couple of .20 days notice at the site. Most were opposed before the 21 meeting. By the end of the meeting, I think the staff 22 will report to you that they were all opposed. I'd like 23 to point out that the Mack Place Apartments, I think it's 24 akeady been mentioned, have also taken a position of 25 opposition. Page 132 1 I'd like to point out that the diversity of 2 housing in the City certainly is necessary and it's 3 appropriate, and the Planning Development Code has 4 stipulated that. I believe in the planning process. I 5 was told by Mr. Robert Reinard today that in the 6 development process, multi-family was cited along McKinney 7 Street. It was anticipated for that growth, mostly on the 8 side intentionally for that reason. On the north side 9 from McKinney all the way up to almost to Mingo and to the 10 raikoad tracks is all scheduled for single-family 11 neighborhood infill. That's what we would like to see it 12 stay: 13 The percentage Of 52 percent, in actuality, 14 I believe the number is actually higher. On the original, 15 on the computer screen a moment ago a moment ago it showed 16 all the respondees on Longmcadow Court as being in a gray 17 coding. In fact, almost ever'y single one of those have 18 submitted their reports and they are all opposed. I have 19 copies of those. So I think that was probably just an 20 over~ight. 21 On my letter I'd like to just read into thc 22 record thc points that I made on that letter, and that is 23 the business about thc zoning along McKinney is 24 appropriate but zoning a lot of multi-family into the 25 housing area north of McKinney is not appropriate. Page 129 - Page Attachment 6 i NRMU-I2 zoning, straight zoning tonight without platting 2 means that the developer, while they state intentions for 3 one purpose at this meeting, could change that to some 4 other purpose, and there are a lot of other uses for NRMU-12. Thc site has 52 single-family homes within 200 6 feet. The value of those homes is $4.8 million. The 7 elementary school is within 200 feet and there's not 8 currently an elementary school in this City that has 9 hundreds of apartments within 200 feet. I0 I will respect the three-minute bell and I will entertain any questions or let the other speakers 13 COMMISSIONER APPLE: Thank you. 14 MR. JANSSEN: Thank you very much. 15 COMMISSIONER APPLE: K~n Cryder. 16 MR. CRYDER: My name is Ken Cryder. I live 17 at 414 Mack Drive. We've lived there for about 12 years 18 since this neighborhood has built. It has been a nice 19 peaceful neighborhood, a quiet neighborhood, and now we've 20 got apartments moving in all around us. Well, you know, 21 like you say, this is our most important value is our 22 home. We put evm-ything we've got into our home. When 23 these places move in like this, it devaluates our home. 24 So what are we supposed to do with that extra money we've 25 lost.'? Just suck it up and go on about it? You know, the Page 134 1 family people are what pays most of the taxes, the family 2 homeowner. 3 And I just don't think it's right for the 4 apartments to come in here and degrade our homes and take 5 our values down when they shouldn't go down. Thank you. 6 COMMISSIONER APPLE: Thank you. Roman 7 Sternprok. § MR. STEMPROK: Hello, cvm'ybody. My name 9 is Roman Stemprok and I live at 2121 Longrneadow Street. 10 And I'm the neighbor of The Fountains Apartments which 11 akeady were built a couple of ),ears ago, and I bought my 12 house five years ago and basically so I can compare before 13 and after. Before I used nay property, my backyard and I 14 had a basketball court and I just played basketball once 15 in awhile there. It was very nice. Then The Fountain 16 apartment complex was built and when I go to my baekyard, 17 then I pick up trash, beer cans. coke cans, and garbage 18 bags once in awhile, cigarette packs. So that's an issue, 19 and I don't usc my backyard, my property as much as 20 before. 21 Then also there is noise. It's not a 22 social noise, just real noise Thursdays, Fridays, 23 Saturdays, parties. So that's also what wakes me up. 24 Then there's basically a large building just maybe 15, 20 25 feet across the fence. And, again, it has a lot of PLANNING AND ZONING COMMISSION 12/4/2002 Page 135 i windows and so I have to keep my blinds closed ail the 2 time. So my life basically changed having now the 3 apartment complex built next to my property. So that's 4 basically just my feelings. 5 .. And then there is some collected 6 infonnatlon from the rest of the people nei~boring the 7 apartment complex. And, for example, Dickson's, 8 three-story looks into their yard;' Watts, lost all 9 privacy, reported people using binoculars looking in their 10 windows; Guttierez, she reported people hollering at her 11 children in her own backyard; Rm-non, attempted to sell 12 home, couldn't and refused to give it away; Davis, dog put 13 to sleep over a problem with apartment dweller; Davison, 14 owner could not sell; Route, could not sell. So those are 15 just some notes from the rest of the people neighboring, 16 you know, the apartment which was built two years ago. 17 That's al1. 18 COMMISSION'ER APPLE: Thank you, sir. 19 MR. STEMPROK: Okay. Thanks. 20 COMMISSIONER APPLE: Mike Steinel. 21 MR. STEINEL: My name is Mike Steinel. I 22 live at 705 Mack Drive which is one of the properties 23 right there that will abut this new development if it goes 24 in. 25 Rather than speak to all these issues that Page 136 1 everybody's concerned about which is privacy, noise, 2 light, pollution, trash, traffic problems which will be 3 severe because of the limited access. One of the nice 4 things about this little neighborhood is that there's only 5 a couple of ways in so it's pretty quiet. 6 But rather than speak to that, I'd like to 7 speak of the over-arching issue which to me is if this 8 zoning is changed, it will basically benefit one person or 9 one group of people and that's the developer, and will i0 adversely affect the 50-some homeowners right on the 11 perimeter and, I don't know, a couple of other hundred 12 people in that neighborhood which is primarily owner 13 occupied. 14 My wife and I bought the house four years 15 ago and we enjoy the neighborhood. This rezoning is not 16 compatible with the neighborhood. It isn't compatible 17 with what happens on the north or the east, to most of the 18 area on the south and to much of the area on the west. 19 And I don't think that it's in the spirit of the zoning :20 plan whJ. ch says, which was stated ~ 'minute ago, which 21 vigorously protects existing neighborhoods. 22 Just one thing to clarify, the builder who 23 said he responded to suggestions, one of the suggestions 24 and one of the requests was that the fences that were 25 destroyed on this area when the land was cleared I think Page 133 -Page 13( 2 3 4 5 6 7 8 9 10 1 12 13 t4 15 16 17 18 19 20 21 22 23 24 25 Attachment 6 18 months ago, awhile back, would be fixed. And he agreerl I to do that in September. I checked with the landowners 2 right the,'e and they're still not fixed. I appreciate 3 4 your time. COMMISSIONER APPLE: Thank you, sir. Dave 5 Rockwell. 6 MR. ROCKWELL: Thank you. My name is Dave 7 Rockwell. I live at 505 Mack Drive and I abut right next 8 to the property myself. I've lived in my house for ten 9 years and it's the only investanent I have. Six years ago, 10 I lost my leg and I damn near lost my house. And I 11 managed to keep it and I struggled though, and everything 12 I got is in my house, and I don't want my house to devalue 13 because they're putting apartments in there. 14 I had a red oak tree planted in my backyard 15 about a foot from behind my fence and not only did they 16 take the red oak out, they pulled my fence down. They 17 hauled it off. It's do~vn there at the City dump right ,18 now. When you go talk to somebody about it, they're doing 19 this, everybody is pointing fingers but it doesn't resolve 20 the issues of the fence. My backyard now is 18.5 acres 21 and I kind of like having that 18.5 acres as a backyard 22 and I appreciate it but, you know, I'd like to have my 23 fence back and my red oak. It didn't belong to them. It 24 was mine. I guess that's ali I've got to say. Thank you. 25 that the reasons for being in opposition to the rezoniag PLANNING AND ZONING COMMISSION Page 139 would be fully understood and acknowledged. I can only appeal to your better judgnnent and put yourself in our place, how you would feel. I know this may go on deaf ears. Y'all have heard this. You're tired. It's very important to us and we can only appeal to you that you would understand our position tonight. Thank you. COMMISSIONER APPLE: Tllank yOU. April Boykin. MS. BOYK[N: Good evening, Madam Chair and members of rite Commission. My name is April Boykin. I reside at 709 Hettie Street here in Denton. I come to you tonight as a member and representative of the Lee Elementary PT^ ~oard with the intent of proposing a resolution to the rezoning of land in our neighborhood, and I have provided you-all with a copy of that resolution. I ask that this be entered as an official document into tonight's minutes and transcripts. WHEREAS, the Lee Elementary Parent/Teacher Association represents 556 students, 80 teachers and staff, and hundreds of parents and residents of the Lee neighborhood; and WHEREAS, a developer is attempting to change the zoning of neighborhood single-family lands at 700 Audra Lane into multi-family zoning for purpose of building up to 300 apartments; and Page 138 ] COMMISSIONER APPLE: Thank you. Judy 1 2 Cowling. 2 3 MS. COWLIXO: Thank you. Judy Cowling, 609 3 4 Mack Drive. And my husband and I both, I mean, we abut 4 5 the property in discussion tonight. My husband and I have 5 6 lived there for mn years at 609 Mack Drive and we 6 7 consider our home our major investment, as all others have 7 8 said. I hate to bore y'alk I'll make this quick. 8 9 We've enjoyed our environment. We're not 9 10 opposed to growth but we feel that by building a 10 1 multi-family dwelling directly behind our liome would 11 .2 greatly bring ~.bout the devaluation of our property. I'm 12 13 sure y' all could all attest to that. Not to mention our 13 14 backyard privacy, how it would be invaded. We do not 14 15 believe that anyone would like to have a two or 15 16 three-story building peering over their fence at them. 16 17 Over the last few years, it has become 17 i8 extremely difficult, not to mention almost impossible to 18 19 pull out from our home on to Mack Drive and on to McKinney 19 20 with the existing traffic. If a multi-family facility is 20 21 allo~ved to be built on that property in question, it would 21 22 again it~c~.,~,~ ;.he traffic tremendously in that area. 22 i 23 We also have a concern over added noise and 23 24 security in that area. By saying this, I can only hope .24 25 25 12/4/2002 Page 140: WUEP,~^S, the land of the attempted rezoning sits across the street and within 250 feet of the front doors of Lee Elementary School; and WHERE~,.S, hundreds of new apartments would do nothing to benefit Lee students, may actually cause significant additional safety hazards for students walking to Lee Elementary, and may create significant additional demands on the educational efforts of the school. BE IT RESOLVED, the Lee PTA strongly supports the preservation of the current single-family zoning of the land at 700 Audra Lane. AND BE IT FURTHER RESOLVED, the Lee PTA strongly opposes any attempts to rezone land at 700 Audra Lane for the purpose of constructing hundreds of muki-family aparmtents. AND BE IT FURTHER RESOLVED, the Lee PTA strongly urges the Mayor and City Council members, Planning and Zoning Corrm~issioners, and all City staff to deny any attempts at rezoning changes that would allow apartments or other high density, high {r~'ffic uses of the land near our school. The motion to accept this resolution was voted on and unanimously passed at our general meeting held Sept~tber 10th. In addition, we have collected three pages of signatures from family members in the surrounding Page 137 -Page 1 2 4 5 6 7 8 .10 I1 12 13 14 15 16 17 18 :19 2O 21 22 23 24 25 1 2 3 4 5 ? g 9 10 11 Attachment 6 12 13 14 15 6 17 18 !9 20 22 23 24 25 Lee neighborhoOds who oppose the rezoning. I would like to add that the intersection 2 located at Paisley and Audra Lane, just west of the school 3 campus, will suffer dramatically increased traffic with an 4 addition of some 250 plus vehicles. Because I, along with 5 many other families live west of Audra Lane, my child, as 6 a walker, has to cross that intersection two times a day. 7 I would like to publicly thank our crossing 8 guard, Mr. Blagg, who is in his 80's and has done a 9 tremendous job over the years in keeping our children safe 10 when crossing at that intersection, because I have 1 personally seen a vehicle pass right through there without 2 stopping at the stop signs. 13 However, with an addition of 250 plus 14 vehicles, I don't know that even Mr. Blagg would be able 15 to handle the traffic while helping our children cross the 16 street. In fact, I suspect a traffic light will have to il7 be installed to ensure adequate regulation of the traffic 18 flow. 19 Therefore, Commissioners, I beg all of you 20 to hear us loud and clear. We do not want this 21 development to take place in our cormnunity. I thank 22 you-all for inviting me to speak this evening on behalf of 23 everyone from the Lee Elementary School and co~mnunity. 24 COMMISSIONER APPLE: Thank yOu. Joy 25 Page 142 Robinson. 1 MS. ROBINSON: Madam Chair person, I'm Joy 2 Robinson. I reside at 409 Fox Creek Court which is withir 3 the 500 area. I also am a teacher at Lee Elementary. I'm 4 also a parent of students at Lee Elementary. 5 I have been a resident in Denton for almost 6 40 years~ I have been a resident in my home for ten of 7 those years. And as such, I would like to implore on you 8 to keep our neighborhood a neighborhood. In the ten years 9 that I've lived there, three apartment complexes have come 10 in. It has devaluated our homes. It has caused 1 increased problems at the school with the mobility of the 2 children moving in and out. We already have a socially -- 13 a low socio-economic population at our school and putting 14 more apartments in that area would only further that 15 problem. And so we implore that you please listen to us. 16 Hear Ms. Boykin. 17 I was going to speak on traffic myself. 18 It's awful and we do not need more people coming in with 19 their traffic and their noise messing up our 20 neighborhoods. Thank you. 21 COMMISSIONER APPLE: Thank you, ma'am. 22 Kiso Zmnora. 23 MR. ZAMORA: Hello. My name is Kiso Zamora 24 and I live at 2009 Paisley Street within 300 feet from, tie ,25 ~'LANNING AND ZONING COMMISSION 12/4/2002 Page 143 proposed zoning change. I bought my home in 1988 because I was starting a family and I wanted my son to attend the ethnically diverse Robert. E. Lee Elm~entary School. I chose a small, quiet neighborliood where evco'onc knew everyone, whm'e kids were playing in the empty lots behind the house we were looking at. When we were looking at the house, .a neighbor stopped by and said we'd be happy there. He welcomed us to the nei~borhood. That alone helped us to decide. I loved and still love tiffs neighborhood. We bought this house and the only worries we had were an occasional speeding car or an occasional overran stop sign. Sadly, this is no longer the case. I've seen two apartment complexes built nearby. I've seen the Ann Windle School built. And while they widened Audra Lane for a small stretch, i~ does little to alleviate the increased traffic. Audra Lane has even more traffic now that it connects to MJngo Road. This increased traffic spills on to our street and our streets, our neighborhoods are not as safe as they used to be. I understand growth and increased traffic, but an apartment complex this close will increase traffic exponentially. I worry what another apartment complex will do to us. We have over 12 children under the age of 14 on Page 144 Paisley Street. Not only will we have to contend with increased traffic but we will be faced with a transient population right in our backyards. I don't want that. I mentioned living here wlzile two apartment complexes were built nearby. I'm talking about apartments off of McKinney Street, not in the middle of a residential neighborhood, not apartments where second-story tenants can look into my neighbor's backyards. This developer bought this land and knew of its zoning beforehand and knew of the surrounding homes that he wishes to disrupt. I'm asking you to please deny this developer's attempt to change the zoning on the neighboring land. Please deny his attempt to overcrowd our streets. Please deny his attempt to build a fifth apartment complex in the short distance to our houses. Please help our little conm~unity of lower to middle income families keep from becoming another multi-family cement city. Thank you. COMMISSIONER APPLE: Thank you, sir. Jason Pitzer. MR. PI'rZER: Hi. My name is Jason Pitzm'. I live at 2009 Longmeadow Court which is right abutted to the property that they're wanting to develop. Everybody has pretty much stated everything that can be said about this so I'I1 just bc realty quick. Page 141 - Page Attachment I I bought this house like a year and a half ago. This is 2 my first home. I'm starting a fanfily here. We moved here 3 because Lee Elementary is right there. It's a good 4 school. 5 And now a developer wants to come in and 6 lower my property values, add more traffic, make it 7 impossible for me, if this does happen, to sell my house 8 and get what I've got into it now. I've got 30 years left 9 to pay off this thing. You know, I'd like to keep it 10 where I can, you know, enjoy my neighborhood. That's why : 11 we moved in. It's quiet. It's close to a good school. I 12 want to start a family and I'm not going to be able to do 13 that if they put aparm~ents, two-story apartments 20 feet 14 from my backyard, in addition to their wrecking of the 15 fences and everything else that they've talked about. So 16 thank you. 17 COMMISSIONER APPLE: 'rhank you. Connie 18 Bell. 19 Ms. BELL: ?hank you, Madam Chairman. The ,20 one thing that was not addressed, that Mr. Russell did not 21 address was drainage. I don't know if you am fanfiliar 22 with the drainage in that area but I live at the end of 23 the hill, I live at 807 Mack Drive. I live at the end of 24 the hill. I've got drainage now all the time. Water 25 comes into my garage every time it rains. I'm worried Page 146 i about the drainage in the area. What is his plan on that? 2 Does anybody have his plan on that, on the drainage? 3 COMMISSIONER APPLE: Mr. Reich.hag. 4 MR. REICHHART: NO plan has been submitted 5 at that time to address the drainage issues. 6 MS. BELL: when do you address that, at the 7 preliminary plat? 8 MR. KEICHHART: Yes, ma'am. 9 MS. BELL: okay. Another thing, we have 10 been, we have heard that the 16-foot easement that goes, I 1 we're right at the comer of the property, that that might 12 possibly be used as a walk-through to Lee Elementary. Is 13 there any truth in that? 14 MK. REICHHART: That hasn't been 15 investigated. But what type of easement is it? 16 MS. BELL: It'S a utility easement. It's a 17 utility and drainage. It doesn't drain anything but it's 18 supposedly -- I mean, it drains into my garage. 19 MR. REICHHART: On face value, unless the 20 easement was identified as a public access easement, it 21 wouldn't normally be used for sidewalks or -- 22 MS. BELL: Or a walkway. Okay. 23 MR. REICHHART: It doesn't prevent people 24 from walking in it. 25 MS. BELL: Another thing, we're right PLANNING AND ZONING COMMISSION 12/4/2002 Page 147 1 across from the Lee Elementary driveway. I leave about 2 7:30 in the morning. Sometimes at the end of Mack Drive, 3 I wait for five or ten minutes reset out on the road on 4 to McKinney, to turn rigllt. The ones that tn. tm left wait 5 lot~ger than I do. And I'm just concerned with the traffic 6 because they're going to be driving around to drop their 7 children off at school. 8 Those are my concerns and I would like for 9 somebody to get back with me on the drainage issue because 10 I believe that's going to be an issue. Thank you. 1 COMMISSIONER APPLE: 'thank you, Ms. Bell. 2 Cathy Huffer. 13 MS. HUrFF.~: My name is Cathy Huffer. I 14 live at 2000 Longmeadow Court. I appreciate the ability 15 to come and speak to y'alL 16 I was a little bit confused when Tiffanie 17 Willis came up on the map she gave. I have a fax showing 18 that I sent mine in on November 1 l th and that it did get 19 tlu:ough showing that I was opposed. And so some of the 20 gray ar~as, I know you w~re addressing that, one of the 21 major on~ is my property in there. Ms. Willis, can you 22 put this on for me up there? I can work my fax. I just 23 can't work that. 24 MR. REICHHART: If you'll allow me a second 25 to address that. I revised that map personally and I did Page 14g. 1 miss some properties on Lon~m~neadow. There are a nmnber of 2 properties on Longmeadow that all should have b~n red. 3 We were trying to update it. The original map had it. We 4 were trying to update it before the meeting to get it into 5 the PowerPoint presentation. And if you click on one 6 property and inadvertently click on it again, it 7 disappears. So that was my m-for. 8 MS. HUFFER: okay. So 2000, as you can see 9 fight down there, is a big amount of property and I did, I 10 am supposed to that. I want that known in there. 1 I chose that property a total of eight 2 months ago. I guess this is going to have a big effect on 13 the value of my propm'ty. I chose it because it was in a 14 cul-de-sac. I chose it because of the neighborhood. I 15 chose it because it was quiet. And all the reasons t 16 chose it for are going to be eliminated. A lot of people 17 here have lived there ten years and have built up some 18 value in their home. I haven't even had time to do that : 19 before someone is going to take that away. So I'd like 20 you to consider that and also please b6 ~iware of all the 21 other areas that we're opposed that aren't on the map 22 there. Thank you. 23 COMM[gSIONERAPPLE: Thank you. Tom Silva. 24 M~. SILVA: FBI Tom Silva. I live at 2201 25 Longmeadow Street and have lived there for about 15 years. Page 145 -Page 14: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 8 19 2O 21 22 23 ~24 25 Attachment And I wanted to just state my opposition in unison with 1 everybody that's here. 2 We've, in tile 15 years we've been there, 3 we've seen a lot of things happen itl our neighborhood. 4 We've seen the expansion of the jail. We've seen the 5 addition of a garage, not a garage but a service station 6 on the comer, a lot of office sites, a new courthouse. 7 And not that we're opposed to change but we don't need 8 anything else to add to the confusion and the congestion 9 in the neighborhood. 10 One of the things that I'm definitely 11 opposed to is the fact that it takes me five to ten 12 n-dnutes to get out of my neighborhood in the morning when 13 I need to go to work. And you're asking us to just go 14 ahead and stick in another 175 to 200 cars added to that 15 mess that it akeady takes to get out of the neighborhood. 16 And I realize that there's been all kinds of surveys and 17 stuff. I was listening awhile ago as you guys were 18 talking about all the surveys on Carroll and stuff. Those 19 people that live in our neighborhood, those pr, opic that 20 drop their kids off at Robert E. Lee know what a mess it 21 is to get in and out of this neighborhood, and it's going 22 to be worse if you go ahead and allow this property to be 23 built. 24 With that 41 percent of the propt~'y owners 25 Page 151 I'm a single woman. And my house is 517 which is -- does abut the property. And so when I look out my bedroom window, I see my fence and on the other side is this property and I'm not real.crazy about the idea of having apartments on the other side. ~Vhen we had this neighborhood meeting, some man was talking about the apartments, The Fountains Aparm~ents and people with binoculars looking in. And, you know, that doesn't make me feel very secure. I feel very safe in Denton. I feel very safe in my neighborhood. I walk around the neighborhood. See kids playing. And it's very important and I just would like to preserve that. Thank you. COMMISSIONER APPLE: Thank you. Calvin Manuel. He wishes to register his opposition. Timothy Henderson. Okay. We'll register him as opposed. Those are all tile cards I have that wish to speak. Is there anyone who did not fill out a card that would like to speak? If you'll come down and give your name and address, please. MR. W~OHT: Thank you. My name is David Wrigl:t. ! live at 307 Jagoe which is not near there. I just wanted to -- actually, I was here for the West Oak meeting but my wife teaches at Lee. I just want to make a couple of comments. Page 150 1 that they talked about awhile ago, you know, we've been 2 here for awhile. I love Denton. This is my home. And I 3 want to do what I can to go ahead and stay here as long as 4 I can. But with my property values going down and the 5 addition of this facility going in, I don't really think 6 we need it so I'm just asking you to search your 7 conscience and vote against this. And, you know, that's 8 about all I've got to say. Thank you. 9 COMMISSIONER APPLE: Thank you, Mr. Silva. 10 Joel Diaz. 1 MR. DIAZ: I'm not a good speaker but my 2 name is Joel Diaz and I just bought the house at 2004 13 Paisley. And if I would have known they w~re going to 4 build some apartments behind my house, I would not buy it. 15 That's all I have to say. Thank you. 16 COMMISSIONER APPLE: Thank you, sir. 17 Justin Quinn. 18 MA. QU~NN: madam Chair, I'd like to defer. 19 A lot-of the issues have been talked about. 20 COMMISSIONER APPLE: Thank you. We'll just 2 t weigh in that you arc opposed. 22 Ma. QU~NN: Thank you. 23 COMM~SS~O.','E~ APPLE: Elizabeth B-A-T -- 24 MS. BATOR: O-R. Elizabeth Bator, 517 Mack 25 Drive. I moved to Denton in tile fall of 1983 by myself. PLANNING AND ZONING CO~SSION 12/4/2002 Page 152 1 I'm opposed to this site for several reasons. One, as was 2 cited earlier with the West Oak homes, Denton is 60 3 percent rental property and 40 percent residential, 4 roughly. And they mentioned that this is the worst ratio 5 in the State and that the City planned on rectifying that 6 to improve that. And if that is a goal of the City, I 7 think approving this complex would be a very terrible way 8 to get started on that. Also, I do have, similarly to the West Oak 10 issue, I applaud you-all in your decision to go with 11 keeping the consistency of the nei~h, borhood. And I th/nk 12 that's what should be done here. This is all residential 13 neighborhoods and the current zoning is residential. I 14 don't think that anybody needs to change that, you know, 15 on the behalf of one builder. So as you were consistent 16 in the 'Crest Oak area, I think we need to be consistent 17 with the area around Mack Park and Lee Elementary. 18 Another point I had is the concerns about 19 the existing infrastructure, the ability of the existing 20 streets to handle the traffic. I'm snre you-all know how 21 McKinney is. You know, it's just two lanes, non-divide& 22 there's no turn lanes either way, very, very congested. 23 Mack Street which is where Lee Elementary is on the east 24 side is just a two-lane street. And adding 250 units and, 25 you know, assuming they're married or whatever, I mean, Page 149 - Page Attachment 6 rage 1 potentially 500 vehicles is a lot of traffic to be adding 2 to that small area with such a small and constricted 3 entrance point. Alt the traffic coming to and out of that 4 could be -- I mean, ii you had a problem with the Carroll 5 turn into that bank. I mean, you could -- there could be 6 thousands of cars coming in and out of that complex daily 7 and they would have to go around the site and come down 8 Mack, which is just a two-lane street, or go down Audra 9 and then get on to McKinney which, as we know, I mean, if 10 you want to try to drive to Wal-Mart from the west side of 11 town, it's pretty bad. 12 So, anyway, I just would encourage you-ali 13 to take those into consideration, the consistency of the 14 neighborhood and your conu'nim~ent to preserving Denton i 15 neighborhoods, as xvell as the safety of the children at t 6 Lee Elementary with the increased traffic and what that 17 burden would do to the school district. Thank you-all for 18 your time. 19 COMMISSIONER APPLE: Thank you. Is there 20 anyone else in the audience who wishes to speak that did 21 not fill out a card? 22 MS. REESE: My name is Kelley Reese. I 23 live at 2008 Paisley. And in the spirit of what was just 24 said, this property is already zoned for single-family 25 residents. And to maintain the integrity of that and the Page 154 1 integrity of our City, I would like to see democracy 2 actually work. You have the citizens of your City here 3 asking you what we would like to have happen, for you to 4 simply stay with the planning that you have in place. We 5 have someone from the outside whose come in and asked us 6 to change that and I'd like to see the voice of the people 7 actually have a say. That's all. 8 COMMISSIONER APPLE: Thank you. Is there 9 anyone else who did not fill out a card that wishes to i0 speak to tiffs item? All fight. I have a number of cards 11 that did not wish to speak but do wish to register ! 2 opposition. And just so that they'll be in the record, I3 I'1i quickly read them. Kathy Hootman, 2000 Paisley. 14 J.S. Adams, 1719 Oak Tree Drive. Micki Wyatt. 801 Mack 15 Drive. Carol Soph, 1620 Victoria. Kevin and Corinia !16 Maxson, 1904 Paisley. William Ca[fee, 701 Mack Drive. 117 James Renfro, 2104 Double Oak Street. Robyn Mullendore, il 8 1139 Oa'khurst. Beverly Hock 705 Mack Drive. Bryan 119 Hartlit'~e, 1920 Paisley. Amanda Hartline at that same 20 address. Eric Kartchner, 2018 Longmeadow. Kevin Rowland, 21 2023 Longrneadow. DarhyI Ramscy, 514 Mack. Bryan 22 Robinson, 409 Fox Creek Court. Elise Ridenour, 2205 West 23 Oak. Lilliana Wright. 307 Jagoe. Steven Friedson, 2205 24 West Oak. And Stephen Moore, 2014 Longmeadow Court. 25 Would the applicant like some time for Page 155 I rebuttal? 2 MR. RUSSELL: Conunissioners, Madam Chair 3 person, only a couple of small points and I'll get om of 4 your way. We have tried and would like to continue to try 5 and~ddress any issues that the homeowners have. And we 6 would like to be a good neighbor. 7 We would like to be there and make changes 8 that are appropriate and that ~ve can live with and that 9 they need. We understand the complaints about the noise, I0 the trash, the buffer between the single-family and the 11 multi-family and we want to work hard to make that work. 12 We think because we're in the back and we face away that 13 we can make it work for them without people looking in 14 their backyards and without the trash and the noise. 15 The only other point I'd like to make is 16 I've relied upon the City staff for traffic questions on 17 Audra Lane. Auclra Lane is designated a major north/south 18 thoroughfare and we had no comments in the -- that doesn't 19 mean we won't have any evidentially, but we've had no 20 comments from traffic as far as the number of cars coming 21 in and out and the traffic that Audra Lane can hold. 22 Thank you. 23 COMMISSIONER APPLE: Thank you. 24 Commissioners, do you have any questions? Commissioner 25 Roy. Page 156 1 COMMISSIONER ROY: would you share with us, 2 sir, are you the property owner? 3 MR. RUSSELL: There's a partnership and I'm 4 the general partner, yes, sir. 5 COMMISSIONER ROY: And would you tell us 6 also when you bought the prope~'y? 7 MR. RUSSELL: Approximately in January of 8 2002. 9 COMMISSIONER ROY: Thank you. l0 COMMISSIONER APPLE: Thank you, sir. I 11 will close the public heating at this time and ask for 12 comments from Commissioners. Conunissioner Powell. 13 COMMISSIONER POWELL: MOVe tO deny. 14 COMMISSIONER HOLT: second. 15 COMMISSIONER APPLE: We have a motion to 16 deny and a second. Any discussion? Vote, please. Motion 17 carries 7-0. 18 Please refrain from -- I know it's hard. 19 20 21 22 23 24 25 PLANNING AND ZONING COMMISSION 12/4/2002 Page 153 - Page 15fi ATTACHMENT 7 City of Denton Planning & Zoning Minutes December 17, 2003 ITEMS FOR INDIVIDUAL CONSIDERATION: Consider the following items and make a recommendation to the City Council: Rezoning of approximately 6.6 acres from Neighborhood Residential 2 (NR- 2) zoning district to Neighborhood Residential 4 (NR-4) zoning district. The sites were located approximately 350 feet south of Paisley Street, between Audra Lane and Mack Drive. Approximately 26 single-family lots were proposed. (Z03-0030, Laurel Oaks Developmem, Chris Fuller). Chris Fuller, Planner I, briefed the Commission on the request for the rezoning. Karen Mitchell, Mitchell Planning Group, presemed on behalf of the applicam. The public hearing was opened. Speaking in opposition were: Sandra Lewis, 2012 Lee Drive, Demon, Tx 76209 Cathy Huller, 2000 Longmeadow Ct., Demon, Tx 76209 Connie Bell, 807 Mack Dr., Demon, Tx 76209 Mike Steinel, 705 Mack Dr., Denton, Tx 76209 Justin Quinn, 513 Mack Dr., Demon, Tx 76209 Eric Janssen, 413 Fox Creek Ct., Denton, Tx Commissioner Mulroy stated the opponents needed to focus on zoning issues only and not platting issues. Dottie Palumbo, Assistant City Attorney, stated Planning &Zoning couldn't deny zoning based on what they may do with the other parcels. Comments need to be addressed to the specific property only. Commissioner Powell stated whether people live in 200 feet or a mile they have the same say. Kelly Carpenter, Director of Planning, stated notices that go out include a 500-foot courtesy notice and some people may still be in the 500 foot for future re-zonings. Karen Mitchell, Mitchell Planning Group, gave a rebuttal and requested that a decision be made and not postponed. The public hearing was closed. After discussion, Commissioner Johnson moved, Powell seconded to approve the request. The roll vote was as follows: Commissioner Johnson - aye; Commissioner Powell - aye; Commissioner Holt - aye; Commissioner Strange - aye; Commissioner Mulroy - aye; Commissioner Roy - aye; Commissioner Watkins - nay. Motion carried 6-1. ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON, TEXAS,. PROVIDING FOR A ZONING CHANGE FROM NEIGHBORHOOD RESIDENTIAL - 2 (NR-2) ZONING DISTRICT CLASSIFICATION AND USE DESIGNATION TO NEIGHBORHOOD RESIDENTIAL - 4 (NR-4) · ZONING DISTRICT CLASSIFICATION AND USE DESIGNATION FOR APPROXIMATELY 6.6 ACRES OF LAND LOCATED APPROXIMATELY 350 FEET SOUTH OF PAISLEY STREET, BETWEEN AUDRA LANE AND MACK DRIVE IN THE CITY OF DENTON, DENTON COUNTY, TEXAS; PROVIDING FOR A PENALTY IN THE MAXIMUM AMOUNT OF $2,000.00 FOR VIOLATIONS THEREOF, A SEVERABIL1TY CLAUSE AND AN EFFECTIVE DATE. (Z03-0030) WHEREAS, Laurel Oaks, Ltd. has applied for a change in zoning for approximately 6.6 acres of land located approximately 350 feet south of Paisley Street, between Audra Lane and Mack Drive and more particularly described in Exhibit "A" attached hereto and made a part hereof as Exhibit "A" (the "Property") from Neighborhood Residential 2 (NR-2) zoning district classification and use designation to Neighborhood Residential 4 (NR-4) zoning district classification and use designation; and WHEREAS, on December 17, 2003, the Planning and Zoning Commission recommended approval of the requested change in zoning; and WHEREAS, the City Council finds that the change is consistent with the Comprehensive Plan; NOW, THEREFORE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The zoning district classification and use designation of the Propertyis hereby changed from Neighborhood Residential 2 (NR-2) zoning district classification and use designation to Neighborhood Residential 4 (NR-4) zoning district classification and use. SECTION 2. The City's official zoning map is amended to show the change in zoning district classification. SECTION 3. If any provision of this ordinance or the application thereof to any person or circumstance is held invalid by any court, such invalidity shall not affect the validity of other provisions or applications, and to this end the provisions of this ordinance are severable. SECTION 4. Any person violating any provision ofthis ordinance shall, upon conviction, be fined a sum not exceeding $2,000.00. Each day that a provision of this ordinance is violated shall constitute a separate and distinct offense. SECTION 5. This ordinance shall become effective fourteen (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, a daily newspaper published in the City of Denton, Texas, within ten (10) days of the date of its passage. PASSED AND APPROVED this the __ day of ,2004. EULINE BROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY BY: ~ PAGE 2 ' , , Exhibit A Oes~r~pUon T~. ,~ $.64 ^ctes ReD.da of Denton Count'~ T=~ .... ~_[~o ~.vo~ZlgLp 5~, Re~ Property ~e~2~ ut O 1/2' the so~t co~ of o &o~t of ~ ~8-r~--, ........... trot ~ ot V~e 1~8, Po~ 2~ Deed Recor~ of ~nton Oounty, Ta~ e~ ]n t~ n~th l~e of o coiled Vo~ 885, Pe~ 830, Deed Re.fda of ~nton Catty, Texas; T~noe North O0 O~eos wlth the west fine of sold Smith tract, o dlet~ce of 164.75 feet to o 1/~ ~r~ rod fo~ et the ~rthweat oorn~ of ~o ~n tM n~th t~ of eo~d ~wning S~ve~ The~e North 69 De.eeo 05 Minutes 01 w~th t~ ao~ ~r~ ~ne, o ~e of 549.68 feet to ~ 1 ~ ~ron r~ found at the nort~t earner of sold ~]l~r trot ~d et the most ~ther~ ~r~eat of S~wl~ ~e ~, on odditi~ to t~ ~ty of Cobtnet F, Po~ 24T ~t R~rde of O~on Oo~ty, Text; The~ ~uth O0 O~ 28 Mi~es ~ ~ondl West wRh ~ e~t Gna of s~d ~ler tract and Tith ? wast line of ~ra treat: T~e ~uth 01 Oe~e~ ~ M~es 52 ~c~ East with t~ east r~e ct aa]d 6.991 a~e tt~t ~d with o w~t B~ of l~d Su~rwi~, ~aae 0~, o d~ta~a of 730~ fee~ to o 1/2' ~ped iro~ rod fo~d et the aouthe~t ~r~ of sold e.~l acre trot and Ot on i~er ~ of sold S~erw~ Ph~e T~ ~rth 87 tro~t and wlth o north fl~ ct ~ ~l~, Phase ~ o ~at~e of 274.~ feat to e 1/~ ~ped Iron r~ $~ ct the ack.est ~r~ of t~ ~re~ ~.~rlbe~ tract; T~noe ~th 01 Oe~e. ~ ~.~t. ~4 Seconds west. o dist~e of 715,2& feet to o 1/2' cO~eO iron ro~ of said ~er eo~t ~ In the ~rth ~e of ~old 6.901 a~8 troct~ Thence South ~ ~uth ~. dlsto~ of 272.&3 f~t to the P~T CERTIFICATION: I hereby oerUfy that l hove conducted an OoOurQte on the ground survey of the pren.Jm depicted hereon and deaoelhed In the legal description shown hereon d.{[. THO]dPSON ii R,P.L.$. No 4.857 Date ~ StYnV~Y I~ Olay AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: CM: February 17, 2004 Economic Development Department Michael A. Conduff, City Manager ~,r~ SUBJECT Consider approval of a resolution of the City of Demon, Texas calling a public hearing to consider establishing a reinvestment Zone VII for Fastenal Company; and declaring an effective date. BACKGROUND Fastenal Company submitted a request for tax abatement on January 2, 2004. The Economic Development Parmership Board reviewed the application at their January 15, 2004 meeting and recommend approval. Tax abatements can only be given to projects located within reinvestment zones. This resolution calls a public hearing to consider the establishment of Reinvestment Zone VII around the subject property. The public hearing notice will be published in the Denton Record-Chronicle February 21, 2004 edition for a March 2, 2004 public hearing. ESTIMATED SCHEDULE OF PROJECT If the establishment of Reinvestment Zone VII is approved, the proposed tax abatement agreement will also be considered at the March 2n~ City Council meeting. PRIOR ACTION/REVIEW The Economic Development Partnership Board recommends approval. FISCAL INFORMATION None. EXHIBITS Resolution Exhibit A - Property Description Exhibit B - Site Map Respectfully submitted: Linda Ratliff, Director Economic Development Department -1- S:\Our Docum~nts~R~olutions~04Wastenal R~investment Zone. doc RESOLUTION NO. A RESOLUTION OF THE CITY OF DENTON, TEXAS CALLING A PUBLIC HEARING TO CONSIDER ESTABLISHING A REINVESTMENT ZONE VII FOR FASTENAL COMPANY; AND DECLARING AN EFFECTIVE DATE. WHEREAS, the City has adopted by resolution a Tax Abatement Policy and criteria governing tax abatement agreements in accordance with Tex. Tax Code ch. 312; and, WHEREAS, the City has received a tax abatement request fi.om Fastenal Company; and WHEREAS, the City finds that it is in the public interest to call a public heating to consider the creation of a reinvestment zone for tax abatement purposes for the purpose of offering a tax abatement to Fastenal Company, in accordance with Tex. Tax Code §312.201; NOW, 'x~rlEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY RESOLVES: SECTION 1. The findings and recitations contained in the preamble of this ordinance are incorporated herein by reference. SECTION 2. The City Council hereby calls a public hearing and the City Manager is hereby authorized to give notice of a public hearing for the establishment of a reinvestment zone (Reinvestment Zone VID, comprised of the property located on approximately 43.653 acres at or near the intersection of Airport Road and Corbin Road, within the corporate limits of the City of Denton as more fully described in Exhibit "A" and as shown on the diagram as the area outlined in red in Exhibit "B," which exhibits are attached hereto and made a part hereof by reference (the "Property") for the purpose of entering into a tax abatement agreement with Fastenal Company for a project to be developed within the Property and this Reinvestment Zone and other eligible projects under the City's Tax Abatement Policy. At the hearing, the City Council will determine whether the improvements sought are feasible and practical and would be a benefit to the land to be included in the Reinvestment Zone and to the City after expiration of any tax abatement agreement entered into under Tex. Tax Code ch. 312. Notice of the public hearing will be substantially in the form of the notice contained in Exhibit "A". The public heating will take place on the 2nd day of March, 2004, at 6:30 p.m. in the City Council Chambers at City Hall at 215 E. McKinney, Denton, Texas 76201, but not until at least seven days after notice of this public hearing has been published in the Denton Record-Chronicle, a newspaper having general circulation within the City, and specific notices are delivered in writing to the presiding officer of the Board of Trustees of the Denton Independent School District, the Commissioners Court of Denton County, and to other taxing units, if any, that include in their boundaries the real property described in the attached Exhibit "A" in accordance with Tex. Tax Code §312.201. SECTION 3. This resolution shall become effective immediately upon its passage and approval at a regular meeting of the City Council of the City of Denton, Texas on this the 17th day of February, 2004, at which meeting a quorum was present and the meeting was held in accordance with the provisions of Tex. Gov't Code §551.001, et. seq. PASSED AND APPROVED this the day of ,2004. EULINE BROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY BY: Page 2 of 2 EXHIBIT A NOTICE OF PUBLIC HEARING PUBLIC NOTICE IS HEREBY GIVEN THAT THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS, WILL HOLD A PUBLIC HEARING TO ALLOW INTERESTED PERSONS TO SPEAK AND PRESENT EVIDENCE FOR OR AGAINST THE ESTABLISHMENT OF A REINVESTMENT ZONE VII FOR COMMERCIAL/ INDUSTRIAL TAX ABATEMENT PURPOSES. THE PURPOSE OF THE ZONE IS TO ATTRACT FASTENAL COMPANY AND SIMILAR INDUSTRIAL AND COMMERCIAL BUSINESS ENTERPRISES TO THE CITY OF DENTON, CREATE JOBS, EXPAND THE LOCAL TAX BASE, AND TO ATTRACT MAJOR INVESTMENT IN THE ZONE THAT WOULD BE A BENEFIT TO THE PROPERTY AND THAT WOULD CONSTRIBUTE TO THE ECONOMIC DEVELOPMENT OF THE CITY. THE PURPOSE OF THE HEARING WILL BE TO DETERMINE WHETHER THE IMPROVEMENTS SOUGHT ARE FEASIBLE AND PRACTICAL AND WOULD BE A BENEFIT TO THE LAND INCLUDED IN THE ZONE AND TO THE CITY AFTER EXPIRATION OF ANY TAX ABATEMENT AGREEMENT ENTERED INTO UNDER CHAPTER 312 OF THE TAX CODE. ALL INTERESTED PARTIES INCLUDING RESIDENTS OF THE PROPOSED ZONE ARE ENCOURAGED TO PRESENT THEIR VIEWS AT THE HEARING. THE PUBLIC HEARING WILL BE HELD ON MARCH 2, 2004, AT 6:30 P.M. IN THE CITY COUNCIL CHAMBERS AT CITY HALL, 215 E. McKINNEY. REINVESTMENT ZONE VII WILL BE COMPOSED OF APPROXIMATELY 43.653 ACRES OF LAND OUT OF WILLIAM NEILL, SURVEY ABSTRACT No. 970, DENTON COUNTY, TEXAS, THE REINVESTMENT ZONE AREA IS MORE PARTICULARLY DESCRIBED AS FOLLOWS: TRACT A PROPERTY DESCRIPTION BEING A TRACT OF LAND SITUATED IN THE WILLIAM NEILL, SURVEY ABSTRACT NO. 970, DENTON COUNTY, TEXAS AND BEING A PORTION OF THAT CERTAIN TRACT OF LAND DESCRIBED IN DEED TO JOHN DEE APPLEBY, TRUSTEE, AS RECORDED IN VOLUME 2549, PAGE 277 OF THE REAL PROPERTY RECORDS OF DENTON COUNTY, TEXAS, BEING MORE PARTICULARLY DESCRIBED BY METES AND BOUNDS AS FOLLOWS: BEGINNING AT A 3/8 INCH IRON ROD FOUND AT THE SOUTHEAST CORNER OF SAID APPLEBY TRACT, BEING THE NORTHEAST CORNER OF THE J. W. HARDING SURVEY, ABSTRACT NO. 1658, AND THE NORTHERLY MOST SOUTHEAST CORNER OF SAID WILLIAM NEILL SURVEY, LYING IN THE APPROXIMATE CENTERLINE OF CORBIN ROAD; THENCE N 89 DEGREES 16 MINUTES 51 SECONDS W, ALONG THE SOUTH BOUNDARY LINE OF SAID APPLEBY TRACT AT 25.94 FEET PASSING A 8 INCH CREOSOTE POST, AND CONTINUING GENERALLY WITH A BARBED WIRE FENCE IN ALL A TOTAL DISTANCE OF 1462.22 FEET TO A ½ INCH IRON ROD SET; THENCE N 00 DEGREES 24 MINUTES 11 SECONDS W, 750.57 FEET DEPARTING SAID BOUNDARY LINE TO A 6" WOOD POST FOUND AT THE SOUTHWEST CORNER OF A TRACT OF LAND DESCRIBED IN DEED TO J. NEWTON RAYZOR, AS RECORDED IN VOLUME 1796, PAGE 601 OF THE REAL PROPERTY RECORDS OF DENTON COUNTY, TEXAS LYING IN NORTH BOUNDARY LINE OF SAID APPLEBY TRACT; THENCE S 89 DEGREES 17 MINUTES 48 SECONDS E, ALONG THE COMMON BOUNDARY LINE BETWEEN SAID APPLEBY TRACT AND SAID RAYZOR TRACT AT 1426.49 FEET PASSING A 5/8 INCH CAPPED IRON ROD FOUND, AND CONTINUING IN ALL A TOTAL DISTANCE OF 1456.55 FEET TO A ½ INCH IRON ROD FOUND AT THE NORTHEAST CORNER OF SAID APPLEBY TRACT BEING THE SOUTHEAST CORNER OF SAID RAYZOR TRACT, AND LYING IN THE APPROXIMATE CENTERLINE OF AFORESAID CORBIN ROAD; THENCE S 00 DEGREES 01 MINUTES 56 SECONDS E, 751.02 FEET ALONG THE EAST BOUNDARY LINE OF SAID APPLEBY TRACT WITH THE APPROXIMATE CENTERLINE OF SAID CORBIN ROAD TO THE PLACE OF BEGINNING, CONTAINING 25.153 ACRES (1,095,649 SQUARE FEET) OF LAND, MORE OR LESS. AND TRACT B PROPERTY DESCRIPTION BEING A PART OF THE WILLIAM NEILL SURVEY, ABSTRACT NO. 970 AND A PART OF SAID 20 ACRE TRACT AND MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE SOUTH LINE OF THE FARM TO MARKET HIGHWAY NO. 1515, SAID POINT BEING 1886 FEET SOUTH 89 DEGREES 20 MINUTES EAST AND 90 FEET SOUTH OF THE SOUTHWEST CORNER OF FIRST TRACT ABOVE DESCRIBED, AND BEING 45 FEET SOUTH OF THE NORTHWEST CORNER OF SAID 20 ACRE TRACT; THENCE EAST ALONG THE SOUTH LINE OF SAID HIGHWAY, 1457.2 FEET TO POINT IN THE EAST LINE OF SAID NEILL SURVEY 45 FEET SOUTH OF THE NORTHEAST CORNER OF SAID 20 ACRE TRACT; THENCE SOUTH ALONG THE EAST LINE OF SAID TRACT AND SURVEY 552.83 FEET TO THE SOUTHEAST CORNER OF SAID 20 ACRE TRACT; THENCE WEST 1457.2 FEET TO THE SOUTHWEST CORNER OF SAID 20 ACRE TRACT; THENCE NORTH 552.83 FEET TO THE PLACE OF BEGINNING, AND CONTAINING 18.5 ACRES OF LAND, MORE OR LESS. BEING THE SAME PROPERTY AS SET OUT IN WARRANTY DEED DATED NOVEMBER 4, 1955, EXECUTED BY JIMMIE UNDERWOOD, A FEME SOLE, ET AL TO J. NEWTON RAYZOR, RECORDED IN VOLUME 417, PAGE 399, DEED RECORDS, DENTON COUNTY, TEXAS. TOTAL OF TRACTS A AND B CONTAINING 43.653 ACRES, MORE OR LESS. EXH!BIT B N Proposed F'astenal Site AGENDA INFORMATION SHEET AGENDA DATE: February 17, 2004 DEPARTMENT: Legal CM/DCM/ACM: Herbert L. Prouty, City Attorney SUBJECT: Consider appointments to the Council Ethics Committee. BACKGROUND: On January 27, 2004 the Denton City Council discussed the formation of a Council Ethics Committee to discuss the creation of an ethics policy. Appointments were made for Councilmember Pete Kamp and Councilmember Jack Thomson to serve on the committee. This agenda item allows the City Council to appoint another Councilmember to the Council Ethics Committee and to add an additional Ex Officio member to the committee. Respectfully submitted: Herbert L. Prouty City Attorney AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: CM: February 17, 2004 City Manager's Office Mike Conduff, City Manager SUBJECT Consider nominations and appointments to the City's Boards and Commissions. BACKGROUND Council Member Redmon has a nomination to the Historic Landmark Commission due to the death of Mildred Hawk. Mayor Brock has two appointments to the Denton Housing Authority. Council may wish to suspend the rules and vote on any nominations made at this meeting. If you require any further information, please let me know. Respectfully submitted: Jennifer Walters City Secretary HANDOUT TO COUNCIL Subehapter 22 Development Code g. Only Light Sand Fracture Technology or technologies approved by the Fire Marshal in accordance with the Fire Code City shall be used to fracture stimulate a well. h. Fracing operation shall be scheduled to occur during daylight hours unless the Operator has notified the Fire Marshal that fracing will occur before or after daylight hours to meet safety requirements. i. Air, gas, or pneumatic drilling shall not be permitted. j. Notices shall be pursuant to Subsection 35.22.12. 4. Storage tanks and separators. a. An operator is allowed to construct, use, and operate such storage equipment and separation equipment as shown on the typical well site, typical drilling pad, and typical pad rite locations on the approved Gas Well Development Plat. b. The use of centralized tank batteries is permitted as shown on the applicable Gas Well Development Plat. c. No gas well development is allowed in the FEMA derignated 100-year floodway or with~ 1200 feet of the flood pool elevation of Lake Ray Roberts or Lake Lewisville. d. No storage tanks or separation faal]ities shall be placed in the Flood Fringe or other ESA except in accordance with Subsection 35.22.5(A)8.: 5. Flow lines and gathering lines. a. Each operator shall place an idenfifying sign at each point where a flow line or gather~_ng Rne crosses a public street or road. b. Each operator shall place a warning sign for lines carryhig H2S (Hydrogen Sulfide) gas as required by the Railroad Comrmsrion. c. All flow lines and gathering lines.with~ the corporate limits of the City (excluding City utility lines and franchise distribution systems) that are used to transport oil, gas, and/or water shall be limited to the maXUnum allowable operating pressure applicable to the pipes installed and shall be installed with at least the minimum cover or backfill specified by the American National Safety Institute Code, as amended. d. Structures shall not be built over flow hnes or gathering lines. 6. Additional safety and environmental requirements. a. The drilling and production of gas and accessing the gas well site shall be in compliance with all state and federal environmental regulations. No gas well development or activity is allowed in the FEMA designated 100-year floodway. Drilling within Flood Fringe or other ESA shown on the Map adopted by the City is allowed under the restrictions set forth inSection 35.22.5(A)8. b. Erosion control practices shall be conducted for all gas wells. Compost berms that are at least 1 foot high and two feet wide,.or equivalent erosion control devices, shall be installed so that all portions of the well pad that may drain off-rite are contained. Damage resulting from sedimentation and/or erosion sliall be repaired immediately. c. Gas wells may have a target location or bottom-hole locafon that is under the floodway, an Environmentally Sensitive Area (ESA) or within 1200 feet of the flood pool elevation of lake Ray Roberts or Lake Lewisville when the gas well is drilled directionally from a location outside such d. Each well shall be equipped with an automated valve that closes the well in the event of an abnormal change in operating pressure. All wellheads shall contain an emergency shut off valve to the well distribution line. 22-6 Subchapter 22 Development Code i. These facilities shall be constructed at least 18 inches above the established Base Flood elevation plus the surcharge depth for encroachment to the limits of the floodway having a one percent chance of being equaled or exceeded in any year. ii. A hydrologic and hydraulic engineering study shall be performed by a Registered Professional Engineer. The study shall be submitted to the Engineering Department in a technical report for review by the City Engineer or his designated representative. The report shall demonstrate that the proposed facilities will have no adverse impacts on the carrying capacity of the adjacent watenvay nor cause any increases to the elevations established for the floodplain. When the Special Flood Hazard Areas (SFHA) on the subject site is designated as "Zone A" on the FIRIvl Panel, or the SFHA is not identified on the FIRM Panel, the following approximate method may be used to evaluate the impacts from gas well development. A flow rate shall be calculated using procedures set forth in the City of Denton Drainage Criteria Manual. Using Manning's Equation with an estimate of the average slope of the stream, measurements of a single irregular cross-section geometry at the well site, and the 100-year discharge rate, the average velodty and normal depth may be calculated. Calculations shall be provided for the unaltered existing channel cross-section and for the proposed modified channel cross-section and submitted to the City for review and approval prior to construction within these areas. e. If evidence from water quality monitoring efforts indicates that contamination is occUmng from gas wells, the operator shall remove, cause to be removed, or otherwise remediate contamination, as required by the oil and gas inspector including but not limited to Waste Minimization Practices established by the Railroad Commission. Cleanup operations shall begin immediately. A re- inspection fee shall be charged as established by the City Council and published in the Application Criteria Manual. f. No more than ten (10) percent of the floodplain, within the limits of the Gas Well Development Plat, may be filled. g. The provisions of 35.22.5(A)6 and 35.22.5 (A)8 shall apply both within the corporate limits of the City of Denton and wiridn the ETJ of the City of Denton. Drilling and production of gas wells shall comply with all federal, state, and local laws applicable to gas well drilling, production and operations. 35.22.6 DRC Recommendations for Specific Use Permits and Planned Development Zoning Districts. The Department shall forward all applications for Specific Use Permits and Planned Development Zoning Districts to the DRC for review. The DRC shall review each application within 30 days after filing and shall make recommendations regarding the applications to the planning and Zoning Comrmssion and City Council. A copy of all recommendations shall be provided to the operator. The DRC may make recommendations regarding any aspect of the proposed gas well development including, but not limited to, recommendations with respect to the standards set forth in Section 35.22.5. In connection with its review of an application for a Specific Use Permit or Planned Development Zoning District for the drilling and production of gas wells, the DRC may determine that it is necessary to hire a petroleum specialist to assist the DRC in reviewing the application. If such a determination is made, the DRC will provide the operator a written "scope of work" that the DRC proposes for such specialist. The DRC and the operator will attempt to agree upon the "scope of work"; however, the decision of the DRC shall control. If required by the specialist, the operator will provide a retainer; othenvise, the operator will pay for the services of the specialist after they are rendered. All work performed by the specialist shall be itemized on a daily basis (including a description of the work and the mount of time spent), and such itermZafion shall be provided to the operator with each request for payment. 22 10 Subchapter 22 Development Code restored, the operator shall prepare a written report to the Fire Marshal identifying any changes to the information that was included in the application for the applicable Gas Well permit that have not been previously reported to the City. 35.22.12 Notice of Activities. A. ~amy person who intends to re-work a well using a drilling rig, to fractttte sfimtdate a well after initial completion, or to conduct seismic exploration involving explosive charges shall give written notice to the City at least 10 days before the activities begin. B. All residences within 500 feet of a well shall be notified twenty-four hours prior to fracing of a wellhead. C. The notice shall identify where the activities will be conducted and shall describe the activities in reasonable detail, including but not limited to the duralion of the activities and the time of day they will be conducted. D. The notice shall also provide the address and 24-hour phone number of the person conducting the activities. E. The person conducting the activities will post a sign on the property giving the public notice of the activities, including the name, address, and 24~hour phone number of the person conducting the activities. F. If the City determines that an inspection by the Fire Marshal is necessary, the operator will pay the City's customary charge for the inspection. 35.22.13 Amended Gas Well Permits. A. An operator may submit an application to the Fire Marshal to amend an existing Gas Well Permit to commence drilling from a new drill site that is not shown on (or incorporated by reference as part of) the existing permit, to relocate a drill site or operation site that is shown on (or incorporated by reference as part of) the existing permit, or to otherwise amend the existing permit, for land subject to the same approved Gas Well Development Plat. B. Apphcadons for amended Gas Well Permits shall be in writing, shall be on forms provided by the Department of planning and Development, shall be signed by the operator, and shall include the following: 1. The application fee as set by City ordinance; 2. A description of the proposed amendments; 3. Any changes to the information submitted with the application for the existing Gas Well Permit (if such information has not previously been provided to the City); 4. Such additional information as is reasonably required by the Fire Marshal to demonstrate compliance with the applicable Development Plat, applicable Specific Use Permit or Planned Development Zoning District; and 5. Such additional information as is reasonably required by the Fire Marshal to prevent imminent destruction of property or injury to persons. C. All applications for amended Gas Well Permits shall be filed with the Department of plarmmg and Development, and the department shall immediately forward all applications to the Fire ~Marshal for review. Incomplete applicahons may be returned to the applicant, in which case the City shall provide a written explanation of the deficiencies; however, the City may retain a processing fee as determined by the Fire Marshal. The City may return any application as incomplete if there is a dispute pending before the Ralkoad comrmssion regarding the determination of the operator. 22-17 Deloitte &Touche LLP JPMorgan Chase Tower, Ste 1600 2200 Ross Avenue Dallas, Texas 75201 6778 Tel: (214) 840-7000 www.deloitte.com HANDOUT TO COUNCIL Deloitte &Touche February l6,2004 The Honorable Mayor and City Council Members City of Denton, Texas Dear Honorable Mayor and City Council Members: We have audited the basic financial statements of City of Denton, Texas (the "City") as of and for the year ended September 30, 2003 and have issued our report thereon dated February 16, 2004. We have prepared the following comments to assist you in fulfilling your obligation to oversee the financial reporting and disclosure process for which management of the City is responsible. OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA AND GOVERNMENT.4 UDITING ST.4ND`4RD$ ISSUED BY THE COMPTROLLER GENERAL OF THE UNITED STATES Our responsibility under auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government`4uditing Standards issued by the Comptroller General of the United States has been described to you in our engagement letter dated June 23, 2003. As described in that letter those standards require, among other things, that we obtain a sufficient understanding of the City's internal control to enable us to properly plan our audit and to determine the nature, timing, and extent of audit procedures to be performed. We have issued a separate report to you, also dated February 16, 2004, containing our comments on the City's internal control. SIGNIFICANT ACCOUNTING POLICIES The City's significant accounting policies are described in Note 1 to the Comprehensive Annual Financial Report. During the year ended September 30, 2003 there were no significant changes in previously adopted accounting policies or their application. MANAGEMENT JUDGMENTS AND ACCOUNTING ESTIMATES Accounting estimates are an integral part of the basic financial statements prepared by management and are based upon management's current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Significant accounting estimates reflected in the City's 2003 basic financial statements include liabilities for compensated absences, accumulated depreciation, litigation claims accruals, liability for self-insurance claims payable, and allowances for doubtful accounts. These estimates are normal and were determined by the City on bases consistent with those used in prior years. Deloitte Touche Tohmatsu SIGNIFICANT AUDIT ADJUSTMENTS Our audit was designed to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud. In addition, we are obligated by auditing standards generally accepted in the United States of America to inform you of any adjustments arising from the audit that could, in our judgment, either individually or the aggregate, have a significant effect on the City's financial reporting process. All proposed audit adjustments (whether recorded or unrecorded) were reviewed with management and were determined individually, or in the aggregate, not to have a significant effect on the financial reporting process. In addition, we are obligated by generally accepted auditing standards to inform you about uncorrected misstatements (regardless of whether they have a significant effect on the financial reporting process) aggregated by us during the current engagement and pertaining to the latest period presented that were determined by management to be immaterial, both individually, and in the aggregate, to the financials statements taken as a whole. There were no such uncorrected misstatements, as all misstatements detected in our audit have been corrected by management. DISAGREEMENTS WITH MANAGEMENT We have not had any disagreements with management related to matters that are material to the City's 2003 financial statements. CONSULTATION WITH OTHER ACCOUNTANTS We are not aware of any consultations that management may have had with other accountants about auditing and accounting matters during 2003. MAJOR ISSUES DISCUSSED WITH MANAGEMENT PRIOR TO RETENTION Throughout the year, routine discussions regarding the application of accounting principles or auditing standards were held with management in connection with transactions that have occurred, transactions that are contemplated, or reassessment of current circumstances. In our judgment, such discussions were not held in connection with our retention as auditors. DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT In our judgment, we received the full cooperation of the City's management and staff and had unrestricted access to the City's senior management in the performance of our audit. OTHER INFORMATION IN THE COMPREHENSIVE ANNUAL FINANCIAL REPORT When audited financial statements are included in documents containing other information, such as the City's Comprehensive Annual Financial Report, generally accepted auditing standards require that we read such other information and consider whether it, or the manner of its presentation, is materially inconsistent with the information, or the manner of its presentation, in the financial statements audited by us. We have read the other information in the City's Comprehensive Annual Financial Report for the year ended September 30, 2003, and have inquired as to the methods of measurement and presentation of such information. If we had noted a material inconsistency, or if we had obtained any knowledge of a material misstatement of fact in the other information, we would have discussed this matter with management and, if appropriate, with the Mayor and City Council Members. -2- This report is intended solely for the information and use of the Mayor and City Council Members and management, and is not intended to be and should not be used by anyone other than these specified parties. Yours truly, -3- I I I I i I ! I I City of Denton, Texas Single Audit Reports Year Ended September 30, 2003 I I I CITY OF DENTON, TEXAS TABLE OF CONTENTS I I I ! I I I ! I I I I, ! ! ! I Auditor Prepared Independent Auditors' Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditors' Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133 Auditee-Prepared Supplementary Schedule of Expenditures of Federal and State Awards Notes to Supplementary Schedule of Expenditures of Federal and State Awards Auditor Prepared Schedule of Findings and Questioned Costs Auditee-Prepared Corrective Action Plan Page 1-2 3-4 5-7 8 9-10 11 I I i I I I ! I I I I ! I I I I i I i Deloitte & Touche LLP JPMorgan Chase Tower, Ste 1600 2200 Ross Avenue Dallas,Texas 75201-6778 Tel;(214) 840 7000 www. deloitte.com Deloitte &Touche INDEPENDENT AUDITORS' REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAl. STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Honorable Mayor and Members of the City Council City of Denton, Texas: We have audited the basic financial statements of the City of Denton, Texas, ("City") as of and for the year ended September 30, 2003 and have issued our report thereon dated February 16, 2004. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether the City's basic financial statements arc free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City's internal control over financial reporting in order to determine our auditing procedures for thc purpose of expressing our opinion on the basic financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively Iow level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to bc material weaknesses. However, we noted other matters involving the internal control over financial reporting that we have reported to the management of the City in a separate letter February 16, 2004. Deloitte Touche Tohmatsu -1- I I I I I I i I I I I i I I I ! I I I This report is intended for the information and use of the Mayor and City Council, management and federal and state awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. February 16, 2004 -2- I I I i I I I I I I I I ! I I I I I I Deloitte &Touche LLP JPMorgan ChaseTower, Ste 1600 2200 Ross Avenue Dallas,Texas 75201 6778 Tel: (214) 840 7000 www.deloitte.corn Deloitte &Touche INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 The Honorable Mayor and Members of the City Council City of Denton, Texas: Compliance We have audited the compliance of the City of Denton, Texas ("City"), with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular.4-1$3 Compliance Supplement that are applicable to each of its major federal and state programs for the year ended September 30, 2003. The City's major federal and state programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal and state programs is the responsibility of the City's management. Our responsibility is to express an opinion of the City's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government,~uditing Standards, issued by the Comptroller General of the United States; OMB Circular A-133, dudits of States, Local Governments, and Non-Profit Organizations, and the State of Texas Uniform Grant Management Standards ("UOMS"). Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal or state program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City's compliance with those requirements. In our opinion, the City complied, in all material respects with the requirements referred to above that are applicable to each of its major federal and state programs for the year ended September 30, 2003. However, the results of our auditing procedures disclosed one instance of noncompliance with those requirements that is required to be reported in accordance with OMB Circular A-133 and which is described in the accompanying Schedule of Findings and Questioned Costs as item 03-1. Internal Control Over Compliance The management of the City is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal and state programs. In planning and performing our audit, we considered the City's internal control over compliance with requirements that could have a direct and material effect on a major federal or state program in order to Deloitte Touche Tohmatsu -3- determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133 and UGMS. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively Iow level the risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major federal or state program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. Schedule of Expenditures of Federal and State Awards We have audited the basic financial statements of City of Denton, Texas, as of and for the year ended September 30, 2003 and have issued our report thereon dated February 16, 2004. Our audit was performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedule of expenditures of federal and state awards is presented for the purpose of additional analysis as required by OMB Circular A-133 and UGMS and is not a required part of the basic financial statements. This schedule is the responsibility of the management of City of Denton, Texas. Such information has been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects when considered in relation to the basic financial statements taken as a whole. This report is intended for the information and use of the Mayor and City Council, management and federal and state awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. February 16, 2004 -4- I I CITY OF DENTON, TEXAS SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS YEAR ENDED SEPTEMBER 30, 2003 I I I I I I I I I I I I I I I i I Federal Grantor/ Pass-Through Grantor/ Program Title FEDERAL AWARDS U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT: Community Developmem Block Grant Community Development Block Grant Community Development Block Grant Community Development Block Grant Community Development Block Grant Community Development Block Grant Community Development Block Grant Community Development Block Grant Home Investment Parlnership Home Investment Paflnership Home Investment Partnership Home Investment Partnership Home Investment Parmership Home Investment Parmership HUD ALERT Grant Total U.S. Department of Housing and Urban Development U.S. DEPARTMENT OF TRANSPORTATION: Federal Transportation Grant Federal Transportation Grant Federal Transportation Grant Federal Transportation Grant Federal Transportation Grant Federal Transportation Grant Total U.S. Depar'anent of Transportation U.S. DEPARTMENT OF JUSTICE: Local Law Enforcement Block Grant Local Law Enforcement Block Grant Total U. S. Department of Justice U.S. DEPARTMENT OF AGRICULTURE: Passed through State Department of Health and Human Services: Summer Food Services Grant Total U.S. Departmant of Agriculture Grant I.D. Number B-96-MC-48-0036 B-97-MC-48-0036 B-98-MC-48-0036 B-99-MC-48-0036 B-00-MC-48-0036 B-01-MC-48-0036 B-02-MC-48-0036 B-02-MC-48-0036 M-95-MC-48-0223 M-98-MC-48-0223 M-99-MC-48-0223 M-00-MC-48-0223 M-0 I-MC-48-0223 M-01-MC-48-0223 TXLHB0194-01 TX-90-X343 TX-90-X380 TX-90-X416 TX-90-X474 TX-90-X572 TX-90-X622 1999-LB-VX-7802 2002-LB-BX-0702 061-1002 -5- Federal CFDA Number 14.218 14.218 14.218 14.218 14.218 14.218 14.218 14.218 14.239 14.239 14.239 14.239 14.239 14.239 14.900 20.507 20.507 20.507 20.507 20.507 20.507 16.592 16.592 10.559 Expenditures Passed Year Ended Through to September 30, 2003 Subrecipients $ 80 7,764 19,750 528 149,560 143,419 $ 17,110 766,275 109,233 4,361 1 12,216 107 28,474 287,859 8,543 226,378 148,275 27,224 1,673,996 283,161 83,220 88,738 215,372 89,967 488,194 228,530 1,194,021 5,178 38,940 44,11~ 43,354 43,354 (Continued) I I CITY OF DENTON, TEXAS SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS YEAR ENDED SEPTEMBER 30, 2003 I I I I I I I I I I I I I I I Federal Grantor/ Pass-Through Grantor/ Program Title U.S. FEDERAL EMERGENCY MANAGEMENT AGENCY: Firo Prevention Grant Total U.S. Federal Emergency Management Agency U.S. DEPARTMENT OF THE INTERIOR: Passed through Texas Historical Commission Texas Historical Commission Total U.S. Department of the Interior U.S. DEPARTMENT OF TRANSPORTATION: Passed Through State Department of Transportation: Speed STEP Safe & Sober STEP Comprehensive STEP CIOT STEP Total U.S. Department of Transportation TEXAS DEPARTMENT OF HOUSING & COMMUNITY AFFAIRS: Emergency Shelter Grant Total Texas Department of Housing & Community Affairs Grant i.D. Number BMW-2002-FG-08187 48-01-16444.006 583XXF6009 583XXF6013 583XXF6014 583XXF6111 422117 TOTAL EXPENDITURES OF FEDERAL AWARDS STATE AWARDS TEXAS DEPARTMENT OF TRANSPORTATION: State Transportation Grant State Transportation Grant State Transportation Grant Airport RAMP Grant Airport Control Tower Grant Federal CFDA Number Total Texas Department of Transportation 83.554 15.914 20.600 20.600 20.600 20.600 14.231 Expenditures Passed Year Ended Through to September 30, 2003 Subrecipients $ 39,164 39,164 3,210 3,210 43,746 55,984 47,392 5,633 152,755 116,245 116,245 3,266,863 $283,161 51218F6004 N/A 64,000 51318F1007 N/A 282,970 51418F7047 N/A 95,169 M318DNTON N/A 14,546 0218DENTN N/A 213,180 213,180 N/A TEXAS DEPARTMENT OF PUBLIC SAFETY: Emergency Management Performance Grant EMT-GR-2003-0005 Total Texas Department of Public Safety 669,865 213,180 73,440 73,440 (Continued) -6- I I CITY OF DENTON, TEXAS SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS YEAR ENDED SEPTEMBER 80, 2003 I I I I I I I I I I I I I I I Federal Gmntorl Pass-Through Gmntorl Grant Program Title I.D. Number OFFICE OF THE GOVERNOR--CRIMINAL: Justice Division Tobacco Compliance SB55 Total Office of Governor TELECOMMUNICATION INFRASTRUCTURE FUND BOARD: TIF Library LSTA Library Loan Star Librmy Total Telecommunication Infrmstmcture Fund Board QE-2001-CN2C-5561 478-02027 442-02132 NORTH CENTRAL TEXAS COUNCIL OF GOVERNMENT (NTCOG): Stop Illegal Dumping Campaign 03-04-G32 Cleaning Up Illegal Dumping Site 03-04-G36 Multi-Family Recycling Project 03-04-G02 Commercial Recycling Program 03-04-G03 Total NCTCOG TEXAS PARKS AND WILDLIFE DEPARTMENT: South Lakes park Grant Cross Timbers Park Total Texas Patios and Wildlife Dcpmcnt TOTAL EXPENDITURES OF STATE AWARDS TOTAL EXPENDITURES OF FEDERAL AND STATE AWARDS 85400 50-00261 Scc notes to thc schedule of expenditures of fcdcral and state awards. Fedeml CFDA Number N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Expenditures Passed Year Ended Through to September 30, 2003 Subrecipients $ 1,039 1,039 500,000 36,114 19,245 555,359 4,850 23,497 7,000 78,833 114,180 1,150 184,097 185,247 1,599,130 $213,180 $ 4,865,993 $496,341 (Concluded) -7- I I I I CITY OF DENTON, TEXAS NOTES TO SUPPLEMENTARY SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS SEPTEMBER 30, 2003 I I I I I I I I I I I I I I I 1. BASIS OF ACCOUNTING The supplementary Schedule of Expenditures of Federal and State Awards is prepared on the modified accrual basis of accounting. Expenditures are recognized when they become a demand on current available financial resources. Encumbrances are used during the year for budgetary control purposes and lapse at fiscal year-and. 2. REPORTING ENTITY The City of Denton, Texas, for purposes of the Supplementary Schedule of Expenditures of Federal and State Awards includes all the funds of the primary government as defined by the Government Accounting Standards Board Statement No. 14 "The Financial Reporting Entity." 3. PASS-THROUGH AWARDS The City of Denton receives certain federal awards from pass-through awards of the State of Texas. The amounts received are commingled by the State of Texas with other funds and cannot be separately identified. The total amount of such pass-through awards is included on the Supplementary Schedule of Expenditures of Federal and State Awards. -8- I I I CITY OF DENTON, TEXAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED SEPTEMBER 30, 2003 I I I I I I I I I I I I I I I I I. SummaryofAuditors' Results: 1. Type of auditor's report issued on the financial statements: unqualified 2. No internal control findings required to be reported in this schedule were disclosed in the audit of the financial statements. 3. Noncompliance that is material to the financial statements: none. 4. No internal control findings required to be reported in this schedule were disclosed in the audit of compliance of the major programs. 5. Type of auditor's report on compliance for major programs: unqualified. 6. Did the audit disclose findings that are required to be reported under Sec. __$10(a): Yes. 7. Major programs include: Federal Program: U. S. Department of Housing and Urban Development: Community Development Block Grant CFDA #: 14.218 State Programs: Telecommunications Infrastructure Fund Board - TIF Library Grant Texas Department of Transportation - Airport Control Tower Grant 8. Dollar threshold used to distinguish between Type A and Type B programs: $300,000 for federal programs and $300,000 for state programs. 9. Low risk auditee: yes. H. Findings Related to the Financial Statements: The audit disclosed no findings required to be reported. -9- I I I I I I I I I I I I I I I I I I I HI. Findings and Questioned Costs Related to the Federal and State Awards Reference No. Program 03-1 Texas Department of Transportation: Airport Control Tower Grant Finding While the City requires its contraetors to follow the guidelines in the Davis Bacon Act, the City was not monitoring the contractors to ensure that the guidelines were followed. Questioned Costs None Recommendation Enhance the monitoring procedures of contractors over wage rates applied to laborers who are paid with grant funds in accordance with the Davis Bacon Act. -10- I I I City of Denton, Texas Corrective Action Plan For Fiscal Year Ended September 30, 2003 Grant: Texas Department of Transportation ("TxDOT") - Airport Control Tower Grant I I ! I I I Finding: 03-1 This grant was initially a 50/50 state funded grant that permitted local acquisition and procurement procedures to satisfy all actions associated with design, construction and installation services. Thus, through the Design/Build Procedure, administered through the City of Denton Materials Management Division, all Davis-Bacon Act requirements were satisfied as per TxDOT, Aviation Division grant officials. However, since the City will be requesting reimbursement on the Radio and Communications equipment associated with this project, it is necessary for the City to maintain records satisfying wage and labor fees (for Davis-Bacon). The reimbursement for this equipment will be funded through the Federal Government, thus requiring the City to meet Davis-Bacon Regulations. TxDOT Grant Manger, Allison Martin, indicated that AJT (equipment installation vendor) has demonstrated compliance via their letter dated October 13, 2003 of which a copy has been provided. Ms. Martin is recommending we maintain this correspondence in our grant files to ensure compliance will not be questioned in the future. I I I I I 1 I I -11- I i i I I I I I I I i I I I i i I i I City of Denton, Texas Report to Management Year Ended September 30, 2003 I I ! I I I I I I I I I I I i I I i I Deloitte &Touche LLP JPMorgan Chase Tower, Ste 1600 2200 Ross Avenue Dallas,Texas 75201-6778 Tel: (214) 840-7000 www.deloitte,com Deloitte &Touche February 16, 2004 !qonorable Mayor and Members of City Council (~.ity of Denton, Texas: I n planning and performing our audit of the basic financial statements of the City of the Denton, Texas ('the "City") for the year ended September 30, 2003 (on which we have issued our report dated February 16, 2004), we considered its internal control in order to determine our auditing procedures for t he purpose of expressing an opinion on the basic financial statements and not to provide assurance on the City's internal control. Such consideration would not necessarily disclose all matters in the City's in~ternaf con,'o; CfiaC might' be material' weatmesses una'er srana'ara's estabf£sfieff 6y the American Institute of Certified Public Accountants. A description of the responsibility of management for establishing and maintaining the internal control, and oftbe objectives of and inherent limitations in such controls, is set forth in the attached Appendix, and should be read in conjunction with this report. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the City's internal control and its operation that we consider to be material weaknesses as defined above. The recommendations included in this report concern administrative and operating matters that resulted from our observations during our audit and are not based on a special study. This report is intended solely for the information and use of the City Council, management and appropriate federal and state agencies, and is not intended to be and should not be used by anyone other than these specified parties. We would be pleased to discuss these observations and recommendations further with you and to assist you in implementing them. Yours truly, Deloitte Touche Tohmatsu I I ! i I I ! ! I I I I I i I I I I I EXHIBIT LEASE AGREEMENTS Observation In evaluating the capital leases currently recorded by the City, it was noted that not all capital leases for which the City is liable were properly recorded. The effect of this was an understatement of capital assets and the related capital lease by approximately $900,000, which was adjusted in the current year. This adjustment resulted fi.om a lack of notification from City departments to the Finance Department when a lease agreement is entered into on behalf of the City. Recommendation The Finance Department should ensure that other City departments are aware that all lease agreements are to be sent to the Finance Department for evaluation. This evaluation would include the determination of the proper nature of the lease agreement (capital versus operating) and the appropriate accounting and disclosure requirements. Management's Response Agree. The Purchasing Department will provide Accounting with copies of all lease agreements for evaluation to insure appropriate accounting and disclosure requirements are met. This procedure has been implemented. INTERFUND TRANSFERS Observation Instead of tracking the interfund transactions throughout the year, the balances for interfund transactions are reconciled by the Finance Department at year-end. There are two basic causes for this issue: 1) The City relies on the accounting system to record most interfund transaction entries. This accounting system uses cash when making these entries instead of due to and due fi.om entries. For example, when recording a transaction between general fund and material management fund, an expenditure is recorded in the general fund and revenue is recorded in the material management fund. In order to make the journal entries balance in each fund, cash is automatically credited for ganeral fund and debited for material management. Even though there is no cash involved, cash balances for both funds are affected and must be adjusted at year-end. 2) The accounting system is designed to record transactions between a primary fund and one or more secondary funds. When a transaction includes recording interfund activity between two or more secondary funds, in addition to interfund activity with the primary fund, the system will record this activity as being between only the primary fund and the secondary funds. For example, when recording a transaction between two special revenue funds, instead of recording one entry between -2- I I I I I I I I I I ! I I I i I I I I these two funds, the interfund activity must be recorded through the general fund with each of the two special revenue funds, rather than directly between the special revenue funds. Again, these funds will have to be adjusted at year end. Even though there is no effect on the adjusted year-end government-wide or fund financial statements, interfund transactions are not properly reflected throughout the year. Because cash is involved in the interfund transactions, negative cash is generated throughout the year. The City has to manually adjust cash, due to and due from accounts in order to properly reflect these balances. Recommendation The City should work with the accounting system vendor to resolve the above system issues. Further, the Finance Department should provide more training to staffaccountants on the basic issues relating to interfund transfers and how to properly record such transactions. Management's Response Agree. Staffwill re-evaluate system set-up (AAIs) for the interfund transfer process currently in place, with specific focus on the non-cash transactions and transactions across multiple funds. Written procedures will be provided to accounting staffregarding the proper way to record these transactions and to ensure consistency. AFFILIATED ORGANIZATIONS Observation The Government Accounting Standards Board ("GASB') has issued Statement No. 39 "Determining Whether Certain Organizations Are Component Units" ("GASB 39") which will be effective for the City in the fiscal year ending September 30, 2004. GASB 39 will require the City to report affiliated organizations as discrete component units if the organizations meet the following criteria: · The affiliated organization raises funds for the direct benefit of the City. · The City has the ability to access the funds raised by the affiliated organization or the City has historically accessed such funds. * The funds held by the affiliated organization are material to the City's financial statements. Recommendation Evaluate affiliated organizations to determine if inclusion in the City's financial statements is required in accordance with GASB 39. Management's Response Agree. Staff will review and evaluate to determine if uny organizations meet the criteria established in GASB 39. Based on a very preliminary review there does not appear to be any organizations that hold funds that are material to the City's financial statements. -3- I I I I I I I I I I ! I I ! i I I I ! RISK DISCLOSURES ON DEPOSITS AND INVESTMENTS Observation The Government Accounting Standards Board has issued Statement No. 40, "Deposit and Investment Risk Disclosures, an amendment to GASB 3" ("GASB 40"), which will be effective for the City in the fiscal year ending September 30, 2005. GASB 40 establishes more comprehensive disclosure requirements regarding state and local governments' investment credit risks, investment policies, and specific investment-related risks. In particular, the state and local governments will have to provide additional disclosures related to investment credit risk, concentration of investment credit risk, interest rate risk, and foreign currency risks. Recommendation Begin reviewing GASB 40 to determine the approach the City will take to obtain the necessary information to make required disclosures. Management Response Agree. Staffwill begin review of GASB 40 requirements to ensure that process is in place to obtain information necessary to appropriately address deposit and investment risk disclosures. -4- I I I I I I i I ! I I I I I I I I I I MANAGEMENT'S RESPONSIBILITY FOR AND THE OBJECTIVES AND LIMITATIONS OF THE INTERNAL CONTROL The following comments concerning management's responsibility for internal control and the objectives of and the inherent limitations in the internal control are adapted from the Statements on Auditing Standards of the American Institute of Certified Public Accountants. Management's Responsibility Management is responsible for establishing and maintaining internal control. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control, policies and procedures. Objectives The objectives of internal control are to provide management with reasonable, but not absolute, assurance regarding the achievement of objectives in the following categories: (a) reliability of financial reporting, (b) effectiveness and efficiency of operations, and (c) compliance with applicable laws and regulations. Limitations Because of inherent limitations in any internal control, errors or fraud nevertheless may occur and not be detected. Also, projection of any evaluation of the internal control to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. -5- · · · · · · · · · · comprehensive Annual Financial Re~or~ _ for ~he year e~d september 30, zoo3 · · · · · · City of Denton, TeXas Pre. pared by the Department of Mana3ement & Bud,~et in dellvem~ outstandin~ llty services amt yroducts throu,~h: c~tlzen ~nvolvement, Innovation and Efficient Use of Resources CITY OF DENTON, TEXAS COMPREHENSIVE ANNUAL FINANCIAl, REPORT For the fiscal year ended September 30, 2003 CITY MANAGER Michael A. Conduff ASSISTANT CITY MANAGER Kathy L. DuBose, CPA, CGFO Director of Management and Budget Anna Mosqueda Prepared by: Stephen C. Nesbitt, CPA, CGFM Controller Michael Rodgers, CPA Chief Accountant Diane Chang, CPA Senior Grants Accountant Kurt Breyfogle Senior Utilities Accountant Harvey Jarvis Senior Utilities Accountant Linda Juniel, CPA Senior Accountant Cody Wood Accountant 111 Lori Allen Accounting Technician Chris Rodriguez Budget Coordinator Antonio Puente Budget Analyst Brenda Ormsby Accounts Payable Supervisor Please visit us at our website at: www.cityofdenton.com City of Denton, Texas Comprehensive Annual Financial Report For Year Ended September 30, 2003 TABLE OF CONTENTS Page INTRODUCTORY SECTION: Transmittal Letter ................................................................................................................................................. i Organizational Chart .......................................................................................................................................... vii Certificate of Achievement .............................................................................................................................. viii List of Principal Officials .................................................................................................................................... ix FINANCIAL SECTION: Independent Auditors' Report .............................................................................................................................. 1 Management's Discussion and Analysis ............................................................................................................. 3 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets ........................................................................................................................ 1 I Statement of Activities .......................................................................................................................... 12 Fund Financial Statements: Governmental Fund Financial Statements: Balance Sheet ................................................................................................................................. 14 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets ...... 15 Statement of Revenues, Expenditures and Changes in Fund Balances .......................................... 16 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities .............................................................. 17 Proprietary Fund Financial Statements: Statement of Net Assets ................................................................................................................. l 8 Statement of Revenues, Expenses and Changes in Fund Net Assets ............................................. 20 Statement of Cash Flows ................................................................................................................ 24 Fiduciary Fund Financial Statements: Balance Sheet ................................................................................................................................. 26 Notes to Basic Financial Statements ........................................................................................................... 27 Required Supplemental Information: Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund ..................................................................................................................................... 49 Schedule of TMRS Funding Progress and Contributions - Last Three Fiscal Years ................................. 50 Combining and Individual Fund Financial Statements and Schedules: Combining Balance Sheet- Nonmajor Governmental Funds ..................................................................... 52 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds ............................................................................................................ 54 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget to Actual: Debt Service Fund ................................................................................................................................ 56 Special Revenue Funds: Recreation ....................................................................................................................................... 57 Police Confiscation ........................................................................................................................ 58 Tourist and Convention .................................................................................................................. 59 Emily Fowler Library ..................................................................................................................... 60 Combining Statement of Net Assets - Internal Service Funds ................................................................... 62 City of Denton, Texas Comprehensive Annual Financial Report For Year Ended September 30, 2003 TABLE OF CONTENTS (continued) Page FINANCIAL SECTION (continued): Combining and Individual Fund Financial Statements and Schedules (continued): Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Internal Service Funds .......................................................................................................................... 64 Combining Statement of Cash Flows - Internal Service Funds ................................................................. 66 Statement of Net Assets - Fiduciary Funds ................................................................................................ 68 Statement of Changes in Assets and Liabilities - Agency Funds ............................................................... 69 Capital Assets Used in the Operation of Governmental Funds: Comparative Schedules by Source .............................................................................................................. 71 Schedule by Function and Activity .............................................................................................................. 72 Schedule of Changes by Function and Activity .......................................................................................... 73 Other Supplemental Information: Comparative Balance Sheet -General Fund .......................................................................................... 75 Balance Sheet - Enterprise Funds (Traditional Format) ............................................................................. 76 Statement of Revenues, Expenses and Changes in Retained Earnings -Enterprise Funds (Traditional Format) ............................................................................................................................. 78 Statement of Cash Flows - Enterprise Funds (Traditional Format) ........................................................... 80 Balance Sheet - Internal Service Funds (Traditional Format) .................................................................... 84 Statement of Revenues, Expenses and Changes in Retained Earnings - Intamal Service Funds (Traditional Format) ............................................................................................................................. 86 STATISTICAL SECTION (UNAUDITED): Table 1 Government-wide Expenses ..................................................................................................................... 90 2 Government-wide Revenues ..................................................................................................................... 91 3 General Government Expenditures by Function ....................................................................................... 92 4 General Government Revenues by Source ............................................................................................... 93 5 Property Tax Levies and Collections ........................................................................................................ 94 6 Assessed and Estimated Actual Value of Taxable Property ..................................................................... 95 7 Property Tax Rates and Tax Levies - Direct and Overlapping Governments ........................................... 96 8 Special Assessment Collections ................................................................................................................ 97 9 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita ....................... 98 I 0 Computation of Legal Debt Margin .......................................................................................................... 99 11 Computation of Direct and Overlapping Debt ........................................................................................ 100 12 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Government Expenditures .................................................................................................................. 101 13 Utility System Revenue Bond Debt Service Coverage ........................................................................... 102 14 Property Value, Construction and Bank Deposits .................................................................................. 103 15 Principal Taxpayers ................................................................................................................................ 104 16 Demographic Statistics ........................................................................................................................... 105 17 Miscellaneous Statistical Data ................................................................................................................ 106 215 E. McKINNEY DENTON, TEXAS 76201 · (940) 349-8200 · FAX(940) 349-8236 February 17, 2004 TO: The Honorable Mayor, Members of the City Council and Citizens of the City of Denton It is with great pleasure we present to you a copy of the Comprehensive Annual Financial Report (CAFR) of the City of Denton (the City) for the fiscal year ended September 30, 2003. The responsibility for both the accuracy of the presented information and the completeness and fairness of the presentation of the data, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the end results of operation of the various funds and account groups of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. The CAFR is presented in three sections: Introductory, Financial and Statistical. The Introductory Section includes this transmittal letter, the City's organizational chart, and a list of principal officials. The Financial Section includes the Management's Discussion and Analysis (MD&A), Government-wide and Major Fund presentations, Required Supplemental Information, Combining Individual Fund Statements and Other Supplemental Information, as well as the independent auditors' report on the financial statements and schedules. The Statistical Section includes selected financial and demographic information, generally presented on a multi- year basis. The City of Denton was incorporated September 26, 1866. The City operates as a home rule city, under a council-manager form of government and provides a full range of services as authorized by its charter, such as public safety (police and fire protection); public works (construction and maintenance of highways, streets and infrastructure); parks and recreation; electric, water and wastewater utilities; solid waste; and general administrative services. This report includes all funds of the City. Economic Condition and Outlook During fiscal year 2002-03, Denton saw a 9.98% increase in certified value over the prior year. This moderate growth came from new and expanding businesses. The new growth brought a total net assessed value of $191,822,608. Major economic highlights during the fiscal year were: · In mid-July, Sally Beauty Company (Sally) broke ground on its new $30 million international headquarters. City staff had been working with officials at Sally to find a suitable site for this expansion. Sites outside Denton where considered; however, the company chose to remain in Denton. Construction plans call for a 200,000-square foot, multi-story building at the comer of Brinker Road and Colorado Boulevard to be completed by fall of 2004. "Dedicated to Quality Service" www. cityofdenton, com · The Denton Independent School District and the City partnered on an aquatic center named Waterworks Park. The aquatic center includes an outdoor water park and a natatorium. The outdoor portion includes three large slides, a children's playpool and a "lazy river" feature. The indoor natatorium includes a competition swimming and diving pool and a warm water therapy pool for year-round swim lessons, water aerobics and physical therapy. The park opened June 2003. · The U.S. Flight Academy broke ground on a new hanger at Denton Municipal Airport in the spring of 2003. Construction for the building was completed in March 2003. · Chelton Flight Systems, an international avionics company, moved to the Denton Municipal Airport during the spring of 2003. The company's employees design and install autopilots in aircraft for certification from the Federal Aviation Administration. · The 52-acre Denton Crossing retail development, located on Loop 288, has spawned much interest from national retailers and restaurants. The tenants in Denton Crossing began opening for business in September 2003. When fully occupied, it is estimated that the development will create 325 new full- time jobs and 130 part-time jobs. Some of the new retailers and restaurants are: Foley's Department Store, Barnes & Noble Booksellers, DSW Shoe Warehouse, Pacific Sun Wear, Best Buy, World Market, Michaels, Pier l Imports, Famous Footwear, Lane Bryant and Bed Bath & Beyond. Golden Triangle Mall and Brinker Plaza have received renewed appeal as a result of the new businesses. · Denton's "Restaurant Row" is under construction on Brinker Road. Texas Roadhouse celebrated its grand opening in the fall of 2002 along with On the Border. Olive Garden opened in June 2003. Other restaurants along the 1-35 corridor include Johnny Carino's Italian Restaurant which opened in 2002 and Chuck E. Cheese which opened soon after. Hampton Inn, a limited service hotel with 82 rooms and suites, opened in 2003. · Long-time Denton retailer Russell's Department Store closed its doors in 2003. The 28,000-square foot retail space was almost immediately occupied by Denton Athletics which opened in the spring of 2003. Denton Athletics sells athletic clothing and equipment. · During the 2002-03 fiscal year, both of Denton's hospitals announced expansion plans. The hospitals will spend approximately $150 million to expand their facilities. Denton Community Hospital announced that it will change its name to Presbyterian Hospital of Denton when it opens a new $100 million medical complex in 2005. The official groundbreaking was held in September 2003. Denton Regional Medical Center, which moved into its five-story building in 1999, will add a four-floor wing and surgery suites beginning in the summer of 2004. These announcements confirm Denton's status as a regional center for quality medical services. · Three area banks are building new facilities in Denton. Farmers & Merchants Bank built a 30,759- square foot bank/office at 1517 Center Place. The project has a permit value of nearly $3.2 million. Point Bank purchased an abandoned building at 1700 N. Carroll Blvd. A small portion of the original building was saved and construction of the new 5,645 square-foot bank is now complete. The Point Bank project has a permit value of $368,957. First State Bank is building at 400 W. Oak. The 30,875- square foot bank/office has a permit value of over $3.2 million and is currently under construction. · The City began working last year with Flowers Foods Bakeries Group, a Georgia-based company, on opening a facility in Denton. In September, Flowers Foods announced that by next fall the company plans to be operating a $40 million bakery employing 200 people in the former Andrew Corporation facility in Denton. Flowers Foods has bakeries in four other Texas cities: San Antonio, Houston, El Paso and Tyler. Flowers Foods was awarded a tax abatement from the City as an incentive to locate in Denton. Additionally, they are partnering with North Central Texas College in applying for a state Skills Development Fund Grant for employee training. · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · More than 12 months ago, the City began working with Thermadyne Holdings Corporation to lore a consolidation project to Denton. The consolidation of two operations resulted in adding employees to Victor Equipment of Denton. The merge follows an announcement iu January 2003 of plans to relocate Tweco Products, lnc.'s Wichita, Kansas, facility to thc Denton area. Warehouse, shipping and assembly operations for both Victor and Tweco will be moved to an Alliance Gateway warehouse in Roanoke. Machining operations will be combined at the Denton Victor plant. The consolidation brings approximately 120 employees to the Denton area with approximately 30 employees at the Denton facility. The additional manufacturing in the Denton plant is estimated to bring about $15 million in taxable value to the City. Victor Equipmeot opened in Denton in 1965. The company manufactures gas-operated cutting and welding torches and gas and flow pressure regulation equipment. Victor also makes a variety of medical equipment used in the oxygen-therapy market. Victor Equipment is enton s fourth largest private employer. Major Initiatives According to recent projections from the North Central Texas Council of Governments, the City is expected to grow at a rate of 5% annually over the next several years. The City is projected to reach a population of I I 1,326 by the end of 2006. Growth continues to increase demand for City of Denton services. Sales tax, the largest revenue source for the City's General Fund, had increased steadily since early 1999. However, during the past two years, the City felt the economic downturn experienced by the rest of the state as sales tax revenue flattened out. Actual sales tax revenue received for fiscal year 2003 was only 1.1% more than prior year's receipts. As was anticipated when the five-year, Long-Range Financial Forecast was presented to Council in February 2002, fiscal year 2002-03 proved to be a very tight budget year. It took the orgmfization working closely together to identify areas for adjustments that could be made without significantly impacting the level of service to oor community. The City's tax base has grown considerably over the last few years. The Denton Central Appraisal District's certified appraisal roll shows an increase of 9.98% over the 2001 certified value and 7.63% over the final 2001 value (including supplementals). A tax increase of three-quarters of a cent had been planned for fiscal year 2002-03 as part of the 2000 Bond Election. However, the increases in valuation allowed the City to maintain the same tax rate as the prior fiscal year. Public safety continues to be a major initiative for the City. The City's new Central Fire Station was completed in early summer of 2003. Training continues to be a focus in the public safety area. The Fire Department's training program currently meets basic certification requirements, but more can be done to enhance and improve the program. A feasibility study was funded to evaluate the possibility of a joint police and fire training facility. The study will assist not only in identifying the most advantageous site but also will provide a utilization plan that considers facility use by outside agencies as a way of generating revenue to help pay for operating the facility. Additional funding was also provided for enhancements to the training program. The Police Department also added two additional police officers througb grants awarded to the City. The first is a grant from the COPS in Schools program, which added an additional school resource officer at a Denton Independent School District (D1SD) school. The second a grant from the Department of Transportation Special Traffic Enforcement Program (STEP), added an additional full-time traffic enforcement officer. The Human Services Committee received requests totaling $701,749 for fiscal year 2002-03. Of those requests, the Committee recommended a total of $449,675, an increase of 3.4% over the prior year. With the assistance of a grant from the Texas Department of Transportation and $500,000 in bond funding approved by the voters in the 2000 Bond Election, an air traffic control tower was completed in October 2003 at the Denton Municipal Airport. In addition, the City began the design of a new terminal building funded by the Texas Department of Transportation and City matching funds. Funding requests are also pending at the federal level for other needed improvements, sucb a~ a 1,500-foot extension of the runway, realignment of the taxiway, and apron extension. The Parks and Recreation Department continues to add and improve facilities for the citizens of Denton. In the summer of 2003, a new joint City-Denton Independent School District (DISD) aquatic center was opened. The aquatic center includes a water park, as well as a natatorium, and is expected to be fully sustained with revenues generated by the facility. Financial Information The City's management team is responsible for establishing and maintaining internal controls designed to ensure that the assets of the City are protected from loss, theft, or misuse and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. Internal controls are designed to provide reasonable but not absolute assurance that these objectives are met. The concept of reasonable assurance recognizes that (l) the cost of the controls should not exceed the benefits likely to be derived and (2) the valuation of cost and benefits requires estimates and judgments by management. Single Audit As a recipient of federal and state grant awards, the City is also responsible for ensuring that adequate internal controls are in place to ensure compliance with applicable state and federal laws and regulations. These controls are subject to periodic evaluation by management and the outside auditors of the City's financial statements. As a part of the City's single audit, tests are conducted to determine the adequacy of the internal controls related to the federal awards programs and to determine that the City has complied with applicable laws and regulations. Budgeting Controls The City maintains budgetary controls to ensure compliance with legal provisions embodied io the annual appropriated budget approved by the City Council. Activities of the General Fund, Special Revenue Funds (Recreation Fund, Police Confiscation Fund, Tourist and Convention Fund, and Emily Fowler Library Fund), Debt Service Fund, Enterprise Funds, and Internal Service Funds (excluding Risk Retention) are included in the annual operating budget. A capital improvement plan is approved each year. The level of budgetary control (i.e., the level at which expenditures cannot legally exceed the appropriated amount) is established by function activity within an individual fund. The City maintains an encumbrance accounting system as one technique of accomplishing budgetary controls and a technique of budgetary "lock out" which will prevent a transaction from exceeding legally appropriated budgetary amounts. As demonstrated by the statements and schedules included in the financial section of this report, the City continues to meet its responsibility for sound Financial management. Enterprise Operations The City's enterprise fund operations consist of a utility system and solid waste operations. The City's utility system provides electric, water and wastewater services. Where were no base rate changes in fiscal year 2002-03 for the City's utility system operations. Although there was no change in the base rate for residential or commercial solid waste collection, there was an increase in the residential rate for those customers receiving manual refuse collection. Commercial collection rates increased slightly for side-load service. During this fiscal year, Building Inspections was re-categorized from an enterprise operation to a general fund operation. Internal Service Operations The internal service operations consist of the Materials Management, Fleet Services, Motor Pool, Risk Retention, and Technology Services funds. The Materials Management Fund accounts for the financing of goods provided by the Warehouse to other City departments. The Fleet Services Fund accounts for the financing of goods and services provided by the municipal garage to other departments within the City. The Motor Pool Fund is responsible for the purchase of City vehicles not budgeted in other funds. The Risk Retention Fund accounts for the accumulation of resources for the payment of workers' compensation, general liability claims, and insurance policies. The Technology Services Fund provides computer-programming services and systems analysis. Reprographics, which is part of the Technology Services Fund, provides imaging, print shop, and office services to City departments. - iv - · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · Fiduciary Operations Agency Funds Thc Agency Funds consist of Payroll, Employee Insurance and Other Agency Funds. The Payroll Fund is responsible for thc collection and payment oftbc City's payroll and associated liabilities. Employee Insurance Fund accounts for City and employee contributions to pay for employee health and life insurance premiums. The Other Agency Funds account for various accumulations of resourees for non-City entities. Debt Administration At September30, 2003, the City had $61,913,038 in genera/ obligatiou bonds outstanding, $41,914,541 in certificates of obligation and $304,360,000 of utility system revenue bonds. Moody's Investor's Service, lnc. has given the City's general obligation bonds and the certificates of obligation a rating of"Aa3." Standard and Poor's Corporation has given both the City's general obligation bonds and certificates of obligation an "AA-" rating. Utility system revenue bonds have maintained an "A+" rating from Standard and Poor's Corporation and an "Al" rating from Moody's Investor's Service, Inc. The City has developed a plan for issuing annual General Obligation Bonds that are approved by voters in a capital improvements plan. Certificates of Obligation are used for short-term construction projects and financing motor pool vehicles, other equipment, and landfill. Cash Management The City follows an active program of cash management, keeping all temporarily idle funds in interest-bearing accounts. These accounts are in the form of Super NOW accounts, certificates of deposits, local government investment pools, treasury issues and federal government agency instrumentalities. On September 30, 2003, the annualized yield on investments was 2.46%, compared to 3.41% and 5.05% for the same period in 2002 and 2001, respectively. Investable funds as of September 30, 2003, were $282.2 million, wbich is a decrease from $303.4 million in 2002 and an increase from $260.5 million in 2001. The City's investment policy is to safeguard assets with a minimal amount of risk, while maintaining the necessary level of liquidity and maximizing the yield on investments. Accordingly, all of the City's deposits are either insured by the Federal Deposit Insurance Corporation or are collateralized by governmental securities. All collateral for deposits are held by a third-party financial institution in the City of Denton's name. The investments of the Deferred Compensation Fund, in which the City participates, are held separately from those of other City funds by an outside trustee appointed by the City. State statutes authorize the City to invest in obligations of the U.S. Treasury and U.S. agencies; obligations of the State of Texas and related agencies; fully collateralized repurchase agreements; local government investment pools; SEC-registered no-load, money market mutual funds; fully collateralized certificates of deposit; and municipal securities of any state rated "AA" or above by a nationally recognized rating service. Risk Management The City has maintained a very aggressive program to increase safety awareness and training. Incentive programs, transitional duty, medical-case management, and cost containment should continue to contain workers' compensation expenditure growth in the future. Legal expenditures for general liability issues have increased steadily over the past three years and are anticipated to continue during the upcoming fiscal year. Independent Audit The City Charter requires an independent audit of the accounts of the City by an independent auditor. The accounting firm of Deloitte LLP was selected by the City Council to perform the annual audit. In addition to meeting the requirements set forth in the City Charter, the audit was also designed to meet the requirements of the Single Audit Act Amendmants of 1996 and related OMB Circular A-133. Awards The Government Finauce Officers' Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Comprehensive Annual Financial Report for the fiscal year ended September 30, 2002, for the nineteenth consecutive year. In order to be awarded the Certificate of Achievement in Financial Reporting, the City published an easily readable and efficiently organized Comprehensive Annual Financial Report. This report satisfies both generally accepted accounting principles and applicable legal requirements. The Certificate of Achievement is held for a period of one year only. We believe our current Comprehensive Annual Financial Report continues to meet the Certificate of Achievement requirements, and we are submitting it to GFOA to determine its eligibility for another certificate' The City also received GFOA's award for Distinguished Budget Presentation,for its 2003 Annual Budget. In order to qualifv for the Distinguished Budget Presentation Award, the City s budget document was judged accordi,ng to it~ comp iance with specific guidelines established by GFOA. These guidelines help ensure that Denton s budget is distinguished as an operations guide, financial plan, policy document, and communication device. The ~ity has submitted its 2004 Budget to GFOA to determine its eligibihty for another certificate. We believe it,continues to meet the Distinguished Budget Presentation Award criteria. , The City s Treasury department was recognized in 2003 by the Municipal Treasurers Association of United State, s and Canada (MTA US & C) and received the Cash-Handling Program Certification. MTA certified the City s cash-handling program by fulfilling the elements that the Association deems as necessary components of a written investment policy, which include subm tting the cash-handling procedures, cash-handling legislation, and cash-handling training syllabus. The attainment of this certification is a positive step toward the safeguard, lng of public funds. The City s Purchasing department earned the Excellence n Procurement Award from the National Purchasing Institute. Inc. (NPI) for 2003 for the sixth year in a row. This award is achieved by those organizations that demonstrate excellence in procurement by achieving a high score on standardized criteria designed to measure innovation professionalism, productivity, and leadership NPI represents purchasing officials employed by national, s~ate, and local governments; educational institutions; and tax-supported and public entities throughout the country. Acknowledgements e would like to thank the City Council for their strong leadership and support that helped make the pWreesentation of this report possible. A tremendous amount of time and effort went into the development of this ......... ~-~ ~ like to thank the department staff, department director~s,.d~mslon ,heads and Finance report, we wumu ,~,~. . · . ,m~,,~,,, o~,,,-t~ in the nranaration of the annual financial staff for their especially the Accounting D~ws~on report. Kathy L. DuBose, CPA, CGFO Assistant City Manager of Fiscal and Municipal Services CITY OF DENTON, TEXAS ORGANIZATIONAL CHART Boards & Commissions Municipal Judge Citizens Ci~ Council City Attorney [ City Manager I Internal Audit & Operation Analysis Economic Development/Main Street Director of Management I and Public Information Services I City Manager's Office Public Information Office Cable Television Reprographics Assistant City Manager Assistant City Manager Assistant City Manager Fiscal Operations I Management and Budget Library Human Resources Technology Services Materials Management Fleet Services Motor Pool Electric Operations Water Operations Wastewater Operations Drainage Operations Solid Waste Operations Traffic Operations Streets Street Lighting Parks & Recreation Police Department/Animal Services Code Enforcement Fire Department Public Transportation Airport Planning Building Inspections Facilities Management En Cert!ficate of Achievement for Excellence in Financial Reporting Presented to City of Denton, Texas For its Comprehensive Annual Financial Report f°r;;etet~:ealr 3Y~,; 0E012dod government units and public employee relkement and financial reporting. Executive Director CITY OF DENTON, TEXAS List of Principal Officials September 30, 2003 ELECTED OFFICIALS Title Mayor Mayor Pro-Tern Counci[member Councilmember Councilmember Councilmember Councilmember CITY OFFICIALS Title City Manager Assistant City Manager Assistant City Manager Assistant City Manager City Attorney Municipal Judge City Secretary Name Euline Brock Mark Burroughs Raymond Redmon Pete Kamp Jack Thomson Perry McNeill Bob Montgomery Name Michael A. Conduff Kathy L. DuBose Howard Martin Jon Fortune Herbert Prouty Robin Ramsay Jennifer Walters of · · · · · · · · · · · · · · · · · · · · · · · · · · Deloitte Deloitte & Touche LLP JPMorgan Chase Tower 2200 ROSS Avenue, Suite 1600 Dallas, TX 75201-6778 USA Tel: +1 214 840 7000 www. deloilte.com INDEPENDENT AUDITORS'REPORT The Honorable Mayor and City Council Members City of Denton, Texas We have audited the accompanying financial statements of the governmental activities, business- type activities, each major fund and the aggregate remaining fund information of the City of Denton, Texas (the "City"), as of and for the year ended September 30, 2003, which collectively compromise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the basic fraancial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, business-type activities, each major fund, and aggregate remaining fund information of the City, as of September 30, 2003, and the respective changes in financial position and of cash flows for the year then ended in conformity with accounting standards generally accepted in the United States of America. Management's Discussion and Analysis, the budgetary comparison information for the General Fund and the schedule of Texas Municipal Retirement System funding progress and contributions, as listed in the table of contents, are not required parts of the basic financial statements, but are supplementmy information required by the Government Accounting Standards Board. This supplementary information is the responsibility of the City's management. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The combining and individual fund financial statements and schedules listed in the foregoing table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements of the City. These financial statements and schedules are the responsibility of management of the City. Such additional information has been Member of Deloitte Touche Tohmatsu subjected to the auditing procedures applied in our audit of basic financial statements and, in our opinion, is fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. The introductory section, statistical section, and other supplemental information, as listed in the table of contents, are presented for the purpose of additional analysis and are not a required part oftbe basic financial statements for the City. Such additional information has not been subjected to the auditing procedures applied in our audit of the basic financial statements and, accordingly, we express no opinion on it. In accordance with Government.4uditing Standards, we have also issued our report dated February 16, 2004 on our consideration of the City's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. February t6, 2004 · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · CITY OF DENTON, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2003 The City of Denton's Management's Discussion and Analysis is designed to (a) assist the reader in focusing on significant financial issues, (b) provide an overview of the City's financial activity, (c) identify changes in the City's financial position (its ability to address the next and subsequent years' challenges), (d) identify any material deviations from the financial plan (the approved budget), and (e) identify individual fund issues or Since the Management's Discussion and Analysis (MD&A) is designed to focus on the current year's activities, resulting changes and currently known facts, please read it in conjunction with the Transmittal Letter (beginning on page i) and the City's financial statements (beginning on page 11 ). FINANCIAL HIGHLIGHTS · The assets of the City exceeded its liabilities at the close of the fiscal year ending September 30, 2003, by $386.9 million (net assets). Of this amount, $91.3 million (unrestricted net assets) may be used to meet the govemment's ongoing obligations to citizens and creditors. · The City's total net assets increased by $29,524,040. This increase can be attributed to increases to proceeds from long-term debt and enterprise fund revenues and contributed capital. · As of September 30, 2003, the City's governmental funds reported combined fund balances of $35,090,560, a decrease of $14,286,045 in comparison with the prior fiscal year, due to increased capital spending. Approximately 29% of this total amount, $10,121,562, is available for spending at the government's discretion (unreserved fund balance). · At the end of the fiscal year, unreserved fund balance for the General Fund was $8,442,942, or 15.46% of actual general fund expenditures. · The City's total debt increased by $35,165,701 during the fiscal year. The primary reason for the increase was the issum~ce of $50,180,000 in revenue bonds and $15,485,000 in general obligation bonds and certificates of obligation. OVERVIEW OF THE FINANCIAL STATEMENTS The Management Discussion and Analysis are intended to serve as an introduction to the City of Denton's basic financial statements. The City's basic financial statements comprise three components: (1) government- wide financial statements, (2) fund financial statements and (3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide Financial Statements. The government-wide financial statements are designed to provide readers with a broad overview of the City's finances in a manner similar to private-sector business. The statement of net assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Over time increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City's net assets changed during the most recent fiscal year. All of the current year's revenues and expenses are taken into account regardless of when cash is received or paid. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but not used vacation leave). Both the statement of net assets and the statement of activities are prepared using the accrual basis of accounting as opposed to the modified accrual basis used in prior reporting models. In its Statement of Net Assets and the Statement of Activities, the City is divided between two kinds of activities: 3 CITY OF DENTON, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (continued) SEPTEMBER 30, 2003 Governmental activities. Most of the City's basic services are reported here, including police, tim, libraries, development, public services and operations, public works, building inspection, technology services and general administration. Property taxes, sales taxes and franchise fees finance most of these activities. Business-type activities. The City charges a fee to customers to help cover all or most of the cost of certain services it provides. The City's utility system (electric, water and wastewater) and solid waste activity are reported here. The government-wide financial statements can be found on pages 11 - 13 of the report. Fund Financial Statements. A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. Fund financial statements provide detailed information about the most significant funds, not the City as a whole. Some funds are required to be established by state law or bond covenants. However, the City Council establishes many other funds to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes, grants and other monies. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental funds. The majority of the City's basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method identified as the modified accrual basis of accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City's general government operations and the basic services it provides. Governmental fund information helps the reader determine whether there are more or fewer financial resources that can be spent in the near future to finance the City's programs. By comparing information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements, readers may better understand the long-term impact of the government's near-term financing decisions. The relationship or differences between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds is detailed in a reconciliation following the fund financial statements. The City of Denton maintains 11 individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures and changes in fund balances for the general fund, debt service fund and capital projects fund, all of which are considered to be major funds. Data from the other eight governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report. Proprietary funds. The City charges customers for the services it provides, whether to outside customers or to other units within the City. These services are generally reported in proprietary funds. Proprietary funds are reported in the same manner that all activities are reported in the Statement of Net Assets and the Statement of Activities. In fact, the City's enterprise funds (a component ofproprietary funds) are identical to the business-type activities that are reported in the government-wide statements, but provide more detail and additional information, such as cash flows. The internal service funds (the other component of proprietary funds) are utilized to report activities that provide supplies and services for the City's other programs and activities, such as the City's municipal warehouse, the City's self insurance fund and equipment maintenance function. Because these services benefit both governmental and business-type functions, they have been included in both the governmental and business-type activities in the government-wide financial statements. The City of Denton maintains four enterprise funds. The City uses enterprise funds to account for its electric, water and wastewater systems and solid waste operations. The funds provide the same type of 4 · · · · · · · · · · · · · · · · · · · · CITY OF DENTON, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (continued) SEPTEMBER 30, 2003 information as the government-wide financial statements, only in more detail and include some of the internal service fund4ype activity. The City considers all enterprise funds to be major funds. During the fiscal year, building inspection activities were re-categorized from enterprise fund to general fund. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are no~t reflected in the government-wide financial statement because the resources of those funds are no~t available to support the City's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. Agency funds are a component of fiduciary funds. Agency funds differ from other fiduciary funds in that they do not typically involve a formal trust agreement. Agency funds are used to account for situations where the City's role is purely custodial, snch as receipt, temporary investment and remittance of fiduciary resources to individuals, private organizations or other governments. The City maintains three fiduciary funds. The City uses agency funds to account for the collection and payment of the City's payroll and associated liabilities, employee-purchased insurance and other similar relationships. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 27 - 47 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS The City's combined net assets were $386,908,416 as of September 30, 2003. Analyzing the net assets and net expenses of governmental and business-type activities separately, business-type activities' net assets are $272,417,498. This analysis focuses on the net assets (Table 1) and changes in general revenues (Table 2) and significant expenses of the City's governmental and business-type activities. The largest portion of the City's net assets (62.1%) reflects its investment in capital assets (e.g., land building, machinery and equipment), less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Table I Net Assets (in thousands) Current and other assets Capital assets Total assets Long-term liabilities outstm~ding Other liabilities Total liabilities Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets Governmental Business-type Activities Activities Total 2003 2002 2003 2002 2003 2002 57,505 $ 71,714 $ 256,537 $ 272,132 $ 314,042 $ 343,846 163,920 135~223 367,643 308~087 531~563 443~310 221,425 206,937 624,180 580,219 845.605 78T156 88,804 84,614 312,607 281,142 401,411 365,756 18~130 19~068 3%156 44~948 57.286 64.016 106,934 103,682 351,763 3267090 458,697 429,772 100,877 88,162 163,785 131,316 264.662 219,478 428 1,001 30,558 28,456 30,986 29,457 I3,186 14~092 78,074 94~357 91,260 108,449 114.491 $ 103.255 $ 272.417 $ 254.129 $ 386,908 357.384 Governmental activities. The City's general revenues for governmental activities (excluding transfers) are detailed on Table 2. CITY OF DENTON, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (continued) SEPTEMBER 30, 2003 Table 2 GeneralRevenues Property taxes Sales taxes Franchise fees Hotel occupancy taxes Beverage taxes Bingo taxes Unrestricted investment earnings Miscellaneous Total general revenues 2003 2002 $20,964,738 $19,075,268 16,047,297 15,875,935 12,571,989 11,930,612 855,879 938,225 192,243 174,264 28,146 20,673 1,451,106 3,990,679 5,354,783 3,246,851 $58,466,486 $55,252,507 Governmental activities increased the City's net assets by $11,236,089. The key elements of this increase are contained in Table 3. Table 3 Changes in Net Assets (in thousands) Governmental Business-type Program Revenue: Charges for services Operating grants and contributions Capital grants and contributions General Revenue: Property tax Sales tax Other taxes/fees Miscellaneous Total revenue Expenses: General govemment Public safety Public works Parks and recreation Interest on long-term debt Electric Water Wastewater Solid waste Building inspections Total expenses Increase in net assets before transfers Transfers Increase in net assets Net assets at beginning of year Net assets at end of year Activities Activities Total 2003 2002 2003 2002 2003 2002 $10,176 $ 8,194 $158,935 $140,866 $169,111 $149,060 3,221 2,480 3,221 2,480 14,023 6,379 19,022 8,505 33,045 14,884 20,965 19,075 20,965 19,075 16,047 15,876 16,047 15,876 15,099 13,064 19,456 13,064 5,355 7238 4,357 12~199 5,355 19,437 84,886 72,306 182,314 161,570 267,200 233,876 22,933 16,240 28,837 27,322 10,275 13,692 8,419 7,363 4,186 4,253 22,933 16,240 28,837 27,322 10,275 13,692 8~19 7,363 4,186 4,253 113,674 99,832 113,674 99,832 20,425 18,095 20,425 18,095 16,560 15,556 16,560 15,556 12,367 11,658 12,367 11,659 1,731 1,731 74,650 68,870 163,026 I46,872 237,676 215,742 10.236 3A36 19.288 14~698 29.524 18.134 1,000 1,074 (1,000) (I,074) 11.236 4.510 18.288 13.624 29.524 18.133 103,255 98.745 254,130 240,506 357,385 339,251 $114,49I $103,255 $272,418 $254,130 $386,909 $357,385 The most significant governmental expense for the City was in providing public safety, which incurred expenses of $28,837,158. These expenses were offset by revenues collected from a variety of sources, with the largest being from property taxes, which are $20,964,738 for the fiscal year coding September 30, 2003. The 6 CITY OF DENTON, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (continued) SEPTEMBER 30, 2003 most significant portion of public safety is the cost of personnel, which is estimated at $23,228,709. Other significant governmental expenses for the City include general government, which incurred approximately $22,933,107 in expenses, of which $11,560,259 represented personnel charges. The public works activities of the City incurred $10,274,822 in expenses, of which $5,892,396 represented personnel expense. Business-type activities. Business-type activities increased the City's net assets by $18,287,951, accounting for 66.0% of the total growth in the government's net assets. Key elements of this increase are as follows: Capital contributions emerged as a major revenue source for the water and wastewater utilities during the current fiscal year, producing $19,022,045 in revenue. Water recorded revenue in the amonnt of $5,565,947 and wastewater recorded revenue in the amount of $13,456,098 from contributions. Contributions of assets arise from new property development within the city. GENERAL FUND BUDGETARY HIGHLIGHTS During fiscal year 2002-03 there were no amendments to the City of Denton general fund budget. For fiscal year 2002-03, actual expenditures on a budgetary basis, were $59.6 million compared to the original budget expenditures of $61.5 million. The $1.9 million variance was primarily due to reduced spending for the general government. Actual revenue on a budgetary basis was $59.8 million compared to the original budget of $61.3 million. The $1.5 million variance was due to fines and forfeitures and fees for services being below expectations. The City of Denton's actual year-end fund balance, on a budgetary basis, was $8.6 million. This compares favorably to the projected year-end fund balance of $7.9 million. The actual year-end fund balance is within the City's policy of maintaining 13% in unreserved fund balance. Many factors were considered when setting the fiscal year 2002-03 budget, tax rates and fees to be charged for business-type activities. A major factor was the economy. One of the more pressing challenges facing the City, and one that imposes the heaviest burden on the resources included in the budget, is the growth occurring in the community. The growth in Denton, in terms of both corporate service area and population, continues to increase the demand for City services. The city grew 20.7% from a population of 66,720 in 1990, to a 2000 census population of 80,537. Over 16% of that growth occurred after 1995. The 1999 Denton Plan population forecast assumed an annual growth of 3%. Current projections have been revised to an annual growth rate of 5%. Annexations have also created an increased demand for city services. In fiscal year 2003-04 the City completed one annexation which added 67.7 acres to the City. Since January 1999, Denton city limits have increased from 55.7 square miles to a Jannary 2004 total of 69.3 square miles. Most of the increase in service area, 13.6 square miles, became subject to development that required City services. As projects are completed from both the 1996 and 2000 bond elections, more operating resources become necessary to maintain the new streets, parks and other infrastructure improvements. Maintaining existing service levels for police, fire, utilities, streets, parks and other programs, as the growth rate rises and improvements are brought on-line, requires the commitment of additional resoumes. Additional and enhanced levels of service desired by the community have also exerted significant funding pressure. Though the issues were numerous and complex, the 2002-03 budget included the necessary programs and enhancements needed to modestly address these growth-related challenges and serves as a foundation to plan for the imminent growth in the community beyond the next fiscal year. Over the years, the Denton City Council has followed a policy of maintaining a general fund balance in order to CITY OF DENTON, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (continued) SEPTEMBER 30, 2003 plan for unforeseen emergencies and place tbe City in a more favorable position. In 1997-I998, the policy level was increased from 10% to 12.5% of general fund expenditures. In 1999-2000, the percentage was increased to 13%. The 2002-03 budget maintains the policy level at 13%. Below is a listing of the ending unreserved balances for the past three years, as well as fiscal year 2002-03 projected and actual. For those years where the actual ending balance has exceeded the policy level, the following year's budget has included utilization of that amount for one-time expenditures. By using the fund balance for one-time expenditures only, the financial impact on futura budgets is eliminated. Unreserved balances % of total expenditures Policy level Actual Actual Actual Projected Actual 9/30/00 9/30/01 9/30/02 9/30/03 9/30/03 $8,536,438 $9,571,700 $8,033,092 $8,048,827 $8,442,942 18.51% 18.20% 13.83% 13.00% 14.10% 13.00% 13.00% 13.00% 13.00% 13.00%o The second largest revenue source of the General Fund was the ad valorem tax. Denton's ad valorem tax rate is comprised of two components. The first is the operations and maintenance component that is used to calculate revenue for the City's General Fund operations. The second component is the debt portion that is used to calculate revenue to pay the City's general debt service obligations. The Denton Central Appraisal District's certified appraisal roll shows an increase of 9.98% over the prior year certified value and 7.63% over the final 2002-03 fiscal year value (including supplements). This increase consisted of $192.1 million of new value added for 2002 and a $144 million increase in value for property on the tax rolls in 2001. The proposed budget incorporates an increase in the operations and maintenance portion of the ad valorem tax rate of $.01112 and a $.01112 decrease in the debt service portion. Tbe total 2002-03 ad valorem tax rate remained at $.54815 per $100 of valuation. The general fund budget also included a minimal fee increase for animal control fees related to rabies testing and euthanasia. CAPITAL ASSET AND DEBT ADMINISTRATION Capital assets. At thc end of fiscal year 2003, thc City had $531,563,860 invested in a broad range of capital assets, including police and fire equipment, buildings, park facilities, roads, bridges and water and sewer lines. (Table 4.) This amount represents a net increase (including additions and deductions) of $90,830,365 or 20.5% over the prior fiscal year. Table 4 Capital Assets at Year-end (Net of Depreciation, in Thousands) Governmental Business-type Activities Activities Totals 2002 2003 2002 2003 2002 2003 Land $ 1,407 $ 1,794 $ 3,051 $ 2,901 $ 4,458 $ 4,695 Landfill improvements 7,741 7,730 7,741 7,330 Buildings and improvements 16,132 16,281 16,132 16,281 Plant, machinery and equipment 16,633 19,770 147,258 75,975 163,891 95,745 Water rights 60,652 59,884 60,652 59,884 lnfi'astructure 62,461 75,489 7,558 107,333 70,019 182,822 Construction in progress 38,589 50,587 81,827 113,819 120,416 164,406 Total capital assets $135,222 $163,921 $308,087 $367,242 $443,309 $531,163 8 · · · · · · · · CITY OF DENTON, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (continued) SEPTEMBER 30, 2003 This year's major additions included: Description Amount $ 4,882,578 4,181,632 1,930,244 1,234,590 1,068,747 936,969 845,304 720,557 665,519 411,619 Aquatic Center North Branch Library New Central Fire Station Community Park Land Technology Plan 2 Upgrade Upgrade Existing Parks Spencer Road Public Safety Communications Airport Control Tower Street Construction Equipment Total $ 16,877,759 Additional information on the City's capital assets can be found in note IV. D. on pages 35-37 of this report. Debt. At year-end, the City had $411,335 million in bonds and notes outstanding as compared to $378,005 million at the end of the prior fiscal year, an increase of 8.8%, as shown in Table 5. Table 5 Outstanding Debt at Year-end (in thousands) Governmental Business-type Activities Activities Totals 2002 2003 2002 2003 2002 2003 General obligation bonds $58,664 $59,722 $ 1,508 $ 2,191 $ 60,172 $ 61,913 Certificates of obligation 27,628 30,149 12,189 11,766 39,817 41,915 Revenue bonds 274,875 304,366 274,875 304,366 Notes 3,141 3,141 3,141 3,141 Total $86,292 $89,871 $291,713 $321,464 $378,005 $411,335 During the current fiscal year the City issued debt in May 2003. The new debt resulted primarily from the issuance of $50,180,000 in revenue bonds and $15,485,000 in general obligation bonds and certificates of obligation. Moody's Investor's Service, Inc. has given the City's General Obligation Bonds and the Certificates of Obligation a rating of"Aa3." Standard and Poor's Corporation bas given both the City's General Obligation Bonds and Certificates of Obligation an "AA-" rating. The City's Utility Revenue Bonds carry "Al" and "AA- '' ratings, as assigned by two of the national rating agencies. The City is permitted by Article XI, Section 5 of the State of Texas Constitution to levy taxes up to $2.50 per $100 of assessed valuation for general governmental services including the payment of principal and interest on general obligation long-term debt. The current ratio of tax-supported debt to assessed value of all taxable property is 2.32%. The City maintains a self-insurance program for general liability, public officials' errors and omission, police professional liability, property loss and workers' compensation. Claims for property loss over $100~000 per occurrence and for workers' compensation over $500,000 per occurrence are covered by private insurance companies. The City has claims and judgments of $1.8 million outstanding at year-end compared with $1.8 million at the end of the prior fiscal year. Other obligations include accrued vacation pay and sick leave. More detailed information about the City's long-term liabilities is presented in Note IV. G., on pages 38-42 of this report. 9 CITY OF DENTON, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (continued) SEPTEMBER 30, 2003 ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES The general fund's largest revenue soume is sales tax receipts. Because of the volatile nature of the sales tax revenue source and because of the recent statewide decline in sales tax receipts, the City has been conservative in sales tax projections for fiscal year 2003-04. The fiscal year 2003-04 budget projects only a 3.0% growth in overall receipts over the prior year's revised estimate. Although the City anticipates another very tight budget year for 2003-04, sales tax trends appear more favorable. The fiscal year 2003-04 budget incorporates no increase in the property tax rate. It remains at $.54815 per $100 valuation. The 2003-04 budget uses $190,227 of fund balance to cover grant matching funds and other one-time needs. By policy, the City maintains an unreserved fund balance of 13% of budgeted expenditures. The use of available fund balance for one-time expenditures eliminates the financial impact on future budgets. The fiscal year 2003-04 utility's operating budgets include electric, water and wastewater. The electric budget includes no base rate changes. The Energy Cost Adjustment (ECA) rate remains at $.0250 per kilowatt-hour. No rate changes are planned for water customers; however, the wastewater budget for 2003-04 includes a 4.0% increase for retail customers. The solid waste budget includes a residential rate increase of $0.70 per month. Commercial collection service rates will increase for front-load and roll-off containers. The landfill rate is also budgeted to increase $1.25 a ton for fiscal year 2003-04. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the City's finances for all those with an interest in the City's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Denton Controller, 215 E. McKinney, Denton, Texas 76201. 10 CITY OF DENTON, TEXAS Exhibit 1 STATEMENT OF NET ASSETS SEPTEMBER 30, 2003 Activities ASSETS: Current assets: Cash, cash equivalents and investments, at fair value $ 43,104,322 $ Receivables, net of allowances: Taxes 3,458,809 Accounts Unbilled utility service Interest 622,160 Other 2,042,181 lnternal balances (1,287,127) Due from other governments 1,602,248 Inventory 4,788,628 Prepaid items 79,128 Deferred debt issuance costs 230?896 Total current assets 54~641~245 Noncurrent assets: Restricted assets: Cash, cash equivalents and investments~ at fair value 2,863,843 Escrow deposits Accrued interest Capital assets, net of accumulated depreciation: Land 1,793,859 Buildings 16,280,725 Plant, machinery and equipment 19,769,780 Infrastructure 75,489,244 Landfill improvements Water rights Construction in progress 507586~589 Total noncurrent assets 166~7847040 Total assets 22174257285 LIABILITIES: Current liabilities: Accounts payable and accrued liabilities 5,401,467 Retainage payable 333,791 Deposits 264 Accrued interest 684,276 Due to fiduciary funds 207,063 Due to other governments 4,161 Other liabilities 670?972 Total current liabilities 773017994 Noneurrent liabilities: Payable from restricted assets: Accounts payable and accrued liabilities 221,474 Retainage payable Accrued interest Deferred revenue 97,767 Noncurrent liabilities: Due within one year 10,539,279 Due in more than one year 88~773~853 Total noncurrent liabilities 99~6327373 Total liabilities 1067934~367 NET ASSETS: Invested in capital assets, net of related debt 100,876,627 Restricted: Restricted for debt service 428,426 Unrestricted Unreserved 13~1857865 Total net assets $ 114.490.918 $ The notes to the financial statements are an integral part of this statement Primary Government Business-type Activities Total 30,887,792 $ 73,992,114 3,458,809 11,246,652 11,246,652 7,298,669 7,298,669 102,105 724,265 33,775 2,075,956 1,287,127 1,602,248 4,788,628 79,128 1~8897424 27120~320 52?745?544 107~386~789 202,328,999 205,192,842 294,299 294,299 1,167,893 1,167,893 2,901,245 4,695,104 16,280,725 75,975,061 95,744,841 107,333,136 182,822,380 7,730,578 7,730,578 59,884,260 59,884,260 11318191383 16414057972 571~4341854 7381218?894 624,180~398 845~605~683 9,463,162 14,864,629 48,085 381,876 1,750,425 1,750,689 684,276 207,063 4,161 670?972 117261~672 18~5631666 1,791,586 2,013,060 2,535,506 2,535,506 5,710,966 5,710,966 3,808,379 3,906,146 14,047,760 24,587439 312~607~031 401,380~884 340~501~228 440~133~601 35177627900 458~697~267 163,784,452 264,661,079 30,558,417 30,986,843 784741629 911260~494 272.417.498 $ 386.908.416 11 CITY OF DENTON, TEXAS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2003 Functions/Programs Expenses Primary government: Governmental activities: General government $ 22,933,107 Public safety 28,837,158 Public works 10,274,822 Parks and recreation 8,419,508 Debt service - interest 4,106,051 Total governmental activities Business-type activities: Electric system 113,674,296 Water system 20,424,805 Wastewater system 16,560,308 Solid waste 12,366,910 Total business-type activities Total primary government Operating Capital Charges for Grants and Grants and Services Contributions Contributions $ 3.654,387 $ 2,514,316 $ 524,349 4,371,407 636,093 92,175 !.803,025 14,546 13,406,532 347,110 56,309 74,650,646 10,175,929 3,221,264 14,023,056 105,509,934 24,552,658 5,565,947 17,144,312 13,456.098 11,728,024 163.026,319 158,934,928 19,022,045 $ 2371676~965 $ 169~110~857 $ 3122K264 $ 33~045~101 Property tax Sales tax Franchise fees Hotel occupancy tax Beverage tax Bingo tax Investment income Miscellaneous Transfers Total general revenues and transfers Change in net assets Net assets at beginning of year Net assets at end of year The notes to the financial statements are an integral part of this statement. 12 Net (Expense) Revenue and Changes in Net Assets Exhibit II Governmental Activities Primary Government Business-type Activities Total $ (16,240,055) (23,737,483) 4,949,281 (8,016,089) (4,186,051) (47,230,397) $ (16,240,055) (23,737,483) 4,949,281 (8,016,089) (4,186,051) (47,230,397) (8,164,362) (8,164,362) 9,693,800 9,693,800 14,040,102 14,040,102 (638,886) (638,886) 14,930,654 13,401,216 (47,230,397) 14,930,654 (32,299,743) 20,964,738 16,047,297 12,571,989 855,879 192,243 28,146 1,451,106 5,354,783 1,000,305 20,964,738 16,047,297 12,571,989 855,879 192,243 28,146 5,594,145 5,569,346 4,143,039 214,563 (I,000,30SI 58,466,486 3,357,297 61,823,783 11,236,089 18,287,951 29,524,040 103,254,829 254,129,547 357,384,376 $ 114,490,918 $ 272,417,498 $ 386~908~416 13 CITY OF DENTON, TEXAS BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2003 Exhibit III Other Total General Capital Governmental Governmental Fund Debt Service Proiects Funds Funds ASSETS: Cash, cash equivalents and investments. at fair value Receivables, net of allowances for uncollectibles: Taxes 3,458,809 Accrued interest 45,982 Other 1,766,785 Due from other funds 3,978,446 Due from other government., Total assets LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities RetainaRe payable Deposits 264 ArbitraRe payable Due to other funds 307,993 Due to other governments 4,161 Other liabilities 670,808 Deferred revenues 752,978 Total liabilities 4~671.933 FUND BALANCES: Reserved for debt service Reserved for encumbrances 137,051 Reserved for capital projects Unreserved, undesignated 8,442,942 Unreserved, undesignated in special revenue funds Total fund balances Total liabilities and fund balances $ 4,00L904 $ 423,067 $ 24,916,893 $ 2,216,011 $ 31,557,875 5,359 405,773 ~ 13_251.q26 ~ 42~.426 ~ 2~_322.666 3,458,809 3,698 460,812 221,945 1,988,730 3,978,446 ~6021248 11602~248 4.043.902 ~ 43.fl46.920 $ 2,935,729 $ $ 220,210 333,791 299,555 79,884 933.440 428,426 24,389,226 8,57%993 428~426 24,389~226 $ 1,139,917 $ 4,295,856 333,791 264 299,555 I,113,138 1,501,015 4,161 164 670,972 97~768 850~746 2~350~987 7~956~360 428,426 14,295 151,346 24,389,226 8,442,942 1~678.620 1~6781620 1~692~915 35~090~560 ~ 4.f143.qf12 ~ 43.046.q20 The notes to the financial statements are an integral part of this statement. 14 CITY OF DENTON, TEXAS RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS AS OF SEPTEMBER 30, 2003 Total fund balances - governmental funds (Exhibit Ill) Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in governmental funds. Certain receivables will be collected next year but are not available soon enough to pay for the current period's expenditures and therefore are reported on deferred revenues in the funds. An internal charge to business-type activities is not recorded at the fund level. Several internal service funds are used by the City's management. The assets and liabilities of the internal service funds are included with governmental activities. The net property of $21,866,599 as it relates to the internal service funds is included in the capital asset amount above. The net long-term liability of $8,673,107 as it relates to the internal service funds is included in long-term liabilities amounts below. Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-term liabilities at year-end consist of: Bonds payable Certificates of obligation payable Less: Deferred charge for issurance costs Accrued interest on the bonds Leases payable Compensated absences Total net assets of governmental activities (Exhibit The notes to the financial statements are an integral part of this statement. 15 Exhibit IV $ 35,090,560 163,920,197 752,980 (86,100) 12,445,599 (59,721,870) (30,148,929) 200,677 (684,276) (696,508) (6,581,412) (97,632,318) $ 114,490,918 CITY OF DENTON, TEXAS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2003 Exhibit V REVENUES: Taxes Licenses and permits Franchise fees Fines and forfeitures Fees for services Investment revenue/(loss) (Note IV.A.} Intergovernmental Miscellaneous Total revenues EXPENDITURES: General governmen! Public safety Public works Parks and recreation Capital outlay Debt service: Principal retirement lnterest and other charges Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Proceeds of long-term debt Proceeds from refunding debt Payments to refunding bond escrow agent Transfers in Transfers (out) Total other financing sources Fund Debt Service $ 29,455,465 $ 7,776,959 1,151,169 12,571,989 3,422,952 6,020,190 856,204 (4,062) 692,581 418,817 54,589~367 7,772?897 16,166,690 28,081,091 4,342,542 5,873,122 147,196 Other Total Capital Governmental Governmental Projects Funds Funds 578,809 519,249 1,452~795 855,879 $ 38,088,303 1,151,169 12,571,989 3,422,952 2,535,812 8,556,002 20,155 1,451,106 4,545,713 5,757,543 5307813 1~304~367 8,488,372 72~303~431 44,801 4,814,495 21,025,986 325,170 28,406,261 284,750 4,627,292 2,221,658 8,094,780 20,873,238 1,824,770 22,845,204 5,027,222 5,027,222 -. 4~487~778 ~ 47487~778 54?6101641 91515~000 20?9181039 %470,843 94,514~523 {21,274~ t1~742~103} (1914651244) (98274711 (22721170921 6,913,483 6,913,483 4,130,000 4,130,000 (4,130,000) (4,130,000) 529,721 1,236,123 6,372 420,464 2,192,680 13937074) ~650~000} I138~042~ (17181~116} 136~647 1~236~123 6~269~855 282,422 7~925~047 Net change in fund balances 115,373 (505,980) (13,195,389) Fund balances at beginning of year 8~464,620 934~406 37~5847615 Fund balances at end ofyear $ 8.579.993 $ 428.426 $ 24.389.226 The notes to the financial statements are an integral part of this statement. (700,049) (14,286,045) 2~392,964 49~3761605 1.692.915 $ 35.090.560 16 CITY OF DENTON, TEXAS RECONCILIATION OF STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES 1N FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2003 Net change in fund balances - total governmental funds (Exhibit Vi Amounts reported for governmental activities in the statement of activities ar~ different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays ($22,845,204) exceeded depreciation ($6,903,132 = $10,918,730 - $4,015,598 internal service portion) in the current period. Statement of activities reports an increase in revenues due to current activit3 in deferred revenues which is not reported at fund level. Capital contributions from developers Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net assets Repayment of bond principal is an expenditure in thc governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. This is the amount by which repayments exceeded proceeds. Fund level financials report bond costs as expenditures; however these art deferred and amortized on the government-wide financials Certain expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditure~ in governmental funds. Internal service funds are used by management to charge the costs of certain activities, such as insurance and telecommunications, to individual funds The net revenue (expense) of certain internal service funds is reported with governmental activities. (Amount reported with business-type activities is $86,100). Change in net assets of governmental activities (Exhibit Ill The notes to the financial statements are an integral part of this statement. 17 Exhibit VI $ (14,286,045) 15,942472 752,980 11,486,777 ( 1,554,277) 37,493 11,783 (1,154,694) $ 11,236,089 CITY OF DENTON, TEXAS STATEMENT OF NET ASSETS PROPRIETARY FUNDS AS OF SEPTEMBER 30, 2003 ASSETS: Current assets: Cash, cash equivalents and investments, at fair value Receivables, net of allowances: Accounts Unbilled utility service Accrued interest Other Due from other funds Merchandise inventory Prepaid items Deferred bond issuance costs Total current assets Noncurrent assets: Restricted assets: Cash, cash equivalents and investments, at fair value Escrow deposit Accrued interest Capital assets, net of accumulated depreciation Total noncurrent assets Total assets LIABILITIES: Current liabilities: Accounts payable and accrued expenses Claims payable Retainage payable Compensated absences payable Leases payable Deposits Accrued interest Due to other funds Total current liabilities Payable from restricted assets: Accounts payable and accrued expenses Arbitrage payable Retainage payable Accrued interest Revenue and general obligation bonds Deferred revenue impact fees Total current liabilites paid from restricted assets Noncurrent liabilities: Leases payable Payable from restricted assets: Arbitrage payable Retainage payable General obligation bonds payable Business-type Activities - Enterprise Funds Electric Water Wastewater Solid System System System Waste $ 10,364,002 $ 13,045,525 $ 2,150,457 $ 5,327,808 8,072,031 1,336,209 970,203 868,209 5,330,217 898,054 719,761 350,637 12,402 33,922 15,167 40,614 28,957 4,818 505,452 394,675 262,066 38,834 594,385 677,306 567,034 50,699 24,878,489 16,414,648 4,684,688 6,681,619 94,529,052 52,697,141 52,370,476 2,732,330 80,658 101,290 112,351 430,573 263,621 462,381 I 1,318 71,175,971 171,317,156 110,735,552 14,414,984 166,216,254 224,379,208 163,680,760 17,158,632 191,094,743 240,793,856 168,365,448 23,840,251 7,919,005 530,741 680,391 333,025 16,952 31,133 176,189 160,632 120,402 127,225 187,576 1,393,769 179,537 177,119 9,488,963 887,862 831,926 824,945 212,070 1,212,103 326,792 40,621 51,071 128,476 45,055 40,346 1,433,743 992,222 69,195 1,475,134 2,576,011 1,562,146 97,675 3,555,000 4,200,000 3,500,000 1,796,134 3,209,476 598,903 5,333,621 12,759,809 7,025,118 2,003,625 6,520 4,790 7,598 12,944 2,046,629 18 · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · Exhibit VII Governmental Activities - Total Internal Enterprise Service Funds Funds $ 30,887,792 $ 11,546,447 11,246,652 7,298,669 102,105 161,348 33,775 53,451 1,201,027 56~397 4,788,628 79,128 1,889,424 30~219 52,659,444 16,715,618 202,328,999 2,863,843 294,299 1,167,893 367,643,663 21,866,599 571,434,854 24,730,442 624,094,298 41,446,060 9,463,162 1,105,619 240,000 48,085 584,448 111,003 187,576 488,604 1,750,425 81,704 3,941,918 12,033,696 5,968,848 1,791,586 221,474 224,602 19,328 2,535,506 5,710,966 13,051,134 779,007 3,808,379 27,122,173 1,019,809 207,904 31352 42,530 2,046,629 19,441 (continued) 19 CITY OF DENTON, TEXAS STATEMENT OF NET ASSETS PROPRIETARY FUNDS AS OF SEPTEMBER 30, 2003 Business-type Activities - Enterprise Funds Electric Water Wastewater Solid System System System Waste Certificates of obligation $ $ $ $10,114,017 Revenue bonds payable, net of discount 71,431,927 140,752,630 82,733,911 Deferred amount on refunding (371,943) (809,871) (531,643) (93,659) Notes payable 3,141,222 Compensated absences payable 176,189 160,632 120,401 127,225 Claims payable Landfill closure/postelosure costs 3,577,512 Total noncurrent liabilites 71,242,693 143,249,403 82,330,267 15,784,668 Total liabilities 86,065,277 156,897,074 90.187,311 18,613,238 NET ASSETS: Invested in capital assets, net of related debt 37,826,298 58,019,538 64,654,423 3,284,193 Restricted for debt service 8,159,242 12,954,223 9,444,952 Unrestricted 59,043,926 12,923,021 4,078,762 1,942,820 Total net assets $10570297466 $ 83,896,782 $ 787178,137 $ 5,227,013 Adjustment to reflect consolidation of internal service fund activities related to enterprise funds. Net assets of business-type activities (Exhibit I) The notes to the financial statements are an integral part of this statement. 20 Exhibit VII Governmental Activities - Total Internal Enterprise Service Funds Funds $ 10,114,017 $ 6,874,441 294,918,468 (1,807,116) 3,141,222 584,447 11 !,003 1,563,000 3,577,512 312,607,031 8,818,319 351,762,900 15,806,976 163,784,452 16,625,143 30,558,417 77,988,529 9,013,941 $ 2727331,398 $ 25,639,084 86,100 $ 272,417,498 (concluded) 21 CITY OF DENTON, TEXAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2003 Business-type Activities - Enterprise Funds OPERATING REVENUES: Utility services Charges for goods and services Other fees Miscellaneous Total operating revenues OPERATING EXPENSES: Operating expenses before depreciation Depreciation Total operating expenses Operating income (loss) NON-OPERATING REVENUES (EXPENSES): Investment revenue Interest expense and fiscal charges Impact fee revenue Loss on disposal of fixed assets Other non-operating revenues (expenses) Total non-operating revenues (expenses) Income (loss) before contributions and transfers CONTRIBUTIONS AND TRANSFERS: Capital contributions Transfers in Transfers (out) Total contributions and transfers Change in net assets Electric Water Wastewater Solid System System System Waste 101,862,084 $ 19,348,543 $ 15,677,355 $ 11,708,109 2,041,765 754,115 766,957 19,915 103,903,849 20,102,658 16,444,312 11,728,024 103,590,262 11,005,676 10,755,899 10,394,772 3,838,656 2,2 ! 1,394 2,114,999 894,263 107,428,918 13,217,070 12,870,898 11,289,035 (3,525,069) 6,885,588 3,573,414 438,989 2,168,830 1,186,731 964,627 (177,149) (3,637,265) (6,922,156) (3,834,577) (787,132) 4,450,000 700,000 (21,162) 160,401 41,546 33,778 (1,468,435) (I,125,024) (2,128,404) (951,665) (4,993,504) 5,760,564 1,445,010 (512,676) 5,565,947 13,456,098 (293,351) (84,993) (81,509) (94,874) (293,351) 5,480,954 13,374,589 (94,874) (5,286,855) 11,241,518 14,819,599 (607,550) Net assets at beginning of year 110,316,321 72,655,264 63,358,538 5,834,563 Net assets at end of year $ 105,029,466 $ 83,896,782 $ 78,178,137 $ 5,227,013 Adjustment to reflect consolidation of internal service fund activities related to enterprise funds. Net assets of business-type activities (Exhibit Il) The notes to the financial statements are an integral part of this statement. 22 Exhibit VIII Building Inspections Activities - Total Internal Enterprise Service Funds Funds $ 148,596,091 $ 19,626,002 3,582,752 234,902 152,178,843 19,860,904 135,746,609 18,787,703 9,059,312 2,336,610 144,805,921 21,124,313 7,372,922 (1,263,409) 4,143,039 170,137 (15,181,130) (477,382) 5,150,000 (21,162) 99,118 235,725 (146,520) (5,673,528) (354,647) 1,699,394 (1,618,056) 19,022,045 57,744 584,501 (445,578) (I,000,305) (535,897) (445,578) 18,021,740 106,348 (445,578) 19,721,134 (1,511,708) 445,578 252,610,264 27,150,792 $ $ 272,331,398 $ 25,639,084 86,100 $ 272,417,498 23 CITY OF DENTON, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2003 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers Cash paid to employees for services Cash paid to suppliers Net cash provided (used) by operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers (out) Transfers in Principal payment on long-term advance from other fund~ Other sources from noncapital financing Net cash provided (used) by noncapital financing activities: CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES: Capital contributions Principal payments on revenue bonds and certificates of obllgafior Interest and fiscal charges Principal payments under capital lease obligatioe Proceeds from sale of revenue bonds and certificates of obligatior Proceeds from lease financing Proceeds from impact fees Gain from sale of capital assets (Loss) from sale of capital assets Acquisition and construction of capital assets Net cash provided (used) by capital financing activities CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale and maturities of investment securitie~ Purchase of investment securities Interest received on investments Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Investments, at fair value (Note 1V.A.} Cash, cash equivalents and investments, at fair valu~ Business-type Activities - Enterprise Funds Electric Water Wastewater System System System $ 101,807,361 $ 20,286,907 $ 16,247,891 (4,667,069) (5,585,001) (3,824,010) (101~176~775) (7~20%303) (7~957~486) (41036~483) 7~492~603 4~466~395 (293,351) (84,993) (81,509) 1607401 41~546 (293~351 ) 75?408 (39,963) 5,565,947 13,456,098 (5,747,257) (3,868,179) (2,794,360) (3,409,804) (7,182,495) (3,342,279) 12,016,742 1,169,303 29,142,299 2,853,867 678,693 (87953~078) (24:375,989} (30~664~778) {670937397) (25~837,546) 6~4757673 90,963,721 58,550,605 9,127,776 (79,275,690) (18,470,000) (32,250,000) 2~128~231 1~76%958 989~179 13~8167262 41~8507563 (227133~045) 3,393,031 23,581,028 (11,230,940) 8,532,489 903,535 1,786,175 11,925,520 24,484,563 (9,444,765) 927967~534 417258,103 63~9651698 104.893.054 $ 65.742.666 $ 54.520.933 RECONCILIATION OF OPERATING 1NCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) Ad.iustments: Depreciation expense CIosure/postclosure expense Decrease (Increase) in receivables Decrease (Increase) in due from other funds Decrease (Increase) in inventories Decrease (Increase) in prepaid items lncrease (Decrease) in accounts payable Increase (Decrease) in accumulated unpaid compensate( absences Increase (Decrease) in due to other funds Total adjustments Net cash provided (used) by operating activities $ (3~525~069) $ 6~885,588 $ 3~5731414 3,838,656 2,211,394 2,114,999 (3,412,970) 437,345 60,645 (499,452) (253,096) (257,066) 215,644 (504,225) (1,611,133) (I,013,933) 29,234 5,467 28,444 (178~301) (182~962) (40~108) (5111414) 607~015 8927981 $ (4~036,483) $ 7~492,603 ~ 4,466,395 NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES: Noncash activity during the year consisted of contributed assets for the Water and Wastewater funds in the amount of $5,565,917 and $13,456,098, respectively, and the change in the fair value of investments of $(1,432,646), $(817,533), $(348,944) and $(492,928) for the Electric, Water, Wastewater and Solid Waste funds, respectively. The notes to the financial statements are an integral part of thls statement. 24 Exhibit IX Solid Waste Governmental Activities Total Internal Enterprise Service Funds Funds 11,773,468 $ 150,115,627 $ 19,996,403 (5,366,014) (19,442,094) (4,133,695) t47397~263) (120,740,827) (14,024~969} 2,010~191 9,932,706 1~837~739 (94,874) (554,727) (535,897) 584,501 33?778 235,725 (146~520) (61~096) (31%002) (9%916) 19,022,045 57,744 (1,488,639) (13,898,435) (680,786) (796,059) (14,730,637) (433,544) (157,083) (157,083) (1,137,714} 1,748,524 44,076,868 2,681,169 344,659 344,659 1,198,780 3,532,560 99,118 (21,162) (21,162) (4,634,2961 (68,628,141) (3~615,0471 (5~0047056) (30?459?326) (178307280) 10,796,911 169,439,013 6,733,543 (6,250,000) (136,245,690) (4,500,000) (136,936) 4,750,432 209?659 4?40%975 37~9437755 2~4431202 1,355,014 17,098,133 2,352,745 1,373,349 12,595,548 2,789,368 2,728,363 29,693,681 5,142,113 573317775 203,523,110 $ 9~2687177 8.060.138 $ 233.216.791 $ 14.410.290 $ 438?989 $ 7,372,922 $ (1~263~409) 894,263 9,059,312 2,336,610 689,162 689,162 (102,566) (3,017,546) 23,222 148,010 (861,604) (38,199) 2,512 2,512 671,422 215,644 2,275 (66,245) (3,195,536) 391,013 20,294 83,439 30,434 (14~228) (415,599) 015,629) 175717202 2?55%784 311011148 $ 2~010~191 $ 9,932~706 $ 1~837,739 25 CITY OF DENTON, TEXAS BALANCE SHEET FIDUCIARY FUNDS AS OF SEPTEMBER 30, 2003 ASSETS: Cash, cash equivalents and investments, at fair value Due from other funds Other receivables Total assets Total Agency Funds $ 2,208,578 307,993 370,352 $ 2,886,923 $ 2,785,993 100,930 $ 2,886,923 LIABILITIES: Accounts payable Due to other funds Total liabilities The notes to the financial statements are an integral part of this statement. 26 Exhibit X CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2003 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Denton is a municipal corporation governed by an elected mayor and six-member council. The City receives funding from state and federal government sources and must comply with the requirements of these funding soume entities. However, the City is not included in any other governmental "reporting entity," as defined in pronouncements by the Governmental Accounting Standards Board (GASB) Statement No. 14, "The Reporting Entity" since council members are elected by the public and have decision-making authority, the authority to levy taxes, the power to desigoate management, the ability to significantly influence operations, and primary accountability for fiscal matters. The financial statements of the City have been prepared to conform to generally accepted accounting principles (GAAP) as applicable to state and local governments. GASB is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the more significant policies: A. Reporting entity The City is governed by an elected mayor and a six-member council. As required by generally accepted accounting principles, these financial statements present the City (the primary government) and its component units, which are entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the City's operations, and so data from these units are combined with data of the primary government. A discretely presented component unit, on the other hand, is reported in a separate column in the government wide financial statements to emphasize it is legally separate from the City. The City had no discretely presented or blended component units at September 30, 2003. B. Government-wide and fund financial statements The basic financial statements include both government-wide (based on the City as a whole) and fund financial statements. The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all non-fiduciary activities of the primary government. For the most part, the effect of inter-fund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, am reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The reporting focus is either the City as a whole (government-wide financial statements) or major individual funds (within the fund financial statements). The government-wide statement of activities demonstrates the degree to which the direct expenses of a functional category (public safety, public works, etc.) or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or applicants who purchase, use or directly benefit from goods, services or privileges provided by a given function or segment, (2) grants and contributions that are restricted to meeting operational requirements ora particular function or segment and (3) grants and contributions that are restricted to meeting the capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. The net cost (by function or business-type activity) is normally covered by general revenue (property taxes, sales taxes, franchise fees, intergovemmental revenues, interest income, etc.). Separate fund financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major governmental funds and major enterprise funds are reported as separate columns in the fund financial statements. The major governmental funds are the general fund, debt service fund and capital projects fund. GASB Statement No. 34 sets forth minimum criteria (percentage of assets, liabilities, revenues or expenditures/expenses of either fund 27 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2003 category for the governmental and enterprise combined) for the determination of major funds. Non-major funds are combined in a column in the fund financial statements. Non-major funds are detailed in the combining section of the statements. Internal service funds, which traditionally provide services primarily to other funds of the government, are presented in the summary form as part of the proprietary fund financial statements. Because the principal users of internal services are the City's governmental and business-type activities, financial statements of internal service funds are allocated (based on the percentage of goods or services provided) between the governmental and business-type activities when presented at the government-wide level. The City's fiduciary funds are presented in the fund financial statements. Since by definition these assets are being held for the benefit of a third party (other local governments, individuals, pension participants, etc.) and cannot be used to address activities or obligations of the government, these funds are not incorporated into the government-wide statements. 3[he government-wide focus is more on the sustainability of the City as an entity and the change in aggregate financial position resulting from the activities of the fiscal period. The focus of the fund financial statements is on the major individual funds of the governmental and business-type categories, as well as the fiduciary funds (by category). Each presentation provides valuable information that can be analyzed and compared to enhance the usefulness of the infurmation. C. Measurement focus, basis of accounting and financial statement presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary statements. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Government fund-level financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property tax, ftanchise fees, sales tax and sales interest associated with the current fiscal period are all susceptible to accrual and so have been recognized as revenues of the current fiscal period. All of the revenue items are considered to be measurable and available only when cash is received. The City reports the following major governmental funds: The general fund is the City's primary operating fund. All general tax revenues and other receipts that arc not allocated by law or contractual agreement to some other fund are accounted for in this fund. From the fund are paid general operating costs, fixed charges and capital improvement costs that are not paid through other funds. The debt service fund accounts for the payment of principal and interest on general long-term liabilities, paid primarily by taxes levied by the City, and for payment of principal and interest on capital leases in the governmental fund. The capital projects fund accounts for financial resources used for the acquisition or construction of major capital facilities being financed from bond proceeds, capital contributions, or transfers from other funds, other than those recorded in the enterprise funds and internal service funds. Other governmental funds is a summarization of all of the non-major governmental funds. 28 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2003 The City reports the following major proprietary funds: The City utility system is made up of three separate funds as follows: The electric fund accounts for electrical utility services to the residents office City. Activities necessary to provide such services are accounted for in the fund, including, but not limited to, administration, operations, maintenance, finance and related debt service. The water fund accounts for water utility services to the residents of the City. Activities necessary to provide such services are accounted for in the fund, including, but not limited to, administration, operations, maintenance, finance and related debt service. The wastewater fund accounts for sewer and storm water services to the residents of the City. Activities necessary to provide such services are accounted for in the fund, including, but not limited to, administration, operations, maintenance, finance and related debt service. The City provides additional services through the following fund: The solid waste fund accounts for the provision of solid waste services to the residents of the City. Activities necessary to provide such services are accounted for in the fund, includiug, but not limited to, administration, operations, maintenance, finance and related debt service. The City additionally reports the following fund types: Internal service funds are used to account for the fumncing of materials and services provided by one department of the City to other departments of the City on a cost-reimbursement basis. Agency funds are used to account for assets held by the City in an agency capacity for individuals, private organizations or other governments. Private-sector standards of accounting and financial reporting (as issued by fl~e Financial Accounting Standards Board) issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the GASB. Governments also have the option of following subsequent private-sector guidance for government- wide reporting and proprietary funds, subject to this stone limitation. The City has elected not to follow subsequent private-sector guidance. Amounts reported as program revenues include (1) charges to customers or applicants for goods, services or privileges provided, (2) operating grants and contributions; and (3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's electric, water, wastewater and solid waste funds are charges to customers for services. Operating expenses for the enterprise funds and internal service funds include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. D. Assets, liabilities and net assets or equity 1. Cash, cash equivalents and investments The City's cash and cash equivalents are considered to be cash on baud, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. 29 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2003 Investments are carried at fair value or cost, if maturities are one year or less. Fair value is determined as the price at which two willing parties would complete an exchange. Interest earned on investments is recorded in the funds in which the investments are recorded. 2. Receivables Outstanding balances between funds are reported as "due to/from other funds." Any residual balances between governmental activities and business-type activities are reported in the government-wide statements as "internal balances." Non-recurring or non-routine transfers of equity between funds are accounted for as transfers. Trade and property tax receivables are shown net of an allowance for uncollectibles. The City accrues amounts for utility services provided in September, but not billed at September 30, 2003. 3. Inventories Inventories of supplies are maintained at the City warehouse for use by all City funds and are accounted for by the consumption method. Inventories are valued at the lower of cost or market. Cost is determined using a moving average method. No inventories exist in the governmental fund types. 4. Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks and similar items) are reported in applicable governmental or business-type activities columns in the government-wide financial statements. The City defines capital assets as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the time received. Major outlays for capital assets and improvements are capitalized as projects are constructed. Net interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. For 2003, net interest capitalization of $253,448 was recorded for electric fund projects, $584,092 was recorded for water fund projects and $479,671 was recorded for wastewater fund projects. Capital assets are depreciated using the straight line method over the following useful lives: .Assets Years Buildings 40 Infrastructure 30 - 40 Streets 20 General improvements 10 Machinery and equipment 10 - 20 Furniture and office equipment 10 Computer equipment 3 Plant and equipment 5 Underground pipe 40 Water storage rights 50 - 100 Water recreation rights 50 Communication equipment 5 Vehicles 5 - I0 3O CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2003 Renewals and betterments of property aud equipment are capitalized, whereas normal repair and maintenance are charged to expense as incurred. 5. Compeusated Absences The City allows employees to accumtdate unused vacation up to 40 days. Upon termination, any accumulated vacation time will be paid to an employee. Generally, sick leave is uot paid upon termination except for fire fighters and police officers. Fire fighters and police officers accumulate unused sick leave up to a maximum of 90 days. All other employees am paid only upon illness while in the employ of the City. Accumulated vacation and sick leave is accrued when incurred in the government-wide, proprietary and fiduciary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. The General Fund has been used in prior years to liquidate governmental funds' related liability. 6. Arbitrage Arbitrage involves the investment of the proceeds from the sale of tax-exempt securities in a taxable money market instrument that yields a higher rate, resulting in interest revenue in excess of interest costs. Federal tax code requires that these excess earnings be rebated to the federal government. The Capital Projects Fund has been used in prior years to liquidate governmental funds' related liability. 7. Long-term obligations In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund-type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums m~d discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not witbheld from the actual debt proceeds received, are reported as debt service expenditures. 8. Fund equity In the fund financial statements, governmental funds report reservations of fund balance for accounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balances represent management plans that are subject to change. H. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS A. Explanation of certain differences between the governmental fund balance sheet and the government- wide statement of net assets The governmental fund balance sheet includes reconciliation between fund balance - total governmental funds and net assets - governmental activities as reported in the government-wide statement of net assets. One element of that reconciliation explains the "long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds." The details of this $97,632,318 difference are shown on the following page. 31 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2003 Bonds payable: Less: Deferred charge on issuance costs (to be amortized over life of debt) Accrued interest payable Lease payable Compensated absences Net adjustment to reduce fund balance- total governmental funds to arrive at net assets - governmental activities $ 89,870,799 (200,677) 684,276 696,508 6,581,412 $ 97~632~318 B. Explanation of certain differences between the governmental fund statement of revenues, expenditures and changes in fund balances and the government-wide statement of activities The governmental fund statement of revenues, expenditures and changes in fund balances includes a reconciliation between net changes in fund balances - total governmental funds and changes in net assets of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains, "Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is capitalized and allocated over their estimated useful lives and reported as depreciation expense." The details of the $15,942,072 difference are as follows: Capital outlay Depreciation expense Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities $22,845,204 (6,903,132) $15.942.072 Another element of that reconciliation states, "The issuance of long-term debt (e.g., bonds, leases) provides current financial resoumes to governmental funds, while the repayment of principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities." The details of this $(1,554,277) difference are as follows: Debt issued or incurred: Issuance of general obligation bonds Principal repayments: General obligation debt Certificates of obligation Principal reduction from other sources Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at chaoges in net assets of governmental activities $(6,913,483) 3,165,330 1,861,892 331,984 $(1.554.277~1 Anotber element of that reconciliation states, "The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins and donations) is to increase net assets." The details of this $11,486,777 difference are as follows: Donation of capital assets increase oct assets in the statement of activities, but do not appear in the governmental funds because they are not financial resources. $11,486.777 32 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2003 Another element of that reconciliation states that, "Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures of governmental funds." The details of the $11,783 difference are as follows: Compensated absences Accrued interest Net adjustments to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities $(252,451) 264,234 $ 1!,783 STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Budgetary information The City Council follows these procedures, as prescribed by City Charter, in establishing the budgets reflected in the financial statements: At least sixty days prior to the beginning of eacb fiscal year, the City Manager submits to the City Council a proposed budget for the fiscal year beginning on the following October 1. The operating budget includes proposed expenditures and the means of financing them. Public hearings are conducted prior to the adoption of the budget in order to obtain taxpayer comments. The annual budget adopted by the City Council covers the general fund, special revenue funds (Recreation Fund, Police Confiscation Fund, Emily Fowler Library Fund, and Tourist and Convention Fund only), the debt service fund, the enterprise funds, and internal service funds (except for the Risk Retention Fund). The budget is legally enacted by the City Council through passage of an ordinance prior to the beginning of the fiscal year. The basic finaucial statements reflect the legal level of control, which is at the appropriation level by fonction activity within an individual fund as approved by City Council. During the year, no increases were made to any fund's budget. The City Charter provides that the City Manager has the authority to transfer any unencumbered appropriation balances from one appropriation to another within a single function (office, department, or agency). City Council approval is not required at this level. The Charter also provides that at any time during the year, at the request of the City Manager, City Council may by resolution transfer any part of the unencumbered appropriation balances or the entire balance thereof between functions, as well as make any increases in fund appropriations. All budgets are adopted on a basis consistent with generally accepted accounting principles except for the governmental funds, proprietary funds, and the budgeted special revenue funds; m~d depreciation expense for the proprietary funds is not budgeted. At the end of the year, encumbrances for wbich goods and services have not been received are cancelled. At the beginning of the subsequent year, management reviews all open encumbrances and, as provided in the budget ordinance appropriation, these encumbrances may be m- established. Also, during the budgetary process, amounts are included in fund budgets to recognize administrative transfers between funds for goods or services. These amounts are not included in the reporting of actual activity for the funds. For funds reporting required budget-to-actual comparisons, these administrative transfers am included as adjustments - budgetary basis. DETAILED NOTES ON ALL FUNDS A. Cash and investments In order to facilitate effective cash management practices, the operating cash of all funds is pooled into common accounts for the purpose of iucreasing income through combined investment activities. At year-end, the carrying amount of the City's deposits was $1,425,796. Of this amount, agency funds reported $630,804. The 33 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2003 City does not control the cash policies of agency funds but is required to include these amounts in its total deposits. The bank balance was covered by collateral with a fair value of $6,220,741. The City had $10,400,000 invested in money market funds included in this report as cash and cash equivalents. In addition, the City had $11,315 in petty cash at year-end. Statutes authorize the City to invest in obligations of the U.S. Treasury; U.S. agencies, fully collateralized repurchase agreements, public fund investment pools, SEC-registered no-load money market mutual funds, investment-grade, rated municipal securities of any state and fully collateralized certificates of deposit. The investments reported at September 30, 2003, were similar to those held during the fiscal year. At September 30, 2003, the City's investments (U.S. Treasury and Agency Securities and Municipal Securities) were insured or registered, or the securities were held by the City or its agent in the City's name (Category 1). The City's money market funds am not subject to categorization. The City reports all investments in the financial statements at fair value or cost if maturities are one year or less. At September 30, 2003, the City's investments carried a fair value of $267,355,022. In addition, the agency funds reported $1,577,774 in investments. The City does not control the investment policies of agency funds but is required to include these amounts in its investments. As of September 30, 2003, total investments were as follows: Category I investments: U.S. Treasury Securities U.S. A~ency Securities Total category I investments Fair Valne $ 39,191,659 229,741,137 $ 268.932.796 The Debt service fund reflects a loss for investment revenue due to its investments' change in fair value not being offset by other investment revenue. Cash, cash equivalents and investments, at fair value are reported together on the financial statements. Investments, at fair value, by fund were as follows: General Debt Capital Citizens' Fund Service Proiects Park Trusts Elec~ic Water $4,571,250 $995,938 $48,769,705 $307,500 $ $ 7,001,747 92,886,876 34,256,356 $4.571.250 $995.938 $48.769.705 $307.500 $92.886.876 $41.258.103 Unrestricted investments Restricted investments Total Other Agency Wastewater .Solid Waste Motor Pool Risk Funds Total Unre~ricted investments $ 2,000,000 Res~icted investments 61,965,698 Total $63.965.698 B. Property tax revenue $3,809,744 $6,751,388 $2,516,789 $1,577,774 $ 78,301,835 1,522,031 190,630,961 $5.331.775 $6.751.388 $2.516.789 $1.577.774 $268.932.796 Property taxes attach as an enforceable lien on property as of January 1. Taxes are levied on October 1 and are due and payable at that time; therefore, the legally enforceable claim arises on October 1 and a receivable is 34 · · · · · · · · · · · · · · · · · · · · CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2003 recorded at that time. All unpaid taxes levied October 1 become delinquent February I of the followiag year. The City records revenue from current property taxes in the year in which bills are measurable and available. An allowance is provided for delinquent taxes not expected to be collected in the future. Property taxes at the fund level are recorded as receivables and revenue at the time the tax levy is billed. Current-year revenues recognized am those ad valorem taxes collected within the current period or soon enough thereafter to pay current liabilities, generally sixty days after year-end. Current tax collections for the year ended September 30, 2003, were 98.6% of the tax levy. At September 30, 2003, the City had a tax margin of $0.54815 per $100 valuation based upon a maximum ad valorem tax of $2.50 per $100 valuation imposed by Texas Constitutional law. Additional revenues up to $73,318,183 could be raised per year based on the current year's assessed value of $4,350,820,231 before the limit is reached. C. Receivables Receivables at September 30, 2003, for the City's individual major funds and other funds (non-major funds, internal service funds and fiduciary funds), in the aggregate, including the applicable allowances for uncollectible accouats, are shown below: Debt Caoital General Service Projects Electric Water Receivables, net: Taxes $3.458.809 $ $ $ $ Accounts 8,072,031 1,336,209 Accrued interest 45,982 5,359 405,773 442,975 297,543 Unbilled utility service 5,330,217 898,054 Other 1,766,785 28,957 Net total receivables $5,271,576 $ 5,359 $ 405,773 $ 13,845,223 $ 2,560,763 Other Internal Waste- Solid Governmental Service water Waste Funds Funds Total Receivables, net: Taxes $ $ $ $ $ 3,458,809 Accounts 970,203 868.209 11,246.652 Accmed interest 477~548 51,932 3,698 161,348 L892.158 Unbilled utility service 719,761 350.637 7,298,669 Other 4,818 221.945 53,451 2 075 956 Net total receivables $2,167,512 $ 1,275,596 $ 225.643 $ 214,799 $ 25,972,244 D. Capital assets During thc year, the City re-evaluated and revised the remaining useful life of proprietary fund capital assets and revised the remaining useful lives on certain assets. Capital assets balances and transactions for the year ended September 30, 2003, are summarized on the following page. 35 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2003 Governmental activities: Capital assets not being depreciated: Land Construction in progress Total capital assets not being depreciated Capital assets being depreciated: Buildings Infrastructure Machinery and equipment and other improvements Total capital assets being depreciated Less accumulated depreciation for: Buildings Infrastructure Machinery and equipment and other improvements Total accumulated depreciation Total capital assets, being depreciated, net Governmental activities capital assets, net Balance at Balance at October I, September 30, 2002 Increases Decreases 2003 $ 1,407,252 $ 386,607 $ - $ 1,793,859 21,686,587 (9,689,219) 50,586,589 39,996,473 22,073,194 {9,689,219) 52,380,448 23,620,749 1,237,457 - 24,858,206 91,244,715 33,543,076 - 124,787,791 58,242,294 6,369,934 {16,934,363) 47,677,865 173,107,758 41,150,467 (16,934,363) 197,323,862 7,488,368 1,08%113 - 8,577,481 28,783,960 20,514,587 - 49,298,547 41,609,503 3,077,531 (16,778,949) 27,908,085 77,881,831 24,681,231 (16,778,949) 85,784,113 95,225,927 16,469,236 (155,414) 111,539,749 13~~ $ (9.844_63 $163.92~0_19~7 (A review of the classification of the beginning balances of governmental capital assets, determined that $14,934,754 of infrastructure and $501,440 of buildings was misclassified as machinery and equipment. Equal amounts of related accumulated depreciation were improperly shown as machinery and equipment and other improvements. The Increases and Decreases columns above reflect these adjustments.) Business-type activities: Balance at Balance at October I, September 30, 2002 Increases Decreases 2003 108,862,727 126,794,597 223,208,449 $308.086.743 Capital assets not being depreciated: Land $ 3,051,340 Construction in progress 81,826,954 Total capital assets not being depreciated 84,878,294 Capital assets being depreciated: Landfill improvements 13,590,472 Water rights 69,883,098 lnfrastructuro 10,409,137 Plant, machinery and equipment and other improvements 256,120,339 Total capital assets being depreciated 350,003,046 Less accumulated depreciation for: Landfill improvements 5,849,856 Water rights 9,231,068 Infrastructure 2,851,216 Plant, machinery and equipment and other improvements Total accumulated depreciation Total capital assets, being depreciated, net Business-type activities capital assets, net $ (150,095) $ 2,901,245 49,705,711 (17,713,282) 113,819,383 49,705,711 (17,863,377) 116,720,628 1,411,798 15,002,270 - 69,883,098 143,681,558 - 154,090,695 9,113,637 (117,687,517) 147,546,459 154,206,993 (117,687,517) 386,522,522 1,422,106 7,271,692 767,770 9,998,838 43,906,343 46,757,559 4,686,626 (41,977,955) 71,571,398 50,782,845 (41,977,955) 135,599,487 103,424,148 (75,709,562) 250,923,035 $153.129.85~9 $(93.572.939) $367.643.663 (A similar misclassification was found in business-type capital assets: $116,842,150 of infrastructure and $707,724 of landfill improvements had been misclassified as plant, machinery and equipment ($I 17,399,779) and land ($150,095). For accumulated depreciation, $40,939,544 (infrastructure) and $751,624 (landfill) were misclassified as plant, machinery and equipment. The Increases and Decreases columns above reflect these adjustments.) 36 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2003 Depreciation expense was charged to functions/programs as follows: Governmental activities: General government Public safety Public works Parks and recreation $ 885,479 106,253 5,610,100 301,300 Total depreciation expense - governmental activities $6.903A3~2 Construction commitments The City has several major construction projects planned or in progress as of September 30, 2003. projects are evidenced by contractual commitments with contractors and include: Proiect Spencer Road at Loop 288 Construction lron Horse Interchange - Electric Denton West- Iron Horse Transmission - Electric Lake Ray Roberts Water Treatment Plant Spent-to-Date Remaining Commitment $ 919,844 $2,200,608 11,450 3,314,515 86,501 3,167,981 39,828,271 2,171,729 E. Interfund receivables, payables and transfers A summary of inteffund receivables and payables at September 30, 2003, is as follows: Interfund Fund Receivables General fund $3,978,446 Capital projects fund - Other governmental funds: Enterprise funds: Electric 505,452 Water 394,675 Wastewater 262,066 Solid waste 38,834 Internal service funds 56,397 Agency funds: Payroll 307,993 Employee insorance - Total $5.543.863 Interfund Payables $3O7,993 79,884 1,113,138 3,941,918 100,930 $5.543.86~3 37 These CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2003 Transfers between funds during the year were as follows: Transfers In Transfers Out General fund $ 529,721 $ 393,074 Debt service 1,236,123 - Capital project fund 6,372 650,000 Other governmental funds 420,464 138,042 Enterprise funds: Electric - 293,351 Water - 84,993 Wastewater - 81,509 Solid waste - 94,874 Building inspections - 445,578 lntemal service funds 584,501 535,897 Governmental capital assets 11,910 - Governmental long-term debt - 71,773 Total $2.789.09~1 $2,789.091 During 2003 the building inspection function trm~sferred from an enterprise fund to a governmental fund (General Fund). Therefore, the above table includes governmental capital assets and long-term debt to reflect the effect of th is transfer. F. Leases Leases payable represent the remaining principal amounts payable under lease purchase agreements for the acquisition of equipment through the motor pool fund, an internal service fund. These leases are recorded as capital leases. Remaining requirements, including interest, under these leases are as follows: Lease Year Payments 2004 $ 739,609 2005 103,651 2006 93,783 2007 93,783 Minimum future lease lmvments 1,030,826 Less: Applicable interest 146,742 Present value of minimum future lease payments $ 884.084 G. Long-term debt Long-term liabilities transactions for the year ended September 30, 2003, are summarized as follows: Balance at Balance at October 1, September 30, Due Within 2002 Increases Decreases 2003 One Year Governmental Activities: Generalobligation bonds $ 58,663,791 $7,233,065 $ 6,174,986 $ 59,721,870 $ 3,828,500 Certificates of obligation 27,628,284 5,650,000 3,129,355 30,148,929 2,453,405 Obligations under capital leases 635,442 563,339 502,273 696,508 488,604 Arbitrage payable 534,149 - 172,736 361,413 238,064 Compensated absences payable 6,374,672 2,855,028 2,648,288 6,581,412 3,290,706 Claims payable 1,814,100 798,837 809,937 1,803,000 240,000 Total governmental long-term liabilities 95,650,438 17,100,269 13,437,575 99,313,132 10,539,279 (continued) 38 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2003 Business-type Activities: Utility system revenue bonds, net of premium (discount) General obligation bonds Certificates of obligation Obligations under capital leases Arbitrage payable Compensated absences payable Note payable Landfill closure/post-closure costs Total business-type activities Total long-term liabilities Balance at Balance at October 1, September 30, Due Within 2002 Increases Decreases 2003 One Year $274,875,129 $50,180,000 $20,688,777 $304,366,352 $11,255,000 1,508,017 846,935 163,784 2,191,168 144,538 12,188,878 1,755,000 2,178,266 11,765,612 1,651,595 344,659 157,083 187,576 187,576 481,629 225,175 256~54 224,603 1,157,231 801,194 789,530 1,168,895 584,448 3,141,222 - 3,141,222 - 2,888,350 689,162 3,577,512 - 296,240,456 54,616,950 24,202,615 326,654,791 14,047,760 $391,890,894 $70,825,219 $37,659,518 $425,056,595 $24,557,038 General bonded debt - General bonded debt at September 30, 2003, is comprised of the following: Bonded Debt Gross Amount Original Outstanding at Interest Rate Amount September 30, (%) of Issue 2003 Final Issue Date Maturity General obligation refunding 7.7 to 8.0 1985 2004 General obligation refunding 5.75 to 8.5 I995 2015 General obligation 5.4 to 7.4 1996 2012 General obligation 5.0 to 7.0 1997 2017 General obligation 5.25 to 5.25 1998 2018 General obligation 4.1 to 5.0 1999 2019 General obligation refunding 3.2 to 5.0 1999 2016 General obligation 5.25 to 6.125 2000 2020 General obligation 4.5 to 5.5 2001 2021 General obligation 5.0 to 5.25 2002 2022 General obligation refunding 3.0 to 4.75 2003 2023 Total general obligation bonds $ 5,171,730 $ 153,038 1,610,000 510,000 2,515,000 1,195,000 4,700,000 3,905,000 9,660,000 7,235,000 8,215,000 6,560,000 7,020,000 6,320,000 3,750,000 3,180,000 14,245,000 12,825,000 12,075,000 11,950,000 8,080,000 8,080,000 77,041,730 61,913,038 (continued) 39 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2003 Interest Rate Final Bonded Debt (%) Issue Date Maturity Certificates of obligation 4.3 to 7.3 1994 2005 Certificates of obligation 5.25 to 8.25 1995 2015 Certificates of obligation 5.0 to 7.0 1996 2010 Certificates of obligation 4.0 to 5.0 1998 2018 Certificates of obligation 4.1 to 5.0 1999 2019 Certificates of obligation 5.25 to 6.125 2000 2020 Certificates of obligation 4.25 to 5.25 2001 2021 Certificates of obligation 4.7 to 5.25 2002 2022 Certificates of obligation 3.0 to 4.75 2003 2023 Total other general bonded debt Total general bonded debt Original Gross Amount Amount Outstanding at of Issue September 30, $ 3,220,000 $ 470,000 2,000,000 1,530,000 5,190,000 1,230,000 5,625,000 2,080,000 6,935,000 4,936,000 3,125,000 2,645,000 12,120,000 9,612,000 12,590,000 12,070,000 7,405,000 7,405,000 58,210,000 41,978,000 $135,251,730 $103,891,038 (These amounts do not include unamortized premiums, discounts, and gain or loss on their sale of $63,459.) Proceeds of general bonded debt are restricted to the uses for which they were approved in the bond elections. The City Charter expressly prohibits the use of bond proceeds to fund operating expenses. The general obligations are collateralized by the full faith and credit of the City and, primarily, payable from property taxes. In prior years, the City defeased general obligation bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all futura debt service payments on the old bonds. Accordingly, the trust account assets and liabilities for the defeased bonds are not included in the City's financial statements. On September 30, 2003, $3,845,000 of general obligation bonds considered defeased are still outstanding. In 2003, the City issued $8,080,000 of general obligation bonds and $7,405,000 in certificates of obligation. The debt was issued to pay the cost of various Capital Project improvements ($6,913,483), proprietary fund capital improvements ($4,441,517) and refund prior bond issues ($4,130,000). The bonds and obligations are payable over the next 20 years. For the refunding, the reacquisition price exceeded the net carrying amount of the old debt by $76,654. Tbis amount is being amortized over the remaining life of the refunded debt, which is shorter than the life of the new debt issued. This advance refunding was undertaken to reduce total debt service payments over the next 20 years by $243,408 and resulted in an economic gain of $139,088. Revenue bonds - Revenue bond debt at September 30, 2003, is comprised of the following issues: Amount Net Net Original Outstanding at Unamortized Outstanding at Interest Rate Issue Final Amount September 30, Premium September 30, Revenue Bonds (%) Date Maturity of Issue 2003 (Discount) 2003 Utility system 5.8to 8.75 1992 2006 $ 4,500,000 $ 610,000 $ $ 610,000 Utility system 5.0 to 7.5 1993 2014 6,575,000 990,000 990,000 Utility system refunding 3.55 to6.75 1993 2008 6,045,000 1,105,000 (3,001) 1,101,999 Utility system refunding 5.3 to 7.8 1996 2025 36,510,000 26,190,000 (135,715) 26,054,285 Utility system 5.3 to 7.4 1996 2017 2,750,000 465,000 465,000 Utility system 4.3 to 6.3 1998 2018 7, I75,000 5,375,000 5,375,000 (continued) 4O CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2003 Amount Net Net Original Outstanding at Unamortized Outstanding at Interest Rate Issue Final Amount September 30, Premium September 30, Revenue Bonds (%) Date Maturity of Issue 2003 (Discount) 2003 Utility system refunding 4.65 to 6.65 1998 2030 36,795,000 36,795,000 (464,477) 36,330,523 Utility system refunding 4.0 to 5.0 1998 2015 7,640,000 7,355,000 - 7,355,000 Utility system 4.974 to 6.0 2000 2019 54,880,000 49,965,000 54,698 50,019,698 Utility system 4.0 to 5.4 2001 2020 59,545,000 56,730,000 553,568 57,283,568 UtiliW system 4.25 to 5.0 2002 2021 56,710,000 54,975,000 335,640 55,310,640 Utitity system 5.0 to 6.5 2002 2021 13,985,000 13,625,000 (41,423) 13,583,577 Utility system 3.625 to refunding 5.625 2003 2022 50,180,000 50,180,000 1,514,177 51,694,177 Total revenue bonds $343,290,000 $304,360,000 $1,813,467 $306,173,467 (These amounts do not include unamortized loss on refunding in the amount of $1,807,115.) The City has the option to retire at par all or a portion of the bonds prior to maturity on or after December 1, 1993. The revenue bonds are collateralized by the revenue of the Denton utility system funds (System) and the various special funds established by the bond ordinance. The ordinance provides that the revenue of the System is to be used first to pay operating and maintenance expenses of the System and second to establish and maintain the revenue bond funds. Any remaining revenues may then be used for any lawful purpose. The ordinance also contains provisions, which among other items restrict the issuance of additional revenue bonds unless the special funds noted above contain the required amounts and certain financial ratios are met. The City is in compliance with all significant requirements. Below is a summary of the various restricted asset accounts required by the bond ordinance as of September 30, 2003: Interest and sinking fund Reserve fund Emergency fund Extension and improvement fund Assets in these accounts consist of cash and U.S. government securities. earnings are as follows: Payable from restricted assets: Accmed interest Revenue bonds payable, current Retained earnings reserved for bond retirement $11,966,816 18,420,454 248,251 4,946,138 $35,581,659 Related liabilities and retained $ 5,710,967 13,051,134 32,270,162 $51,032,263 In 2003, the City issued $50,180,000 in utility revenue bonds. The debt was issued to pay the cost of various utility improvements and refund prior bond issues ($11,605,000). The bonds are payable over the next 20 years. For the refunding, the reacquisition price was less fl~an the net carrying amount of the old debt by $182,682. This amount is being amortized over the remaining life of the refunded debt, which is shorter than the life of the new debt issued. This advance refunding was undertaken to reduce total debt service payments over the next 20 years by $865,253 and resulted io an economic gain of $782,538. 41 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2003 In prior years, the City defeased revenue bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and liabilities for the defeased bonds are not included in the City's financial statements. On September 30, 2003, $12,760,000 of revenue bonds considered defeased are still outstanding. Note payable In 1980 the City and the City of Dallas contracted with the Corps of Engineers for the construction and development of Ray Roberts Reservoir in Denton County. In contracts with the Corp of Engineers, the City will pay for twenty-six (26%) percent of the estimated water storage rights of the reservoir. Water obtained from the Reservoir will be pro rata on the basis of each city's proportional share of total construction cost. The closing of the dam was completed in 1987 with water being available from the Reservoir in 1989. Aggregate maturities of the long-term debt (principal and interest) for the years subsequent to September 30, 2003, are as follows: Bonds Cegificges of General Obliggion Obligation Revenue Fiscal Year Principal Interest Principal Interest Principal In,mst 2004 $ 3,973,038 $ 3,643,118 $ 4,105,000 $ 1,974,372 $11,255,000 $ 15,979,950 2005 3,830,000 2,726,749 4,160,000 1,673,140 11,920,000 14,956,995 2006 3,860,000 2,549,861 4,045,000 1,483,263 12,205,000 14,323,430 2007 3,900,000 2,372,953 2,972,000 1,323,705 12,845,000 13,689,949 2008 3,700,000 2,197,865 2,686,000 1,210,708 13,680,000 13,019,771 2009-2013 18,160,000 8,456,478 11,145,000 4,429,486 69,265,000 54,466,984 2014-2018 16,635,000 4,049,737 7,865,000 2,267,115 80,385,000 35,376,159 2019-2023 7,855,000 754,501 5,000,000 494,114 71,840,000 13,513,802 2024-2028 15,740,000 3,089,643 2029-2033 5,225,000 271,241 Total $61,913,038 $26,751,262 $41,978,000 $14,855,903 $304,360,000 $178,687,924 Fiscal Year 2004 2005 2006 2007 2008 2009-2013 2014-2018 2019-2023 2024-2028 2029-2033 Total Notes Payable Capital Leases Principal Interest Principal lnte~st $3,141,222 $ $676,180 $ 63,429 $ 75,880 27,771 66,012 27,771 66,012 27,771 Total Principal Interest 23,150,440 $ 21,660,869 19,985,880 19,384,655 20,176,012 18,384,325 19,783,012 17,414,378 20,066,000 16,428,344 98,570,000 67,352,948 104,885,000 41,693,011 84,695,000 14,762,417 15,740,000 3,089,643 5~2257000 271~241 $3,141,222 $ $884,084 $146,742 $412,276,344 $220,441,831 (These amounts do not include net unamortized premium/(discount) of $1,813,467 nor loss on refunding of $1,713,456.) · · · · · · · · · · · · · · · · · · · · · · Vo · · · · · · · · CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2003 Bonds authorized and unissued General obligation bonds authorized but unissued as of September 30, 2003, amounted to $4,467,000. When issued, the proceeds will be allocated to thc applicable Capital Projects Funds. H. Landfill closure and post-closure cost State and federal laws and regulations require thc City to place a final cover on its Mayhill Road landfill site upon closure and to perform certain maintenance and monitoring functions at the site for thirty years after closure. Although closure and post-closure care costs will be paid only upon anticipated closure, the City reports a portion of these costs as an operating expense in each period based on landfill capacity used as of each balance sheet date. The $3,577,512 reported as landfill closure and post-closure care liability represents the cumulative amount incurred to date based on the use of 26% of the estimated capacity of the entire landfill at September 30, 2003. Based on this estimate, the remaining potential estimated liability for closure and post-closure care of the entire landfill is $10,000,849. The City will recognize the remaining estimated cost of closure and post-closure care as the remaining capacity is filled. These amounts are based on what it would cost to perform closure and post- closure care in 2003. Actual cost may fluctuate due to inflation, changes in technology, or chaogcs in regulations. The landfill has a remaining life of 27 years, and thc City expects to close the landfill in fiscal year 2030. The solid waste fund has provided for a designation of cash of $1,468,585 at September30, 2003, and anticipates increasing fl~e reserve in futura periods as the closure and post-closure activities are carried out. OTHER INFORMATION A. Pension plans Texas Municipal Retirement Plan Plan description The City provides pension benefits for all of its full-time employees (except firefighters) through a nontraditional, joint contributory, hybrid-defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS), one of 774 administered by TMRS, an agent, multiple-employer, public employee, retirement system. Benefits depend upon the sum of the employee's contributions to the plan, with interest, and the City-financed monetary credits, with interest. At the date the plan began, the City granted monetary credits for service rendered before the plan began of a theoretical amount equal to two times what would have been contributed by the employee, with interest, prior to establishment of the plan. Monetary credits for service since the plan began are a percent (200%) of the employee's accumulated contributions. In addition, the City can grant, as often as annually, another type of monetary credit referred to as an updated service credit which is a theoretical amount which, when added to the employee's accumulated contributions and the monetary credits for service since the plan began, would be the total monetary credits and employee contributions accumulated with interest if the current employee contribution rate and City matching percent had always been in existence and if the employee's salary had always been the average of their salary in the last three years that are one year before the effective date. At retirement, the benefit is calculated as if the sum of the employee's accumulated contributions with interest and the employer-financed monetary credits with interest were used to purchase an annuity. Members can retire at ages 60 and above with ten or more years of service or with 20 years of service regardless of age. A member is vested after 5 years. The plan provisions are adopted by the governing body of the City, 43 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2003 within the options available in the state statutes governing TMRS and within the actuarial constraints also in the statutes. Contributious The contribution rate for the employees is 7%, and the City matching ratio is currently 2 to 1, both as adopted by the governing body of the City. In addition, the City reimburses employees for 5% of the 7% employee contribution. Under the state law governing TMRS, the actuary annually determines the city contribution rate. This rate consists of the normal cost contribution rate and the prior service contribution rate, both of which are calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the currently accruing monetary credits due to the City matching percent, which are the obligation of the City as of an employee's retirement date, not at the time the employee's contributions are made. The uormal cost contribution rate is the actuarially determined percent of payroll necessary to satisfy the obligation of the City to each employee at the time a retirement becomes effective. The prior service contribution rate amortizes the unfunded or actuarial liability over the remainder of the plan's 25-year open amortization period. The unit credit actuarial cost method is used for determining the City contribution rate. Both the employees and the City make contributions monthly. Since the City needs to know its contribution rate in advance for budgeting purposes, there is a one-year delay between the actuarial valuation that is the basis for the rate and the calendar year when the rate goes into effect. Schedule of Actuarial Liabilities and Funding Progress Actuarial valuation date Actuarial value of assets Actuarial accrued liability Percentage funded Unfunded actuarial accrued liability (UAAL) Annual covered payroll UAAL as a percentage of covered payroll Net pension obligation (NPO) at the beginning Annual pension cost: Annual recmired contribution (ARC) Interest on NPO Adjustment to the ARC Contributions made Increase in NPO NPO at the end of the neriod 12/31/02 12/31/01 $79.067.756 103,903,682 76.1% 24,835~926 44~981,067 55.2% $8,387,271 $7,59&718 8.387.271 $70,356.623 92,304,867 76.2% 21,948,244 41,413,185 53.0% 7.596.718 Actuarial Assumptions Actuarial cost method Amortization method Remaining amortization period Asset valuation method 1 ? IR 1 Ih? Unit Credit Level Percent of Payroll 25 Years - Open Period Amortized Cost 19/ql/01 Unit Credit Level Percent of Payroll 25 Years - Open Period Amortized Cost Investment rate of return Proiected salary increases Includes inflation at Cost-of-livin~ adiustments 8% 8% None None None None None None The City of Denton is one of 774 municipalities having the benefit plan administered by TMRS. Each of the 774 municipalities has an annual, individual actuarial valuation performed. All assumptions for the 44 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2003 December 3 l, 2002, valuations are contained in the 2002 TMRS Comprehensive Annual Financial Report, a copy of which may be obtained by writing to P.O. Box 149153, Austin, Texas 78714-9153. Fireman's Relief and Retirement Plan The City provides pension benefits for all Civil Service employees of the Fire Department through a defined contribution plan. The Board of Trustees of the Denton Fireman's Relief and Retirement Fund (the Plan) is the administrator. The Plan is not considered a part of the City of Denton entity. In a defined contribution plan, benefits depend solely on amounts contributed to the Plan plus investment earnings. Fire employees are required to become a member as a condition of employment. The Texas Local Firefighter's Retirement Act (TLFFRA) authorizes the benefit provisions of the Plan. TLFFRA provides the authority and procedure to amend benefit provisions. Under the Plan, an employee becomes fully vested after ten years of credited service. The Plan provides service retirement, death, disability, and withdrawal benefits. Employees may retire at age 50 with twenty years of service. The Plan provides a monthly normal service retirement benefit, payable in a Joint and Two-thirds to Spouse form of annuity, equal to 2.3% of highest 36-month average salary for each whole year of service. City contributions for, and interest forfeited by, employees who leave employment before vesting are redistributed to plan participants. For the Plan in effect through December 31, 2002, the funding policy required contributions equal to 10% of pay by the firefighters and was equally matched by the City of Denton. In November 2002, employee contributions increased to 12%. Both the City and employees made the required contributions of $823,466 and $975,602, respectively. B. Deferred compensation plan The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all permanent City employees, permits them to defer, until future years, up to 25% of annual gross earnings not to exceed $12,000. Employees who are within three years of retirement may elect to participate in a catch-up provision allowed by Section 457, which has an annual maximum contribution amount of $24,000. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property or rights are, until paid or made available to the employee or other beneficiary, solely the property and rights of the employees. Accordingly, the assets and associated liability of the plan are not included in the City's financial statements. It is the opinion of the City's legal counsel that the City has no liability for losses under the plan but does have the duty of due care that would be required of an ordinary prudent investor. C. Self-insurance plan The City has established a self-insurance plan for workers' compensation benefits and general liability. Accrued claims payable incfude provisions for claims reported and claims incurred but not reported. The provision for reported claims is determined by estimating the amount, which will ultimately be paid each claimant. The provision for claims incurred but not yet reported is estimated based on the City's experience. The costs associated with the self-insurance plan are reported as interfund transactions. Accordingly, they are treated as operating revenues of thc Internal Service Risk Retention Fund and operating expenditures (expenses) of the other funds. Workers' compensation and general liability insurance It is the policy of the City of Denton not to purchase commercial insurance for workers' compensation claims. Commercial liability insurance coverage is purchased for public officials, airport, emergency medical services, take-home vehicles, employee theft and dishonesty and after-school action site programs at recreation centers. 45 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2003 The City reports liabilities when it is probable that a loss has occurred, and the amount of that loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported. Because actual claims liabilities depend on such complex factors as inflation, changes in legal doctrines, and damage awards, the process used in computing claims liability does not necessarily result in an exact amount. Claims liabilities are re-evaluated periodically to take into consideration settlement of claims, new claims and other factors. As &September 30, 2003, the estimated value of these liabilities was $1,803,000. Changes in balances &claims liabilities during fiscal years 2003 and 2002 were as shown on the following page. Claims Liability Claims and Claims Liability Beginning of Change in Claims End of Fiscal Year Estimates Payments Fiscal Year Workers' Compensation 2003 $1,450,000 $ 652,600 $652,600 $1,450,000 2002 785,279 1,343,623 678,882 1,450,000 General Liability 2003 $ 353,000 $ 157,337 $157,337 $ 353,000 2002 68,494 716,862 432,356 353,000 Employee Insurance 2003 $ 11,100 $ (11,100) $ - $ - 2002 11,100 - - 11,100 On September 30, 2003, the City of Denton held $654,875 in the Risk Retention Fund for payment of claims. There were no significant reductions in insurance coverage from coverage in the prior year and the amount of settlements did not exceed insurance coverage in the current year or in any of the past three fiscal years. D. Commitments and contingencies Agreement with TMPA In 1976, the City, along with the cities of Bryan, Greenville, and Garland, Texas (the Cities) entered into a Power Sales Contract with the Texas Municipal Power Agency (TMPA). TMPA was created through concurrent ordinances of the Cities and is governed by a Board of Directors consisting of eight members, two appointed by the governing body of each city. Under the terms of the agreement, TMPA agreed to construct or acquire electric generating plants to supply energy and power to the Cities for a period of not less than 35 years. The Cities in turn agreed to purchase all future power and energy requirements in excess of the amounts generated by their systems from TMPA at prices intended to cover operating costs and retirement of debt. In the event that revenues are insufficient to cover all costs and retire the outstanding debt, each of the Cities has guaranteed a portion of the unpaid debt based, generally, upon its pro rata share of the energy delivered to consumers in the prior operating year. As of September 30, 2003, total TMPA long-term debt outstanding was approximately $1,222,831,000 and the City's percentage was approximately 21.0%. In the opinion of management, the possibility of a material payment in the near future under this guarantee is remote in that TMPA is generating operating profits and assets exceed liabilities. TMPA operates a 452-megawatt, lignite-fueled generating plant. In I996, TMPA switched to an external soume of lignite to reduce costs. Should TMPA be dissolved, each city would be entitled to an undivided interest in the property. 46 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2003 Selected financial statement information of TMPA is as follows: September 30, (Unaudited) 2003 2002 (000s) (000s) Oneratim, revenues $ 226A59 $ 211,373 Oneratina exnenses 91.671 93,562 ODeratino income 134.788 117.81 I Other non-oneratin~ sources 1.358 4.415 Current assets 66.583 58.687 Total assets 1.383.167 1.417,026 Lon~,-term debt 1.222.831 1.272.347 Total liabilities 1.345.363 1.381.051 Total etluit¥ 37,804 35.976 Agreement with the City of Dallas During I985, the City entered into an agreement with the City of Dallas which provides for the purchase of a minimum of 500,000 gallons/day of untreated water from the City of Dallas from Lake Lewisville. This contract will be effective for 30 years. The cost of water purchased under this agreement during fiscal year 2003 was $112,523. F. Litigation Various claims and lawsuits are pending against the City. In accordance with GAAP, those judgments considered "probable" are accrued, while those claims and judgments considered "reasonably possible" are disclosed but not accrued. In the opinion of City management and legal counsel, the maximum amount of all significant claims which are considered reasonably possible, excluding condemnation proceedings, is approximately $850,000 as of September 30, 2003. Potential losses after insurance coverage on all probable claims and lawsuits will not have a material effect on the City's financial position as of September 30, 2003. F. Enterprise funds' equity identified for future needs At the end of the fiscal year, the City has identified certain amounts of enterprise fund net assets to be used for future needs. In addition to net assets, Solid Waste Fund bas accrued $3,577,512 for landfill closure/post closure cost as a liability. The amounts and purposes for future needs are identified as follows: Electric Water Wastewater Solid Waste Purpose Fund Fund Fund Fund Landfill closure Rate stabilization Water tower painting Infrastructure financing O & M contingency Capital construction Lewisville WTP regulatory rehab TXDOT highway relocations Debt retirement Contingency Drainage $ $ $ $2,433,842 56,096,752 6,000,000 1,500,000 1,100,000 2,000,000 1,000,000 1,000,000 400,000 300,000 35,465,673 250,000 250,000 900,000 1,000,000 2,050,000 900,000 53,899 250,000 Total $91.562.425 $12.700.000 $3.950.000 $4.737.741 47 of 48 · · · · · · · · · · · · · CITY OF DENTON, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES 1N FUND BALANCES - BUDGET TO ACTUAL GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 2003 Budgeted Amounts Oril~inal Final Actual Amounts Adjustments - Budgetary Basis Exhibit XI 5,212,227 REVENUES: Taxes $ 29,668,219 $ 29,668,219 $ 29,455,465 Licenses and permits 1,288,940 1,288,940 1,151,169 Franchise fees 12,278,206 12,278,206 12,571,989 Fines and forfeitures 3,914,500 3,914,500 3,422,952 Fees for services 12,089,606 12,089,606 6,020,190 Investment revenue 1,030,485 1,030,485 856,204 Intergovernmental 787,739 787,739 692,581 Miscellaneous 278,728 278,728 418,817 Total revenues 61,336,423 61,336,423 54,589,367 5,212,227 59,801,594 (1,534,829) EXPENDITURES: General government 22,272,606 22,272,606 Public safety 28,464,873 28,464,873 Public works 4,440,530 4,440,530 Parks and recreation 6,111,061 6,111,061 Capital outlay 231,909 231,909 Total expenditures 61,520,979 61,520,979 54,610,641 4,983,334 59,593,975 1,927,004 (184,556) (184,556) (21,274) 228,893 207,619 392,175 529,721 529,721 529,721 (393,074) (393,074) (393,074) (393,074) {393,074) (393,074) 136,647 136,647 529,721 (577,630) (577,630) 115,373 228,893 344,266 921,896 $ 921,896 16,166,690 5,132,563 21,299,253 973,353 28,081,091 (19,296) 28,061,795 403,078 4,342,542 (120,065) 4,222,477 218,053 5,873,122 (9,868) 5,863,254 247,807 147,196 147,196 84,713 Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Transfer in Transfers (out) Total other financing sources (uses) Excess (deficiency) of revenues and other sources over (under) expenditures and other uses Fund balance at beginning of year 8,464,620 8,464,620 8,464,620 8,464,620 Fund balance at end of year $ 7,886,990 $ 7,886,990 $ 8,579,993 $ 228,893 $ 8,808,886 Adjustments - Budgetary Basis include $5,212,227 of expenditures allocated to and reimburse by other funds. These expenditures are recorded in the other funds' flnancials. Also included is $228,893 of expenditures for prior year encumbrances. 49 Variance with Actual on a Final Budget - Budgetary Positive Basis (Nel~ative) $ 29,455,465 $ (212,754) 1,151,169 (137,771) 12,571,989 293,783 3,422,952 (491,548) 11,232,417 (857,189) 856,204 ( 174,281 ) 692,581 (95,158) 418,817 140,089 Fiscal Year CITY OF DENTON, TEXAS REQUIRED SUPPLEMENTAL INFORMATION SCHEDULE OF TMRS FUNDING PROGRESS AND CONTRIBUTIONS LAST THREE FISCAL YEARS (Unaudited) Unfunded Actuarial Actuarial Actuarial Actuarial Accrued Accrued Valuation Value of Liability (AAL) Liability Date Assets Entry Age (UAAL) 2001 12/31/2000 $ 64,853,498 $ 85,028,022 $ (20,174,524) 2002 12/31/2001 70,356,623 92,304,867 (21,948,244) 2003 12/31/2002 79,067,756 103,903,682 (24,835,926) Fiscal Year 2001 2002 2003 Exhibit XII Funded Percent 76.30% 76.20 76.10 50 UAAL as Percent of Annual Covered Covered Required Actual Percent Payroll Payroll Contributions Contributions Contributed $ 38,039,869 53.0% $ 6,371,989 $ 6,371,989 100.0% 41,413,185 53.0 7,596,718 7,596,718 100.0 44,981,067 55.2 8,387,271 8,387,271 100.0 · · · · · · · · · · · · · · · · · · · NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Special revenue funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes. Community Development Block Grant (CDBG) - to account for the operations of projects utilizing Community Development l~lock Grant Funds. Such revenues are restricted to expenditures for specified projects by the Department of Housing and Urban Development. Recreation - to account for the revenues and expenditures for the recreation programs that are self-supporting. All expenditures will be reimbursed 100%. Various business operations, such as concessions, fall into this account. Criminal Justice - to account for revenue received from the State of Texas Crimiual Justice Division and other grants administrated by the Police Department. Police Confiscation - to account for revenues received from confiscated goods. Expenditures are restricted to enhancing law enforcement. Tourist and Convention - to account for taxes received from hotel and motel occupancy for the purpose of promoting tourism. Emily Fowler Library - to account for fines, donations, memorials and gifts to the library that are restricted for the Public Library. Citizens' Park Trusts to account fur several small trust funds which are for park development, previously reported as expendable trust funds. All Other- to account for miscellaneous special revenue sources which are required to finance specific activities. 51 CITY OF DENTON, TEXAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS AS OF SEPTEMBER 30, 2003 ASSETS Cash, cash equivalents and investments, at fair value Receivables (net of allowances): Accrued interest Other Due from other governments Total assets LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities Due to other funds Other liabilities Deferred revenues Total liabilities FUND BALANCES: Reserved for encumbrances Unreserved balance Total fund balances Total liabilities and fund balances Special Revenue Funds Community Development Criminal Police Block Grant Recreation Justice Confiscation $ $ 44,496 $ 11,735 $ 89,715 5,933 11,438 525,017 18348 6,887 $ 530,950 $ 74,282 $ 18,622 $ 89,715 $ 124,693 $ 64,184 $ 24 $ 1,699 321,632 164 26,377 799 16,462 472,702 65,147 16,406 1,699 9,135 58,248 2,136 88,016 58,248 9,135. 2,136 88,016 $ 530,950 $ 74,282 $ 18,622 $ 89,715 52 · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · Exhibit XII1 Special Revenue Funds (continued) Total Tourist Emily Citizens' Nonmajor and Fowler Park All Governmental Convention Librar~y Trusts Other Funds 192,941 $ 58,358 $ 1,804,842 $ 13,924 $ 2,216,011 3,698 3,698 66,494 666 137,414 221,945 1,051,996 1,602,248 $ 259,435 $ 59,024 $ 1,808,540 $ 1,203,334 $ 4,043,902 $ 215,782 $ 86 $ 471,288 $ 262,161 $ 1,139,917 791,506 1,113,138 164 54,130 97,768 215,782 86 471,288 1,107,797 2,350,987 2,899 2,261 14,295 40,754 56,677 !,337,252 95,537 1,678,620 43,653 58,938 1,337,252 95,537 1,692,915 $ 259,435 $ 59,024 $ 1,808,540 $ 1,203,334 $ 4,043,902 53 CITY OF DENTON, TEXAS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2003 REVENUES: Fees for services Investment revenue Tax revenue Intergovernmental Miscellaneous Total revenues EXPENDITURES: General government Public safety Public works Parks and recreation Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Transfers in Transfers (out) Total other financing sources (uses) Net change in fund balances Fund balance (deficit) at beginning of year Fund balance at end of year Special Revenue Funds Community Development Criminal Police Block Grant Recreation Justice Confiscation $ 1,893,523 $ $ 5,844 1,876,885 55,509 39,791 172,963 1,799 83,655 2,049,848 1,954,876 41,590 83,655 1,760,105 2,211,721 43,781 73,393 1,760,105 2,211,721 43,781 73~93 289,743 (256,845) (2,191) 10,262 55~91 39,300 4,327 (45,672) (80,000) 9,719 (40,700) 4,327 299,462 (297,545) 2,136 10~62 (241,214) 306,680 77,754 $ 58,248 $ 9,135 $ 2,136 $ 88,016 54 · · · · · · · · · · · · · · · · · · · Exhibit XIV Special Revenue Funds (continued) Total Tourist Emily Citizens' Nonmajor and Fowler Park All Governmental Convention Library Trusts Other Funds 1,981 855,879 857,860 $ 95,094 $ 556,498 64,026 715,618 12,330 $ 547,195 $ 2,535,812 20,155 855,879 2,017,030 4,545,713 208,370 530,813 12,330 2,772,595 8,488,372 820,963 277,193 9,937 438,357 748,692 1,956,234 4,814,495 207,996 325,170 284,750 284,750 2,221,658 637,721 1,824,770 · · · · 820,963 36,897 715,550 758,629 3,086,701 9,470,843 68 (746,299) (314,106) (982,471) 321,446 420,464 (12,370) (138,042) 309,076 282,422 36,897 68 (746,299) (5,030) (700,049) 6,756 58,870 2,083,551 100,567 2,392,964 $ 58,938 $ 1,337,252 43,653 $ 95,537 $ 1,692,915 55 CITY OF DENTON, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUAL DEBT SERVICE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2003 REVENUES: Taxes Investment (loss) Total revenues EXPENDITURES: Debt service: Principal, interest and fiscal charges Total expenditures Excess(deficiency)ofrevenues over(under)expenditures OTHER FINANCING SOURCES: Transfers in Total other financing sources Net change in fund balance Fund balance at beginning of year Fund balance at end of year Exhibit XV Variance with Adjustments - Actual on a Final Budget - Budgeted Amounts Actual Budgetary Budgetary Positive Original Final Amounts Basis Basis (Negative) $ 7,776,959 $ 7,776,959 $ 7,776,959 $ $ 7,776,959 $ (4,062) (4,062) (4,062) 7,776,959 7,776,959 7,772,897 7,772,897 (4,062) 9,783,866 9,783,866 9,515,000 9,515,000 268,866 9,783,866 9,783,866 9,515,000 9,515,000 268,866 (2,006,907) (2,006,907) (1,742,103) (1,742,103) 272,928 1,265,430 1,265,430 1,236,123 1,236,123 (29,307) 1,265,430 !,265,430 1,236,123 1,236,123 (29,307) (741,477) (741,477) (505,980) (505,980) 235,497 934,406 934,406 934,406 934,406 $ 192,929 $ 192,929 $ 428,426. $ $ 428,426 $ 235,497 56 · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · CITY OF DENTON, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUAL SPECIAL REVENUE FUNDS: RECREATION FUND FOR YEAR ENDED SEPTEMBER 30, 2003 Exhibit XVI REVENUES: Fees for services Investment revenue Intergovernmental Miscellaneous Total revenues Variance with Adjustments- Actual on a Final Budget- Budgeted Amounts Actual Budgetary Budgetary Positive Original Final Amounts Basis Basis (Negative) $ 2,722,379 2,722,379 $ 1,893,523 $ $ 1,893,523 $ (828,856) 4,500 4,500 5,844 (2,474) 3,370 (I,130) 55,509 (55,509) 2,726,879 2,726,879 1,954,876 (57,983) 1,896,893 (829,986) 2,831,206 2,831,206 2,211,721 (26,518) 2,185,203 646,003 2,831,206 2,831,206 2,211,721 (26,518) 2,185,203 646,003 (104,327) (104,327) (256,845) (31,465) (288,310) (183,983) 39,300 (39~00) (80,O00) (80,O00) (80,O00) (80`O00) (184,327) (184,327) (297,545) (70,765) (368,310) (183,983) EXPENDITURES: General government Parks and recreation Total expenditures expenditures OTHER FINANCING SOURCES (USES): Transfers in Transfers out Net change in fund balance Fund balance at beginning of year 306,680 306,680 306,680 306,680 Fundbalanceatendofyear $ 122,353 $ 122,353 $ 9,135 $ (70,765) $ (61,630) $ (183,983) Adjustments - Budgetary Basis include $2,474 of donation interest revenue, $55,509 of grant revenue, $39,300 of grant transfers from other special revenue funds and $26,518 of grant parks and recreation expenditures. Donations and grant transfers, revenue and expenditures are not subject to budgetary restraints. 57 CITY OF DENTON, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUAL SPECIAL REVENUE FUNDS: POLICE CONFISCATION FUND FOR YEAR ENDED SEPTEMBER 30, 2003 REVENUES: Miscellaneous Total revenues EXPENDITURES: Public safety Total expenditures Net change in fund balance Fund balance at beginning of year Fund balance at end of year Exhibit XVII Variance with Adjustments - Actual on a Final Budget - Budgeted Amounts Actual Budgetary Budgetary Positive Original Final Amounts Basis Basis (Nesative) $ 50,000 $ 50,000 $ 83,655 $ $ 83,655 $ 33,655 50,000 50,000 83,655 83,655 33,655 88,600 88,600 73,393 73,393 15,207 88,600 88,600 73,393 73,393 15,207 (38,600) (38,600) 10,262 10,262 48,862 77,754 77,754 77,754 77,754 $ 39,154 $ 39,154 $ 88,016 $ $ 88,016 $ 48,862 58 · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · CITY OF DENTON, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUAL SPECIAL REVENUE FUNDS: TOURIST AND CONVENTION FUND FOR YEAR ENDED SEPTEMBER 30, 2003 REVENUES: Taxes Fees for services Investment revenue Miscellaneous Total revenues EXPENDITURES: General government Total expenditures Net change in fund balance Fund balance at beginning of year Fund balance at end of year Exhibit XVIII $ 835,000 $ 835,000 $ 855,879 $ $ 855,879 $ 20,879 5,000 5,000 1,981 1,981 (3,019) 840,000 840,000 857,860 857,860 17,860 840,000 840,000 820,963 820,963 19,037 840,000 840,000 820,963 820,963 19,037 36,897 36,897 36,897 6,756 6,756 6,756 6,756 $ 6,756 $ 6,756 $ 43,653 $ $ 43,653 $ 36,897 59 Variance with Adjustments - Actual on a Final Budget - Budgeted Amounts Actual Budgetary Budgetary Positive Original Final Amounts Basis Basis (Negative) CITY OF DENTON, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUAL SPECIAL REVENUE FUNDS: EMILY FOWLER LIBRARY FUND FOR YEAR ENDED SEPTEMBER 30, 2003 REVENUES: Fees for services Intergovernmental · Miscellaneous Total revenues Exhibit XIX Variance with Adjustments - Actual on a Final Budget - Budgeted Amounts Actual Budgetary Budgetary Positive Original Final Amounts Basis Basis (Nel~ative) EXPENDITURES: General government Capilal outlay Total expenditures Net change in fund balance Fund balance at beginning of year Fund balance at end of year $ 99,686 $ 99,686 $ 95,094 $ $ 95,094 $ (4,592) 556,498 (556,498) 64,026 (53,902) 10,124 10,124 99,686 99,686 715,618 (610,400) 105,218 5,532 94,686 94,186 277,193 (185,411) 91,782 2,404 5,000 5,500 438,357 (432,892) 5,465 35 99,686 99,686 715,550 (618,303) 97,247 2,439 68 7,903 7,971 7,971 58,870 58,870 58,870 58,870 $ 58,870 $ 58,870 $ 58,938 $ 7,903 $ 66,841 $ 7,971 Adjustments - Budgetary Basis includes $556,498 of grant revenue and $53,902 of donations revenue. Capital outlays were made from grant monies ($175,936), donations ($3,744) and prior year encumbrances ($5,731). General government expenditures were made from grant monies ($430,130) and prior year encumbrances ($2,762). Grant and donation revenue and expenditures are not subject to budgetary restraints. 60 · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · INTERNAL SEVICE FUNDS Internal Service Funds account for the financing of goods or services provided by one department for another. The City has five Internal Service Funds as follows: Materials Management Fund to account for the financing of goods and services provided by Materials Management to other City departments. Such costs provided by Materials Management are billed to the other departments at standard labor charges and cost of parts plus 13 percent. Actual costs include depreciation on machinery and equipment used to provide the service. Fleet Services Fund - to account for the financing of goods and services provided by the Municipal Garage and Machine Shop to other City departments. Municipal Garage and Machine Shop billings include labor charges and cost of parts plus 25 percent. Actual costs include depreciation on the building, improvements, machinery, and equipment used to provide the service. Motor Pool Fund to account for the purchase of City vehicles and equipment not budgeted in other funds. These vehicles are then leased to other City departments. Monthly charges are equal to the vehicle costs less salvage value divided by the expected life of the vehicle. Risk Retention Fund - to account for the accumulation of resources for the payment of employee insurance claims and insurance policies. Technology Services Fund to account for the accumulation of resources to provide computer programming services, systems analysis, imaging, print shop, and office services to City departments. 61 CITY OF DENTON, TEXAS COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS SEPTEMBER 30, 2003 ASSETS: Current assets Cash, cash equivalents and investments~ at fair value Accounts receivable, net of allowances: Accrued interest Other Due from other funds Merchandise inventory Prepaid items Deferred bond issuance costs Total current assets Noneurrent assets: Restricted assets Cash, cash equivalents and investments, at fair value Capital assets, net of accumulated depreciation Total non current assets Total assets LIABILITIES: Current liabilities: Accounts payable and accrued expenses Claims payable Compensated absences payable Accrued interest Due to other funds Leases payable Payable from restricted assets: Accounts payable and accrued expenses Arbitrage payable Certificate and general obligation bonds Total current liabilities Noncurrent liabilities: Leases payable Payable from restricted assets: Arbitrage payable General obligation bonds payable Certificates of obligatlon Claims payable Compensated absences payable Total noneurrent liabilities: Total liabilities NET ASSETS: Invested in capital assets, net of related debl Unrestricted Total net assets Materials Fleet Motor Risk Management Services Pool Retention Fund Fund Fund Fund 1,725 $ $ 8,434,189 $ 2,455,872 152,735 8,613 51,567 41,587 4,637,866 150,762 22,805 6,959 2,282 4,669,355 153,044 8,628,511 2,516,052 250,803 196,007 742,937 2,886,372 14,764,587 23,186 742,937 3,137,175 14,960,594 23,186 5,412,292 3,290,219 ~ 2,539,238 481,942 177,330 83,740 58,177 240,000 19,852 28,470 6,024 15,804 13,540 3,941,918 488,604 3,723 19,328 11,564 71,155 500,129 4,461,300 296,482 1,105,341 298,177 207,904 34,767 19,441 604,940 2,466,270 1,692,325 1,563,000 19,852 28,470 624,792 2,529,507 1,919,670 1,563,000 5,086,092 2,825,989 3,025,011 1,861,177 126,433 599,750 12,748,699 23,186 199,767 (135,520) 7,815,395 654,875 326.200 $ 464.230 $ 20.564.094 $ 678.061 62 · · · · · · · · · · · · · · · · · · · · · · · · · · · · Exhibit XX Total Technology Internal Services Service Fund Funds $ 656,386 $ 11,546,447 161,348 159 53,451 14,810 56,397 4,788,628 56,323 79,128 20,978 30,219 748,656 16,715,618 2,417,033 2,863,843 3,449,517 21,866,599 5,866,551} 24,730,442 6,615,206 41,446,060 304,430 1,105,619 240,000 62,681 111,003 46,336 81,704 3,941,918 488,604 217,751 221,474 19,328 196,159 779,007 827,357 0,988,657 207,904 7,763 42,530 19,441 2,110,906 6,874,441 1,563,000 62,681 I 11,003 2,181,350 8,818,319 3,0118,707 15,806,976 3,127,075 16,625,143 479,424 9,013,941 $ 3.606.499 $ 25.639.084 63 CITY OF DENTON, TEXAS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2003 OPERATING REVENUES: Charges for goods and services Miscellaneous Total operating revenues OPERATING EXPENSES: Operating expenses before depreciation Depreciation Total operating expenses Operating income (loss) NONOPERATING REVENUES (EXPENSES): Interest expense and fiscal charges Loss on disposal of fixed assets Other non-operating revenues (expenses} Total non-operating revenues (expenses) Income (loss) before transfer~ Capital contributions Transfers in Transfers (out) Change in net assets Total net assets at beginning of year Total net assets at end of year Materials Fleet Motor Risk Management Services Pool Retention Fund Fund Fund Fund $ 5,587,744 $ 3,376,905 $ 3,014,999 $ 634,916 11,191 38,855 184,856 5,598,935 3,415,760 3,014,999 819,772 6,101,559 3,285,888 519,900 2,727,974 15,061 24,587 2,083,547 3,383 6,116,620 3,310,475 2,603,447 2,731,357 (517,685) 105,285 411,552 (1,911,585) 222,777 (60,180) (6,025) (107,030) (303,277) 99,118 (146,520) (6,025) (107,030) 18,618 (206,700) (523,710) (1,745) 430,170 (2,118,285) 57,744 584,501 (8,510) (28,380) (532,220) (30,125) 487,914 (1,533,784) 858,420 494,355 20,076,180 2,211,845 $ 326,200 $ 464,230 $ 20,564,094 $ 678,061 64 · · · · · · · · · · · · · · · · · · · · · Exhibit XXI Total Technology Internat Services Service Fund Funds $ 7,011,438 $ 19,626,002 234,902 7,011,438 19,860,904 6,152,382 18,787,703 210,032 2,336,610 6,362,414 21,124,313 649,024 (1,263,409) 7,540 170,137 (61,050) (477,382) 99,118 046,520) (53,510) (354,647) 595,514 (1,618,056) 57,744 584,501 (499,007) (535,897) 96,507 (I,511,708) 3,509,992 27,150,792 $ 3,606,499 $ 25,639,084 65 CITY OF DENTON, TEXAS COMBINING STATEMENT OF CASH FLOWS 1NTERNAL SERVICE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2003 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers Cash paid to employees for services Cash paid to suppliers Net cash provided (used) by operations CASH FLOWS FROM NONCAPITAL FINANCING ACTVITIES: Transfers (out) Transfers in Other sources from noncapital financing Net cash provided (used) by noncapital financing activities CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES: Proceeds from contributed capital Principal payments on certificates of obligation lnterest and fiscal charges Principal payments under capital lease obligation Proceeds from the issuance of certificates of obligation Procceds from lease financing Loss on sale of capital assets Acquisition from construction of fixed assets Net cash provided (used) by capital financing activities CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale and maturities of investment securities Purchase of investment securities Interest received on investments Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Investments, at fair value Cash, cash equivalents and investments, at fair value RECONCILIATION OF OPERATING FUND INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) Adjustments: Depreciation expense Decrease (Increase) in receivables Decrease (Increase) in due from other funds Decrease (Increase) in inventories Decrease (Increase) in prepaid items Increase (Decrease) in accounts payable Increase (Decrease) in accumulated unpaid compensated absences Increase (Decrease) in due to other funds Total adjustments Net cash provided (used) by operating activities 66 Materials Fleet Motor Management Services Pool Fund Fund Fund 5,597,210 $ 3,480,330 $ 3,142,086 (747,098) (889,548) (4,860,227) (2,509,384) 1440,466) (10,115) 81,398 2,701,620 (8,510) (28,380) (28,380) 57,744 (4,452) (80,201) (555,378) (6,959) (79,430) (310,387) (1,137,714) 620,956 202,095 1,198,780 99,118 (604,677) (40,733) (2,609,728) 4,868 1,731 (3,257,565) 13,757 13,757 6,108,925 (4,500,000) 206,573 1,815,498 54,749 1,259,553 196,054 619,255 250,803 1,878,808 6,751,388 $ $ 250,803 $ 8,630,196 $ (517,685) $ 105,285 $ 411,552 15,061 24,587 2,083,547 (1,725) 64,570 (150,476) 127,087 677,493 (6,071) 2,275 105,914 34,706 98,557 5,058 8,797 (296,506) (19,123) 507,570 (23,887) 2,290,068 $ (10,115) $ 81~398 $ 2,701,620 · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · Exhibit XXll Total Risk Technology Internal Retention Services Service Fund Fund Funds $ 780,308 $ 6,996,469 $ 19,996,403 (196,069) {2,300,980) (4,133,695) (2,540,365) (3,674,527) (14,024,969) (1,956,126) 1,020,962 1,837,739 584,501 (146,520) (499,007) (535,897) 584,501 (146,520) 437,981 (499,007) (97,916) 57,744 (40,755) (680,786) (36,768) (433,544) (I,137,714) 1,858,118 2,681,169 1,198,780 99,118 (359,909) 13,615,047) 1,420,686 (I,830,280) 123,524 501,094 6,733,543 (4,500,000) (25,742) 15,071 209,659 97,782 516,165 2,443,202 (1,420,363) 2,458,806 2,352,745 1,359,446 614,613 2,789,368 (60,917) 3,073,419 5,142,113 2,516,789 9,268,177 $ 2~455~872 $ 3~073~419 $ 14~410~290 (1,911,585) 3,383 (39,464) (8,460) (44,541t $ (1~956,126) $ 649,024 $ (1,263,409) 210,032 2,336,610 059) 23~22 04,810) (38,199) 671,422 2,275 160,296 391,013 16,579 30~34 (315,629) 371,938 3,101,148 $ 1~020~962 $ 1~837~739 67 CITY OF DENTON, TEXAS STATEMENT OF NET ASSETS FIDUCIARY FUNDS AS OF SEPTEMBER 30, 2003 ASSETS: Cash, cash equivalents and investments, at fair value Due from other funds Other receivables Total assets LIABILITIES: Accounts payable Due to other funds Total liabilities Exhibit XXIII Agency Funds Employee Other Total Payroll Insurance Agency Agency Fund Fund Funds Funds $ $ $ 2,208,578 $ 2,208,578 307,993 307,993 351,181 19,171 370,352 $ 307,993 $ 351,181 $ 2,227,749 $ 2,886,923 $ 307,993 $ 250,251 $ 2,227,749 $ 2,785,993 100,930 100,930 $ 307,993 $ 351,181 $ 2,227,749 $ 2,886,923 68 CITY OF DENTON, TEXAS STATEMENT OF CHANGES IN ASSETS AND LIABILITES AGENCY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2003 Exhibit XXIV Balance Balance September 30, 2002 Additions Deduction September 30, 2003 PAYROLL FUND ASSETS Cash and deposits $ $ 65,367,704 $ 65,367,704 Due from other funds 3,026,517 307,993 3,026,517 Other receivables 5,656 5,656 Total assets $ 3,032,173 $ 65,675,697 $ 68,399,877 $ 307,993 $ 307,993 LIABILITIES Accounts payable $ 1,480,403 $ 65,675,697 $ 66,848,107 Salaries payable 1,551,770 1,551,770 Total liabilities $ 3,032,173 $ 65,675,697 $ 68,399,877 $ 307,993 $ 307,993 EMPLOYEE INSURANCE FUND ASSETS Cash and deposits $ 27,202 $ 7,734,656 $ 7,761,858 $ Other receivables 2,042 739,841 390,702 Total assets $ 29,244 $ 8,474,497 $ 8,152,560 $ 351,181 351,181 LIABILITIES Accounts payable $ 29,244 $ 8,373,567 $ 8,152,560 $ 250,251 Due to other funds 100,930 100,930 Total liabilities $ 29,244 $ 8,474,497 $ 8,152,560 $ 351,181 OTHER AGENCY FUNDS ASSETS Cash and deposits $ 2,203,341 $ 1,194,980 $ 1,189,743 $ Investments Other receivables 11,305 135,670 127,804 Total assets $ 2,214,646 $ 1,330,650 $ 1,317,547 $ 2,208,578 19,171 2,227,749 LIABILITIES Accounts payable $ 2,214,646 $ 1,330,650 $ 1,317,547 $ 2,227,749 Total liabilities $ 2,214,646 $ 1,330,650 $ 1,317,547 $ 2,227,749 TOTAL AGENCY FUNDS ASSETS Cash and cash equivalents $ 2,230,543 $ 74,297,340 $ 74,319,305 $ Investments Due from other funds 3,026,517 307,993 3,026,517 Other receivables 19,003 875,511 524,162 Total assets $ 5,276,063 $ 75,480,844 $ 77,869,984 $ 2,208,578 307,993 370,352 2,886,923 LIABILITIES Accounts payable $ 3,724,293 $ 75,379,914 $ 76,318,214 $ 2,785,993 Salaries payable 1,551,770 1,551,770 Due to other funds 100,930 100,930 Total liabilities $ 5,276,063 $ 75,480,844 $ 77,869,984 $ 2,886,923 69 of 70 CITY OF DENTON, TEXAS CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS COMPARATIVE SCHEDULES BY SOURCE* SEPTEMBER 30, 2002 AND 2003 Governmental funds capital assets: Land Construction in progress Buildings Equipment Infrastructure Total governmental funds capital assets 2003 $ 1,610,053 44,515,957 24,366,079 10,944,685 124,787,791 $ 206,.~224,565 Investments in governmental funds capital assets by source: General fund $ 139,361,394 Special revenue funds 1,919,869 Capital projects funds 64,943,302 Total governmental funds capital assets: $ 206,224,565 *This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets. 71 Exhibit XXV 20O2 $ 1,223,446 32,705,796 23,620,749 23,097,849 91,244,715 $ 171,892,555 $ 47,561,119 380,926 123,950,510 $ 171,892,555 CITY OF DENTON, TEXAS CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE BY FUNCTION AND ACTIVITY* SEPTEMBER 30, 2003 Exhibit XXVI Function and Activity General government: Finance Legal Municipal court/judge/clerks Human resources City manager/economic development Facility management Library South branch library Building inspections Planning/community development Engineering Public transportation Airport Total general government Public works: Traffic operations Streets Total public works Machinery Construction and in Land Buildings Equipment Infrastructure Progress Total $ $ 7,182 $ $ $ 55,572 808,462 361,440 10,536,812 369,100 7,857,239 1,535,599 2,447,548 1,225,601 494,500 $ 62,754 163,609 163,609 7,705 7,705 6,643 6,643 20,522 828,984 581,316 19,705,907 4,458,868 8,442,015 607,784 1,833,385 22,740 22,740 31,411 24,057 549,968 467,370 769,237 1,255,377 870,217 879,530 6,771,395 18,770 9,313 328,696 846,410 4,212,546 1,383,743 690,136 15,463,879 7,238,185 5,374,940 11,762,872 40,530,012 387,055 15,023,251 15,410,306 5,000 83,894 100,413,603 9,876,704 110,379,201 5,000 470,949 115,436,854 9,876,704 125,789,507 Parks and recreation 919,917 5,678,271 826,375 3,975,997 14,625,027 26,025,587 Public safety: Fire administration Fire operations Fire prevention Emergency medical Police Animal control Total public safety Total governmental funds capital assets 23,242 2,823,531 132,166 26,927 36,340 8,596 2,149,392 386,802 41,109 5,387,441 5,410,683 2,955,697 26,927 176,225 212,565 2,687,688 4,845,676 427,91 i 3,218,929 2,409,176 8,251,354 13,879,459 $ 1,610,053 $ 24,366,079 $ 10,944,685 $ 124,787,791 $ 44,515,957 $ 206,224,565 *This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets. 72 · · · · · · · · · · · · · · · · · · · · · · · · · · · · · CITY OF DENTON, TEXAS CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITY* FOR THE YEAR ENDED SEPTEMBER 30, 2003 Exhibit XXVII Function and Activity General government: Finance Legal Municipal court/judge/clerks Human resources City manager/economic development Facility management Library South branch library Building inspections Planning/community development Engineering Public transportation Airport Total general government Public works: Traffic operations Streets Total public works Parks and recreation Public safety: Fire administration Fire operations Emergency medical Police Animal control Total public safety Construction in progress Total governmental funds capital assets Funds Capital Assets October 1, 2002 Additions 271,150 $ 269,694 19,404 14,324 4,183 1,092,704 14,989,403 1,204,333 6,127,833 562,621 2,310,593 25,110 22,740 534,682 870,450 193,477 706,551 5,327,318 35,570 32,005,811 2,576,329 Deductions Funds Capital Assets September 30, 2003 271,150 289,098 14,324 4,183 1,092,704 16,193,736 6,690,454 2,335,703 22,740 534,682 870,450 900,028 5,362,888 34,582,140 I, I 14,977 101,024,878 102,139,855 1,114,977 85,599,126 15,425,752 86,714,103 15,425,752 12,673,187 3,998,470 I6,671,657 501,475 2,965,085 65,541 19,529 3,917,869 455,755 389,702 501,475 3,030,626 19,529 4,373,624 389,702 7,793,660 521,296 8,314,956 32,705,794 21,499,281 (9,689,118) 44,515,957 $ 171,892,555 $ 44,021,128 $ (9,689,118) $ 206,224,565 *This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets. 73 ~---...,.~ 74 · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · CITY OF DENTON, TEXAS GENERAL FUND COMPARATIVE BALANCE SHEET SEPTEMBER 30, 2003 AND 2002 ASSETS: Cash and cash equivalents Receivables, net of allowances: Taxes Accrued interest Other Due from other funds Due from other governments Total assets LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities Deposits Due to other funds Due to other governments Other liabilities Deferred revenue Total liabilities FUND BALANCES: Reserved for encumbrances Unreserved, undesignated Total fund balances Total liabilities and fund balances 2003 2002 $ 4,001,904 $ 3,341,553 3,458,809 3,624,947 45,982 21,994 1,766,785 925,485 3,978,446 4,964,289 5,020 $ 13,251,926 $ 12,883,288 $ 2,935,729 $ 551,029 264 162 307,993 3,044,715 4,161 3,993 670,808 24,908 752,978 793,861 4,671,933 4,418,668 137,051 431,528 8,442,942 8,033,092 8,579,993 8,464,620 $ 13,251,926 $ 12,883,288 75 Exhibit XXVIll CITY OF DENTON, TEXAS BALANCE SHEET - TRADITIONAL FORMAT ENTERPRISE FUNDS SEPTEMBER 30, 2003 Electric Water Wastewater Utility System System System Systems Fund Fund Fund Subtotal ASSETS: Current Cash, cash equivalents and investments, at fair value $ 10364.002 Receivables, net of allowances: Accounts 8,072,031 Unbilled utility service 5,330,217 Accrued interest 12,402 Other Due from other funds 505,452 Merchandise inventory Deferred bond issuance costs 594,385 Restricted assets: Cash. cash equivalents and investments, at fair value 94,529,052 Escrow de0osit 80,658 Accrued interest 430,573 Fixed assets, net of accumulated depreciation 71~175~971 Total assets ~ lql.flq4_743 LIABILITIES: Current Accounts payableand accrued expenses $ 7,919,005 Claims Retaina~,e payable Compensated absences payable 176.189 Leases payable Deposits 1,393,769 Payable from restricted assets: Accounts payable and accrued expenses 212,070 Arbitrage payable 51,071 Retainage payable 40,346 Accrued interest 1,475,134 Revenue and general obligation bonds 3,555,000 Deferred revenue imoact fees Noncurrent Payable from restricted assets: Arbitrage payable 6,520 General obligation bonds payable Certificates of obligation Revenue bonds payable, net ofdiscouni 71,431.927 Deferred amount on refundin~ (371,943) Notes payable Compensated absences payable 176,189 Landfill closure/postclosure costs Total liabilities FUND EQUITY: Retained earnings: Reserved: Debt service 8.676,193 Landfill closure Rate stabilization 56,096.752 Water tower painting Infrastructure financing O & M contingency Capital construction 35,465,673 Lewisville WTP regulatory rehab TXDOT highway relocations Drainage Unreserved 4~790~848 Total fund equltv 105~029~466 Total liabilities and fund equity $191.094.743 $ 13,045,525 1,336,209 898,054 33,922 28,957 394,675 677.306 2,150,457 $ 25,559,984 970,203 10,378,443 719,761 6,948,032 15,167 61,491 28,957 262,066 1,162,193 567,034 1,838,725 52,697,141 52,370,476 199,596,669 101,290 112,351 294,299 263,621 462,381 1,156.575 17L317.156 1101735n552 353~228~679 24fi_703.8~6 ~ 168.365.448 ~ 60fl.2~4.f147 530,741 16,952 160,632 179,537 680,391 $ 9.130.137 31,133 48,085 120,402 457.223 1,573,306 1,212,103 326,792 1,750,965 128.476 45,055 224,602 1,433,743 992,222 2,466,311 2,576,011 1,562,146 5,613,291 4.200.000 3,500,000 11,255,000 3,209,476 598,903 3,808,379 4,790 7,598 18,908 140,752,630 82,733,911 294,918,468 (809,871) (531,643) (1,713,457} 3,141,222 3,141.222 160,632 120,401 457,222 86~065~277 156~897~074 90~187~311 333,149~662 14,944,600 10,766,067 34,386,860 6,000,000 1.500,000 63,596,752 2.000,000 2,000,000 1,000,000 1,000,000 2,000,000 400,000 300,000 700,000 250,000 250,000 35,965,673 1,000,000 1,000.000 2.050,000 2,050,000 900,000 900,000 56.252~!82 63.462.070 124~505~100 83.896.782 78~i78~i37 267.104.385 76 · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · Exhibit XXIX Solid Total Waste Enterprise Fund Funds $ 5,327,808 $ 30,887,792 868,209 I 1,246,652 350,637 7,298,669 40,614 102,105 4,818 33,775 38,834 1,201,027 50,699 1,889,424 2,732,330 202,328,999 294,299 11,318 1,167,893 14~414~984 367~643~663 $ 333,025 $ 9,463,162 48,085 127,225 584,448 187,576 187,576 177,119 1,750,425 40,621 i,791,586 224,602 69,195 2,535,506 97,675 5,710,966 1,796,134 13,051,134 3,808,379 12,944 31,852 2,046,629 2,046,629 10,114,017 10,114,017 294,918,468 (93,659) (1,807,116) 3,141,222 127,225 584,447 3.577.512 3~577~512 18~613~238 351~762~900 53,899 34,440,759 2,433342 2,433,842 1,100,000 64,696,752 2,000,000 2,000,000 250,000 950,000 900,000 36,865,673 1,000,000 2,050,000 900,000 489~272 124~994~372 51227.013 2721331.398 77 CITY OF DENTON, TEXAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS - TRADITIONAL FORMAT ENTERPRISE FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2003 REVENUES: Utility services Other fees Total operating revenues OPERATING EXPENSES: Operating expenses before depreciation Depreciation Total operating expenses Operating income (loss) NON-OPERATING REVENUES (EXPENSES): Investment revenue interest expense and fiscal charges Impact fee revenue Loss on disposal of fixed assets Other non-operating revenues (expenses) Total non-operating revenues (expenses) Income (loss) before contributions and transfers CONTRIBUTIONS AND TRANSFERS: Capital contributions Transfers (out) Total contributions and transfers Increase(decrease)in retained earnings RETAINED EARNINGS: Retained earnings ut beginning of year Retained earnings at end of year · · · · · · · Denton Electric Water Wastewater Utility · System System System Systems · Fund Fund Fund Subtotal $101,862,084 $ 19,348,543 $ 15,677,355 $ 136,887,982 3,647,850 754,115 766,957 5,168,922 · 105,509,934 20,102,658 16,444,312 142,056,904 · 105,196,347 11,005,676 10,755,899 126,957,922 · 3,838,656 2,211,394 2,114,999 8,165,049 109,035,003 13,217,070 12,870,898 135,122,971 · (3,525,069) 6,885,588 3,573,414 6,933,933 · 2,168,830 1,186,731 964,627 4,320,188 · (3,637,265) (6,922,156) (3,834,577) (14,393,998) · 4,450,000 700,000 5,150,000 · 160,401 41,546 201,947 · (I,468,435) (1,125,024) (2,128,404) (4,721,863) · (4,993,504) 5,760,564 1,445,010 2,212,070 · 5,565,947 13,456,098 19,022,045 · (293,351) (84,993) (81,509) (459,853) (293,351) 5,480,954 13,374,589 18,562,192 · (5,286,855) I 1,241,518 14,819,599 20,774,262 110,316,321 72,655,264 63,358,538 246,330,123 $ I05,029,466 $ 83,896,782 $ 78,178,137 $ 267,104,385 78 · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · Exhibit XXX Solid Building Total Waste Inspections Enterprise Fund Fund Funds $ 11,708,109 $ $ 148,596,091 19,915 5,188,837 11,728,024 153,784,928 10,394,772 137,352,694 894,263 9,059,312 11,289,035 146,412,006 438,989 7,372,922 (177,149) 4,143,039 (787,132) (15,181,130) 5,150,000 (21,162) ~(21,162) 33,778 235,725 (951,665) (5,673,528) (512,676) 1,699,394 19,022,045 (94,874) (445,578) (1,000,305) (94,874) (445,578) 18,021,740 (607,550) (445,578) 19,721,134 5,834,563 445,578 252,610,264 $ 5,227,013 $ $ 272,331,398 79 CITY OF DENTON, TEXAS STATEMENT OF CASH FLOWS ~ TRADITIONAL FORMAT ENTERPRISE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2003 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers Cash paid to employees for services Cash paid to suppliers Net cash provided (used) by operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers out to other funds Other sources from noncapital financin~ Net cash provided (used) by noncapital financing activities CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES: Capital contributions Principal payments on revenue bonds and certificate., of obligation lnterest and fiscal charges Principal payments under capital lease obligation Proceeds from lease financinl~ Proceeds from sale of revenue bonds and certificates of obligation Proceeds from impact fees Loss from sale of capital assets Acquistion and construction of capital assets Net cash provided (used) by capital financing activities CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale and maturities of investment securitie~ Purchase of investment securities Interest received on investments Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Investments, at fair value Cash, cash equivalents and investments, at fair value Electric Water Wastewater Utility Fund Fund Fund Systems System System System Subtotal $ 101,807,361 $ 20,286,907 $ 16,247,891 $ 138,342,159 (4,667,069) (5,585,001) (3,824,010) (14,076,080) (10171767775) (7?209?3031 (77957~486) (116734375641 (41036~483) 7?492?603 47466~395 779227515 (293,351) (84,993) (81,509) (459,853) 1607401 41~546 2017947 (29373511 75?408 (39~963) 12577906) 5,565,947 13,456,098 19,022,045 (5,747,257) (3,868,179) (2,794,360) (12,409,796) (3,409,804) (7,182,495) (3,342,279) (13,934,578) 12,016,742 1,169,303 29,142,299 42,328,344 2,853,867 678,693 3,532,560 (8~953~078) (24?375?989) (30?664,778) (63~9937845) (6?093?397) (25~837~546) 6?475?673 (25,455~270) 90,963,721 58,550,605 9,127,776 158,642,102 (79,275,690) (18,470,000) (32,250,000) (129,995,690) 271287231 177697958 9897179 41887~368 1378167262 4178507563 (227133~045) 33?533?780 3,393,031 23,581,028 (11,230,940) 15,743,119 8,532,489 903,535 1,786,175 11,222,199 11,925,520 24,484,563 (9,444,765) 26,965,318 92,967,534 41,258,103 63,965,698 198,191,335 $ 10418931054 $ 657742~666 $ 54~520~933 $ 225.156.653 80 · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · Exhibit XXXI Solid Total Waste Enterprise Fund Funds $ 11,773,468 $ 150,115,627 (5,366,014) (19,442,094) (4?39%263) (120,740,827) 2~010~191 9,932,706 (94,874) (554,727) 33?778 235,725 (617096) (319,002) 19,022,045 (I,488,639) (13,898,435) (796,059) (14,730,637) (157,083) (157,083) 344,659 344,659 1,748,524 44,076,868 3,532,560 (21,162) (21,162) (4~634~296) (68,628,141) (5~0047056) (30,459,326) 10,796,911 169,439,013 (6,250,000) (136,245,690) (136~936) 4,750,432 4?40%975 37,943,755 1,355,014 17,098,133 1,373,349 12,595,548 2,728,363 29,693,681 5,331,775 203,523,110 $ 8~060~138 $ 233~216~791 (continued) 81 CITY OF DENTON, TEXAS STATEMENT OF CASH FLOWS - TRADITIONAL FORMAT ENTERPRISE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2003 Denton Electric Water Wastewater Utility Fund Fund Fund Systems System System System Subtotal RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) $ (315251069t $ 6?8851588 Adjustments: Depreciation expense 3,838,656 2,211,394 CIosure/postclosure expense Decrease (Increase) in receivables (3,412,970) 437,345 Decrease (Increase) in due from other funds (499,452) (253,096) Decrease (Increase) in inventories Decrease (Increase) in prepaid items 215,644 Increase (Decrease) in accounts payable (504,225) (1,611,133) Increase (Decrease) in accumulated unpaid compensate¢ absences 29,234 5,467 lncrcase (Decrease) in due to other funds 1178~3011 1182t9621 Total adjustments (511~414) 607~015 Net cash provided (used) by operating activities $ {4~036~483) $ 7~492~603 SUPPLEMENTAL SCHEDULE OF NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES: Noncash activity during the year consisted of contributed assets for the Water and Wastewater Funds in the amounts of $5,565,917 and $13,456,098, respectively and the change in the fair value of investments of $(1,432,646), $(817,533), $(348,944) and $(492,928) for the Electric, Water, Wastewater and Solid Waste funds, respectively, 82 $ 3~5737414 $ 6?933?933 2,114,999 8,165,049 60,645 (2,914,980) (257,066) (I,009,614) 215,644 (1,013,933) (3,129,291) 28,444 63,145 (407108} (4017371) 892~981 988~582 $ 4~466~395 $ 7~922~515 · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · Exhibit XXXI Solid Total Waste Enterprise Fund Funds $ 438?989 $ 14,306,855 894,263 17,224,361 689,162 689,162 (102,566) (5,932,526) 148,010 (1,871,218} 2,512 2,512 431,288 (66,245) (6,324,827) 20,294 146,584 (14~228~ (816,970) 1~5711202 3~548~366 $ 2~010~191 $ 9~932~706 83 CITY OF DENTON, TEXAS BALANCE SHEET - TRADITIONAL FORMAT INTERNAL SERVICE FUNDS SEPTEMBER 30, 2003 ASSETS: Cash, cash equivalents and investments, at fair value Accounts receivable, net of allowances: Accrued interest Other Due from other funds Merchandise inventory Prepaid items Deferred bond issuance costs Restricted assets: Cash, cash equivalents and investments, at fair value Total current assets Fixed assets, net of accumulated depreciation Total assets LIABILITIES: Current liabilities: Accounts payable and accrued expenses Claims payable Compensated absences payable Accrued interest Due to other funds Leases payable Payable from restricted assets: Accounts payable and accrued expenses Arbitrage payable Certificate and general obligation bonds Non-current liabilities: Leases payable Payable from restricted assets: Arbitrage payable General obligation bonds payable Certificates of obligation Claims payable Compensated absences payable Total current liabilities FUND EQUITY: Retained earinings - Reserved for capital projects Reserved for fleet replacement Reserved for future claims Unrestricted Total fund equity Total liabilities and fund equity Materials Fleet Motor Risk Management Services Pool Retention Fund Fund Fund Fund $ $ 1,725 4,637,866 150,762 22,805 6,959 2,282 $ 8,434,189 $ 2A55,872 152,735 8,613 51,567 41,587 250,803 196,007 4,669,355 403,847 8,824,518 2,516,052 742,937 2,886,372 14,764,587 23,186 $ 5,412,292 $ 3,290,219 $ 23,589,105 $ 2,539,238 $ 481,942 $ 177,330 $ 83,740 $ 58,177 240,000 19,852 28,470 6,024 15,804 13,540 3,941,918 11,564 498,604 3,723 19,328 71,155 500,129 207,904 34,767 19,441 604,940 2,466,270 1,692,325 19,852 28,470 1,563,000 5,086,092 2,825,989 3,025,011 1,861,177 14,418 68,074 169,545 8,990,868 1,570,861 311,782 396,156 11,403,681 (892,800) 326,200 464,230 20,564,094 678,061 $ 5,412,292 $ 3,290,219 $ 23,589,105 $ 2,539,238 84 · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · Exhibit XXXII Technology Internal Services Service Fund Funds $ 656,386 $ 11,546,447 161,348 159 53,451 14,810 56,397 4,788,628 56,323 79,128 20,978 30,219 2,417,033 2,863,843 3,165,689 19,579,461 3,449,517 21,866,599 $ 6,615,206 $ 41,446,060 $ 304,430 $ 1,105,619 240,000 62,681 i11,003 46,336 81,704 3,941,918 488,604 217,751 221,474 19,328 196,159 779,007 207,904 7,763 42,530 19,441 2,110,906 6,874,441 1,563,000 62,681 111,003 3,008,707 15,806,976 1,615,426 1,867,463 8,990,868 1,570,861 1,991,073 13,209,892 3,606,499 25,639,084 $ 6,615,206 $ 41,446,060 85 CITY OF DENTON, TEXAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS - TRADITIONAL FORMAT INTERNAL SERVICE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2003 OPERATING REVENUES: Charges for goods and services Miscellaneous Materials Fleet Motor Management Services Pool Fund Fund Fund $ 5,587,744 $ 3,376,905 $ 3,014,999 11,191 38,855 5,598,935 3,415,760 3,014,999 6,101,559 3,285,888 519,900 15,061 24,587 2,083,547 6,116,620 3,310,475 2,603,447 (517,685) 105,285 411,552 222,777 (6,025) (107,030) (303,277) 99,118 (6,025) (I07,030) 18,618 (523,710) (1,745) 430,170 57,744 (8,510) (28,380) (532,220) (30,125) 487,914 858,420 494,355 20,076,180 $ 326,200 $ 464,230 $ 20,564,094 86 Total operating revenues OPERATING EXPENSES: Operating expenses before depreciation Depreciation Total operating expenses Operating income (loss) NONOPERATING REVENUES (EXPENSES): Investment revenue lnterest expense and fiscal charges Loss on disposal of fixed assets Other non-operating revenues (expenses) Total non-operating revenues (expenses) Income (loss) before transfers Capital contributions Transfers in Transfers (out) Change in retained earnings Retained earnings at beginning of year Retained earnings at end of year · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · Exhibit XXXIII Total Risk Technology Internal Retention Services Service Fund Fund Funds $ 634,916 $ 7,011,438 $ 19,626,002 184,856 234,902 819,772 7,01 i,438 19,860,904 2,727,974 6,152,382 18,787,703 3,383 210,032 2,336,610 2,731,357 6,362,414 21,124,313 (1,911,585) 649,024 (1,263,409) (60,180) 7,540 170,137 (61,050) (477,382) 99,118 (146,520) (146,520) (206,700) (53,510) (354,647) (2,118,285) 595,514 0,618,056) 57,744 584,501 584,50 I (499,007) (535,897) (1,533,784) 96,507 (I,511,708) 2,211,845 3,509,992 27,150,792 $ 678,061 $ 3,606,499 $ 25,639,084 87 CITY OF DENTON. TEXAS STATISTICAL SECTION (UNAUDITED) 89 CITY OF DENTON, TEXAS GOVERNMENT-WIDE EXPENSES BY FUNCTION (1) (in thousands) Table 1 Fiscal General Public Year Government Safety Public Parks and Long-term Building (2) Waste- Solid Works Recreation Debt Inspections Electric Water water Waste Total 2002 $16,240 $27,322 $13,692 $7,363 $4,253 2003 22,933 28,837 10,275 8,419 4,186 $1,731 $99,832 $18,095 $15,556 $11,659 $215,743 113,674 20,425 16,560 12,367 237,677 (1) Amounts for years prior to 2002 are not available. (2) Building inspections functions were moved into the General Government category in 2003. 9O · · · · · · · · · · · · · · · · · · · · · · · · · · · · · Charges Fiscal for Year Services CITY OF DENTON, TEXAS GOVERNMENT-WIDE REVENUES (1) (in thousands) Operating Capital Grants & Grants & investment Contributions Contributions Taxes Income Miscellaneous Table 2 Total 2002 $149.060 2003 169,111 $2,480 $14,884 $48,015 $15,810 $3,626 $233,875 3,221 33,045 50,660 5,594 5,569 267,200 (I) Amounts for years prior to 2002 are not available. 91 CITY OF DENTON, TEXAS GENERAL GOVERNMENT EXPENDITURES BY FUNCTION (1) LAST TEN FISCAL YEARS Fiscal GenaraI Year Government Table 3 Public Public Parks and Capital Debt Safety Works Recreation Outlay Service Total $11,917,580 $4.123,527 $2,868,169 $ 546,183 $4,812,285 $33,041,142 12.604.527 4,374,433 3,017.813 1,123.650 4,586,888 35,782.222 13.951,797 4.396.384 3,344,822 1,069,359 4,960.963 39,334.257 15,379,257 5,040,465 3,697,577 1,187,669 4,906,023 42,200,006 16, 756.551 5,447.174 3,989,773 2.717,163 4, 729,432 46,905.370 19,060,713 5,098,539 4,413.869 1,469,975 6,337,757 48.000,571 22.679.278 4,888,271 5,341,227 682,836 6,886,901 55.011,996 23,957.206 6.954.265 6,336,352 959.899 7,034.535 61,588,694 26,155,876 7,949,472 6.962,373 470,007 9,174,868 65,461,438 28,406,261 4,627,292 8,094,780 1,971.966 9.515,000 73,596,484 1994 $ 8,773,398 1995 10.074,911 1996 11,610,932 1997 11,989.015 1998 13,265,277 1999 11,619,718 2000 14,533,483 2001 16,346,437 2002 14,748.842 2003 20,981.185 (I) Includes General, Special Revenue, and Debt Service Funds 92 · · · · · · · · · · · · · · Fiscal · Year CITY OF DENTON, TEXAS GENERAL GOVERNMENT REVENUES BY SOURCE (1) LAST TEN FISCAL YEARS and Franchise Taxes Permits Fees Investment Revenue& Net Change Fines in Fair and Fees for Value of Forfeitures Services Investments Governmental Miscellaneous Table 4 Total · 1994 · 1995 1996 1997 1998 1999 · 2000 · 2001 · 2002 2003 $21,758,706 $418,693 $ 5,219,164 $1,195,427 $1,578,773 $ 428,163 $1,834,115 $L006,993 $33,440,034 22,099,226 388,274 6,112,849 1,552,840 1,747,664 737,282 2,779,956 1,295,034 36,713,125 22,583,299 572,676 6,067,244 1,574,050 1,848,307 813A29 3,375,210 2,332,969 39,167, I84 24,571,249 52L642 6,592,694 1,849,082 2,101,049 744,612 3,273,874 1,102,438 40,75&640 25~931,946 708,607 9A07,182 2,257,015 2,187,136 839,776 3,844,399 L502,480 46,37&541 27,359,533 373,979 9,283,328 2,855,899 2,512,669 813,109 4,913,341 LI33,051 49,244,909 30,114,965 441,831 9~958,500 2,680,352 3,359,523 1,060,264 4,805,302 1,788,797 54,209,534 35,171,917 233,219 10.709,710 3,222,517 4,118,361 869,713 5,406,957 996,037 60,728,431 35,903,165 91,049 11,930,612 3,522,895 6,818,363 1,109,368 3,435~248 496,092 63,306,792 38,088,303 1,151,169 12,571,989 3,422,952 8,556,002 872,297 5,238,294 949,630 70,850,636 (1) Includes General, Special Revenue and Debt Service Funds 93 CITY OF DENTON, TEXAS PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Total Current Fiscal Taxx T~x Year Levy (1) Collections Total Collections Percent of Delinquent Total As a % of Levy Tax Tax Cu~cnt Collection Collections Collection Levy 98.50% $194,761 $14,008,586 99.90% 98.65 172,279 11,102,356 100.21 98.88 224,806 11,177,862 100.91 98.70 160,366 IL476,570 100.10 98.56 164,847 11,932,935 99.94 98.40 191,849 12,268,298 99.96 98.75 199,011 13,803,790 100.19 98.20 253~806 16,402,106 100.24 98.26 285,489 18,783,379 99.76 98.57 287,917 20,585,537 99.98 1994 $14,023,943 $13,813,825 1995 11,080,169 10,930,077 1996 11,076,657 10,953,056 1997 11,465,710 11,316,204 1998 11,940,387 11,768,088 1999 12,272,839 12,076,449 2000 13,777,583 13,604,779 2001 16,442,224 16,148,300 2002 18,824,890 18,497,890 2003 20,590,395 20,297,620 (1) Denton Central Appraisal District 94 Table 5 Outstanding Delinquent Outstanding Taxes Delinquent As a %of Taxes Cu~ent Levy $912,342 6.51% 846,352 7.64 722,256 6.52 723,408 6.31 692,946 5.81 735,160 5.99 491,069 3.56 533,080 3.24 623,288 3.31 576,175 2.79 · · · · · · · · · · · · · · · Real Property Estimated Fiscal Assessed Actual Year Value Value CITY OF DENTON, TEXAS ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS Personal Property Total Estimated Estimated Assessed Actual Assessed Actual Value Value Value Value Table 6 Ratio of Total Assessed to Total Estimated Actual · · · · · · · · · · · · · · · · · · · 1994 $1,533,929,030 $1,546,725,334 1995 1,598,557,980 1,625,199,300 1996 1,649,535.236 1,672,452,635 1997 1,720,506,423 1,764,897,930 1998 1,869,034,612 1,903,853,579 1999 1,989,440,482 2,017,449,788 2000 2,199,215,704 2,365,588,174 2001 2,629,559,281 2,874,901,236 2002 3,349,263,415 3,711,095,197 2003 3,692,857,822 4,129,344374 $325,667,239 $328,384,012 $1,859,596,269 $1,875,109,346 344,486,297 350,227,452 1,943,044,277 1,975,426,752 370,223,523 375,367,130 2,019,758,759 2,047,819,765 394,807,571 404,994,167 2,115,313,994 2,169,892,097 415,092,754 423,026,865 2,284,127~366 2,326,880,444 358,758,416 438,471,342 2,348,198,898 2,455,921,130 450,904,790 560,228,151 2,650,120,494 2,925,816,325 647,168,442 681,838,950 3,276.727,723 3,556,740,186 537,987,932 596~019,388 3,887,251,347 4,307,114,582 657,962,409 659,848,833 4,350,820.231 4,798,193,007 Information provided by the Denton Central Appraisal District. Certified Appraisal Roll. 95 100.83% 101.67 101.39 102.58 101.88 104.59 110.40 108.54 110.80 110.08 CITY OF DENTON, TEXAS PROPERTY TAX RATES AND TAX LEVIES DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS TAX RATES (Per $100 of Assessed Valuation) Table 7 Fiscal School Year City District County Total 1994 $0.7479 $1.5600 $0.2994 $2.60730 1995 0.5609 1.5277 0.2899 2.37850 1996 0.5409 1.5520 0.2784 2.37130 1997 0.5284 1.6607 0.2669 2.45600 1998 0.51315 1.8500 0.24875 2.61190 1999 0.50815 1.8500 0.24875 2.60690 2000 0.50815 1.7000 0.23504 2.44319 2001 0.52815 1.8440 0.23193 2.60408 2002 0.54815 1.8640 0.24897 2.66112 2003 0.54815 1.8640 0.24717 2.65932 TAX LEVIES * Fiscal School Year City(l) District(2) County(2) Total 1994 $14,023,943 $33,552,757 $32,154,363 $ 79,731,063 1995 11,080,169 32,853,831 31,134,101 75,068,101 1996 11,076,657 38,890,687 33,975,873 83,943,217 i997 11,465,710 43,419,520 36,028,376 90,913,606 1998 11,940,387 47,370,971 38,105,447 97,416,805 1999 12,272,839 49,856,888 39,938,121 102,067,848 2000 13,777,583 56,386,461 52,655,777 122,819,821 2001 16,442,224 72,400,263 53,675,987 142,518,474 2002 18,824,890 80,615,363 66,756,376 166,196,629 2003 20,590,395 90,075,194 74,597,046 185,262,635 (I) City of Denton Tax Office (2) Denton County Tax Office * Ending Values as of September 30 96 · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · CITY OF DENTON, TEXAS SPECIAL ASSESSMENT COLLECTIONS LAST TEN FISCAL YEARS Fiscal Year Current Current Ratio of Assessments Assessments Collections to Due Collected Amount Due 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 97 Table 8 Total Delinquent Outstanding Assessments Current and Collections Delinquent Adjustments Assessments $2,421 $4,608 3,530 1,078 1,078 CITY OF DENTON, TEXAS RATIO OF NET GENERAL BONDED DEBT TO ASSESSED VALUE AND NET BONDED DEBT PER CAPITA LAST TEN FISCAL YEARS Ending Assessed Gross Less Debt Net Fiscal Value (1) Bonded Service Bonded Year Population (in thousands) Debt (2) Funds Debt Ratio of Net Bonded Debt To Assessed Value 1994 68,650 $1,875,109 $33,240,605 $ 322,763 $32,917,842 1995 69,550 1,975,426 33,152,498 704,904 32,447,594 1996 70,450 2,047,819 36,684,478 682,167 36,002,311 1997 71,450 2,169,892 37,000,813 504,760 36,496,053 1998 73,050 2,326,880 48,083,020 1,061,887 47,021,133 1999 75,300 2,455,921 57,230,934 1,131,067 56,099,867 2000 80,537 2,711,777 5~296,353 822,913 58,473~440 2001 82,976 3,113,173 80,521,880 1,594,620 78,927,260 2002 86,550 3,887,251 98,469,790 934,406 97,535,384 2003 90,200 4,350,820 101,692,870 428,426 101,264,444 1.76% 1.64 1.76 1.68 2.02 2.28 2.16 2.54 2.51 2.32 (I) Information from Cio of Denton Tax Department and Denton Central Appraisal District. (2) Excludes general obligation bonds pledged by solid waste revenues 98 Table 9 Net Bonded Debt Per Capita $ 480 467 511 511 644 745 738 986 I,i27 I,II4 · · · · · · · · · · · · · · · · · · · · CITY OF DENTON, TEXAS COMPUTATION OF DIRECT AND OVERLAPPING DEBT SEPTEMBER 30, 2003 Jurisdiction Denton Independent School District Denton County Total Overlapping Debt City of Denton Total Direct and Overlapping Debt Net Debt Applicable to the Outstanding City of Denton (1) $288,721,585 68.78% 129,827,570 12.1 I 101,699,870 (2) 100.00 (I) Based on the relative assessed values within the City of Denton. (2) Excludes general obligation bonds pledged by solid waste revenues. 100 Table 11 Amount Applicable to City of Denton $198,582,706 15,722,118 214,304,824 101,699,870 $316,004,694 oi · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · CITY OF DENTON, TEXAS RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL BONDED DEBT TO TOTAL GENERAL GOVERNMENT EXPENDITURES (1) LAST TEN FISCAL YEARS Table 12 Ratio of Debt Service Fiscal Interestand Total Total Expenditures Year Principal Fiscalcharges Debt Service Expenditures (percent) 1994 $3,057,565 $1,754,720 $4,812.285 $35,968,218 13.37% 1995 3,095,856 1,491,032 4,586,888 35,782,222 12.82 1996 3,549,515 1,411,448 4,960,963 39,334,257 12.61 1997 3,532,417 L373,606 4,906,023 42,200,006 11.63 1998 3,230,865 1,498,567 4,729,432 46,905,370 10.08 1999 3,797,814 1,754,249 5~552,063 48~000,571 11.57 2000 2,751,282 2,686,690 5,437,972 55,011,996 9.89 2001 3,853,087 3,181,448 7,034,535 61,588,694 11.20 2002 5,019,164 4,155,704 9.174~868 65,461,438 14.01 2003 5,027,222 4,487,778 9,515,000 73,596,484 12.93 (I) Includes General, Special Revenue and Debt Service 101 CITY OF DENTON, TEXAS UTILITY SYSTEM REVENUE BOND DEBT SERVICE COVERAGE LAST TEN FISCAL YEARS Debt Service Requirements Net Revenue Direct Available Fiscal Oper~ing Operming for Debt Year Revenue Expenses(l) Service Principal Interest Total 1994 $ 96,572,936 $64,658,746 $31,914,190 $4,015,000 $ 3,577,695 $ 7,592,695 1995 95,045,662 66,903,767 2&141,895 4,295,000 3,249,14I 7,544,141 1996 100,453,467 69,004,130 31,449,337 4,385,000 2,952,911 7,337,911 1997 102,614,300 66,338,364 36,275,936 5,380,000 5,280,014 10,660,014 1998 111,476,726 73,983,381 37,493,345 5,380,000 4,718,328 10,098,328 1999 114,946,834 79,405,565 35,541,269 5,035,000 6,329,558 1L364,558 2000 123,813,370 90,647,158 33,166,212 4,620,000 6,245,27! 10,865,271 2001 138,265,427 103,992,039 34,273,388 5,850,000 9,168.379 15,018,379 2002 137,054,353 105,070,148 31,984,205 7,345,000 12,130,021 19,475,021 2003 155,610,436 117,750,419 37~860,017 9,965,000 14,324,178 24,289,178 ( I ) Excluding Depreciation, Franchise Fee, and Return on Investment 102 Table 13 Coverage 4.20% 3.73 4.29 3.40 3.71 3.13 3.05 2.28 1.64 1.56 · · · · · · · · · · · · · · · CITY OF DENTON, TEXAS PROPERTY VALUE, CONSTRUCTION AND BANK DEPOSITS LAST TEN FISCAL YEARS Commemial Residential Construction (1) Construction (1) Table 14 Property Bank Fiscal Value Number Number Deposits Year (in thousands) of Units Value of Units Value (in thousands) 1994 $1,875,109 189 $30,316,353 398 $ 33,793,717 $ 619,211 (2) 1995 1,975,426 179 14,560,423 492 36,330,817 728,100 (3) 1996 2,047,819 199 58,729,540 460 35,586~747 843,527 (3) 1997 2~169,892 167 41,085~727 784 50,384,468 1,314,771 (4) 1998 2,326,880 109 60,407,564 1,060 85,752,929 1,269,302 (5) 1999 2,455,921 34 27,132,960 1,520 161,641,558 846~667 (6) 2000 2~711,777 39 17,646~643 1,360 166,783,910 997,670 2001 3,113,173 25 13,482,019 1,718 205,012,186 I, 142,772 (7) 2002 3,630,711 25 11,244,487 1,767 214,544,246 1,016,191 (7) 2003 4,042,203 38 42,066,436 948 186,528,843 1,059,031 (7) (I) City of Denton Planning and Development Department Estimate (2) Denton Chamber of Commerce Estimate (3) Bank Statement of Condition. Bank deposits for Bank One of Texas were not available at the time of publication. (4) Bank Statement of Condition. Bank deposits for Norwest Bank and NationsBank were not available due to merger. (5) Bank Statement of Condition. Bank deposits for Norwest Bank were not available due to merger. Deposits included for NationsBank as of 6/30/98. Deposits for First State Bank included all branches. (6) Bank Statement of Condition. Bank deposits for Bank of America were not available at the time of publication. (7) FDIC Summary of Deposits 103 CITY OF DENTON, TEXAS PRINCIPAL TAXPAYERS SEPTEMBER 30, 2003 Name of Taxpayer Verizon Southwest Columbia Medical Center of Denton Anderson Merchandisers Triad Denton Hospital Robson Denton Development Kind of Property Telephone Utility Hospital & Professional Building Distribution Center Hospital & Professional Building Real Estate Development Paccar, Inc. Denton Mall Company Tetra Pal<, Inc. Denton Educational Housing Corp. James Woods Motors Diesel Trucks Shopping Mall Packaging Manufacturing Housing & Properly Management Automobile Dealership 2OO2 Taxable Assessed Valuation ( I ) $ 41,865,730 41,864,562 32,767,992 24,470,983 21,663,189 21,311,459 17,581,299 16,794,384 16,447,438 15,9t5,146 Table 15 Percentage of Total Taxable Assessed Valuation 0.91% 0.91 0.71 0.53 0.47 0.46 0.38 0.36 0.36 0.35 $250,682,182 Note: Total assessed valuation as of September 30, 2002 was $4,350,820,231. (I) Source: Denton Central Appraisal District reported property value as of September 30, 2003. 5.44% 104 · · · · · · · · · · · · · · · · · · CITY OF DENTON, TEXAS DEMOGRAPHIC STATISTICS LAST TEN FISCAL YEARS Table 16 Per Public Fiscal Capita Average School Unemployment Year Population Income Age Enrollment (4) Rate (5) 1994 68,650 (1) $12,013 (3) 30.7 (3) 11,800 5.9% 1995 69,550 (1) 12,013 (3) 30.7 (3) 12~100 5.0 1996 70,450 (1) I2,013 (3) 30.7 (3) 12,512 3.7 1997 71,450 (I) 12,013 (3) 30.7 (3) 12,777 3.4 1998 73,050 (1) 12,013 (3) 30.7 (3) 12,986 2.7 1999 75,300 (1) 12,013 (3) 30.7 (3) 13,283 2.8 2000 80,537 (2) 12,013 (3) 26.8 (2) 13,667 2.9 2001 82,976 (I) 18,474 (6) 26.8 (2) 14,408 4.9 2002 86,550 (3) 18,643 (8) 26.8 (2) 13.600 6.8 2003 91,588 (I) 21,932 (8) 26.9 (2) 15,128 7.1 (I) Ciiy of Denton Planning and Development Department Estimate (2) 2000 Census (3) 1990 Census (4) Denton Independent School District Official Count (5) Texas Workforce Commission Estimate (6) Estimate provided by Claritas, Inc., a consumer-business marketing corporation (7) North Central Texas Council of Govemments (8) Denton Chamber of Commerce 105 CITY OF DENTON, TEXAS MISCELLANEOUS STATISTICAL DATA SEPTEMBER 30, 2003 Form of Government Area Date of Incorporation Miles of Streets Number of Street Lights Fire Protection: Number of stations Number of sworn public safety officers Police Protection: Number of stations Number of sworn public safety officers Municipal Water Department: Number of customers Annual water production Average monthly consumption Miles of water main Municipal Wastewater Department: Number of customers Miles of wastewater main Annual wastewater discharge Building Permits Issued Recreation and Culture: Number of parks and open space sites Number of libraries Library items in cimulation Total City Employees Council-Manager 68.099 square miles September 26, 1866 1,356 6,527 6 132 I 137 24,978 5.231.917,370gallons 435,993,119 gallons 477 miles 23,329 424 miles 4,689,470,000 gallons 986 31 with 1,144 acres 3 175,075 1,261 106 Table 17 · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · LEADERSHIP PHILOSOPHY our ~eatest performance ts acht~,, e, d throu~h.~artnersh,~s and coo, peratton. ~o~ ~eofle. We are talented, ~dteated a~ diverse eha~e~t~ ~e~ a~ o~tn~ our work, m~ st~cant cont~tto~ to the 3reater good of the eommunt~. To Oe~e with C~CTER: Cooperation Aeeountabtl~t~ creativity Tmst EXcellence Responsiveness