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December 7, 2004 Agenda
AGENDA CITY OF DENTON CITY COUNCIL December 7, 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, December 7, 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 concerning environmemal issues related to the recent revisions of Subchapter 22 of the Denton Development Code (related to Gas Well Drilling and Production). Receive a report, hold a discussion and give staff direction concerning existing road damage repair agreements for natural gas development activities and possible alternative methods for assessing road use fees. o Receive a report, hold a discussion and give staff direction regarding the impact of gas well developmem on nearby (adjacem) residemial properties. Receive a report, hold a discussion and consider approval of enhancements to the current City of DeNon Utility Bill. 5. Hold a discussion and give staff direction regarding the 2005 Council meeting schedule. o Requests for clarification of consent agenda items listed on the consent agenda for today's City Council regular meeting of December 7, 2004. NOTE: The City Council reserves the right to adjourn imo a Closed Meeting on any item on its Open Meeting agenda consistent with Chapter 551 of the Texas Government Code, as amended, including without limitation, Sections 551.071-551.086 of the Texas Open Meetings Act. Regular Meeting of the City of Demon City Council on Tuesday, December 7, 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 mo U.S. Flag Texas Flag "Honor the Texas Flag - I pledge allegiance to thee, Texas, one and indivisible." 2. PROCLAMATIONS/PRESENTATIONS mo Proclamations/Awards Recognition of staff accomplishments 3. 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. City of DeNon City Council Agenda December 7, 2004 Page 2 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-Q). This listing is provided on the Consem Agenda to allow Council Members to discuss or withdraw an item prior to approval of the Consem Agenda. if no items are pulled, Consem Agenda items A-Q 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 approval of the minutes off November 2 November 8 November 9 November 16 November 17 November 18 Bo Consider adoption of an ordinance of the City of DeNon, Texas authorizing the City Manager to execute a Professional Services Agreemem with ETTL Engineers and Consultams, inc. for Hydrogeological Consulting and Analytical Services pertaining to the City of DeNon Landfill (MSW Permit No. 1509A); authorizing the expenditure of funds therefor; providing for retroactive ratification and approval thereof; and providing an effective date. Co Consider adoption of an ordinance of the City Council of the City of DeNon, Texas, authorizing the City Manager to pay the City's annual consolidated water quality fees for FY 2005 to the Texas Commission on Environmemal Quality; authorizing the expenditure of funds therefor; providing an effective date. Do Consider adoption of an ordinance accepting competitive bids and awarding an annual contract for the purchase of distribution padmounted switchgear; providing for the expenditure of funds therefor; and providing an effective date (Bid 3247 - Annual Contract for Manual PME 9,10,11 Padmounted Switchgear awarded to Priester Supply Co. in the estimated amoum of $184,465). mo Consider adoption of an ordinance authorizing the City Manager or his designee to execute Change Order Two to the contract between the City of Denton and Circle C Construction Company, inc.; providing for the expenditure of funds therefor; and providing an effective date (Bid 3107 - Hickory Creek Basin Sewer Replacemems and Liners Change Order Two in the amoum of $202,750). Fo Consider adoption of an ordinance awarding a comract for the purchase of network structured connectivity wiring for the Civic Cemer and Emily Fowler Library Renovation projects as awarded by the State of Texas Building and Procurement Commission through the Catalog Information Service Vendor (CiSV) Catalog Program; providing for the expenditure of funds therefor; and providing an effective date (File 3276 - Purchase of Network Wiring for Civic Cemer and Emily Fowler Library Renovation Project awarded to Devolve Corporation in an amoum not to exceed $31,796.33). City of DeNon City Council Agenda December 7, 2004 Page 3 Go Consider adoption of an ordinance awarding a comract for the purchase of Cisco network equipment for the Civic Center and Emily Fowler Library renovation projects as approved by the State of Texas Building and Procuremem Commission Departmem of information Resources (DiR); providing for the expenditure of funds therefor; and providing an effective date (File 3275 - Purchase of Cisco Network Equipment for the Civic Center and Emily Fowler Library awarded to imerNetwork Experts in the amoum of $61,122). Ho Consider adoption of an ordinance approving the expenditure of funds for the purchase of shelving for the Emily Fowler Library renovation project available from only one source in accordance with the provision for state law exempting such purchases from requiremems of competitive bids; and providing an effective date (File 3267 - Shelving for Emily Fowler Library awarded to Libra-Tech Corporation in the amoum of $119,461.53). Consider adoption of an ordinance of the City of DeNon authorizing the City Manager or his designee to execute a purchase order with the Houston-Galveston Area Council of Governmems (H-GAC) for the acquisition of recycling carts for the Solid Waste Division by way of an imerlocal Agreemem with the City of Denton; authorizing the expenditure of funds therefor; and providing an effective date (File 3269 - Purchase of Recycling Carts awarded to Otto industries, inc. in the amoum of $70,951.70). Jo Consider adoption of an ordinance accepting sealed proposals and awarding a comract for Excess Liability and Workers Compensation insurance Coverage for the City of DeNon; providing for the expenditure of funds therefor and providing an effective date (RFSP 3256 - Excess Liability and Workers' Compensation Insurance awarded to State National Insurance Company in the amount of $182,580). Ko Consider adoption of an ordinance approving the expenditure of funds for the purchase of an iSCO Model 6712 Portable Water Sampler for the Denton Water/Wastewater Department available from only one source in accordance with the provision for state law exempting such purchases from requirements of competitive bids; and providing an effective date (File 3270 - Purchase of Automatic Water Sampler awarded to Teledyne isco inc. in the amoum of $36,990). Lo Consider adoption of an ordinance in accordance with the provisions of State law exempting such purchases from the requiremems of competitive bidding awarding a comract for purchase of a Caterpillar Model 826 landfill compactor from the City of Brownwood; providing for the expenditure of funds therefor; and providing for an effective date (File 3268 - Purchase of Landfill Compactor awarded to the City of Brownwood, Texas in the amoum of $125,000). Mo Consider adoption of an ordinance approving an assignmem of leasehold imerest in an airport lease from Dalton Family Partnership, LTD to Aero Properties of DeNon, LLC; and providing an effective date. (The Airport Advisory Board recommends approval.) City of DeNon City Council Agenda December 7, 2004 Page 4 No Consider adoption of an ordinance approving a Fixed Base Operator airport lease agreement between the City of Denton and BAM Denton Management Ventures; and providing an effective date. (The Airport Advisory Board recommends approval.) Oo Consider adoption of an ordinance approving a commercial operator airport lease agreement between the City of Denton, Texas and Beacon Air Service LLC; and providing an effective date. (The Airport Advisory Board recommends approval.) Po Consider approval of tax refunds for the following property taxes: Tax Name Reason Amount Year ~ig~ M~al/J~ Ri~ar~ Qv~ay~nt ~003 $ ~0 80 Q. Consider approval of enhancemems to the currem City of DeNon Utility Bill. 4. PUBLIC HEARINGS mo Hold a public hearing and consider approval of an ordinance of the City of Denton, Texas, denying in part CoServ Gas, Ltd.'s request to change rates in Denton, Texas, establishing maximum permitted rates and charges that CoServ Gas, Ltd. may assess residemial, commercial and industrial customers in the City of Denton; requiring the filing of revised tariffs; adopting declarations and findings related to rates and charges assessed to residemial, commercial and industrial customers in the City of Denton; providing for prompt recovery of rate case expenses incurred by the City; finding that the meeting at which this Ordinance is passed is open to the public as required by law; providing for notice of this Ordinance to CoServ Gas, Ltd; providing a severability clause; and providing an effective date. Bo Hold a public hearing and consider adoption of an ordinance rezoning approximately 6.7 acres from Neighborhood Residemial 2 (NR-2) zoning district to Neighborhood Residemial 4 (NR-4) zoning district with an overlay district. The property is generally located on the southwest corner of Willowwood Street and McCormick Street. (The Planning and Zoning Commission recommends approval 7-0). (Z04-0039, Taylor Park of the Nazarene) Co Hold a public hearing and consider adoption of an ordinance regarding rezoning of approximately 38 acres of land from Neighborhood Residemial 4 (NR-4), and Neighborhood Residemial 6 (NR-6) zoning districts to Neighborhood Residemial Mixed Use (NRMU) zoning district with an overlay district. The property is generally located south of Ryan Road at Momecito Drive. (The Planning and Zoning recommends approval with conditions 7-0). (Z04-0042, Lake Forest Good Samaritan Village Twin Homes) Do Hold a public hearing to afford the public appropriate notice and participation for the purpose of commeming on the cable television franchise application filed by the University of North Texas with the City of DeNon. City of DeNon City Council Agenda December 7, 2004 Page 5 5. ITEMS FOR INDIVIDUAL CONSIDERATION mo Consider adoption of an ordinance authorizing the issuance, sale and delivery of City of DeNon General Obligation Refunding Bonds, Series 2004, approving and authorizing instruments and procedures relating thereto; and providing an effective date. Bo Consider adoption of an ordinance of the City of DeNon, Texas authorizing the formation of a Division of Environmemal Quality within the Water Utilities Department; pledging that this newly-formed division will serve as the main contact, coordinator, and source of information concerning Denton's environmental resources; assuring that the resources of the Division of Environmemal Quality will be directed towards activities that enhance the City of Denton's responsibility as a steward of the natural environment; and directing this division to ensure regulatory compliance and conduct related activities that will provide greater environmental benefits to Denton residents and businesses; authorizing the expenditure of funds therefor; and providing an effective date. (The Environmemal Committee recommends approval.) (The Public Utilities Board recommends approval.) Co Consider adoption of an ordinance of the City of DeNon, Texas amending the Schedule of Rates comained in Ordinance No. 2003-262 for Electric Service; adding the provisions of the Residemial Service Rate Schedule (Schedule RES); adding the provisions of the Residemial Renewable Service Rate Schedule (Schedule RG); amending the General Service Small Rate (Schedule GSS); adding the provisions of the General Service Medium Rate Schedule (Schedule GSM); amending the General Service Large Rate (Schedule GSL); amending the General Service Time of Use Rate (Schedule TGS); amending the provisions of the Local Government Rate (Schedule Gl); amending the provisions of the Weekend Rate (Schedule WK); amending the provisions of the Athletic Field Rate (Schedule AF); amending the provisions of the Street Lighting Rate (Schedule LS); amending the provisions of the Traffic Lighting Rate (Schedule LT); amending the Other Lighting Rate (Schedule LO); changing the name of the Dusk-to-Dawn Lighting Rate to Security Lighting Rate and amending the provisions of the Security Lighting Rate (Schedule DD); amending the provisions of the Temporary Service Schedule (Schedule TL); deleting the reference to availability of the Industrial Developmem Rider by General Service Small Customers (Schedule IDR); rewording the provisions of the Energy Cost Adjustmem Schedule to facilitate the meaning (schedule ECA); rewording the provisions of the special facilities rider to clarify its meaning; amending the provisions of the Discount Rider for State Universities and Colleges to update and clarify the rider; adding the Distributed Generation from Renewable Sources Rider (Schedule DGR); deleting the provisions of the following schedules: Residemial Service (Schedule Ri); Residemial Service (Schedule R2); Residemial Time of Use (Schedule TR); Decorative Ground Lighting (Schedule DGL); Imerruptible Primary Service (Schedule Pi); Standby, Supplememary and Maimenance Service (Schedule ES); and Premium-Efficiency Motor Rebate (Schedule MTR); authorizing the Assistam City Manager for Utilities to expend City of DeNon City Council Agenda December 7, 2004 Page 6 funds to issue rebates to electric customers who are entitled to rebates in accordance with the terms and provisions of schedule EP; providing for a repealer; providing for a severability clause; and providing for an effective date. (The Public Utilities Board recommends approval.) Consider adoption of an ordinance of the City of DeNon, Texas providing for the amendmem of the Schedule of Miscellaneous Fees, Service Charges, Deposits, Billings and Procedures for Administrative Services to city customers and taxpayers comained in Ordinance No. 2004-259; providing for an increase in the delinquem service charge (when service is disconnected at the meter socket); providing for an increase in the reconnect charge after business hours (when service is disconnected at the meter socket); providing for a new return trip charge to reconnect service during business hours; providing for a new return trip charge after business hours to reconnect service; providing for a repealer; providing for a severability clause; and providing for an effective date. (The Public Utilities Board recommends approval.) Consider adoption of an ordinance of the City Council of the City of DeNon, Texas, on first reading, authorizing the City Manager or his designee to execute a one-year extension to the Interim Grant of Authority with Grande Communications Networks, Inc., formerly Denton Telecom Partners I, L.P. d/b/a Advantex Communications; and providing an effective date. Consider adoption of an ordinance accepting competitive bids and awarding a comract for purchase of two Bomb Technician Response Vehicles for the City of Denton Fire Department; providing for the expenditure of funds therefor; and providing for an effective date (Bid 3248 - Bomb Technician Response Vehicle awarded to Sam Pack's Five Star Ford in the amoum of $81,051.06). Consider adoption of an ordinance of the City of DeNon, Texas, amending the Code of Ordinances of the City of Demon, by amending Chapter 18 to add Article IX Automated Traffic Signal Enforcement; providing a repealing clause; providing a severability clause; providing for the imposition of civil penalties from a minimum of $75 to a maximum of $150 for third and subsequem offenses; and providing an effective date. H. Consider nominations/appoimmems to the City's Boards and Commissions. Citizen Reports 1. Review of procedures for addressing the City Council. 2. Receive citizen reports from the following: A. Peternia Washington regarding the Campus Theater and free utility service. B. Ed Soph regarding community concerns. C. Suzanne Gauvreau regarding toxic waste and health. City of Demon City Council Agenda December 7, 2004 Page 7 Jo New Business This item provides a section for Council Members to suggest items for future agendas or to request information from the City Manager. Ko Items from the City Manager 1. Notification of upcoming meetings and/or conferences 2. Clarification of items on the agenda Lo Possible Cominuation of Closed Meeting under Sections 551.071-551.086 of the Texas Open Meetings Act. Mo 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: DEPARTMENT: ACM: December 7, 2004 Water Utilities Howard Martin, 349-8232 SUBJECT Receive a report, hold a discussion and give staff direction concerning environmeNal issues related to the recent revisions of Subchapter 22 of the Denton Development Code (related to Gas Well Drilling and Production). BACKGROUND Several amendments were made to Subchapter 22 of the Denton Development Code on March 2, 2004. The purpose of this agenda item is to update the City Council on the implementation phase of the environmental components of these amendments, as well as give an overview of grant activities related to natural gas drilling and production. Most of the environmental components of Subchapter 22 may be found in Section 35.22.5.A.6.b. Those environmeNal regulations specific to drilling within the flood fringes or other EnvironmeNally Sensitive Areas (ESAs) of DeNon can be found in 35.22.5.A.8. It is important to note that to date there have not been any drilling operations that have occurred within a flood fringe or other ESA in the City of Denton. Overall, administering the revised environmeNal regulations of Subchapter 22 is going reasonably well. However, there are several significant challenges that have been encouNered, including the issue of enforcemeN in the extra territorial jurisdiction and multiple issues of non-compliance. The most prevaleN non-compliance issues so far have been related to drilling mud pits, and center on many operator's unwillingness to dewater and cover these pits within the time schedule required by the code (30 days to dewater after completion of drilling operations, 90 days to remove the pit contents and close the pit, with the option ora 90 day extension, as stated in 35.22.5.A.6.w. To date, there has been one case where a violation was filed in municipal court because an operator failed to obtain a plat prior to drilling. There have also been some instances where mud pits have been either leaking or had their coNeNs iNeNionally discharged iNo waterways. Exhibit 1 shows an example of water quality effects caused by one of these mud pit violations that was observed during the routine monitoring conducted by the Watershed Protection Department. The monitored parameter is conductivity, which is indicative of the amouN of dissolved ions (in this case, mainly salts) in the water. The large increase in conductivity that occurred during May 2004 was due to pit contents flowing from the site into a stream. After the violation was observed, a notice was issued and the operator fixed the leak in June. However, the leak reoccurred in June-July after the heavy rains in June, at which point the operator was contacted again and complain was filed with the Texas Railroad Commission (TRC). After inspection by the TRC, the operator decided to completely close the pit to avoid any further violations. To date, there have been no further problems with the receiving stream and visual observations affirm that the pit has been closed. In addition, the operator was required by the TRC to provide an environmental investigation report to confirm that no contamination remains onsite. The investigation was conducted by Green Star Environmental, and did confirm that moderate, short-lived impacts had occurred to the stream from pit releases. Subsequent monitoring has been conducted by the Denton's Watershed Protection Department and no further evidence of contamination has been found. We will continue to monitor this site to ensure that no further violations occur. Gas Well Monitoring - Water Quality Gram Update The 104b(3) gram received by the City of Demon's Watershed Protection Departmem was reviewed and approved by the PUB during the October 11, 2004 meeting. Since this date, the grant was presented to the City Council and was accepted unanimously on October 19, 2004. The Watershed Protection Department is in the process of procuring the equipment needed to start sampling, and has conducted a technical meeting to discuss sampling strategies with Dr. Paul Hudak and Dr. Tom Lapoint at the University of North Texas. Devon Energy agreed to allow site access and sampler construction on local drilling sites, and two meetings (including site visits) have been conducted between the City of Demon and Ray Stevens of Devon. So far, the gram has been progressing as scheduled, with no major problems. Staff Suggestions Concerning the Environmental Aspects of Drilling and Production Operations Impacts to water quality from drilling operations have been relatively minor to date. However, in the period since the revisions to Subchapter 22 there has not been a single well that has been drilled within the flood fringes of Demon's floodplains. During normal operations, the gas well inspector has noted minor violations at practically all sites that have been visited. Although the site operators have been generally willing to correct these minor problems, the issue of closing mud / reserve pits within the timeframe specified by Subchapter 22 of the Denton Development Code has been the most difficult compliance problem. Closing out these pits is simply not a priority with operators. So far, numerous citations have been written for failing to close the pits, and compliance remains somewhat inconsistent. In a general sense, it could be argued that this situation necessitates reconsideration of closed loop drilling, especially in areas where flooding is a possibility. However, since operators can land-apply the spem drilling mud with a minor permit from the TRC and permission of the landowner, closed loop drilling alone will not ensure that no drilling fluids escape the site. Staff will continue to pursue compliance within the timeframe specified by Subchapter 22 for pit closure and site cleanup through all remedies available to the City of Denton, paying special attention to flood fringes if drilling occurs in these areas. Although many minor violations of the revisions to Subchapter 22 have been noted since the revisions were enacted, it is important to note that these violations were recorded by the Oil and Gas Inspector and were generally resolved in a relatively short time frame. Had the environmental revisions to Subchapter 22 not been in place, it is very likely that non-compliance issues would have not been detected or certainly would not have been resolved in a timely manner. As operators become more familiar with requirements, it is anticipated that compliance will become more consistent and violations will decrease. OPTIONS Staff is seeking direction from Council concerning the environmemal provisions of Subchapter 22. RECOMMENDATION Staff recommends continuing the environmental compliance measures under the existing provisions of Subchapter 22, with updates when drilling operations commence in the flood fringes of Demon's floodplains. This recommendation is based on the relatively minor impacts to water quality to date and the fact that no drilling has yet been conducted in the flood fringes of Demon's floodplains PRIOR ACTION/REVIEW (Council, Boards, Commissions) A presentation of this material was given to the Public Utility Board on November 22, 2004. This was an informational presentation only, requiring no formal action from the Board. FISCAL INFORMATION None BID INFORMATION None EXHIBITS 1. Conductivity increases caused by mud pit leakages 2. Gas well inspection summary map. 3. Table of major non-compliance noted since Subchapter 22 revisions Respectfully Submitted: Kenneth Banks. Water Resources Program Manager Conductivity increases (increased salt content) caused by pit leakages. Conductivity (umhos/cm) 7000 6000 5000 4000 3000 2000 1000 EXHIBIT 1 --i- X I.iJ Major non-compliance noted since Subchapter 22 revisions. 3 GWP 04-0007 Citation for drilling without a permit issued in 6-04 5 GWP 03-0013 Pending approval from legal to file in municipal court for violations that have not been remediated 7 GWP 03-0038 Reserve and frac pit violations, water quality remediation following complaint to the TRC. TRC legal enforcement for surface remediation 13 GWP 04-0006 Reserve pit not dewatered. Complaint filed with the TRC 08-04 14 GWP 04-0008 Reserve pit not removed after well completion 18 GWP 04-0013 Drilling without plat approval 21 GWP 04-0021 Drilling without a permit EXHIBIT 3 AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: ACM: December 7, 2004 Streets Howard Martin, Utilities 349-8232 SUBJECT Receive a report, hold a discussion and give staff direction concerning existing road damage repair agreements for natural gas development activities and possible alternative methods for assessing road use fees. BACKGROUND Gas well drilling and development activities have a potential for significant impact on a community's road system infrastructure. This is particularly true for development activities that depend upon older rural roads that were not designed to handle the heavy truck traffic required to drill and develop a gas well. As gas well drilling and developmem activities progressed from eastern Wise County and into western Denton County, there has been significant road damage on rural roads that were not capable of handling the large increases in heavy truck traffic due to this industry. Recognizing the potential for adverse impact on existing roads within Denton's city limits, and under the direction of the City Council, Subchapter 22 of the Denton Development Code required all gas wells drilled within the city's ETJ and city limits to prepare and submit gas well drilling plats that included procedures designed to help minimize negative impacts to city roads. These procedures included the following: 1. Identification of access routes that impacted city streets. 2. Idemification of water supply sources for drilling and fracing operations. 3. Gas well developers were required to emer imo a road repair agreemem with the city and post a performance bond of $50,000 for a single well or $100,000 for two or more wells on a gas well plat site. 4. Provide a video of road conditions prior to beginning drilling operations. 5. Notify the engineering departmem when well drilling and developmem activities were completed to allow for a determination of what road damages occurred. This would result in a damage claim to outline needed road repairs that would be performed by the gas well developer. Additional information related to these procedures can be found in Sub Chapter 22 of the DeNon Developmem Code - Gas Well Drilling and Developmem (Exhibit 1) and the Road Repair Agreemem (Exhibit 2). Since adoption of Sub Chapter 22 of the Denton Development Code on February 5, 2002, staff has encountered a variety of implementation issues related to the Road Repair Agreements. These issues included: 1. Pre drilling videos provided by gas well developers often were performed by methods and means that made determination of existing road conditions difficult. Gas well drillers in general failed to notify the city's engineering department when drilling and fracing operations were completed to make a proper determination of post construction road damage claims. o Many gas well developments used common access roads and it was impossible to identify which particular developer's trucks caused which specific damage to a given road section. This problem was further compounded by the fact that other heavy trucks (including construction contractors and rock haulers) also used these roads and the city had no similar road use agreements with these companies. As many of the rural roads within the western side of Denton's city limits rapidly deteriorated, staff received numerous citizen complaints about poor road conditions demanding repairs to be made. Faced with the challenges with no budget funds available to make road repairs for these limited use roadways coupled with trying to implement road repair agreements with gas well developers that were unwilling to accept total responsibilities for fixing city roads, staff began efforts to enforce existing Road Repair Agreements while investigating other methods to allocate these costs to gas well developers. Staff quickly realized some of the shortcomings of the existing agreements based upon discussions with gas well developers and made a "first round" attempt to assess road damage claims based upon a consumptive use of the design life of the road method. This method was based upon some preliminary assumptions that included information obtained from gas well development representatives and staff concerning gas well drilling and development activities, typical county road design practices, and basic engineering principals related to design life, average daily vehicle trips and road replacement costs. The advantageous of this approach for determining road damage claims by the city for each gas well developer with a Road Repair Agreement were: 1. Each developer was treated equally with respect to damage claims. The methodology was based upon standard engineering principles and is used by most federal and state DOT agencies for determining road use impacts for trucks on highways and calculating gasoline taxes, truck license permits and load limits. 3. The city agreed to provide a release of road damage claims for all drilling and development activities prior to payment of the damage assessment. The city was able to collect some revenues to help make emergency repairs to roads that were in very poor condition due in part to original road design and condition and being exposed to extreme use by the gas well development community. The chief drawbacks of this approach were: The damage assessment method was not specifically outlined in the terms and conditions of the existing Road Repair Agreemems. This made enforcemem challenging for any gas well developer that chose to not to pay the city's damage claim. The damage assessment methodology was based upon various assumptions that may not always apply for each situation. This further exposed the city with challenges if a gas well developer refused to pay the damage claim and the city needed to take the next step in the enforcement process. o If a gas well driller refused to cooperate with the approach or wanted to negotiate a different settlement, the administrative process to resolve the matter often resulted in considerable time and effort by staff that on occasion was disproportionate to the actual road damage incurred and the revenue received. Recognizing these drawbacks, staff began to evaluate other approaches to improve the process and minimize the effort necessary to assess and collect damage claims for road repairs while continuing to utilize this approach to deal with deteriorating road conditions. One approach that staff pursued was conducting an engineering study to refine the original assumptions used in the "first round" damage claim assessmem. The results of this study are summarized in a report (Exhibit 3) and staff will provide a brief overview of the study results in the staff presentation to the City Council. The second approach was a preliminary investigation of how other jurisdictions have dealt with this same issue in past and how they are handled in their ordinances. This preliminary investigation observed the following methods being used: Increase the cost of well drilling permit fees to a level above the administrative cost of processing the permit to generate some level of excess revenue to deal with "other costs." Southlake's gas well ordinances require a $7,500 permit fee for gas wells. Post load limits on roads based upon design criteria and collect revenue through fees collected from users that exceed the load limits posted for the roadway. This method was used by Denton County to try and deal with truck damages to rural roads but has several negative drawbacks. o Requiring an up from fee for gas well drilling permits based upon a method related to access road length and pre drilling condition. Flower Mound's gas well ordinance (Exhibit 4) requires a road use fee using this approach. OPTIONS 1. Keep using the existing Road Repair Agreements as developed but refine the damage claim calculation methodology using the recently completed Road Damage Assessment Study prepared by C&P Engineering, LTD. Revise the existing Gas Well Drilling and Developmem Ordinance to require a road damage assessmem fee based upon a calculation methodology using the C&P Engineering Study. Revise the existing Gas Well Drilling and Development Ordinance to require a road damage assessment fee based upon a calculation methodology using the Town of Flower Mound's gas well ordinance. Discontinue using Road Repair Agreements and repair roads using the city's general fund revenue sources and increase annual O&M budgets for the Streets Division to adequately address the impact of the gas well development activities on rural roads that are unable to handle the truck traffic. 5. Continue to evaluate other methods and approaches for future consideration. RECOMMENDATION Staff is seeking policy direction and guidance from the City Council before pursing any of the options listed above. Based upon the experiences gained from the past coupled with an understanding of the advantages and disadvantages of each alternative, staff recommends Option 2 - Revise the existing Gas Well Drilling and Development Ordinance to require a road damage assessment fee based upon a calculation methodology using the C&P Engineering Study. This item was also taken to the Public Utilities Board for direction and input at their November 22, 2004 meeting. Staff will brief the City Council at the December 7, 2004 work session presentation what input they received from the PUB PRIOR ACTION/REVIEW (Council, Boards, Commissions) Staff provided a briefing to the PUB on this issue at the November 22, 2004 meeting. The City Council has been briefed in executive session on three occasions in the past related to accepting reduced road damage claims from negotiation efforts between gas well developers and staff. FISCAL INFORMATION The city has collected a total of $491,877 from ten different gas well developers for road damage claims for 47 well sites and is still attempting to collect an additional $18,000 from an eleventh developer for three additional wells. Using the original road damage assessment methodology proposed by staff, the city should have collected $1,101,405 in actual road use fees. Using the proposed method outline in the C&P Engineering Study, the city would have collected $733,994 for these same 50 wells. Using the Town of Flower Mound's methodology, and using information collected on road conditions contained in the city's recently completed Pavement Management Study, the city would have collected $1,177,519 for these same 50 wells. A comparison of how these methods would have affected each individual gas well developer is shown in Exhibit 5. EXHIBITS 2. 3. 4. 5. 6. Sub Chapter 22 of the Denton Development Code - Gas Well Drilling and Production. Road Damage Agreement. Road Damage Assessment Study- C&P Engineering, Ltd., August 12, 2004. Town of Flower Mound gas well ordinance. Assessment Comparison Spreadsheet. PowerPoint Presentation. Prepared by Tim Fisher, P.E. Assistant Director of Water Utilities Respectfully submitted, Jim Coulter Director of Water Utilities Subchapter 22 Development Code Subchapter 22 - Gas Well Drilling and Production Sections: 35.22. i 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.i0 35.22. ii 35.22. i2 35.22.i3 35.22.i4 35.22.i5 35.22.i6 35.22.i7 Purpose. Defiaitions. Gas Well Drilling and Production "By Right". Gas Well Drilling and Production by Specific Use Permit or Planned Development Zoaing District; Application and Requirements. Standards for Gas Well Drilling and Production. DRC Recommendations for Specific Use Permits and Planned Development Zoning Districts. Gas Well Permit Required. Insurance and Indemrfification. Security. Reviexv of Application for Gas Well Permit. Periodic Reports. Notice of Activities. Amended Gas Well Permits. Transfer of Gas Well Permits. Inspection Remeches of the City. Enforcement, Right of Entry. 35.22.1 Purpose. The drilling and production of gas xvithin the corporate limits and Extraterritorial jurisdiction (ETJ) of the City necessitate reasonable regulations to prevent destruction of property, protect xvatersheds xvitNn the City of Denton and its ETJ, prevent injury to persons, and ensure that production activities conform to the Denton Plan and development regulations. TNs Subchapter implements reasonable regulations to protect the health, safety, and gener~J xvelfare of the public and to accomplish the orderly and practical development of mineral resources. TNs subchapter is adopted pursuant to authority vested under the City Charter and Tex. Loc. Gov't Code, Chapters 2ii, 212 and 40i. 35.22.2 Definitions. All techaical industry xvords or phrases related to the drilling and production of gas xvells not specifically defined sh~Jl have the meaaings customarily attributable thereto by prudent operators in the gas industry. For the purposes of tNs Subchapter, the folloxving defiaitions shall apply unless the context clearly indicates or requires a different meaaing. Abandonment. "Abandonment" as defined by the Railroad Commission and includes the plug~ng of the xvell and restoration of the drill site as required by tNs Subchapter. Cathodic protection. An electrochemical corrosion control techaique accomplished by appl5Sng a direct current to the structure that causes the structure potential to change from the corrosion potential to a protective potential in the immunity region. The required cathodic protection current is supplied by sacrificial anode materials or by an impressed current system. Contaminant. Any substance capable of causing pollution, including but not limited to smoke, vapors, fumes, acids, alkalis, toxic chemicals, liquids or gases, drilling fluids including muds, or other irritants. Drilling. Any digging or boring of a nexv xvell to develop or produce gas or to inject gas, xvater, or any other fluid or substance into the earth. Drilling means and includes the re-entry of an abandoned xvell. Drilling does not mean or include the re-entry of a xvell that has not been abandoned Exhibit 1 22-1 Subchapter 22 Development Code Drill Site. The area used for drilling, completing, or re-xvorking a xvell. Exploration. Geolo~c or geophysical activities, including, but not limited to surve~4ng and seismic exploration, related to the search for oi1, gas, or other sub-surface hydrocarbons. Fracturing. The use of stimulants injected into a gas well to split or fracture the formation to improve the productivity of the gas well. Gas. Gas or natural gas, as such terms are used in the rules, regulations, or lomas of the RaiJroad Commission. Gas Well. Any xvell drilled for the production of gas or classified as a gas xvell under the Texas Natural Resources Code. Gas Well Permit. A Gas Well Permit applied for and issued or denied under this Subchapter authorizing the dr/lling, production, and operation of one or more gas wells. Hazardous Materials Management Plan. The hazardous materials management plan and hazardous materials inventory statements required by the Fire Code. Liner. A continuous layer of materials, synthetic or natural, beneath and on the sides of a pit that restricts the downward and lateral release of fluids. New Well. A new well bore or new hole established at the ~ound surface and shall not include the re-working of an existing well that has not been abandoned. Oil and Gas Inspector. An inspector designated by the Ci9~ of Denton that is responsible for evaluating the impacts of exploration, development, and production of oi1 and/or gas wells. Responsibilities include environmentally sensitive areas review, erosion control inspection, monitoring, and evaluating compliance with federal, state, and loc~J regulations. Operation Site. The area used for development and production and all related operational actMties of gas after driJling activities are complete. Operator. For each well, the person listed on the Railroad Commission Form W-1 or Form P-4 for a gas well. Permit. Any written license ~anted by the City of Denton for the exploration, development, and production of gas xvells issued pursuant to rules and regulations of this Subsection. Petroleum Specialist. A person familiar with and educated in the oil and gas industry who has been retained by the City. Railroad Commission. The RaiJroad Commission of Texas. Re-working. Re-completion or re-entry of an existing well within the existing bore hole or by deepening or sidetrack operations which do not extend more than one hundred fifg~ (150) feet from the existing well bore, or replacement of well liners or casings. Spud: The first time the drill bit enters the ground for gas well dr/lling and production. Tank. A container, covered or uncovered, used in conjunction with the drilling or production of gas or other hydrocarbons for holding or storing fluids. Technical advisor. Such person(s) familiar with and educated in the oil and gas industry or the law as it relates to oil and gas matters who may be retained from time to time by the City of Denton. Well. A hole or bore to any horizon, formation, or strata for the purpose of producing gas, or other liquid hydrocarbons. 22-2 Subchapter 22 Development Code A. The drilling and production of gas xvithin the corporate limits of the City shall be permitted by right xvithin the Rural Residential (RD-5), Rural Commercial (RC), Neighborhood Residential 1 0NR-1), Neighborhood Residential 2 0NR-2), Regional Center Commerci~J Neighborhood (RCC-N), Regional Center Commercial Doxvntoxvn (RCC-D), Employment Center Commercial (EC-C), Employment Center Industrial (EC-I), Industrial Center Employment (IC-E) and Industrial Center General (IC-G) Zoning Districts provided that no residential structure or place of assembly, institution or school exists no closer than five hundred feet (500') from the xvellhead or xvitNn a previously platted residential subdivision xvhere one or more lots have structures and provided that the drilling and production of gas meets the folloxving 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 frie xvith the Director. 3. A Gas Well Permit has been issued by the Fire Marshal. 4. A Watershed Protection Permit for xvells located in the Flood Fringe or other ESA's B. The drilling and production of gas xvithin the corporate limits of the City shall be permitted by right xvithin the Rural Residential (RD-5), Rural Commercial (RC), Neighborhood Residential 1 0NR-1), Neighborhood Residential 2 0NR-2), Regional Center Commerci~J Neighborhood (RCC-N), Regional Center Commercial Doxvntoxvn (RCC-D), Employment Center Commercial (EC-C), Employment Center Industrial (EC-I), Industrial Center Employment (IC-E) and Industrial Center General (IC-G) Zoning Districts if the property oxvner of a residential structure xvithin txvo hundred and fifty feet (250') to five hundred feet (500') of the xvellhead a~ees in xvriting 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 tNs subchapter. C. A gas ~vell pem~it shall automatically terminate, unless extended, if drilling is not commenced ~vitNn one year from the date of the issuance of the pemait. A permit may be extended for an additional six months upon request by the operator and proof that the regulatory standard of the requested permit for such location has not changed. D. A xvatershed protection pemait shall automatically terminate, unless extended, if spudding is not commenced xvitNn six months from the date of the issuance of the pemait. A permit may be extended for an additional three months upon application and if no revision to the gas xvell drilling and 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. E. The gas xvell permits required by tNs Subchapter are in addition to, and are not in lieu of, any permit that may be required by any other provision of the Denton City Code or by any other government~J agency. 35.22.4 Gas Well Drilling and Production by Specific Use Permit or Planned .......................................................... ........................................................................ A. No person, acting for Nmself or acting as an agent, employee, independent contractor, or servant for any person, shall engage in drilling or production of a gas xvell xvitNn the corporate limits of the City xvithout first obtaining either a Specific Use Permit as required by tNs Subchapter or unless permitted xvitNn a Planned Development Zoning District unless drilling is permitted by right pursuant to Section 35.22.3. A Specific Use Permit shall be required to vary the standards under Subsection 35.22.5. B. An application for a Specific Use Permit or Planned Development Zoning District for the drilling and production of a gas xvell shall be fried by the person having legal authority. That person is presumed to be the record oxvner, mineral oxvner, or the duly authorized agent of either the record oxvner or the mineral oxvner. The Chairman of the Development Reviexv Committee (DRC) may require an applicant to submit information of authority to frie an application. 22-3 Subchapter 22 Development Code The Chairman of the DRC has the authority to establish requirements for applications in the Application Criteria Manual. No application shall be accepted for filing until it is complete and the fee established by the City Council of the City of Denton has been paid. Incomplete applications shall be returned less a fee for processing determined by the Director of Planning and Development. No application for a Gas Well Development Plat, Gas Well Permit, Watershed Protection Permit or any other application for drilling and production of gas xvitNn the city limits shall be approved outright or conditionally until a Specific Use Permit or Planned Development District authorizing such use first has been approved. Denial or conditional approval of a Specific Use Permit or Planned Development District for gas xvell drilling and production shall be grounds for denial or conditional approval of any other permit application pertaining to such use for the same land. The drilling and production of a gas xvell xvitNn city limits or the City's ETJ shall include the folloxving standards: 1. Development Permits Required. No drilling or production of a gas xvell shall be~n until the folloxving permits have been approved: a. A Gas Well Development Plat that has been approved by the Chairman of the DRC is on xvith the Department that conforms to the requirements of Subsection 35.16.19, Gas Well Development Plats. b. A Gas Well Permit has been issued by the CiD~ Fire Marshall in accordance xvith Subsection 35.22.7 and Subsection 35.22.10. c. A Watershed Protection Permit for land xvithin the Flood Fringe or other ESA has been approved by the Chairman of the DRC pursuant to Subsection 35.22.5.A.8. d. No permits shall be approved for gas xvell drilling and production on any land located xvitNn the 100-year floodxvay or xvitNn 1200 feet of the flood pool elevation of Lake Ray Roberts or Lake Lexvisville. unless the properD~ oxvner has first applied for and received approval of the City Council, for Specific Use Permit pursuant to Subsection 35.22.4.A. or for relief pursuant to Subsection 35.3.i0. 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 identi~ing the entrance to the drill site or operation site shall be reflective. b. Fences shall not be required on drill sites during initial drilling, completion, or re-xvork operations as long as 24 hour on site supe~qsion is provided. Once 24-hour supervision has ceased, all drilling features including storage pits shall be fenced to prevent access. c. Fences located on operation sites shall remain locked at all times xvhen no one is present. d. No refining process, or any process for the extraction of products from gas, sh~Jl be carried on at a drill site or operation site, except that a dehydrator and separator may be maintained on a drill site or operation site for the separation of liquids from gas. Any such dehydrator or separator may serve more than one xvell. Gas Processing Facilities shall require a Specific Use Permit. e. Permanent xveatherproof signs reading "DANGER NO SMOKING ALLOWED" in a minimum of four inch (4") lettering shall be posted at the entrance of each drill site and operation site. The sign shall include the development or operating company that is currently responsible for the gas xvell plat, the Railroad Commission Well Identification Number and the American Petroleum Institute number for the xvell, the phone number for emergency se~qces 22-4 Subchapter 22 Development Code (9ii), the number for the operator, and any other xvell designation required by the Railroad Commission in txvo inch (2") lettering. f. No person shall place, deposit, or chscharge (or cause or pemait to be placed, deposited, or discharged) any oil, naphtha, petroleum, asphalt, tar, hydrocarbon substance, or any refuse, including xvastexvater or brine, from any gas operation or the contents of any container used in connection xvith any gas operation in, into, or upon any public right-of-xvay, storm drain, ditch or sexver, sanitary drain or sexver, any body of xvater, or any private property xvithin the corporate limits or the ETJ of the 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 the surrounchng areas or subdivision. i. All fire suppression and prevention equipment required by any applicable federal, state, or local laxv 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, xvater, or minerals on, under, or through the streets or alleys or other land of the City xvithout an easement or right- of-xvay license from the City, at a price to be a~eed upon, and then only in strict compliance xvith tNs Subchapter, xvith other ordinances of the City, and xvith the specifications established by the En~neering Department. k. The dig~ng up, breaking, excavating, tunneling, undermining, breaking up, or dama~ng of any public street or leaving upon any public street any earth or other materials is proNbited. Construction activities or deposition of any materials or objects creating an obstruction xvitNn limits of public right-of-xvay or easements are proNbited unless the operator has first obtained xvritten approval from the Engineering Department and, if applicable, has fried a right-of-xvay use agreement, and then only if in compliance xvith specifications established by the department. 1. No Gas Well permit shall be issued for any xvell to be drilled xvithin any of the streets or alleys of the City and/or streets or alleys shoxvn by the Denton Plan, i999-2020 and no street shall be blocked or encumbered or closed due to any exploration, drilling, or production activities unless prior consent is obtained by the City Manager, and then only temporarily. m. Pit liners shall be designed, constructed, and installed to prevent any migration of materials from the pit into adjacent subsurface soils, ground xvater, or surface xvaters at any time during the life of the pit. All lined pits shall adhere to the liner standards set forth by the Railroad Commission. n. All xvell heads, storage tanks, separation facilities or other mechanical equipment located xvitNn 500' of an adjacent residential property and not xvitNn a floodplain shall be screened from the residential property xvith a 6' high solid screen fence, good side facing the residential property. 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 xvell drilling and production operations and shall be provided so as to not disturb or adversely affect adjacent developments. c. The operator shall at all times comply xvith the rules and regulations of the Railroad Commission including but not limited to all applicable Field Rules. d. Internal combustion engines may be used in drilling operations if they have mufflers that ~vill 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 pumping gas xvells. 22-5 Subchapter 22 Development Code e. There shall be no venting of gas into the open air in residential areas except as alloxved by the Railroad Commission and as approved by the Fire Marshal. f. VeNcles, equipment, and machinery shall not be placed or located on a drill site or operation site (or on any public street, alley, drivexvay, or other public right-of-xvay) in such a xvay as to constitute a fire hazard or to unreasonably obstruct or interfere xvith fighting or controlling fires. g. Only Light Sand Fracture Technology or technolo~es approved by the Fire Marshal in accordance xvith the Fire Code City shall be used to fracture stimulate a xvell. h. Fracing operation shall be scheduled to occur during dasqight hours unless the Operator has notified the Fire Marshal that fracing xvill 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.i2. Storage tanks and separators. a. An operator is alloxved to construct, use, and operate such storage equipment and separation equipment as sho~vn on the t~pical ~vell site, ~pical drilling pad, and ~pical pad site locations on the approved Gas Well Development Plat. b. The use of centralized tank batteries is permitted as shoxvn on the applicable Gas Well Development Plat. c. No gas xvell development is alloxved in the FEMA designated 100-year floodxvay or xvitNn i200 feet of the flood pool elevation of Lake Ray Roberts or Lake Lexvisville. d. No storage tanks or separation facilities shall be placed in the Flood Fringe or other ESA except in accordance xvith Subsection 35.22.5(A)8.: Flow lines and gathering lines. a. Each operator shall place an identif5Sng sign at each point xvhere a floxv line or gathering line crosses a public street or road. b. Each operator shall place a xvarning sign for lines car~ing H2S (Hydrogen Sulfide) gas as required by the Railroad Commission. c. All flo~v lines and gathering lines ~vitNn the corporate limits of the City (excluding City ut/lit}- lines and franchise distribution systems) that are used to transport oil, gas, and/or xvater shall be limited to the maximum alloxvable operating pressure applicable to the pipes installed and shall be installed xvith at least the minimum cover or backfill specified by the American National Safety Institute Code, as anaended. d. Structures shall not be built over floxv lines or gathering lines. Additional safety and environmental requirements. a. The drilling and production of gas and accessing the gas xvell site shall be in compliance xvith all state and federal environmental regulations. No gas ~vell development or activity is allo~ved in the FEMA designated 100-year floodxvay. Drilling xvitNn Flood Fringe or other ESA shoxvn on the Map adopted by the CiD- is alloxved under the restrictions set forth in Section 35.22.5(A)8. b. Erosion control practices shall be conducted for all gas xvells. Compost bemas that are at least i foot Ngh and txvo feet xvide, or equivalent erosion control devices, shall be installed so that all portions of the xvell pad that may drain off-site are contained. Damage resulting from sedimentation and/or erosion shall be repaired immediately. c. Gas xvells may have a target location or bottom-hole location that is under the floodxvay, an Environmentally Sensitive Area (ESA) or xvithin 1200 feet of the flood pool elevation of lake Ray 22-6 Subchapter 22 Development Code Roberts or Lake Lexvisville xvhen the gas xvell is drilled chrectionally from a location outside such areas. d. Each xvell shall be equipped xvith an automated valve that closes the xvell in the event of an abnormal change in operating pressure. All xvellheads shall contain an emergency shut off' valve to the xvell distribution line. e. Each storage tank shall be equipped xvith a level control device that xvill automatically activate a valve to close the xvell in the event of excess 1/quid accumulation in the tank. f. All storage tanks shall be anchored for stabil/ty. g. All storage tanks shall be equipped xvith either steel or concrete secondary containment systems including liaing ~vith an impervious material. The secondary containment system shall be of a sufficient height to contain one and one-half (i 1/2) times the contents of the largest tank in accordance xvith the Fire Code. Drip pots shall be provided at pump out connections to cont~Sn the l/quids from the storage tank. h. Outdoor storage areas shall be equipped xvith a secondary containment system designed to contain a spill from the largest individual vessel. If the area is open to r~Snfall, secondary containment shall be designed to include the volume of a 24-hour rainfall as determined by a 25- year storm and provisions shall be made to drain accumulations of ground xvater and rainfall. i. Tank battery facil/ties shall be equipped xvith a remote foam l/ne and a lightaing arrestor system. j. A Hazardous Materials Management Plan shall be on file xvith the Fire Marshal. Any updates or changes to this plan shall be provided to the Fire Marshal xvithin 3 xvorkSng days of the change. All chemic~Js and/or hazardous materials shall be stored in such a manner as to prevent, contain, and facilitate rapid remediation and cleanup of any accidental spill, leak, or discharge of a hazardous material. Operator shall have all material safety data sheets (MSDSs) for all hazardous materials on site. All applicable federal and state regulatory requirements for the proper labeling of containers shall be folloxved. Appropriate pollution prevention actions shall be required and include, but are not limited to, chemical and materials raised from the ground (e.g., xvooden pallets), bulk storage, installation and maintenance of secondary containment systems, and protection from stoma xvater and xveather elements. k. All xvells shall be abandoned in accordance xvith the rules of the Railroad Commission; hoxvever, all xvell casings shall be cut and removed to a depth of at least ten feet (i0') beloxv the surface unless the surface oxvner submits a xvritten agreement other~vise. Three feet (3') shall be the miaimum depth. 1. No structures shall be built over an abandoned xvell. m. No gas xvell drill sites shall be alloxved on slopes greater than ten (i0) percent. n. No salt-xvater disposal xvells shall be located xvithin the City of Denton. o. Lining the reserve pit shall be required if the reserve pit is xvithin txvo hundred feet (200)' of a body ofxvater, creek, or floodpl~Sn. p. No gas xvell permit xvill be issued for any xvell xvhere the center of the xvell at the surface of the ground is located xvithin 250 feet of an existing fresh xvater xvell intended for domestic use. q. The contents of any pit shall alxvays be maintained at least 2 feet beloxv the top of the pit. r. Fencing shall be installed to restrict access to a reserve pit or other open xvater reservoir utilized in gas xvell drilling operation at a drill site xvithin the corporate limits of the City, except as provided in Section 35.22.5, C.2.c. s. Drip pans and other containment devices or oil absorbing materials shall be placed or installed underneath all tanks, containers, pumps, lubricating oil systems, en~nes, fuel and chemical 22-7 Subchapter 22 Development Code storage tanks, system valves, connections, and any other areas or structures that could potential leak, discharge, or spill hazardous liquids, semi-liquids, or solid waste materials, including hazardous waste inseparable by simple mechanical removal processes that is made up primarily of natural material. After the well has been completed, or plugged and abandoned, the operator shall clean and repair all damage to public property caused by such operations within thirD- (30) days. After any sp/ll, leak or malfunction, the operator shall remove or cause to be removed ~Jl waste materials from any public or private property affected by such spill, leak or malfunction. Clean- up operations sh~Jl be~n immediate¢. The dr/il site shall at all times be kept free of debris, pools of water or other liquids, contaminated so/l, weeds, brush, trash or other waste material outside the drill site within a radius of one hundred (100) feet around any separators, tanks and producing wells within the leased property. Drilling mud and reserve pits shall adhere to the folloxving requirements i The t)~pe of pit used in drilling operations shall be specified at the time of permitting. The oil and gas inspector naa)- perform a contamination assessment for any reserve pit, completion / xvork-over pit, drilling fluid chsposal pit, makeup xvater pit, mud circulation pit, xvashout pit, or xvater condensate pit. The folloxving concentrations for contaminants xvill be used to determine if contamination exists xvithin any materials in the pits: Compound Concentration limit TPH 15 mg/L BTEX 500 ug/L Benzene 50 ug/L From 30TAC 321.131.138 If concentrations exceeding these values are detected, the operator shall remove, cause to be removed, or other~vise remediate contaminants, to the satisfaction of the oil and gas inspector. Cleanup operations shall begin immediately. Cleanup activities that do not be~n xvithin 24 hours of notification by the oil and gas inspector shall be considered a violation of this Subchapter. ii Only fresh~vater-based mud systems shall be permitted. Saltwater-based mud systems and oil-based mud systems are prohibited. Chloride content of fluids held in reserve pits naa)- not exceed 3,000 m/lli~ams per liter. iv No metal additives naa)- be added to any drilling fluids. v All fluid produced from the xvell during completion of production shall be held in enclosed containers xvhile stored on the property. vi All fluids sh~Jl be removed ("de-~vatering") from the reserve pits ~vithin 30 days of completion of dr/lling operations. vi/ The pit and its contents shall be removed from the premises ~vithin ainety (90) days after completion of the xvell; provided, hoxvever, that the permittee naa)- apply for a 90 da)- extension from such requirements based on shoxving of good cause, necessity to maintain said pit, inclement xveather, or other factors. The CiD- naa)- designate a period of time shorter than the 90-day extension set out herein. No gas xvell operation shall be permitted xvithin rvveNe hundred (i,200) feet of the flood pool elevation of Lake Ray Roberts or Lake Lexvisville. The provisions of 35.22.5(A)6 shall apply both xvithin the corporate limits of the City of Denton and xvithin the ETJ of the CiD- of Denton. 22-8 Subchapter 22 Development Code Supplemental drilling. a. Supplemental drilling to deepen or directional drill an existing wall shall be conducted in accordance with the conditions for the applicable Specific Use Permit or Planned Development Zoaing District or underlying zoning classification that pemaits gas development by right. The operator shall provide the Fire Marsh~J a copy of additional Railroad Commission pemaits that allow drilling to a deeper depth. b. Supplemental drilling to deepen or chrectional drill an existing well shall be conducted in accordance with the approved Gas Well Permit for the well on file with the City. Watershed Protection Requirements for Wells located in Flood Fringe or other ESA's. The standards in this subsection are intended to miaimize adverse impacts on areas within in the Flood Fringe or ESA, reduce flood damage, and lessen the potential for contaminating surface water or any water supply. a. Prior to location of any gas well in the Flood Fringe or ESA, the property owner or applicant shall first obtain approval of an application that meets the criteria of the Application Criteria Manual for a Watershed Protection Permit and shall comply with the provisions of Subsection 35.22.5.. and shall be located outside these areas whenever practicable to minimize adverse impacts on these areas, reduce flood damage, and lessen the potential for contaminating surface water or any water supply. b. A Watershed Protection Permit containSng an ESA assessment of the drill site shall be submitted to the DRC by the Watershed Protection Department and/or the Floodplain Admiaistrator for all riparian buffer and floodplain ESA's prior to the approval of a Gas Well Development Plat. i If a riparian buffer is designated as "fair" to "excellent" ESA, the designated protective stream buffer xvidth as specified in Subchapter i7 of the Denton Development Code shall apply. ii WitNn all areas except unstudied floodplains, if the stream is designated as a "poor" ESA, the designated xvidth of the protective stream buffer 'sh~Jl be decreased by either 50- percent or to the limits of the floodxvay xvNchever is greater, but in no instance shall the protectNe stream buffer xvidth be decreased beloxv 25-feet measured each direction from the centerline of the existing channel. iii Drill sites sh~l not be located ~vithin any designated ESA riparian buffer. c. The Watershed Protection permit application shall contain the folloxving information and such infomaation as may be required by the Development Review Committee wh/ch is reasonably necessary to review and determine whether the proposed development and required facilities meet the requirements of th/s Subchapter and as required by the Application Criteria Manual. The infomaation that is required for the Watershed Protection permit shall include, but not be limited to: i A tree inventou~ plan shall be submitted. ii Any request to remove tree(s) shall be accomparfied by a letter from a certified geolo~st or engineer that inchcates xvhy the xvell site cannot be located to avoid the trees. iii Tree mitigation for gas ~vells located in a floodplain fringe or other ESA shall be required and shall be calculated on a i:i replacement value for i00% of the dbh of trees removed from the drill site. Tree mitigation shall be accomplished by planting replacement trees, xvithin a floodplain, on-site or off-site xvith similar tree species or by payment into a tree fund. Tree mitigation funds that are specific to ESA's xvill be kept separate from other tree funds and xvill only be used to either acquire xvooded floodplain or riparian property that rem~Sns in a naturalistic state in perpetuity, or to purchase conservation easements xvitNn 22-9 Subchapter 22 Development Code riparian or floodplain areas. Funds may be used to purchase, plant, and maintain trees on public property, as long as the public proper~y is witNn a riparian area or floodpl~Sn. iv Tree Mitigation funds shall be paid prior to final approval of a Gas Well Development Plat in a Flood Fringe or other ESA. d. Storage tanks or separation facilities, serving one well head, may be placed in the Flood Fringe or ESA under the folloxving conditions: 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 hydrolo~c and hydraulic en~neering study shall be performed by a Re~stered Professional En~neer. The study shall be submitted to the En~neering Department in a technical report for review by the City Engineer or Ns desi~onated representative. The report sh~Jl 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 Dr~Snage Criteria Manual. Using Manrfing's Equation with an estinaate 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 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 approv~J prior to construction witNn these areas. e. If evidence from water quality moaitoring effbrts indicates that contamination is occurring from gas wells, the operator shall remove, cause to be removed, or otherwise remechate contamination, as required by the oil and gas inspector incluchng 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, witNn 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 witNn the corporate limits of the City of Denton and within the ETJ of the City of Denton. Drilling and production of gas xvells 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 .......................................................... .°. . . .m. ?. t. z. . . . . . ¢. .t. . r. . . .s. .: ............................................................................................................................................................................................................................................................. A. The Department shall for~vard all applications for Specific Use Permits and Planned Development Zoning Districts to the DRC for reviexv. The DRC shall reviexv each application xvitNn 30 days after filing and sh~21 make recommendations regarding the applications to the Planaing and Zoaing 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 xvell development including, but not limited to, recommendations xvith respect to the standards set forth in Section 35.22.5. B. In connection xvith its reviexv of an application for a Specific Use Permit or Planned Development Zoaing District for the drilling and production of gas xvells, the DRC may determine that it is necessary to h/re a 22-10 Subchapter 22 Development Code petroleum specialist to assist the DRC in reviexving the application. If such a determination is made, the DRC xvill provide the operator a xvritten "scope of xvork" that the DRC proposes for such specialist. The DRC and the operator xvill attempt to agree upon the "scope of xvork"; hoxvever, the decision of the DRC sh~Jl control. If required by the specialist, the operator xvill provide a retainer; other~vise, the operator xvill pay for the services of the specialist after they are rendered. All xvork performed by the special/st shall be itemized on a daily basis (including a description of the xvork and the amount of time spent), and such itemization shall be provided to the operator ~vith each request for payment. The DRC has the authority to establish guidel/nes 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. 35.22.7 Gas Well Permit Required. A. Any person, acting for Nmself or acting as an agent, employee, independent contractor, or servant for any person, shall not engage in the drilling and production of gas xvells xvithin the corporate l/mits of the City xvithout first obtaining a Gas Well Permit issued under tNs Subchapter. The requirements of tNs section shall be construed as an exercise of the City's zoning poxvers, pursuant to City Charter, Tex. Loc. Gov't Code Chapter 2i i and the provisions of Subchapter 35.5 of the Denton Development Code. B. When a Gas Well Permit has been issued covering a xvell, the pemait shall constitute authority for drilling, operation, production, gathering of production, maintenance, repair, re-xvorkSng, testing, site preparation consisting of rigs or tank batteries, plug~ng and abandonment, and any other actMty authorized by tNs Subchapter associated xvith drill/ng 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 there~vith, incluchng gathering lines and discharge l/nes, by the operator and its respective employees, agents, contractors and subcontractors. C. A Gas Well Permit sh~Jl not be required for exploration for gas. Exploration of gas means geolo~c 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 xvell that has been annexed into the City shall be required to meet the requirements of tNs Subchapter and shall apply for a Gas Well Permit on the effective date of the annexation. Any ~vell that has obtained a Gas Well Permit issued by the Fire Marshal prior to the effective date of this Subchapter shn2l provide all infomaation required for Gas Well Permits under tNs Subchapter unless the information has been previously provided to the Fire Marsh~Z Gas Well Permits issued by the Fire Marshal prior to the effective date of this Subchapter shall comply xvith the folloxving requirements: i. 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.ii. 4. Road Maintenance Agreement unless already provided. 5. Notice of ActMty requirements of Section 35.22.i2. E. A Gas Well Pemait sh~21 not, hoxvever, constitute authority for the re-entering and drilling of an abandoned xvell. Re-entry and drill/ng of an abandoned xvell shall require a nexv Gas Well Pemait. F. Appl/cations for Gas Well Permits shall be in xvriting, shall be on fom~s 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 Appl/cation Criteria Manual unless such information has been previously provided to the City. 22-11 Subchapter 22 Development Code 35.22.8 Insurance and Indemnification. The operator shall provide or cause to be provided the insurance described beloxv for each xvell for xvhich a Gas Well Permit is issued, such insurance to continue until the xvell is abandoned and the site restored. The operator may provide the required coverage on a "blanket basis for multiple xvells". Such coverage shall be approved by the Risk Manager for the City of Denton. A. General Requirements. Indemnification and Express Negligence Provisions. i. Each Gas Well Permit issued by the City shall include the folloxving language: Operator does hereby expressly release and discharge, all claims, demands, actions, judgments, and executions xvhich it ever had, or no~v have or may have, or assigns may have, or claim to have, against the City of Denton, and/or its departments, it agents, officers, servants, successors, assigns, sponsors, volunteers, or employees, created by, or arising out of personal injuries, knoxvn or unknoxvn, and injuries to property, real or personal, or in any xvay incidental to or in connection xvith the performance of the xvork performed by the operator under a gas xvell permit and the operator caused by or arising out of, that sequence of events xvhich occur from the operator under the Gas Well Permit and xvork performed by the operator shall fully defend, protect, indemnify, and hold harmless the City of Denton, Texas, and/or its departments, 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, judgments, losses, fines, pen~Jties, costs, fees, and expenses incurred in defense of the City of Denton, Texas, and/or its departments, agents, officers, servants, or employees, including, xvithout limitation, personal injuries and death in connection therexvith xvhich may be made or asserted by Operator, its agents, assigns, or any third parties on account of, arising out of, or in any xvay incidental to or in connection xvith the performance of the xvork performed by the Operator under a Gas Well Permit and, the Operator agrees to indemnify and hold harmless the City of Denton, Texas, and/or its departments, 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 the City and/or, its departments, it's officers, agents, servants, or employees, created by, or arising out of the acts or omissions of the City of Denton occurring on the drill site or operation site in the course and scope of inspecting and permitting the gas xvells 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 INDEMNIFY 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. 4. All policies shall be endorsed to read "this policy xvill not be cancelled or non-renexved xvithout 30 days advanced xvritten notice to the oxvner and the City except xvhen this policy is being cancelled for nonpayment of premium, in xvhich case 10 days advance xvritten notice is required". 5. Liability policies sh~Jl be xvritten by carriers licensed to do business in Texas and xvith companies xvith A: VIII or better rating in accordance xvith the current Best Key Rating Guide, or xvith nonadmitted carriers that have a financial rating comparable to carriers licensed to do business in Texas approved by the City. 22-12 Subchapter 22 Development Code 6. Liability policies shall name as "Additional Insured" the City and its officials, agents, employees, and volunteers. 7. Certificates of insurance shall be presented to the City evidencing all coverage's and endorsements required by this Section 35.22.8, and the acceptance of a certificate xvithout the required limits and/or coverage's shall not be deemed a xvaiver of these requirements. 8. Claims made policies xvill not be accepted except for excess policies or unless other~vise provided by tNs Subchapter. Required Insttrance Coverage's. 1. Commercial Gener~J Liability Insurance. a. Coverage should be a minimum Combined Single Limit of $1,000,000 per occurrence for Bodily Injury and Property Damage. TNs coverage shall include premises, operations, bloxvout or explosion, products, completed operations, blanket contractual liability, underground property damage, broad form property damage, independent contractors protective liability and personal injury. b. Environmental Impairment (or Seepage and Pollution) shall be either included in the coverage or xvritten as separate coverage. Such coverage shall not exclude damage to the lease site. If Environmental Impairment (or Seepage and Pollution) Coverage is xvritten on a "claims made" basis, the policy shall provide that an5- retroactive date applicable precedes the effective date of the issuance of the permit. Coverage shall apply to sudden and non-sudden pollution conditions resulting from the escape or release of smoke, vapors, fumes, acids, alkalis, toxic chemicals, liquids or gases, xvaste material or other irritants, contaminants or pollutants. 2. Automobile Liability Insurance. Minimum Combined Single Limit of $500,000 per occurrence for Bodily Injury and Property Damage. Such coverage shall include oxvned, non-oxvned, and h/red veNcles. 3. Worker's Compensation Insurance. In addition to the minimum statutory requirements, coverage shall include Employer's Liability limits of at least $100,000 for each accident, $100,000 for each employee, and a $500,000 policy limit for occupational disease, and the insurer agrees to xvaive rights of subrogation ag~Snst the CiD-, its officials, agents, employees, and volunteers for an5- xvork performed for the CiD- by the operator. 4. Excess (or Umbrella) Liability Insurance. Minimum limit of $10,000,000 covering in excess of the preceding insurance policies. 5. Control of Well Insurance. a. Minimum limit of $5,000,000 per occurrence. b. Policy shall cover the Cost of controlling a xvell that is out of control, Re-drilling or Restoration expenses, Seepage and Pollution Damage. Damage to Property in the Operator's Care, Custody, and Control xvith a sub-limit of $500,000 naa5- be added. A security instrument that covers each xvell shall be delivered to the Fire Marshal before the issuance of the Gas Well Pemait for the well. The instrument shall provide that it cannot be cancelled without at least thirD- 30 days' prior written notice to the CiD- and, if the instrument is a performance bond, that the bond cannot be cancelled without at least ten i0 days' prior written notice for non-payment of premium. The instrument shall secure the obligations of the operator related to the xvell to: i. Repair damage, excluding ordinary wear and tear, if an)-, to public streets, including but not limited to bridges, caused by the operator or by the operator's employees, agents, contractors, subcontractors or 22-13 Subchapter 22 Development Code representatives in the performance of any actMty authorized by or contemplated by the Gas Well Permit; 2. Comply with the insurance and securiD- provisions set forth in Section 35.22.8 and Section 35.22.9; and 3. Pa}- fines and penalties imposed upon the operator by the CiD- for an}- breach of the Gas Well Permit. B. The securiD- instrument naa}- be in the form of an irrevocable letter of credit or payment bond issued by a bank or sureD- approved by the CID-. The instrument shall run to the CiD- for the benefit of the CiD-, shall become effective on or before the date the Gas Well Pem~it is issued, and shall remain in effect until the well is abandoned and the site restored. C. A certificate of deposit naa}- 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 the CiD- to secure the obligations of the operator described above, and shall be pledged to the bank with evidence of delivery provided to the Director of Plann/ng and Commun/D- Development. Interest on the certificate shall be payable to the operator. D. The securiD- instrument naa}- be provided for individual wells or on a "blanket" basis for multiple wells. The anaount of the securiD- shall be a rain/mum of $50,000 for an}- single well and a rain/mum of $i00,000 for multiple wells on a "blanket" basis. E. The securiD- will temainate when the Gas Well Permit is transferred, with respect to the operator- transferor and if the operator-transferee provides replacement securiD- that complies with th/s section, when the well is abandoned and the site restored, and when the Fire Marshal consents in writing to such temaination. F. An appeal of the detemaination of the anaount of securiD- required under th/s Subchapter naa}- be made to the Planning and Zon/ng Commission for recommendation to the CiD- Council for fin~J determination of the anaount of securiD-. A. All applications for Gas Well Permits shall be f~ed with the Department xvho shall immediately for~vard all applications to the DRC for review. Incomplete applications shall be returned to the applicant, in wh/ch case the CiD- shall provide a written explanation of the deficiencies if requested by the applicant. The CiD- sh~Jl retain a processing fee determined by the Director. The City naa}- return an}- application as incomplete if there is a dispute pending before the Railroad Commission regarding the determination of the operator. No Gas Well Permit shall be approved under th/s Section unless the properD- owner or applicant first receives approv~J of a Specific Use Permit or Planned Development District, where required; a Watershed Protection Permit, where applicable; and a Gas Well Development Plat. Den/al or conditional approval of an}- such applications shall be grounds for denial or conditional approval of the Gas Well Permit. B. The DRC shall review each application within i5 days after acceptance for filing and shall determine whether the application includes all of the information required by th/s Subchapter, whether the application is in conformance with the applicable Gas Well Development Plat, applicable Specific Use Permit or Planned Development Zon/ng District and whether the application is in confomaance with the insurance and securiD- requirements set forth in Subsection 35.22.8 and Subsection 35.22.9. The DRC shall forward a written report regarchng its determination to the Fire Marshal and ()il and Gas Inspector, with a copy provided to the operator. C. The Fire Marshal shall review the application and the written report of the DRC and shall issue the Gas Well Permit after receMng the DRC report witbSn i0 days unless he detemaines that the application is incomplete or that the application is not in confomaance with the applicable Gas Well Development Plat, 22-14 Subchapter 22 Development Code applicable Specific Use Permit, Planned Development Zoning District. The Fire Marshal may employ a technical advisor under the Fire Code. D. The Fire Marshal may condition the release of the approved Gas Well Permit upon the operator providing the security required by Subsection 35.22.9 and upon the operator entering into a Road Repair Agreement that xvill obligate the operator to repair damage excluding ordinary xvear and tear, if any, to public streets, including but not limited to, bridges caused by the operator or by the operator's employees, agents, contractors, subcontractors or representatives in the performance of any activity authorized by or contemplated by the approved Gas Well Permit. E. The failure of the DRC or the Fire Marshal to revie~v and issue a Gas Well Permit ~vitNn the time limits specified above shall not cause the application for the permit to be deemed approved. F. Each Gas Well Permit issued by the Fire Marshal shall: 1. Identify the name of each xvell and its operator; 2. SpecitS- the date on xvNch the Fire Marshal issued each permit; 3. SpecitS- the date by xvNch drilling shall commence on at least one xvell covered by the permit other~vise the permit expires (such date shall not be less than one year after the date of issuance). A one year extension of time may be ~anted if existing conditions are the same; 4. SpecitST that if drilling is commenced on at least one xvell covered by the permit before the permit expires, the pemait shall continue until the xvells covered by the permit are abandoned and the site restored; 5. Incorporate, by reference, the insurance and security requirements set forth in Subsection 35.22.8 and Subsection 35.22.9; 6. Incorporate, by reference, the requirement for periodic reports set forth in Subsection 35.22.11 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; 8. Incorporate, by reference, the conditions of the applicable Watershed Protection permit, Development Plat and applicable Specific Use Permit or Planned Development Zoning District; 9. Incorporate, by reference, the information contained in the permit application; 10. Incorporate, by reference, the applicable rules and regulations of the Railroad Commission, including the applicable "field rules"; 11. SpecitS- 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, xvNch person shall be a resident of Texas that can be served in person or by registered or certified mail; and 13. Incorporate by reference ~Jl permits and fees required by the Fire Code. G. The decision of the Fire Marshal to deny an application for a Gas Well Permit shall be provided to the operator in xvriting xvithin 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 den/al to the Construction Reviexv Board. H. If an application for a Gas Well Permit is den/ed by the Fire Marshal, notNng herein contained shall prevent a nexv permit application from being submitted to the City for the same xvell. I. Watershed Protection Permit. Applicability, Sequence of Permits and Effect 1. Any person, acting for Nmself or acting as an agent, employee, independent contractor, or servant for any person, shall not engage in the drilling and production of gas xvells xvitNn any floodpl~Sn or ESA 22-15 Subchapter 22 Development Code within the corporate limits or extraterritorial jurisdiction of the City without first obtaining a Watershed Protection Pemait issued under this Section. 2. No application for a Gas Well Development Plat or Gas Well Permit shall be approved until a Watershed Protection Permit has first been approved for the land in the floodplain or ESA. If an application for a Gas Well Development Plat or Gas Well Permit is submitted with an application for a Watershed Protection Permit, the time for processing the application shall commence to mn from the date the Watershed Protection Permit is finally decided. 3. Approval or conditional approval of a Watershed Protection Permit authorizes the applicant to seek approval for a Gas Well Development Plat or Gas Well Permit. 4. All applications for Watershed Protection Permits shall be fried with the Department, who shall immediately forward all applications to the DRC for review. Incomplete applications shall be returned to the applicant, in which case the City shall provide a written explanation of the deficiencies if requested by the applicant. The Ci9T shall retain a processing fee determined by the Director. The Ci9T may return any application as incomplete if there is a dispute pending before the R~Jlroad Commission regarding the determination of the operator. No application shall be deemed accepted for filing until the application is complete. 5. The DRC may attach such conditions to approv~J of a Watershed Protection Permit as are necessary to assure that the requirements of Subsection 35.22.5 are met. 6. Each Watershed Protection Permit approved by the DRC shall: a. Identify the name of each well subject to the permit; b. Specify the date on which the Pemait was issued; c. Incorporate by reference all applicable standards of approval; and d. Incorporate by reference all applicable conditions of approval. 7. The following standards apply to an application for a Watershed Protection Pemait: a. For land inside the CiD~, all conditions imposed by any applicable Specific Use Permit or a Planned Development District for the land subject to the Watershed Protection Permit. b. Standards in Subsection 35.22.5(A)6 and 35.22.5(A)8. 8. The applicant may appeal the denial or condition~J approv~J of a Watershed Protection Permit on grounds pertaining to the standards in Subsection 35.22.5(A)6 and 35.22.5(A)8 to the Planning and Zoning Commission within ten (10) calendar days of the decision by the DRC. The Commission shall decide the appeal applying the standards made applicable to the permit by Subsection 35.22.5(A)6 and 35.22.5(A)8. 9. The applicant may file a petition for review pursuant to Subsection 35.22.5(A)6 and 35.22.5(A)8 on grounds therein specified to the CiD~ Council within ten (10) calendar days of the decision by the DRC. The Council shall decide the petition based upon the criteria in Subsection 35.22.5(A)6 and 35.22.5(A)8. 10. An approved Watershed Protection Permit shall expire upon expiration of an approved Gas Well Development Plat for the same land. 35.22.1 ~ Periodic Reports. The operator shall notify the Fire Marshal of any changes to the folloxving information immediately, xvithin one business day after the change occurs. 1. The name, address, and phone number of the operator; 22-16 Subchapter 22 Development Code 2. The name, address, and 24-hour phone number of the person(s) with supetxTisory- 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 shall a resident of Texas that 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. The operator shall provide a copy of any "incident reports" or written complaints submitted to the Railroad Commission or any other state or federal agency within 30 days after the operator has notice of the existence of such reports or complaints. Beginaing on December 31st after each well is completed, and continuing on each December 31st thereafter until the operator notifies the Fire Marshal that the well has been abandoned and the site restored, the operator shall prepare a written report to the Fire Marshal identi~ing any changes to the infomaation 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. Any person who intends to re-work a well using a drilling rig, to fracture stimulate a xvell after iaitial 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 duration 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 xvill post a sign on the property ~Mng the public notice of the actMties, including the name, address, and 24-hour phone number of the person conducting the activities. F. If the CiD- 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. An operator naa}- submit an application to the Fire Marshal to anaend 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 anaend the existing permit, for land subject to the same approved Gas Well Development Plat. Applications for anaended 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: i. The application fee as set by City ordinance; 2. A description of the proposed anaendments; 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 CID-); 22-17 Subchapter 22 Development Code 4. Such additional information as is reasonably required by the Fire Marshal to demonstrate compliance xvith the applicable Development Plat, applicable Specific Use Pemait 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 Pemaits shall be fried xvith the Department of Planning and Development, and the department shall immediately for~vard all applications to the Fire Marshal for reviexv. Incomplete applications may be returned to the applicant, in xvhich case the City shall provide a xvritten explanation of the deficiencies; hoxvever, the City may retain a processing fee as detemained by the Fire Marshal. The City may return any application as incomplete if there is a dispute pending before the Railroad Commission regarding the determination of the operator. D. If the activities proposed by the amendment are not materially different from the activities covered by the existing Gas Well Permit, and if the proposed activities are in conformance xvith the applicable Watershed Protection Permit, Development Plat, applicable Specific Use Permit or Planned Development Zoning District, then the Fire Marshal shall approve the amendment xvithin 10 days after the application is fried. E. If the activities proposed by the amendment are materially different from the activities covered by the existing Gas Well Permit, and if the proposed activities are in conformance xvith the applicable Watershed Protection Permit, Development Plat, applicable Specific Use Permit or Planned Development Zoning District, then the Fire Marshal shall approve the amendment xvithin 30 days after the application is fried. If, hoxvever, the activities proposed by the amendment are materially different or, in the judgment of the Fire Marshal, might create a risk of imminent destruction of property or injury to persons that xvas not associated xvith the activities covered by the existing permit or that xvas not other~vise taken into consideration by the existing permit, the Fire Marshal may require the amendment to be processed as a nexv Gas Well Permit application. F. The failure of the Fire Marshal to reviexv and issue an amended Gas Well Permit xvithin the time limits specified above shall not cause the application for the amended permit to be deemed approved. G. The decision of the Fire Marshal to deny an amendment to a Gas Well Permit shall be provided to the operator in xvriting xvithin 10 days after the decision, including an explanation of the basis for the decision. The operator may appeal any such denial to the City Council. 35.22.14 Transfer of Gas Well Permits. A Gas Well Permit may be transferred by the operator xvithout the consent of the City if the transfer is in xvriting signed by both parties, if the transferee agrees to be bound by the terms and conditions of the transferred permit, if all information previously provided to the Ci9T as part of the application for the transferred permit is updated to reflect any changes, if the transferee provides the insurance and securi9~ 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 xvritten transfer is provided to the City. The transfer shall not relieve the transferor from any liabili9~ 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 xvith any such order or directive shall constitute a violation of this Subchapter. B. The Fire Marshal and/or the oil and gas inspector shall have the authority to enter and inspect any premises covered by the provisions of this Subsection to determine compliance xvith the provisions of this 22-18 Subchapter 22 Development Code Subsection and all applicable la~vs, rules, regulations, standards, or directives of any local state or federal authority. The oil and gas inspector shall conduct periodic inspections of all xvells permitted under this Subchapter. 35.22.16 Remedies of the City. A. If an operator (or its officers, employees, agents, contractors, subcontractors or representatives) fails to comply xvith any requirement of a Gas Well Permit (incluchng any requirement incorporated by reference as part of the pemait), the Fire Marshal or oil and gas inspector shall ~ve xvritten notice to the operator speci~ing the nature of the alleged failure and gMng the operator a reasonable time to cure, takSng into consideration the nature and extent of the alleged failure, the extent of the effbrts required to cure, and the potential impact on the health, safety, and xvelfare of the community. In no event, hoxvever, shall the cure period be less than 30 days unless the alleged failure presents a risk of imminent destruction of property or injury to persons or unless the alleged f~51ure invoNes the operator's failure to provide periodic reports. The Fire Marshal or oil and gas inspector may issue a Stop Work Order under the Fire Code. B. If the operator does not cure the alleged failure xvitNn the time specified by the Fire Marshal and/or oil and gas inspector, the Fire Marshal and/or oil and gas inspector may notify the Railroad Commission and request that the Railroad Commission take appropriate action (xvith a copy of such notice provided to the operator), and the City may pursue any other remedy available. C. If the operator does not cure the alleged failure xvitNn 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 Permit 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 Permit be revoked. D. The decision of the Fire Marshal and/or oil and gas inspector to recommend suspension or revocation of a Gas Well Pemait shall be provided to the operator in xvriting at least ten (10) days before any action by the City Council unless the alleged failure present a risk of imminent destruction of property or injury to persons E. If a Gas Well Permit is revoked, the operator may submit an application a nexv Gas Well Pemait for the same ~vell. A. The Fire Marshal and the oil and gas inspector are authorized and directed to enforce tNs Subchapter and the provisions of any Gas Well Permit. Whenever necessary to enforce any provision of tNs Subchapter or a Gas Well Permit, or xvhenever there is reasonable cause to believe there has been a violation of tNs Subchapter or a Gas Well Permit, the Fire Marshal and/or oil and gas inspector, or there designated representative, may enter upon any proper~y covered by tNs Subchapter or a Gas Well Pemait at any reasonable time to inspect or perform any duty imposed by tNs Subchapter. If entry is refused, the City shall have recourse to every remedy provided by laxv and equity to gain entry. B. It shall be unlaxvful and an offense for any person to do the folloxving: i. engage in any activity not pern~tted by the terms of a Gas Well Permit issued under this Subchapter; 2. fail to comply xvith any conditions set forth in a Gas Well Pemait issued under tNs Subchapter; or 22-19 Subchapter 22 Development Code 3. violate any provision or requirement set forth under th/s Subchapter. C. The enforcement and penalty provision under Subsection 35.i.i0.4 sh~Jl apply to a violation of tNs Subchapter (Amended ()rd. No. 2004-059, 03/02/2004) 22-20 C:'WINDOWS TEMP'Road Repair A~re~:,mcnt.doc ROAD REPAIR AGREEMENT This Road Repair Agreement, ("Agrecment"), is made and entered into on this the .~__ day of , 2002 by and between the City of Denton, Texas ("City"), a Texas home rule municipality, and ("CORPORATION") for the repair of certain streets and/or roadways maintained by the City of D'enton, Texas as more fully described herein. WHEREAS, CORPORATION is in the business of drilling gas wells and, in connection therewith, shall be engaged in gas well drilling and production activities on tpack routes on N' roadways mainta.inted by the City of Denton as shown on CORPORATIOI s Gas Welt Development Plat; and WHEREAS, use of the roadways by CORPORATION for the purpose of perfbrming the activities described hereinabove may cause damage to the roadways; and WHERAS, Denton and CORPORATION, fbr the mutual consideration hereinafter stated, desire to enter into an A~eernent fbr CORPORATION to temporarily repair said roadways for the duration of the teton of tlnis Agreement in consideration of CORPORATION's use of said roadways for the purpose of the activities described hereinabove; NOW, THEREFORE, IT IS AGREED THAT: ARTICLE 1. REPAIR OBLIGATION l. CORPORATION al~ees to repair damages, excluding ordinary wear and tear, to truck routes as identified on approved gas well development plats caused by CORPORATION, its contractors, subcontractors~ employees, agents, or representatives in connection with activities authorized by the Gas Well Pen;nit or Gas Well Development Plat. This obligation shall continue during the term of this Agreement and CORPORATION shall, prior to the termination of this Agreement, as provided herein, repair the darnage to the roadways to the condition in which the roadways existed, excluding ordinary wear and tear to the roadway, if any, prior to the executio, n of this Agreement. CORPORATION shall make a videotape of the roadways prior to the start of CORPORATION's drilling and operation of its gas wells. CORPORATION shall provide a copy of the videotape to the Director of Engineering. CORPORATION NAME shall notify the City's Department of Engineering when gas well drilling, fi-acing or reworking operations are complete so that the City's Department of Engineering can determine if repairs are required. Upon inspection, City's Departrnent of Engineering shall notify CORPORATION NAME of what repairs, if any, are required or shall notify CORPORATION NAME that repairs are not required. 2. In connection with its obligation to repair said roadways, CORPORATION shall use rnaterials of the same or better quality than those utilized to surface and/or repair the roadways prior to execution of this Agreement. Deviation from the materials described herein shall not be permitted without the prior written consent of the Director of Engineering. Repairs shall be completed in accordance with standard engineering practices acceptable to the City. Exhibit 2 expense. CORPORATION shall repair the damage to the roadways at its sole cost and 4. During the term of this Agn:eement, CORPORATION shall periodically inspect said roadways during drilling, fkacture stimulation or reworking of the gas well to determine whether or not any damage has occurred as a result of CORPORATION's activities. Immediately upon discovering the existence of any such damage to the roadways, CORPORATION shall undertake to repair and/or remedy the damage to the roadways. Upon discovery of damage by the CORPORATION, the CORPORATION will have 48 hours to contact the Director of Enginee~ng to work out a schedule of repairs. Repairs shall take place within 30 days, or immediately if the darnage affects the irnrnediate health and safety of individuals, ARTICLE 2. TERM OF AGREEMENT This Agreement shall commence upon the date indicated above and shall continue in full force and effect until CORPORATiON's Gas Well Pennit has expired, has been terminated or if the CORPORATION has permanently discontinued the activities upon the roadways, as described hereinabove. CORPORATION's obligation to repair the roadways shall terminate in accordance with the expiration or tem~ination of the Gas Well Permit or if the CORPORATION has plugged the well in accordance with the requirements of Chapter 22 of the Denton Development Code, efl'ective February 20, 2002. ARTICLE 3. FNSURANCE AND INDEMNITY CORPO~TION shall provide or cause to be provided the insurance described below when CORPORATION repairs said roadways that are within Division 1 of the City of Denton's ETJ unless a Gas Well Pemfit has been issued wherein such insurance has been provided Ibr the issuance of the Gas Well PermiL a. Commercial General Liability Insurance. This coverage must include premises, operations, blowout or explosion, products, complete operations, blanket contractual liability, underground prope~y damage, broad form property damage, independent contractors and personal injury. This coverage should be a minimum Combined Single Limit of $500,000 per occurrence for Bodily Injury and Property Damage. Automobile Liability Insurance. (1) Minimum Combined Single Limit of $500~000 per occurrence for Bodily Injury and iProperty Damage; and (2) The Business Auto Policy must slnow Symbol i in the Covered Autos Portion of the liability section in Item 2 of the declarations page. Page 2 Co (2) (3) (4) Worker's Compensation Insurance. requirements: In addition to the minimum statutory (1) Employer's Liability limits of at least $100,000 for each accident, $100,000 fbr each employee, and a $500,000 policy limit for occupational disease; and (2) The insurer agrees to waive fights of subrogation against the city, its of'ficials, agents, employees, and volunteers for any work performed for the city by the CORPORATION. (3) The CORPORATION shall COlnply with the provisions of with Section 406.096 of the Texas Labor Code and rule 28TAC I10.110 o£ the Texas Worker's Compensation Commission. Indemnification. CORPORATION shall and hereby does indemnif}~, defend and save harmless the City, its officers, agents and employees from all suits, actions or claims of any character, name and description brought fbr or on account of any injufies or damages received as sustained by any person, persons or property on account of the operations of the CORPORATION, its agents, employees, contractors or subcontractors; or on account of any negligent act of fault of CORPORATION, its agents, employees, contractors or subcontractors in connection with the obligations of the CORPORATION under this Road Repair Agreement; and shall pay any judgment, with costs, which may be obtained against the City growing out of such injury or damage. General prov~ons All policies shall be endorsed to read "THIS POLICY WiLL NOT BE CANCELLED OR NON-RENEWED WITHOUT 30 DAYS ADVANCED WRITTEN NOTICE TO THE OWNER AND THE CITY EXCEPT WHEN THIS POLICY IS BEING CANCELLED FOR NONPAYMENT OF PREMIUM, IN WHICH CASE I 0 DAYS ADVANCE WRITTEN NOTICE IS REQUIRED". Commercial General Liability and Automobile Liability insurance shall be written by companies with A: VIII or better rating in accordance with the current Best Key Rating Guide Commercial General Liability and Automobile Liability insurance policies shall name as "Additional Insured" the city and its officials, agents, employees, and volunteers. Certificates of insurance must reflect all coverages and endorsements required by this section. Page 3 (5) Coverage shall be placed with insurance carriers licensed to do business in the State of Texas or with nonadmitted carriers that have a financial rating comparable to carriers licensed to do business in Texas approved by the City. ARTICLE 4. PERFORMANCE BONDS CORPORATION shall provide a performance bond, unless a performance bond has been provided for the issuance of a Gas Well Permit, in an amount not less than the amount necessary to repair the above-described roadways, as required by this A~eement, as determined by the Director of Engineering. The performance bond shall be executed by a surety company authorized to do business in the State of Texas in accordance with Chapter 2253 of the Texas Government Code. 2. If the cost of completing the repair is an amount of $15,000 or less, as determined by the Director o.f Engineering, cash money in the mnount necessary to complete the improvements, as determined by the Director of Engineering, may be deposited with a bank or escrow agent pursuant to an escrow agreement ensuring completion of the repair in lieu of providing a performance bond. ARTICLE 5 MISCELLANEOUS PROVISIONS 1. CORPORATION understands and agrees that CORPORATION, its employees, servants, agents, and representatives shall at no time represent themselves to be employees, servants, agents, and/or representatives of the City. The City shall not have any control over the means or methods by which CORPORATION shall pertbrm its obligations hereunder. CORPO~TION shall fhmish all equipment and materials necessary to perfolTn hereunder and shall at all times be acting as an independent CORPO~TION. 2. By entering into this Agreement, the City does not waive, nor shall it be deemed to waive, any immunity or defense that ~vould otherwise be available to it against claims arising by third parties. ARTICLE 6. FORCE MAJEURE The performance of this Agreement shall be subject to events of fbrce majeure. Events of Force Majeure shall mean any contingency or cause beyond the reasonable control of a party including, without limitatiom acts of God or the public enemy, war, riot, civil commotion, insurrection, government or de thcto government action (unless caused by acts or omissions of the Page 4 party), fires, explosions, rain or other weather delay's, floods, strikes, slowdowns or work stoppages. ARTICLE 7. ASSIGNABILITY/CONSEN I Except as otherwise provided herein, or except as may be hereafter deten'nined by the parties, no party to this Agreement may sell, assign, or transfer its interest in this Agreement, or any of its right, duties, or obligations hereunder, without the prior ~vritten consent of the other party? Whenever the consent or the approval of a party is required, herein, such party shall not unreasonably withhold, delay, or deny such consent or approval. Notwithstanding the foregoing, the CORPORATION may assign this Agreement if the Gas Well Permit has been assigned in accordance with the Gas Well Drilling and Production Ordinance, Article XII of Chapter 12 of the Code of Ordinances for The City of Denton, Texas. ARTICLE 8. NOTICE Any notice given by one party to the other in connection with this Agreement shall be in writing and shall be by personal delivery; sent by registered mail or certified mail; or by U.S. Mail, return receipt requested, postage prepaid; to: CITY: Office of the City Managcr City of Denton, Texas 215 East McKinney Denton, Texas 76201 CORPORATION: Notice shall be deemed to have been received on the date of receipt as shown on the return receipt or other written evidence of receipt. ARTICLE 9. MODIFICATION No waiver or modificaion of this Agreement or of any covenant, condition, 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 fi~ts or obligations of the parties hereunder, unless such waiver or modification is in writing, duly executed. The parties further agree that the provisions of this Article will not be waived unless as herein set tk~rth. ARTICLE 10. Page 5 SAVINGS/SEVERABIIATY In the event that any one or more of the provisions faereof contained in this Agreement shall for any reason be held to be i~valid, illegal, or unenforceable in m~y respect, such invalidity, illegality, or unenforceability shall not eff'ect the other provisions~ and the A~eement shall be construed as if such invalid, illegal, or une~tbrceable provision had never been contained in this Agreement. ARTICLE 11. GOVERNING LAW AND VENUE This Agreement shall be construed under and governed by, and in accordance with the laws of the State of Texas, and all o.bligalior~s of the parties hereto, created by this Agreement are perfomnable in Denton County, Texas. Venue of any suit or cause of action under this Agreement shall lie exclusively in Denton County~ Texas. Page 6 ~ E ARTICL 1 2. ENTIRE AGREEMENT This Agreement and the exhibits attached thereto, constitute the entire agreement among the parties hereto with respect to the subject matter hereof,, and supersede any prior understandings or written or oral agreements between the parties with respect to thc subject matter of this Agreement. No amendment, modification, cancellation or alteration of the terms of this Agreernent shall be binding on any party hereto unless the same is in writing, dated subsequent to the date hereof, and is duly authorized and executed by the parties hereto. ARTICLE 13. WAIVER OF TERMS AND CONDITIONS The f:aiture of either party to entbrce or insist upon compliance with any of the terms or conditions of this Agreement shall not constitute a general waiver or relinquishment of any such terms or conditions, but the same shall be and remain at alt times in full tbrce and effect. ARTICLE 14. CAPTIONS The captions contained in this A. greement are for informational purposes only and shall not in any way aftkct the substantive terms or conditions of this Agreement. ARTICLE 15. COUNTERPARTS This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and constitute one and the sm~ne instrument. Page 7 IN WITNESS WHEREOF, the parties do hereby affix their signatures and enter into this Agq:eemcnt as of the .... day of__ ., 2001. CITY O.F DENTON, TEXAS By: CITY MANAGER ATTEST: J ENN IFER WALTERS, CITY SECRETARY By: APPROVED AS TO LEGAL FORM:: HERBERT L. PROUTY, CITY ATTORNEY CORPORATION By: (Printed Name and Title) Number: Texas Rail Road Commission CORPORATION STATE OF TEXAS CO, UNTYOF DENTON Page 8 appeared , the undersigned notary public, on this day personally the of (CORPORATION). known to me; proved to me on the oath of ; or proved to me through his/her current {description of identification card or otlher document issued by the federal government or any state government that contains the photograph and signature of the acknowledging person to be the person whose name is subscribed to the foregoing instrument; and acknowledged to me that he/she executed that instrument for the purposes and consideration therein expressed. Given under my hand and seal of office this ...... day of 2002. Notary Public Page 9 ROAD DAMAGE ASSESSMENT STUDY Report Prepared for THE CITY OF DENTON August 12, 2004 Prepared by C&P Engineering, Ltd. 1801 Gateway Boulevard · Suite 101 · Richardson, Texas 75080 · (972) 644-2800 Exhibit 3 ROAD DAMAGE ASSESSMENT STUDY CITY OF DENTON INTRODUCTION The City has determined that the truck traffic associated with the drilling of natural gas wells is having a detrimental impact on the pavement life of the City streets upon which the vehicles travel. As a result, the City is seeking a solution to this problem that will be equitable to both the City and to the drilling companies. At the City's request C&P Engineering, Ltd. has conducted an engineering study to address this issue. A meeting to discuss the City's concerns and objectives for this study was conducted on January 21,2004 at the City's offices. In attendance at that meeting for the City were Timothy Fisher, Keith Gabbard, Quentin Hix, and David Salmon. This report documents the findings that resulted from that study. METHODOLOGY The focus of this study was the development of a road damage assessment fee structure based on the weight impact of vehicles associated with gas well drilling companies that travel on the City's street system. To develop this fee structure a four step study methodology was developed. A description of these four steps has been outlined in the following paragraphs. Data Collection... The Consultant developed a preliminary vehicle survey data form for the collection of the information necessary to complete this study. That form was revised and finalized based on review comments and concerns expressed by the City. City staff collected field data from several drilling companies. Such data included the following information: water availability to the site (hauled or piped); the number, classification (rock hauler, bob-tail, tank truck, etc.), and weight of vehicles entering and exiting the site each day; the duration of operation; and the type of operation (drilling, fracing, etc.). City staff identified four typical street sections for use in developing the road damage assessment fee structure. City staff also provided data associated with the replacement and maintenance of the four City street sections: life expectancy; typical replacement and maintenance costs; etc. Data Reduction and Analysis... C&P utilized the firm of Alpha Testing to assist in this study. Mr. Brian Powell, P.E. of Alpha Testing was provided with the necessary data to calculate the life expectancy ESAL's (equivalent single axle loads) for the four street sections provided by City staff. C&P then analyzed the collected field data and calculated the weight impact in terms of 18-kip ESAL's that a typical drilling operation will produce on each of the four sections during the first 12 months of operation. Also calculated were the costs to the City with regard to the replacement and maintenance of each of the four pavement sections. Findings and Recommendations . . . C&P compiled and summarized the findings that resulted from the data reduction and analysis portion of this study. Based on these findings C&P developed a recommended road damage assessment fee structure based on a unit cost per lane mile basis. The fees would be assessed to the appropriate drilling company based on that company's first 12 months of operation. Report . . . C&P prepared a draft report for submittal to the City. The report summarized the work efforts, findings, and fee structure recommendations. A final report was submitted to the City that included revisions and modifications based on City staff's review of the initial draft report. Page -2- DATA COLLECTION A copy of the vehicle survey form has been included in the attachment section of this report. The following three paragraphs describe the thought process and the reasoning behind the development of the form as well as the data collected in this study. These paragraphs were prepared by Quentin Hix. There are three phases of drilling activity identified by City staff. First is the preparation of a drilling pad site and the erection/operation ora drilling rig. The second phase of activity is fracturing of the gas producing formation in order to stimulate the flow of natural gas from the completed well. The final activity is ongoing operation of the well, which includes removing liquids extracted from the natural gas and stored in tank batteries located at the drilling site. Each of these activities is repeated at each drilling site, and each activity is conducted according to generally established drilling procedures. The volume of truck traffic associated with each activity was then determined by requesting experienced gas well operators to identify the type of truck and the volume of trips into a well site to conduct each phase of drilling activity. Winchester Production Company shared with the City the results of a recent industry study that had been conducted by their Operations Manager. The information was compiled into the City survey form and reviewed by the Company. A second, independent compilation of truck traffic for each phase of drilling activity was produced by Devon Energy Corporation and compared to the initial survey information. A summary of "average" truck traffic volumes was compiled by City staff from the industry information and presented to Endeavor Energy, a major drilling operator, to confirm the validity of information displayed as "average of all wells drilled". The only major variable in truck traffic volume for all gas wells used in this survey is whether the fracturing activity, which requires approximately 1 million gallons of water, is accommodated by hauling water into a frac pit via water tank trucks, or filling the frac pit through temporary water lines attached to a water source. This variable is taken into consideration in the survey data by identifying the average truck traffic volume associated with "hauled" water versus "piped" water to fill a frac tank. Copies of the completed vehicle survey form have been included in the Attachment section of the report. The first completed form summarizes the collected survey data for a drilled well that uses piped water. The second completed form summarizes the collected survey data for a drilled well that uses hauled water. The four typical street sections developed by the City for inclusion in this study are listed below. Page -3- Type I Six inch (6") flex base with chip seal. Type IISix inch (6") flex base with chip seal and a two inch (2") asphalt overlay. Type III Six inch (6") treated subgrade with six inches (6") of asphalt. Type IV Six inch (6") treated subgrade with eight inches (8") of asphalt. The City also prepared a listing of current street and roadway replacement and maintenance costs for each of the four sections listed above. These costs have also been included in the Attachment section of this report. Please note that these costs do not include drainage or additional maintenance overlay costs. Page -4- DATA REDUCTION AND ANALYSIS Alpha Testing, Inc. conducted an analysis of the four pavement sections with regard to the 1993 AASHTO Guide for Design of Pavement Structures. The focus of their analysis was the calculation of the number of 18-kip equivalent single axle loads (ESAL's) for each of the four sections. The results of their analysis have been summarized in Table 1. TABLE 1 AASHTO EQUIVALENT SINGLE AXLE LOADS Type I 1,600 ESAL's Type II 8,700 ESAL's Type III 246,400 ESAL's Type IV 1,544,200 ESAL's A copy of the report prepared by Alpha Testing has been included in the Attachment section of this report. The report includes a summary of the AASHTO design parameters used in the calculation of the ESAL values. The report also includes a listing of the axle load equivalency factors for the six variations of truck loads that were identified in the data collection effort. These factors represent the impact that a single truck (ora particular weight and number of axles) would have on a City street in terms of 18-kip ESAL's. Using the truck volume and weight information included in the vehicle survey forms in conjunction with the axle load equivalency factors developed by Alpha Testing we were able to calculate the total 18-kip equivalent single axle loads for two conditions ora typical gas well drilling operation: Scenario #1 - Piped Water; and Scenario #2 - Hauled Water. Table 2 on the following page has been prepared to summarize this information. A detailed breakdown of the calculations for both scenarios has been included in the Attachment section of this report. It should be noted that these weight impacts reflect the first 12 months of operation. TABLE 2 ESAL'S FOR TYPICAL GAS WELL DRILLING OPERATIONS Page -5- PIPED OR hAUlED WATE~ I TOT~ 18-~P SINGLE roADS Scenario #1 - Piped Water 488.35 ESAL's Scenario #2 - Hauled Water 1,336.05 ESAL's C&P then calculated amount of road damage (in terms of percent) that a typical gas well drilling operation (both piped water and hauled water) would have on each of the four pavement sections during the first 12 months of operation. Tables 3 and 4 have been prepared to summarize the results of those calculations. TABLE 3 SCENARIO #1 - PIPED WATER Type I 1,600 488.35 30.522 % Type II 8,700 488.35 5.613 % Type III 246,400 488.35 0.198 % Type IV 1,544,200 488.35 0.032 % TABLE 4 SCENARIO #2 - HAULED WATER Type I 1,600 1,336.05 83.503 % Type II 8,700 1,336.05 15.357 % Type III 246,400 1,336.05 0.542 % Type IV 1,544,200 1,336.05 0.087 % Page -6- The cost to the City for each pavement section consists of two components: the replacement cost and the annual maintenance cost. The following two paragraphs describe how each of these values were obtained. The replacement costs were provided by the City and reflect current year 2004 labor and materials costs. 20 year maintenance costs were provided by the City and they too reflect current year 2004 labor and materials costs. These costs were reduced to an annual maintenance cost. Table 5 has been prepared to summarize replacement and maintenance costs per lane mile for each pavement section and the resulting total cost that we believe should be included in the calculations for determining a road damage assessment fee structure. TABLE 5 ROADWAY COSTS PER LANE MILE Type I $40,680 $1,100 $41,780 Type II $70,126 $1,300 $71,426 Type III $137,549 $2,373 $139,922 Type IV $186,851 $2,623 $189,474 Page -7- FINDINGS AND RECOMMENDATIONS The results of our study have verified that truck traffic associated with the drilling of natural gas wells is detrimental to the pavement life of the City streets upon which the vehicles travel. As logic would dictate, the more substantial the pavement design (Types III and IV) the less the damage due to the truck traffic. The following Table 6 has been prepared to summarize and document a recommended road damage assessment fee structure. The resulting assessment fees are based on the data in previous Tables 3, 4 and 5. The percentages in Tables 3 and 4 were applied to the total costs in Table 5 and the results inserted into Table 6. TABLE 6 ROAD DAMAGE ASSESSMENT FEE STRUCTURE Type I $12,752 per lane mile $34,888 per lane mile Type II $4,009 per lane mile $10,969 per lane mile Type III $277 per lane mile $758 per lane mile Type IV $61 per lane mile $165 per lane mile CLOSING We have appreciated the opportunity to assist you in the preparation of this road damage assessment study. Please do not hesitate to contact our office should you have any questions or comments concerning this report. Page -8- ATTACHMENT SECTION GAS WELL DRILLING DATA FORM COMPLETED DATA FORMS Piped Water Data Hauled Water Data REPLACEMENT AND MAINTENANCE COSTS REPORT BY ALPHA TESTING ESAL CALCULATIONS Scenario #1 - Piped Water Scenario #2 - Hauled Water 1 page 1 page 1 page 1 page 6 pages 1 page 1 page 'T ROAD STUDY AS§'iESSMENT BY REIE'LACEMENT L/~NE MILE TYPE I FLEX BASE 2.025 TNS $ 18,~.-65,50 CHIPS~=AL .. ~867 SY $ 12,320.70 LABOR & EQUIPMENT $ 10,093.45 TOTAL ..... $ ~0,67.9.,65 TYPE II FLEX BASE " 2025 TNS' $ 18,265.50.. ~i-:IIPSEAL 5867 SY '"$ 12,320.70 2" ASPHALT .... 675 TNS $ 22,140.00 LABOR & EQUIPMENT $ 17,399.6~ T.O. TAL ...... $ 70,125.85 TYPE III 6" TRI~TED SUBGRADE ~2, TNS LIME $ 9';4'oo.oo 16" ASPHAI~' .... $ ' 61,863.75 EQUIPMENT & LABOR ...... $ 23,517.04 CURB PER LANE MILE *ONE SIDE ONLY $ 42,768.06 TOTAL $ " 137,._5.48.79 TYPE IV 6" TREATED SUBGP~bE 94 TNS 'LIME $ ..9,400.00 6" ASPHALT 3239 TN $ 98,93.3..12 EQUIPM"ENT & LABOR .... $ 35,749.93 CURB PER LANE MILE *ONi= SIDE ONLY $ 42,768.00 TOTAL ...... I $ ' 186,851.05 I '~'0TE *THIS ESTIMATE DOES NOT INCLUDE DRAIN,~GE WORK 20 YEAR MAINTENANCE COST PER LANE MILE TYPE I $ " 2...2.,ooo.oo TYPE I! $ 26,..000.00 TYPE III $ 47,464.00 TYPE IV " $ 5.2,464.00 ALPHA TESTING, INC. 2209Wtscons~ $~,S~tet00 Dallas, Texas 75229 972/620-8911- 972~263-4937(Metro) FAX; 972/406-8023 July 22, 2004 C & P Engineering, Ltd. 1801 Gateway Boulevard, Suite 10I Richardson, Texas 75080 Attention: Mr. Dannie Cummings Re: Pavement Section Evaluation Four Typical Pavement Sections Denton, Texas ALPHA Report No. G04141A Submitted herein is an evaluation of four (4) typical pavement sections provided by the Client. This study has been authorized by Mr. Dannie Cummings on February 16, 2004 and performed in accordance with ALPHA Proposal No. GT 12166 dated January 26, 2004. The purpose of this evaluation is to determine the approximate number of Equivalent Single Axle Loads (ESAL's) expected for the following pavement sections. PAVEMENT SECTIONS The four (4) pavement sections provided by the Client for evaluation arc as follows: i. Six inch (6") Flex base with chip seal 2. Six inch (6") Flex base w/chip seal and a two inch asphalt overlay 3. Six inch (6") treated subgrade with six inches (6") asphalt 4. Six inch (6") treated subgrade with eight inches (8") asphalt PAVEMENT EVALUATION Based on our analyses using the 1993 AASHTO Guide for Design of Pavement Structures Design Charts and the AASHTO Pavement Design Program, the following engineering opinions and conclusions have been developed based on the above referenced pavement sections. If project criteria changes our office should conduct a review to determine if modifications in the opinions and conclusions are required. Report No. G04141A Per the AASHTO 1993 Design Guidelines the following design parameters were used in analyses of the pavement sections. Reliability- 50 percent (Local Unpaved Road - Section 1) 75 percent (Local Paved Road - Sections 2-4) Total Standard Deviation - 0.45 PSI Loss - Change in Serviceability - 2.0 Roadbed Soil Resilient Modulus (Untreated Subgrade) - 5,000 psi Roadbed Soil Resilient Modulus (6" Lime or Cement Treated Subgrade) N 10,000 psi The design structural number for each pavement section is determined in the following Table. The contribution of' the chip/seal coat is considered to be equivalent to 0.5 inches of asphalt surface course. The Flexible Base material is considered to be equivalent to TxDOT Item 247, Type A, Grade 1 or 2. Pavement Flexible Base Asphalt Asphalt Base Drainage Design Section Thickness, Surface Course, Coefficient Structural In ch es Course, Inch es Number (Layer Inches (Layer Coefficient) (Layer Coefficient) Coefficient) 1 6 (0,14) 0.5 (0.4) - I 1.04 2 6._(0,.!4_) 2 (0.4) - 1 1.64 3 2 (0.4) .. 4 (.0...35) 1 2.20 4 ._ 3 (0.4) 5 (0.35) 1 2.95 Using the above referenced data, the estimated total I8-Kip ESAL's for each referenced pavement section are provided in the following Table. Estimated Total 18-Kip Pavement Resilient Equivalent Single Load Section Modulus, Design Structural Applications Number AASHTO Psi AASHTO Program 1993 Design Guide 1 5,0.0.9 .... 0.8'4 1,600 .... 2 5,000 1.64 8,700 .... 3 10,000 2.20 246,400 250,000 4.... 10,000 2.95 1,544,200 1,600.,000 ALPHA Report No. G04141A AXLE LOAD EQUIVALENCY FACTORS The following axle load equivalency factors are provided for five typical design trucks as provided by the Client. These factors are based on information provided in Tables D.1 and D.2 of the 1993 AASHTO Guide for Design of Pavement Structures. The following factors assume a minimum pavement Structural Number of 2. Total Truck Total NUmber of Axle Load Load, Axles Equivalency Kips Factor 20 5 0.09 35 5 0.13 50 $ 0.32 80 $ 2.32 84 5 2.94 100 5 6.90 Supporting data, calculations, computer program results and design charts are attached to this report. ALPHA TESTING, INC. appreciates the opportunity to be of service on this project. If we can be of further assistance, please contact our office. HVA/BAP/har Copies:' (2) Client Attachments Sincerely yours, ALPHA TESTING, INC. Harsha Addula Project Manager -~'~¢' J.~ ~ ! ""--~'---'----' .~'~ ,-.2". ~,' ..... P.E. 4'." ".., Manager o f Engineering S ervic~...t~ ........ ; ............. '~':...,., ' ~ BRIAN A. POWELL ~,...~ ........................ ~...~ ~,'?d'. 83992 ,,',~'. ,.~ ,'.,, 2 ALPHA Report No. G0414lA Pavement Section: Six (6") inch Flex base with chip seal Pavement Section: Six inch (6") Flex base w/chip seat and a hvo inch (2") asphalt m'crlay AASI-I'I"O Pavement I)csign Program Resulls ALPHA Report No. G04141A Pavement Section: Six inch (6") treated subgrade with six inches (6") asphalt AASHTO Pavement Design Program Results ,.,\,,\SI IT() 1993 I)csign Uhm'l Ibr Flcx iblc [>::tx cn'~cnts ALPHA Report No. G04141A Pavement Section: Six inch (6") treated subgrade with eight inches (8") asphalt AASHTO Pavement Design Program Results .,\,,\NI t'1'¢) 1993 I)esign ('h:u't Ii)r I:lcxiblt~ Pztvcmctat~ ESAL CALCULATIONS SCENARIO #2 - HAULED WATER Drilling: 100K 84K 50K 35K 20K (6.9)(4) = 27.60 (2.94) (70) = 205.80 (0.32)(63) = 20.16 (0.13)(70) = 9.10 (0.09)(63) = 5.67 Sub-Total 268.33 ESAL's Fracing: 80K 50K 35K 20K 80K 35K Operation: 80K 35K (2.32) (74) (0.32)(24) (0.13)(70) (0.09)(24) (2.32) (346) (0.13) (346) Sub-Total (2.32)(12) (0.13)(12) Sub-Total TOTAL 171.68 7.68 9.10 2.16 802.72 44.98 1,038.32 ESAL's 27.84 1.56 29.40 ESAL's 1,336.05 ESAL's JULY 20,2004 ESAL CALCULATIONS SCENARIO #1 - PIPED WATER Drilling: 100K 84K 50K 35K 20K (6.9)(4) = 27.60 (2.94) (70) = 205.80 (0.32)(63) = 20.16 (0.13)(70) = 9.10 (0.09)(63) = 5.67 Sub-Total = 268.33 ESAL's Fracing: 80K 50K 35K 20K Operation: 80K 35K (2.32) (74) = 171.68 (0.32) (24) = 7.68 (0.13)(70) = 9.10 (0.09)(24) = 2.16 Sub-Total = 190.62 ESAL's (2.32) (12) = 27.84 (0.13) (12) = 1.56 Sub-Total TOTAL = 29.40 ESAL's = 488.35 ESAL's JULY 20, 2004 ROAD MAINTENANCE AGREEMENT This Road Maintenance Agreement ("Agreement"), is made and entered into on this the day of , 2003, by and between the Town of Flower Mound, Texas ("Town"'), a Texas home rule municipality, and ("Corporation") for the repair of certain streets and/or roadways maintained in whole or in part by the Town of Flower Mound, Texas, as more fully described herein. WHEREAS, the Town had adopted regulations and permitting requirements to reasonably govern oil and natural gas wells, oil and natural gas exploration, and oil and natural gas operations within the jurisdiction of the Town; and WHEREAS, Corporation is in the business, of drilling oil and/or gas wells and, in connection therewith, shall be engaged in oil and/or gas well drilling and production activities on truck routes on roadways maintained in whole or in part by the Town of Flower Mound, as shown on Corporation's Transportation Route Map submitted to the Town pursuant to Section 34-421(d)(3) of the Town's Code of Ordinances; and WHEREAS, the nature of heavy vehicular traffic during oil and natural gas well development (drilling) and post-production well stimulation (fracing) activities wilt exceed the normal and anticipated use of the public roadways within the Town's corporate limits; and WHEREAS, many of the Town's public roadways are not designed to support heavy vehicle loadings and are highly susceptible to increased deterioration rates due to heavy vehicular traffic associated with oil and gas well drilling and production activities; and WHEREAS, the condition of a road segment decreases in quality with heavy vehicular traffic, and heavy equipment loads produce greater amounts of road damage, which in turn, increases overall maintenance oversight, repair, and replacement costs to the roadways, in connection with Corporation's oil and/or gas well drilling and production activities; and WHEREAS, the Town and Corporation, for the mutual consideration hereinafter stated, desire to enter into an Agreement for Corporation to pay to the Town a designated fee for the Town to temporarily and/or permanently repair said roadways, as necessary, for the duration of the term of this Agreement in consideration of Corporation's use of said roadways for the purpose of the activities described hereinabove. NOW, THEREFORE, IT IS AGREED THAT: ARTICLE 1. Exhibit 4 REPAIR OBLiGATiON Corporation agrees to pay to the Town .a designated road maintenance fee ("fee"), as identified and enumerated in Article 3 of this Agreement, for the sole purpose of repairing damage, excluding ordinary wear and tear, to truck routes as identified on an approved Transportation Route Map, Exhibit attached hereto and hereby incorporated by reference, caused by or '~elated to, motor vehicle operations by Corporation, its contractors, subcontractors, employees, agents, or representatives in connection with activities authorized by the oil, gas, or combined well permit issued by the Town. This obligation to pay all required fees shall continue during the term of this Agreement. Corporation shall notify the Town's oi! and gas inspector in writing within five (5) business days when oil and/or gas well drilling, well stimulation activities ("fracing"), or reworking operations are complete so that the Town's Public Works Division can determine what repairs, if any, are required to road routes identified on the Transportation Route Map. Pursuant to this Agreement, the Town,, after receiving all applicable fees from Corporation, and issuance of an oil, gas, or combined well permit, shall take full responsibility for the repair to damaged roadways when, in the Town's determination, such damage is caused by motor vehicle activities of the Corporation, due to normal and anticipated operations related to. the development, production, and/or maintenance of oil and/or natural gas wells, including all associated activities. During the term of this Agreement, Corporation shall periodically inspect said roadways during drilling, fracture stimulation, or reworking of the oi! and/or gas well to determine whether any damage has occurred as a result of 'Corporation's activities. Upon, discovery of damage by the Corporation, the Corporation will have forty-eight (48) hours to contact the Town oil and gas inspector in writing regarding the nature and extent to any identified damage that has occurred as a result of Corporation's activities and operations. Any work requiring interruption of motor vehicle traffic shall require prior submittal and approval by the Town Engineer of a Traffic Control Plan in accordance with the Texas Manual on Uniform Traffic Control Devices, as amended. ARTICLE 2. TERM OF AGREEMENT This Agreement shall commence upon the date indicated above and shall continue in full force and effect until Corporation's oil, gas, or combined well permit issued by the Town has expired, has been terminated, or until the Corporation has permanently discontinued the activities upon the roadways., as described hereinabove, whichever is Page 2 later. Corporation's obligation to repair the roadways shal~ terminate in acoordance with the expiration or termination of the oil, gas, or combined well permit issued by the Town or if the Corporation has appropriately abandoned said w,eli(s) in accordance with the requirements of Section 34-430, Plugged and Abandoned Wells, of the Town's Code ,of Ordinances, as amended. ARTICLE 3, ROAD MAINTENANCE FEE The Road Maintenance Fee shall be calculated using the following method prepared by the Town: All road segments identified on the Transportation Route Map, Exhibit , attached hereto and hereby incorporated by reference, shall be used in calculating the total requ red Road Maintenance Fee. Each separate segment of the road route shall be individually calculated; and added, together to provide for the 'total Road Maintenance Fee required. The Paving ,Coefficient Index (PCl) methodology, which is a standar,d street rating system, shall be used by the Town to calculate the fee per each road segment, as 'follows: The PCI shall use the, following criteria and corresponding weighting factors toi determine the PCI' Cracking 20% 2. Sub Base 20% 3.. Drainage 15% 4. Surface Condition 25% 5. Disto~ion 15% 6. Ride Quality 5% ii, Each criterion, her.einabove stated, shall receive a ranking coefficient on a scale ranging from one (1), constituting the poorest condition, t,o five (5), representing the best condition. iii. The resultant ranking coefficient for each criterion shall be multiplied by the oorrespoinding weighting factor set forth above, the total of which is then multiplied by a constant factor of ~enty Page 3 (20), with the resultant number constituting the PCI rating for said road segment, ranging in a scale of zero (0) to one-hundred (100). d. A condition classification shall b.e applied to each road segment as determined from said roadway's PCI rating, as follows: i. Excellent 80-t00 PCI ii. Good 70-79 POi iii. Fair 60-68 PCI iv. Poor Below 60 PCI e. The following fee structure shall be applied to each road segment condition classification to determine the projected replacement cost due to motor vehicle operations and activities related to the oil and/or natural gas exploration, development, production, and abandonment: i. Excellent t0% of projected replacement cost ii. Good 15% of projected replacement cost iii. Fair 20% of projected replacement cost iv. Poor 25% of projected replacement cost f. Replacement costs for asphalt and/or concrete road segments shall be determined from current fair market va!ue cost per square yard of road surface material, including installation and labor. g. The Town shall provide as an attachment to this Agreement, a copy of all calculations directly related to the PCI, condition classification, and projected replacement cost, which attachment is incorporated herein by this reference. h. The Town's investigation and determination of any and all aspects of the above referenced methodologies constitute generally accepted practices of road replacement, repair, and maintenance professionals undertaking simi!ar project evaluations at the same time, and in the same geographical area. The Town observes the same degree of care and skill generally exercised by professionals under similar circumstances and conditions. Page 4 The Road Maintenance Fee, hereinafter stated and in compliance with all applicable methodologies hereinabove enumerated, shall be an amount of no , as determined from the following ratings:: more than $ a, Road Segment PCI rating: 1. Cracking Criterion Rating: 2, Sub Base Criterion Rating: 3. Drainage Criterion Rating: 4. Surface Condition Criterion Rating: 5. Distortion Criterion Rating: 6. Ride Quality Criterion Rating: ii. Road Segment Condition Classification: iii. Road Segment Replacement Fee: b. Road Segment i. PCI rating: 1. Cracking Criterion Rating: 2. Sub Base Criterion Rating: 3. Drainage Criterion Rating: 4, Surface Condition Criterion Rating: 5. Distortion Criterion Rating: 6. Ride Quality Criterion Rating: ii. Road Segment Condition Classification: iii. Road Segment Replacement Fee: c, Total Road Maintenance Fee: Page 5 The Road Maintenance Fee is required to be paid in full at the time of an oil, natural gas, or combined wel~ permit application submittal to the Town's oil and natural gas inspector. Said permit application shall be considered administratively incomplete until this Agreement is executed, Road Maintenance Fee payment received, and both are on file with the Town's oil and natural gas inspector. ARTICLE 4. M~SCELLANEOUS PROVISIONS Corporation understands and agrees that Corporation, its employees, servants, agents, and representatives shall at no time represent themselves to be employees, servants, agents, and/or representatives of the Town. Corporation shall furnish all equipment and materials necessary to perform hereunder and shall at all times be acting as an independent contractor. By entering into this Agreement, the Town does not waive, nor shall it be deemed to waive, any immunity or defense that would otherwise be available to it against claims arising by third parties. ¸3. Corporation agrees that the Road Maintenance Fee provided hereunder is not an impact fee under Chapter 395 of the Texas Local Government Code, and expressly agrees that this Road Maintenance Fee is not a charge or assessment imposed by a political subdivision against new development in order to generate revenue for funding or recouping the costs of capital improvements or facility expansions necessitated by and attributable to new development. Further, Corporation agrees that the Road Maintenance Fee provided hereunder will not be credited to any subsequent roadway impact fees if the subject property is subdivided or developed in the future. ARTICLE 5, FORCE !VlAJ EURE The performance of this Agreement shall be subject to .events of force majeure. Events of force maieure shall mean any contingency or cause beyond the reasonable control of a party including, without limitation, acts of God or the public enemy, war, riot, civil commotion, insurrection, government or de facto government action (unless caused by acts or omissions of the party), fires, explosions, rain or other weather delays, floods, strikes, slowdowns or work stoppages. ARTICLE 6, ASSIGNABiLiTY/CONSENT Except as otherwise provided herein, or except as may be hereafter determined by the parties, no party to this Agreement may se!l, assign, or transfer its interest in this Agreement, or any of its right, duties, or obligations hereunder, without the prior written consent of the other party. Whenever the consent or the approval of a party is required herein, such party shall not unreasonably withhold, delay, or deny such consent or Page: 6 approval. Notwithstanding the foregoing, the Corporation may assign this Agreement if the oil, gas, or combined well permit issued by the Town has been assigned in accordance with the Oil and Natural Gas Welt Drilling and Operations Ordinance, Article VII of Chapter 34, "Environment," of the Code of Ordinances of The. Town of Flower Mound, Texas. ARTICLE 7. NOTICE Any notice given by one party to the other in connection with this Agreement shall be in writing and shall be by personal delivery or sent by registered mail or certified mail; or by U.S. Mail, return receipt requested, postage prepaid; to: TOWN: Oil & Gas Inspector Town of Flower Mound, Texas 2121 Cross Timbers Flower Mound, Texas 75028 CORPORATION: Notice shall be deemed to have been received on the date of receipt as shown on the return receipt or other written evidence of receipt. ARTICLE 8. MODIFICATION No waiver or modification, of this Agreement: or of any covenant, condition, 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 and duly executed. The parties further agree that the provisions of this Article will not be waived unless as herein set forth. ARTICLE 9, SAVINGSISEVERAB1LWY In the event that any one or more of the provisions hereof contained in this Agreement shall for any reason be held by a court of competent jurisdiction to be invalid, iltegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not effect the other provisions, and the Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained in this Agreement, Page 7 ARTI C LE '10, GOVERNING LAW AND VENUE This Agreement shall be construed under and governed by, and in accordance with the laws of the State of Texas, and all obligations of the parties hereto, created by this Agreement are to be performed in Denton County, Texas. Venue of any suit or cause of action under this Agreement shall lie exclusively in Denton County, Texas. ARTICLE 1 t. ENTIRE AGREEMENT This Agreement and the exhibits attached thereto, constitute the entire agreement among the parties hereto with respect to the subject matter hereof, and supersede any prior understandings or written or oral agreements between the parties with respect to the subject matter of this Agreement. No amendment, modification, cancellation or alteration of the terms of this Agreement shall be binding on any party hereto unless the same is in writing, dated subsequent to the date hereof, and is duly authorized and executed by the parties hereto. ARTICLE '!2. WAIVER OF TERMS AND CONDiTiONS The failure of the Town to enforce or insist upon compliance with any of the terms or conditions of this Agreement shall not constitute a general waiver or relinquishment of any such terms or conditions, but the same shall be and remain at all times in full force and effect. ARTICLE CAPTIONS The captions contained in this Agreement are for informational purposes only and shall not in any way affect the substantive terms or conditions of this Agreement. ARTICLE 14. COUNTERPARTS This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and constitute one and the same instrument. IN WITNESS WHEREOF, the parties do hereby affix their signatures and enter into this Agreement as of the day of ,2003.. TOWN OF FLOWER MOUND, TEXAS Page 8 ATTEST: By: MAYOR PAULA J. LAWRENCE, TRMC, CMC, TOWN SECRETARY APPROVED AS. TO LEGAL FORM: TERRENCE S. WELCH, TOWN ATTORNEY STATE OF TEXAS § § COUNTYOF DENTON § Before me, personally appeared of ., the undersigned notary public, on this day , the Town of Flower Mound, Texas. known to me; proved to me on the oath of .; or proved to me through his/her current {description of identification card or other document issued by the federal government or any state government that contains the photograph and signature of the acknowledging person to be the person whose name acknowledged to me that he/she consideration therein expressed. is subscribed to the foregoing instrument, and executed that instrument for the purposes and Given under my hand and seal of office this __ day of .,2003. Page 9 Notary Public CORPORATION By: (Printed Name and Title) Texas Rail Road Commission CORPORATION Number: STATE OF TEXAS COUNTYOF DENTON Before me, personal!y appeared of (Corporation), ., the undersigned notary public, on this day , the known to me; proved to me on the oath of ; or proved to me through his/her current {description of identification card or other document issued by the federal government or any state government that contains the photograph and signature of the acknowledging person Page 10 to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he/she executed that instrument for the purposes and consideration therein expressed. Given under my hand and seal of office this __ day of .,2003. Notary Public Page 11 0 0 0 0 0 0 0 '~- 0 '~-- 0 0 0 O0 O0 AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: CM/DCM/ACM: December 7, 2004 Planning Department Jon Fortune, Assistant City Manager SUBJECT - Si03-0024 (Gas Well Amendments) Receive a report, hold a discussion and give staff direction regarding the impact of gas well development on near by (adjacent) residential properties. BACKGROUND At a recent Planning and Zoning public hearing on a gas well Specific Use Permit (SUP), at the last Planning and Zoning Commissions quarterly review of the development code and at a subsequent City Council meeting, residents expressed concerns about gas wells near residential properties. Those issues included: · Noise · Visual impact of the well site (debris, trash and mud pits) · Traffic Summary of Existing Regulations: The drilling and production of gas within the corporate limits of the City is permitted by right within the Rural Residential (RD-5), Rural Commercial (RC), Neighborhood Residential 1 (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-i), industrial Center Employment (lC-E) and industrial Center General (lC-G) Zoning Districts provided that: No residential structure or place of assembly, institution or school exists no closer than five hundred feet (500') from the wellhead, or within a previously platted residential subdivision where one or more lots have structures (unless 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 Subchapter 22. A Specific Use Permit is required if the well head is closer than 500' to a residential structure (and the property owner does not "sign-off") or place of assembly, institution or school or within the Neighborhood Residential 3 (NR-3), Neighborhood Residential 4 (NR-4), Neighborhood Residential 6 (NR-6), Neighborhood Residential Mixed Use 12 (NRMU-12), Neighborhood Residential Mixed Use (NRMU), Downtown Residential 1 (DR-l), Downtown Residential 2 (DR-2), Downtown Commercial Neighborhood (DC-N), Downtown Commercial General (DC- G), Community Mixed Use General (CM-G), Community Mixed Use Employment (CM-E), Regional Center Residential 1 (RCR-1) and Regional Center Residential 2 (RCR-2), zoning districts. The regulations also require screening (6' high solid screen fence) of all well heads, storage tanks, separation facilities or other mechanical equipment located within 500' of a residential property. Subchapter 22 also contains a number of regulations that are intended to mitigate the impact of the production of gas wells on adjacent residential properties. They include: · Adequate nuisance prevention measures shall be taken to prevent or control offensive odor, fumes, dust, noise and vibration. · 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. · 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 pumping gas wells. · 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. · A Hazardous Materials Management Plan shall be on file with the Fire Marshal. · Fencing shall be installed to restrict access to a reserve pit or other open water reservoir utilized in gas well drilling operation at a drill site within the corporate limits of the City. · 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 supervision has ceased, all drilling features including storage pits shall be fenced to prevent access. · Fences located on operation sites shall remain locked at all times when no one is present. · The drill site shall at all times be kept free of debris, pools of water or other liquids, contaminated soil, weeds, brush, trash or other waste material outside the drill site within a radius of one hundred (100) feet around any separators, tanks and producing wells within the leased property. · The pit and its contents shall be removed from the premises within ninety (90) days after completion of the well; provided, however, that the permittee may apply for a 90 day extension from such requirements based on showing of good cause, necessity to maintain said pit, inclement weather, or other factors. The City may designate a period of time shorter than the 90-day extension set out herein. Alternatives: Any or all of the existing regulations could be enhanced to provide additional protection to adjacent residential properties. Possible enhancements include, but are not limited to: · Increasing the 500' distance requirement for an SUP. · Not allow well heads within X' of a residential property line. · Require a SUP if a well head is within X' of a residential property (instead of a residential structure). · improving decibel levels performance near residential properties, improved mufflers, using electric motors or installing sound barriers, could accomplish this. Another alternative is to allow higher decibel levels only during fracing and less during the routine drilling operation. Additional regulations that could also be considered include: · Requiring access to a site from a State Road or approved Truck Route if either is adjacent to the site. This would limit the amount of traffic on local roads. · Increase the number of inspections per site. An analysis of what other cities in the Barnett Shale are doing will be in the Legal Department status report. ESTIMATED PROJECT SCHEDULE N/A PRIOR ACTION/REVIEW March 2, 2004 - Ordinance 2004-059 approved amending Subchapters 3 (Procedures), 16 (Subdivisions), 17 (ESA's) and 22 (Gas Well Drilling and Production) of the Development Code related to amendments to gas well regulations. FISCAL INFORMATION N/A ATTACHMENTS None Prepared By: ~rry R,,o~hhartl RLA, Assistant~' Director of Planning and Development Respectfully submitted: Kelly Ca,enter, AICP Director of Planning and Development AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: ACM: December 7, 2004 Customer Service Howard Martin, Utilities 349-8232 SUBJECT Receive a report, hold a discussion and consider approval of enhancemems to the currem City of DeNon Utility Bill. BACKGROUND On January 6, 2004, Customer Service began producing a new utility bill for the City of DeNon citizens. On December 29, 2003, City Council was provided a memorandum imroducing the new bill. Since the inception, we have received several requests for additional enhancemems and modifications for better ease of interpretation. OPTIONS 1. Give staff approval to move forward with additional enhancements. Implementation of the new bill will occur with the start of cycle 1 in January, 2005. RECOMMENDATION We recommend approval of the additional enhancemems and modifications. PRIOR ACTION/REVIEW (Council, Boards, Commissions) On November 8, 2004 and, on November 22, 2004, a bill update was presented to the board for discussion and direction. Clarifications and changes were discussed and implememed with a recommendation to gain final approval from City Council. FISCAL INFORMATION Cost associated with the enhancements and modifications total $3,200. The 2004-2005 budgets have allowed for expenditures up to $25,500 in accoum 630800.7879. BID INFORMATION Not Applicable EXHIBITS 1. Draft copy of updated new Utility bill 2. PUB Minutes Respectfully submitted: Charles C. Atkinson Utility/Customer Service Manager Account 1190147-03 Cycle 1 Service address Last payment -207,06 Last payment date 08/18/04 Service period 07/29/2004-08/30/2004 Billing date 09/03/2004 Billing days 32 Due Date 09/21/04 Usage History 2000 1500 1000 500 0 ttt-.tttt-- J F M A M J J A S O N D Electric Previous balance 219.70 Late payment charge 10.00 Pay within 5 days of billing date to avoid disconnection 229.70 Current month's balance due by 09/21/2004 213.26 Total amount due 442.96 For more information, contact Utilities Customer Service at 940.349.8700 or visit www.dentonutilities.com. To schedule a water audit, call 940.349.7322. To schedule an energy audit, call 940.349.7137. Meter Rate Previous Current Multi Usage Amount 0000060090 R21 00027806 00026961 1 1155 Electric 131.96 Electric total 131.96 J F M A M J J A S O N D Water **TRASH BAG DISTRIBUTION IS OCT 4-8 AT NORTH LAKES PARK AND SOUTH LAKES PARK FROM NOON TO 7 PM. BRING THIS RECEIPT TO COLLECT BAGS.*** Our offices will be closed on Monday, October 11, 2004 for Staff Development. We will be closed for normal business hours on Tuesday, October 12, 2004. Meter Rate Previous Current Multi Usage Amount 0000009613 WR.75 00003296 00003271 100 65005 Water 27.09 Wastewater 25.07 Drainage 1.07 Water total 53.23 Residential Solid Waste 18.94 Residential Recycling 3.19 Solid Waste total 22.13 Interest charge 2.16 Sales Tax 3.76 Total 5.94 Keep this portion of your bill for your records. 0000419093902000000140748 -- Enroll in P-L-U-S ONE. Please indicate a monthly amount if you would like to assist Iow-income families in paying their utilities. Please call to be removed from the program. -- Enroll in Keep Denton Beautiful program. Please indicate a monthly amount if you would like to promote education and a diverse urban forest. Please call to be removed from the program. Customer #(15113) NAME ADDRESS CITY ST 12345-6789 Previous balance due within five (5) days of billing date. Account 1190147-03 Service address Previous balance to avoid disconnection 229.70 Current amount due by 09121104 213.26 Total amount due 442.96 Late payment charge ($10) assessed after due date. II ,,~1 ,~1 ....... il, Il ...... II Il,, CITY OF DENTON PO BOX 961082 FT WORTH TX 76161-0082 Please return this portion and payment in the envelope provided. Please make your check payable to DENTON MUNICIPAL UTILITIES. To pay in person: Denton Municipal Utilities, 601 E. Hickory St., Suite F, Denton, TX 76205, or City Hall in the Mall in the Golden Triangle Mall, Ph: 940.349.8700 Metro: 972.434.2529 TDD: 800.735.2959 ADA/EOE/ADEA www.cityofdenton.cOmExHiBiT 1 ~ 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 CITY OF DENTON PUBLIC UTILITIES BOARD MINUTES November 22, 2004 DRAFT After determining that a quorum of the Public Utilities Board of the City of Denton, Texas was present, the Public Utilities Board convened into an Open Meeting on Monday, November 22, 2004, at 9:00 a.m. in the Solid Waste Conference Room, City of Demon Service Cemer, 1504 Mayhill Road, Denton, Texas. PRESENT: Bob Bland, Dick Smith, Phil Gallivan, Charldean Newell EX OFFICIO MEMBERS Michael Conduff, City Manager Howard Martin, ACM/Utilities ARRIVED LATE: John Baines, Bill Cheek and George Hopkins 5) Receive a report, hold a discussion and give staff direction regarding the update of the City of Denton Utility Bill. Charles Atkinson, Customer Service Manager Presented this item. Atkinson presented an updated copy of a Utility bill with the recommend changes from the Board. Newell made a suggestion to shade the P-L-U-S One section on the bill in an attempt to draw more attention and increase contributions. Atkinson reported that Utility Bill changes are schedule for Council approval at their December 7th meeting. The Board was pleased with the final layout of the bill and directed staff to present the layout changes to City Council Page 1 of l EXHIBIT 2 AGENDA INFORMATION SHEET AGENDA DATE: December 7, 2004 DEPARTMENT: City Manager's Office CM/DCM/ACM: Mike Conduff, City Manager SUBJECT Hold a discussion and give staff direction regarding the 2005 Council meeting schedule. BACKGROUND Looking forward to the 2005 calendar year, staff has worked to provide you with adequate time to discuss the issues you have brought forward as needing Council attention. It is our goal not only to schedule those items you have already listed as being your priorities for discussion, but to identify ample time through out the year outside the Council work sessions and business meetings the first and third Tuesdays of the month, per charter provisions, to address council requests as you bring them to our attention. OPTIONS To accommodate the growing number of topics needing discussion, council might consider reserving the 4~h Tuesday of each month for a standing council luncheon. In the immediate future, we seek your recommendation on rescheduling the February 15~h Council work session and business meeting, as Denton County Days will also be concluding in Austin the morning of February 15, 2005. Prepared By: Pamela Rambo-Estill Assistant to the City Manager 2005 CITY COUNCIL MEETING DATES January 4 January 11 January 18 January 25 Work/Regular Session 2nd Tuesday Session Work/Regular Session No Meeting USCM, Washington, DC, 1/17-19 February February February February 1 8 15 22 Work/Regular Session 2nd Tuesday Session Work/Regular Session No Meeting AMCC, Austin, 2/12-13 Denton County Days, 2/14-15 March 1 March 8 March 15 March 22 March 29 Work/Regular Session No Meeting No Meeting SC Work/Regular Session No Meeting NLC, Washington, DC, 3/11-15 Spring Break, 3/14-18 April 5 ^pri112 April l9 April26 Work/Regular Session 2nd Tuesday Session Work/Regular Session No Meeting May May May May May 3 10 17 24 31 Work/Regular Session 2nd Tuesday Session Election Meeting SC Work/Regular Session No Meeting Installation of CC Members Only June June June June 7 14 21 28 Work/Regular Session 2nd Tuesday Session Work/Regular Session No Meeting TCMA, Galveston, 6/10-13 USCM, Chicago, IL, 6/10-14 5 12 19 26 No Meeting No Meeting Work/Regular Session SC Work/Regular Session Council Recess Council Recess August 2 August 4 August 9 August 16 August 23 August 30 Work/Regular Session Budget Workshop 2nd Tuesday Session Work/Regular Session No Meeting No Meeting September 6 September 13 September 20 September 27 Work/Regular Session 2nd Tuesday Session Work/Regular Session No Meeting ICMA, Minneapolis, MN, 9/25-28 October 4 October 11 October 18 October 25 November 1 November 8 November 15 November 22 November 29 December 6 December 13 December 20 December 27 2005 CITY COUNCIL MEETING DATES Work/Regular Session 2nd Tuesday Session Work/Regular Session No Meeting TML, Grapevine, 10/26-29 Work/Regular Session 2nd Tuesday Session Work/Regular Session No Meeting No Meeting Thanksgiving Holiday, 11/24-25 Work/Regular Session 2nd Tuesday Session No Meeting No Meeting NLC, Charlotte, NC, 12/6-10 Christmas Holiday, 12/23 & 26 S:\Lists\2005 CC Mtg Dates.doc [Revised 11/30/04] 0 o o CITY OF DENTON CITY COUNCIL MINUTES November 2, 2004 After determining that a quorum was present, the City Council convened in a Work Session on Tuesday, November 2, 2004 at 4:00 p.m. in the Council Work Session Room at City Hall. PRESENT: Mayor Brock; Mayor Pro Tem McNeill; Council Members Kamp, Montgomery, Mulroy, Redmon and Thomson. ABSENT: None 1. The Council received a report, held a discussion, and gave staff direction regarding the recommendations from the Citizens Capital Improvement Advisory Committee for the 2005- 2009 Capital Improvement Program. Mark Burroughs, Chair-CIP Committee, and Randy Robinson, Co-Chair-CIP Committee, presented a handout representing the committee's recommendations. The committee was recommending three main categories of improvements; transportation, parks and recreation, and community development, ideally spread over five years. In order to provide flexibility for timing and to maximize leverage of local dollars, the top priorities in each category were listed and the committee encouraged the Council to use its best judgment over the life of the CIP. The committee acknowledged that based on the timing of these improvements, inflation, and the growth of the local tax base, up to a four-cent tax rate increase may be necessary. The committee felt the projects listed were absolute imperatives for the quality of life for the citizens. The wording on the ballot should provide the most flexibility possible. Council discussion included: An Oversight Committee would make recommendations on any shift in the priority of projects during the life of the bond program. The original committee presentation had indicated a three and a quarter cent tax increase would be needed to do all of the projects-what kind of increase would be needed with inflation factored in - an estimate was about 4 cents. It appeared that the categories had been reorganized from the original presentation of projects with an inflation factor added. Which of the proposed projects would require some additional staffing - staffing along with operation and maintenance costs would have to be considered. The proposed package was diverse with benefits for all citizens. The inflation factor, based on historical data, appeared to be correct. Leveraging state and federal money would allow for additional flexibility with the program. Randy Robinson, Co-Chair, CIP Committee, stated that a four-cent tax increase might not be needed over the life of the proposed CIP. Growth assumptions of the property tax would need to be factored into the equation. 2. The Council discussed and considered legislative priorities to be presented by the City of Denton at the Denton County Legislative Luncheon, including but not limited to state initiatives that impact city finances, regional transportation, and Texas Municipal League Resolutions passed at the Texas Municipal League Annual Conference. City of DeNon City Council Minutes November 2, 2004 Page 2 Dottie Palumbo, Senior Assistant Attorney, presented information regarding the propose issues, reviewing the categories and definitions of the proposed legislation. The City's legislative issues included opposition to state initiatives that restricted a city's ability to fund necessary local services; support for legislation that repealed the drainage exemption for state entities; and support for legislation that would permit cities to exceed the two-percent local sales tax cap for transportation revenue purposes. The City would continue to work with the Chamber and DISD on join cooperative issues. 3. Staff responded to requests for clarification of consent agenda items listed on the consent agenda for the regular meeting of November 2, 2004. Mayor Pro Tem McNeill requested a rewording of a bullet point on page 2 of the October 13, 2004 minutes. He felt the bullet point regarding fencing would be clearer if it stated, "staff would readdress this issue". 1. The Council considered the following in Closed Meeting: mo Consultation with Attorney -- Under TEXAS GOVERNMENT CODE Section 551.071. Considered and discussed status of litigation styled Ugwuh v. City of Denton, Cause No. 2002-41462-362, curreNly pending in the 362nd District Court of Denton County, Texas. Considered and discussed status of litigation styled Robinson v. City of Denton, Cause No. 2003-60130-393, curreNly pending in the 211th District Court of Denton County, Texas. o Consultation with the City's attorneys on legal matters arising out of construction of Aquatic Center facilities under the Interlocal Agreement dated September 15, 2001 between the City of Denton and the Denton Independent School District, where to discuss such matters in public would conflict with the duty of the attorneys to the City Council and City under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas. Bo Deliberations regarding real property - Under TEXAS GOVERNMENT CODE Section 551.072, Consultation with Attorney - Under TEXAS GOVERNMENT CODE Section 551.071. Deliberated the value of real property iNerests for the fee acquisition of approximately 1.0578 acres being a part of the Gideon Walker Survey, Abstract No. 1330, located on the east side of Mayhill Road between Spencer Road and Foster Road, DeNon, Texas, which is being acquired for a public purpose, and receive legal advice from the City Attorney or his staff concerning legal issues regarding the acquisition and donation of such real property iNerests. City of DeNon City Council Minutes November 2, 2004 Page 3 Discussed and deliberated the use and value of certain real property and appurtenances, thereto, consisting of street right-of-way all owned by the City of DeNon, Texas, being situated throughout the City of DeNon, Texas; relating to Verizon's fiber optic operations within the City of Denton, Texas and the receipt of legal advice from the City's attorneys on matters in which their professional responsibility to the City Council regarding requires private legal consultation. Deliberations regarding economic development negotiations---Under TEXAS GOVERNMENT CODE Section 551.087, regarding real property - Under TEXAS GOVERNMENT CODE Section 551.072 and Consultation with Attorney - Under TEXAS GOVERNMENT CODE Section 551.071. Deliberated and discussed 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 relating to a proposed lease with Jet Works Aviation for a hangar development located at the Denton Municipal Airport east of Taxiway Alpha on the expanded north terminal apron. The deliberation includes the leasing and value of such real property imerests. It also may include consultation with the City Attorney or his staff concerning legal issues regarding the leasing of such real property imerests. Regular Meeting of the City of DeNon City Council on Tuesday, November 2, 2004 at 6:30 p.m. in the Council Chambers at City Hall. 1. PLEDGE OF ALLEGIANCE The Council and members of the audience recited the Pledge of Allegiance to the U. S. and Texas flags. 2. PROCLAMATIONS/PRESENTATIONS A. Proclamations/Awards Mayor Brock presemed proclamations for: City of Demon GIS Day Texas Recycles Day Mike Conduff-congratulations for ICMA award B. Recognition of staff accomplishments City Manager Conduffpresemed staff accomplishmems to Council. 3. CONSENT AGENDA Mayor Brock indicated that Item N had been pulled from consideration. City of DeNon City Council Minutes November 2, 2004 Page 4 Mayor Pro Tem McNeill requested Item I be pulled for separate consideration. Council Member Montgomery requested that Item D be pulled for separate consideration. Montgomery motioned, Thomson seconded to approve the Consent Agenda and accompanying ordinances and resolutions with the exception of Items D, N and I. On roll vote, Kamp "aye", McNeill "aye", Montgomery "aye", Mulroy "aye", Redmon "aye", Thomson "aye" and Mayor Brock "aye". Motion carried unanimously. Item D was considered. Council Member Montgomery left the meeting due to potential conflict of interest. Mulroy motioned, Kamp seconded to approve Item D. On roll vote, Kamp "aye", McNeill "aye", Mulroy "aye", Redmon "aye", Thomson "aye" and Mayor Brock "aye". Motion carried unanimously. Council Member Montgomery returned to the meeting. Item I was considered. Mayor Pro Tem McNeill stated that he had requested this item for separate consideration in order to inform citizens of further support by the Council for the police department. McNeill motioned, Mulroy seconded to approve Item I. On roll vote, Kamp "aye", McNeill "aye", Montgomery "aye", Mulroy "aye", Redmon "aye", Thomson "aye" and Mayor Brock "aye". Motion carried unanimously. 2004-335 - An ordinance of the City of DeNon, Texas approving an Imerlocal Cooperation Agreemem by and between the City of DeNon, Texas and the City of Oak Poim, Texas to provide temporary municipal clerk services; and providing an effective date. R2004-051 - A resolution by the City of DeNon, Texas, authorizing the City Manager to sign and submit an amendment to the 2004 Action Plan for Housing and Community Developmem submitted in June 2004 to the U.S. Departmem of Housing and Urban Development with appropriate certifications, as authorized and required by the Housing and Community Developmem Act of 1974, as amended, and the Affordable Housing Act of 1990, as amended; and providing for an effective date. 2004-336 - An ordinance of the City of DeNon, Texas authorizing an agreemem between the City of DeNon, Texas and the DeNon City-County Day School for professional childcare and preschool for low to moderate income families; finding an exemption from public bidding requiremem; providing for the expenditure of funds therefor; and providing for an effective date. City of DeNon City Council Minutes November 2, 2004 Page 5 Do 2004-337 - An ordinance of the City of DeNon, Texas authorizing an agreemem between the City of Denton, Texas and Denton County Friends of the Family for counseling and case management to victims of domestic violence for low to moderate income families; finding an exemption from public bidding requiremem; providing for the expenditure of funds therefor; and providing for an effective date. mo 2004-338 - An ordinance of the City of DeNon, Texas authorizing an agreemem between the City of Denton, Texas and Family Health Care Incorporated for prenatal services for low-income families; finding an exemption from public bidding requiremem; providing for the expenditure of funds therefor; and providing for an effective date. Fo R2004-052 - A resolution to declare intent to reimburse expenditures from the Motor Pool Fund with Certificates of Obligation so that vehicles approved in the 2004-05 Budget more fully described in the attachment to this resolution may be purchased; and providing an effective date. Go 2004-339 - An ordinance accepting competitive bids and awarding an annual comract for the purchase of Hand Tools and Miscellaneous Hardware; providing for the expenditure of funds therefor; and providing an effective date (Bid 3211 - Annual Contract for Hand Tools and Miscellaneous Hardware awarded to Denton Tool and Fastener in the estimated amoum of $35,000). Ho 2004-340 - An ordinance accepting competitive bids and awarding an annual contract for the purchase of Hot Mix Hot Lay Asphalt Concrete; providing for the expenditure of funds therefor; and providing an effective date (Bid 3221 - Annual Contract for Hot Mix Hot Lay Asphalt Concrete awarded to Jagoe Public Company in the estimated amoum of $1,000,000). 2004-341 - An ordinance accepting competitive bids by way of an Imerlocal Agreement with Tarrant County and awarding a contract for the purchase of police sedans; providing for the expenditure of funds therefor; and providing an effective date (File 3251 - imerlocal Agreemem for Police Sedans with Tarram County, contract awarded to Philpott Ford inc. in the amoum of $386,388). Jo 2004- 342 - An ordinance approving the expenditure of funds for the purchase of the renewal of annual support maintenance for Denton Municipal Electric's Supervisory Comrol and Data Acquisition System (SCADA) available from only one source in accordance with the provision for state law exempting such purchases from requirements of competitive bids; and providing an effective date (File 3246 - Renewal of SCADA Maimenance Agreemem awarded to Advanced Comrol Systems in the amoum of $31,967). Ko 2004-343 - An ordinance accepting competitive bids and awarding a comract for the purchase of a Pole Setting Machine for the Electric Distribution Department; and providing for the expenditure of funds therefor; and providing an effective date (Bid 3217 - Pole Setting Machine awarded to lowest responsible bidder, Altec industries, inc., in the amoum of $87,618). City of Demon City Council Minutes November 2, 2004 Page 6 Lo 2004-344 - An ordinance of the City of Demon authorizing the City Manager, or his designee, to execute on behalf of the City of Demon an acceptance of an offer from the Texas Department of Transportation relating to a grant for routine Airport Maintenance Program; authorizing the City Manager to expend funds provided for in the gram program; and declaring an effective date. (TxDOT Project No.: AM2005DNTON; and TxDOT CSJ No.: M518DNTON) Mo 2004-345 - An ordinance approving a commercial operator airport lease agreement between the City of Denton and Terrence Jarog on approximately 2,790 square feet of land at the Denton Municipal Airport; and providing an effective date. No Note: this item was pulled from consideration - an ordinance approving a commercial operator airport lease agreement between the City of Denton and Jet Works Aviation, Inc. at the Denton Municipal Airport; and providing an effective date. Oo Approved tax refunds for the following property taxes: Tax Name Reason Amount Year 2004-346 - An ordinance declaring a public necessity exists and finding that public welfare and convenience requires the taking and acquiring of an approximate 1.0578 acre tract or parcel of land with fee simple title vesting in the City of Demon, Texas, and said real property being located in the G. Walker Survey, Abstract Number 1330 in the City of Denton, Denton County, Texas and being a portion of a parcel of land conveyed to Rosa Lee Chavez by Deed recorded in Volume 676, Page 369 of the Deed Records of Demon County, Texas; authorizing the City Manager or his designee to make an offer to purchase the property for its just compensation, and if such offer is not accepted, authorizing the City Attorney, or his designee, to institute the necessary proceedings in condemnation in order to acquire the property necessary for the public purpose of municipal landfill facilities and improvemems, and other municipal purposes and declaring an effective date. Qo 2004-347 - An ordinance authorizing the City Manager or his designee to execute a Wire Crossing Agreemem with The Kansas City Southern Railway Company for an aerial wire crossing located at Mile Post 104.79, City of Denton, Denton County, Texas; authorizing the expenditure of funds therefor; and providing an effective date. Ro Approved the minutes of: October 4, 2004 October 5, 2004 October 12, 2004 October 13, 2004 City of Demon City Council Minutes November 2, 2004 Page 7 4. PUBLIC HEARINGS A. The Council held a public hearing, considered a recommendation from the Capital Improvements Committee, and gave staff direction. Mark Burroughs, Chair-CIP Committee, reviewed the process undertaken by the committee to reach its recommendation for Council. He reiterated the charge given the committee by the Council. The committee presented the recommendation with three categories of transportation, parks and recreation, and community developmem. Council discussed that any possible tax rate increase for the proposed projects would cover the next five years at a maximum of 4 ceres and might not even be required. Flexibility was a key issue to allow a future council to adapt the recommendations in order to leverage best usage of the dollars available. The Mayor opened the public hearing. The following individuals spoke during the public hearing: Randy Robinson, Co-Chair-CIP Committee, spoke in favor. He stated that many tough choices had to be made regarding recommendation of projects. Chuck Carpemer, Chamber of Commerce, spoke in favor. The Chamber was in support of the bond package. Darlene Mullenweg, 711 West Oak Street, Denton, 76201, spoke in favor. She suggested a better image for corridors such as emranceways, sidewalks, and a revitalization of older neighborhoods. George Young, 3822 Waterford Way, Demon, 76210, spoke in favor. He suggested looking at parks and recreation items for greater quality of life issues for Denton. Mayor Brock indicated that Commem Cards had been received from: Richard Huckaby, 924 Ridgecrest Circle, Demon, 76205 - in favor of the proposal. Pat Goble, 3901 Grant Parkway, Denton, 76208, in favor of the proposal. Charlice Kruger, 3841 Gram Parkway, Demon, 76208, in favor of the proposal. The Mayor closed the public hearing. B. The Council held a public hearing and considered adoption of an ordinance amending the Mobility Plan Componem of The Demon Plan revising the alignmem and changing the classification of Mayhill Road; and providing an effective date. The Planning & Zoning Commission recommended approval (7-0). Butch Jones, Regional Mobility Coordinator, stated that the proposed change to Mayhill Road was to make it a primary arterial. That designation would make it a six lane divided road between US380 and I35. The Texas Department of Transportation was also looking at designating this section of road as a farm-to-market road within the next few years. In order to meet those standards two alignment problems needed to be corrected. The Mayor opened the public hearing. City of Demon City Council Minutes November 2, 2004 Page 8 The following individuals spoke during the public hearing: Wilma Haggard, 1900 S. Mayhill Road, Demon, 76208 - spoke in opposition. Robert Donnelly, 3900 Quail Creek Road, Demon, 76208 - spoke in opposition Dean Stoler, ITS, available to answer questions regarding the traffic study on Loop 288. Frank Martino spoke in favor. Alan Bussell, Greg Edwards Engineering, questioned the mass transit connection and suggested looking at the Comprehensive Plan in relation to the proposal. Mayor Brock indicated Commem Cards had been received from: Lavilla and Terry Johnson, P.O. Box 2425, Sherman, 75091 - in favor of the proposal. Carl Janin, Mayhill/Mills, Demon - in favor of the proposal. Nick Zala, Mayhill & Mills, Demon - in favor of the proposal. Randall DesCamp, 551 N. Mayhill, Demon - in favor of the proposal. Additional speakers included: Janet Calhoun, 321 N. Mayhill Road, Denton - expressed concerned about the location of the road when expanded in relation to her home. The Mayor closed the public hearing. The following ordinance was considered: NO. 2004-348 AN ORDINANCE AMENDING THE MOBILITY PLAN COMPONENT OF THE DENTON PLAN TO REVISE THE ALIGNMENT AND CHANGE THE CLASSIFICATION OF MAYHILL ROAD; AND PROVIDING AN EFFECTIVE DATE. Redmon motioned, Kamp seconded to adopt the ordinance. On roll vote, Kamp "aye", McNeill "aye", Montgomery "aye", Mulroy "aye", Redmon "aye", Thomson "aye" and Mayor Brock "aye". Motion carried unanimously. C. The Council held a public hearing and considered the following: Adoption of an ordinance for a Comprehensive Plan Amendmem from 'Existing Neighborhood/Infill Compatibility' to 'Employmem Cemers' land use designation. The 4.38-acre site was generally located on the west side of Woodrow Lane and approximately 300 feet north of Morse Street. The Planning and Zoning Commission recommended approval (6-1). (CA04- 0003, Vetco) Kelly Carpenter, Director of Planning and Development, stated that the property was located on the northwest corner of Morse and Woodrow. She showed the existing land use areas, reviewed the currem zoning conditions and the proposed zoning regulations for the property. The Mayor opened the public hearing. City of Demon City Council Minutes November 2, 2004 Page 9 The following individual spoke during the public hearing: Alan Bussell, representing the petitioner, spoke in favor. The Mayor closed the public hearing. The following ordinance was considered: NO. 2004-349 AN ORDINANCE AMENDING THE DENTON PLAN 1999-2020 BY ADOPTING AN AMENDMENT TO THE LAND USE PLAN OF THE LAND ELEMENT OF THE DENTON PLAN FOR THE CITY OF DENTON, TEXAS; THE AREA FOR AMENDMENT ENCOMPASSING APPROXIMATELY 4.38 ACRES AND IS GENERALLY LOCATED ADJACENT TO THE WEST SIDE OF WOODROW LANE, APPROXIMATELY 300' NORTH OF MORSE STREET, PROVIDING A SAVINGS AND REPEAL CLAUSE; AND PROVIDING AN EFFECTIVE DATE. (CA04-0003) Mulroy motioned, McNeill seconded to adopt the ordinance. On roll vote, Kamp "aye", McNeill "aye", Montgomery "aye", Mulroy "aye", Redmon "aye", Thomson "aye" and Mayor Brock "aye". Motion carried unanimously. Adoption of an ordinance rezoning approximately 4.38 acres from a Neighborhood Residemial 4 (NR-4) to an Employmem Cemer Industrial (EC-I) zoning district. The site was generally located on the west side of Woodrow Lane and approximately 300 feet north of Morse Street. The Planning and Zoning Commission recommended approval (7-0). (Z04- 0043, l/etco) The following ordinance was considered: NO. 2004-350 AN ORDINANCE OF THE CITY OF DENTON, TEXAS, PROVIDING FOR A ZONING CHANGE AND USE DESIGNATION CHANGE FROM NEIGHBORHOOD RESIDENTIAL 4 (NR-4) TO EMPLOYMENT CENTER INDUSTRIAL (EC-I) FOR APPROXIMATELY 4.38 ACRES OF LAND LOCATED ADJACENT TO THE WEST SIDE OF WOODROW LANE APPROXIMATELY 300' NORTH OF MORSE STREET; PROVIDING FOR A PENALTY IN THE MAXIMUM AMOUNT OF $2,000.00 FOR VIOLATIONS THEREOF; PROVIDING A SEVERABILITY CLAUSE AND AN EFFECTIVE DATE. (Z04-0043) Montgomery motioned, Thomson seconded to adopt the ordinance. On roll vote, Kamp "aye", McNeill "aye", Montgomery "aye", Mulroy "aye", Redmon "aye", Thomson "aye" and Mayor Brock "aye". Motion carried unanimously. D. The Council held a public hearing and considered the following: City of DeNon City Council Minutes November 2, 2004 Page 10 Adoption of an ordinance for a Comprehensive Plan AmendmeN from 'Neighborhood CeNer' to 'Community Mixed Use Activity CeNer' land use designation. The 2.0-acre site was located south of McKinney Street and approximately 700 feet west of Loop 288. The Planning and Zoning Commission recommended approval (6-1). (C,404-0002, 3520 E. McKinney StreeO Kelly Carpenter, Director of Planning and Development, presented the details of the proposal. The proposed change would be from a neighborhood resideNial mixed use-12 to a community mixed use general zoning category. The Mayor opened the public hearing. The following individuals spoke during the public hearing: Brad Springer, 8181 E. McKinney, DeNon, 76208 - spoke in favor indicating he waned the same zoning opportunities as neighboring properties. Rob Rayner, 1200 Woodrow Lane, DeNon, 76205 - spoke in favor of the proposal. The Mayor closed the public hearing. The following ordinance was considered: 2004-351 AN ORDINANCE AMENDING THE LAND USE PLAN ELEMENT OF THE DENTON PLAN 1999-2020 FOR THE CITY OF DENTON, TEXAS FROM NEIGHBORHOOD CENTERS TO COMMUNITY MIXED USE CENTER PERTAINING TO APPROXIMATELY 2.0 ACRES OF LAND GENERALLY LOCATED ON THE SOUTH SIDE OF E. MCKINNEY STREET AND 700' WEST OF LOOP 288; PROVIDING A SAVINGS AND REPEAL CLAUSE; A SEVERABILITY CLAUSE; AND PROVIDING AN EFFECTIVE DATE. (CA04-0002) Montgomery motioned, McNeill seconded to adopt the ordinance. On roll vote, Kamp "nay", McNeill "aye", Montgomery "aye", Mulroy "aye", Redmon "aye", Thomson "nay" and Mayor Brock "nay". Motion carried with a 4-3 vote. Adoption of an ordinance rezoning approximately 2 acres from the Neighborhood ResideNial Mixed Use 12 (NRMU-12) zoning district to the Community Mixed Use General (CM-G) zoning. The site is south of McKinney Street and approximately 700 feet west of Loop 288. The Planning and Zoning Commission recommends approval (6-1). (Z04- 0032, 3520 E. McKinney StreeO The following ordinance was considered: No. 2004-352 AN ORDINANCE OF THE CITY OF DENTON, TEXAS, PROVIDING FOR A ZONING CHANGE FROM NEIGHBORHOOD RESIDENTIAL MIXED USE 12 City of Demon City Council Minutes November 2, 2004 Page 11 (NRMU-12) ZONING DISTRICT CLASSIFICATION AND USE DESIGNATION TO COMMUNITY MIXED USE GENERAL (CM-G) ZONING DISTRICT CLASSIFICATION AND USE DESIGNATION FOR APPROXIMATELY 2 ACRES OF LAND LOCATED GENERALLY ADJACENT TO THE SOUTH LINE OF MCKINNEY STREET, APPROXIMATELY 700 FEET WEST OF LOOP 288 AND LEGALLY DESCRIBED AS LOT 1, BLOCK A, PUTT-PUTT GOLF AND GAMES ADDITION iN THE CITY OF DENTON, DENTON COUNTY, TEXAS; PROVIDING FOR A PENALTY IN THE MAXIMUM AMOUNT OF $2,000.00 FOR VIOLATIONS THEREOF, A SEVERABiLiTY CLAUSE AND AN EFFECTIVE DATE. (Z04-0032) Montgomery motioned, Mulroy seconded to adopt the ordinance. On roll vote, Kamp "nay", McNeill "aye", Montgomery "aye", Mulroy "aye", Redmon "aye", Thomson "nay" and Mayor Brock "nay". Motion carried with a 4-3 vote. 5. ITEMS FOR INDIVIDUAL CONSIDERATION A. The Council considered adoption of an ordinance of the City of Demon, Texas, amending the provisions of Chapter 20 by amending Article ii titled "Abandoned Property" by changing the name of Article ii to "Junk Vehicles" and by replacing Section 20-41 and 20-47; by deleting Article iii entitled "Grass and Weeds" in its entirety and replacing it with a new Article iii titled Article iii titled "Weeds and Grass and Unsightly or Unsanitary Matter"; providing for a severability clause; providing for a repealer clause; providing for a savings clause; providing for a penalty not to exceed $500 for violations of this ordinance; and providing for an effective date. Captain Joanie Housewright-Denton Police Department, stated that the proposed ordinance had been revised per Council's suggestions. Council would be considering additional proposals regarding code enforcemem in upcoming meetings. Council discussion included: 20 acres was too large a step at one time to change from the current requirement for mowing vacant lots-a better cut off measurement was needed for acreage. A suggestion would be up to five acres for the entire lot to be mowed. The following ordinance was considered: NO. 2004-335 AN ORDINANCE OF THE CITY OF DENTON, TEXAS, AMENDING THE PROVISIONS OF CHAPTER 20 BY AMENDING ARTICLE ii TITLED "ABANDONED PROPERTY" BY CHANGING THE NAME OF ARTICLE ii TO "JUNK VEHICLES" AND BY REPLACING SECTION 20-41 AND 20-47; BY DELETING ARTICLE iii ENTITLED "GRASS AND WEEDS" IN ITS ENTIRETY AND REPLACING IT WITH A NEW ARTICLE iii TITLED ARTICLE iii TITLED "WEEDS AND GRASS AND UNSIGHTLY OR UNSANITARY MATTER"; PROVIDING FOR A SEVERABiLiTY CLAUSE; PROVIDING FOR A REPEALER CLAUSE; PROVIDING FOR A SAVINGS CLAUSE; PROVIDING FOR A PENALTY NOT TO EXCEED $500 FOR VIOLATIONS OF THIS ORDINANCE; AND PROVIDING FOR AN EFFECTIVE DATE. City of DeNon City Council Minutes November 2, 2004 Page 12 Mulroy motioned, Montgomery seconded to adopt the ordinance with a change to mow 5 acres and below rather than 20 acres and below. Thomson motioned, Mayor seconded to amend the motion to keep the requiremem at 20 acres for complete mowing. On roll vote, Kamp "nay", McNeill "nay", Momgomery "nay", Mulroy "nay", Redmon "nay", Thomson "aye" and Mayor Brock "aye". Motion carried with a 5-2 vote. B. The Council considered approval of a resolution nominating members to the Appraisal Review Board of the DeNon Central Appraisal District; and declaring an effective date. Diana Ortiz, Director of Fiscal Operations, stated that the three Demon represematives had terms that would expire at the end of this year. Only one of those members could be re-nominated, John Solberg, as the other two members were termed out. Mulroy motioned, McNeill seconded to postpone consideration of this item umil the November 16th work session meeting. On roll vote, Kamp "aye", McNeill "aye", Montgomery "aye", Mulroy "aye", Redmon "aye", Thomson "aye" and Mayor Brock "aye". Motion carried unanimously. C. The Council considered nominations/appoimmems to the City's Boards and Commissions. Mayor Pro Tem McNeill nominated Thomas Wood for the Historic Landmark Commission. Citizen Reports 1. Review of procedures for addressing the City Council. The Council received a citizen report from the following: A. Peternia Washington regarding issues with Demon Electric. Municipal Ms. Washington stated that she should have a choice of electric provider. She felt the utility charges were too high and that an alternate provider should be available. E. New Business The following items of New Business were suggested by Council for future agendas: 1. Council Member Momgomery requested an update Taliaferro Street-whether it could be opened and if so, when. 2. Mayor Brock asked for a review on random used car sales. on reopening Items from the City Manager 1. Notification of upcoming meetings and/or conferences 2. Clarification of items on the agenda City Manager Conduff did not have any items for Council. City of Demon City Council Minutes November 2, 2004 Page 13 G. Possible Cominuation of Closed Meeting under Sections 551.071-551.086 of the Texas Open Meetings Act. Mayor Brock indicated that Council would continue with the Closed Meeting items listed at the beginning of the agenda plus the item listed below. H. Official Action on Closed Meeting Item(s) under Sections 551.071-551.086 of the Texas Open Meetings Act. Closed Meeting: 1. Personnel Matters - Under TEXAS GOVERNMENT CODE Section 551.074 a. Evaluation and appraisal of the City Manager including deliberation on the City Manager's duties. With no further business, the meeting was adjourned. JENNIFER WALTERS CITY SECRETARY CITY OF DENTON, TEXAS EULINE BROCK MAYOR CITY OF DENTON, TEXAS CITY OF DENTON CITY COUNCIL MINUTES November 8, 2004 After determining that a quorum was presem, the City Council convened in a Special Called Meeting on Monday, November 8, 2004 at 11:30 a.m. in the Council Work Session Room. PRESENT: Mayor Brock; Mayor Pro Tem McNeill; Council Members Montgomery, Mulroy, and Thomson. ABSENT: Council Member Kamp and Redmon 1. The Council received a report, held a discussion, and gave staff direction regarding Bioreactor Landfill Technology and its impact on the City of DeNon Landfill. Vance Kemler, Director of Solid Waste Services, presemed information regarding bioreactor landfill technology and its impact on the City's landfill. Solid waste managemem strategies include waste minimization, maximize landfill site life, maximize waste diversion and pay for services utilized. He noted state and federal regulations relative to environmental protection and landfill sites. Advamages of bioreactor technology include landfill stabilization, methane production and utilization and increased site life. Bioreactor benefits included accelerated waste degradation/stabilization, reduced environmemal risk, gain airspace/extended landfill life, deferred capital investmem and developmem of new landfill, more efficiem methane gas collection, made beneficial use of gas more viable, more efficiem and economical leachate treatment and reduced post closure maintenance potential. Council discussion included: · Use of the methane gas collected. · Reasons for the State originally denying use of this technology. · Other city-owned facilities using this technology. · Cost benefits realized for facilities already using this technology. · Concern regarding the emission of odors and how imense that odor might be. Kemler cominued with bioreactor challenges which included increased gas emissions, imemal liquid managemem, potemial for leachate seeps, side slope stability, potemial for fires in aerobic bioreactors, odors and additional costs. Proposed implememation plan included staff education and training, incorporate design and permit modification into the design of Phase 3 of the landfill, FY 2005-2006 and initiate construction late FY 2006 or early FY 2007. Council discussion included: · Whether or not project work to be done by outside contractors. · PR work might have to be done regarding the bum off flare of the methane gas. · Consensus of the Council was to proceed with proposal, looking at all of the options available. City of DeNon City Council Minutes November 8, 2004 Page 2 2. The Council received a report, held a discussion, and gave staff direction regarding the status of a Green Building Program. Katherine Barnett, Special Projects Coordinator, and Kelly Carpemer, Director of Planning and Development, presented information on a green building program. Staff presented several examples of green building programs to the City Council Environmem Committee. The Committee had requested additional information regarding Code Compliance, Energy Star, and additional conservation information measures that might be implemented as well as input from local builders. Next steps to the project would include idemify specific costs associated with adopting most recem version of IECDC or Energy Star, draft a green building program, hold a series of meetings with local builders to review a draft plan and work together to determine the best possible additions for conservation and practices, and presem finding to the City Council Environment Committee. Council discussion included: · Mandatory components of local programs such as the one at Frisco. · At what point in the process relative to the Environment Committee. Consensus of the Council was to cominue with the exploration of the program. With no further business, the meeting was adjourned at 12:45 p.m. JENNIFER WALTERS CITY SECRETARY CITY OF DENTON, TEXAS EULINE BROCK MAYOR CITY OF DENTON, TEXAS CITY OF DENTON CITY COUNCIL MINUTES November 9, 2004 After determining that a quorum was presem, the City Council convened in a Closed Session of the City of DeNon City Council on Tuesday, November 9, 2004 at 4:00 p.m. in the City Council Work Session Room. PRESENT: Mayor Brock; Mayor Pro Tem McNeill; Council Members Kamp, Montgomery, Mulroy, Redmon, and Thomson ABSENT: None 1. The Council considered the following in Closed meeting: DELIBERATIONS REGARDING CERTAIN PUBLIC POWER UTILITIES: COMPETITIVE MATTERS -Under Texas Governmem Code§551.086. Received a competitive public power presentation from Gary Parsons, General Manager of Texas Municipal Power Agency ("TMPA"); from both City of DeNon TMPA Board Members; and/or from City Staff pertaining to certain competitive electric issues regarding the surface transportation of coal, coal delivery costs to TMPA and its members, the concept of "captive shipping," the status of the appeal of the TMPA rate case of the Surface Transportation Board, alternatives available for the transportation of coal, and other issues related to the expense of transportation of coal to the TMPA Plant near Carlos, Texas; and discussed, deliberated, considered, and provided the TMPA Board Members and City Staff with direction regarding such matters. Following the completion of the Closed Session, the Council convened in a Planning Work Session: 1. The Council received a report, held a discussion, and gave staff direction regarding the structuring of the proposed CIP program and ballot. City Manager Conduff stated that Ted Brizzolera III of McCall, Parkhurst & Horton, the City's Bond Counsel, was presem, as well as Mark Burroughs, Chair of the Citizens Advisory Committee and Randy Robinson, Co-Chair of the Citizens Advisory Committee. Brizzolera stated that the Attorney General's Office had reviewed the draft recommendations for the proposed ballot for the bond election and advised that multi-modal transit facilities could not be considered under the transportation category but were considered mass transit facilities. He stated that the Attorney General's office also advised that the transit sites and the airport runway extension would have to be separate categories on the ballot. Brizzolera presented the Council with a list of five propositions for the ballot, which were discussed. City Manager Conduff advised the Council that if they were not comfortable with five propositions on the ballot, Certificates of Obligations could be issued for the airport improvements. City of DeNon City Council Minutes November 9, 2004 Page 2 City Manager Conduff asked for suggestions for the ballot. Mark Buurroughs stated that five propositions were too many. He suggested that the acquisition of land for public transportation facilities not be included on the ballot. He stated that the facility would eventually go to the DCTA. The Council discussed issuing Certificates of Obligation for the land acquisition. The Mayor suggested three propositions for the proposed ballot. Proposition No. 1 - The issuance of $4,000,000 of public securities for construction and improvemeNs to public facilities. Proposition No. 2 - The issuance of $27,700,000 of public securities for construction of street, roadway, sidewalk and traffic control improvements. Proposition No. 3 - The issuance of $10,700,000 of public securities for construction of improvemeNs to parks and other recreational facilities. Discussion followed and the consensus of the Council was to change Proposition No. 3 to read: The issuance of $10,700,00 of public securities for parks system improvemeNs. The total bond package would be $42.4 million. Kathy DuBose, AssistaN City Manager, stated that the Council would consider the ordinance calling the election at the November 16 Council meeting. She stated that it would include the propositions and the specific details of the February 5, 2005 election. 2. Suggestions for Agenda Committee on future agenda items and/or placement of items for upcoming agendas. Council Member Thomson requested a discussion on renal housing, such as the number of people/cars allowed on renal property and other renal property concerns. Council Member Redmon requested a discussion on the new garbage bags as he had received complaints that the yellow garbage bags were not big enough. Council Member Mulroy requested a discussion on process and procedures as a wrap-up to Council's budget discussions. Council Member Montgomery requested a discussion on prevention/regulation of extended stay hotels in Denton. Council Member Kamp requested information on Animal Services procedures and an update on how we were responding to requests already received. With no further business, the meeting was adjourned at 6:00 p.m. JANE RICHARDSON ASST. CITY SECRETARY CITY OF DENTON, TEXAS EULINE BROCK MAYOR CITY OF DENTON, TEXAS CITY OF DENTON CITY COUNCIL MINUTES November 16, 2004 After determining that a quorum was presem, the City Council convened in a Work Session on Tuesday, November 16, 2004 at 4:00 p.m. in the Council Work Session Room at City Hall. PRESENT: Mayor Brock; Mayor Pro Tem McNeill; Council Members Kamp, Montgomery, Mulroy, Redmon and Thomson. ABSENT: None 1. The Council received a report, held a discussion and gave staff direction regarding proposed ordinance revisions related to Code Enforcemem and property appearance. Lt. Scott Fletcher, Denton Police Department, stated that this was a continuation of an earlier work session discussion held with the Council. Council discussion included: Registering used car dealers. Possible limitation of the number of used cars/vehicles for sale on private property. Provisions in the code amendments to allow for temporary visits of people with RV's. Encourage the rental inspection program. Consider implementing the changes one at a time in increments rather than all at once. Life safety issue would be a good starting poim. Consensus of the Council was to proceed with the proposals in tiers such as life safety, health issues, general nuisances with associated work session discussions. Each item would be investigated for options with a staggered implementation plan. Fletcher stated that Items #1-8 already had model ordinances drafted. The remaining items would require a more in-depth examination. Council agreed that Items #1 and #3 dealing with stagnant water would be a good starting point as they dealt with life safety and health issues. It was also noted that there was a need for a good public information campaign in order to make sure citizens knew what the Council was trying to accomplish. Neighborhood associations could also be used to help with that campaign. 2. Staff responded to requests for clarification of consent agenda items listed on the consent agenda for November 2, 2004. 3. The Council received a report and held a discussion with Leadership DeNon. Council met with Leadership DeNon and discussed major topics of imerest concerning the city and city govemmem. Following the completion of the Work Session, the City Council convened in a Closed Meeting to consider the following: City of DeNon City Council Minutes November 16, 2004 Page 2 1. Closed Meeting: mo Consultation with Attorney - Under TEXAS GOVERNMENT CODE Section 551.071. Considered and discussed ratification of mediated settlement agreement in litigation styled Ugwuh v. City of Denton, Cause No. 2002-41462-362, currently pending in the 362nd District Court of Denton County, Texas. Considered and discussed status of litigation styled Robinson v. City of Denton, Cause No. 2003-60130-393, curremly pending in the 211th District Court of Denton County, Texas. Bo Deliberations regarding real property - Under TEXAS GOVERNMENT CODE Section 551.072, Consultation with Attorney - Under TEXAS GOVERNMENT CODE Section 551.071. Deliberated the value and purchase of real property imerests for the fee acquisition of approximately 88.56 acres and donation of approximately 34.89 acres, both being a part of the James Edmondson Survey, Abstract- 401, and the James L. Harris Survey, Abstract A-5555, located at the southwest corner of Vintage Boulevard and Bonnie Brae Street, and the fee acquisition of approximately 10.186 acres being a part of the Thomas Toby Survey, Abstract No. 1285, located along the north side of FM 1515 (Airport Road), northeast of Westcourt Road, (the "Properties") and other alternate sites, which are being acquired for a public purpose, and receive legal advice from the City Attorney or his staff concerning legal issues regarding the acquisition and donation of such real property imerests. Co Deliberations regarding certain public power utilities: competitive matters - Under TEXAS GOVERNMENT CODE Section 551.086. Received an electric public power briefing and presemation from the Director of Denton Municipal Electric regarding competitive electric and commercial information, pertaining to the subject of electric base rates; discuss, deliberate, consider, and provide Staff with direction regarding such matters. Regular Meeting of the City of DeNon City Council on Tuesday, November 16, 2004 at 6:30 p.m. in the Council Chambers at City Hall. 1. PLEDGE OF ALLEGIANCE The Council and members of the audience recited the Pledge of Allegiance to the U. S. and Texas flags. City of DeNon City Council Minutes November 16, 2004 Page 3 2. JOINT PUBLIC HEARING A. The Council held a join public hearing with the Planning and Zoning Commission to consider zoning amendments to the Denton Development Code affecting multi- family developmeN including, without limitation, requiring Specific Use Permits for all multi- family developmeN in the City of DeNon. Planning and Zoning Commission Chairman Powell announced that a quorum of Commissioners was present with Commissioners Holt, Strange and Noble absent. The Mayor opened the public hearing. The following individuals spoke during the public hearing: Randall Smith, 829 Tealwood Circle, Flower Mound, 75028- opposition-has property that would be affected. Glenn GuNer, 4653 Seneca, Fort Worth, 76137 - opposed - has property that would be affected. Karen Raabe, 2515 Jamestown Lane, Denton, 76209 - opposed - develop a clearer definition of multifamily unit. Delores Vann, 811 West Oak, Denton, 76201 - favor-need to protect inner city from large multifamily developments. Karen DiVinney, 1820 West Oak, Denton, 76201 - favor - would protect existing neighborhoods. Alan Bussell, 1668 Amanda Court, Ponder, 76259 - opposed - put regulations in the Code to start with rather than try to incorporate with an SUP. Melissa Lindelow, 1717 Main, Dallas, 75201 - represeNing Windjammer, opposed-has property that would be affected. Paul Cauduro, Greater Dallas Homebuilders Association - opposed - let Development Code work on its own. Steve McNeill, 2303 Bradwood Court, Arlington, 76011 - opposed - has property that would be affected. Eddie Lane, 111 W. McKinney, DeNon, 76201 - opposed-has property that would be affected. Henry Rife, 2248 Stonegate, Denton, 76205 - opposed. Ed Wolski, 2301 Hollyhill, DeNon, 76205 - opposed - requested exemption for projects already in the process. CommeN cards were received from: Pam Grimes, 1829 Northlake Trail, DeNon, 76201 - opposed Virginia McNeill, 432 Fulton, DeNon, 76201 - opposed Additional public hearing speakers included: Audrey Barrow, SENDA - support the proposal. Elise Ridenour, Oak Street, Denton, 76201 - in favor of the proposal. The Mayor closed the public hearing. City of DeNon City Council Minutes November 16, 2004 Page 4 3. PROCLAMATIONS/PRESENTATIONS A. Proclamations/Awards Mayor Brock presemed a proclamation for Leadership Demon Week. 2. Resolution of Appreciation for Gregory Hedges. McNeill motioned, Kamp seconded to approve the Resolution of Appreciation. On roll vote, Kamp "aye", McNeill "aye", Montgomery "aye", Mulroy "aye", Redmon "aye", Thomson "aye" and Mayor Brock "aye". Motion carried unanimously. B. Yard of the Momh Awards Mayor Brock presented Yard of the Month Awards to: Stacy, Angie, Nathan and Nicholas Murray Jane and Dick Boothby Ed and Susan Schoemhal Steve and Andrea Talkington Bob Hay and Mary Messmer Doug Helfrich at the Savannah House The Woody Family-Watersmart The Greenhouse-Business Award C. Recognition of staff accomplishmems City Manager Conduffpresemed staff accomplishmems to the Council. 4. CONSENT AGENDA Mulroy motioned, Kamp seconded to approve the Consem Agenda and accompanying ordinances. On roll vote, Kamp "aye", McNeill "aye", Momgomery "aye", Mulroy "aye", Redmon "aye", Thomson "aye" and Mayor Brock "aye". Motion carried unanimously. Approved the minutes of: October 19, 2004 October 20, 2004 October 25, 2004 2004-354 - An ordinance of the City of DeNon, Texas authorizing the expenditure of funds for paymems by the City of DeNon for electrical energy transmission fees to those cities and utilities providing energy transmission services to the City of DeNon; and providing an effective date (File 3257 - Electrical Energy Transmission Fees in the total amoum of $613,819). 2004-355 - An ordinance accepting competitive bids by way of an Imerlocal Agreement with U.S. Communities and awarding a contract for the purchase of City of DeNon City Council Minutes November 16, 2004 Page 5 carpet; providing for the expenditure of funds therefor; and providing an effective date (File 3259 - Carpet for Emily Fowler Library and Civic Cemer awarded to Interface Americas, Inc. by way of an Interlocal Agreement in the amount of $58,914.66). Do 2004-356 - An ordinance of the City of DeNon authorizing the City Manager or his designee to execute a purchase order with the Houston-Galveston Area Council of Governmems (H-GAC) for the acquisition of two new ambulances by way of an Interlocal Agreement with the City of Denton; authorizing the expenditure of funds therefor; and providing an effective date (File 3258 - Purchase of Ambulances for Fire Department awarded to Jack Roach Ford in the amoum of $211,550). mo 2004-357 - An ordinance accepting competitive bids and awarding a comract for Childcare Expansion Program for Low-Income Children; providing for the expenditure of funds therefor; and providing for an effective date (Bid 3254 - Childcare Expansion Program for Low-Income Children awarded to DeNon Christian Preschool in the amoum of $30,336). Fo 2004-358 - An ordinance accepting competitive bids and awarding a comract for Daycare Programs for Low-Income Families; providing for the expenditure of funds therefor; and providing for an effective date (Bid 3255 - Daycare Program for Low-Income Children awarded to Fred Moore Day Nursery School, Inc. in the amoum of $39,640). Go 2004-359 - An ordinance authorizing the Mayor to enter into an Interlocal Cooperation Agreemem with DeNon County for library services; and providing an effective date. Ho 2004-360 - An ordinance authorizing the Mayor to enter into an Interlocal Cooperation Agreemem with the City of Irving, City of Carrollton, City of Fort Worth, City of North Richland Hills, City of Plano, City of Frisco, and City of Euless for the sharing of imeractive virtual reference library services; and providing an effective date. 2004-361 - An ordinance approving a commercial operator airport lease agreement between the City of Denton, Texas and The Weyer Living Trust; providing an effective date. Jo 2004-362 - An ordinance approving a commercial operator airport lease agreement between the City of Denton and Jet Works Aviation, Inc.; and providing an effective date. Ko 2004-363 - An ordinance authorizing the City Manager or his designee to approve a Right-of-Way Use Agreement with Fairfield Denton Exchange, Ltd. to allow the placemem of security and communication wiring under Cleveland Street approximately 355 feet south of the intersection of West Collins Street and Cleveland Street, and providing an effective date. City of DeNon City Council Minutes November 16, 2004 Page 6 Lo 2004-364 - An ordinance of the City of DeNon, Texas approving and authorizing settlemem of litigation styled Godson Ugwuh vs. City of Denton, et al, Cause No. 2002-41462-362 filed in the 362nd District Court of Denton County; approving the proposed settlement agreement to be dated November 17, 2004; authorizing the City Manager and the City's Attorneys to act on the City's behalf in executing any and all documents, and to take other actions necessary to finalize the settlement and release of claims; and declaring an effective date. 4. PUBLIC HEARINGS A. The Council held a public hearing and considered adoption of an ordinance rezoning approximately 6.1 acres from a Regional Cemer Commercial Neighborhood (RCC-N) zoning district to a Regional Cemer Commercial Dowmown (RCC-D) zoning district. The property was generally located 1,500 feet east of State School Road, on the south side of Imerstate 35. The Planning and Zoning Commission recommended approval (7-0). (Z04-0036, Jim McNatt Automotive) Kelly Carpemer, Director of Planning and Development, stated that this proposal was for an extended use for Jim McNatt Motors. There was no opposition to the case. The Mayor opened the public hearing. No one spoke during the public hearing. The Mayor closed the public hearing. The following ordinance was considered: NO. 2004-365 AN ORDINANCE OF THE CITY OF DENTON, TEXAS, PROVIDING FOR A ZONING CHANGE FROM REGIONAL CENTER COMMERCIAL NEIGHBORHOOD (RCC-N) ZONING DISTRICT CLASSIFICATION AND USE DESIGNATION TO REGIONAL CENTER COMMERCIAL DOWNTOWN (RCC-D) ZONING DISTRICT CLASSIFICATION AND USE DESIGNATION FOR APPROXIMATELY 6.1 ACRES OF LAND LOCATED ADJACENT TO THE SOUTH SIDE OF INTERSTATE 35E APPROXIMATELY 1,500 FEET EAST OF STATE SCHOOL ROAD, IN THE CITY OF DENTON, DENTON COUNTY, TEXAS; PROVIDING FOR A PENALTY IN THE MAXIMUM AMOUNT OF $2,000.00 FOR VIOLATIONS THEREOF, A SEVERABILITY CLAUSE AND AN EFFECTIVE DATE. (Z04-0036) McNeill motioned, Mulroy seconded to adopt the ordinance. On roll vote, Kamp "aye", McNeill "aye", Montgomery "aye", Mulroy "aye", Redmon "aye", Thomson "aye" and Mayor Brock "aye". Motion carried unanimously. B. The Council held a public hearing and considered adoption of an ordinance rezoning approximately 95.1 acres from a Neighborhood Residemial 2 (NR-2) zoning district to City of DeNon City Council Minutes November 16, 2004 Page 7 a Neighborhood Residemial 3 (NR-3) zoning district with an overlay. The property was generally located on the east side of Bonnie Brae, approximately 750 feet north of Vintage Boulevard. The Planning and Zoning Commission recommended approval (7-0). (Z04-0037, Glenwood Meadows) Kelly Carpemer, Director of Planning and Developmem, stated that the request was to change the zoning to Neighborhood Residemial-3 with an overlay permitting four foot side yard setbacks. The developer had, since the Planning and Zoning Commission meeting, offered to cap the density at 200 single-family dwelling units with the possibility of increasing it to 285 dwelling units if Council approved an alternative environmemally sensitive reclamation of flood plain proposal. Council discussion included: The proposal concemrated homes in a smaller area in order to maimain the green space. The Developmem Code and Comprehensive Plan allowed for density transfer to limit sprawl. The flood plain needed further examination to determine the exact extem. The Mayor opened the public hearing. The following individuals spoke during the public hearing: Mary Bush, represeming the developer, spoke in favor. Council discussed the processes involved with FEMA, the determination of the amoum of acres in the floodplain and the differences between the city figures and the developer's figures. Wally Creal, Holigan Land Developmem, spoke in favor. Council discussed the need for better represemation of the final project in order to consider the proposal. What was available for developmem needed to be known before a decision could be made. The Mayor closed the public hearing. Council cominued discussion: Density transfer - density would diminish the potemial developmem of the site. Access roads in the area included the Vintage Road and the consideration that the proposal would add to congestion to the area. Past practice had been to return a proposal to the Planning and Zoning Commission when there was a unanimous vote from the Commission that appeared to not be the direction the Council was heading. If the proposal were voted down would the petitioner have to wait a year to resubmit the proposal-yes if it were the same zoning proposal. City of Demon City Council Minutes November 16, 2004 Page 8 Suggest tabling the item umil the flood plain and density questions were answered. Mayor motioned, Mulroy seconded to deny the request. Montgomery motioned, McNeill seconded to table the proposal until information was received from FEMA on how many flood plain acres were involved. On roll vote, Kamp "aye", McNeill "aye", Montgomery "aye", Mulroy "nay", Redmon "aye", Thomson "nay" and Mayor Brock "nay". Motion carried with a 4-3 vote. 5. ITEMS FOR INDIVIDUAL CONSIDERATION A. The Council considered adoption of an ordinance authorizing the City Manager or his designee to execute a Real Estate Contract for the acquisition of approximately 88.56 acres by purchase, and approximately 34.89 acres by donation, for a Public Safety Training Facility, Park, and other future public amenities located at the southwest corner of Vintage Boulevard and Bonnie Brae Street, said tracts being a part of the James Edmondson Survey, Abstract No. 401, as described in the Deed to Denton-CJW Partners, Ltd., Recorded in Clerks Document No. 98- R0038601, Deed Records, Demon County, Texas; authorizing the expenditure of funds, and declaring an effective date. The following ordinance was considered: NO. 2004-366 AN ORDINANCE AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO EXECUTE A REAL ESTATE CONTRACT FOR THE ACQUISITION OF APPROXIMATELY 88.56 ACRES BY PURCHASE, AND APPROXIMATELY 34.89 ACRES BY DONATION, FOR A PUBLIC SAFETY TRAINING FACILITY, PARK, AND OTHER FUTURE PUBLIC AMENITIES LOCATED AT THE SOUTHWEST CORNER OF VINTAGE BOULEVARD AND BONNIE BRAE STREET, SAID TRACTS BEING A PART OF THE JAMES EDMONDSON SURVEY, ABSTRACT NO. 401, AS DESCRIBED IN THE DEED TO DENTON-CJW PARTNERS, LTD., RECORDED IN CLERKS DOCUMENT NO. 98-R0038601, DEED RECORDS, DENTON COUNTY, TEXAS; AUTHORIZING THE EXPENDITURE OF FUNDS, AND DECLARING AN EFFECTIVE DATE. Montgomery motioned, Thomson seconded to adopt the ordinance. On roll vote, Kamp "aye", McNeill "aye", Montgomery "aye", Mulroy "aye", Redmon "aye", Thomson "aye" and Mayor Brock "aye". Motion carried unanimously. B. The Council considered adoption of an ordinance by the City Council of the City of Demon, Texas, calling an election to be held within said City on the question of the issuance of Ad Valorem Tax Supported Public Securities; making provision for the conduct of the election; and containing other provisions incidental thereto; and declaring an effective date. The following ordinance was considered: City of DeNon City Council Minutes November 16, 2004 Page 9 NO. 2004-367 AN ORDINANCE BY THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS, CALLING AN ELECTION TO BE HELD WITHIN SAID CITY ON THE QUESTION OF THE ISSUANCE OF AD VALOREM TAX SUPPORTED PUBLIC SECURITIES; MAKING PROVISION FOR THE CONDUCT OF THE ELECTION; AND CONTAINING OTHER PROVISIONS INCIDENTAL THERETO; AND DECLARING AN EFFECTIVE DATE Kamp "aye", "aye". motioned, Mulroy seconded to adopt the ordinance. On roll vote, Kamp "aye", McNeill Montgomery "aye", Mulroy "aye", Redmon "aye", Thomson "aye" and Mayor Brock Motion carried unanimously. C. The Council considered approval of a resolution nominating members to the Appraisal Review Board of the DeNon Cemral Appraisal District; and declaring an effective date. Mayor Pro Tem McNeill nominated George Gibson. Council Member Momgomery nominated David Riley. The following resolution was considered: NO. R2004-053 A RESOLUTION NOMINATING MEMBERS TO THE APPRAISAL REVIEW BOARD OF THE DENTON CENTRAL APPRAISAL DISTRICT; AND DECLARING AN EFFECTIVE DATE. Redmon motioned, Kamp seconded to approve the resolution. On roll vote, Kamp "aye", McNeill "aye", Montgomery "aye", Mulroy "aye", Redmon "aye", Thomson "aye" and Mayor Brock "aye". Motion carried unanimously. D. The Council considered nominations/appoimmems to the City's Boards and Commissions. Montgomery motioned, McNeill seconded to approve the nomination of Tom Wood to the Historic Landmark Commission. On roll vote, Kamp "aye", McNeill "aye", Montgomery "aye", Mulroy "aye", Redmon "aye", Thomson "aye" and Mayor Brock "aye". Motion carried unanimously. Council Member Thomson nominated Ann Barnett to the Traffic Safety Commission. Citizen Reports 1. Review of procedures for addressing the City Council. 2. The Council received citizen reports from the following: A. Cymhia Cochran regarding high utility bills. City of Demon City Council Minutes November 16, 2004 Page 10 Ms. Cochran stated that her utility bill was too high and she could not determine why. She questioned why another utility company could not be available in Demon. B. Nell Yeldell regarding Verizon telephone service and the high cost of utilities. Ms. Yeldell was not present at the meeting. F. New Business The following items of New Business were suggested by Council Members for future agendas: 1. Council Member Redmon requested a memo on the security measures that will be in effect during the holiday for shopping areas. 2. Council Member Redmon requested information on customer service billing prior to the holidays. G. Items from the City Manager City Manager Conduff did not have any items for Council. H. Possible Cominuation of Closed Meeting under Sections 551.071-551.086 of the Texas Open Meetings Act. Mayor Brock announced that Council would continue the Closed Meeting with items listed at the beginning of the meeting. I. Official Action on Closed Meeting Item(s) under Sections 551.071-551.086 of the Texas Open Meetings Act. There was no official action on Closed Meeting items. With no further business, the meeting was adjourned. JENNIFER WALTERS CITY SECRETARY CITY OF DENTON, TEXAS EULINE BROCK MAYOR CITY OF DENTON, TEXAS CITY OF DENTON CITY COUNCIL MINUTES November 17, 2004 Join Meeting of the City of DeNon City Council and the DeNon IndependeN School District Board of Trustees on Wednesday, November 17, 2004 at 12 noon in the Board Room at the DISD CeNral Services Building. PRESENT: Mayor Brock; Mayor Pro Tem McNeill; Council Members Kamp, Montgomery, Mulroy, and Thomson. ABSENT: Council Member Redmon 1. Call to order; announce quorum, introductions. Mayor Brock called the Council to order and announced a quorum was preseN. 2. The Council received a report and held a discussion regarding future school site development in the Denton city limits. Dr. Ray Braswell, Superintendent, presented information on possible future school sites within the DISD boundaries. These projections were for the next 25-30 years. Discussion by Council and the Trustees included the option of variable sizes of schools based on the size of a development. There was a need for good communication between the two entities for future infrastructure relative to future school sites. 3. The Council received a report and held a discussion regarding DeNon developmeN, mobility and major transportation projects. Jon Fortune, Assistant City Manager, presented potential growth areas for the City. He reviewed mobility plan revisions under construction and associated time frames for the projects. 4. The Council received a report and held a discussion regarding the upcoming City of Denton Capital Improvement Projects bond election. Council and the Trustees discussed the proposed propositions and the need for a cooperative effort between the DISD and the City similar to the support the City provided the DISD for its bond election. 5. The Council received a report and held a discussion regarding an update on the DISD Career and Technology Campus developmeN. Marty Townsend, DISD, preseNed an update on the DISD's Advanced Technology Complex. The facility was scheduled to be opened in the fall of 2006. This complex would be a benefit to both students and the area residents. Mayor Pro Tem McNeill left the meeting. City of Demon City Council Minutes November 17, 2004 Page 2 6. Determine next meeting date. Council discussed a January meeting to review legislative issues. 7. Adjourn. With no further business, the meeting was adjourned at 1:40 p.m. JENNIFER WALTERS CITY SECRETARY CITY OF DENTON, TEXAS EULINE BROCK MAYOR CITY OF DENTON, TEXAS CITY OF DENTON CITY COUNCIL MINUTES November 18, 2004 Join Meeting of the City of DeNon City Council and the Planning and Zoning Commission on Thursday, November 18, 2004 at 7:00 a.m. in the Council Work Session Room. PRESENT: Mayor Brock; Mayor Pro Tem McNeill; Council Members Kamp, Montgomery, Mulroy, and Thomson. ABSENT: Council Member Redmon Commissioners AbseN: Commissioners Hold and Noble 1. The Council received a report, held a discussion, and gave staff direction regarding adopting zoning amendments to the Denton Development Code affecting multi-family developmeN including, without limitation, requiring Specific Use Permits for all multi-family developmeN in the City of DeNon. City Manager Conduff indicated that staff did not have a formal preseNation for Council but rather this was a time for Council and the Commission to review the comments made at the prior public hearing. Kelly Carpenter, Director of Planning and Development, presented Council with an estimate of the total amount of multifamily approved but not yet developed. Council and Commission discussion included: What was trying to be accomplished with this proposal? A concern about the proliferation of the number of multifamily units being developed in the city. Information on the zoning categories that allowed multifamily but were not used for multifamily. A concern that the application of NRMU and NRMU-12 zoning for multifamily purposes was not in conjunction with the philosophy of the multifamily along with single family and commercial uses-only multifamily was being built. There were an unequal number of multifamily units being built in the NRMU and NRMU- 12 zoning categories. The proposal for a SUP for multifamily developmeNs would not be permaneN- only uNil a review of the Code and zoning categories could be examined. Another dimension of the problem was that children in apartments tended to move more often and that might have a negative impact in their ability to learn. Decisions made today would impact how DeNon looked in the future. The developmeNs already in progress needed to be protected from any additional requirements. It might be better to progressively implement the proposal. Standards needed to be written on what would be developed. Put a moratorium on multifamily development if the purpose was to eliminate additional multifamily rather than burden the Planning and Zoning Commission, the Council and developers with a SUP. Let the market determine whether or not new apartments were developed rather than trying to artificially control development. City of DeNon City Council Minutes November 18, 2004 Page 2 Let what was approved at this point in time develop while staff reexamined the percentage of multifamily in the various zoning categories rather than institute the burden of a SUP. One weakness in the code was that there were no percentages for any zoning categories relative to multifamily units. Ed Snyder, Deputy City Attorney, reviewed the currem legal provisions now in place in order to institute a moratorium on multifamily development. Larry Reichhart, Assistant Director of Planning and Development, presented the following proposal for consideration - as there already was a L4 limitation in the Code, apply this limitation to other zoning categories, possibly coupled with a maximum percentage of multifamily units to be applied to all mixed-use districts. If a developer did not want to meet this limitation he would have to apply for a SUP. Council and Commissioners cominued discussion: · The 60/40 percemage of single family to multifamily developmem was wrong. There was a need for an analysis of that percentage and to reduce the ratio. · This was Denton, not Flower Mound or McKinney. These were very different communities and there was a need to be realistic on what Denton was. Denton had two major universities and two major highways running through the city, which was very different from other cities in the area. · There was no economic base in DeNon for buying power for higher end homes. The economic base of the city needed to be elevated to promote those types of homes. Higher paying jobs were needed to attract higher end homes. · Statements had been made regarding Denton having a higher percentage of low income citizens and an exception was taken to the implication that low-level income people were not as desirable in DeNon-DeNon should embrace diversity. · Caving out niches of zoning would not change what DeNon was-higher quality of life issues relative to economic developmem was needed. Consensus of the Council and the Commission was to have staff move in the direction of Mr. Reichhart's proposal relative to the maximum percentage of multifamily in the zoning categories; to look at the 60/40 ratio; to consider an increase in open space qualifications for multifamily; and to define criteria for a definition of "currem projects" so that projects already with a multifamily designation would not be affected. With no further business, the meeting was adjourned at 8:30 a.m. JENNIFER WALTERS CITY SECRETARY CITY OF DENTON, TEXAS EULINE BROCK MAYOR CITY OF DENTON, TEXAS AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: ACM: December 7, 2004 Solid Waste Howard Martin, Utilities 349-8232 SUBJECT Consider adoption of an ordinance of the City of DeNon, Texas authorizing the City manager to execute a Professional Services Agreement with ETTL Engineers and Consultants, Inc. for Hydrogeological Consulting and Analytical Services pertaining to the City of DeNon Landifll (MSW Permit No. 1509A); authorizing the expenditure of funds therefore; providing for retroactive ratification and approval thereof; and providing an effective date. BACKGROUND The Landfill is required to perform and submit ground water monitoring results of the landfill's twenty monitoring wells and two leachate sumps on a semi-annual basis to the Texas Commission on Environmemal Quality (TCEQ). ETTL drilled and constructed the groundwater monitoring wells at Denton's landfill and has provided monitoring and reporting information to the Solid Waste Departmem and TCEQ for the previous five fiscal years, 2000 - 2004. The company is familiar with DeMon's hydrogeological site conditions, and possesses staff capable of monitoring and accurately interpreting Denton's groundwater data. ETTL has provided excellent services in prior years. OPTIONS 1. Approve the agreemem as presemed. 2. Disapprove the agreement as presented. 3. Modify the agreemem. RECOMMENDATION The Public Utilities Board and staff recommends the City Council approve the professional services agreement with ETTL Engineering and Consulting, Inc. to provide the Solid Waste Departmem with hydrogeological consulting and ground water monitoring services at the City's Landfill. PRIOR ACTION/REVIEW (Council, Boards, Commissions) The Public Utilities Board approved a professional services agreement with ETTL Engineering and Consulting, Inc. for an amount not to exceed $41,772 at their meeting of November 8, 2004. FISCAL INFORMATION The agreement, not to exceed $41,772.00, will provide the Solid Waste Department and the TCEQ with DeNon Landfill groundwater monitoring and reporting information during the 2005 fiscal year. EXHIBITS 1. Ordinance 2. Professional Services Agreement 3. PUB Minutes Respectfully submitted: A. Vance Kemler Director of Solid Waste 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 50 51 52 53 CITY OF DENTON PUBLIC UTILITIES BOARD MINUTES November 8, 2004 DRAFT After determining that a quorum of the Public Utilities Board of the City of Denton, Texas was present, the Public Utilities Board convened into an Open Meeting on Monday, November 8,, 2004, at 9:00 a.m. in the Service Cemer Training Room, City of DeNon Service Cemer, 901-A Texas Street, Denton, Texas. PRESENT: John Baines, Bob Bland, Bill Cheek, Dick Smith, Phil Gallivan, George Hopkins, Charldean Newell EX OFFICIO MEMBERS Michael Conduff, City Manager Howard Martin, ACM/Utilities The Public Utilities Board reconvened in an Open Session at 10:15 a.m. The meeting was called to order to consider the following business: CONSENT AGENDA: Staff recommends this item, 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. The Public Utilities Board has received background information and has had an opportunity to raise questions regarding these items prior to consideration. Listed below are bids or purchase orders or other matters to be brought before the Public Utilities Board to be considered and approved for paymem under Consem Agenda items 1, 2, 3 & 4. Detailed information is attached to each Consent Agenda item. This listing is provided on the Consent Agenda to allow Public Utilities Board Members to discuss or withdraw an item prior to approval of the Consent Agenda. if the item is pulled prior to consideration, Consent Agenda Items 1 through 4 will be approved with one motion of the Board. if the item is pulled for separate discussion, such item will be considered as the first item taken up under the "Items For individual Consideration" section of the agenda, set forth below. 1) Consider approval of a Professional Services Agreement with ETTL Engineering and Consulting, Inc. to supply the Solid Waste Department with hydro geological consulting and ground water monitoring services at the City's landfill, in an amount not to exceed $41,772. 2) Consider approval of an authorization to expend funds by the City of DeNon, Texas for electrical energy transmission fees owing to those cities and utilities providing energy transmission services to the City of DeNon, Texas (File #3257 - Electrical Energy Transmission Fees - $613,819). 3) Consider approval of Change Order No. 2 in the amoum of $202,750 for Bid No. 3107 for the Hickory Creek Basin Sanitary Sewer Replacemems and Liners project. 4) Consider approval ofpaymem of the Consolidated Water Quality Fee for FY 2005 to Texas Commission on Environmemal Quality for the Pecan Creek and Robson Ranch Water Reclamation Plants in the amount of $63,970. EXHIBIT 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Consent Agenda Items #1 and #3 were pulled for discussion. Board Member George Hopkins moved to approve Consent Agenda Items #2 and #4, with a second from Board Member Phil Gallivan. The motion was approved by a vote of 7-0. Consent Agenda Item #1 Vance Kemler, Director of Solid Waste answered the Board's questions regarding this item. Gallivan wanted to know how the $41,772 for hydro geological consulting and ground water monitoring services at the City's Landfill compared with last years estimated budget amount. He also asked for a comparison between this years fee versus the actual amount spent for the same services in the 2003-2004 budget year. Kemler responded by explaining that this expenditure is approximately $200 more than the previous year. He explained that stafPs estimate for this type of service is generally within $1,000 of the approved budget amount. This year's estimate is approximately $300 less than was approved this year. Staff can determine the number of hours it will take to do the sampling, but equipment breakdowns or pump problems could account for less than a 5% difference staff's estimates. Gallivan moved to approve Consent Agenda Item #1, with a second from Board Member Dick Smith. The motion was approved by a vote of 7-0. ORDINANCE NO. 2004- AN ORDINANCE OF THE CITY OF DENTON, TEXAS AUTHORIZING THE CITY MANAGER TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT WITH ETTL ENGINEERS & CONSULTANTS, INC. FOR HYDROGEOLOGICAL CONSULTING AND ANALYTICAL SERVICES PERTAINING TO THE CITY OF DENTON LANDFILL (MSW PERMIT NO. 1590A); AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR; PROVIDING FOR RETROACTIVE RATIFICATION AND APPROVAL THEREOF; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City Council deems that it is in the public interest to continue to engage ETTL Engineers & Consultants, Inc., a Corporation, of Tyler, Texas ("ETTL"), to provide professional hydrogeological consulting and analytical services for the City pertaining to the City of Denton Landfill (MSW Permit No. 1590A); the City Council has engaged ETTL for a number of consecutive years to perform these services, and has been satisfied as to the quality and reasonable price of their work; and WHEREAS, the City staff has reported to the City Council that there is a substantial need for the above-referenced professional consulting services, and that limited City staff cannot adequately perform the specialized services and tasks with its own personnel; and WHEREAS, it is necessary for the professional services provided by ETTL to begin on October 1, 2004, and the timing involved in the contract approval process dictates that this ordinance be ratified and approved effective as of October 1, 2004, which continues the professional services contracted by the City with ETTL for similar services for the City's landfill, without interruption; 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 on the basis of demonstrated competence, knowledge, and qualifications, and for a fair and reasonable price; NOW THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1: That the City Manager is hereby authorized to execute a Professional Services Agreement with ETTL Engineers & Consultants Inc., a Corporation, of Tyler, Texas, for further professional hydrogeological consulting and analytical services pertaining to the City of Denton Landfill (MSW Permit No. 1590A); in substantially the form of the Professional Services Agreement attached hereto as Exhibit "A" and incorporated herewith by reference. SECTION 2: That the award of this Agreement by the City is on the basis of the continued demonstrated competence, knowledge, and qualifications of ETTL and the 1 EXHIBIT 1 continued demonstrated ability of ETTL to perform the services needed by the City for a fair and reasonable price. SECTION3: That the expenditure of funds as provided in the attached Professional Services Agreement is hereby authorized. SECTION 4: That the effective date of the Professional Services Agreement approved hereby, is hereby ratified, confirmed, and made effective as of the 1st day of October, 2004. SECTION 5: That otherwise, except as stated in Section 4 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 S 5Our Documents\Ordmances\0&ETTL Eng~neers-Landfill-PSA 2004-2005 ord.doc 2 STATE OF TEXAS COUNTY OF DENTON PROFESSIONAL SEKVICES AGREEMENT FOR HYDR~EOLOGICAL CONSULTING AND ANALYTICAL SERVICES PERTAINING TO THE CITY OF DENTON LANDFILL THIS AGKE~ ~s made, ~n~etod into, and eff~'~LW as ofthc 1~ day of October, 2004, by and betwoem fl~e City of D~nton, Texas, a Texas Municqml Corporation, wth ~ts principal et'rices at 215 East McKnmey Street, Denton, Texas 76201 (heremsffgr "OWNEK"); and BTTL Bngmeers & Consultants, Iuc, a Corporation, w~th its corlxn~c of~ce at 1717 East Brwm Street, Tyler, Texas 75702-6398 (hercmafl~ "CONSULTANT"); th~ psm~ achng hereto by and through them respectave duly-authormed rep~ves and of Boem. wrr ssm a, t~ m of the covenants and agreements heroin contained, the parties hereto do mulually AGREE as follows: AR'T~I'CT.~ I EMPLOYMENT OF CONSULTANT The OWNER hereby contracts with CONSULTANT, as an independent contractor, ~nd the CONSULTANT hereby agrees to perfoim the sei~oes hereto m connectaon w~th the Project as stated m the Arbcles to follow, with d,hgonco and m accordance with thc professtonal standards customarily obtmned for such serwces in the State of Texas. Thc profesmonal se~w~ set forth hereto are m conne~aon ~nth thc following described pro~ect (the "Project"). Prowdmg professional hydrogeolog~cal consulting and analytical serwces pertsmmg to the Oty of Denton Landfill (lvISW Porant No 1590A) for thc pewiod be~owming on Oc~ber 1, 2004 and ending on Scpmml~r 30, 2005, ETTL ~hs11 serve as the OWNER's professtonal scmces consultant rclahve to ail landfill groundwater momtofing, dst_, review, repotting (mcludmg, w~thout hmttaSaon, two semi-annual detectmn grom~clwater monnormg events), and general §cologtcal and hydrogeologtcal consulting serwces, where needed for the Pro~ect SCOPE OF SERVICES The CONSULTANT shall lxa'form the following Basic Serv-iees m a professtonal manner:. A To perform all those s~wvices as are set forth m the CONSULTANT's "Proposal" to the Clty of Denton, Texas contained in that om-tmn three (3) page latter from Leslie A Joske, P G., Hydrogeologmt retmued by CONSULTANT to David Dugger, Landfill Supenntendent of OWNER, dated September 30, 2004, which letter xs attached hereto as Extu3it "A" and is incorporated herevath by mfexence If there is any conflict that ames between the terms of thru Agreement and the '5~robable Cost Estmaate" (September 30, 2004), Exhb~t "B" attached to th~a Agreement, then the teans and Page 1 ofl0 EXHIBIT 2 conthfions of Ex~lxt "B" shall control over thc terms and conthOons of the Agreement ADDmONAL SERVlC~ Any AdchUonal Services to be performed by CONSULTANT, if _~nthorized by OWNER, winch are not mcludecI as Basic Services ra the above<lescnbod SCOl~ of Services, set forth m Article II above, shall be later agre~l-~ by OWNER and CONSULTANT, who shall deteimine, tn writing, the scope of such Addilaonal Sa~ices, the amount of compensation for such adcMaonal sevaces, and other essealaal trams potiammg to the provision of such Additional Services by CONSULTANT A parttal hstmg of posmble Ackhuonal Sermces and the hourly rates and the amounts thercfor, are set forth on page two (2) of the "Pmb~le Cost Estimate" winch ~s attached hereto as Extnb~t '~B' and ~s mcorporal~ by reference ~th. P~OD O~ S~CE The part,cs hereby agree that m any event, thts Agreement shall be effecttve as of October 1, 2004. Work shall commence upon the issuance of a notice to proceed to CONSULTANT by the OWNER. Tins Agrceme~ shall remain m force for fl~ period that may reasonably be requuvd for the compleaon of the Project, including Adthttonal Sennces, ff any, and aay requned extenmous approved by the OWNER, or until Setfmmber 30, 2005, whichever evem shall first occur. Tins Agreement may be sooner t~,,nmated in accordance w~th the prowmous hereof Ttme ~s of the e~sence m the porformance oftl~ Agreem~t CONSULTANT nhall make ali reasonable efforts to completc ~he services set forth hereto as expedmously as posm'ble and to meet thc schedule(s) reasonably established by thc OWNBR, acting through ds Dircaor of Sohd Waste or bis dc~gnee. COMPENSATION A COMPENSATION TERMS: '~aect Non-Labor Bxpeme" ~s defined ms that expense [other than "p~ them" ~xpense], based upon actual cost plus fffie~n (15%) percent, for aay out-of-pockot expense reasonably mere'red by the CONSULTANT related to ~ts petfonnance of this Agrecment, for long distance telephone charges, telecopy c.3arges, messenger services, printing and reprodu~on oxpenses, out-of-pock~ exptms~s for purchased computer twne, prudently recurred travel expens~ related to the work on the Proje.~t, and snmlar mc~dontal ~ recurred m connection with the Pro}eot. B BILl.lNG AND PAYMENT. For and m conmderatJon of the profesmonal services to be performed by CONSULTANT hereto, OWNER agrees to pay CONSULTANT, based utxm the sattsfactory completmn of the Basic Services ~.qks set forth in the Scope of Sermces as shown in Arttcle H above, as follows Page 2 of 10 C D 1 CONSULTANT shall perform its work on tins Project on aa hourly fee bas~, plus rennbursement for ail reasonably recurred om-of-pocket expenses, b~lled monthly, or for longer penods of ttme CONSULTANT shall bill from time sheets, m rmmmum V4 hour increments of trine, at the rates and subject to the fei-ms set forth m CONSULTANT's "Probable Cost EstLmate" winch ~s contained m Exhxbit "B' heretofore refen~d to m Aracle ]IL OWNER shall payto CONSULTANT for its profes~onal serwces lxa'formed, and for ~ts out-of pocket expemes mmm~ m th~ Projecg a total amount not to exceed $41,772- 2 Part~al payments to the CONSULTANT wLll be made monthly based on tho peromt of actual completion of thc Bamc Services, rendered to and appi-oved by thc OWNER through ~ts I)ne~or of Solid Waste or Ins demgnee However, under no cu-cumstaaees shall any monthly statement for sexvaees exceed the value of the work pexfooag~ at the _t,m¢ a statement ~s roa~ The OWNER may wthhold the fiaal ten (10%) percent of the above not-to-exceed amount unal saasfactory compleaon of the Project by CONSULTANT 3 Nothing contained m tins Amcte ghall require th~ OWNER to pay for any work that is not sub~tted m comphance with the te~ms of thts Agreement OWNEK shall not be reqtured to make any payments to CONSULTANT at any Ume when CONSULTANT ~s m default under tins Agreement 4. It ~s specifically unde~'lood and agreed tI~at the CONSULTANT shall not be authorized to undertake any work purs~.~ant to th~s Agreement winda would rextmre addmonal payments by the OWNER for any charge, expense or r~aabursement above the not-to-exceed amount as stated hereinaboYe, Vtlthotlt first having obtaincd the prior wntt~ authorization of the OWNER. CONSULTANT ~ not proceed to perform any se~nce~ to be latex proxuded for under Amcl¢ ~ "AdchUonal Sennc~" without first obtaining prior written authorization fi.om the OWNER ADDITIONAL SERVICES' For Ad~hl~onal Sexwe.~ authorized in wntmg by the OWNER m Arttcl~ IIL h~-emabove., CONSULTAtqT shall be paid based on a to-be-agreed- upon Schedule of Charges. Payments for Ad&ttonal Sexv~ces shall be due and payable upon ~bnnsmon by the CONSULTANT, and shall be in accordance vath Exlnblt "B" attached hereto, and Amcle V B hereinabove Statements for Basu(: Sexv~ces and any Addsttonal Serwees shall be mxbmJtted to OWNER no more ~lythan once monthly. PAYMENT' If the OWNER fmls to make payments due the CONSULTANT for sennces and expenses vathm thtrty (30) days after receipt of the CONSULTANT's unchsputed statement thereof; the amounts duo the CONSULTANT ~ be mzreased by the rate of one percent (1%) pear month from and after the smd thnt~eth (30th) day, and m addmon, thcreaflex, the CONSULTANT may, after gxvmg tea (10) days written not~ce to the OWNER, suspend serrates under thru Agreement until thc CONSULTANT has been prod m full for all amounts then due and ovang, and not d~s-puted by OWNER, for services, expenses and charges Prowded, however, nothtug hereto shall reqmre the OWNER to pay the late charge of one percent (1%) per month as set forth hereto, d' the OWNER reasonably deterrames that the CONSULTANT's work ~s not subnntted in accordance w~th the terms of tlus Agreement, m accordance vath Article V.B. of th~ Agreement, and OWNER has promptly not~fied CONSULTANT of that fa~ tn writing. Page 3 of I0 OBSERVATION AND REVIEW OF TI-IE WORK The CONSULTANT ~ exerms¢ reasonable car~ ~ad duc dihgence m dmcovc~mg and promptly r~portmg to the OWNEK any dcfec~ or defic~en~ues m the work of CONSULTANT AR TTCT .F, VH O~ OF DOCUMEbT~ All documflts prepared or Nmished by the CONSULTANT pursuanI to thru Agreement are instruments of serwce and ~ become the ~ of the OWNEK upon the termm~4~on of th~ Agreement The CONSULTANT ~s ratified to rc~n coln~ of all such documents The documents prepared and firm,shed bythe CONSULTANT ar~ mtended only to be apphcable to tlus project and OWNF. R's use of these documents in other projects shall be a~ OWNER's solo nsk and expense In th~ evmt the OWNEK uses the Agreement in ~noth~r project or for oth~ purposes than specified here~n any of the inform~on or materials developed pursuant to tht~ Agreem~P., CONSULTANT m ~leased from any and ail hab~hty relaimg 1o thctr u~ m that project INDEPENDENT CONTRACTOR CONSULTANT shall prowde ser, uc.~ to OWNEK as an mdc~ndent contractor, not as an employee of the OWNEP~ CONSULTANT shall not have or clann any nght arising f~om employee staiuz Thy CONSULTANT sh~ mdcmmfy and save m~d hold tmrmless the OWNEK and its officmls, officers, agents, attorneys and employees from and ag~ra~t any and all habihty, clanns, demands, 6amage~, losses and expenses, including but not lmuted to court costs and reasonable attorney fees recurred by the OWNER, z~d including vathout hm~tat~on damages for bochly and persenal injury, death, or property damage, resulting from the neghgent acts or on~smons of the CONSULTANT or its officers, share~l~, agents, attomey~ and employees m the execWaon, operahon, or performance of~ Agreem~t Nothing in tins Agreement .~hall be construed to create a hab~hty to any person who ts not a party to tl~s Agre. cment and nothing hereto ~ waive any of the party's defenses, both at law or cqmty, to any clam~ cause of action or lmg~on fled by anyone not a party to thru Agreement, including the defense of governmental m~mumty, which defvnscs arc hereby expressly reserved. INSURANCE Dunng the performance of the Sm-vices under thru Agreement, CONSULTANT shall mmntam the follovang insurance v~th an msm'aacc company hcensed to do business m the State of Page 4 of 10 Texas by the State Insurance Board or any successor agency, that has a mtmg with A. M Best Rate Careers of at least an "A-" or above: Comprehemive General Liab~hty Insurance with bochly injury tarots of not less than $1,000,000 for each occurrence and not less than $1,000,000 m the aggregate, and with property damage hrmts of not less than $100,000 for each occurrence and not less than $100,000 m the aggregate. Automobtle laabflity Insuraiice with bodily injury !ira,ts of not less than $1,000,000 for each person and not less than $1,000,000 for each ac, ca(tent and v~th property damage lmnts for not less than $100,000 for each accident. C D Worker's Comtxms~on Insurance in accordance with statutory requu'vments, and Employer's laabihty Insurance vath lirmts of not less than $100,000 for each acodent Profess~onaI Liabthty lnsmance or appropnate Erro~ & Omissions Insurance with lamts of not less than $I,000,000 ~ual aggregate CONSULTANT shall furmsh insurance cemficates or insurance pohcues at the OWNER's request to ewdence such coveaages The insurance pohcaes shall name thc OWNER as an ad&tional insured on all such polioes to the extent that ~s l%gally poss%l¢, and shall contain a prov~on that such insurance shall not b~ cancelled or moddied vathom flxttly 00) days prior written not~ce to OWNER and CONSULTANT. In such event, the CONSULTANT shall, prior to the ¢ffectrv¢ date of the change or c, an~llation of coverage, dehver cop~es of any such subsmute pohoes, furmshing at least the same pohoy hmlts and coverage, to OWNER. AW'I'~C~I' .'F. ARBITRATION A_ND ALTERNATE DISPUTE KESOLUTION The Farttes vail make effom to settle any &spates arrsung under fins Agreem~t by subnntting the dasputo to arbltratto~l or other mmm of alternate &spute resolution such as me&stroh However, no arbltratton or other form of alternate dispute resolution arising out of, or relating to this Agreement involving one party's drsagreem~ may include the other party to the drsagreement vatl~ut the ethos approval. ARTIC1,1~. XTI TER.lVlINATION OF A~ A B Notwithstanding any other provision of this Agtoem~ ~ither pltt'ty may terminate this Agreement by promdmg th,try (30) days advance written nottce to the other party. Tins Agreement may alternahvely be t~tmmated m whole or m part m the event of either party substanually fading to 15jlfill ~ts obhgahons under tlns Agreement. No such'cermmatmn will be effected unless the other party is given (1) written not~ce (dehvered by certtfied marl, return recenpt requested) of inlet to term,nato and setting forth the reasons specifying the nonperformance or other reason(s), and not less than tlnrty {30) calendar days to cure the fatlure, and (2) an opportun~ for consultahon wth the temnnating party prior to tenmnat~om Page 5 of 10 C If thc Agr~ment ~s tcrmmat~ prior to completion of thc serwc~ ~o be p~d~ h~d~, CONS~T~ ~ ~mm~ty c~ ~l ~ ~n r~t of ~e ~R~ no~ce of t~,~on ~ O~ ~ ~ ~d~ a ~ bi~ for ~ ~ ~ O~ ~ ~ (20) ~ ~ ~e ~tc of t~aom ~c O~ ~ pay CONS~T~ for ~1 s~ ~p~ly ~d~ ~d ~~Y ~~ ~ f~ ~b~Ie e~ ~ m noh~ of ~~ ~ ~v~ ~ CONS~T~, m ~ra~ ~ ~cle V of ~ A~e~t. ~o~d ~e O~R ~bs~y ~t ~ a n~ ~~t f~ · e ~n~on of ~ on ~e Pm]~ CONS~T~ s~ ~~ ~ ~o~on m ~ O~ ~d ~ ~c n~ ~. ~ ~h~lc, O~R ~ CONS~T~ a ~~le ume m ~~ ~d to ~ ov~ ~e ~j~ ~ a n~ ~~t CONS~T~ s~ ~ ~ ~ d~~ ~ ~ ~~ by CONS~T~ p~.,~nt ~ ~s A~t ~ ~e O~ ~ or ~fo~ ~e ~le of ~o~ but my ~ ~i~ of ~ch ~~m f~ l~ ~. RESPONSIBILITY FOR CLAIMS AND LIABILITIES Approval of the work by the OWNER shall not constttute nor be deemed a release of the responmbahty and habthty of the CONSULTANT, ds officers, cmploye~, or agents, for the accuracy and competency of their work performed pumuant to th~s Agrecan~ nor shall such approval by the OWNER be deemed as an assmnptton of such responstb~ty by thc OWNER for any defect m thc work prepm~ by the CONSULTANT, its pnncupals, officers, employees, and AR~ICT .R ~ All notices, eommumeat~ons, and reports requn'cd or pc~mtted under tins Agreement s1~11 be pe~onally deLnrered W; or t~locopled to; or marled to the respective parties by dopoaltmg same in tho Umted States mad at the addresses shown below, postage prepaid, cet~ed mail; xetan-n reccupt requested, unless othervase specrfied hereto To CONSULTANT. ETII, Engineers & Consultants, Inc. 1717 East Erwm Street Tyler, Texas 75702 Fax' (903) 595-6113 To OWNEK' City of Denton, Texa~ lVhcbael A. Conduff; C~ty ~ 215 East McKumey Street Denton, Texas 76201 Fax: (940) 349-8596 All notices under thru Agreement shall be effective upon their actual rec~pt by the party to whom such not~ce as gtven, or three (3) days agter mailing of the notice, wbachever event shall first Page 6 of 10 ENTIRE AG~ Tlus Agreement con. sting of ten (10) pages and two (2) Exlnbim thereto, smd Exhibits eons, sting of three (3) and two (2) pages respectively, consfi~ the complete and final expressaon of the Agreement of the paraes and is intended as a complete and exclusive statement of the terms of theft agreements, and supersedes ali prior contemporaneous offers, pronnses, representations, negomat~ons, &s~uss~ons, commumcatmns, understmdiags, and agreements v,,heh may have been made m eonneetmn wah the ~-llbj ~-'[ mat[er of th~ Agre~menL If any provls~on of th, s Agreement ~s found or deemed by a court of ~t junsdachon to be mv~d or ~o~le, ~t ~ ~ ~d~ ~le ~ ~e ~d~ of ~s ~d sh~ not ~e ~e ~d~ ~ ~ mv~d ~ ~~le h ~ ~ ~e p~es ~h~ll ~fo~ ~ A~~ ~ ~e ~t ~ly ~ble, ~ ~1~ ~h ~ck~ p~saon ~ a v~d ~d ~o~le pw~ion w~eh ~m~ ~ clo~ ~ ~s~ble ~ ~~g ~e on~ ~~s of ~e p~ ~~ ~Y ~h ~ck~ COMPLIANCE W1TH LAWS CONSOLTANT shall comply with all federal, ~ local laws, rules, regulations, and ordinances apphcable to the work perftmned by CONSULTANT hereunder, as they may now read or as they may herea/~ be amended. DISCRIMINATION PKOI{IBITED In performing the ~xvxces reqmred hereamder, CONSULTANT shall not &sevin, hate against any person on the basra of x-ace, color, rehg~on, sex, national orion or ancestry, age, or physwal hanchcap PERSONNEL A B CONSULTANT represents that it has or vail secure at its own expense all personnel reqmred to perform all the servaees requrred under this Agreement Such personnel shall not be employees or officers off nor have any contractual rela~ons with the OWNER. CONSULTANT shall tmmed~tely reform the OWNER m writing of any eonfhct of interest or potenaal eonfl, ct of mterest that CONSULTANT may discover, or which may arise dunng the term of ths Agreement OWNER reqmres that CONSULTANT carefully safeguard all documents, data, and mformat~on prowded by OWNER to CONSULTANT incident to th~.~ engagement CONSULTANT recoL'n~zes that such documents; data, and mformahon, involve sens~ttve, Page 7 of I0 compe~t~v¢ issues, m ~ome c~es, confiden~al mfommaon; and m some c. as~ propnetary mform~on, and the dmclosum of such reformation by CONSULTANT to any third party, w~thout the express written consent of OWNER, m expressly probJ'b~ted by OWNER, and would hkely cause econorme loss ard detnment to OWNER. Any such unauthonzed chsclosure of informatton by CONSULTANT ~ constttute an act of default respecting thru Agreement CONSULTANT represents to OWNER that ~t vall safogum'd OWNER's reformation and will, upon OWNER'S reasonable mque~ prowde OWNER vath CONSULTANT'S poh¢~e~ regarding ars procedur~ for ~d~nafsqng con/hots of mterezt, and ~ts procedure~ and ~afegum~ wlnch are tn place which would apply to CONSULTANT'S treatment and handling of OWNER'S doc~nent% data, and mfommtion during tins engagement. All senaces reqm_red hereunder will be performed by CONSULTANT or under ~ts dtrect supermstom All personn,1 engaged in pefform,ng the work promdexl for m this Agreement, shall be q!mbfied, alld shall bo allthonzed and peiiiiitted tlllder apphcable state and local laws m l~rform such sm-v~ces The CONSI~TANT shall not assign any interest tn tins Agreemeat and shall not transfer any interest m th~s Agreement (whether by a_~l~t, novation or othcrcnso) vothout tho Imor written consent of the OWNER. CONSULTANT shall promptly notify OWNER. of any change of rts name as well as of any matenal change m ~ts corporate slnmm~ ~s location, and/or m its operations MODIFICATION No wmv~r or mod,~ica~ton of*h,~ Asreement or of ~y ~vm~ ~n&~ ilm~on h~ ~~ ~ be v~d ~ m ~g ~ duly ~ by ~o p~ m be c~ ~~ No emd~ of ~y ~v~ or m~ifi~on ~ ~ off~ or ~v~ m ew~ m ~y p~g ~g ~ ~e p~ h~ o~ of ~ ~g ~ A~~ or ~e n~ts or ob~s of~ p~ h~d~, ~ml~ ~h w~v~ ~~~ m m ~ d~y ~~ ~e pm~ ~ ~ ~ ~ ~m~om of ~s ~le ~ not ~ ~v~ ~ ~ h~m ~t fo~ ARTfUl ,~. ~ MISCELLANEOUS A CONSULTANT agrees that OWNER sb_atl: until the expxratton of three (3) years after the final payment made by OWNER unct~r tins Agreement, have acce~ to and the nghi to examine any dxrectly pertinent books, documents, pal>em and records of thc CONSULTANT revolving transaclnon.q relating to this Agreement CONSULTANT agrees that OWNER shall have access dunng normal worbng hours to all necessary CONSULTANT fac~ht~es and shall be provtded adequate and approprmte worlang space m order to conduct exammattons or anchts tn comphance vath fins Arttcle OWNER shall gtve CONSULTANT reasonable Page 8 of 10 advance notice of all intended exar~mat~ons or auch~s. B Venue of any stat or c~use of actaon under th~s Agreement shall lie exclusively m Denton County, Texas Thts Agreement shall be governed by and construed m accordance w~th the laws of the S~e of Texas. C. For proposes oftl~s Agreement, the parues agree that Leslie A Jeske ("$eske"), of the fnm of Solu~ent GeoSe~enees, Ine shall serve as the Project Manager for CONSULTANT respecting ,hi.~ engagement Thts Agreement has been entered into w~th the understanding that Ieske shall serve as the CONSULTANT's Project Manager and will be the key person serving the OWNER on th,.~ Project Any proposed changes requested by CONSULTANT, respecting Jeske serving as the Pro~ect Manager on the Proiect, shall be subject to the approval of the OWNER, which approval the OWNER shall not ,mreasonabty withhold Nothing hereto shall l~rn~t CONSULTANT from using other quah6ed and competent members of ~ts firm to perform the other services required herein, under its superv~on or control D. CONSULTANT shall commence, caxy on, and complete ~ts work on the Prqlect vath ail apphcable dm-patch, and m a sound, economical, effiment manner, and m accordance with the provimons hereof. In accompt:shmg the Project, CONSULTANT sb~li take such steps as are appropriate to ensure that the work revolved is tm0pcrly coordinated with related work being camed on by the OWNER E The OWNER shall assist and fiflly cooperate with CONSULTANT by placing at the CONSULTANT's disposal all available mformataon pertinent to the Project, including prevaous reports, any other daea relatrve to the Project and arranging for the access to, and make ali provasmns for the CONSULT~ to enter m or upan, pubt~c and private property as reqtured for the CONSULTANT to perform profcsmonal services under th~s Agreement 0WNF__~ and CONSULTANT agree that CONSULTANT ~s entitled to rely upon background mformanon fttrmshed to ~t by OWNER vathout the need for fttrther mqmry or lnvest~ga~on into such tnfonnataoxt F The captaons of tins Agreement are for mformatmnal purposes only and shall not in any way affect the substantive terms or concht~ons of thts Agreement. IN WITNESS WHEREOF, the Chty of I)enton, Texas has executed th~s Agreement m four (4) original counterparts, by and through its duly authorized C~ty Manager, and CONSULTANT has executed thxs Agrevnaaent by and through its duly authomzed undersigned officer, on this the day of ,2004, but to be effective onthe Ist day of October, 2004 Page 9 of 10 ~ OF DENTON, TEXAS A Munimpal Corpora*aon By:. M~¢haol .~ Conduff~ C~ty Manager ATTEST JENNIFER WALTERS, C1TY SECRETARY By. APPROVED AS TO LEGAL FORM. HERBERT L PROUTY, crrY ATTORNEY "CONSULTANT" ETTL ENGINEERS & CONSULTANTS, INC A Corpor~on I ' ATTEST secretary Page 10 of 10 M'~_.M B ER ETTL EN~n~~ & Co~stm~xms INc. ~11 GEOTECHNICAL · MATEFIALS * EHVIFK~NMENTAL David Dugger i~n S~ City of De~on 5166 Foff~ Road Denton, T~ 762~ PROPOSAL 200~ HYI)RO~LOGICAL CO~TING AND ANALY~CAL ?.q~RVICES crrY O1, DENTON LANDFILL (MNW PERMIT NO. 1.~) Dm~rroN (nm~rroN coum'Y), TEXAS 8~op~ of mo~iK~rlng ~,mt~ m~d ~ in m~jr, t~ ~ th~ ~ Texas Commi..q~on On ("OWSAP") ,~a 30 T~as ~~ Codo ("TACD §~30.233-330.24~ at tho above,. refea'emaxl faille. Tho following dis~mion provid~ a &t~il~ explana~n oftl~ ~ HOME OFFICE: 1717 E:est Fro'win Sll'oot Tyler, Texas 757~-6398 EXHtBIT A Mr. David Duper, City o£Denton Septe~t~r 30, 2OO4 Page 2 All servie~/,io~ided w/Il be ~ _~d ~ amt~the dir~ sapetvisioa oflVlr. L~ti¢ SesI~ P.G., Hyd~ogeologi~ Co~t~ and unit leos. It is es6mnted that tim ~otnl amount of Rfis coah=a~ for Ociobex 1, 2004' getmm3ber 30, 2005 should not exceed S 41, 772.00. You w/Il be n~t/fiefl if unforeseen .amdifions are ~ _eounl~red or there is a necessity to cb~mge tl~ scope ofwork- Additiomtt workwiH not be ~ without first o~ your approval of~he addifionnI costs. An invoice w~ll be submitted on amonthly basis for con~. We look farward to ~ with you again h~ 200$. A~c~: Probable Cost Estimate cc: ~ Co~lznd. City PROBABLE COST ESTIM~ (September ~ 2o04) C'dy of Deafen Landf~ (MSWPermit No. 1590/0 Denten (Denton CountD, Texas Seni~ for Omund Wa~r Sottwerc l~eimcnemc Agrccm~ SUBTOTAL ......... $ 375.00 375.00 glO.O0 100.00 170.00 150.00 162.50 125 O0 Pa~ lo£ 2 EXHIBIT B ~ROBABLE COST I!~'"rIMATE - colvrm~a~ (s~m=b~r ao, 2~04) City ofDmttoa ~ (MSW Pm-mit No. ISgOA) DeaUm ~ Co, m~), T~ra~ 13,446.oo 350.00 EVENTS A.NN~AL TOTAT.::::--:.. $ 41,7TLO0 ~logist- $I 15.001~ hour C, oal~ - $~0.00 ~ hour Eavi~. ~ Technleitm- $55 O0 C~D ~r - $~.~ ~ ~ ~- $0~ ~ ~o ~ ~ (~., ~ ~~ ~I~~ ~)- ~o~1 ~ (~ ~ 1~ ~.) - ~ +I5% Page2 of 2 AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: ACM: December 7, 2004 Utility Administration Howard Martin, Utilities 349-8232 SUBJECT Consider adoption of an ordinance of the City Council of the City of DeNon, Texas, authorizing the City Manager to pay the City's annual consolidated water quality fees for FY 2005 to the Texas Commission on EnvironmeNal Quality; authorizing the expenditure of funds therefor; providing an effective date. BACKGROUND The Texas Commission on EnvironmeNal Quality charges the Consolidated Water Quality Fee (CWQ) to all wastewater treatment plans in Texas. This fee is based on the permitted plan capacity and the wasteload allocation allowed to be discharged in the receiving stream. The City of Denton operates two wastewater treatments plants. The Pecan Creek Water Reclamation Plant (PCWRP) is curreNly permitted for 15 million gallons per day (MGD) and the Robson Ranch Water Reclamation Plan (RRWRP) is permitted for 0.25 MGD flow. The CWQ fee assessmeN for the PCWRP is $63,170, and for the RRWRP the fee is $800. The total CWQ fee assessmeN for the FY 2005 is $63,970. The City Council in the November 2nd meeting directed staff to present all expenditure items including payments to regulatory agencies to the PUB. Only on approval from the PUB the expenditure item is to be presented to the Council. This annual payment to TCEQ is presented to the PUB to comply with the Council's direction. OPTIONS None RECOMMENDATION Staff recommends approval of the CWQ fee to TCEQ. PRIOR ACTION/REVIEW (Council, Boards, Commissions) The CWQ fee was included in the FY 2005 budget approved by the PUB and City Council. FISCAL INFORMATION The CWQ Fee will be paid from the revenue account. EXHIBITS 1. TCEQ CWQ Fee Invoice 2. Ordinance 3. PUB Minutes Respectfully submitted, Jim Coulter Director of Water Utilities Prepared by P. S. Arora, P.E. Assistant Director Wastewater CITY OF DENTON A??N: dl~ COULTER 90,~ TEXAS, STE A DENTON TX 762094354 CITY :OF ~NTON PAGE 84 CH:F~CK MERE IF YOUR ABDRESS HAS CHANGED, PLEASE ~ND!CATE ADDRESS CHANGE ON ;BACK. $3, 170. 11/83/2084 05:24 948349?50? CITY OF DENTON PAGE OCT~4,0,4 DETACH ?H~S PORTION AND RETURN WITH CHiCK OR M~EY OROEI:~ ~A'¢AB~ TO: T¢×AS CO~I,SSiO~ ON F~NVIRON~ENTA'L @UAL~TY CITY OF D~NTON 90~ TE×AS ST SUITE A DENTON TX 762090,000 CHECK HEBE IF YOUR ADDRE:SS HAS CHANG[;D. PLEASE INB[©ATE ADDREBS CHANGE ON BACK. iNVOiCES NOT PAID W~TH!N DAYS OF iNVOiCE DATE WiLL . ACC__ ~UE PENALTIES FOR ?~C~CAL @~$:~O~fS CO~CB~G T~$ F~ PL~,A5~ CA,L~ 512-239-5161, ~C~V~Q THROUGH: OCT OCT 14 04 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 CITY OF DENTON PUBLIC UTILITIES BOARD MINUTES November 8, 2004 DRAFT After determining that a quorum of the Public Utilities Board of the City of Denton, Texas was presem, the Public Utilities Board convened imo an Open Meeting on Monday, November 8, 2004, at 9:00 a.m. in the Service Cemer Training Room, City of DeNon Service Cemer, 901-A Texas Street, Denton, Texas. PRESENT: John Baines, Bob Bland, Bill Cheek, Dick Smith, Phil Gallivan, George Hopkins, Charldean Newell EX OFFICIO MEMBERS Michael Conduff, City Manager Howard Martin, ACM/Utilities CONSENT AGENDA: Staff recommends this item, 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. The Public Utilities Board has received background information and has had an opportunity to raise questions regarding these items prior to consideration. Listed below are bids or purchase orders or other matters to be brought before the Public Utilities Board to be considered and approved for paymem under Consem Agenda items 1, 2, 3 & 4. Detailed information is attached to each Consent Agenda item. This listing is provided on the Consent Agenda to allow Public Utilities Board Members to discuss or withdraw an item prior to approval of the Consent Agenda. If no item is pulled prior to consideration, Consent Agenda Items 1 through 4 will be approved with one motion of the Board. If an item is pulled for separate discussion, such item will be considered as the first item taken up under the "Items For individual Consideration" section of the agenda, set forth below. 1) Consider approval of a Professional Services Agreemem with ETTL Engineering and Consulting, Inc. to supply the Solid Waste Department with hydro geological consulting and ground water monitoring services at the City's landfill, in an amoum not to exceed $41,772. 2) Consider approval of an authorization to expend funds by the City of DeNon, Texas for electrical energy transmission fees owing to those cities and utilities providing energy transmission services to the City of DeNon, Texas (File #3257 - Electrical Energy Transmission Fees - $613,819). 3) Consider approval of Change Order No. 2 in the amoum of $202,750 for Bid No. 3107 for the Hickory Creek Basin Sanitary Sewer Replacemems and Liners project. 1 EXHIBIT 3 1 2 3 4 5 6 7 8 9 10 4) Consider approval of payment of the Consolidated Water Quality Fee for FY 2005 to Texas Commission on Environmental Quality for the Pecan Creek and Robson Ranch Water Reclamation Plants in the amount of $63,970. Consent Agenda Items #1 and #3 were pulled for discussion. Board Member George Hopkins moved to approve Consent Agenda Items #2 and #4, with a second from Board Member Phil Gallivan. The motion was approved by a vote of 7-0. ORDINANCE NO. 2004- AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS, AUTHORIZING THE CITY MANAGER TO PAY THE CITY'S ANNUAL CONSOLDATED WATER QUALITY FEES FOR FY 2005 TO THE TEXAS COMMISSION ON ENVIRONMENTAL QUALITY; AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR; PROVDING AN EFFECTIVE DATE. WHEREAS, the Public Utilities Board of the City of Denton, Texas has examined, considered, and recommended approval for payment of the Consolidated Water Quality Fees ("CWQ") that have been charged and assessed to the City by the Texas Commission on Environmental Quality ("TCEQ") for the Fiscal Year 2005; that said CWQ fees are now due and owing, and the TCEQ invoice requesting payment of said CWQ's has been issued to the City; and WHEREAS, all wastewater treatment plants in Texas are charged such fees by TCEQ as provided by applicable law; said CWQ fees are based upon the permitted plant capacity and the wasteload allocation allowed to be discharged in the receiving stream; and WHEREAS, the City of Denton, Texas operates two wastewater treatment plants; the Pecan Creek Water Reclamation Plant ("PCWRP") is currently permitted for 15 million gallons per day ("MGD"); and the Robson Ranch Water Reclamation Plant ("RRWRP") is currently permitted for 250,000 gallons per day; the CWQ fee assessment for the PCWRP is $63,170; for the RRWTP the fee assessment is $800; the two CWQ fees owing the TCEQ total $63,970; and WHEREAS, City Council finds that it is in the public interest that such fees should be paid, and accordingly, approves the payment of $63,970 for CWQ fees for FY 2005 to the TCEQ; NOW THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. That the City Manager is hereby authorized to pay the sum of $63,970 directly to the Texas Commission on Environmental Quality ("TCEQ"), for the FY 2005 Consolidated Water Quality Fees for the two wastewater treatment facilities maintained by the City. SECTION 2. That this ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of ,2004. EULINEBROCK, MAYOR EXHIBIT 2 ATTEST: JENNIFER WALTERS, CITY SECRETARY By: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY S \Our Documents~Or&nanccs\04WCEQ-FY 2005 CWQ Fees-Wastewater Treatment doc AGENDA DATE: DEPARTMENT: ACM: AGENDA INFORMATION SHEET December 7, 2004 Materials Management Kathy DuBose ~ Questions concerning this acquisition may be directed to Sharon Mays 349-8487 SUBJECT Consider adoption of an Ordinance accepting competitive bids and awarding an annual comract for the purchase of distribution padmoumed switchgear; providing for the expenditure of funds therefore; and providing an effective date (Bid 3247-Annual Comract for Manual PME 9,10,11 Padmoumed Switchgear awarded to Priester Supply Co., in the estimated amoum of $184,465). BACKGROUND This bid is for an annual price agreemem to supply padmoumed switchgear for the DeNon Municipal Electric. These units will be utilized in the maintenance and new construction of the electric distribution system. PRIOR ACTION/VIEW (COUNCIL, BOARDS, COMMISSIONS) The Public Utility Board approved this item at the November 22, 2004 meeting. RECOMMENDATION We recommend this bid be awarded to the lowest responsible bidder for each item: Item Description Supplier Price 1 Padmoumed Switchgear PME 9 Priester Supply Co. $10,660 2 Padmoumed Switchgear PME 10 Priester Supply Co. $11,525 3 Padmoumed Switchgear PME 11 Priester Supply Co. $11,255 12 1 4 The lower priced bid offered by Wesco Distribution (Federal Pacific Switchgear brand) did not meet bid specifications in several areas. These areas include: unit did not have a six-inch base spacer (as required), unit did not have fault viewing windows (as required) and non-compliance of the fuse holder. PRINCIPAL PLACE OF BUSINESS Priester Supply Co. Arlington, TX Agenda Information Sheet December 7, 2004 Page 2 ESTIMATED SCHEDULE OF PROJECT Each item is quoted to be delivered within 105 days of receipt of an order. FISCAL INFORMATION Funding for the purchase of these units will come from Warehouse Working Capital account (800001.6402) and charged to the appropriate job work order when placed in service. Attachment 1: Tabulation Sheet 1-AlS-Bid 3247 Padmounted Switchgear Respectfully submitted: Tom Shaw, C.P.M., 349-7100 Purchasing Agent Bid # 3247 Attachment 1 Date: 10/28/04 Annual Contract for: Manual PME-9, 10, 11 Padmounted Switchgear i ,!~m I ~n~, I s!~k# ~ENOO, ~ENDOR ~ENDOR ~ENDOR Qty ~ Wesco Distribution Hughes Priester Supply TEC Utility Supply Principle Place of Business: Fort Worth, TX Corinth TX Arlington TX Denton TX I 1 12 28579309 Padmounted Switchgear, 14.4 $9,648.00 $10 887.78 $10 660 O0 $10 875 O0 kV nominal, 3-Phase unit. ' ' ' ' ' EStl m atexd uS~itfl~tria~e0QuantIty $115,776.00 $130,653.36 $127,920.00 $130,500.00 ~ Manual PME-10 configuration, I 2 1 28579310 Padmounted Switchgear, 14.4 $10,560.00 $11,771.58 $11,525.00 $11,487.00 kV nominal, 3-Phase unit. Brand/Mfg. Catalog# F~d0_e~140P~)_~fi2c9/9_PTS7E' S&C/65242R1-F2K S&C/65242R1-F2K Malt~/s~l~110- Estl m atexd uS~i~fl~tria~eOQuantIty $10,560.00 $11,771.58 $11,525.00 $11,487.00 ~ Manual PME-11 configuration, I 3 4 2857931 1 Padmounted Switchgear, 14.4 $10,463.00 $11,492.42 $11,255.00 $11,641.00 ~ Federal Pacific / PSE- kV nominal, 3-Phase unit. Brand/Mfg. Catalog# 11-4431~_-7A294-E4- S&C/65162R1-E 1F2K S&C/65162R1-E1F2K M~I~r~/FM2E~1T121- ( QEuSat in ,~ ia; exd uSnUi tb 'p°rtiacle ) $4.1,852.00 $4.5,969.68 $4.5,020.00 $4.6,564.00 GRAND TOTAL BID $168,188.00 $188,394.62 $184,465.00 $188,551.00 Shipment 40-60 Days 12-15 Weeks 105 Days 70 Days 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 CITY OF DENTON PUBLIC UTILITIES BOARD MINUTES November 22, 2004 DRAFT After determining that a quorum of the Public Utilities Board of the City of Denton, Texas was present, the Public Utilities Board convened into an Open Meeting on Monday, November 22, 2004, at 9:00 a.m. in the Solid Waste Conference Room, City of Demon Service Cemer, 1504 Mayhill Road, Denton, Texas. PRESENT: Bob Bland, Dick Smith, Phil Gallivan, Charldean Newell EX OFFICIO MEMBERS Michael Conduff, City Manager Howard Martin, ACM/Utilities ARRIVED LATE: John Baines, Bill Cheek and George Hopkins The Public Utilities Board convened its Open Session at 9:05 a.m. The Chair, Charldean Newell, stated that there were two Closed Meeting agenda items that were set forth in the Closed Meeting agenda. Newell requested with three members not present at the call to open the meeting, that the closed session items be reviewed at the end of the agenda. The meeting convened to consider the following business: CONSENT AGENDA: 1) Consider approval of Bid #3247 - Annual Price Agreement for Distribution Padmounted Switchgear awarded to Priester Supply Co., in the estimated amount of $184,465. Newell called for a motion to approve the consent agenda or if the item needed to be pull from the consem agenda for further discussion. Board Member Phil Gallivan responded that he did not want to pull the item, but did want an explanation of why this bid was not granted to the low bidder. Tom Shaw, Purchasing Agent, confirmed that the bid was not awarded to the low bidder, Wesco Distribution. Shaw reported that Wesco's bid did not meet specifications and was determined incompatible with the City's current system. Gallivan moved to approve Consent Agenda, with a second from Board Member Dick Smith. The motion was approved by a vote of 4-0. Page 1 of 1 ORDINANCE NO. AN ORDINANCE ACCEPTING COMPETITIVE BIDS AND AWARDING AN ANNUAL CONTRACT FOR THE PURCHASE OF DISTRIBUTION PADMOUNTED SWITCHGEAR; PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFORE; AND PROVIDING AN EFFECTIVE DATE (BID 3247-ANNUAL CONTRACT FOR MANUAL PME 9,10,11 PADMOUNTED SWITCHGEAR AWARDED TO PRIESTER SUPPLY CO., IN THE ESTIMATED AMOUNT OF $184,465). WHEREAS, the City has solicited, received and tabulated competitive bids for the purchase of necessary materials, equipment, supplies or services in accordance with the procedures of State law and City ordinances; and WHEREAS, the City Manager or a designated employee has reviewed and recommended that the herein described bids are the lowest responsible bids for the materials, equipment, supplies or services as shown in the "Bid Proposals" submitted therefore; 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, equipment, 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 bids for materials, equipment, supplies, or services, shown in the "Bid Proposals" on file in the office of the City Purchasing Agent, are hereby accepted and approved as being the lowest responsible bids for such items: BID ITEM NUMBER NO VENDOR AMOUNT 3247 1,2,3 Priester Supply Co. Exhibit A SECTION 2. That by the acceptance and approval of the above numbered items of the submitted bids, the City accepts the offer of the persons submitting the bids for such items and agrees to purchase the materials, equipment, supplies or services in accordance with the terms, specifications, standards, quantities and for the specified sums contained in the Bid Invitations, Bid Proposals, and related documents. SECTION 3. That should the City and persons submitting approved and accepted items and of the submitted bids wish to enter into a formal written agreement as a result of the acceptance, approval, and awarding of the bids, 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, specifications, standards, quantities and specified sums contained in the Bid Proposal and related documents herein approved and accepted. SECTION 4. That by the acceptance and approval of the above numbered items of the submitted bids, the City Council hereby authorizes the expenditure of funds therefor in the amount and in accordance with the approved bids 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-BID 3247 ( ~" Bid # 3247 Exhibit A Date: 10/28/04 Annual Contract for: Manual PME-9, 10, 11 Padmounted Switch( ear / Pnester Supply Principle Place of Business: Arlington, TX Horizontal Mounted Manual PME-9 configuration, 1 12 28579309 Padmounted Switchgear, 14.4 $10,660.00 kV nominal, 3-Phase unit. Brand/Mfg. Catalog # S&C/65152R1-E1F2K Estimated Subtotal (Quantity $127,920.00 X Unit Price) Manual PME-10 configuration, 2 1 28579310 Padmounted Switchgear, 14.4 $11,525.00 kV nominal, 3-Phase unit. Brand/Mfg. Catalog # S&C/65242R1-F2K Estimated Subtotal (Quantity $11,525.00 X Unit Price) Manual PME-11 configuration, 3 4 28579311 Padmounted Switchgear, 14.4 $11,255.00 kV nominal, 3-Phase unit. Brand/Mfg. Catalog # S&C/65162R1 -El F2K Estimated Subtotal $45,020.00 (Quantity X Unit Price) GRAND TOTAL BID $184,465.00 Shipment 105 Days AGENDA DATE: DEPARTMENT: ACM: AGENDA INFORMATION SHEET December 7, 2004 Materials Management Kathy DuBose ~ Questions concerning this acquisition may be directed to Jim Coulter 349-7194 SUBJECT Consider adoption of an Ordinance authorizing the City Manager or his designee to execute Change Order Two to the contract between the City of Denton and Circle C Construction Company, inc.; providing for the expenditure of funds therefore; and providing an effective date (Bid 3107-Hickory Creek Basin Sewer Replacements and Liners Change Order Two in the amount of $202,750). CHANGE ORDER INFORMATION The Hickory Creek Basin Infiltration/Inflow Corrections project is part of the ongoing projects mandated by the EPA Administrative Order in 1999. The City has completed these corrections in the Cooper Creek, Western Pecan, Middle Pecan and Eastern Pecan Basins. The rehabilitation work in Hickory Creek Basins is currently underway and close to completion. Bids for the construction phase of this project were received on November 25, 2003. The original project consisted of a Base Bid in the amount of $1,856,545.50 and one Alternate Bid for manhole rehabilitation in the amount of $138,730. in January of 2004, the Public Utility Board (PUB) and the City Council approved the award of the Base Bid and Alternate One in the total amount of $1,995,275.50 to Circle C Construction Company, Inc. However, on January 20, 2004, the City of Denton entered in to a contract with Circle C Construction for the Base Bid only, in the amount of $1,856,545.50. The manhole rehabilitation originally bid as Alternate One was performed by City crews. Change Order Number One was approved by PUB on May 10, 2004. It consisted of correcting the omission of 1,499 linear feet of 27- inch sanitary lining by adding it to the Base Bid. The increase in total contract price was $136,409 for a total cost of $1,992,954.50. Change Order Two consists of additional sewer line reconstruction in the Taylor Park subdivision near the Denia Neighborhood by Borman Elementary School. The construction includes rehabilitation of the sewer line in Westwood Street, which was intended to be included in the Parvin Street Sewer Line CiP project. However, the Street Department was repaving Westwood Street at that time, so staff decided to include the Westwood Street sewer line as a Change Order to this contract. The work near the Denia neighborhood includes 1,474 linear feet of 8-inch sanitary sewer line, three manholes, 40 sanitary sewer services and other associated items of construction. Agenda Information Sheet December 7, 2004 Page 2 CHANGE ORDER INFORMATION CONTINUED Change Order Two also includes relocation of a sewer line due to the expansion of the Civic Center. The cost of the relocation will be paid by the Parks Department. The work at the Civic Center includes 340 linear feet of 24-inch sanitary sewer line, three manholes and other associated items of construction. The estimated cost of the additional work at the Denia Neighborhood is $141,980 and $60,770 for work at the Civic Center. The increase in total contract price is $202,750 for a total cost $2,195,704.50. PRIOR ACTION/VIEW (COUNCIL~ BOARDS~ COMMISSIONS) Council approved the award of Bid 3107-Hickory Creek Basin Sanitary Sewer Replacements and Liners in the Base Bid amount plus Alternate One in the amount of $1,995,275.50 at its January 20, 2004 meeting. The City of Denton then entered in to a contract with Circle C Construction for the Base Bid only in the amount of $1,856,545.50. The manhole rehabilitation originally bid as Alternate One ($138,730) was completed by City crews. The Public Utility Board approved Change Order One in the amount of $136,409 at its May 10, 2004 meeting. The Public Utility Board approved Change Order Two in the amount of $202,750 at its November 8, 2004 meeting. RECOMMENDATION We recommend award of Change Order Two to Circle C Construction Company, Inc. in the amount $202,750 for a total purchase order amount of $2,195,704.50. PRINCIPAL PLACE OF BUSINESS Circle C Construction Company, Inc. Fort Worth, TX ESTIMATED SCHEDULE OF PROJECT This Change Order added 30 days to the estimated completion date of August 2004. Agenda Information Sheet December 7, 2004 Page 3 FISCAL INFORMATION Funding for this item will be provided from project account 640038540.1360.40100. Respectfully submitted: Tom Shaw, C.P.M., 349-7100 Purchasing Agent Attachment 1: Change Order Two 1-AlS-Bid 3107 Change Order Two CITY OF DENTON CHANGE ORDER 1. Division (Department) 2. Purcl~'ase Order No: '-~i" Change Order Nc~"."~) En~¢neering .. 116227 Name of Project 5. Project Acct N~. 6. Date"Prepared: Hickory Creek Basin Sewer 640038540.1360.40100 Line Replacements and October 21 2004 Liners 7. Name and Address of Contra'~,tori""~i'rcle C Construction Cor~)'~'ny, lnc 500 W. Trammell Street Ft. Worth, TX 76140 8. Description of Work Included in Contract Sanitary sewer line and manhole reconstruction / rehabilitation by open cut, pipe bursting and lining ......... [9 rocesses. 9. Changes ordered and reason ordered: AdditionaI"work on Mercedes, West~ood, and the Civic Center 10. Contract Changes Bid Origina'l ' Contract Revised .... Negotiated Original Revised Item Estimated Unit Price Estimate C.O. Unit Estimated Estimated ...N..°.. Quantit,/ ..Quantib/ Price Cost Cost 1. 8" SDR 35 SS 2.12-C 6071 $32.00 7063 $1941~.72.00 $226,018.00 2.8" CI 51 DI SS 2.12-C 1739 $49.00 2221 $85,2tl.06' $108,829.00 3. Block Sod 3.9 ~34 $5.00 616 .... $2,670.00 $3,080.00 4. Concrete MH 4' WS13/ 76 ~;~,650.00 78 ..... $125,400.00 $128,~)0.00 15 5. 4" SS Service w/CO WS18 172 $450.00 ';~2 $77,400.00 $95,400.00 6. Remove Existing Mit'"' WS 27 62 $600.00 6~ .... $37,200.00 $38,400.00 7. Excavation Protection SP-37 13,810 $1.00 15'~'6~ ' $13,8~'(~'.00 $15,765.00 8. Asphalt Saw Cut SP 43 22,,~2" $2.50 27,272 ....... $56,380.00 $68,1~'b',00 9, Concrete Saw Cut Sp-2 39C $3.00 885 .... $1,170.00 $2,055.00 10, Demolish/Remove 3-A 97 $~"0100 213 $970,00 $2,130.00 Concrete Paving 11, Reinforced Concrete 5.8 76 $45.00 192 $3,420.00 $8,640,00 .. P .av[ng t2. Remove Sidewalk / 3-C t89 $2.00 .... 248 "~;~78,00 $496.00 Driveways 13. Construct Concrete 8,3A 69 $45,0(~" 128 $';~',105,00 $5,760.00 Sidewalk 14. Extra Depth for4' 7.6 114' .......... $95.00 117 ......... $10,830.00 $111'i"~.00 MH 15. Manhole Lining WS34 609 $185.00 624 $112,665.00 $115,440.00 16. Concrete Plans 120 $'§5.00 563 "' $4,200.00 $19,705.0'~" Encasement 8" SS 17. Pipe Ream 8" HDPE WS35 558 -" $90.00 799 $50,220.00 $71 18. 24" PVC Sanitary 2.12-C 0 ......... $0.00 340 $129.¢0 $0.00 $44,030~(~0 Sewer 19. 5' MH 0-6' Deep 6.6 2 $2,200.0~ 5 $4,400.00 $11,000.00 20. Extra Depth 5' MH 6.6 15 $150.00 55 $2,250.00 $8,250.00 21.4" Deep Sewer WS 18 0 $0.00 2 $900.00 $0.00 $1800.00 Service with Clean Out 22. Cut and Plug Pier'S 0 $0.00 2 $1,000.00 $0.00 $2,000.00 Existing TOTAL $785,951.00'"' $988,701.00 HTC .~..RY CREEK BASIN SANITARY SEWER ~ REPC.AC~EMENTS AND LINERS " SHEETS: 21A, 22A, 21B, Civic Center 24" ;" Quantity Take-Off and Cast Estimate Based Upon Circle C's Existing Unit Prices Work Days Bid No. P.O, No. 3107 Sheet 21 A Sheet 22A Sheet 22B Civic Center Total Circle C Construction [ten;,I, Descriplti~n . Quallfit¥ Quantity Q,.lalllity Qnalfity Quantity Unit b~titPH[e [$Total .... 1.21 [Contractors W, rrantie$ and Understandings ... LS $ ..65,000.00 / LS 0.00 Unit Price in Wu,ds ,.).12-B 18'" SDR-26 Sanitary Sewer Pip~e ..... [ l [ 'l ,, [ [ LF $ 34.00 /LF[$ 0.00 ........ Unit Price ~11 Words Unit Price [I1 words 2.12C 18" Class 5, Ductfle Iron Pipe for Sanitary Sewer [ .... 423 I 18 [ 4-I ,.I I482 [ LF $ 4~.00 /LF[$ 23,618,00 ...... Unit Price in Words Unit Price In Words Unit Price In Words Unit Prioe In Words Ullit Price In Words Unit Price In Words Our Price In Words 3.1 IPrepamtionofRi,htofWay ...t " I I I .... " [ ILS $ is,QUO.Q0,, "/LsI; o.o0 Unit Price In Words 3.10.4 Seedin~ 1.50 / SY i$ Unit Price [~ Words Unit Price la Words Unit Price In Words Unit Price In Wards Unit Price In Words Unh Price In Words Unit Price In Words Unit Price In Words U~i[ Price ]. Winds WS18 Unit Price In Words Unit Price h~ Words 10/26/2004 P 1 HICKC~.RY CREEK BASIN SANJTARY SEWER ~ RFJ~LA~CEMENTS AND £1NERS "¢. SHEETS: 2tA, 22A, 21 B, Civic Cer~ter 24" ' Quanti.ty Take-Off and Cost Estimate Based Upon Circle C's Existing Unit Prices Work Days Bid No. P.O. No. 3107 ,,, ISh,eet 21 A I Sheet 2~ Circte C Constraction Item I ,? .... iption I Q.~,antity Quantity ~ ~uan~ityI ~.~e, I 9"~""~ Iv~it udh~,ic, I Total .,~ Uni: PHc~ In Words Unit Price I. Werds Unit Price in Words Unit Ph~ In Words Unit Price in Wo~ds Uoit Prlce In Words U~it Price h~ Werds Unit Pdce In Wards Unit Price ~n Words Un~l.~,[ice In Words Unit Price [~ Wor~ Unit Price In Words 0.4 [Sleeve OaseEx..w,t,rLine-,2"SteelCasin~ Pipe I " I I 'l ... ~ I LF $ IO0.O0 t LF 15 0.00 ...... U~it ~rice ~n Words Uni~ Plice In Words Unit Price In W~rds 116" RRB ..... d,~[¢~i Encasement I ' I [ I I [ LF $ 250.00 /LF [$ 0.00 Unit Pffce la Words U~fit Price In Wolds Unit Price In Wo~ ds Uni~ Price In Words U~it Price In Werds Unit Price In Words Unil Price I~ Words Unif Price [n Words 10/26/2004 P 2 HIC~CcRY CREEK BASIN SANITARY SEWER RE_PLACEMENTS AND LINERS SHEETS: 21A, 22A, 21 B, Civic Center 24" Quanti~ty Take-Off and Cost Estimate Based Upor~ Circle C's Existing Unit Prices Work Days Bid No, P.O. No, 3107 Sheet 21 A Sheet 22A Sheet 22B civic Center Total Circle C Construction lten;'~ De$c,'ipti:,, ' Oua.tity Quantity QnaafitY., ~anlity Qaantity U~t Unit P~e ~ T~'~I ~,o l~ra Deplh for 5' Diameter $anitaw Sewer M~hole Unit Price ~n Words Ua~t Price In Wor~s Unit Price In Unit Price In Unit Pri~e In Words Unit Pri~ in Words ........... ,, , [,, i ....... Unit Price in Words Unk Price In Words Unit Price In Words Unit Price In Words Unit Price tn Werds Unit Price In Words Unit P~ice In Words Unit Price In Words ~ 1~,~..~,,~,~ .... I I ~ I ...I. I:~, ~.o~ ~...1~ o.oo Unit Price In Werds Unit Pr/ce In Words Unit Price in Words 9PECIAL ]RgmovoExistingCleanoutpriorlopipebursting I I [ [ .... I I~ $ 300.00 /EAI$ 0.00 Unit Price In Words ~e. EO,AL J,~o,~i=,i,gC,..... [priortopipebumt~ngI I t... I I I~* , zoo.co /,Al, o.oo Unit Price ~n Words Unit Price h~ Word8 I $ 202~750.00 10/26/2004 P 3 11. Original Contract Price $1,992,954,50 $2,195,704.50 Increase in contract price $202,750.00 New Contract Price Decrease in contract price 12. Contract time increased/decreased b~days. New contract time days.' THE AFOREMENTIONED CHANGE~ AND WORK AFFECTED THEREBY, IS SUBJECT TO ALL CONTRACT 14. ACCEPTED BY CITY ENGINEER: Signature ACC T O .v CONTRACTOR: Titl.e i~ate / Date Signature ~ Date 16. ASSISTANT CITY MANAGER: 17. DIRECTOR OF UTILITIES: CONDITIONS OF APPROVAL: 18. PURCHASING/FiNANCE: 19. COUNCIL APPROVAL (iF NEEDED) Signature Signature Signature Signature Date Date Date Date 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 50 51 52 CITY OF DENTON PUBLIC UTILITIES BOARD MINUTES November 8, 2004 DRAFT After determining that a quorum of the Public Utilities Board of the City of Denton, Texas was present, the Public Utilities Board convened into an Open Meeting on Monday, November 8,, 2004, at 9:00 a.m. in the Service Cemer Training Room, City of DeNon Service Cemer, 901-A Texas Street, Denton, Texas. PRESENT: John Baines, Bob Bland, Bill Cheek, Dick Smith, Phil Gallivan, George Hopkins, Charldean Newell EX OFFICIO MEMBERS Michael Conduff, City Manager Howard Martin, ACM/Utilities The Public Utilities Board reconvened in an Open Session at 10:15 a.m. The meeting was called to order to consider the following business: CONSENT AGENDA: Staff recommends this item, 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. The Public Utilities Board has received background information and has had an opportunity to raise questions regarding these items prior to consideration. Listed below are bids or purchase orders or other matters to be brought before the Public Utilities Board to be considered and approved for paymem under Consem Agenda items 1, 2, 3 & 4. Detailed information is attached to each Consent Agenda item. This listing is provided on the Consent Agenda to allow Public Utilities Board Members to discuss or withdraw an item prior to approval of the Consent Agenda. if the item is pulled prior to consideration, Consent Agenda Items 1 through 4 will be approved with one motion of the Board. if the item is pulled for separate discussion, such item will be considered as the first item taken up under the "Items For individual Consideration" section of the agenda, set forth below. 1) Consider approval of a Professional Services Agreemem with ETTL Engineering and Consulting, Inc. to supply the Solid Waste Department with hydro geological consulting and ground water monitoring services at the City's landfill, in an amoum not to exceed $41,772. 2) Consider approval of an authorization to expend funds by the City of DeNon, Texas for electrical energy transmission fees owing to those cities and utilities providing energy transmission services to the City of DeNon, Texas (File #3257 - Electrical Energy Transmission Fees - $613,819). 3) Consider approval of Change Order No. 2 in the amount of $202,750 for Bid No. 3107 for the Hickory Creek Basin Sanitary Sewer Replacements and Liners project. 4) Consider approval ofpaymem of the Consolidated Water Quality Fee for FY 2005 to Texas Commission on Environmemal Quality for the Pecan Creek and Robson Ranch Water Reclamation Plants in the amount of $63,970. EXHIBIT 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Consent Agenda Items #1 and #3 were pulled for discussion. Board Member George Hopkins moved to approve Consent Agenda Items #2 and #4, with a second from Board Member Phil Gallivan. The motion was approved by a vote of 7-0. Consent Agenda Item #3 Jim Coulter, Director of Water/Wastewater Utilities, presented this item for consideration. Board Member Bill Cheek asked if this project was associated with Change Order Number 1 approved by the Board on May 10, 2004. Frank Payne, Engineering Administrator, responded by explaining that Change Order Number 1 consisted of an additional 1,499 feet of sanitary sewer lining that was inadvertently omitted and then added to the Base Bid. This is Change Order Number 2, consisting of additional sewer line reconstruction in the Taylor Park subdivision near the Denia neighborhood by Borman Elementary School. Payne also informed the Board that Change Order Number 2 also includes relocation of a sewer line due to expansion of the Civic Center. The cost of the relation will be paid for by the Parks Department. Cheek moved to approve Consent Agenda Item #3, with a second from Gallivan. The motion was approved by a vote of 7-0. ORDINANCE NO. AN ORDINANCE AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO EXECUTE CHANGE ORDER TWO TO THE CONTRACT BETWEEN THE CITY OF DENTON AND CIRCLE C CONSTRUCTION COMPANY, INC.; PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFORE; AND PROVIDING AN EFFECTIVE DATE (BID 3107-HICKORY CREEK BASIN SEWER REPLACEMENTS AND LINERS CHANGE ORDER TWO IN THE AMOUNT OF $202,750). WHEREAS, on January 20, 2004 by Ordinance No. 2004-016, the City awarded a public works contract to Circle C Construction Company, Inc., in the amount of $1,995,275.50 for the Hickory Creek Basin Sanitary Sewer Replacements and Liners; WHEREAS, the Staff and the City Manager having recommended to the Council that a change order be authorized to amend such contract with respect to the scope of work and an increase in the payment amount; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The Change Order No. Two, increasing the amount of the contract between the City and Circle C Construction Company, inc., which is on file in the office of the Purchasing Agent, in the amount of Two Hundred Two Thousand Seven Hundred Fifty and 0/100 ($202,750) 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 $2,195,704.50. SECTION 2. That 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: HERBERT L. PROUTY, CITY ATTORNEY BY: 3-ORD-Bid 3107Change Order Two AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: December 7, 2004 Materials Management Questions concerning this acquisition may be directed to Alex Pettit at 349-8595 ACM: Kathy DuBose ~G SUBJECT Consider adoption of an Ordinance awarding a contract for the purchase of network structured connectivity wiring for the Civic Center and Emily Fowler Library Renovation projects as awarded by the State of Texas Building and Procurement Commission through the Catalog Information Service Vendor (CISV) Catalog Program; providing for the expenditure of funds therefore; and providing an effective date (File 3276-Purchase of Network Wiring for Civic Center and Emily Fowler Library Renovation Project awarded to Devolve Corporation in an amount not to exceed $31,796.33). FILE INFORMATION The current renovation of the Civic Center and Emily Fowler Library includes this network- structured connectivity wiring to allow access to the network infrastructure and is part of the overall scope of work. Initial estimates for wiring at the Emily Fowler Library & Civic Center were $47,250. Redefining requirements resulted in a cost savings of $9,537. Network- structured connectivity wiring located at the Civic Center Building will support network-based applications supporting the Parks & Recreation registration services offered to the citizens. Network structured connectivity wiring located at the Emily Fowler Library will support network-based Millennium Library System supporting self-check stations, library patron accounts, managing library collections, and processing fines & fees. Other supported services at Emily Fowler Library utilizing structured connectivity wiring solution include access to the Internet on public computers. Wiring for connectivity of computers, workstations, printers, card readers, etc. was not included in the specifications of the construction project. Proper installation of network wiring is a skilled technical trade and the oversight is best performed under the direction of Technology Services staff. Future expansion and maintenance of the network is the responsibility of Technology Services staff to assure compatibility with the Citywide network. The pricing structure established by the State of Texas Building and Procurement Commission through the CISV program are considerably below current market cost and are only available to a division of the State. By not including the network structural connectivity wiring in the construction contract we were able to fulfill the current requirements of the user departments, maintain a high quality network compatible with our existing system, and take advantage of State of Texas pricing. Agenda Information Sheet December 7, 2004 Page 2 RECOMMENDATION We recommend award of this item to Devolve Corporation in the amount of $31,796.33. PRINCIPAL PLACE OF BUSINESS Devolve Corporation Houston, Texas ESTIMATED SCHEDULE OF PROJECT The network-structured connectivity wiring solution will be installed at Civic Center on or before March 21, 2005. The network-structured connectivity wiring solution will be installed at Emily Fowler Library on or before July 31, 2005. FISCAL INFORMATION Funding for this item is budgeted in the Civic Center and Emily Fowler Library Renovation Project accounts 100080445.1365.40100 (Emily Fowler $17,712.76) and 1000804451365.40100 (Civic Center $14,083.57). Respectfully submitted: Tom Shaw, C.P.M., 349-7100 Purchasing Agent Attachment 1: Quote for Emily Fowler Library/CISV Certification Attachment 2: Quote for Civic Center/CISV Certification 1-AlS-File 3276 Attachment 1 DE:V LV ~I ~"/~ IN FO R MATI 0 N October 26, 2004 601 Hickory, Suite A Denton TX, 76205 Quotation # HS-04-078 Attention: John Durnell Subject: Denton Library Buildout Thank you for allowing D EVOLVE the opportunity to quote this project to you. Scope of Work 1. Price includes all labor and material to complete all work as specified in the RFP and as shown on the drawings provided to us. 2. Price includes all labor and material to install (142) category 5e Hyper Plus BerkTek station cables, to (67) workstations. 3. D EVOLiVE"~ will install Berk-Tek/Ortronics Voice/Data Category 5e cabling and termination hardware, as also outlined in the RFP 4. DEV©LYE'~will provide and install all ladder tray and racks as shown on the drawings. 5. D EVOLVE'~ will certify and register this project as an Ortronics/Berk-Tek Clarity solution with a GT2 class of warranty. For the portions of the project not covered under the Clarity warranty, D will warranty the workmanship, and materials used for a period of 2 years. 6. NOTE: The pricing used for this proposal are at or below our CISV Catalog pricing. Material $ 10,573.14 Labor $ 7,038.09 CAD Work $ 101.53 Total Cost $ 17,712.76 1 __Co~__ I~l~i(:n 2 amtySeRmmEme, Wite, Vdce B::rkTd( 1Er¢'7~ 5,030 $ 012 $ 017 $ 1,450.00 R 3 amtySeRmmrme, amma B::rkTd( 1(t'r¢'/'27 17,030 $ Q12 $ Q17 $ 4,E130.00 R 4 50F~rRenLmQt3Eb:N3o-e B:a:kTek 10E~12 250 $ Q88 $ 1.06 $ 485.00 R Attachment 1 7. 5 12 Strand Multi Mode Armored Fiber Cable BerkTek PDPK012CB3510/25 225 $ 0.88 $ 2.15 $ 681.75 Ft 6 Caddy J-hook for up to 50 Cables Caddy Cat214Z34 100 $ 1.46 $ 1.80 $ 326.00 Ea 7 Caddy J-hook for up to16 Cables Caddy Cat124Z34 100 $ 1.46 $ 1.32 $ 278.00 Ea 8 Ceiling WireswithHiltiShots Hilti 588707 200 $ 1.95 $ 0.88 $ 566.00 Ea 9 10 Work Area Outlets 11 Clarity5e Insert, Red, Data Ortronics OR-TJ5E00-22 109 $ 3.41 $ 3.92 $ 798.97 Ea 12 Cat 5e Data Insert, White Ortronics 6467 5 181 20 33 $ 3.41 $ 3.92 $ 241.89 Ea 13 4-PortFaceplate, FogWhite Ortronics OR-40300546 67 $ 2.92 $ 1.42 $ 290.78 Ea 14 Blanklnserts Ortronics 159 $ 0.96 $ 0.20 $ 184.44 Ea 15 16 Equipment Rooms 17 7' Data Equipment Rack CPI 46353-703 4 $ 43.77 $ 206.89 $ 1,002.64 Ea 18 12" Ladder Tray (10' length) CPI 10250-712 6 $ 13.13 $ 58.30 $ 428.58 Ea 19 12" Wall Mount Rack Support CPI 11421-712 7 $ 5.84 $ 13.75 $ 137.13 Ea 20 3" Channel Rack To Runway Mounting Plate CPI 10595-712 4 $ 5.84 $ 19.42 $ 101.04 Ea 21 Butt Splice Kit CPI 11301-701 1 $ 7.29 $ 6.07 $ 13.36 Ea 22 Junction Splice Kit CPI 11302-701 1 $ 3.65 $ 3.30 $ 6.95 Ea 23 Vertical Wall Brackets CPI 101608-001 6 $ 14.59 $ 11.54 $ 156.78 Ea 24 48 Port Category 5e Patch Panel Ortronics OR-PHD5ECU48 4 $ 14.59 $ 152.79 $ 669.52 Ea S110 Field Terminated 19 Inch Panels, 4 Pair, 25 with Manager Siemon S110DB2-100RWM 2 $ 5.84 $ 55.29 $ 122.26 Ea 26 Sl10 Field Terminated 19 Inch Panels, 5 Pair Siernon S110DA1-100RFT 2 $ 5.84 $ 48.41 $ 108.50 Ea 27 Vertical CableManagers Leviton 49266-vfr 6 $ 7.29 $ 135.69 $ 857.88 Ea 28 Hodzontal Cable Manager Leviton 49275-hfr 6 $ 7.29 $ 31.85 $ 234.84 Ea 29 25 Pair Building Entrance Protector Porta 581P225GT 2 $ 7.29 $ 174.90 $ 364.38 Ea 30 Rack Mount Fiber Enclosure Siecor CCH-02U 2 $ 7.29 $ 199.89 $ 414.36 Ea 31 Fiber Adapter Panels, ST Siecore CCH-CP06-15T 8 $ 1.46 $ 25.04 $ 212.00 Ea 32 4x8PlywoodBackboard, FireRated 2 $ 29.18 $ 93.50 $ 245.36 Ea 33 Ground Terminal Blocks for Equipment Racks CPI 08009-001 4 $ 2.42 $ 8.31 $ 42.92 Ea 34 #C AWG Ground Wire for Racks to Bus Bar THHN-1/0-STR-GRN50001 100 $ 1.46 $ 0.28 $ 174.00 Ft 35 36 MDF/IDF Station Dress and Termination 37 Dress Cables In IDF - Data Horizontal 142 $ 0.88 $ 124.96 Ea 38 Terminations- Copper 4 Pairs in TC 142 $ 2.43 $ 245.06 Ea 39 Copper Backbone terminations 200 $ 0.29 $ 58.00 Ea 40 ST Fiber Terminations Siecor 95-100-11 24 $ 7.29 $ 17.03 $ 583.68 Ea 41 42 Copper and Fiber Cable Testing 43 Testing- Workstation Cables 142 $ 1.95 $ 276.90 Ea 44 Testing - Fiber OTDR 24 $ 7.29 $ 174.96 Ea 45 Test Voice/Data Backbone Pairs 100 $ 0.15 $ 15.00 Ea 48 49 Leviton75'RollVelcro Leviton43115-075 2 $ 145.89 $ 46.20 $ 284.18 Ea 50 Bucket of Jet Line 1 $ 20.08 $ 20.08 Ea 51 Tie Wraps11" , for Temp Uses Pa~tduit 30 $ 0.09 $ 0.11 $ 6.00 Ea 52 Misc. (tape, labels,etc.) 1 $ 233.61 $ 165.00 $ 398.61 Lot I I I I I ITOTAL l$ 17'712'761 Attachment - Unit Prices A. One (1) to (5) 4-pair UTP voice drop Labor Hours for Proiect $70.00 Attachment 1 A. 241 hours of Lead Technician (LT) $20.00 per hour = $4820.00 B. 241 hours of Cable Technician 2 (CT2) $9.204 per hour = $2219.61 C. Total labor cost $7,038.09 Qualifications and Assumptions 1. D EV~O L,VE'' has based this proposal on normal business hours defined as 7:00am to 3:3 Opm, Monday- Friday, excluding holidays. 2. D EVO[.¥E'; has not included the installation of wall molding in this proposal. 3. DEV©[.VE"; assumes that all permits, licenses and right-of-way will be grated to the customer. 4. DEV©LV~5 will not be responsible for any costs or delays related to these permits, licenses or right-of- way. 5. This proposal does not include the removal or abatement of asbestos. Should the existence of asbestos material be found, and will impede or affect any installation, any work activities will halt and may require the negotiation of a change order. 6. DEV©L,VE"~ will not be responsible for any verbal instructions or changes to the scope of work. All changes and deviations will be submitted in writing. 7. D EV©LiVE'~ has not included fiber or copper patch cables in this proposal. 8. DEVO[iYE'~ assumes our proposal is valid for 90 days from the date of this proposal. 9. D EV©LiVE': assumes that others will provide all telecommunication rough in. This includes boxes, jet line and conduit that are free from obstruction that would harm the cables. 10. D EVO LiVE'~ has not included any electronic hardware equipment for this project. 11. DEV©LiV~': shall provide an on-site Project Supervisor for this project. 12. D EV© [.VE"~ shall provide an off-site Project Manager for this project. 13. D EVO L.VE'~ assumes work stoppage or delay by others resulting in compression of workdays or escalation of manpower justifies an increase in our total contract amount. If I may be of further assistance, please contact me ~ 281-484-1777. Respectfully, Linda Searcy D EV© ILiVE", Sales Manager 12626 Fuqua Street Houston, Texas 77034 281-484-1777 Fax 281-481-0432 Attachment 2 DE:V LV ~I ~"/~ N FO R MATI 0 N October 26, 2004 601 Hickory, Suite A Denton TX, 76205 Quotation # HS-04-106 Attention: John Durnell Subject: DeNon Civic Cemer Buildom Thank you for allowing D EV©L.VEi the opportunity to quote this project to you. Scope of Work Material $ 9,104.57 Labor $ 4,979.00 Total Cost $ 14,083.57 Price does not include any applicable taxes 1. Price includes all labor and material to complete all work as specified in the RFP and as shown on the drawings provided to us. 2. Price includes all labor and material to install (73) category 5e Hyper Plus BerkTek station cables, to (67) workstations. 3. D EV©L.VE'~ will install Berk-Tek/Ortronics Voice/Data Category 5e cabling and termination hardware, as also ©relined in the RFP 4. D EV©LVE'~ will provide and install all (20') of ladder tray, tray hardware and MegaFrame cabinets as ©relined in the provided material list 5. DEVOLVE'~will provide and install (4) Porta 25-pair protectors and terminate (2) existing 25-pair cables to them. 6. DE¥©L¥~'~will reroute and reterminate an existing 12-strand fiber cable and 50-pair copper cable. (existing panels will be reused) 7. D EV©LV['~ will certify and register this project as an Ortronics/Berk-Tek Clarity solmion with a GT2 class of warramy. For the portions of the project not covered under the Clarity warramy, will warramy the workmanship, and materials used for a period of 2 years. 8. NOTE: The pricing used for this proposal are at or below our CISV Catalog pricing. Attachment 2 Labor Material Extended Item # Description By Product Code Quantity Cost per Cost per Cost Per Unit Unit 1 Cable Installation 2 Clarity 5e Plenum Cable BerkTek White or Blue 21,000 $0.12 $0.17 $ 6,090.00 Ft 4 50 Pair Plenum Cat 3 Backbone BerkTek 10032112 100 $0.88 $1.06 $ 194.00 Ft 6 Caddy J-hook for up to 50 Cables Caddy Cat214Z34 20 $1.46 $1.81 $ 65.40 Ea 7 Caddy J-hook for up to 16 Cables Caddy Cat124Z34 40 $1.46 $1.32 $ 111.20 Ea 8 Ceiling Wires with Hilti Shots Hilti 588707 60 $1.96 $0.88 $ 170.40 Ea 9 10 Work Area Outlets 11 Clarity5e Insert, Red, Data Ortronics OR-TJ5E00-22 5 $3.41 $3.92 $ 36.65 Ea 12 Cat 5e Data Insert, White Ortronics 6467 5 181 20 68 $3.41 $3.92 $ 498.44 Ea 13 4-Port Faceplate, Fog White Ortronics OR-40300546 34 $2.93 $1.42 $ 147.90 Ea 14 Blank Inserts Ortronics 68 $0.97 $0.20 $ 79.56 Ea 15 16 Equipment Rooms 17 Mega Frame Cabinet CPI M1033-731 2 $58.35 $1,598.80 $ 3,314.30 Ea 18 12" Ladder Tray (10' length) CPI 10250-712 2 $13.13 $58.30 $ 142.86 Ea 19 12" Wall Mount Rack Support CP! 11421-712 2 $5.84 $13.75 $ 39.18 Ea 20 3" Channel Rack To Runway Mounting Plate CPI 10595-712 2 $5.84 $19.42 $ 50.52 Ea 24 48 Port Category 5e Patch Panel Ort~onics OR-PHD5E6U48 3 $14.59 $152.79 $ 502.14 Ea Sl10 Field Terminated 19 Inch Panels, 4 Pair, 25 with Manager Siemon Sl10DB2-100RWM 1 $5.84 $55.29 $ 61.13 Ea 26 Sl10 Field Terminated 19 Inch Panels, 5 Pair Siemo~ Sl10AB2-100RFT 1 $5.84 $24.74 $ 30.58 Ea 31 Remove Existing Cabinet 1 $21.88 $0.00 $ 21.88 Ea 32 Porta 25 Pair Protectors Porta 581P225GT 4 $29.18 $152.90 $ 728.32 Ea 33 Ground Terminal Blocks for Equipment Racks CPI 08009-001 2 $2.42 $8.31 $ 21.46 Ea 34 #6 AWG Ground Wire for Racks to Bus Bar THHN-1/0-STR-GRN5000( 50 $1.46 $0.28 $ 87.00 Ft 35 36 MDF/IDF Station Dress and Termination 37 Dress Cables In IDF- Data Horizontal 73 $0.88 $0.00 $ 64.24 Ea 38 Terminations - Copper 4 Pairs in TC 73 $2.43 $0.00 $ 177.39 Ea 39 Copper Backbone terminations 300 $0.29 $0.00 $ 87.00 Ea 40 ST Fiber Terminations Siecor 95-100-11 12 $7.29 $0.00 $ 87.48 Ea 41 42 Copper and Fiber Cable Testing 43 Testing - Workstation Cables 73 $1.95 $0.00 $ 142.35 Ea 44 Testing- Fiber OTDR 12 $7.29 $0.00 $ 87.48 Ea 45 Test Voice/Data Backbone Pairs 150 $0.15 $0.00 $ 22.50 Ea 49 50 Misc 51 Leviton 75' Roll Velcro Leviton 43115-075 2 $145.89 $46.20 $ 384.18 Ea Bucket of Jet Line 1 $0.00 $20.08 $ 20.08 Ea Tie Wraps 11", for Tamp Uses Panduit 50 $0.10 $0.11 $ 10.50 Ea Misc. (tape, labels, surface raceway,etc.) 1 $300.00 $165.00 $ 465.00 Lot CAD Drawings and Test Documents 1 $48.00 $94.45 $ 142.45 Lot TOTAL $ 14,083.57 Attachment - Unit Prices A. One (1) to (5) 4-pair UTP voice drop Labor Hours for Proiect A. B. C. $70.00 164 hours of Lead Technician (LT) $20.00 per hour = $3280.00 164 hours of Cable Technician 2 (CT2) $10.359 per hour = $1698.87 Total labor cost $4979.00 Attachment 2 Qualifications and Assumptions 1. D EV~O L,VE', has based this proposal on normal business hours defined as 7:00am to 3:3 Opm, Monday- Friday, excluding holidays. 2. D EV©L.V~5 has included 30 feet of wall molding in this proposal. 3. DEV©LVa'~has not included the cost of rental for a lift and assumes that all locations will be within reach of a 10' or less ladder. 4. DEVOLV~'; assumes that all permits, licenses and right-of-way will be grated to the customer. 5. DEV©[.VE"; will not be responsible for any costs or delays related to these permits, licenses or right-of- way. 6. This proposal does not include the removal or abatement of asbestos. Should the existence of asbestos material be found, and will impede or affect any installation, any work activities will halt and may require the negotiation of a change order. 7. [)EV©LVE'~ will not be responsible for any verbal instructions or changes to the scope of work. All changes and deviations will be submitted in writing. 8. D EV®L.V~"~ has not included fiber or copper patch cables in this proposal. 9. DEVO[.V["~ assumes our proposal is valid for 90 days from the date of this proposal. 10. D EVO L.V~'~ assumes that others will provide all telecommunication rough in. This includes boxes, jet line and conduit that are free from obstruction that would harm the cables. 11. D EV® [.V["~ has not included any electronic hardware equipment for this project. 12. DEVOLV~'~ shall provide an on-site ProJect Supervisor for this project. 13. D EVO LV~'~ shall provide an off-site ProJect Manager for this project. 14. D EV® [.VE"~ assumes work stoppage or delay by others resulting in compression of workdays or escalation of manpower justifies an increase in our total contract amount. If I may be of further assistance, please contact me ~ 281-484-1777. Respectfully, Linda Searcy DEVOL.V~'~ Sales Manager 12626 Fuqua Street Houston, Texas 77034 281-484-1777 Fax 281-481-0432 ORDINANCE NO. AN ORDINANCE AWARDING A CONTRACT FOR THE PURCHASE OF NETWORK STRUCTURED CONNECTIVITY WiRiNG FOR THE CIVIC CENTER AND EMILY FOWLER LIBRARY RENOVATION PROJECTS AS AWARDED BY THE STATE OF TEXAS BUILDING AND PROCUREMENT COMMISSION THROUGH THE CATALOG INFORMATION SERVICE VENDOR (CiSV) CATALOG PROGRAM; PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFORE; AND PROVIDING AN EFFECTIVE DATE (FILE 3276-PURCHASE OF NETWORK WiRiNG FOR CIVIC CENTER AND EMILY FOWLER LIBRARY RENOVATION PROJECT AWARDED TO DEVOLVE CORPORATION iN AN AMOUNT NOT TO EXCEED $31,796.33). WHEREAS, the City Council of the City of Denton has heretofore adopted Resolution 92- 019 pursuant to Section 2157.067 of the Texas Government Code and Sections 271.082 and 271.083 of the Texas Local Government Code which authorizes the City to participate in the State Purchasing Building and Procurement Commission information Service Vendor Catalog Purchase Method provided for in Subchapter B of Chapter 2157 of the Texas Government Code (the "CiSV Catalog"); and WHEREAS, the herein described vendor is a qualified vendor in the CiSV Catalog and the contract authorized by this ordinance is in the best interests of the City and complies with the requirements of Subchapter B of Chapter 2157 of the Texas Government Code as a CiSV Catalog purchase; 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, equipment, supplies or services approved and accepted herein; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The numbered items in the following numbered purchase order for materials, equipment, supplies, or services, shown in the "File Number" listed hereon, and on file in the office of the Purchasing Agent, are hereby approved: FILE NUMBER VENDOR AMOUNT 3276 Devolve Corporation $31,796.33 SECTION 2. 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 Procurement Commission for such items and agrees to purchase the materials, equipment, supplies or services in accordance with the terms, conditions, specifications, standards, quantities and for the specified sums contained in the bid documents and related documents filed with the Building and Procurement Commission, and the purchase orders issued by the City. SECTION 3. 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; provided that the written contract is in accordance with the terms, conditions, specifications 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. By the acceptance and approval of the above numbered items set forth in the subject 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. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this day of ,2004. ATTEST: JENNIFER WALTERS, CITY SECRETARY EULINE BROCK, MAYOR BY: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY BY: 3-ORD-File 3276 AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: December 7, 2004 Materials Management Questions concerning this acquisition may be directed to Alex Pettit at 349-8595 ACM: Kathy DuBose ~G SUBJECT Consider adoption of an Ordinance awarding a comract for the purchase of Cisco network equipmem for the Civic Cemer and Emily Fowler Library renovation projects as approved by the State of Texas Building and Procurement Commission Department of Information Resources (DIR); providing for the expenditure of funds therefore; and providing an effective date (File 3275-Purchase of Cisco Network Equipmem for the Civic Cemer and Emily Fowler Library awarded to ImerNetwork Experts in the amoum of $61,122). FILE INFORMATION The Cisco network equipmem provides connectivity for the Civic Cemer and Emily Fowler Library to enable them to use phone and data services over the City of DeNon network infrastructure and is part of the overall scope of work for their currem renovation projects. Initial estimates for network equipmem at the Civic Cemer and Emily Fowler Library were $100,080. Utilization of existing network equipment from other City facilities, and redefining requirements resulted in a cost savings of $38,958. Network equipmem located at the Civic Cemer will support network-based applications supporting the Parks & Recreation registration services offered to the citizens. Network equipmem located at Emily Fowler Library will support network-based Millennium Library System supporting self-check stations, library patron accoums, managing library collections, and processing fines and fees. Other supported services at Emily Fowler include access to the Internet on public computers. RECOMMENDATION We recommend award of this item to InterNetwork Experts in the amount of $61,122. PRINCIPAL PLACE OF BUSINESS ImerNetwork Experts Lewisville, Texas Agenda Information Sheet December 7, 2004 Page 2 ESTIMATED SCHEDULE OF PROJECT Equipment will be installed at the Civic Center on or before March 21, 2005. Equipment will be installed at Emily Fowler Library on or before July 31, 2005. FISCAL INFORMATION This item will be funded from the following Civic Center and Emily Fowler Library Renovation Project account numbers: Civic Center-100087445.1365.40100 ($23,079) and Emily Fowler- 100080445.1365.40100 ($38,043). Respectfully submitted: Tom Shaw, C.P.M., 349-7100 Purchasing Agent Attachment 1: Quote from InterNetwork Experts 1-AlS-File 3275 ORDINANCE NO. AN ORDINANCE AWARDING A CONTRACT FOR THE PURCHASE OF CISCO NETWORK EQUIPMENT FOR THE CIVIC CENTER AND EMILY FOWLER LIBRARY RENOVATION PROJECTS AS APPROVED BY THE STATE OF TEXAS BUILDING AND PROCUREMENT COMMISSION DEPARTMENT OF INFORMATION RESOURCES (DIR); PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFORE; AND PROVIDING AN EFFECTIVE DATE (FILE 3275-PURCHASE OF CISCO NETWORK EQUIPMENT FOR THE C1VIC CENTER AND EMILY FOWLER LIBRARY AWARDED TO INTERNETWORK EXPERTS IN THE AMOUNT OF $61,122). 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 Commission 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 NUMER VENDOR AMOUNT 3275 InterNetwork Experts $61,122 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 the 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 3275 Page 2 of 2 AGENDA DATE: DEPARTMENT: ACM: AGENDA INFORMATION SHEET December 7, 2004 Materials Management Kathy DuBose ~ Questions concerning this acquisition may be directed to Eva Poole 349-8754 SUBJECT Consider adoption of an Ordinance approving the expenditure of funds for the purchase of shelving for the Emily Fowler Library renovation project available from only one source in accordance with the provision for state law exempting such purchases from requirements of competitive bids; and providing an effective date (File 3267-Shelving for Emily Fowler Library awarded to Libra-Tech Corporation in the amount of $119,461.53). FILE INFORMATION This item is to provide shelving for the Emily Fowler Library renovation project. The shelving specified will match the shelving that is in place at the North Branch Library. This will allow the City to move sections and shelving parts from one branch library to another. Several ranges of existing shelving will be moved from the North Branch Library to Emily Fowler for the Library's reopening. It will also be more economical and efficient to maintain shelving stock parts for only one shelving system. Libra-Tech Corporation is the sole source vendor for Estey cantilever library shelving. Section 252.022 of the Local Government Code provides that procurement of items that are only available from one source do not have to be competitively bid. Library shelving was not included in the construction contract. This is a sole source acquisition and installation. Any warranty or damage issues will be dealt with directly by the supplier. The construction phase will have been completed prior to the delivery and installation of shelving and other furniture. RECOMMENDATION We recommend award of this item to Libra-Tech Corporation in the amount of $119,461.53. PRINCIPAL PLACE OF BUSINESS Libra-Tech Corporation Argyle, TX Agenda Information Sheet December 7, 2004 Page 2 ESTIMATED SCHEDULE OF PROJECT The shelving can be delivered within 6-8 weeks of receipt of an order. FISCAL INFORMATION Funding for this item will provided from account 100080445.1365.40100. Respectfully submitted: Tom Shaw, C.P.M., 349-7100 Purchasing Agent Attachment 1: Quote from Libra-Tech Attachment 2:Sole Source Letter 1-AIS-ile 3267 LIBRA-TECH SPECiALIZiNG IN LIgRARY AND TECHNICAL FURNISHINGS 1115 Thornddge Court Argyle, TX 76226 (940) 464-3033 FAX: (940) 464-3034 Toll Frae: (888) 542-7283 E-Mail: penny@libraryfumiture.com DATE: November 3, 2004 Attactment 1 CORPORATION Quotation TO: City of Denton Attn: Karen Smith Emily Fowler Branch Library 502 Oakland Street Denton, TX 76201 SHIP TO: ITEM MODEL NO. DESCRIPTION UNIT QTY. EXTENDED 1 S-4S3 W4236 42 x 36'~,""~"~ Estey Welded Frame unit including 130.41' 4 521.64 (1 ) integral base shelves and (2) integral adjustable shelves, sliding book supports. 2 S-4D3 W423'6 42 x 36 x 12t12 Estey Welded Frame unit ..... 188.58 30 5,657.40 including (1) integral base shelves and (4) integral adjustable shelves, sliding book supports. 3 S-6S5 W6636 66 x 36 x 12 Estey Welded Fran~e"'~nit including 164.62 4 658.48 (1 ) integral base shelves and (4) integral adjustable shelves, sliding book supports. 4 S-6S6 W663~ .... 66 x 36 x 12 Estey Welded Frame unit including '"~ 80.26 4 721.04 (1 ) integral base shelves and (5) integral adjustable shelves, sliding book supports. 5 S-6SP4 WP61120 66 x 36,~ 12 Estey Welded Frame unit including 510.95 4 '" 2,043.80 (4) pivoting periodical shelves with plexiglass covers. 6 S-6D5" W6636 66 x 36x 12/12 EsteyWelded Frame unit 2~'~.71 73 18,447.83 including (1) integral base shelves and (4) integral adjustable shelves, sliding book supports. 7 S-6D5/S W6636 66 x 36 x 12/12 Estey Welded Frame unit 268.34 4 1,073.36 including (1) integral base shelves and (4) integral adjustable shelves, sliding book {supports. , .... Page 8 S'-'~)5/SW6636 66 x 36 x 1;~)12 Estey Welded Frame unit 618.77 4 2,475.08 including (1) integral base shelves and (1) pivoting periodical shelves with plexiglass cover.. (4) integrat adjustable shelves and sliding book supports. . ...... 9 s-6D5/s W6636 66 x 36 x 1~12 Estey Welded Frame unit 253.53 3 760.59 including (1) integral base shelves and (3) irrtegral adjustable shelves, and (3) media hanger and sliding book support..s.. 10 S-6D6fS W6636 66x 36 x 12112 EsteyWelded Frame unit 1,262.58 11 13,888.38 including (1) integral base shelves, (1) integral adjustable shelves, (5) pullout browser bins and (1 ) zig zag insert and sliding book supports 11 S-8D6fS W843'~ 84 x 36 x 12t12 Estey Welded Frame unit 735.76 6 4,414.56 including (1) integral base shelves, (4) integral adjustable shelves, (5) pivoting periodical shelves with plexiglass covers and sliding book supports 12 S-8D7 W8436 84 x 36 x 12/12 Estey W~lded Frame unit 318.9;i' 90 28,701.90 including (1) integral base shelves and (6) iintegral adjustable shelves and sliding book ~supports 13 S-~'S6 W8436 84 x 36 x 12 Est~ Welded Frame unit including 183".'~6 21 3,861.06 ~(1) integral base shelves and (5) integrai · adjustable shelves and sliding book supports 1~ S-837 W8436 ,84 x 36x':i2 EsteyWelded Frame unit including ~'~9.49 34 6,782.66 i(1) integral base shelves and (6) integral adjustable shelves and sliding book supports 15 .... S-8DPS WP81120 84 x 36 x 12 Estey Welded Frame unit including 543.77 6 3,262.62 (5) pivot periodical shelves with plexiglass cover: 16 S-SSPN W8436 84 x 36 x 12 Estey Welded Frame unit i'ncluding 591.17 1 591.17 (1) integral base shelves and (1) newspaper rac~ and (2) pivoting periodical shelves with plexiglas co ve rs I7 $6DAV5 W6636 66x 36x 12/12 Estey~lded Frame unit 2,246.10 8 17,968.80 including (1) integral base shelves, (2) integral adjustable shelves, (5) pullout browser bins and (1 ) zig zag insert and sliding book supports 18" ' S-8D6 W8436 84 x 36 x 1~/12 Estey Welded Frame unit 257.~8 2 5t5.16 including (1) integral base shelves and (5) integral adjustable shelves and siiding book supp,o, rts 19 EWD-2 Intergral back sliding book supports 4.9~ 1200 5,916.00 20 Existing-I~'stey Pickup existing 15 sections of doub~e't:~ced 80.00 15 t,200.00 shelving and (8) end panels from the Denton warehouse and relocate and install at the Emily ...... Fowler Library in Denton. .... Color: Light Grey ..... Total Delivered and Installed: 119,461.53 50% Deposit required 50% Upon Delivery Page 2 October 28, 2004 Attachment 2 Emily Fowler Branch Library To Whom It May Concern: Libra-Tech Corporation is the exclusive distributor for Estey cantilever library shelving in central Texas and will be the sole source distributor for the library shelving at the Emily Fowler Branch Library. Should you require further information, please contact me at 866-385-7391. Sincerely, Tennsco Corp. Chris Blankenship Estey Sales Manager ORDINANCE NO. AN ORDINANCE APPROVING THE EXPENDITURE OF FUNDS FOR THE PURCHASE OF SHELVING FOR THE EMILY FOWLER LIBRARY RENOVATION PROJECT AVAILABLE FROM ONLY ONE SOURCE IN ACCORDANCE WITH THE PROVISION FOR STATE LAW EXEMPTING SUCH PURCHASES FROM REQUIREMENTS OF COMPETITIVE BIDS; AND PROVIDING AN EFFECTIVE DATE (FILE 3267-SHELVING FOR EMILY FOWLER LIBRARY AWARDED TO LIBRA-TECH CORPORATION IN THE AMOUNT OF $119,461.53). WHEREAS, Section 252.022 of the Local Government Code provides that procurement of items that are only available from one source, including; items that are only available from one source because of patents, copyrights, secret processes or natural monopolies; films, manuscripts or books; electricity, gas, water and other utility purchases; captive replacement parts or components for equipment; and library materials for a public library that are available only from the persons holding exclusive distribution rights to the materials; need not be submitted to competitive bids; and WHEREAS, the City Council wishes to procure one or more of the items mentioned in the above paragraph; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. That the following purchase of materials, equipment or supplies, as described in the "Files" listed hereon, and on file in the office of the Purchasing Agent, are hereby approved: FILE NUMBER 3267 VENDOR Libra-Tech Corporation AMOUNT $119,461.53 SECTION 2. That the acceptance and approval of the above items shall not constitute a contract between the City and the person submitting the quotation for such items until such person shall comply with all requirements specified by the Purchasing Department. SECTION 3. That the City Manager is hereby authorized to execute any contracts relating to the items specified in Section I and the expenditure of funds pursuant to said contracts is hereby authorized. SECTION 4. 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: ~:::': : :'~ 4-ORD-File 3267 AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: December 7, 2004 Materials Management Questions concerning this acquisition may be directed to Vance Kemler 349-8044 ACM: Kathy DuBose ~G SUBJECT Consider adoption of an Ordinance of the City of DeNon authorizing the City Manager or his designee to execute a purchase order with the Houston-Galveston Area Council of Governments (H-GAC) for the acquisition of recycling carts for the Solid Waste Division by way of an imerlocal Agreemem with the City of DeNon; authorizing the expenditure of funds therefore; and providing an effective date (File 3269-Purchase of Recycling Carts awarded to Otto industries, inc. in the amoum of $70,951.70). BID INFORMATION The Residemial Curbside-Recycling Program, established in November 2002, has been a major success, in initiating the Program, residems were delivered 35-gallon recycling carts. As the Program further developed, customers were provided an option to increase their cart size to a nominal sixty-eight gallon cart, if their weekly recycling volumes required the larger cart size. There has been high demand for the larger recycling carts, and this trend is cominuing. Originally the City purchased 2,000 sixty-eight gallon carts. This invemory level curremly requires restocking. As more residems have increased their recycling, more and more sixty-eight gallon carts are being requested, and are being provided by the Solid Waste Departmem. Otto Industries, Inc. provided the majority of the recycling carts we curremly have in the field. They currently are listed as the cart vendor on the H-GAC materials purchasing website. Otto has agreed to upgrade the 2,000 carts ordered to include new in-molded graphic technology on the lids for no extra fee. The in-molded graphic provides visual examples, and is particularly helpful to residents in determining whether an item is recyclable or not. PRIOR ACTION/VIEW (COUNCIL, BOARDS, COMMISSIONS) The Public Utilities Board approved the purchase of 2,000 sixty-eight gallon recycling carts at their meeting of March 22, 2004 from Otto Industries, Incorporated through the Houston- Galveston Area Council of Govemmems (H-GAC) imerlocal Purchasing Agreemem. Agenda Information Sheet December 7, 2004 Page 2 RECOMMENDATION We recommend award of this item to Otto Industries, Inc. in the amount of 70,951.70. The 2,000 sixty-eight gallon-recycling carts will be purchased at a unit cost of $34.89 each for a total of $69,780. The H-GAC administrative fee is $1,171.70 making the total purchase price $70,951.70. PRINCIPAL PLACE OF BUSINESS Otto Industries, Incorporated Charlotte, North Carolina ESTIMATED SCHEDULE OF PROJECT Upon award of the purchase order, Otto Industries, Incorporated will require approximately six weeks to manufacture and deliver the 2,000 sixty-eight gallon recycling carts. FISCAL INFORMATION Recycling cart purchases will be funded from project number 660028585.30100. Respectfully submitted: Tom Shaw, C.P.M., 349-7100 Purchasing Agent Attachment 1: H-GAC Quote 1-AlS-File 3269 · ,.~,:SH. .Serif: ~,8¢3¢-~ Base/.'-:Pri'ee $ ~.',89 $ c.,. Ss:bte.taI.' ora + :B (E40~;~; Unp. ubiJ~he~"OPbOf~.:CANN'QT: ~e-~'s~6 ;efea~::a:rCO.~BiCf' ~b:qt:r.adtoi~.s 'b~d i~em) s $~btata.i :$," , .:, '~[_:" $~t~otal ;..~ E.'. Oqn.~ract:P~:i,~e. A:dj~.s:tmei0:t.:(i:f:anY ,-.ex.pla: ri: 6~ :.~uarifity Ordered ~: . Ha H:sGAQ, Ad.nhi:rli~trat.ixe,-Fe.e (:ro.m.'~ee:8:cheduie:'T, abl,~) ~: Nc~Eq'.ui'p.m~:h[.' C,h'~t~e's: '& 'cr~'d,i't~. ~:n't F~Ct,.:Pd:Ce A'dj u.St me(~'t: ~ et. al $'. ~:ie...~Ext. ,warranty.. ¥~a,de-:l:n. ~-'F~o~or~/ · $. x ~ - ,S. -. x s~8t~l: .J;( TO~AL pURCHASE PRI;GE:,I'N"C:LUDIN:G $ l'vl,FT;:?O CITY OF DENTON PUBLIC UTILITIES BOARD MINUTES March 22, 2004 After determining that a quorum of the Public Utilities Board of the City of DeNon, Texas was presem, the Public Utilities Board convened imo an Open Meeting on Monday, March 22, 2004, at 9:00 a.m. in the Service Cemer Training Room, City of DeNon Service Cemer, 901-A Texas Street, Denton, Texas. PRESENT: Bill Cheek, Yolanda Guzman, George Hopkins, Charldean Newell, Dick Smith and Don White EX OFFICIO MEMBERS Michael Conduff, City Manager Howard Martin, ACM/Utilities EXCUSED: John Baines CONSENT AGENDA: 1) Consider approval of Task Order 04-B with R. J. Covington Consulting, LLC, Austin, Texas for professional consulting services relative to a retail rate study for DME, in an amount not to exceed $93,100. 2) Consider approval of the purchase of sixty-gallon curbside recycling carts from Otto Waste Systems through the Houston-Galveston Area Council of Govemmems ("HGAC") by way of an interlocal agreement with the City of Denton in an amount not to exceed $70,951.70. (Bid #3269) 3) Consider approval of Bid No. 3140 to Thelin Recycling Company for comract wood waste grinding in an amoum not to exceed $88,900. Board Member Dick Smith moved to approve Consent Agenda Items #1, #2 and #3, with a second from Board Member Don White. The motion was approved by a vote of 6-0. Charldean Newell, ChairpersZon Lyn~edrick, Secretary Howard Martin, ACM/Utilities Page 1 of 1 ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO EXECUTE A PURCHASE ORDER WITH THE HOUSTON-GALVESTON AREA COUNCIL OF GOVERNMENTS (H-GAC) FOR THE ACQUISITION OF RECYCLING CARTS FOR THE SOLID WASTE DIVISION BY WAY OF AN INTERLOCAL AGREEMENT WITH THE CITY OF DENTON; AUTHORIZING THE EXPENDITURE OF FUNDS THEREFORE; AND PROVIDING AN EFFECTIVE DATE (FILE 3269-PURCHASE OF RECYCLING CARTS AWARDED TO OTTO INDUSTRIES, INC. IN THE AMOUNT OF $70,951.70). WHEREAS, pursuant to Ordinance 95-107, the Houston-Galveston Council Area of Government (H-GAC) has solicited, received, and tabulated competitive bids for the purchase of necessary materials, equipment, supplies, or services in accordance with the procedures of state law on behalf of the City of Denton; and WHEREAS, the City Manager or a designated employee has reviewed and recommended that the herein described materials, equipment, supplies, or services can be purchased by the City through the Houston-Galveston Area Council of Government (H- GAC) 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, equipment, 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, equipment, supplies, or services, shown in the "File" referenced herein and on file in office of the Purchasing Agent, are hereby accepted and approved as being the lowest responsible bids for such items: FILE NUMBER VENDOR AMOUNT 3269 Otto Industries, Inc. $70,951.70 SECTION 2. That by the acceptance and approval of the above numbered items set forth in the referenced purchase orders, the City accepts the offer of the persons submitting the bids to the H-GAC for such items and agrees to purchase the materials, equipment, supplies, or services in accordance with the terms, conditions, specifications, standards, quantities and for the specified sums contained in the bid documents and related documents filed with the H-GAC, 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 referenced purchase orders wish to enter into a formal written agreement as a result of the City's ratification of bids awarded by the H-GAC, the City Manager or his designated representative is hereby authorized to execute the written contract; provided that the written contract is in accordance with the terms, conditions, specifications and standards contained in the Proposal submitted to the H-GAC, 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 referenced purchase orders, the City Council hereby authorizes the expenditure of funds therefor in the amount and in accordance with the approval 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 3269 AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: ACM: December 7, 2004 Materials Management Kathy DuBose Questions concerning this acquisition may be directed to Scott Payne at 349-7836 SUBJECT Consider adoption of an Ordinance accepting sealed proposals and awarding a contract for Excess Liability and Workers' Compensation insurance Coverage for the City of DeNon; providing for the expenditure of funds therefore and providing an effective date (RFSP 3256-Excess Liability and Workers' Compensation insurance awarded to State National insurance Company in the estimated amoum of $182,580). BACKGROUND The City curremly has Excess Liability and Workers' Compensation Insurance coverage through State National insurance Company. Although the City self-funds Workers' Compensation claims and General/Auto Liability claims and relies on the Texas Tort Claims Act to limit the dollar amoum a municipality pays on liability claims to $100,000 for property damage, $250,000 per individual injury, and $500,000 total per occurrence, there are still many exposures the City faces that do not fall within the Texas Tort Claims Act and therefore the City has unlimited liability. Claims with unlimited liability include but are not limited to: Workers' Compensation Claims - Although the City has a good claims history as it relates to Workers' Compensation, the City is liable for all reasonable and necessary medical expenses, indemnity benefits, and related expenses if an employee is injured on the job while in the course and scope of employmem. There is no limit to the potemial costs of an on-the-job injury. One example is a traffic accident involving a City employee in February of 2004 that has currently reached $270,000 paid with a projected total cost of over $800,000. Law Enforcemem Liability Claims - The City could be held liable with no limit for claims involving Civil Rights violations due to police activity. These claims could stem from charges of wrongful arrest/detemion, unlawful search and seizure, deprivation of Civil Rights, and excessive force. Again, the City has a good history as it relates to claims of this nature, with only a few minor claims over the last five years; but the potential exposure in this area is unlimited. Agenda Information Sheet December 7, 2004 Page 2 BACKGROUND Electric Utility Operation Claims - By definition, the operation of an electric utility by a municipality is a proprietary function and is excluded from any limits of liability under the Texas Tort Claims Act. An error made in wiring a transformer that results in property damage, injury, or death would present the City with unlimited exposure to liability as would other operations within the electric utility. The City has experienced several claims of this nature, some minor and some relatively large. Employment Related Claims - In many cases these types of claims also allege violations of Civil Rights and therefore, no liability limit applies. Examples could include claims of discrimination, sexual or physical harassment and violations of the Americans With Disabilities Act (ADA). Although these claims are not common, an employment related claim was recently settled at mediation. The City will continue to self-fund the first $500,000 for Workers' Compensation and Liability claims. This Excess Liability Insurance policy will provide the City with a layer of protection from $500,000 to $5,000,000. The policy will include potential liability under Workers' Compensation, General/Auto Liability, Law Enforcement Liability, Public Officials Liability and Employment Practices Liability coverage. Public Official Liability insurance covers elected and appointed officials such as the City Council, Boards and Commissions, as well as, professional positions within the City such as attorneys, accountants, and architects. Two proposals were received in response to RFSP #3256. An analysis of the proposals is shown on Attachment 1. PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS) Pursuant to Ordinance No. 2001-477 the City Council awarded a contract for Excess Liability and Workers Compensation Insurance Coverage to North River Insurance Company expiring on December 31, 2004. North River Insurance discontinued its program and State National Insurance Company assumed our policy on December 31, 2002, under the same terms, conditions and premium. RECOMMENDATION Staff recommends award of this item to State National Insurance Company in the estimated amount of $182,580. Agenda Information Sheet December 7, 2004 Page 3 ESTIMATED SCHEDULE OF PROJECT The contract for coverage is to begin December 31, 2004 for one (1) year with 2 one-year options to renew at a guaranteed rate. FISCAL INFORMATION Funds for Excess Liability and Workers' Compensation Insurance are budgeted in the Risk Retention Fund under account number 860002.6704. Respectfully submitted: Tom Shaw, C.P.M., 349-7100 Purchasing Agent Attachment 1: Bid Analysis Attachment 2: Vendor List $500,000 Self-Insured Retention Error & Omissions/Employment Practices Liabilit, General Liability Auto Liability Law Enforcement Liability Workers' Compensation Total $250,000 Self-Insured Retention Error & Omissions/Employment Practices Liabilit, General Liability Auto Liability Law Enforcement Liability Workers' Compensation Total $100~000 Self-Insured Retention Error & Omissions/Employment Practices Liabilit, General Liability Auto Liability Law Enforcement Liability Workers' Compensation Total ATTACHMENT l BID ANALYSIS Premiums Bid TML $120,136 $76,325 $43,113 $37,792 Not Offered $27~366 TML $146,970 $87,319 $50,822 $45,120 Not Offered $33~231 TML $202,771 $107,181 $68,020 $58,314 Not Offered $436,286 Premiums Bid State National $121,210 Included Above Included Above Included Above $61,370 $152,55o State National Not Offered Not Offered Not Offered Not Offered Not Offered N/A State National Not Offered Not Offered Not Offered Not Offered Not Offered N/A Current Coverage $179,000 Included Above Included Above Included Above Included Above $179, 000 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A ATTACHMENT 2 - VENDOR LIST FM GLOBAL GRANITE PARK TWO 5700 GRANITE PARKWAY STE 700 PLANO TX 75024 PALMER & CAY OF TEXAS LLC ATTN ROBERT BOOKHAMMER III 5956 SHERRY LANE STE 2000 DALLAS TX 75225 HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY ATTN ELIZABETH BAUTISTA 107 SUMMIT COVE TROPHY CLUB TX 76262 RAMEY AND KING INSURANCE ATTN JAMES KNG 510 N 135 E DENTON TX 76205 NGS INSURANCE AGENCY INC ATTN SCOTT ICAKACEK PO BOX 740307 DALLAS TX 75374-0307 TEXAS POLITICAL SUBDIVISIONS JOINT INSURNACE FUNDS ATTN RHONDA RUEHLE PO BOX 803356 DALLAS TX 75380-3356 TML INTERGOVERNMENTAL RISK POOL ATTN BILL SNYDER 1821 RUTHERFORD LANE 1s* FLOOR PO BOX 149194 AUSTIN TX 78754 TML INTERGOVERNMENTAL RISK POOL ATTN LAURA LANTRIP 18601 LBJ FREEWAY STE 210 MESQUITE TX 75150 WASAU INSURANCE COMPANIES ATTN TIM PERRY PO BOX 152800 IRVING TX 75015-2800 WM RIGG COMPANY ATTN SCOTT MILLER 777 MAIN ST STE C50 FORT WORTH TX 76102 MIDWEST EMPLOYERS CASUALTY ATTN ICAREN CASSERLY 14755 N. OUTER FORTY DRIVE, #300 CHESTERFIELD, MO 63017 LIBERTY MUTUAL ATTN BUSINESS SALES 2100 WALNUT HILL LANE STE 100 IRVING TX 75038 NEW MARKETS (ACE) ATTN CHRIS CLARK 55 HADDONFIELD ROAD CHERRY HILL, NJ 08002 SAFETY NATIONAL ATTN LES ESLINGER 2043 WOODLAND PARI(WAY, #200 ST. LOUIS, MO 63146 AIG INSURANCE ATTN BARBARA ODOM 8144 WALNUT HILL LANE, # 1600 DALLAS, TX 75231 ST. PAUL/TRAVELERS ATTN DAVID BYROM P.O. BOX 65100 SAN ANTONIO, TX 78265 GENESIS UNDERWRITING ATTN TIM MCCREARY 3525 PIEDMONT ROAD N.E., #720 ATLANTA, GA 30305-1500 STATE NATIONAL INSURANCE CO. ATTN TOM ELLER 8150 N. CENTRAL EXPRESSWAY DALLAS, TX 75206 ORDINANCE NO. AN ORDINANCE ACCEPTING SEALED PROPOSALS AND AWARDING A CONTRACT FOR EXCESS LIABILITY AND WORKERS COMPENSATION INSURANCE COVERAGE FOR THE CITY OF DENTON; PROViDiNG FOR THE EXPENDITURE OF FUNDS THEREFORE AND PROViDiNG AN EFFECTIVE DATE (RFSP 3256-EXCESS LIABILITY AND WORKERS COMPENSATION INSURANCE AWARDED TO STATE NATIONAL iNSURANCE COMPANY IN THE ESTIMATED AMOUNT OF $182,580). WHEREAS, the City has solicited, received and evaluated competitive sealed proposals for the purchase of Excess Liability and Workers Compensation Coverage in accordance with the procedures of STATE law and City ordinances; and WHEREAS, the City Manager or a designated employee has received and reviewed and recommended that the herein described proposals are the most advantageous to the City considering the relative importance of price and the other evaluation factors included in the request for proposals; 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, equipment, supplies or services approved and accepted herein; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. That the items in the following numbered request for proposal for materials, equipment, supplies or services, shown in the "Request Proposals" on file in the office of the Purchasing Agent, are hereby accepted and approved as being the most advantageous to the City considering the relative importance of price and the other evaluation factors included in the request for proposals. RFSP NUMBER CONTRACTOR AMOUNT 3256 State National insurance Company $182,580 SECTION 2. That bythe acceptance and approval of the above numbered items of the submitted proposals, the City accepts the offer of the persons submitting the proposals for such items and agrees to purchase the materials, equipment, supplies or services in accordance with the terms, specifications, standards, quantities and for the specified sums contained in the Proposal Invitations, Proposals, and related documents. SECTION 3. That should the City and person submitting approved and accepted items and of the submitted proposals wish to enter into a formal written agreement as a result of the acceptance, approval, and awarding of the proposals, the City Manager or his designated representative is hereby authorized to execute the written contract; provided that the written contract is in accordance with the terms, conditions, specifications, standards, quantities and specified sums contained in the Proposal and related documents herein approved and accepted. SECTION 4. That by acceptance and approval of the above numbered items of the submitted proposals, the City Council hereby authorizes the expenditure of funds therefor in the amount and in accordance with the approved proposals 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 the day of .,2004. EULINE BROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY BY: 4-ORD-RFSP 3256 AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: December 7, 2004 Materials Management Questions concerning this acquisition may be directed to Jim Coulter 349-7194 ACM: Kathy DuBose SUBJECT Consider adoption of an Ordinance approving the expenditure of funds for the purchase of an ISCO Model 6712 Portable Water Sampler for the Denton Water/Wastewater Department available from only one source in accordance with the provision for state law exempting such purchases from requiremems of competitive bids; and providing an effective date (File 3270- Purchase of Automatic Water Sampler awarded to Teledyne Isco Inc. in the amoum of $36,990). FILE INFORMATION This item is for the purchase of five (5) Isco Model 6712 auto-samplers and accessories for storm water sampling by the Watershed Protection Department. The samplers are placed in the field to monitor water mn-off. The Isco auto-samplers are required to maintain compatibility with existing samplers and peripherals (software, rain gauges, flow monitoring devices, etc) in the City. Currem staff is trained to utilize this brand of equipmem, creating efficiencies in training and usage. Teledyne Isco Inc. is the sole source supplier, as well as the only authorized service and calibration personnel for Isco automatic wastewater sampling and flow monitoring products. Section 252.022 of the Local Government Code provides that procurement of items that are only available from one source do not have to be competitively bid. PRIOR ACTION/VIEW (COUNCIL, BOARDS, COMMISSIONS) The Public Utility Board approved a 104B3 Water Quality Gram for the purchase of this equipment on October 11, 2004. The City Council approved the same gram at its October 19, 2004 meeting. RECOMMENDATION We recommend award of this item to Teledyne Isco Inc. in the amoum of $36,990. PRINCIPAL PLACE OF BUSINESS Teledyne Isco Inc. Pass Christian, MA Agenda Information Sheet December 7, 2004 Page 2 ESTIMATED SCHEDULE OF PROJECT Shipmem can be made within 2-3 weeks after placemem of an order. FISCAL INFORMATION This item will be funded by a National EPA GraM, 104B3 Water Quality GraM, accoum number 320804.8535. Respectfully submitted: Tom Shaw, C.P.M., 349-7100 Purchasing Agent Attachment 1: Sole Source Letter Attachment 2: Quote 1-AlS-File 3270 tttaaI~ent I Augustl7,2004 Sole Source Certification This letter is to certify that C. C. Lynch & Associates, Inc., P.O. Box 836, Pass Christian, MS 39571-0836 is the sole source supplier, as well as the only authorized service and calibration personnel, of Isco automatic wastewater sampling and flow monitoring products in the state of Texas. These products include, but are not limited to samplers, flow meters, connecting cables, associated hardware, replacement peripherals, as well as operational software. Please be certain to contact me with additional questions, or if further clarification is required. Regards, Lorance Newburn Sales Manager Attachment 2 ~. / C.C. LYNCH & ASSOCIATES, INC. ~j~/,~., . Environmental Technology ~'b~ os+nc~ ' v.o. S~36 3~ ~ A~ Pass Cl~stian. MS 39571 1-800-333-2252 24 Hour Helplhte TELEFAX: (228) 452-2563 Email: info@CCLA.com Web: www. ccla.colll David Hunter City of Denton - Water Utilities 901 B Texas St Denton, TX 76209 Phone: (940)349-7123 Fax: (940)349-7334 Proposal 50627 Date 10/20/2004 We are )leasedto provideyou with the following prices: Exp. 12t191200 Qty Part # Description Price Extend 5 6.8-6710-070 ksco Model 6712 Full-size Portable Sampler. $2,515.50 $12,577.50 2 ;68-6700-139 Int. ernal Voice Modem w/Remote Phone Command $495.00 $990.00 Software and 12 ft. modem cable. 4 68-6700-006 24 potypropylene l-liter bottle configuration. $144.00 $576.00 1 60-2544-052 Isco Flowlink Software, Version 4. $1,075.50 $1,075.50 1 60-2544-044 Interrogator Cable, 9-pin connector $67.50 $67.50 1 68-6700-056 Isco 581 Rapid Transfer Device (RTD) with power/data $562.50 $562.50 'transfer cable. 4 60-1684-040 Model 934 Nickel-Cadmium Battery. Rechargeable, 12 $202.50 $810.00 volts, 4 amp-hours. 1 68-3000-965 Isco Model 965 Five Station Battery Charger $405.00 $405.00 5 69-2903-138 3/8 inch Low Flow Stainless Steel Strainer $40.50 $202.50 5 60-9004-367 3/8 inch standard weighted polypropylene strainer. $49.50 $247.50 5 68-3700-007 3/8 inch vinyl tubing coupler $13.50 $67.50 2'68-1680-059 3/8 inch vinyl suction line - 500 foot roll $58.50 $117.00 3,68-6700-045 Pump tubing for 6700 Series Sampler - quantity 25 $283.50 $850.50 3 209-9006-02 ProHanger for 19-3/4 - 22 inch manhole. Stainless steel $315.00 $945.00 bracket for suspending equipment in manhole. 3 60-1394-014 Sampler Suspension Harness.. $36.00 $108.00 6 60-9004-338 Y Connect Cable; for YSI Sonde and Rain gauge to 6712. $135.00 $810.00 5 60-9004-342 Y Connect Cable; for Generic SDI-12 sensor, Rain gauge $81.00 $405.00 and Isco Avalanche or 6712 Sampler 1 FRT Shipping $100.00 $100.00 Address Purchase Order To: - Teledyne ISCO, Inc. Terms: Net 30 Days TOTAL: $20,917.00 Shipment: 2-3 Weeks FOB: Prepaid and Invoice Add Taxes: Not included in these prices .. - C.C. LYNCH & ASSOCIATES, INC. Ken Dillard .,..~' C.C. LYNCH &ASSOCIATES, INC. ~ j,v ~nviro~menta~.. ~eh~olo~y .. ~mai]~ ~fo~C~A.oar~ QUOTATION To: City of Denton - Water Utilities David Hunter 901 A Texas St Denton, TX 76209 Denton Phone: (940)349-7123 Fax: (940)349-7334 WE ARE PLEASED TO FURNISH THE FOLLOWING PRICES. ~b.e...s. mp'do~:: :2:.ii!L:2 :i~.,,~:.iL'.!~!;..i.i:~ :..:..ii:i:: 2 ;_'.~ !' .i.':!~i::..5,2 ............. '~ ..... ::: ; '"':.'":"' · ': ..... '".::' 1::5~::':.':,":;'!'i~ii'::: i:U~¢ P:r:im, Ti:!!:::.iiJ!:i!~i(.C:;:!';!!~t..i:.[!~O '~"[:i 68-6700-007 2~bo~te Co~gur~on for67~ Sefles Full-s~e . $238,50 $%192.50 Portable SamCer. Includes 24 Glass 350-mt round bottles with Teflon-lined caps, b~ttle retaining ring, and two discharge tubes. 2 3 68-6700-108 [$CO 750 Module w/Low Profile Area Velocity Sensor $2,695.50 $8,086.50 wi 25 ff. cable 3 1 68-6700-052 I$CO 701 Module with Stainless Steei double junction $1,525.50 $1,525.50 combination pH probe, exposed temp. probe wi 25 it, cable. Buffer & Rinse Solution ISCO 674 Rain Gauge wi 50 fL cabie 4 3 60-3284-001 5 4 68-6700-056 6 5 60-1684--040 7 4 68-3700-007 Address Order to: Teledyne-lsco, inc. P.O. Box 82531 Lincoln, NE 6850%2531 Fax to: (228)452-2563 Thank you and please call us any time. C,C. LYNCH & ASSOCIATES, INC, Trey Campbell 18c0 581 Rapid Transfer Device w/PC cable Model 934 Nickel-Cadmium Battery. Rechargeable, 12 vol[s, 4 amp-heur Coupler for 3/8 inch vinyl suction I~ne. Can be used with any lsco Sampler. $625.50 $1,876.50 ~62.50 $2,250.00 $202.50 $1,012.50 $13.50 $54.00 PUB AGENDA ITEM #5 PUBLIC UTILITIES BOARD AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: ACM: October 11, 2004 Wastewater Utilities Howard Martin, Utilities 349-8232 SUBJECT Receive a report, hold a discussion, and give staff direction concerning a United States Environmemal Protection Agency (USEPA) 104(b)3 Water Quality gram that has been offered to the City of Demon. BACKGROUND Approximately 6 momhs ago, the City Council adopted revisions to Subchapter 22 of the Denton Development Code that allowed gas well developers to drill wells within the flood fringes of Demon's floodplains, under certain restrictions. One of the outcomes of the revisions was a proposal to monitor the mud pit contents of gas wells located in the City and to monitor for potemial storm water / water quality impacts from drilling operations. Shortly after the revisions to Subchapter 22 were adopted, City of Denton Watershed Protection staff applied for a 104(b)3 Water Quality Gram under the national USEPA program. Since the issue of assessing the potential storm water impacts of oil and gas exploration is an important topic to the USEPA, staff felt that the grant application was timely and that the goals of the monitoring component of Subchapter 22 could be enhanced by the activities proposed in the grant. Although the USEPA 104(b)3 program is highly competitive on a national scale, the City of Demon was successful in competing for the grant. Staff believes that this grant will enhance our ability to effectively monitor the water quality componem of gas well drilling operations within the City of Denton, and that the results from our monitoring efforts will be important to the USEPA on a national basis when the Phase II storm water permit is reauthorized during the next permitting cycle. The gram is designed to be implememed over a 3 year period, and will likely begin mid- October 2004 if approved. Detailed information concerning the grant is contained in the interim proposal, which is provided as an attachment. Points of interest concerning this grant include the purchase of a large amount of monitoring equipment using grant funds, a relatively large componem of the project dedicated to funding monitoring activities, and support for a field technician, which we anticipate to be a graduate student at the University of North Texas. OPTIONS o Accept the proposed grant without modifications. Accept the proposed grant, with modifications. The acceptability of modifications will be comingem on decisions by the USEPA Do not accept the proposed grant. RECOMMENDATION Staff recommends Option 1, accepting the proposed resolution without modification. PRIOR ACTION/REVIEW (Council, Boards, Commissions) None FISCAL INFORMATION The proposed gram is for a 3-year period, for a total amoum of $245,141. The federal share of this gram is $157,100, which is allocated mainly towards the purchase of equipment, analytical costs, and the support of a field technician. The cost share for the City of Demon is therefore approximately $88,041 over the three-year graM. This cost share is exclusively comprised of in-kind services related to the monitoring program that was established during the revisions to Subchapter 22 of the Denton Development Code. BID INFORMATION None DATE SCHEDULED FOR COUNCIL APPROVAL October 19, 2004 EXHIBITS 1. Imerim Proposal for USEPA 104(b)3 Water Quality graM. Prepared by: Respectfully submitted: Jim Coulter Director of Water Utilities Kenneth Banks, Ph.D. Water Resources Program Manager 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 October 11, 2004 After determining that a quorum of the Public Utilities Board of the City of Denton, Texas was present, the Public Utilities Board convened into an Open Meeting on Monday, October 11, 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, Bob Bland, Bill Cheek, Dick Smith, Phil Gallivan, George Hopkins, Charldean Newell EX OFFICIO MEMBERS Michael Conduff, City Manager Howard Martin, ACM/Utilities ITEMS FOR INDIVIDUAL CONSIDERATION: 4) Receive a report, hold a discussion, and give staff direction concerning a United States Environmental Protection Agency (USEPA) 104(b)3 Water Quality grant that has been offered to the City of Denton. Kenny Banks, Water Resources Program Manager, presented this item. Approximately 6 months ago, the City Council adopted revisions to Subchapter 22 of the Denton Development Code that allowed gas well developers to drill wells within the fringes of Denton's floodplains, under certain restrictions. One of the outcomes of the revisions was a proposal to monitor the mud pit contents of gas wells located in the City and to monitor for potential storm water/water quality impacts from drilling operations. Shortly after the revisions to Subchapter 22 were adopted, City of Demon Watershed Protection staff applied for a 104(b)3 Water Quality Gram under the national USEPA program. Although the USEPA 104(b)3 program is highly competitive on a national scale, the City of Denton was successful in competing for the grant. The gram will enhance the City's ability to effectively monitor the water quality componem of gas well drilling operations within the City of Demon, and the results from monitoring efforts will be important to the USEPA on a national basis when the Phase II storm water permit is reauthorized during the next permitting cycle. Board Member Dick Smith moved to accept the proposed grant without modifications, with a second from Board Member George Hopkins. The motion was approved by a vote of 7-0. Page 1 of 1 ORDINANCE NO. AN ORDINANCE APPROVING THE EXPENDITURE OF FUNDS FOR THE PURCHASE OF AN ISCO MODEL 6712 PORTABLE WATER SAMPLER FOR THE DENTON WATER/WASTEWATER DEPARTMENT AVAILABLE FROM ONLY ONE SOURCE IN ACCORDANCE WITH THE PROVISION FOR STATE LAW EXEMPTING SUCH PURCHASES FROM REQUIREMENTS OF COMPETITIVE BIDS; AND PROVIDING AN EFFECTIVE DATE (FILE 3270-PURCHASE OF AUTOMATIC WATER SAMPLER AWARDED TO TELEDYNE ISCO INC. IN THE AMOUNT OF $36,990). WHEREAS, Section 252.022 of the Local Government Code provides that procurement of items that are only available from one source, including; items that are only available from one source because of patents, copyrights, secret processes or natural monopolies; films, manuscripts or books; electricity, gas, water and other utility purchases; captive replacement parts or components for equipment; and library materials for a public library that are available only from the persons holding exclusive distribution rights to the materials; need not be submitted to competitive bids; and WHEREAS, the City Council wishes to procure one or more of the items mentioned in the above paragraph; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. That the following purchase of materials, equipment or supplies, as described in the "File Number" listed hereon, and on file in the office of the Purchasing Agent, are hereby approved: FILE NUMBER VENDOR AMOUNT 3270 Teledyne Isco Inc. $36,990 SECTION 2. That the acceptance and approval of the above items shall not constitute a contract between the City and the person submitting the quotation for such items until such person shall comply with all requirements specified by the Purchasing Department. SECTION 3. That the City Manager is hereby authorized to execute any contracts relating to the items specified in Section I and the expenditure of funds pursuant to said contracts is hereby authorized. SECTION 4. 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: 3-ORD-File 3270 AGENDA DATE: DEPARTMENT: ACM: AGENDA INFORMATION SHEET December 7, 2004 Materials Management Kathy DuBose ~ Questions concerning this acquisition may be directed to Vance Kemler 349-8044 SUBJECT Consider adoption of an Ordinance in accordance with the provisions of State law exempting such purchases from the requiremems of competitive bidding awarding a comract for purchase of a Caterpillar Model 826 landfill compactor from the City of Brownwood; providing for the expenditure of funds therefore; and providing for an effective date (File 3268-Purchase of Landfill Compactor awarded to the City of Brownwood, Texas in the amoum of $125,000). BID INFORMATION The Solid Waste Department owns two compactors, and recently the backup unit, a Caterpillar Model 826, became inoperable due to a catastrophic transmission failure. The unit has operated at Denton's landfill in excess of 14,000 hours. The estimated repair cost to the transmission is approximately $65,000. In addition, the engine is due for rebuilding and all major pivot poims are worn out, and require replacemem. The transmission expense plus the additional expenses required to complete a major rebuild make the repair of this machine not economically cost effective. The FY 2005 approved Landfill budget does include the replacemem of this machine. A three to five year-old used Caterpillar Model 826 landfill compactor in good mechanical condition ranges in price from $200,000 to $300,000. The City of Brownwood, Texas recemly purchased a new compactor and has agreed to sell the City of DeNon their Caterpillar Model 826 for $125,000. This is a low operating hour machine, and could be used in landfill construction and in a backup capacity on the working face for several years at the City of Denton Landfill. PRIOR ACTION/VIEW (COUNCIL, BOARDS, COMMISSIONS) The Public Utility Board approved this purchase at the November 8, 2004 meeting. RECOMMENDATION We recommend the award of this item to the City of Brownwood, Texas, in the amount of $125,000. Agenda Information Sheet December 7, 2004 Page 2 PRINCIPAL PLACE OF BUSINESS City of Brownwood Brownwood, TX ESTIMATED SCHEDULE OF PROJECT The Compactor can be picked up from the City of Brownwood, after Council approves this item. FISCAL INFORMATION The Landfill Compactor will be funded using Short-Term Bonds, capital account number 660041587.1350.30100. Respectfully submitted: Tom Shaw, C.P.M., 349-7100 Purchasing Agent Attachment 1: City of Brownwood Certification of Surplus Property 1-AlS-File 3268 A~taclment 1 CER.TI~ICATION I~ l~m Kaas% City Seca'~ of thc City of Brown,rood, T~, do h~by c~ ~t ~e ~ ~ a~e ~d co.ct ~ycfa Ml.u~e Order wh~by Co.cfi de~ated ~he ~s 2~1 ~~, M~18280 ~p~t~, S~ No. ~N00757, ~I~prop~, w~ ~ O~ ~ of mce~ ~ ~ ~ute Bool~ of~ CiW of Bm~w~. T~ Volta: 25, Page 98. Witness my tnmd aud S~t of the City on tl~s the 16m day Of November, 2004. 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 CITY OF DENTON PUBLIC UTILITIES BOARD MINUTES November 8, 2004 DRAFT After determining that a quorum of the Public Utilities Board of the City of Denton, Texas was present, the Public Utilities Board convened into an Open Meeting on Monday, November 8,, 2004, at 9:00 a.m. in the Service Cemer Training Room, City of DeNon Service Cemer, 901-A Texas Street, Denton, Texas. PRESENT: John Baines, Bob Bland, Bill Cheek, Dick Smith, Phil Gallivan, George Hopkins, Charldean Newell EX OFFICIO MEMBERS Michael Conduff, City Manager Howard Martin, ACM/Utilities The Public Utilities Board reconvened in an Open Session at 10:15 a.m. The meeting was called to order to consider the following business: ITEMS FOR INDIVIDUAL CONSIDERATION: 6) Consider approval of the purchase of a Caterpillar Model 826 landfill compactor, in the amoum of $125,000, from the City of Brownwood, Texas through an imer-governmemal arrangement. Vance Kemler, Director of Solid Waste, presented this item. The Solid Waste Departmem owns two compactors, and recently the back up unit, a Caterpillar Model 826, became inoperable due to a catastrophic transmission failure. The unit has operated at DeMon's landfill in excess of 14,000 hours. The machine is not economically repairable. The FY 2005 approved landfill budget does include the replacemem of this machine. The estimated repair cost to the transmission is approximately $65,000. In addition, the engine is due for rebuilding and all major pivot poims are worn out, and require replacemem. The transmission expense plus the additional expenses required to complete a major rebuild make the repair of this machine financially impractical. A three to five year old used Caterpillar Model 826 landfill compactor in the D/FW area that is in good mechanical condition ranges in price from $200,000 to $300,000. The City of Brownwood, Texas recemly purchased a new compactor and has agreed to sell the City of DeNon their Caterpillar Model 826 for $125,000. This is a low operating hour machine, and could be used in landfill construction and in a back up capacity on the working face for several years at the City of DeNon landfill. Board Member Bob Bland moved to approve Agenda Item # 6, with a second from Board Member George Hopkins. The motion was approved by a vote of 7-0. ORDINANCE NO. AN ORDINANCE IN ACCORDANCE WITH THE PROVISIONS OF STATE LAW EXEMPTING SUCH PURCHASES FROM THE REQUIREMENTS OF COMPETITIVE BIDDING AWARDING A CONTRACT FOR PURCHASE OF A CATERPILLAR MODEL 826 LANDFILL COMPACTOR FROM THE CITY OF BROWNWOOD; PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFORE; AND PROVIDING FOR AN EFFECTIVE DATE (FILE 3268- PURCHASE OF LANDFILL COMPACTOR AWARDED TO THE CITY OF BROWNWOOD, TEXAS IN THE AMOUNT OF $125,000). WHEREAS, the City of Denton is desirous of purchasing a Caterpillar Model 826 compactor from the City of Brownwood, Texas, a political subdivision of the State of Texas; and WHEREAS, this purchase is exempt from competitive bidding requirements under Section 252.022 (12)(C) of the Local Government Code; 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, equipment, supphes or services approved and accepted herein; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The findings and recitations contained in the preamble of this ordinance are incorporated herein by reference. SECTION 2. The numbered items in the following numbered proposal for materials, equipment, supplies, or services, shown in the "Proposals" on file in the office of the City Purchasing Agent, are hereby accepted and approved as being in the best interests of the City of Denton for purchasing: FILE NUMBER VENDOR AMOUNT 3268 City of Brownwood $125,000 SECTION 3. Bythe acceptance and approval of the above numbered items of the submitted proposal, the City accepts the offer of the persons submitting the proposal for such items and agrees to purchase the materials, equipment, supplies or services in accordance with the terms, specifications, standards, quantities and for the specified sums contained in the Proposal, and related documents. SECTION 4. Should the City and persons submitting approved and accepted items and of the submitted proposals wish to enter into a formal written agreement as a result of the acceptance, :approval, and awarding of the bids, the City Manager or his designated representative is hereby authorized to execute the written contract which shall be on file in the office of the Purchasing · Agent; provided that the written contract is in accordance with the terms, conditions, specifications, standards, quantities and specified sums contained in the Bid Proposal and related documents herein approved and accepted. SECTION 5. By the acceptance and approval of the above numbered items of the submitted bids, the City Council hereby authorizes the expenditure of funds therefor in the amount and in accordance with the approved proposals or pursuant to a written contract made pursuant thereto as authorized herein. SECTION 6. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this day of ,2004. EULINEBROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY AGENDA INFORMATION SHEET AGENDA DATE: December 7, 2004 DEPARTMENT: CM/DCM/ACM: Airport and Transportation Operations Jon Fortune, Assistant City Manager SUBJECT Consider adoption of an ordinance approving an assignmem of leasehold imerest in an airport lease from Dalton Family Partnership, LTD to Aero Properties of Denton, LLC; and providing an effective date. BACKGROUND Mr. George Dalton, President of Dalton North Texas Aero has requested the City of Denton authorize the assignment of his commercial operator airport lease agreement with the City of Denton to Aero Properties of Denton, LLC. Mr. Dalton has entered into an agreement with Dr. Nathan Graves and Gen. Mike McClendon to partner in the creation of Aero Properties of DeNon, LLC. To date, Dr. Graves and Gen. McClendon have invested over $400,000 dollars of additional capital imo the operation. Each partner will own 33 1/3% equity in the newly formed limited liability company. The gemlemen are curremly in the process of remodeling the existing hangar/office structure. The upgrades include a stone exterior faCade, complete remodel of the office complex and lounge area. Aero Properties of Denton, LLC has indicated they will request an assignment of additional tracts from the neighboring Ezell Aviation lease agreement in the near future. At that time, Aero Properties of Denton has indicated they plan on requesting an extension to their current lease agreement set to expire on May 5, 2027. ESTIMATED SCHEDULE OF PROJECT The lease assignment would become effective November 17, 2004 and continue through the 5th day of May 2027 (end of currem lease). PRIOR ACTION/REVIEW The City Attorney has reviewed the lease assignmem and the Airport Advisory Board recommends approval of the assignment. Staff recommends approval of this assignment based on the additional investmem in the property. FISCAL INFORMATION There will be no change to the lease rate established in the current version of the lease agreement. EXHIBITS Ordinance Assignment Respectfully submitted: Mark Nelson, Director Airport and Transit Operations S:\Our Documents\Ordinances\04XDalton Airport Lease Assignment.doc ORDINANCE NO. AN ORDINANCE APPROVING AN ASSIGNMENT OF LEASEHOLD iNTEREST iN AN AIRPORT LEASE FROM DALTON FAMILY PARTNERSHIP, LTD TO AERO PROPERTIES OF DENTON, LLC; AND PROVIDiNG AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager or his designee is hereby authorized to execute an Assignment of Leasehold Interest in Airport Lease from Dalton Family Partnership, Ltd. toe Aero Properties of Denton, LLC, in substantially the form of the Assignment attached to and made a part of this ordinance for all purposes, to evidence the City's consent to the Assignment. SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the dayof ,2004. EULINE BROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: HERBERT L. ;ORNEY BY: ASSIGNMENT OF LEASEHOLD INTEREST IN AIRPORT LEASE This Assignment of Leasehold Interest in Airport Lease (the "Assignment') is made and entered into as of the Effective Date (as defined below) set forth below by and between Dalton Family Partnership, Ltd., a Texas limited partnership (the "Assignor"), and Aero Properties of Denton, LLC, a Texas limited liability corporation ("Assignee"). WHEREAS, George Dalton, Nathan Graves, and Mike McClendon are the owners of Assignee; and WHEREAS, Ezetl Aviation, Incorporated ("Ezell") and Lessor have entered into that certain Airport Lease Agreement dated May 6, 1997 approved by Ordinance No. 97- 132 as amended by that certain First Amendment to Airport Lease Agreement dated December 8, 1998, approved by Ordinance No. 98-431 and further amended by that Certain Second Amendment (the "Second Amendment") to Airport Lease Agreement dated effective June 1, 2003, approved by Ordinance No. 2003-230 (collectively called the "Airport Lease"); and WHEREAS, pursuant to that certain Partial Assignment of Airport Lease dated effective December 16, 2003 (the "Ezell Partial Assignment"), Ezell assigned to Assignor that portion of the Airport Lease pertaining to the Fixed Base Operator Premises, being Tract A in the Airport Lease ("Tract A"); and WHEREAS, Assignor desires to assign to Assignee all right, title and interest that it has in the Ezell Partial Assignment and the leasehold for Tract "A"; and WHEREAS, the City of Denton, Texas (the "Lessor") has executed this Assignment to evidence its consent to the Assignment, which is hereby given subject to the terms and conditions of this Assignment; NOW, THEREFORE, in consideration of the mutual covenants, the parties agree as follows: 1.. Assignor hereby assigns and transfers to Assignee all of Assignor's fight, title and interest in and to that portion of the Airport Lease pertaining to Tract A only, including the Ezell Partial Assignment. 2. Assignee assumes all of Assignor's rights, 'duties and responsibilities under the Airport Lease pertaining to Tract A and the Ezell Partial Assignment. However, Assignor remains liable under the Airport Lease as to Tract A and the Ezell Partial Assignment, should Assignee default. Signed to be effective as of the 7th day of December, 2004 (the "Effective Date"). DALTON FAMILY PARTNERSHIP, LTD., A Texas limited partnership By: DALTON FAMILY ENTERPRISES, INC., ,6reorg~ D-altor~ ~r., President AERO PROPERTIES OF DENTON, LLC A Texas limited liability corporation Georg~"13alton, Sr., President CITY OF DENTON, TEXAS BY: ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO F~OvRM: B Y: '-'~~ Michael A. Conduff City Manager ACKNOWLEDGMENTS Page 2 STATE OF TEXAS COUNTY OF DENTON This instrument was acknowledged before me on the ~5 day of ~i)¥em~.t~ , 2004 by George Dalton, Sr., President of Dalton Family Partnership Enterprises, Inc. a Texas corporation, general parmer of Dalton Family Limited Partnership, Ltd., a Texas limited partnership. Name: Notary Public, State of Texas My commission expires ~'- ~-7 ~ 0~ STATE OF TEXAS } ~i~ ~"'~g~' NOTARY PUBLIC l[~k~2~? state of Texas COUNTY OF DENTON } 'q~? ~' co~11m. Exp 08-27-2008 This instrument was acknowledged before me on the :~$ day of 1%YOm iX, C, 2004 by George Dalton, Sr., President of Aero Properties of Denton, LLC a Texas limited liability corporation, on behalf of said corporation. __~~ . Name: Notary Public, State of Texas My commission expires 5; ~¢~:, JUUECH^P~AN i~,~"..;g'~ ,OrARV PUaUC STATE OF TEXAS } ~\~[j.;J State of Texas } x.~.~..~- [Jomm. Exp. 08-27-2008 COUNTY OF DENTON } This instrument was acknowledged before me on the __ day of ., 2003 by Michael A. Conduff, City Manager of the City of Denton, Texas, a Home Rule municipal corporation, on behalf of said municipal corporation. Name: Notary Public, State of Texas My commission expires Page 3 AGENDA INFORMATION SHEET AGENDA DATE: December 7, 2004 DEPARTMENT: CM/DCM/ACM: Airport and Transit Operations Jon Fortune, Assistant City Manager SUBJECT Consider adoption of an ordinance approving a Fixed Base Operator airport lease agreement between the City of Denton and BAM Denton Management Ventures; and providing an effective date. BACKGROUND BAM DeNon ManagemeN Ventures (BAM) curreNly holds a commercial airport lease for the purpose of providing Fixed Base Operator (FBO) services on DeNon Airport. The curreN lease agreemeN held by BAM is an assigned agreemeN. Originated in November 1988, the original agreement is scheduled to expire in November of 2019. In the past three years BAM has made significant investments in the airport leasehold including renovation of the main FBO hangar and completion of an additional 12,000 square foot storage hangar. BAM is currently converting a hangar iNo an aircraft pain facility adding a service that is in great demand. In addition to these recent improvements, BAM is proposing an expansion of the lease to construct an additional 12,000 square foot storage hangar. This facility will assist in the provision of aviation services and will enhance the partnership with Jet Works Aviation creating a full-service aviation enterprise able to serve the needs of the aviation community in North Texas. BAM has requested the City consider a renegotiated lease that would allow for a longer term to enable BAM the ability to capitalize on recent investments and proposed development on Denton Airport. The lease extension will provide better financing options for their proposed expansion plans. BAM has been a quality partner in marketing the Denton Airport, following through on developmeN proposals, and assisting with coNinued quality growth in other areas of the airport. OPTIONS I. Approve the lease as proposed. II. Provide staff direction with additional lease options. RECOMMENDATION The Airport Advisory Board unanimously recommends approval of the lease as preseNed. Airport staff recommends approval of the lease as presented based on past performance by BAM and based on the caliber and quality of the aviation services BAM provides at DeNon Airport. ESTIMATED SCHEDULE OF PROJECT The lease would become effective December 15, 2004 and continue through the 14th day of December 2034 (30 years). The lease also provides for one 10-year option to extend which is based on investment in the lease and performance measures. PRIOR ACTION/REVIEW The City Attorney's Office has reviewed the proposed lease. FISCAL INFORMATION The lease rate for the proposed lease is $0.0918 per square foot per year for the first five years, 10% tie-down and hangar commission. The lease rate for the first five years will be $39,000 per year, not including fuel and hangar commissions. The lease has two adjustments to the tie-down and hangar commission effective in December 2009 and December 2019. The lease also provides for a fuel flow rate increase in December 2009 and the opportunity to renegotiate the fuel flow rate in December 2019. The lease agreement provides for rate adjustments, based on the Consumer Price Index, every other year for the term of the lease as per FAA requirement beginning December 2009. EXHIBITS Ordinance Lease Agreement Respectfully submitted: Mark Nelson Director, Airport and Transportation Operations S:\Our Documents\Ordinances\0&BAM Airport Lease Ordinance.doc ORDINANCE NO. AN ORDINANCE APPROVING A FIXED BASE OPERATOR AIRPORT LEASE AGREEMENT BETWEEN THE CITY OF DENTON, TEXAS AND BAM DENTON MANAGEMENT VENTURES; AND PROVII)ING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager or his designee is hereby authorized to execute an airport lease agreement for fixed base operator between the City of Denton and BAM Denton Management Ventures, in substantially the form of the Airport Lease Agreement which is attached to and made a part of this ordinance for all purposes. SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of ,2004. EUL1NE BROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEC3AL FORM: BY: ~~ '- BAM Lease-final. DOC AIRPORT LEASE AGREEMENT FIXED BASED OPERATOR This Lease Agreement is made and executed to be effective as of the Fifteenth day of December, 2004 (the "Effective Date") at Denton, Texas, by and between the City of Denton, Texas, a municipal corporation, hereinafter referred to as "Lessor", and BAM Denton Management Ventures, a Texas limited liability company, hereinafter referred to as "Lessee". WlTNESSETH: WHEREAS, Lessor now owns, controls and operates the Denton Municipal Airport (the "Airport") in the City of Denton, County of Denton, State of Texas; and WHEREAS, Lessee is the current lessee pursuant to that certain assignment dated October 16, 2001 approved by Resolution No. 2001-063 of that certain Airport Lease Agreement for fixed base operations dated August 30, 1988, as amended by amendments dated June 7, 1994, October 6, 1998, and December 7, 1999 (the "Existing Lease"); and WHEREAS, Lessee and Lessor desire to enter into this Lease Agreement (sometimes called this "Lease Agreement", "Agreement", or "Lease") in order to extend and supercede the Existing Lease subject to the terms and conditions contained in this Agreement; and WHEREAS, pursuant to this Agreement Lessee is also leasing that certain parcel or tract of land depicted as Parcel A on Attachment A attached hereto and made a part hereof by reference; NOW, THEREFORE, for and in consideration of the promises and the mutual covenants comained in this Agreement, the parties agree as follows: I. CONDITIONS OF I.EASE AGREEMENT NOTWITHSTANDING ANY LANGUAGE TO THE CONTRARY HEREINAFTER CONTAINED, THE LANGUAGE IN PARAGRAPHS A THROUGH D OF THIS SECTION SHALL BE B1NDING. activities agreeing: PRINCIPLES OF OPF. R ATIONIR, The fight to conduct aeronautical and related for furnishing services to the public is granted to Lessee subject to Lessee 1. To furnish said services on a fa/r, equal and not unjustly discriminatory basis to all users thereof; and To charge fair, reasonable and not unjustly discriminatory prices for each trait or service; provided, that Lessee may be allowed to make reasonable and nondiscriminatory discounts, rebates, or other similar types of price reductions to volume purchasers. NON-DISCRIMINATION: Lessee, for itself, its personal representatives, successors, and assigns, as a part of the consideration hereof, does hereby covenant and agree as a covenant running with the land that: No person on the grounds of race, religion, color, sex, or national origin shall be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of said facilities; In the construction of any improvements on, over, or under such land and the furnishing of services thereon, no person on the grounds of race, religion, color, sex, or national origin shall be excluded from participation in, denied the benefits of, or otherwise be subjected to discrimination; 3. Lessee shall use the premises in compliance with all other requirements imposed by or pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimi- nation in Federally assisted programs of the Department of Transportation - Effectual of Title Vi of the CMl Rights Act of 1964, as said Regulations may be amended. C. RIGHT OF INDIVIDIJAi~q TO MAINTAIN AIRCRAFT. It is clearly understood by Lessee that no right or privilege has been granted which would operate to prevent any person, firm or corporation operating aircraft on the Airport fi'om performing any services on its own aircraft with its own regular employees (including, but not limited to, maintenance and repair) that it may choose to perform. D. NIONT-EXCI l l.qlVF, RIGI-IT. It is understood and agreed that nothing herein contained shall be construed to grant or authorize the granting of an exclusive right within the meaning of Title 49 U.S.C. Appendix § 1349. E. PlIFIIJC ARF, A~q. Lessor reserves the right to further develop or improve the landing area of the Airport as it sees fit, regardless of the desires or views of Lessee, and without interference or hindrance. Lessor shall be obligated to maintain and keep in good repair the landing area of the Airport and alt publicly owned facilities of the Airport, together with the right to direct and control all activities of Lessee in this regard. During time of war or national emergency, Lessor shall have the right to lease the landing area or any part thereof to the United States Government for military or naval use, and, if such lease is executed, the provisions of this instrument insofar as they are inconsistent with the provisions of the lease to AIRPORT LEASE AGREEMENT BAM FBO - Page 2 the Government, shall be suspended. 4. Lessor reserves the right to take any action it considers necessary to protect the aerial approaches of the Airport against obstruction, together with the right to prevent Lessee from erecting, or permitting to be erected, any building or other structure on or adjacent to the Airport which, in the opinion of Lessor, would limit the usefulness or safety of the Airport or constitute a hazard to aircratl or to aircraft navigation. The hangar/office/shop complex as currently proposed as provided in Section II.D. does not violate this provision. 5. This Lease Agreement shall be subordinate to the provisions of any existing or future agreement between Lessor and the United States or agency thereof, relative to the operation or maintenance of the Airport. 11. T ,I~.ASF. D PRF, MISF,,q Lessor, for and in consideration of the covenants and agreements herein contained, to be kept by Lessee, and subject to the conditions contained herein, does hereby demise and lease unto Lessee, and Lessee does hereby lease from Lessor, for the lease term described in Article llI, the following described land situated in the City of Denton, Denton County, Texas: A. t .and_ The same 9.1 acre tract or parcel of land leased to Lessee under the Existing Lease, together with improvements thereon, which property is more particularly described in Attachment "B", attached hereto and incorporated herein by reference (the "Existing Parcel"), and an additional approximate 28,000 square feet of land identified as Parcel A on Attachment "A" (the "Leased Premises"). Together with the right of ingress and egress to the Leased Premises; and the fight in common with others so authorized of passage upon the Airport property generally, subject to reasonable regulations by the City of Denton and such rights shall extend to Lessee's employees, passengers, patrons and invitees. For purposes of this Agreement, the term "Leased Premises" shall include leasehold improvements constructed by the Lessee, but not including certain easements or property owned and/or controlled by the Lessor. A legal description of Parcel A is not currently attached to this Lease Agreement. Lessee shall deliver to Lessor no later then 30 days after the Effective Date of this Agreement a legal description of Parcel A accurately describing same that is acceptable to Lessor. If Lessee fails to do so, Lessor at its option may terminate this Agreement as to Parcel A, in which case it will have no further force and effect. The approved legal description will be attached to this Agreement as Attachment "C". B. llse of Fuel Farm. Subject to the requirements of V.B.I., Lessee shall have the right of ingress and egress and use of the fuel farm which is located on property that is particularly described in Attachment D attached hereto and made a part hereof by reference (the "Fuel Farm"). Lessor may in its discretion provide for the installation of one additional AIRPORT LEASE AGREEMENT BAM FBO - Page 3 12,000 gallon fuel facility at the Fuel Farm. C. Righl of First Refimal_ So long as Lessee is in compliance with all construction requirements pertaining to Lessee's Improvements on Parcel A as set forth in Section ll.D. below and is not in default of any term or condition of this Lease Agreement, Lessee shall have a right of first refusal (the "Right of First Refusal") to lease Parcels B and/or C which are generally depicted in Attachment "A" to which Lessor receives a written offer to lease (the "Offer to Lease"). The Right of First Refusal shall be effective for a period of five (5) years after the Effective Date (the "Option Period"). Should Lessor receive an Offer to Lease from a third party during the Option Period that Lessor has an interest in consummating, Lessor shall give Lessee a written notice of such Offer to Lease along with a copy of said Offer to Lease (the '*Notice"). If Lessee desires to exercise its Right of First Refusal it shall no later than 45 days after the receipt of the Notice tender to Lessor a signed written lease with identical terms and conditions as are contained in the Offer to Lease (the "Deadline"). If Lessee fails to meet the Deadline, the Right of First Refusal will be null and void and of no further force and effect. Lessee shall be entitled to an additional five year right of first refusal (the 'Second Option Period") as to the remaining parcel (the "Remaining Parcel") (the "Second Right of First Refusal") if: 1. Lessee exercises the Right of First Refusal as to Parcel B or C within the Option Period resulting in the consummation of a lease as to Parcel B or C; and 2. Lessee completes construction of hangar/office facility containing at least 10,000 square feet on the Remaining Parcel within 720 days after the beginning of the new lease for Parcel B or C; and 3. Lessee is not in default under this Lease Agreement or the lease for Parcel B or C. Should Lessor receive an Offer to Lease from a third party during the Second Option Period that Lessor has an interest in consummating, Lessor shall give Lessee a written notice of such Offer to Lease along with a copy of said Offer to Lease (the '*Notice"). If Lessee desires to exercise its Right of First Refusal it shall no later than 45 days after the receipt of the Notice tender to Lessor a signed written lease with identical terms and conditions as are contained in the Offer to Lease (the "Deadline"). If Lessee fails to meet the Deadline, the Right of First Refusal will be null mad void and of no further force and effect. C.IMPROVF. MENTS PROVID]~,D BY I.F. RROR: The only improvements provided by Lessor, except as set forth in Article II.F. "Access to Utilities" below, shall be as follows: Lessor shall continue to maintain the FBO Ramp as depicted on Attachment D (the "FBO Ramp"). All maintenance costs for the FBO Ramp under $2,000.00 shall be borne by Lessor. For maintenance costs of $2,000.00 or over the cost of materials will be shared 50- 50 with the Lessor being responsible for 100% of the labor costs. AIRPORT LEASE AGREEMENT BAM FBO - Page 4 The term "Lessor improvements" shall mean those things on or adjacent to the Leased Premises belonging to, constructed by, or to be constructed by the Lessor. Unless otherwise noted herein, all Lessor improvements are and will remain the property of Lessor. All Lessor improvements must be described in detail above, or above referenced and attached to this Agreement in an exhibit approved by Lessor. D.. IMPRC)VlV. MF. NTR PROVIDED BY 1 1. Can~qtmcfion of 1 lp~m'arle.q. The following improvements are currently located on the Existing Parcel: Six buildings as more particularly described in Attachment "E" attached hereto and made a part hereof by references (the "Existing Improvements'). The Lessee shall make the following improvements and renovations to the Existing Improvements at an estimated cost of $450,000.00: Conversion of Building 2 into a paint facility meeting all requisite environmental and fn'e codes (the "Upgrades"). Construction of the Upgrades shall be commenced no later than 60 days after the Effective Date of this Agreement and be completed no later that 365 days after the Effective Date ("ConsU'uction Period for the Upgrades''). Construction of the Upgrades are considered commenced upon issuance of a building permit and commencement of constmction of any portion of the Upgrades. Construction of the Upgrades are considered complete when all of the Upgrades are actually completed in full. 2. Co_n~qtnmtian of P~rcel A lmprovementsk On Parcel A, Lessee shall construct a commercial hangar/office facility of not less than 10,000 square feet with a minimum door height of 28 feet and a minimum door width of 90 feet, minimum aircraft sta~ng apron of 9,000 square feet and appropriate taxiway access to Taxiway H ("Parcel A Improvements'). Construction of Parcel A Improvements shall be commenced no later than 365 days after the Effective Date of this Agreement and completed no later than 720 days after the Effective Date (the "Construction Period"). Construction of Parcel A Improvements are considered commenced upon issuance of a building permit and construction of any portion of the hangar/office facility. Construction of Parcel A Improvements are considered complete upon the issuance of a certificate of occupancy for the entire hangar/office facility. Notwithstanding anything contained in this Lease Agreement to the contrary, a failure to complete the Parcel A Improvements within the Construction Period may, at the sole option and discretion of the Lessor, result in the immediate termination and cancellation of this Lease Agreement as to Parcel A upon 30 days written notice of cancellation to Lessee. In such case Lessee's rights under the Lease Agreement as to Parcel A will immediately cease and be forfeited, and all of Parcel A Improvements shall immediately become the property of Lessor at no cost, expense or other compensation paid by Lessor to Lessee; and Lessee shall immediately vacate the Parcel A. In such case this Lease Agreement will remain in force and effect as to the Existing Parcel. Notwithstanding anything contained in this Lease Agreement to the contrary, a failure to complete the Upgrades within the Construction Period for Upgrades may, at AIRPORT LEASE AGREEMENT BAM FBO - Page 5 the sole option and discretion of the Lessor, result in the primary term of this Lease being reduced from 30 years to 15 years. E. ~. Lessor and Lessee by mutual agreement may establish, on the Leased Premises, easements for public access on roads and taxiways. F. ACCESS TO IFFII,ITIF. S_ Lessor represents that there are water, sewer and 3- phase electricity lines within close proximity to the Leased Premises available to "tap-in" by Lessee, and that the same are sufficient for usual and customary service on the Leased Premises. 1II. T~RM The term of this Lease Agreement shall be for a period of thirty (30) years, com- mencing on the 15th day of December, 2004 and continuing through the 14thth day of December of 2034, unless earl/er terminated or reduced under the provisions of the Lease Agreement (the "Lease Term"). Lessee has the option to renew for one (i) additional ten (10) year term. In order to exercise the option Lessee must provide written notice to Lessor of its intent to exercise the t0 year option no later than 180 day before the expiration of the 30 year primary term. The rental and terms to be negotiated for the option term shall be reasonable and consistent with the then value, rentals and terms of similar property on the Airport. IV. PAYMENTS; RENTAI,,q ANT) FEER Lessee covenants and agrees to pay Lessor, as consideration for this Lease Agreement, the following payments, rentals and fees: A. I.AND RF~NTAL_ Land rental shall be due and payable to Lessor in twelve (12) equal monthly installments in the sums set forth below, on or before the 1st day of each and every month during the term of this Lease Agreement. Lessee has the option to pay annual rentals and fees in whole on or before the 1st day of October, at the beginning of the City's fiscal year, each and every year of this Lease Agreement. Annual rent shall be a sum equal to $0.0928 per square foot of the land area contained in the Leased Premises (the "Original Rent"). Monthly rental shall be 1/12th of the annual rent. However, beginning December 1, 2009 the Original Rent will be adjusted in accordance with Section IV.C. Notwithstanding the foregoing, the annual lease rental will be reduced by the current lease rate per square foot, as adjusted by the CPI-U referenced in Section IV.C., times the number of square feet comprising all easements established in accordance with Section II.E_ B. I,ESSOR IMPROVEMENTS RENTAI.S. NONE: improvements on the Leased Premises. There are no Lessor C. PAYMF'.KW': PENAI.TY: ADH ISTMENITS. All payments due Lessor from Lessee AIRPORT LEASE AGREEMENT BAlM FBO - Page 6 under this Lease Agreement shall be made to Lessor at the offices of the Finance DeparUnent of the City of Denton, Customer Service Division, 601 West Hickory, Denton, Texas, unless otherwise designated in writing by the Lessor. If payments are not received on or before the 15th day of the month, a five percent (5%) penalty will be due as of the 16th. If payments are not received by the first of the subsequent month, an additional penalty of one pement (1%) of the unpaid rental/fee amount will be due. A one percent (1%) chat'ge will be added on the first of each subsequent month until the unpaid rental/fee payment is made. The Original Rent for the Leased Premises shall be readjusted at the end of each one year period during the Lease Term on the basis of the proportion that the then current United States Consumer Price Index for all m-ban consumers (CPI-U) for the Dallas- Fort Worth Bureau of Labor Statistics bears to the previous odd month 2004 index (September), which was 179.7 (1982-84 = 100). Each rental adjustment, if any, shall occur on the 1 st day of December, beginning 2009, and every other year thereafter on such date. The adjustments in the yearly rent shall be determined by multiplying the Original Rent by a fraction, the numerator of which is the index number for the last month prior to the adjustment, and the denominator of which is the index number applicable at the execution of this Lease Agreement. If the product of this multiplication is greater than the Original Rent, Lessee shall pay this greater amount as the yearly rent until the time of the next rental adjustment as called for in this section. If the product of this multiplication is less than the Original Rent there shall be no adjustment in the annual rent at that time, and Lessee shall pay the previous year's annual rent until the time of the next rental adjustment as called for in this section. In :no event shall any rental adjustment called for in this section result in an annual rent less than the previous year's annual rent. The adjustment shall be limited so that the annual rental payment determined for any given two-year period shall not exceed the annual rental payment calculated for the previous CPI adjustment by more than twenty percent (20%) percent. If the consumer price index for all urban consumers (CPI-U) for the Dallas-Fort Worth geographical region, as compiled by the U.S. Department of Labor, Bureau of Labor Statistics, is discontinued during the Lease Term, the remaining rental adjustments called for in this section shall be made using the formula set forth above, but by substituting the index numbers for the Consumer Price Index-Seasonally Adjusted U.S. City Average For All Items For All Urban Consumers (CPI-U) for the index numbers for the CPI-U applicable to the Dallas-Fort Worth geographical region. If both the CPI-U for the Dallas- Fort Worth geographical region and the U.S. City Average are discontinued during the Lease Term, the remaining rental adjustments called for in this section shall be made using the statistics of the Bureau of Labor Statistics of the United States Department of Labor that are most nearly comparable to the CPI-U applicable to the Dallas-Fort Worth geographical region. If the Bureau of Labor Statistics of the United States Department of Labor ceases to exist or ceases to publish statistics concerning the purchasing power of the consumer dollar during the Lease Term, the remaining rental adjustments called for in this section shall be made using the most nearly comparable statistics published by a recognized financial authority selected by Lessor. AIRPORT LEAS]~ AGREEMENT BAM FBO - Page 7 D. OTHER PAYMF, NTR TO I,ESSOR. 1. Hanger and Tie-Down Feeg_ Lessee shall pay Lessor a percentage of all hangar and tie-down rentals and fees collected by Lessee from persons renting facilities on the Leased Premises. Such fees shall be equal to: a. 10% of all hangar and tie-down fees through November 30, 2009. b. 11% of all hangar and tie-down fees through November 30, 2019. c. 12% of all hangar and tie-down fees through the end of the Lease Tenn. All such fees shall be paid monthly to Lessor on or before the 15th day of each month during the Lease Term. The fees shall be accompanied by records showing the date and location on the Airport where the aircraft was hangared or parked and the tail number, or side number, of the aircraft. Lessee shall pay Lessor a fuel flow fee for use of the Fuel Farm equal to 6% of the wholesale price per gallon of all fuel used by Lessee through November 30, 2009. From December 1, 2009 through November 30, 2019 the fuel flow fee will be adjusted to 7%. Thereafter, through the end of the Lease Term an adjustment will be made based on a market analysis as of December 1, 2019. E. RECORD.q. Lessee shall keep and maintain accurate records of wholesale fuel delivered under this Agreement, and Parking and hangar fees collected, for a period of three (3) years from the date the record is made. Such records shall be kept according to generally accepted accounting principles. Lessor or its duly authorized representatives shall have the right at all reasonable times during business hours to inspect the books, records and receipts of Lessee, for the purpose of verification. F. ANNIIAL STATI~,MF. NT Within sixty (60) days after the end of each calendar year, Lessee shall furnish to Lessor a certified statement of fuel deliveries, and parking and hangar fees collected during the preceding calendar year. Lessor reserves the right to audit said statement and Lessee's books and records, including examination of the general ledger and all other supporting material, at any reasonable time during business hours, for the purpose of verification. If the audit establishes the Lessee has understated or overstated fuel sales, parking fees, or hangar rentals collected by five percent (5%) or more, the entire expense of said audit shall be borne by Lessee. Any additional payment due from Lessee shall forthwith be paid to Lessor, with interest thereon at one percent (1%) per month from the date such amount originally became payable to Lessor. Any overpayment by Lessee shall be credited against further payments due to Lessor. Either party may refer the results of the AIRPORT LEASE AGREEMENT BAM FBO - Page 8 audit for resolution in accordance with Section IV.G. (Disputes) below. G. ~ If any dispute arises as to the mount owed fi:om fuel deliveries or hangar or parking fees collected, the party .disputing the mount and/or fee shall notify the other, in wrfing, within thirty (30) days from the date the dispute arises. Upon notification of the dispute, the disputed mount shall be submitted to a panel of three (3) certified public accountants, one to be selected by Lessor, one to be selected by Lessee and the third to be chosen by the first two accountants selected. This panel shall, by majority vote, determine the rights of the parties hereunder in conformity with generally accepted accounting principles. The fees due the accountants for such service shall be paid by the unsuccessful party, or in the event the determination is partially in favor of each party, the fee shall be borne equally by the parties. V. RIGHTS AND OBI JGATIONS OF 1 ,F, RRF. F. A.HSE OF I,F, ASED PRF. M[qF~R. Lessee is granted the non-exclusive privilege to engage in or provide the following on the Leased Premises: The right and privilege to engage in commercial aviation activities, hereby defined as those activities which involve the sale of aviation services for profit to the general public and shall include the maintenance and servicing of aircraft, which right shall include overhauling, rebuilding, repairing, inspection, and licensing of same and the purchase and sale of parts, equipment, and accessories therefore. 2. The sale of aircraft fuels, lubricants, and propellants within the leased area and at such other areas that may be designated by the Airport Manager. 3. The storing of aircraft in hangars or on tie down areas owned or operated by Lessees. 4. The sale of said fuels, lubricants, and propellants shall include the right to use vehicles necessary for the servicing of aircraft. The operation of a business of buying and selling, or renting new and used aircraft, aircraft parts, and accessories therefore, and aviation equipment of all descriptions either at retail, wholesale, or as a dealer. The operation and sale of aerial survey, photograph, mapping, and spraying services. (However, spraying services shall, at all times comply with applicable local, state, and national regulations pertaining to aerial spraying.) 7. The operation and sale of air taxi and sightseeing services. 8. The operation of schools for the instruction of the general public in flying, AIRPORT LEASE AGREEMENT BAM FBO - Page 9 navigation, mechanics, aerial survey, photography, aircraft design and/or training of the general public in any art, science, craft, or skill pertaining directly or indirectly to aircraft. 9. The operation of non-scheduled and charter air transportation of passengers. 10. The sale through coin operated vending machines of tobacco, confections, and refreshments and the maintenance on the leased premises of appropriate facilities therefore. 11. The undertaking of any phase of aviation activity for profit related to or in any way contributing to air transportation or aerial navigation, as long as such activity in no way interferes or hinders any F.A.A. approved navigational aids that may exist now or in the future at the Airport. 12. Ten years after the Effective Date of this Lease Agreement Lessee will begin to pay a commission fee to Lessor for car rentals based on the then existing market commission at similar sized airports. 13. The general use, in common with others authorized to do so, of all public airport facilities and improvements which are now or may hereafter be connected with or appurtenant to said Airport, except as hereinafter provided. 14. Ramp services, including loading and unloading of passengers, baggage, mail and freight, and providing of ramp equipment, aircraft cleaning and other services for persons, firms or air carders. No person, business or corporation other than Lessee may operate a commercial, retail or industrial business upon the Leased Premises or upon the Airport, without prior written consent from Lessor authorizing such commercial, retail or industrial activity. Lessee shall be allowed to provide sleeping quarters and other accommodations for use of an around-the-clock security guard. This provision shall not be construed to allow family living on the leased premises, and it is expressly understood and agreed that no permanent dwelling or domicile may be built, moved to or established on or within the leased premises nor may the Lessee, its tenants, invitees, or guests be permitted to reside or remain as a resident on or within the leased premises or other airport premises. Lessee shall file with the Airport Manager and keep current its mailing address, telephone number(s) and contacts where he can be reached in an emergency. Lessee shall file with the Airport Manager and keep current a list of its tenants and sub-lessees. Lessee shall require its employees and sub-lessees (and sub-lessee's invitees) to abide by the terms of this Agreement. Lessee agrees it shall promptly correct or remedy AIRPORT LEASE AGREEMENT BAM FBO - Page 10 any breaches of any rules, regulations, terms, conditions or covenants by its employees or sub -lessees. Lessee, its tenants, employees, invitees and guests shall not be authorized to conduct any services not specifically listed in this Lease Agreement. The use of the Leased Premises by Lessee, its tenants, employees, invitees or guests shall be limited to only those private, commercial, retail or industrial activities having to do with or related to airports and avia- tion. Except as specifically authorized in this Lease Agreement, no person, business or corporation may operate a commercial, retail or industrial business upon the Leased Premises or upon the Airport without a lease or license from Lessor authorizing such commercial, retail or industrial activity. The Lessor shall not unreasonably withhold authorization to conduct aeronautical or related services. B. RF, QITfRFD SERVIC. F.,q_ Lessee is required and is hereby granted the non- exclusive privilege to engage in the business of and provide the services of a full and complete fixed base operator. It is expressly understood and agreed that the non-exclusive right to conduct aeronautical activities for furnishing services to the public, including the delivery of fuel into aircraft is granted to the Lessee subject to the provisions set forth herein and all applicable ordinances of the City of Denton. Lessee agrees to perform the following services: Fuel: To have available those grades and octanes of aviation gasoline, jet fuel and other petroleum products normally found at similar airports, and to provide ramp services including the sale and into-plane delivery of those aviation fuels, lubricants and other related aviation products, and to provide aircraft guidance and assistance within the areas of the leased premises, at least during daylight hours, sunrise to sunset, three hundred sixty-five (365) days per year. All fuels shall meet minimum F.A.A. requirements for aviation fuels as set out in F.A.A. Circular 5230-4, Aircraft fuel storage handling and dispensing, as the same may be revised, updated, or replaced by the F.A.A. or the United States Government. All fuels which are a nationally known brand shall meet the terms of this requirement. All fuels shall be made available either by tank truck, stationary pump or other suitable equipment approved by the Fire Marshall of the City of Denton and the Airport Manager; and in accordance with the provisions of the Fire Code of the City of Denton. All fueling operations and all fuel facilities owned or operated by the Lessee shall be in compliance with the Minimum Fueling Standards Ordinance of the City of Denton. All prices for fuels and other petroleum products shall be posted in full public view at all times. Lessee agrees that it shall locate any new fuel storage tanks underground and in compliance with all local, State and Federal codes and regulations. Except for major system failure not caused by Lessee's neglect, Lessee shall maintain the Fuel Farm and its equipment in good repair including the replacement of normal wear and tear items and making TCEQ upgrades. Lessee's privilege to use the Fuel Farm to meet its fuel obligations under this Agreement may be rescinded by Lessor should fuel levels at the Fuel Farm fall below 2,000 gallons for more than 45 days. AIRPORT LEASE AGREEMENT BAM FBO - Page 1I o Ramp gervices: To provide ramp servicing of, and assistance to, aircraft, including parking, storage and tie-down service, to both based and itinerant aircraft upon or within facilities leased to Lessee or other areas designated by the Lessor, at least during the Required Hours of Operation. Pilot Lonnge: To provide a pilot lounge area, informational services, and telephone service connections to the Flight Service Station at least during the Required Hours of Operation. Honr.q of t3peralion: FBO will be open 6 a.m. to 8 p.m. Monday through Friday; 7:00 a.m. to 7:00 p.m. Saturday and Sunday, 365 days of the year. However, FBO may close on the following hohdays: Thanksgiving, Christmas, New Year's Day, and 4th of July. Such hours of operations are herein called the "Required Hours of Operation". Additional Services: Lessee shall provide a minimum of three of the following additional services: a. Airframe and power plant repair (this service is providing two services) b. Flight insl~:uction/aircraft rental c. Aircraft sales d. Airtaxi and/orpart t35 charter e. Avionics and instrument shop/maintenance f. Propeller repair g. Pilot shop h. Aircraft wash rack i. Aircraft paint services j. Aircraft upholstery k. Other commercial aeronautical services as Management the equivalent of approved by Airport C. ~qTANDARD~q. Lessee shall meet or exceed the following standards: Adclre~qs_ Lessee shall file with the Airport Manager and keep current its mailing addresses, telephone numbers and contacts where it can be reached in an emergency. 2. I,i.qt. Lessee shall file with the Airport Manager and keep current a list of its 'tenants and subtessees. o Cnnchmt, Lessee shall contractually require its employees and sublessees (and sublessee's invitees) to abide by the terms of this Lease Agreement. Lessee shall promptly enforce its contractual rights in the event of a default of such covenants. AIRPORT LEASE AGREEMENT BANi FBO - Page 12 4. [ltilitie% Taxes and ~'ee.q. Lessee shall meet all expenses and payments in connection with the use of the Leased Premises and the rights and privileges herein granted, including the timely payment of utilities, taxes, permit fees, license fees and assessments lawfully levied or assessed. 5. Law~. Lessee shall comply with all current and future federal, state and local laws, roles and regulations which may apply to the conduct of business contemplated, including rules, regulations and ordinances promulgated by Lessor, and Lessee shall keep in effect and post in a prominent place all necessary and/or required licenses or permits. Maintenance of Property.. Lessee shall be responsible for the maintenance, repair and upkeep of all property, buildings, structures and improvements, including the mowing or elimination of grass and other vegetation on the Leased Prem/ses, and shall keep the Leased Premises neat, clean and in respectable condition, free from any objectional matter or thing, including trash or debris. Lessee agrees not to utilize or permit others to utilize areas on the Leased Premises which are located on the outside of any hangar or building for the storage of wrecked or pem~anently disabled aircraft, aircraf% parts, automobiles, vehicles of any type, or any other equipment or items which would distract from the appearance of the leased premises. Lessee agrees that at no time shall the Leased Premises be used for a flea market type sales operation. Painting of Flnildings. During the Lease Term of this Lease Agreement and dm-lng each extension, Lessor shall have the right to require, not more than once every five years, that the metal exterior of hangar(s) or building(s) located on the Leased Premises be repainted. The Lessor may require Lessee to repaint said exteriors accordh~g to Lessor's specifications (to specify color of paint, quality of workmanship and the year and month in which the hangar(s) or building(s) are to be painted, if needed.) Lessee shall complete the painting in accordance with such specifications within one (1) year of receipt of notice from Lessor. Lessee agrees to pay all costs and expense involved in the hangar or building pa/nting process. Failure of Lessee to complete the painting required by Lessor, within the one (1) year period shall constitute Lessee's default under this Lease Agreement. llnanthnriT, ed n.qe of Lem~ed Premises. Lessee may not use any of the Leased Premises for any use not authorized herein unless Lessor gives Lessee prior written approval of such additional use. Without limiting the foregoing the Leased Premises shall not be used for the operation of a motel, hotel, restaurant, private club or bar, apartment house, storage of recreational vehicles, automobiles, or marine vehicles, or for industrial, commercial, retail, or other purposes, except as authorized herein. AtRPORT LEASE AGREEMENT BAM FBO - Page 13 D_v_allings. It is expressly understood and agreed that no dwelling or domicile may be built, moved to or established on or within the Leased Premises nor may lessee, its tenants, employees, invitees, or guests be permitted to reside or remain as a resident on or within the Leased Premises or other Airport premises. Lessee may have a pilot lounge, including restroom and shower facilities for use by flight crew and passengers. 10. Quit pc}.q~e.q.qian. Lessee shall quit possession of the Leased Premises at the end of the Lease Term or any renewal or extension thereof, or upon cancellation or termination of the Lease Agreement, and deliver up the Lease Premises to Lessor in as good condition as existed when possession was taken by Lessee, reasonable wear and tear excepted. 11. hgdemniW. Lessee must indemnify, hold harmless and defend the Lessor, its officers, agents and employees, from and against liability for any and ali claims, liens, suits, demands and/or actions for damages, injuries to persons (including death), property damage, (including loss of use), and expenses, including court costs, attorneys' fees and other reasonable costs, occasioned by or incidental to the Lessee's occupancy or use of the Leased Premises or the Airport and/or activities conducted in connection with or incidental to this Lease Agreement, including all such causes of action based on common, constitutional or statutory law, or based in whole or in part upon the negligent or intentional acts or omissions of Lessee, its officers, agents employees, invitees or other persons. Lessee must at all times exercise reasonable precautions on behalf of, and be solely responsible for, the safety of its officers, employees, agents, customers, visitors, invitees, licensees and other persons, as well as their property, while in, on, or involved in any way with the use of the Leased Premises. The Lessor is not liable or responsible for the negligence or intentional acts or omissions of the Lessee, its officers, agents, employees, agents, customers, visitors and other persons. The Lessor shall assume no responsibility or liability for harm, injury, or any damaging events which are directly or indirectly attributable to premise defects, whether real or alleged, which may now exist or which may hereafter arise upon the Leased Premises, responsibility for all such defects being expressly assumed by the Lessee. The Lessee agrees that this indenmity provision applies to all claims, suits, demands, and actions arising from all premise defects or conditions. THE T,ESSOR AND THE I,ESSEF~ EXPRESSLY INTF. N--D TI-IlS 1NDEMNITYPRO~rTSTON TO REQIIIRF. T,F, SSF. F, TO INDEMN-'IF¥ AND pROTECT THE T,ESSOR FROM THE CONSF. QI IF. NCES OF THE 1 ,F. SSOR',q OWN NEGI JGENCF. WI-IH ,E 1 ,F. SSOR Ig PARTTCIPATINIG IN THiS I,EASE AGREEMENT WIqF, RE THAT NF. GIJGF, NCE IS A CONCIYRRING CAIJSE OF THE IN.HIRY: DEATH: OR DAMAGE_ NOTWITHSTANDING TIqF, TERMS OF TI-IE PRECEDINIG SF,NTF, NCES, THIS INDF. MN-ITY PROVISION DOES NOT APPI.¥ TO A1RPORT LEASE AGREEMENT BAM FBO - ?aqe 14 ANY CLATM: T,OSS; DAMAGE: CAITSE OF ACTTON: SITTT AND T,TABIIJTY WI-IF. RE TT-YE TNY[TR¥; DEATH; OR DAMAGE RESIII,Tg FROM THE SOI,E NEGTJGENCE OF TI--1T, T,EgSOR OR ANY OF lTg EMPI,OYEES: CONTRACTORS; OR AGENTS; TINMIXED WITH TI-IE FAI 7I ,T C)F ANY OTHER PERSON OR ENTITY. 12. ~. Lessee agrees to properly store, collect and dispose of all chemicals and chemical residues; to properly store, confine, collect and dispose of all paint, including paint spray in the atmosphere, and paint products; and to comply with all Local, State and Federal regulations goveming the storage, handling or disposal of such chemicals and paints. Further, the Lessee shall be solely responsible for ali discharges, whether accidental or intentional, of any chemical and for the costs associated with the cleanup, remediation and disposal of said chemicals. 3.3. HaT. ardmm Activities. Should Lessee violate any law, rule, restriction or regulation of the City of Denton or the Federal Aviation Administration, or any other regulatory authority, or should the Lessee engage in or permit other persons or agents to engage in activities which could produce hazards or obstruction to ak navigation, obstructions to visibility or interference with any aircraft navigational aid station or device, whether airborne or on the ground, then Lessor shall state such violation in writing and deliver written notice to Lessee or Lessee's agent on the Leased Premises, or to the person(s) on the Leased Premises who are causing said violation(s), and upon delivery of such written notice, Lessor shall have the right to demand that the person(s) responsible for the violation(s) cease and desist from all such activity creating the violation(s). In such event, Lessor shall have the right to demand that corrective action, as required, be com2nenced immediately to restore the Leased Premises into conformance with the particular law, rule or aeronautical regulation being violated. Should Lessee, Lessee's agent, or the person(s) responsible for the violation(s) fail to cease and desist firom said violation(s) and to irmnediately commence correcting the violation(s), and to complete said corrections within twenty-four (24) hours following written notification, then Lessor shall have the right to enter onto the Leased Premises and correct the violation(s) at the sole cost and expense of Lessee, and Lessor shall not be responsible for any damages incurred to any improvements on the Leased Premises as a result of the corrective action process. In addition, such violation shall be considered a material default by Lessee authorizing Lessor, at its sole option and discretion, to immediately terminate and cancel this Lease Agreement. . Manager. Lessee shall select, appoint, and designate to Lessor in writing, a full-time Manager of business at the Leased Premises. The manager shall be vested with full power and authority to act in the name of Lessee with respect to the method, manner and conduct of the operation of the fixed base services to be provided under this agreement. The manager shall be available during AIRPORT LEASE AGREEMENT BAM FBO - Page 15 regular business hours and during the manager's absence, a duly authorized subordinate shall be in charge and available during Required Hours of Operation, and on an on-call basis during other hours of the day. · Employees. Lessee shall provide, at its sole expense, the employees necessary to provide effectively and efficiently the services required or authorized in this Agreement. Lessee shall control the conduct, demeanor and appearance of its employees, who shall possess such technical qualifications and hold such certificates of qualification as may be required in carrying out assigned duties. Lessee shall be responsible to supervise its employees to assure a high standard of service to customers of the Lessee. 16. Cbarge~q by T.e.q~qee: The Lessee agrees to furnish all services on a fair, equal, and not unjustly discriminatory basis to all users thereof, and to charge fair, reasonable, and not unjustly discriminatory prices for each unit or service, provided, however, that the Lessee may be allowed to make reasonable and nondiscriminatory discounts, rebates, or other similar types of price reductions to volume purchasers. i7. Property Appearance: Lessee shall at its sole cost and expense keep and maintain the Leased Premises and all improvements, additions or alterations thereto, equipment and landscaping constructed or installed upon the Leased Premises, in first-class condition, which condition shall at all times be based on a standard of care reflecting prudent property management. D. SIGNS. No signs, posters, or other similar devices ("Signage") shall be placed on the exterior of the Lease Improvements or on any portion of the Leased Premises or Airport property without the prior written approval of Lessor. Lessee, at its sole expense, shall be responsible for the creation, installation and maintenance of all such Signage. Lessee shall pay to Lessor any and all damages, injuries, or repairs resulting from the installation, maintenance or repair of any such Signage. Any Signage placed on the Leased Premises shall be maintained at alt times in a safe, neat, sightly and good physical condition. All signage shall be removed from the Leased Premises by Lessee immediately upon receipt of instructions for removal of same from Lessor, including without limitation, upon expiration or termination of this Lease Agreement. If Lessee fails to remove the Signage then Lessor may do so at the sole cost and expense of Lessee. Lessee shall be permitted the right to place two wall signs, no greater than thirty-two square feet each, identifying the commercial hangar operation. All signage shall comply with all applicable ordinances including the City of Denton sign ordinance." E. ENTRY. Lessor and its designees shall have the right to enter the Leased Premises upon reasonable advance notice (written or oral) and at any reasonable times for the purposes of inspecting the Leased Premises, performing any work which Lessor elects to perform under this Lease Agreement, and exhibiting the Leased Premises for sale, lease, or mortgage. Nothing in this section shall imply any duty upon Lessor to do any work, which under any other provision of this Lease Agreement Lessee is required to AIRPORT LEASE AGREEMENT BAM FBO - Page 16 perform, and any performance by Lessor shall not constitute a waiver of Lessee's default. VI. CO.VF. NANTS 9~¥ I.F,q.qoR Lessor hereby agrees as follows: A. PF, ACEFIT[. ENIOYMFNT. Upon on payment of ail rent, fees, and performance of the covenants and agreements on the part of Lessee to be performed hereunder, Lessee shall peaceably hold and enjoy the Leased Premises and ail rights and privileges herein granted. B. ~. Lessor warrants and represents that in the establishment, construction and operation of the Airport, that Lessor has heretofore and at this time is complying with all existing mles, regulations, and criteria distributed by the Federai Aviation Administration, or any other govemmentai authority relating to and including, but not limited to, noise abatement, air rights and easements over adjoining and contiguous areas, over-flight in landing or takeoff, to the end that Lessee will not be legally liable for any action of trespass or similar cause of action by virtue of any aeriai operations of adjoirfing property in the course of nom~al take-off and landing procedures fi:om the Airport; Lessor further warrants and represents that at all times during the Lease Term, or any renewal or extension of same, that it will continue to comply with the foregoing. VII. SPF~CIAI. CONDITIONS It is expressly understood and agreed by and between Lessor and Lessee that this Lease Agreement is subject to the following speciai terms and conditions. RI ~NWAYS AND TAXIWAYK Because of the present sixty thousand (60,000) pound continuous use weight beating capacity of the taxiways, Lessee herein agrees to limit all aeronautical activity including landing, take-off and taxiing, to aircraft having an actual weight, including the weight of its fuel, of sixty thousand (60,000) pounds or less, until such time that the runway and designated taxiways on the Airport have been improved to handle aircraft of such excessive weights. It is further agreed that, based on qualified engineering studies, the weight restrictions and provisions of this clause may be adjusted, up or down, and that Lessee agrees to abide by any such changes or revisions as such studies may dictate. "Aeronautical activity" referred to in this clause shall include any activity of the Lessee or its agents or subcontractors, and its customers and invitees, but shall not include those activities over which it has no solicitory part or control, such as an unsolicited or unscheduled or emergency landing. A pattern of violating the provisions of this section on two or more occasions shall be sufficient to cause the immediate termination of this entire Lease Agreement and subject Lessee to liability for any damages to the Airport that might result. AIRPORT LEASE AGREEMENT BAM FBO - Page t7 VIH. IJEASF. HOI ,D IMPRCIVF, ME, NTS A. REQIIIREMP. N-TS: Before commencing the construction of any additional improvements on the Leased Premises including the Parcel A improvements (the" Additional Lease Improvements"), Lessee shall submit: Documentation, specifications, or design work, to be approved by the Lessor, which shall establish that the improvements to be built or constructed upon the Leased Premises are in conformance with the overall size, shape, color, quality and design, in appearance and structure of the program established by Lessor on the Airport. 2. All plans and specifications showing the location upon the Leased Premises of the proposed construction and improvements; 3. The estimated cost of such construction. No construction may commence until Lessor has approved the plans and specifications and the location of the Lease Improvements, and the estimated costs of such construction. Approval by the Lessor shall not be unreasonably withheld. Documentary evidence of the actual cost of construction on public areas only (such as taxiways) shall be delivered by Lessee to Lessor's City Manager from time to time as such costs are paid by Lessee, and Lessor's City Manager or designee is hereby authorized to endorse upon a copy of this Lease Agreement filed with the City Secretary of Lessor such actual mounts as he shall have found to have been paid by Lessee, and the findings of the City Manager when endorsed by him upon said contract shall be conclusive upon all parties for all purposes of this Lease Agreement. No later than 30 days after completion of the Additional Lease Improvements, Lessee shall submit to Lessor detailed as built plans of the Additional Lease Improvements and documentary evidence acceptable to Lessor evidencing the total cost to construct the Lease Improvements (''Cost to Construct Lease Improvements"). B. ADDITIONAl, CONgTI~IICTION OR 1MPROVF. MF~NTS: Lessee is hereby authorized to construct upon the Leased Premises, at its own cost and expense, buildings, hangars, and structures, that Lessor and Lessee mutually agree are necessary for use in connection with the operations authorized by this Lease Agreement, provided however, Lessee shall comply with all of the requirements of Section VIII.A., above. Such additional improvements shall be a part of the Additional Lease Improvements. C. OW%IF, RSHIP OF IMPRCIVF, MIT. NIT,q: The Existing Improvements except for the hangar constructed by Lessee in 2003 which is identified on Attachment "E" (the "2003 Hangar'') are the property ofthe Lessor. The 2003 Hangar and the Additional Lease Improvements, when completed by Lessee, (the "Lease Improvements") shall remain the property of Lessee during the Lease Term subject to the following conditions, terms and provisions: AIRPORT LEASE AGREEMENT BAM FBO - ?a~e 18 1. Removal of Building,~, No building or permanent fixture may be removed from the Leased Premises. AssamtX~. The Lease Improvements shall automatically become the property of Lessor absolutely free, without any cost to Lessor, at the end of the Lease Term, or any extension thereof. F. ailnre to Complete Parcel A Improvements. The Parcel A Improvements shall immediately become the property of Lessor at no cost, expense, or compensation to Lessee should Lessee fail to complete the Lessee's Improvements within the Construction Period as provided in Section II.D. of this Lease Agreement. Cancellation or Tem~ination. Should this Lease Agreement be cancelled or terminated before the end of the Lease Term, or extension thereof, Lessor shall have the right to purchase all of the Lease Improvements. In the event of a cancellation or termination, other then due to a default by Lessee that has not been cured as provided below, the purchase price shall be equal to the most recent value of the Lease Improvements as determined by the Denton Cotmty Central Appraisal District ("Value of the Lease Improvements") reduced by 1/30 for each year of the Lease Term that has expired as of the date of termination (the "Purchase Price"). With regard to Additional Lease Improvements, should the Denton County Central Appraisal District not determine a separate value for the Lease Improvements, or should such separate valuation be older than two years, then the Purchase Price will be determined taking the Cost to Construct the Lease Improvements reduced by 1/30 for each year the Lease Term has expired as of the date of termination. If the termination or cancellation is due to a default by Lessee that has not been cured within 30 days after written notice of default to Lessee, then the Purchase Price as determined above shall be reduced by 50%. However, if Lessee provides written notice to Lessor within said 30 day cure period that it is impossible to cure such default wittfin said time period, then the Lessor may consent to an extension of such time to cure, which consent will not be unreasonably withheld. IX. SUBROGATION OF MORTGAGEE Any person, corporation or institution that lends money to Lessee for construction of any hangar, structure, building or improvement and retains a security interest in said hangar, structure, building or improvement shall, upon default of Lessee's obligations to said mortgagee, have the right to enter upon the Leased Premises and operate or manage said hangar, structure, building or in~provement according to the terms of this Lease Agreement, for a period not to exceed the term of the mortgage with Lessee, or until the loan is paid in full, whichever comes first, but in no event longer than the Lease Term. It is expressly understood and agreed that the right of the mortgagee referred to herein is AIRPORT LEASE AGREEMENT BAM FBO - Page 19 limited and restricted to those improvements constructed with funds borrowed from mortgagee, those improvements purchased with the borrowed funds, and those improvements pledged to secure the refinancing of the improvements. X. RIGHT OF F.A,qFJMENT Lessor shall have the right to establish easements, at no cost to Lessee, upon the Leased Premises for the purpose of providing underground utility services to, from or across the Airport property or for the construction of public facilities on the Airport. However, any such easements shall not interfere with Lessee's use of the Leased Premises and Lessor shall restore the property to the original condition as is reasonable practicable upon the installation of any utility services on, in, over or under any such easement at the conclusion of such construction. Construction in or at the easement shall be completed within a reasonable time. XI. As~qIGNMF. NIT OF 1 Lessee expressly covenants that it will not assign this Lease Agreement, convey more than fifty percent (50%) of the interest in its business, through the sale of stock or otherwise, transfer, license, nor sublet the whole or any part of the Leased Premises for any purpose, except for rental of hangar space or tie-down space for storage of aircratt only, without the written consent of Lessor. Lessor agrees that it will not unreasonably withhold its approval of such sale, sublease, transfer, license, or assignment of the facilities for Airport related purposes; provided however, that no such assignment, sublease, transfer, license, sale or otherwise shall be approved if the rental, fees or payments, received or charged are in excess of the rental or fees paid by Lessee to Lessor under the terms of this lease, for such portion of the Leased Premises proposed to be assigned, subleased, transferred, licensed, or otherwise. The provisions of this Lease Agreement shall remain binding upon the assignees, if any, of Lessee. XII. lN~qI 7R ANCE A. }{F, QIJ1RED INSIIR ANCP,: Regardless of the activities contemplated under this Lease Agreement, Lessee shall maintain continuously in effect at all times during the term of this agreement, at Lessee's sole expense, the following minimum insurance coverages: Commercial (Public) General Liability covering the Lessee or its company, its employees, agents, tenants and independent contractors, and its operations on the airport. Coverage shall be in an mount not less than $1,000,000 per occurrence and provide coverage for premises/operations and contractual liability AND where exposure exists, coverage for: products/completed operations; explosion, collapse and underground property damage. 2. All risk property insurance on a replacement cost basis covering loss or damage to all facilities used by the Lessee, either as a part of this agreement or erected by the AIRPORT LEASE AGREEMENT BAM FBO - Page 20 Lessee subsequent to this agreement. Under r~o circumstances shall the Lessor be liable for any damages to fixtures, merchandise or other personal property of the Lessee or its tenants. 3. Business Automobile Liability to include coverage for Own~ed Autos, Non- Owned Autos and Hired Cars: For operation in aircraft movement areas the limit of liability shall be $100,000 per occurrence. For other operations the limit of liability shall be consistent with the amount set by State Law. B. ADD1TTONAI. COVFJRAGES: In addition to the above referenced coverages, the following insurance is required if the activity or exposure exists or is contemplated: Aircraft Fuel/Oil Storage and Dispensing - Comprehensive Commercial (Public) General Liability shall include coverage or separate coverage shall be provided for Environmental Impairment Liability. Aircraft Sales or Aircraft Charter and Air Taxi - Aircraft Liability in the mount of $1,000,000 per occurrence to include Hull Coverage and Liability. In addition, Passenger Liability in an amount of $100,000 per person (per passenger seat) shall be provided. Aircraft Rental or Flight Training - Aircraft Liability in the amount of $1,000,000 per occurrence to include Hull Coverage and Liability, Passenger Liability in the amount of $100,000 per person (per passenger seat) and Student/Renter Liability covering all users in the amount of $500,000 per occurrence. Specialized Commercial Flying (including crop dusting, seeding, and spraying, banner towing and aerial advertising, aerial photography and surveying, fire fighting, power tine or pipe line patrol) - Aircraft Liability in the amount of $1,000,000 per occurrence to include Hull Coverage and Liability. In addition, Passenger Liability in an amount of $100,000 per person (per passenger seat) shall be provided. Aircraf~ Storage, Maintenance and/or Repair - Aircraft Liability in the amount of $1,000,000 per occurrence to include Hull Coverage and Liability. In addition, Hanger Keepers Liability in the amount of $500,000 per occurrence shall be provided. The requirement for Hangar Keepers Liability shall not apply to individual owner/operators whose primary use of the hangar space is the storage of their own aircraft. The requirement does not apply to such individuals notwithstanding the fact that they may, from time to time, permit the storage of non-owned aircraft in the hangar space and charge a fee for the storage of such aircraft so long as such use is in the nature of a rent-sharing AIRPORT LEASE AGREEMENT BAM P-'BO - Page 21 agreement rather than a commercial aircraft storage business. C. COVERAGE REQI IIRI~MF, NT~q: All insurance coverages shall comply with the following req~rements: All liability policies shall name the City of Denton, and its officers and employees as an additional named insured and provide for a minimum of 30 days written notice to the City of any cancellation or material change to the policy. All insurance required by this Lease Agreement must be issued by a company or companies of sound and adequate financial responsibility and authorized to do business in the State of Texas. All policies are subject to the examination and approval of the City's office of Risk Management for their adequacy as to content, form of protection and providing company. Required insurance naming the City as an additional insured must be primary insurance and not contributing with any other insurance available to the City whether fi:om a third party liability policy or other. Said limits of insurance shall in no way limit the liability of the Lessee hereunder. The Lessor shall be provided with a copy of all such pohcies and renewal certificates. Failure of Lessee to comply with the minimum specified amounts or types of insurance as required by Lessor shall constitute Lessee's default of this Lease Agreement. During the Lease Term, or any extension thereof, Lessor herein reserves the right to, with 60 days notice, adjust or increase the liability insurance amounts required of the Lessee, and to require any additional rider, provisions, or certificates of insurance, and Lessee hereby agrees to provide any such insurance requirements as may be required by Lessor; provided however, that any requirements shall be commensurate with insurance requirements at other public use airports similar to the Denton Municipal Airport in size and in scope of aviation activities, located in the southwestern region of the United States. XII[. CANCFJ J.ATTC)N BY T.~SSOR In the event that Lessee shall file a voluntary petition in bankruptcy or proceedings in bankruptcy shall be instituted against it and Lessee thereafter is adjudicated bankrupt pursuant to such proceedings, or any court shall take jurisdiction of Lessee and its assets pursuant to proceedings brought under the provisions of any Federal reorganization act, or Lessee shall be divested of its estate herein by other operation of law; or Lessee shall fail to perform, keep and observe any of the terms, covenants, or conditions herein contained, or on its part to be performed, the Lessor may give Lessee written notice to correct such condition or cure such default and, if any condition or default shall continue for thirty (30) days after the receipt of such notice by Lessee, then AIRPORT LEASEAGREEMENTBAMFBO - ?age 22 Lessor may terminate this Lease Agreement by written notice to Lessee. However, if Lessee provides written notice to Lessor within said 30 day cure period that it is impossible to cure such default within said time period, then the Lessor may consent to an extension of such time to cure, which consent will not be unreasonably withheld. In the event of default, Lessor has the right to purchase any or all of the Lease Improvements under the provisions of Section VIII. C.4. hereof. XIV. CXatNCF. IJ.ATION BY T Lessee may cancel this Lease Agreement, in whole or part, and terminate all or any of its obligations hereunder at any time, by thirty (30) days written notice, upon or after the happening of any one of the following events: (1) issuance by any court of competent juris- diction of a permanent injunction in any way preventing or restraining the use of the Airport or any part thereof for airport purposes; (2) the breach by Lessor of any of the covenants or agreements contained herein and the failure of Lessor to remedy such breach for a period of ninety (90) days after receipt of a written notice of the existence of such breach; (3) the inability of Lessee to use the Lease Premises and facilities continuing for a longer period than ninety (90) days due to any law or any order, rule or regulation of any appropriate governmental authority having jurisdiction over the operations of Lessor or due to war, earthquake or other casualty; or (4) the assumption or recapture by the United States Government, or any authorized agency thereof, of the maintenance and operation of said airport and facilities or any substantial part or parts thereof. Upon the happening of any of the four events listed in the preceding paragraph, such that the Leased Premises cannot be used for aviation purposes, then the Lessee may cancel this Lease Agreement as aforesaid, or may elect to continue this Lease Agreement under its terms, except, however, that the use of the Leased Premises shall not be limited to aviation purposes, their use being only limited by such laws and ordinances as may be applicable at that time. Should Lessor close the Airport and relocate the Airport to another location during the primary term of this Lease Agreement, Lessee shall have the right to relocate its facilities to the new airport at a suitable location under the same or similar terms of this Lease Agreement. The cost of relocation of Lessee's facilities will be shared by Lessor and Lessee in proportion to the number of years remaining on the primary term of this Lease Agreement. In this regard Lessor will be responsible for 1/30 of the such costs for every year remaining on the primary term. XV. MT,qCFJJLANEOI T.q PR OVT,qIONl,q A. FJNTIRE AGRF, EMENT. This Lease Agreement constitutes the entire understanding between the parties and as of its Effective Date supersedes all prior or independent Agreements between the parties covering the subject matter hereof. Any change or modification hereof shall be in writing signed by both parties. AIRPORT LEASE AGREEMENT BAM FBO - Page 23 B. BINDING F,]h'FF. CT. All covenants, stipulations and agreements herein shall extend to, bind and inure to the benefit of the legal representatives, successors and assigns of the respective parties hereto. C. 8F.VRR AlqIIJTY. If a provision hereof shall be finally declared void or illegal by any court or administrative agency having jurisdiction, the entire Lease Agreement shall not be void; but the remaining provisions shall continue in effect as nearly as possible in accordance with the original intent of the parties. D. NOTICE. Any notice given by one party to the other in connection with this Lease Agreement shall be in writing and shall be sent by certified mail, return receipt requested, with postage fees prepaid or via facsimile as follows: 1. If to Lessor, addressed to: City Manager City of Denton 215 E. McKinney Street Denton, Texas 76201 Fax No.940.349.8596 2. If to Lessee, addressed to: Damon Ward, President BAM Denton Management Ventures, L.L.C. 5007 Airport Road Denton, Texas 76207 Phone (940) 898-1200 Fax No. (940) 382-5602 E. HEADINGS. The headings used in this Lease Agreement are intended for convenience of reference only and do not defme or limit the scope or meaning of any provision of this Agreement. F. GOVERNING LAW AND VF. NI IF.. This Lease Agreement is to be construed in accordance with the laws of the State of Texas and is fully performable in Denton County, Texas. Exclusive venue for any lawsuit to enforce the terms or conditions of this Lease Agreement shall be a court of competent jurisdiction in Denton County, Texas. G. NO WAIVER, No waiver by Lessor or Lessee of any default or breach of covenant or term of this Lease Agreement may be treated as a waiver of any subsequent default or breach of the same or any other covenant or term of this Lease Agreement. H. NO AGENCY. During all times that this Lease Agreement is in effect, the parties agree that Lessee is and shall not be deemed an agent or employee of the Lessor. AIRPORT LEASE AGREEMENT BAM FBO - pa<jo 24 I. FORCE MAJEURE. None of the Parties shall be in default or otherwise liable for any delay in or failure of performance under this Lease Agreement if such delay or failure arises by any reason beyond their reasonable control, including any act of God, any acts of' the common enemy or terrorism, the elements, earthquakes, floods, fires, epidemics, riots, failures or delay in transportation or communications. However, lack of funds shall not be deemed to be a reason beyond a Party's reasonable control. The Parties will promptly inform and consult with each other as to any of the above causes, which in their judgment may or could be the cause of a delay in the performance of this Lease Agreement. J. 8IIPF. RCEDF, S EXIRTING LEASF, the nlace of the Fxisling 1 ,a~e in its entire~_ Thi~q I,ease Aero. ement ,qnnercede.q and take.,q IN WITNESS WHEREOF, the parties have executed this Lease Agreement as of the Effective Date first above written. CITY OF DENTON, TEXAS, LESSOR BY: MICHAEL A. CONDUFF, CITY MANAGER ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: BY: ~ Q~. f~/("~ BAM DENTON MANAGEMENT VENTURES, L.L.C., a Texas limited Liability company BY: DAMON WARD, PRESIDENT AIRPORT LEASE AGREEMENT BAM FBO Page 2 5 ACKNOWLEDGMENTS THE STATE OF TEXAS § COUNTY OF DENTON § This instrument was acknowledged before me on the day of ,2004, by Michael A. Conduff, City Manager of the City of Denton, Texas, on behalf of said municipality. NOTARY PUBLIC, STATE OF TEXAS THE STATE OF TEXAS § COUNTY OF DENTON § Th/s instrument was acknowledged before me on the ~ day of ,2004 by Damon Ward, President, BAM Denton Management Ventures, L.L.C., a Texas limited liability company, on behalf of said company. NOTARY PUBLIC, STATE OF TEXAS AIRPORT LEASE AGREEMENT BAM FBO - Page 2 6 A ~. 0 I~ox Attachment B All that certain lot, tract, or parcel of land situated in the William Neil Survey, Abstract Number 970, and the T.' Toby Survey, Abstract Number 1285, Denton County, Texas, and being part of a tract shown by deed to the City of Denton, recorded in Volume 305, Page 216 of the Deed 'Records of Denton County, Texas and part of a tract .shown by deed to the City of Denton, recorded in Volume 304, Page 503 Deed Records and being more particularly described as follows: Beginning at a point that is North 88 degrees 33 minutes .59 seconds West 528.37 feet from the northwest c-orner of a tract shown bY deed to Patrick F. Breen recorded in Volume 427., Page 183 Deed Records; Thence South 00 degrees 59 minutes 07 seconds West a distance of 592.66 feet to a point for a corner, said point being in the north line of Lot 1, Block 1 of the Southeast Airport Addition, and addition ~o the City of Denton as shown by plat recorded in Cabinet G, Slide 295, Plat Records, Denton County, Texas; Thence North 88 degrees 53 minutes 12 seconds West a distance of 617.60 feet to a point for a corner, said point being South .88 degrees 53 minutes 12 seconds East 41.67 feet' from the northwest corner of said Lot 1; Thence North 08 degrees 24 minutes 37 seconds East a distance of 403.85 feet to the beginning of a non-tangent curve to the left whose center is South 86 degrees 04 minutes 55 seconds West 293.69 feet and central angle is 34 degrees 30 minutes 00 seconds; Thence with said curve a distance of 176.84 feet to the end of said curve; and the beginning of another curve to the right, whose center is North 56 degrees 28 minutes 22 seconds East 405.64 feet and central angle is 32 degrees 42 minutes 43 seconds; Thence with said curve, a distance of 231.59 feet to the end of said curve; Thence leaving the last mentioned curve in a non-tangent direction of South 87 degrees 03 minutes 22 .seconds East a distance of 150.42 feet to a point in a chain link fence and the beginning of a non-tangent curve to the left' whose center is North 79 degrees 32 minutes 34 seconds East 3'75.00 feet and central angle is 20 degrees 51 minutes 11 seconds; Thence with said curve a distance of 136.48 feet to the end of. said curve; Thence leaving the last mentioned curve in a non-tangent direction of South 88 degrees 34 minutes 29' seconds Eaat a distance of 273.05 feet to a point for a corner; Thence South 01 degrees 19 minutes 14 seconds West a distance of 52.60 feet to a point for a corner; Thence South 88 degrees 33 minutes 59 seconds East a distance of 228.66 feet to the Place of Beginning and containing 9.100 acres of land. Attachment D ATTACHMENT E .............. [~ 338' Bidg 2 - 1971 Hangax Bldg 102 -2003 Hangar Bldg 3- 1991 Hangar Blc~g 4 - i999 Hanges Bldg 5 - 1971 & i972 T-Hangar Bldg 6- i974 3 AGENDA INFORMATION SHEET AGENDA DATE: December 7, 2004 DEPARTMENT: CM/DCM/ACM: Airport and Transit Operations Jon Fortune, Assistant City Manager SUBJECT Consider adoption of an ordinance approving a commercial operator airport lease agreement between the City of Demon, Texas and Beacon Air Service LLC, and providing an effective date. BACKGROUND Beacon Air Service LLC wishes to lease a parcel of land totaling approximately 64,800 square feet at the Denton Airport. The terms of the lease will obligate Beacon Air Service LLC to construct two hangar and office facilities totaling approximately 20,000 square feet within 720 days. This facility will be constructed for the purpose of commercial or general aviation aircraft storage and aircraft sales. OPTIONS I. Approve the lease as proposed. II. Provide staff direction with additional lease options. RECOMMENDATION The Airport Advisory Board unanimously recommends approval of the proposed lease. Airport Staff recommends the approval of this lease agreemem as proposed. ESTIMATED SCHEDULE OF PROJECT The lease would become effective December 7, 2004 and continue through the 6~h day of December 2034 (30 years). The lease also provides for two successive option terms often years each. PRIOR ACTION/REVIEW The City Attorney's Office has reviewed the proposed lease. FISCAL INFORMATION The lease rate for the identified site is $0.17 per square foot per year. The lease rate for the first two years will total $11,016 per year. The lease agreement provides for rate adjustments, Consumer Price Index adjustments, every other year for the term of the lease as per FAA requirement. EXHIBITS Ordinance Lease Agreement Respectfully submitted: Mark Nelson Director of Airport and Transit Operations S:\Our Documents\Ordinances\04XBeacon Air Airport Lease Ordinance.doc ORDINANCE NO. AN ORDINANCE APPROVING A COMMERCIAL OPERATOR AIRPORT LEASE AGREEMENT BETWEEN THE CITY OF DENTON, TEXAS AND BEACON AIR SERVICES (BCON), LLC; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager or his designee is hereby authorized to execute an airport lease agreement for commercial operator between the City of Denton and Beacon Ak Services (BCON), LLC, in substantially the form of the Airport Lease Agreement which is attached to and made a part of this ordinance for all purposes. SECTION 2. 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: Beacon Air Service LLC Lease 11-18-04.DOC AIRPORT LEASE AGREEMENT COMMERCIAL OPERATOR This Lease Agreement is made and executed to be effective as of the Seventh day of December, 2004 (the "Effective Date") at Denton, Texas, by and between the City of Denton, Texas, a municipal corporation, hereinafter referred to as "Lessor", and Beacon Air Services (BCON) LLC, a Texas corporation, hereinafter referred to as "Lessee". WITNESSETH: WHEREAS, Lessor now owns, controls and operates the Denton Municipal Airport (the "Airport")in the City of Denton, County of Denton, State of Texas; and WHEREAS, Lessee desires to lease certain premises at the Airport and construct and maintain an aircraft hangar and related aviation fadlities thereon; NOW, THEREFORE, for and in consideration of the promises and the mutual covenants contained in this Agreement, the parties agree as follows: I. CONDITIONS OF I,EASE AGRF. EMENT NOTWITHSTANDING ANY LANGUAGE TO THE CONTRARY HEREINAFTER CONTAINED, THE LANGUAGE IN PARAGRAPHS A THROUGH D OF THIS SECTION SHALL BE BINDING. A. PRINClPI,ES OF OPERATIONS. The right to conduct aeronautical and related activities for furnishing services to the public is granted to Lessee subject to Lessee agreeing: 1. To furnish said services on a fair, equal and not unjustly discriminatory basis to all users thereof; and To charge fair, reasonable and not unjustly discriminatory prices for each unit or service; provided, that Lessee may be allowed to make reasonable and nondiscriminatory discounts, rebates, or other similar types of price reductions to volume purchasers. NON-DISCRIMINATION: Lessee, for itself, its personal representatives, successors, and assigns, as a part of the consideration hereof, does hereby covenant and agree as a covenant running with the land that: No person on the grounds of race, religion, color, sex, or national origin shall be excluded from participation in, denied the benefits of, or be otherwise subjected to discrimination in the use of said facilities; 2. In the construction of any improvements on, over, or under such land and the furnishing of services thereon, no person on the grounds of race, religion, color, sex, or national origin shall be excluded fi`om participation in, denied the benefits of, or otherwise be subjected to discrimination; Lessee shall use the premises in compliance with all other requirements imposed by or pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A, Office of the Secretary, Part 21, Nondiscrimi- nation in Federally assisted programs of the Department of Transportation - Effectual of Title VI of the Civil Rights Act of 1964, as said Regulations may be amended. C. RIGHT OF INDIV1DI~AI,~q TO MAINTAIN AIRCRAFT, It is clearly understood by Lessee that no right or privilege has been granted which would operate to prevent any person, fm or corporation operating aircraft on the Airport from performing any services on its own aircraft with its own regular employees (including, but not limited to, maintenance and repair) that it may choose to perform. D. NION-I~XCI I ISIVE RIGHT. it is understood and agreed that nothing herein contained shall be construed to grant or authorize the granting of an exclusive right within the meaning of Title 49 U.S.C. Appendix § 1349. E. PIllqlJC ARI~,A~. Lessor reserves the right to further develop or improve the landing area of the Airport as it sees fit, regardless of the desires or views of Lessee, and without interference or hindrance. Lessor shall be obligated to maintain and keep in good repair the landing area of the Airport and all publicly owned facilities of the Airport, together with the fight to direct and control all activities of Lessee in this regard. o During time of war or national emergency, Lessor shall have the right to lease the landing area or any part thereof to the United States Government for military or naval use, and, if such lease is executed, the provisions of this instrument insofar as they are inconsistent with the provisions of the lease to the Govemment, shall be suspended. Lessor reserves the right to take any action it considers necessary to protect the aerial approaches of the Airport against obstruction, together with the right to prevent Lessee from erecting, or permitting to be erected, any building or other stmcture on or adjacent to the Airport which, in the opinion of Lessor, would limit the usefulness or safety of the Airport or constitute a hazard to aircraft or to aircraft navigation. The hangar/office/shop complex as currently proposed as provided in Section II.D. does not violate this provision. 5. This Lease Agreement shall be subordinate to the provisions of any existing or Beacon Air Service LLC Lease 11-18-04.DOC- Page 2 future agreement between Lessor and the United States or agency thereof, relative to the operation or maintenance of the Airport. II. i.F~A~qF.1-) PRF. MTSES Lessor, for and in consideration of the covenants and agreements herein contained, to be kept by Lessee, does hereby demise and lease unto Lessee, and Lessee does hereby lease from Lessor, for the lease term described in Article III, the following described land situated in Denton County, Texas: A. I.AND. A tract of land, being approximately 360 feet by 180 feet or 1.4876 acres, drawn and outlined on Attachment "A", and legally described in Attachment "B" as Parcel 1, such attachments being incorporated herein by reference (the "Leased Premises"). Together with the fight of ingress and egress to the Leased Premises; and the fight in common with others so authorized of passage upon the Airport property generally, subject to reasonable regulations by the City of Denton and such rights shall extend to Lessee's employees, passengers, patrons and invitees. For purposes of this agreement, the term "Leased Premises" shall mean all property located within the metes and bounds described and identified within Attachment "B", including leasehold improvements constructed by the Lessee, but not including certa/n easements or property owned and/or controlled by the Lessor. A legal description of the leased premises is not currently attached as Attachment "B". Lessee shall deliver to Lessor no later then 30 days after the date of this Agreement a legal description of the leased premises accurately describing the leased premises that is acceptable to Lessor. If Lessee fails to do so, Lessor at its option may terminate this Agreement, in which case it will have no further force and effect. The approved legal description will be attached to this Agreement as Attachment "B". B. IMPROVF~MENTS PROVIDFD BY I,FJ~q~qlDR: NONE: There will be no improvements provided by Lessor, except as set forth in Article II.E. "Access to Utilities" below. The term "Lessor improvements" shall mean those things on or adjacent to the Leased Premises belonging to, constructed by, or to be constructed by the Lessor. Unless otherwise noted herein, all Lessor improvements are and will remain the property of Lessor. All Lessor improvements must be described in detail above, or above referenced and attached to this Agreement in an exhibit approved by Lessor. D.. IMPROVI~MF. NTS PROVIDED FlY I.F. SSEF,. On the Leased Premises, Lessee shall construct two hangar/office facilities not less than 10,000 square feet each with taxiway access and appropriate culverts or drainage as required by City ordinances in the utility fight of way south and north of the proposed developments as well as other improvements as determined necessary by City ordinances. A minimum of 10 percent of total area "under roof" will be developed as office or shop space. Beacon Air Service LLC Lease 11-18-04.DOC- Page 3 Lessee shall also construct appropriate culverts or drainage as required by City ordinances in the utility right of way south and north of the proposed hangar as well as other improvements as determined necessary by City ordinances (All above described improvements to be constructed by Lessee are called the "Lessee's Improvements"). Construction of Lessee's Improvements shall be commenced no later than 270 days and completed no later than 720 days after the Effective Date (the "Construction Period"). Construction of Lessee's Improvements are considered commenced upon issuance of a building permit and construction of any portion of the hangar/office/shop complex. Construction of Lessee's Improvements are considered complete upon thc issuance of a Certificate of Occupancy for the entire hangar/office/shop complex, drainage and utility improvements are completed. Notwithstanding anything contained in this Lease Agreement to the contrary, a failure to complete the Lessec's Improvements within the Construction Period may, at the sole option and discretion of the Lessor, result in the immediate termination and cancellation of this Lease Agreement upon 30 days written notice of cancellation to Lessee. In such case Lessee's rights under the Lease Agreement will immediately cease and be forfeited, and all of Lcssee's Improvements shall immediately become the property of Lessor at no cost, expense or other compensation paid by Lessor to Lessee; and Lessee shail immediately vacate the Leased Premises. E. EA~F. MENT~q. Lessor and Lessee by mutual agreement may establish, on the Leased Premises, easements for public access on roads and taxiways. F. ACCF. SS TO l/TII,IT[ES. Lessor represents that there are water, sewer and 3- phase electricity lines within close proximity to the Leased Premises available to "tap-in" by Lessee, and that the same are sufficient for usual and customary service on the Leased Premises. HI. TERM The term of this Lease Agreement shall be for a period of thirty (30) years, com- mencing on the 7th day of December, 2004 and continuing through the 6m day of December of 2034, unless earlier terminated under the provisions of the Lease Agreement (the "Lease Term"). Lessee has the option to renew for two (2) additional ten (10) year terms. In order to exercise the first option Lessee must provide written notice to Lessor of its intent to exercise the first 10 year option no later than t80 day before the expiration of the 30 year primary tenn. To exercise the second option such written notice must be provided no later than 180 days before the expiration of the first 10 year option term. The rental and terms to be negotiated for the option tei-ms shall be reasonable and consistent with the then value, rentals and terms of similar property on the Airport. Beacon Air Service LLC Lease 11-18-04.DOC- Page 4 IV. PAYMENT,q> RI~.NTAT ,.q AND F~ES Lessee covenants and agrees to pay Lessor, as consideration for this Lease Agreement, the following payments, rentals and fees: A. LAND AND RENTAl.. Shall be due and payable to Lessor in the sum of $0.17 per square foot or $11,016 per year (the "Original Rent"), payable in twelve (12) equal monthly installments in the sum of Nine Hundred and Eighteen Dollars ($918) in advance, on or before the 1 st day of each and every month during the term of this Lease Agreement. Lessee has the option to pay annual rentals and fees in whole on or before the 1st day of October, at the beginning of the City's fiscal year, each and every year of this Lease Agreement. Notwithstanding the foregoing, the annual rental will be reduced by the current lease rate per square foot, as adjusted by the CPI-U referenced in Section 1V.C, times the number of square feet comprising all easements established in accordance with Article II (D). B. LESSOR IMPROVF. MF. NT.q R ENTAI.S. NONE: improvements on the Leased Premises. There are no Lessor C. PAYMF. NT~ PF. NALTY: ADJI kqTMF. NT~q. All payments due Lessor from Lessee shall be made to Lessor at the offices of the Finance Department of the City of Denton, Customer Service Division, 601 West Hickory, Denton, Texas, unless otherwise designated in writing by the Lessor. If payments are not received on or before the 15th day of the month, a five percent (5%) penalty will be due as of the 16th. If payments are not received by the first of the subsequent month, an additional penalty of one percent (1%) of the unpaid rental/fee amount will be due. A one percent (1%) charge will be added on the first of each subsequent month until the unpaid rental/fee payment is made. The Original Rent for the Leased Premises shall be readjusted at the end of each one year period during the Lease Term on the basis of the proportion that the then current United States Consumer Price Index for all urban consumers (CPI-U) for the Dallas-Fort Worth Bureau of Labor Statistics bears to the previous odd month 2004 index (September), which was 179_7 (1982-84 = 100). Each rental adjustment, if any, shall occur on the 1st day of December, beginning 2006, and every other year thereafter on such date. The adjustments in the yearly rent shall be determined by multiplying the Original Rent by a fraction, the numerator of which is the index number for the last month prior to the adjustment, and the denominator of which is the index number applicable at the execution of this Lease Agreement. If the product of this multiplication is greater than the Original Rent, Lessee shall pay this greater amount as the yearly rent until the time of the next rental adjustment as called for in this section. If the product of this multiplication is less than the Original Rent there shall be no adjustment in the annual rent at that time, and Lessee shall pay the previous year's annual rent until the time of the next rental adjustment as called for in this section. In no event shall any rental adjustment called for in this section result in an annual rent less than the previous year's annual rent. The adjustment shall be limited so that the annual rental payment determined for any given Beacon Air Service LLC Lease 11-18-04.DOC- Page 5 two-year period shall not exceed the annual rental payment calculated for the previous CPI adjustment by more than twenty percent (20%) percent. If the consumer price index for all urban consumers (CPI-U) for the Dallas-Fort Worth geographical region, as compiled by the U.S. Department of Labor, Bureau of Labor Statistics, is discontinued during the Lease Term, the remaining rental adjustments called for in tJais section shall be made using the formula set forth above, but by substituting the index numbers for the Consumer Price Index-Seasonally Adjusted U.S. City Average For All Items For All Urban Consumers (CPI-U) for the index numbers for the CPI-U applicable to the Dallas-Fort Worth geographical region. If both the CPI-U for the Dallas- Fort Worth geographical region and the U.S. City Average are discontinued during the Lease Term, the remaining rental adjustments called for in this section shall be made using the statistics of the Bureau of Labor Statistics of the United States Department of Labor that are most nearly comparable to the CPI-U applicable to the Dallas-Fog Worth geographical region. If the Bureau of Labor Statistics of the United States Department of Labor ceases to exist or ceases to publish statistics concerning the purchasing power of the consumer dollar during the Lease Term, the remaining rental adjustments called for in this section shall be made using the most nearly comparable statistics published by a recognized financial authority selected by Lessor. V. RIGHTS AND OBI,IGATTONS OF LESSEE A. IISF. OF I.F, ASED PRF. MISFS. Lessee is granted the non-exclusive privilege to engage in owner/operator activities providing the following aviation services: I-langar and Office Space l,ea~qing, Lessee is granted the non-exclusive right to rent hangar and office space. 2. General Aircraft Maintenance. Lessee is granted the non-exclusive right to conduct airframe and power plant maintenance services. 3. Aircraft Management Service.q. Lessee is granted the right to manage aircraf~ and flight operations for third parties. Aircraft. Sa.leq and Brokerage Lessee is granted the non-exclusive fight to engage in the sale and/or brokering of aircraft. 5. Tie-Down Service~, Lessee is granted the non-exclusive right to charge for tie- down services on Lessee's property. Lessee, its tenants, employees, invitees and guests shall not be authorized to conduct any services not specifically listed in this Lease Agreement. The use of the Leased Premises by Lessee, its tenants, employees, invitees or guests shall be limited to only those private, commercial, retail or industrial activities having to do with or related to airports and avia- tion. Except as specifically authorized in this Lease Agreement, no person, business or corporation may operate a commercial, retail or industrial business upon the Leased Beacon Air Service LLC Lease 11-i8-04.DOC- Page 6 Premises or upon the Airport without a lease or Iicense from Lessor authorizing such commercial, retail or industrial activity. The Lessor shall not unreasonably withhold authorization to conduct aeronautical or related services. B. STANDARDS. Lessee shall meet or exceed the following standards: Addre~q~q. Lessee shall file with the Airport Manager and keep current its mailing addresses, telephone numbers and contacts where it can be reached in an emergency. 2. l.ist_ Lessee shall file with the Airport Manager and keep current a list of its tenants and sublessees. ~. Lessee shall contractually require its employees and sublessees (and sublessee's invitees) to abide by the terms of this Lease Agreement. Lessee shall promptly enforce its contractual rights in the event of a default of such covenants. Ufilifie.% Taxaq and F'e~_ Lessee shall meet all expenses and payments in connection with the use of the Leased Premises and the fights and privileges herein granted, including the timely payment of utilities, taxes, permit fees, license fees and assessments lawfully levied or assessed. 1 ~aw~. Lessee shall comply with all current and future federal, state and local laws, rules and regulations which may apply to the conduct of business contemplated, including rules, regulations and ordinances promulgated by Lessor, and Lessee shall keep in effect and post in a prominent place all necessary and/or required licenses or pennits. Maintenance of Property. Lessee shall be responsible for the maintenance, repair and upkeep of all property, buildings, structures and improvements, including the mowing or elimination of grass and other vegetation on the Leased Premises, and shall keep the Leased Premises neat, clean and in respectable condition, free from any objectional matter or thing, including trash or debris. Lessee agrees not to utilize or permit others to utilize areas on the Leased Premises which are located on the outside of any hangar or building for the storage of wrecked or permanently disabled aircraft, aircraft parts, automobiles, vehicles of any type, or any other equipment or items which would distract from the appearance of the leased premises. Lessee agrees that at no time shall the Leased Premises be used for a flea market type sales operation. Painting of Buildings. During the Lease Term of this Lease Agreement and during each extension, Lessor shall have the right to require, not more than once every five years, that the metal exterior of hangar(s) or building(s) located on the Leased Premises be repainted. The Lessor may require Lessee Beacon Air Service LLC Lease !1-18-04.DOC- Page 7 to repaint said exteriors according to Lessor's specifications (to specify color of paint, quality of workmanship and the year and month in which the hangar(s) or building(s) are to be painted, if needed.) Lessee shall complete the painting in accordance with such specifications within one (1) year of receipt of notice from Lessor. Lessee agrees to pay all costs and expense involved in the hangar or building painting process. Failure of Lessee to complete the painting required by Lessor, within the one (1) year period shall constitute Lessee's default under this Lease Agreement. Unauthorized n.qe of l,ea~ed Premi~qe~q. Lessee may not use any of the Leased Premises for any use not authorized herein unless Lessor gives Lessee prior written approval of such additional use. Without limiting the foregoing the Leased Premises shall not be used for the operation of a motel, hotel, restaurant, private club or bar, apartment home, storage of recreational vehicles, automobiles, or marine vehicles, or for industrial, commercial, retail, or other purposes, except as authorized herein. D_w_ellings. It is expressly understood and agreed that no dwelling or domicile may be built, moved to or established on or within the Leased Premises nor may lessee, its tenants, employees, invitees, or guests be permitted to reside or remain as a resident on or within the Leased Premises or other Airport premises. Lessee may have a pilot lounge, including restroom and shower facilities for use by flight crew and passengers. 10. t~aiCPasam.~m. Lessee shall quit possession of the Leased Premises at the end of the Lease Term or any renewal or extension thereof, or upon cancellation or termination of the Lease Agreement, and deliver up the Lease Premises to Lessor in as good condition as existed when possession was taken by Lessee, reasonable wear and tear excepted. 11. Indemnity. Lessee must indemnify, hold harmless and defend the Lessor, its officers, agents and employees, from and against liability for any and all claims, liens, suits, demands and/or actions for damages, injuries to persons (including death), property damage, (including loss of use), and expenses, including court costs, attorneys' fees and other reasonable costs, occasioned by or incidental to the Lessee's occupancy or use of the Leased Premises or the Airport and/or activities conducted in connection with or incidental to this Lease Agreement, including all such causes of action based on common, constitutional or statutory law, or based in whole or in part upon the negligent or intentional acts or omissions of Lessee, its officers, agents employees, invitees or other persons. Lessee must at all times exercise reasonable precautions on behalf of, and be solely responsible for, the safety of its officers, employees, agents, customers, visitors, invitees, licensees and other persons, as well as their property, while in, on, or involved in any way with the use of the Leased Premises. The Lessor is not liable or responsible for the negligence or intentional acts or omissions of the Lessee, its officers, Beacon Air Service LLC Lease 1i-18-04.DOC- Page 8 agents, employees, agents, customers, visitors and other persons. The Lessor shall assume no responsibility or liability for harm, injury, or any damaging events which are directly or indirectly attributable to premise defects, whether real or alleged, which may now exist or which may hereafter arise upon the Leased Premises, responsibility for all such defects being expressly assumed by the Lessee. The Lessee agrees that this indemn/ty provision applies to all claims, suits, demands, and actions arising from all premise defects or conditions. THE I.ESSOR AND THE I.ESSEE EXPRESSI.Y 1NITF. ND THIS INDEMNITYPROVISION TO REQII1RE I,ESSEE TO INDEMNIFY AND PROTECT THE I.ESSOR FROM THE CONSEQIIENCES OF TI--IFr I.ESSOR'S OWN NEGt.IGENCE WHII.E I.ESSOR IS PARTICIPATING IN THIS i.EASE AGRF. EMENT WI-IEEE TI-IAT NEGLIGENCE IS A Ct-)NCI~RRING CAIJSE OF THE INJIIRY: DEATH; OR DAMAGE NOTWITHSTANDING THE TERMS OF THF. PRECEDING SENTENCES; TI-IlS INDEMNITY PROVISION DOES NOT APPI.Y TO ANY CI.AIM; LOSS; DAMAGE: CAUSE OF ACTION: SUIT AND LIABILITY WIqERE TI4E INJURY; DF. ATI--I: OR DAMAGE RESIJI.TS FROM THE. SOLE NEGLIGENCE OF THE LESSOR OR ANY OF.ITS EMPI.OYEES: CONTRACTORS: OR AGENTS; IINMIXED WITH TI-IF, FAIII.T OF ANY OTI-IER PERSON OR ENTITY· 12. ~. Lessee agrees to properly store, collect and dispose of all chemicals and chemical residues; to properly store, confine, collect and dispose of all paint, including paint spray in the atmosphere, and paint products; and to comply with all Local, State and Federal regulations governing the storage, handling or disposal of such chemicals and paints. Further, the Lessee shall be solely responsible for all discharges, whether accidental or intentional, of any chemical and for the costs associated with the cleanup, remediafion and disposal of said chemicals. 13. Hazardou~q Activities. Should Lessee violate any law, role, restriction or regulation of the City of Denton or the Federal Aviation Administration, or any other regulatory authority, or should the Lessee engage in or permit other persons or agents to engage in activities which could produce hazards or obstmction to air navigation, obstructions to visibility or interference with any aircraft navigational aid station or device, whether airborne or on the ground, then Lessor shall state such violation in writing and deliver written notice to Lessee or Lessee% agent on the Leased Premises, or to the person(s) on the Leased Premises who are causing said violation(s), and upon deliv~y of such written notice, Lessor shall have the right to demand that the person(s) responsible for the violation(s) cease and desist from all such activity creating the violation(s). In such event, Lessor shall have the right to demand that corrective action, as required, be commenced immediately to restore the Leased Premises into conformance with the particular law, role or aeronautical Beacon Air Service LLC Lease 11-18-04.DOC- Page 9 regulation being violated. Should Lessee, Lessee's agent, or the person(s) responsible for the violation(s) fail to cease and desist from said violation(s) and to immediately commence correcting the violation(s), and to complete said corrections within twenty-four (24) hours, following written notification, then Lessor shall have the right to enter onto the Leased Premises and correct the violation(s) at the sole cost and expense of Lessee, and Lessor shall not be responsible for any damages incurred to any improvements on the Leased Premises as a result of the corrective action process. In addition, such violation shall be considered a material default by Lessee authorizing Lessor, at its sole option and discretion, to immediately terminate and cancel this Lease Agreement. C. SIGNS. No signs, posters, or other similar devices ("Signage") shall be placed on the exterior of the Lease Improvements or on any portion of the Leased Premises or Airport property without the prior written approval of Lessor. Lessee, at its sole expense, shall be responsible for the creation, installation and maintenance of all such Signage. Lessee shall pay to Lessor any and all damages, injuries, or repairs resulting fi'om the installation, maintenance or repair of any such Signage. Any Signage placed on the Leased Premises shall be maintained at all times in a safe, neat, sightly and good physical condition. All signage shall be removed from the Leased Premises by Lessee immediately upon receipt of instructions for removal of same from Lessor, including without limitation, upon expiration or termination of this Lease Agreement. If Lessee fails to remove the Signage then Lessor may do so at the sole cost and expense of Lessee. Lessee shall be permitted the right to place two wall signs, no greater than thirty-two square feet each, identifying the commercial hangar operation. All signage shall comply with all applicable ordinances including the City of Denton sign ordinance." D. ENTRY. Lessor and its designees shall have the fight to enter the Leased Premises upon reasonable advance notice (written or oral) and at any reasonable times for the pm'poses of inspecting the Leased Premises, performing any work which Lessor elects to perform under this Lease Agreement, and exhibiting the Leased Premises for sale, lease, or mortgage. Nothing in this section shall imply any duty upon Lessor to do any work, which under any other provision of this Lease Agreement Lessee is required to perform, and any performance by Lessor shall not constitute a waiver of Lessee's default. VI. COVENANTS BY 1 ,F.qSOR Lessor hereby agrees as follows: A. PEACEFt 11. ENJOYMENT. Upon on payment of all rent, fees, and performance of the covenants and agreements on the part of Lessee to be performed hereunder, Lessee shall peaceably hold and enjoy the Leased Premises and all rights and privileges herein granted. B. COMPTJANCE. Lessor warrants and represents that in the establishment, conslxuction and operation of the Airport, that Lessor has heretofore and at this time is Beacon Air Service LLC Lease 11-18-04.DOC- Page 10 complying with all existing rules, regulations, and criteria distributed by the Federal Aviation Administration, or any other governmental authority relating to and including, but not limited to, noise abatement, air rights and easements over adjoining and contiguous areas, over-flight in landing or takeoff, to the end that Lessee will not be legally liable for any action of trespass or similar cause of action by virtue of any aerial operations of adjoining property in the course of normal take-off and landing procedures from the Airport; Lessor further warrants and represents that at all times during the Lease Term, or any renewal or extension of same, that it will continue to comply with the foregoing. VII. gPF. CIAL CONDITIONS It is expressly understood and agreed by and between Lessor and Lessee that this Lease Agreement is subject to the following special terms and conditions. RUNWAYS AND TAXIWAYS. Because of the present thirty thousand (30,000) pound continuous use weight bearing capacity of the taxiway of Lockheed, Lessee herein agrees to hmit all aeronautical activity including landing, take-off and taxiing, to aircraft having an actual weight, including the weight of its fuel, of thirty thousand (30,000) pounds or less, until such time that the runway and designated taxiways on the Airport have been improved to handle aircraft of such excessive weights. It is further agreed that, based on qualified engineering studies, the weight restrictions and provisions of this clause may be adjusted, up or down, and that Lessee agrees to abide by any such changes or revisions as such studies may dictate. "Aeronautical activity" referred to in this clause shall include any activity of the Lessee or its agents or subcontractors, and its customers and invitees, but shall not include those activities over which it has no solicitory part or control, such as an unsolicited or unscheduled or emergency landing. A pattern of violating the provisions of this section on two or more occasions shall be sufficient to cause the immediate termination of this entire Lease Agreement and subject Lessee to liability for any damages to the Airport that might result. VIII. I~EASEHOID IMPROVEMENTS A. REQI IIRF. MENTS. Before commencing the construction of any improvements on the Leased Premises including Lessee's Improvements (the "Lease Improvements"), Lessee shall submit: Documentation, specifications, or design work, to be approved by the Lessor, which shall establish that the improvements to be built or constructed upon the Leased Premises are in conformance with the overall size, shape, color, quality and design, in appearance and structure of the program established by Lessor on the Airport. 2. All plans and specifications showing the location upon the Leased Premises of the proposed construction and improvements; Beacon Air Service LLC Lease 11-18-04.DOC- Page !1 3. The estimated cost of such construction. No construction may commence until Lessor has approved the plans and specifications and the location of the Lease Improvements, and the estimated costs of such constmction. Approval by the Lessor shall not be unreasonably withheld. Documentary evidence of the actual cost of construction on public areas only (such as taxiways) shall be delivered by Lessee to Lessor's City Manager from time to time as such costs are paid by Lessee, and Lessor's City Manager or designee is hereby authorized to endorse upon a copy of this Lease Agreement filed with the City Secretary of Lessor such actual amounts as he shall have found to have been paid by Lessee, and the findings of the City Manager when endorsed by him upon said contract shall be conclusive upon all parties for all purposes of this Lease Agreement. No later than 30 days after completion of the Lease Improvements, Lessee shall submit to Lessor detailed as built plans of the Lease Improvements and documentary evidence acceptable to Lessor evidencing the total cost to construct the Lease Improvements ("Cost to Construct Lease Improvements"). B. ADDITIONAl. CONSTRUCTION OR IMPROVEMENT~q: Lessee is hereby authorized to construct upon the Leased Premises, at its own cost and expense, buildings, hangars, and structures, that Lessor and Lessee mutually agree are necessary for use in connection with the operations authorized by this Lease Agreement, provided however, Lessee shall comply with all of the requirements of Section VIII.A., above. Such additional improvements shall be a part of the Lease Improvements. C. OWNERSI--IIPOF1MPROVEMF. NTS: Except as otherwise provided in this Lease Agreement, the Lease Improvements constructed upon the Leased Premises by Lessee shall remain the property of Lessee during the Lease Term subject to the following conditions, terms and provisions: 1. removal of Fluildingq. No building or permanent fixture may be removed from the Leased Premises. g~ssumptian. The Lease Improvements shall automatically become the property of Lessor absolutely fi-ee, without any cost to Lessor, at the end of the Lease Term, or any extension thereof. Faih,re to Complete [,es,qee'~q lrnprovement.q. The Lease Improvements shall immediately become the property of Lessor at no cost, expense, or compensation to Lessee should Lessee fail to complete the Lessee's Improvements within the Construction Period as provided in Section ll.D. of this Lease Agreement. Cancellation or Termin,tion. Should this Lease Agreement be canceled or terminated before the end of the Lease Term, or extension thereof, Lessor shall have the right to purchase all of the Lease Improvements. In the event of a Beacon Air Service LLC Lease 1I~18-04,DOC- Page 12 cancellation or termination, other then due to a default by Lessee that has not been cured as provided below, the purchase price shall be equal to the most recent value of the Lease Improvements as determined by the Denton County Central Appraisal District ("Value of the Lease Improvements") reduced by 1/30 for each year of the Lease Term that has expired as of the date of termination (the "Purchase Price"). Should the Denton County Central Appraisal District not determine a separate value for the Lease Improvements, or should such separate valuation be older than two years, then the Purchase Price will be determined taking the Cost to Construct the Lease Improvements reduced by 1/30 for each year the Lease Term has expired as of the date of termination. If the termination or cancellation is due to a default by Lessee that has not been cured within 30 days after written notice of default to Lessee, then the Purchase Price as determined above shall be reduced by 50%. However, if Lessee provides written notice to Lessor within said 30 day cure period that it is impossible to cure such default within said time period, then the Lessor may consent to an extension of such time to cure, which consent will not be unreasonably withheld. IX. SIIRROGATION OF MORTGAGEE Any person, corporation or institution that lends money to Lessee for construction of any hangar, structure, building or improvement and retains a security interest in said hangar, structure, building or improvement shall, upon default of Lessee's obligations to said mortgagee, have the right to enter upon the Leased Premises and operate or manage said hangar, structure, building or improvement according to the terms of this Lease Agreement, for a period not to exceed the term of the mortgage with Lessee, or until the loan is paid in full, whichever comes first, but in no event longer than the Lease Term. It is expressly understood and agreed that the right of the mortgagee referred to herein is limited and restricted to those improvements constructed with funds borrowed from mortgagee, those improvements purchased with the borrowed funds, and those improvements pledged to secure the refinancing of the improvements. X. RIGHT OF F. ASEMENT Lessor shall have the right to establish easements, at no cost to Lessee, upon the Leased Premises for the purpose of providing underground utility services to, from or across the Airport property or for the construction of public facilities on the Airport. However, any such easements shall not interfere with Lessee's use of the Leased Premises and Lessor shall restore the property to the original condition as is reasonable practicable upon the installation of any utility services on, in, over or under any such easement at the conclusion of such construction. Construction in or at the easement shall be completed within a reasonable time. XI. ASSiGNMlqNT OF TF. ASF, Lessee expressly covenants that it will not assign this Lease Agreement, convey more Beacon Air Service LLC Lease 11-18-04.DOC- Page 13 than fifty percent (50%) of the interest in its business, through the sale of stock or otherwise, transfer, license, nor sublet the whole or any part of the Leased Premises for any purpose, except for rental of hangar space or tie-dom space for storage of aircraft only, without the written consent of Lessor. Lessor agrees that it will not unreasonably withhold its approval of such sale, sublease, transfer, license, or assignment of the facilities for Airport related purposes; provided however, that no such assignment, sublease, transfer, license, sale or otherwise shall be approved if the rental, fees or payments, received or charged are in excess of the rental or fees paid by Lessee to Lessor under the terms of this lease, for such portion of the Leased Premises proposed to be assigned, subleased, transferred, licensed, or otherwise. The provisions of this Lease Agreement shall remain binding upon the assignees, if any, of Lessee. XII. INSI IRANCF. A. REQIIIRFD 1NSl IR ANCE: Regardless of the activities contemplated under this Lease Agreement, Lessee shall maintain continuously in effect at all times during the term of this agreement, at Lessee's sole expense, the following minimum insurance coverages: o Commercial (Public) General Liability covering the Lessee or its company, its employees, agents, tenants and independent contractors, and its operations on the airport. Coverage shall be in an amount not less than $1,000,000 per occurrence and provide coverage for premises/operations and contr~tual liability AND where exposure exists, coverage for: products/completed operations; explosion, collapse and underground property damage. All risk property insurance on a replacement cost basis covering loss or damage to all facilities used by the Lessee, either as a part of this agreement or erected by the Lessee subsequent to this agreement. Under no circumstances shall the Lessor be liable for any damages to fixtures, merchandise or other personal property of the Lessee or its tenants. 3. Business Automobile Liabihty to include coverage for Owned/Leased Autos, Non- Owned Autos and Hired Cars: For operation in aircraft movement areas the limit of liability shall be $100,000 per occurrence. For other operations the limit of liability shall be consistent with the amount set by State Law. B. ADDITIONAl. COVFR AGF, S: In addition to the above referenced coverages, the following insurance is required if the activity or exposure exists or is contemplated: 1. Aircraft Fuel/Oil Storage and Dispensing - Comprehensive Commercial (Public) General Liability shall include coverage or separate coverage shall be provided for Beacon Air Service LLC Lease 11-18-04.DOC- Page 14 Environmental Impairment Liability. Aircraft Sales or Aircraft Charter and Air Taxi - Aircraft Liability in the mount of $1,000,000 per occurrence to include Hull Coverage and Liability. In addition, Passenger Liability in an amount of $100,000 per person (per passenger seat) shall be provided. Aircraft Rental or Flight Training - Aircraft Liability in the amount of $1,000,000 per occurrence to include Hull Coverage and L/ability, Passenger Liability in the amount of $100,000 per person (per passenger seat) and Student/Renter Liability covering all users in the mount of $500,000 per occurrence. Specialized Commercial Flying (including crop dusting, seeding, and spraying, banner towing and aerial advertising, aerial photography and surveying, fire fighting, power line or pipe line patrol) - Aircraft Liability in the amount of $1,000,000 per occurrence to include Hull Coverage and Liability. In addition, Passenger Liability in an amount of $100,000 per person (per passenger seat) shall be provided. Aircraft Storage, Maintenance and/or Repair - Aircraft Liability in the amount of $1,000,000 per occurrence to include Hull Coverage and Liability. In addition, Hanger Keepers Liability in the amount of $500,000 per occurrence shall be provided. The requirement for Hangar Keepers Liability shall not apply to individual owner/operators whose primary use of the hangar space is the storage of their own aircraft. The requirement does not apply to such individuals notwithstanding the fact that they may, from time to time, permit the storage of non-owned aircraft in the hangar space and charge a fee for the storage of such aircraft so long as such use is in the nature of a rent-sharing agreement rather than a commercial aircraft storage business. C. COVERAGF~ REQI I1REMENTS: All insurance coverages shall comply with the following requirements: All liability policies shall name the City of Denton, and its officers and employees as an additional named insured and provide for a minimum of 30 days written notice to the City of any cancellation or material change to the policy. All insurance required by this Lease Agreement must be issued by a company or companies of sound and adequate financial responsibility and authorized to do business in the State of Texas. All policies are subject to the examination and approval of the City's office of Risk Management for their adequacy as to content, form of protection and providing company. Beacon Air Service LLC Lease 1!-18-04.DOC- Page I5 Required insurance naming the City as an additional insured must be primary insurance and not contributing with any other insurance available to the City whether from a third party liability policy or other. Said limits of insurance shall in no way limit the liability of the Lessee hereunder. The Lessor shall be provided with a copy of all such policies and renewal certificates. Failure of Lessee to comply with the minimum specified amounts or types of insurance as required by Lessor shall constitute Lessee's default of this Lease Agreement. During the Lease Term, or any extension thereof, Lessor herein reserves the right to, with 60 days notice, adjust or increase the liability insurance amounts required of the Lessee, and to require any additional rider, provisions, or certificates of insurance, and Lessee hereby agrees to provide any such insurance requirements as may be required by Lessor; provided however, that any requirements shall be commensurate with insurance requirements at other public use airports similar to the Denton Municipal Airport in size and in scope of aviation activities, located in the southwestern region of the United States. XIII. CANCF. I .LATION RY I.F.,RROR In the event that Lessee shall file a voluntary petition in bankruptcy or proceedings in bankruptcy shall be instituted against it and Lessee thereafter is adjudicated bankrupt pursuant to such proceedings, or any court shall take jurisdiction of Lessee and its assets pursuant to proceedings brought under the provisions of any Federal reorganization act, or Lessee shall be divested of its estate herein by other operation of law; or Lessee shall fail to perform, keep and observe any of the terms, covenants, or conditions herein contained, or on its part to be performed, the Lessor may give Lessee written notice to correct such condition or cure such default and, if any condition or default shall continue for thirty (30) days after the receipt of such notice by Lessee, then Lessor may terminate th/s Lease Agreement by written notice to Lessee. However, if Lessee provides written notice to Lessor within said 30 day cure period that it is impossible to cure such default within said time period, then the Lessor may consent to an extension of such time to cure, which consent will not be unreasonably withheld. In the event of default, Lessor has the right to purchase any or all of the Lease Improvements under the provisions of Section VIII.C.4. hereof. XIV. CANCEl J,ATTON BY LESSEE Lessee may cancel this Lease Agreement, in whole or part, and terminate all or any of its obligations hereunder at any time, by thirty (30) days written notice, upon or atter the happening of any one of the following events: (i) issuance by any court of competent juris- diction of a permanent injunction in any way preventing or restraining the use of the Airport or any part thereof for airport purposes; (2) the breach by Lessor of any of the covenants or Beacon Air Service LLC Lease 11-18-04.DOC- Page 16 agreements contained herein and the failure of Lessor to remedy such breach for a period of n/neW (90) days after receipt of a written notice of the existence of such breach; (3) the inability of Lessee to use the Lease Premises and facilities continuing for a longer period than ninety (90) days due to any law or any order, nde or regulation of any appropriate governmental authority having jurisdiction over the operations of Lessor or due to war, earthquake or other casualty; or (4) the assumption or recapture by the United States Government, or any authorized agency thereof, of the maintenance and operation of said airport and facilities or any substantial part or parts thereof. Upon the happening of any of the four events listed in the preceding paragraph, such that the Leased Premises cannot be used for aviation purposes, then the Lessee may cancel this Lease Agreement as aforesaid, or may elect to continue this Lease Agreement under its terms, except, however, that the use of the Leased Premises shall not be limited to aviation purposes, their use being only limited by such laws and ordinances as may be applicable at that time. Should Lessor close the Airport and relocate the Airport to another location during the primary term of this Lease Agreement, Lessee shall have the fight to relocate its facilities to the new airport at a suitable location under the same or similar terms of this Lease Agreement. The cost of relocation of Lessee's facilities will be shared by Lessor and Lessee in proportion to the number of years remaining on the primary term of this Lease Agreement. In this regard Lessor will be responsible for 1/30 of the such costs for every year remaining on the primary tenn. XV. M[qCF. I J ~ANEOI IS PROVISIONS A. ENTIRE AGREEMENT. This Lease Agreement constitutes the entire understanding between the parties and as of its Effective Date supersedes all prior or independent Agreements between the parties covering the subject matter hereof. Any change or modification hereof shall be in writing signed by both parties. B. lqINDING EFFECT. All covenants, stipulations and agreements herein shall extend to, bind and inure to the benefit of the legal representatives, successors and assigns of the respective parties hereto. C. SF. VERABIt.ITy. Ifa provision hereof shall be finally declared void or illegal by any court or administrative agency having jurisdiction, the entire Lease Agreement shall not be void; but the remaining provisions shall continue in effect as nearly as possible in accordance with the original intent of the parties. D. NOTICE, Any notice given by one party to the other in connection with this Lease Agreement shall be in writing and shall be sent by certified ma/l, return receipt requested, with postage fees prepaid or via facsimile as follows: 1. If to Lessor, addressed to: Beacon Air Service LLC Lease t1-!8-04,DOC- Page 17 City Manager City of Denton 215 E. McKinney Street Denton, Texas 76201 Fax No.940.349.8596 2. If to Lessee, addressed to: Mr. Donald Wayne Back President Beacon Air Services (BCON) LLC 2216 Lookout Lane Denton, Texas 762070 Fax No. 940-591-0888 E. ~. The headings used in this Lease Agreement are intended for convenience of reference only and do not define or limit the scope or meaning of any provision of this Agreement. F. GIDVFRN1NG I,AW AND VENIIV,. This Lease Agreement is to be construed in accordance with the laws of the State of Texas and is fully performable in Denton County, Texas. Exclusive venue for any lawsuit to enforce the terms or conditions of this Lease Agreement shall be a court of competent jurisdiction in Denton County, Texas. G. No WAWER. No waiver by Lessor or Lessee of any default or breach of covenant or term of this Lease Agreement may be treated as a waiver of any subsequent default or breach of the same or any other covenant or term of this Lease Agreement. H. NO A GENICY. During all times that this Lease Agreement is in effect, the parties agree that Lessee is and shall not be deemed an agent or employee of the Lessor. I. FORCF~ MAJF, I IRE~ None of the Parties shall be in default or otherwise liable for any delay in or failure of performance under this Lease Agreement if such delay or failure arises by any reason beyond their reasonable control, including any act of God, any acts of the common enemy or terrorism, the elements, earthquakes, floods, fires, epidemics, riots, failures or delay in transportation or communications. However, lack of funds shall not be deemed to be a reason beyond a Party's reasonable control. The Parties will promptly inform and consult with each other as to any of the above causes, which in their judgment may or could be the cause of a delay in the performance of this Lease Agreement. IN WITNESS WHEREOF, the parties have executed this Lease Agreement as of the Effective Date first above written. CITY OF DENTON, TEXAS, LESSOR Beacon Air Service LLC Lease !1-18-04.DOC Pa~e 18 BY: MICHAEL A. CONDUFF, CITY MANAGER ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, r ATTORNEY BY: BEACON AIR SERVICES (BCON) LLC DONALD WAYNE B~,, PRESDENT Beacon Air Service LLC Lease 11-15-04.DOC- Page 19 ACKNOWLEDGMENTS THE STATE OF TEXAS § COUNTY OF DENTON § This instrument was acknowledged before me on the ~ Michael A. ConduiT, municipality. day of ., 2004, by City Manager of the City of Denton, Texas, on behalf of said NOTARY PUBLIC, STATE OF TEXAS THE STATE OF TEXAS § COUNTY OF DENTON § This instrument was acknowledged before me on the l__~__q day of ~_.0_~J~, 2004 by Donald Wayne Back, President, Beacon Air Services (BCON) LLC, a Texas corporation, on behalf of said corporation. NOTARY PUBLIC, STATE OF TEXAS TA~ PUBLIC State of Texa~l Beacon Air Service LLC Lease 11-18-04.DOC- Paffe 20 Attachment A 1 A" Westcourt Road i ~, ~ ................. ----~ :~ .... · :.. L__~ , ~ ~ I:~ AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: ACM: December 7, 2004 Tax Kathy DuBose SUBJECT Consider approval of a tax refund for the following property tax: Tax Name Reason Year Amount BACKGROUND Chapter 31.11 of the Texas Property Tax Code requires the approval of the governing body of the taxing unit for refunds in excess of $500.00. FISCAL INFORMATION The tax overpayment revenue fund would be reduced by $640.80. Respectfully submitted: Diana G. Ortiz Director of Fiscal Operations AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: ACM: December 7, 2004 Customer Service Howard Martin, Utilities 349-8232 SUBJECT Consider approval of enhancemems to the currem City of DeNon Utility Bill. BACKGROUND On January 6, 2004, Customer Service began producing a new utility bill for the City of DeNon citizens. On December 29, 2003, City Council was provided a memorandum imroducing the new bill. Since the inception, we have received several requests for additional enhancemems and modifications for better ease of interpretation. OPTIONS 1. Give staff approval to move forward with additional enhancements. Implementation of the new bill will occur with the start of cycle 1 in January, 2005. RECOMMENDATION We recommend approval of the additional enhancemems and modifications. PRIOR ACTION/REVIEW (Council, Boards, Commissions) On November 8, 2004 and, on November 22, 2004, a bill update was presented to the board for discussion and direction. Clarifications and changes were discussed and implememed with a recommendation to gain final approval from City Council. FISCAL INFORMATION Cost associated with the enhancements and modifications total $3,200. The 2004-2005 budgets have allowed for expenditures up to $25,500 in accoum 630800.7879. BID INFORMATION Not Applicable EXHIBITS 1. Draft copy of updated new Utility bill 2. PUB Minutes Respectfully submitted: Charles C. Atkinson Utility/Customer Service Manager Account 1190147-03 Cycle 1 Service address Last payment -207,06 Last payment date 08/18/04 Service period 07/29/2004-08/30/2004 Billing date 09/03/2004 Billing days 32 Due Date 09/21/04 Usage History 2000 1500 1000 500 0 ttt-.tttt-- J F M A M J J A S O N D Electric Previous balance 219.70 Late payment charge 10.00 Pay within 5 days of billing date to avoid disconnection 229.70 Current month's balance due by 09/21/2004 213.26 Total amount due 442.96 For more information, contact Utilities Customer Service at 940.349.8700 or visit www.dentonutilities.com. To schedule a water audit, call 940.349.7322. To schedule an energy audit, call 940.349.7137. Meter Rate Previous Current Multi Usage Amount 0000060090 R21 00027806 00026961 1 1155 Electric 131.96 Electric total 131.96 J F M A M J J A S O N D Water **TRASH BAG DISTRIBUTION IS OCT 4-8 AT NORTH LAKES PARK AND SOUTH LAKES PARK FROM NOON TO 7 PM. BRING THIS RECEIPT TO COLLECT BAGS.*** Our offices will be closed on Monday, October 11, 2004 for Staff Development. We will be closed for normal business hours on Tuesday, October 12, 2004. Meter Rate Previous Current Multi Usage Amount 0000009613 WR.75 00003296 00003271 100 65005 Water 27.09 Wastewater 25.07 Drainage 1.07 Water total 53.23 Residential Solid Waste 18.94 Residential Recycling 3.19 Solid Waste total 22.13 Interest charge 2.16 Sales Tax 3.76 Total 5.94 Keep this portion of your bill for your records. 0000419093902000000140748 -- Enroll in P-L-U-S ONE. Please indicate a monthly amount if you would like to assist Iow-income families in paying their utilities. Please call to be removed from the program. -- Enroll in Keep Denton Beautiful program. Please indicate a monthly amount if you would like to promote education and a diverse urban forest. Please call to be removed from the program. Customer #(15113) NAME ADDRESS CITY ST 12345-6789 Previous balance due within five (5) days of billing date. Account 1190147-03 Service address Previous balance to avoid disconnection 229.70 Current amount due by 09121104 213.26 Total amount due 442.96 Late payment charge ($10) assessed after due date. II ,,~1 ,~1 ....... il, Il ...... II Il,, CITY OF DENTON PO BOX 961082 FT WORTH TX 76161-0082 Please return this portion and payment in the envelope provided. Please make your check payable to DENTON MUNICIPAL UTILITIES. To pay in person: Denton Municipal Utilities, 601 E. Hickory St., Suite F, Denton, TX 76205, or City Hall in the Mall in the Golden Triangle Mall, Ph: 940.349.8700 Metro: 972.434.2529 TDD: 800.735.2959 ADA/EOE/ADEA www.cityofdenton.cOmExHiBiT 1 ~ 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 CITY OF DENTON PUBLIC UTILITIES BOARD MINUTES November 22, 2004 DRAFT After determining that a quorum of the Public Utilities Board of the City of Denton, Texas was present, the Public Utilities Board convened into an Open Meeting on Monday, November 22, 2004, at 9:00 a.m. in the Solid Waste Conference Room, City of Demon Service Cemer, 1504 Mayhill Road, Denton, Texas. PRESENT: Bob Bland, Dick Smith, Phil Gallivan, Charldean Newell EX OFFICIO MEMBERS Michael Conduff, City Manager Howard Martin, ACM/Utilities ARRIVED LATE: John Baines, Bill Cheek and George Hopkins 5) Receive a report, hold a discussion and give staff direction regarding the update of the City of Denton Utility Bill. Charles Atkinson, Customer Service Manager Presented this item. Atkinson presented an updated copy of a Utility bill with the recommend changes from the Board. Newell made a suggestion to shade the P-L-U-S One section on the bill in an attempt to draw more attention and increase contributions. Atkinson reported that Utility Bill changes are schedule for Council approval at their December 7th meeting. The Board was pleased with the final layout of the bill and directed staff to present the layout changes to City Council Page 1 of l EXHIBIT 2 AGENDA INFORMATION SHEET AGENDA DATE: December 7, 2004 DEPARTMENT: Legal CM/DCM/ACM: Herbert L. Prouty, City Attorney SUBJECT: Hold a public hearing and consider approval of an ordinance of the City of Denton, Texas, denying in part CoServ Gas, Ltd.'s request to change rates in Denton, Texas, establishing maximum permitted rates and charges that CoServ Gas, Ltd. may assess residential, commercial and industrial customers in the City of Denton; requiring the filing of revised tariffs; adopting declarations and findings related to rates and charges assessed to residential, commercial and industrial customers in the City of Denton; providing for prompt recovery of rate case expenses incurred by the City; finding that the meeting at which this Ordinance is passed is open to the public as required by law; providing for notice of this Ordinance to CoServ Gas, Ltd; providing a severability clause; and providing an effective date. BACKGROUND: On August 25 of this year, CoServ Gas, Ltd. (CoServ) filed a system wide request for a gas rate increase requesting $1,165,525 in additional annual revenue. The increase was filed in twenty-five cities in CoServ's current distribution system including the City of Denton. The gas rate request constituted an overall 19.4 percent increase in total revenues, (excluding gas costs) for CoServ. CoServ's request also included a number of other increases including a surcharge on customer bills to recover pipeline safety fees assessed by the Raikoad Commission, a rate ease expense surcharge to cover reasonable expenses relating to the filing of CoServ's Statement of Intent to Increase Rates, an increase in its monthly customer charge, and a request for a declining block rate design which would provide lower proportional rates for high usage, especially during the winter months. CoServ indicated that for Denton customers residential rates would increase 20.06 percent, commercial rates would increase 25.98 percent and industrial rates would increase 20.2t percent. The impact of the rate increase was reflected by the notice CoServ published in the newspaper as required by Ordinance No. 2002-073. According to that notice, published in the September 6, 2004 issue of the Denton Record- Chronicle, aggregate revenues in Denton would increase by $152,144, a 74.09 percent increase in revenues, exclusive of the gas commodity costs. Base rate revenues would increase by 72.96 percent for residential customers and by 143.96 percent for commercial customers. A residential customer using 6 Mcr would see a base rate increase of $10.18 per month while a commercial customer using 30 Mcf would see a base rate increase of $66.26 per month. The total impact of the rate increase on Denton customers could be more when the surcharges and additional monthly customer charges are included. CoServ also had requested an 8.68 percent rate of return on its $24,372,960 rate base. The rate of return was not based on CoServ's capital structure as of March 31, 2004, but it was based on a capital structure utilizing local distribution companies (LDC) indush3~ norms. Agenda Information Sheet December 7, 2004 Page 2 On September 21, 2004 you passed a Resolution suspending the scheduled effective date of CoServ's rate increase - October 1, 2004 - for 90 days and for such additional time that the parties may agree upon. You also authorized the City to join a coalition of cities within CoServ's distribution system and to authorize a steering committee of those cities to hire the law firm of Lloyd Gosselink Blevins Rochelle & Townsend, P.C. and rate consultants that the coalition steering committee decided to employ. Additionally, you authorized the employment of Diversified Utility Consultants, Inc. (DUCI) to represent the City in investigating this rate increase request. Both the consultants hired by the coalition of cities - C2 Consulting Services, Inc. and Denton's consultant, DUCI - investigated and made their reports to the City indicating that the entire mount of CoServ's rate request should be reduced and instead recommending mounts less than one-quarter of the system wide rate increase which was requested. Based upon the information reviewed by legal counsel and the consultant, CoServ has failed to meet its burden justifying its request for a rate increase. Specifically, the investigation determined that (a) CoServ's requested return on equity is excessive; (b) CoServ's restatement of the gross distribution plant accounts as "Plant in Service" or "Plant Held for Future Use" should be adjusted to more closely track the actual use of the system; (c) CoServ did not submit a valid lead lag study to justify its request for Cash Working Capital; (d) CoServ failed to adequately support its requested increase in Affiliate Costs; and (e) CoServ failed to meet its burden to support recurring regulatory expenses, depreciation expense, and other expenses. The legal counsel and consultant further found that he Company has justified an increase in base rate revenues of only $250,000. The total impact of the rate increase including CoServ's rate case expense surcharges, and the increase in monthly customer charges and other rate increases are more fully covered in the Legal Department's status report of December 3, 2004. Attached is an Ordinance that will accomplish the following objectives: Deny CoServ's request in part, and authorize an increase in base rate revenues equal to $250,000. Direct CoServ to file tariffs with the City for approval consistent with a system-wide increase of $250,000 in total annual base rate revenues. Deny CoServ's request for declining block rates and a surcharge to recover pipeline safety fees. Sets a deadline of twenty (20) days from the effective date of the Ordinance for the filing of the revised tariffs. Approval or rejection of the revised tariffs will be taken at the first City Council meeting that is at least fourteen (14) days after the filing of the revised tariffs with the City. Authorizes intervention in any appeal filed by CoServ with the Railroad Commission regarding the denial of its rate request. o Requires reimbursement of reasonable rate case expenses incurred on behalf of the City to investigate CoServ's request and prosecute the appeal, if any, of the City's Ordinance. Agenda Information Sheet December 7, 2004 Page 3 OPTIONS: The City Council can approve the Ordinance authorizing the partial increase in rates for CoServ Gas, Ltd., which is supported by the coalition of cities. The City Council can pass the Ordinance either allowing a greater or lesser amount or denying the rate increase request entirely. The City Council can choose not to enact the Ordinance and CoServ's gas rate increase that would automatically go into effect on or after December 28, 2004. RECOMMENDATION: The staff recommends that the City Council choose Option 1 and pass the Ordinance denying CoServ's rate request and authorizing the much smaller increase in rates recommended by the Consultants and authorizing intervention at the Railroad Commission in any appeal initiated by CoServ regarding this Ordinance and requiring reimbursement of the City's reasonable rate case expenses. This rate increase would be over 75 percent less than the rate increase requested by CoServ. If the City chooses not to agree to any rate increase and to deny the rate increase, CoServ would most likely appeal this to the Railroad Commission, which would mean additional time and consultant expense in prosecuting this matter before the Commission. The cost of litigating this matter before the Railroad Commission could result in substantial rate case expenses, which can be passed on to Denton customers. Staff feels by authorizing the rate increase recommended by the Consultants there is a smaller chance of an appeal to the Railroad Commission by CoServ. FISCAL IMPACT: Gas customers utilizing CoServ will see an increase in their gas bills after the first of the year. However, the increase will be much less than requested by CoServ. Under Section 103.022 of the Gas Utility Regulatory Act, all reasonable costs of the rate case consultants are reimbursable to the City by CoServ and under the Ordinance, CoServ is required to pay the rate case expenses. CoServ has the right to pass rate case expenses on to customers in the form of a surcharge, but these expenses are a small fraction of the decrease in the rates requested achieved by utilizing the consultants. The impact on the gas customers will be lessened due to the fact that the Ordinance requires CoServ to spread the surcharge on the rate case expenses over a six-month period. Respectfully submitted: He~bert ~.'Pr-o'uty City Attorney ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON, TEXAS, DENYING IN PART COSERV GAS, LTD.'S REQUEST TO CHANGE RATES IN DENTON, TEXAS, ESTABLISHING MAXIMUM PERMITTED RATES AND CHARGES THAT COSERV GAS, LTD. MAY ASSESS RESIDENTIAL, COMMERCIAL AND INDUSTRIAL CUSTOMERS IN THE CITY OF 'DENTON; REQUIRING THE FILING OF REVISED TARIFFS; ADOPTING DECLARATIONS AND FINDINGS RELATED TO RATES AND CHARGES ASSESSED TO RESIDENTIAL, COMMERCIAL AND INDUSTRIAL CUSTOMERS IN THE CITY OF DENTON; PROVIDING FOR PROMPT RECOVERY OF RATE CASE EXPENSES INCURRED BY THE CITY; FINDING THAT THE MEETING AT WHICH THIS ORDINANCE IS PASSED IS OPEN TO THE PUBLIC AS REQUIRED BY LAW; PROVIDING FOR NOTICE OF THIS ORDINANCE TO COSERV GAS, LTD; PROVIDING A SEVERABILITY CLAUSE; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, on or about August 25, 2004, CoServ Gas, Ltd. ("CoServ" or "Company") filed with the City Secretary of the City of Denton, Texas ("City") a "Statement of Intent to Increase Gas Rates in all municipalities within the CoServ Distribution System" under which higher rates charged by CoServ would go into effect in the City on October 1, 2004; and WHEREAS, the City has exclusive original jurisdiction to evaluate the Company's Statement of Intent as it pertains to the distribution facilities located within the City, pursuant to Texas Utilities Code § § 102.001(b) and 103.001; and WHEREAS, pursuant to Section 104.107 of the Texas Utilities Code, on September 21, 2004, the City Council passed Resolution No. 2004-050 suspending implementation of CoServ's proposed rate schedule for ninety days from the originally scheduled effective date of October 1, 2004 or until December 28, 2004; and WHEREAS, failure to take action regarding CoServ's rate request by December 28, 2004, will cause CoServ's request to become effective for all CoServ customers within the municipal limits; and WHEREAS, the City Council authorized Denton to cooperate with a coalition of cities within the CoServ Distribution System (Cities) and authorized the hiring of rate consultants and an attorney and further authorized the retention of Diversified Utility Consultants, Inc. to assist Denton in its review of CoServ's proposed rate application; and WHEREAS, the consultants hired by the Cities and Denton have studied CoServ's rate request and made their recommendations and counsel for the Cities, upon review of the Company's filing and upon consultation with various consultants, recommends findings that the Company's proposal is unjustified and unreasonable and that a more modest rate increase should be authorized; and WHEREAS, pursuant to Chapters 103 and 104 of the Texas Utilities Code, the Cities and Denton are required to (i) analyze CoServ's Rate Filing, as updated; (ii) conduct a public heating in order to determine the propriety of the proposed rate increase (the "Public Hearing"); and (iii) make a reasonable determination of CoServ's rate base, expenses, investment and rate of return in Denton; and WHEREAS, the Public Hearing was conducted on December 7, 2004 before the enactment of this Ordinance at which all interested parties were given a full opportunity to comment on the Rate Filing; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. That the City Council, pursuant to its exclusive original jurisdictional authority over the rates, operations and service of CoServ within Denton and in the exercise of its sound legislative discretion, after reasonable notice and hearing, makes the following findings of fact: 1.1. CoServ filed with Denton's City Council a Statement of Intent to Increase Residential, Commercial and Industrial Gas Rates charged to consumers within Denton. t.2 That CoServ's Statement of Intent to change gas rates within the City is found to be unreasonable because: (a) CoServ's requested return on equity is excessive; (b) CoServ's restatement of the gross distribution plant accounts as "Plant in Service" or "Plant Held for Future Use" should be adjusted to more closely track the actual use of the system; (c) CoServ did not submit a valid lead lag study to justify its request for Cash Working Capital; (d) CoServ failed to adequately support its requested increase in Affiliate Costs; and (e) CoServ failed to meet its burden to support recurring regulatory expenses, depreciation expense, and other expenses. 1.3 That upon review of CoServ's Statement of Intent to change gas rates and the information provided by the Company it is clear that CoServ can only justify an overall increase in total revenues equal to $250,000. SECTION 2. That CoServ is directed to file tariffs with the City for approval consistent with a system-wide increase of $250,000 in total annual revenues. The tariffs should be filed within twenty (20) days of the effective date of this Ordinance. Approval or rejection of the revised tariffs will be taken at the first City Council meeting that is at least fourteen (14) days after the filing of the revised tariffs with the City. That CoServ's request for declining block rates and its request for a surcharge to recover pipeline safety fees assessed by the Railroad Commission are hereby denied. That CoServ shall set its monthly customer change at no more than that allowed TXU Gas (Atmos Energy) at the recent Railroad Commission Proceeding, GUD Docket No. 9400. Ail other rate relief requested by the Company is hereby denied. SECTION 3. That the City is authorized to intervene in any appeal filed with the Railroad Commission by CoServ regarding this Ordinance. SECTION 4. That all costs incurred by the City in reviewing the Company's application and prosecuting any appeal, including without limitation the costs incurred in hiring Diversified Utility Consultants, Inc. (DUCI) to investigate the Company's rate request, be promptly reimbursed by the Company. Page 2 of 4 SECTION 5. If CoServ elects to recover, in whole or in part, the costs of this rate proceeding through a surcharge to its customers in Denton, it shall do so through a surcharge designed for a six (6) month nominal recovery period. The surcharge per Mcf shall be calculated by dividing the Rate Case Expenses to be recovered by one-half of the adjusted annual sales volume to residential and commercial customers. When a surcharge is applicable, monthly status reports will be provided to Denton to account for the collections. CoServ shall refund to its customers any over collection of rate case expenses that may occur. SECTION 6. In order to ensure that rates and charges assessed by CoServ in Denton are just and reasonable to both CoServ and its customers, Denton reserves the right and privilege at any time to increase, decrease, alter change or amend this Ordinance or the rates established herein or to enact any ordinance or adopt any rates and charges which would effectuate that purpose. In this connection, Denton further reserves the right and privilege to exercise any authority and power granted to it under any applicable law, ordinance or administrative rule or regulation. SECTION 7. If CoServ disputes all or any portion of this Ordinance, prior to filing an appeal with the Railroad Commission of Texas, CoServ shall file with the City Secretary a request for rehearing on the merits by the City Council and shall comply with the procedures established for such a reheating as set forth in this Section 7. Upon receipt of a request for reheating, the City Council will promptly provide a forum during a public hearing on an open meeting in order for CoServ to set forth the aspects of this Ordinance which CoServ disputes. The City Council shall have sixty (60) calendar days following the date of such reheating to render a final decision. Action of the City Council shall not be considered final for purposes of appeal to the Railroad Commission of Texas until a final decision on any motion for rehearing has been rendered. The provisions of this Ordinance shall remain in full force and effect from and after its adoption unless modified by a subsequent ordinance adopted by the City Council as a result of a final decision following a reheating. SECTION 8. If any portion, section or part of a section of this Ordinance is subsequently declared invalid, inoperative or void for any reason by a court of competent jurisdiction, the remaining portions, sections or parts of sections of this Ordinance shall be and remain in full force and effect and shall not in any way be impaired or affected by such decision, opinion or judgment. SECTION 9. Unless otherwise noted herein, other than CoServ (a named party), no person or entity has been admitted as a party to this rate proceeding. SECTION 10. It is hereby found and determined that the meeting at which this Ordinance was passed was open to the pubhc, as required by Texas law, and that advance pubhc notice of the time, place and purpose of the meeting was given. SECTION 11. This Ordinance shall take effect and be in full force and effect from and after the date of its adoption. Page 3 of 4 SECTION 12. The City Secretary is hereby directed to deliver a certified copy of this Ordinance, constituting final action on the CoServ application, to CoServ by sending the Ordinance by U.S. Mail to the Company's designated representative, Charles D. Harrell, Chief Financial Officer, CoServ Gas, Ltd., 7701 South Stemmons, Corinth, Texas 76210-1842 within ten days o£the date of passage of this Ordinance. PASSED AND APPROVED this the 7th day of December, 2004. EULINEBROCK, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY BY: Page 4 of 4 AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: CM/DCM/ACM: December 7, 2004 Planning and Development Department Jon Fortune, Assistant City Manager SUBJECT - Z04-0039 (Taylor Park of the Nazarene) Hold a public hearing and consider adoption of an ordinance rezoning an approximately 6.7 acre parcel from Neighborhood Residential 2 (NR-2) zoning district to Neighborhood Residential 4 (NR- 4) zoning district with an overlay. The property is generally located on the southwest corner of Willowwood Street and McCormick Street. The Planning and Zoning Commission recommends approval. BACKGROUND Applicant: Taylor Park Church of the Nazarene Denton, TX The applicant requests a change of zoning from NR-2 to NR-4 with an overlay to allow only churches on the property. Under the current zoning district, the maximum lot coverage is thirty percent (30%), which includes parking, structures, and walkways. If rezoned to NR-4, the maximum lot coverage would be increased to sixty percent (60%). A pre-design meeting was held with the applicant on February 26~h, 2004. Public notification and property owner responses are provided in Attachment 3. As of this writing, staff received 6 written responses from property owners within 200 feet of the subject site. Three are in opposition, and four are in favor. The primary concern of the neighboring property owners related the increase in traffic. The opposition is currently at 5.18%. RECOMMENDATION The Planning and Zoning Commission recommends approval (7-0). OPTIONS 1. Approve as submitted. 2. Approve with conditions. 3. Deny. 4. Postpone consideration. 5. Table item. RECOMMENDATION See Staff Analysis (Attachment 1). ESTIMATED PROJECT SCHEDULE The subject property is platted. A building permit will be required prior to construction of the church. ATTACHMENTS 1. Staff Analysis 2. Maps 3. Public Notification (Property Owner Notification Map) 4. Site Photo 5. Aerial Photo 6. Application Letter 7. Responses from property owners within 200 feet 8. October 27th P&Z Meeting Minutes 9. Ordinance Prepared by: Chingyun (Kay) Liang Planner I Respectfully submitted: Kelly Carpenter, AICP Director of Planning and Development 2 ATTACHMENT 1 Staff Analysis Summary_ of Zoning Request The applicant requests to rezone an approximate 6.7-acre parcel from Neighborhood Residential 2 (NR-2) zoning district to Neighborhood Residemial 4 (NR-4) zoning district with an overlay district. The proposed overlay district will restrict all allowed uses except for churches. Existing Condition of Property The subject site is curremly used for non-residemial purposes. The subject property was zoned Agriculture prior to the adoption of the Denton Development Code. Adiacem Zonin~ North: Neighborhood Residemial 3 (NR-3), Single-Family South: Neighborhood Residemial Mixed Use 4 (NR-4), Vacam East: Neighborhood Residemial Mixed Use 4 (NR-4), Church and Single-Family West: Neighborhood Residemial Mixed Use 2 (NR-2), Single-Family Comprehensive Plan Analysis The subject site is located in the "Existing Neighborhood/Infill Compatibility" future land use area. New development in this district should respond to existing development 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. Page 188 of the DeNon Plan defines compatibility as follows: The characteristics of different uses or activities or design which allow them to be located near or adjacent to each other in harmony. Some elements affecting compatibility include pedestrian or vehicular traffic, circulation, access, and parking impacts. Other important characteristics that affect compatibility are landscaping, lighting, noise, order and architecture. Compatibility does not mean "the same as." Rather, compatibility refers to the sensitivity if development proposals in maintaining the character of existing development. The permitted uses within the Neighborhood Residemial zoning district are compatible with the Existing Neighborhoods uses as stated within the Denton Plan. The request to rezone the subject property is compatible with the Future Land Use Plan (Existing Neighborhoods) and with the surrounding zoning designations. The proposed zoning change is in compliance with the DeNon Plan. Development Review Analysis Access Access to the subject site is from Willowwood Street, which is classified as a collector street. A Traffic Impact Analysis (TIA) will be required at time of platting to determine any additional traffic related improvements that may be needed. Public Infrastructure Public utilities are in place to serve the site. Development Code / Zoning Analysis A comparison between uses permitted in NR-2 and NR-4 zoning districts are provided in the following charts. Attached single-family dwelling unit is permitted in NR-4 with the approval of a Specific Use Permit. This is not an allowed use in NR-2. While manufactured housing is allowed in NR-2 with the approval of a Specific Use Permit, it is not allowed in NR-4. The proposed NR-4 zoning district would allow residential development of a higher density. However, the applicant proposes an overlay district restricting permitted uses to churches only. If approved, any future use unrelated to the church would require a rezoning application. Attached Single Family Dwellings N SUP Duplexes N L(3) Manufactured Housing Developments SUP N Equestrian Facilities SUP N Kennels L(37) N Veterinary Clinics L(14) N SUP Gas Wells L(27) L(27) The following limits apply to subdivision of 2 acres or less: Minimum lot area (square feet) 16,000 7,000 Minimum lot width 80 feet 50 feet Minimum lot depth 100 feet 80 feet 20 feet Minimum front yard setback 20 feet L(2) Minimum side yard 6 feet 6 feet Minimum side yard adjacent to a street 10 feet 10 feet Minimum rear yard 10 feet 10 feet The following limits apply to subdivision of more than 2 acres in lieu of minimum lot size and dimension requirements: Maximum density, dwelling units per acre 2 4 Minimum side yard for non-attached buildings 10 feet 5 feet 4 The following limits apply to all buildings: Maximum lot coverage 30% 60% Minimum landscaped area 70% 40% Maximum building height 40 feet 40 feet 10 feet 10 feet plus 1 plus 1 foot for foot for each each Minimum yard when abutting a single- foot of foot of family use or district building building height height above above 20 feet 20 feet 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. L(14) - Uses are limited to no more than 10,000 square feet of gross floor area. L(27) - Must comply with the provisions of Subchapter 22, Gas Well Drilling and Production. L (37) - 5-acre minimum land area required and no more than 25 kennels per acre allowed, including indoor and outdoor runs. A natural buffer strip is required adjacent to any residential use. Staff Findings The proposed zoning change is compatible with the Existing Neighborhood future land use designation, and in compliance with the intent of the Denton 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 Exi~ing l',lei¢3bor hood Center -© ATTACHMENT 3 Notification Map NORTH Limits of 200' / , .~ ............ :1!~- ~ -- Notification \ /" --~- i~ Limits of 500' Scale: None Public Notification Date: October 12, 2004 200' Legal Notices* sent via Certified Mail: Number of responses to 200' Lee al Notice: 30 · In Opposition: 3 · In Favor: 4 [] · Neutral: 0 [] Opposition: 5.18% *A copy of the notification list can be obtained at City Hall West, 221 N. Elm Denton TX 76201 ATTACHMENT 4 Site Photo Photo 1' View of subject property from Willowwood. ATTACHMENT 5 Aerial Photo Church of the Nazarene Pastor Mark Ramsey 1905 McCormick Street Denton, TX 76205 (940) 387-6085 Email: taylorparkchurch@msn.com August 24, 2004 City o f Denton Denton, TX To Whom It May Concern: We are requesting that you change the zoning rating for the property at 1513 Willowwood. We are acquiring this propers' with plans ro build a new ministry coster there that will serve our neighborhood here on the south side of Denton. Our church is very involved in our immediate community and we have outgrown our present Facilities. Our plan is to build an attractive center for worship and activities that will be a blessing to everyone around us. We are working with professional church architect, Robe~ K~,ob!ec'.<, to degig:x a bu':;di:~g 'dm: wiil take advantage of the beauty and park-like setting of this property. The design will add to the neighborhood's appearance and aesthetic quality. Our desire is to begin this building project in 2005 and move our congregation to this new site within a few months of the start date. The property is currently zoned R2 and we are requesting that the zoning be changed to R4. Presently, we have no plans to use the property for residential building of any kind. The change in zoning would allow us to utilize more of the land. Our understanding is that R2 zoning allows only thirty percent of the property to be covered with hard surface. R4 zoning would allow us to cover up to sixty percent of the Please consider our application for this change and feel free to contact me for any other information about our organization or our plans. Thank you fox, bur help and working with us on this matter. Sinclerely, Mark Ramsey Pastor Taylor Park Church of the Nazarene LS ATTACHMENT 7 Responses from Property Owners within 200 Feet Name Property Address Position Comments Bruce and Marjorie 1520 Willowwood In Favor Chamberlain Sharon Smith 1517 Willowwood In Favor James R. Russell 1808 McCormick In Favor I was told the use is for the Nazarene Church. I am for this, but I am not for anything else on the property. Esther L. Goodwin 1906 McCormick In Favor Carolyn Barnes 2011 McCormick Oppose This project is not in keeping with the overwhelmingly single family character of the surrounding neighborhoods. Residents in these neighborhoods work to keep this character intact. This project will destroy those efforts. Marilyn Bradley 2013 Kendolph Oppose Back from vacation, received your letter today 10/25/04 and am leaving town tomorrow for my husband's surgery. Will return 11/8/04. I need time to study the effect of NR2 zoning to NR4 zoning district with an overlay district to any property, therefore I am opposed to request for change until I return and receive all the necessary data to make an intelligent decision. Dr. Norma S. Gilbert 2020 Kendolph Oppose More traffic in the area! There are sufficient churches in or near the same location. Like to keep residential zoning as is. CondcnscltTM 5 6 7 8 9 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 t0 i1 12 13 14 15 16 17 18 19 20 21 22 23 2,~ 25 Page 21 COMMISSIONER POWELL: ^nd we'll go to I~n SA, public hearing. Hold a public hearing and consideri making a recolmneadarion to City Council on the following items. Rezoning of an approximately 6.7 acre parcel to the Neighborhood Residential 2 Zoning District to Neighborhood Residential 4 Zoning District with an overlay. Ms. Lions. MS. LIANG: GOOd evening, Conmfissioners. What's in front of you is a request for a zoning change from NR-2 to NR-4 with an overlay district. The purpose of the overlay district is to restrict uses to - uses allowed to churches only. Tho proposed request would allow the applicant to lmw a maximmn of 60 percent of lot coverage instead of 30 percent, which is allowed with th~ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Page 23 property. And in thc course of time, tho situation arose where we could acqulm this land that's not far from us, the Denton Police Association and Shop with a Cop Charity Group actually owns this property. And they are a nonprofit organization as well. And we are under contract with and are trading -- are going to trade for that property, would allow us to stay there and minister to the area that our church ministers to. And our -- of course, the reason we're here tonight, the zoning change, we don't have any plans of course, to build four homes per acre there. We want to use the entire property for a church and for our new plan and let us remain in the area. We've been working with an architect with keeping in mind we want to keep that existing NR-2 zoning. The subject site is within the existing / neighborhood land use designation. Thirty neighborhood notices -- excuse me, 30 legal notices were mailed out to residents within tlao 200 foot limit. Staff received six written responses, three in favor and three in opposition. The opposition is currently at 5.18 percent. The staff reconunendation is approval. Thank you. COMMISSIONER POWELL: Thank yOll very much. Is there any questions of staff?. Mr. Roy. I COMMISSIONER ROY: I just want to clarify P~ge 22 about the overlay. The overlay restricts all tm-4 uses and only allows a church? MS. LIANG: That's correct. COMMISSIONER ROY: okay. Thank you. MS. LIANG: YOU~I~ welcOlIle. COMMISSIONER POWELL: Any other questions of staff here? Seeing none, I will open the public hearing and ask if the applicant is here and would like to speak. If you would come forward and give us your name and address, sir. ! MR. RAMSAY: Colmnissioners, my name is M}rk Ramsey. I am the pastor at Taylor Park Church of the Nazarene that meets there at 1905 McCormick Street. And I just want to give you a little bit of history about where we -- why we're lac-re tonight. The church has been here! in town for about 45 years and at that location for almost 40 years serving tiao neighborhood. Back in 1984 the church purchased a property south of town just off of Teasley with hopes move out there at some point. But over the course of I time, we made the decision because we're ministering to the neighborhood itself and it become increasingly multi-cultural, we have a Hispanic congregation that meets and molly our ministry is in that part of -- that south part of Denton, we made tho decision to sell that 15 16 17 18 19 20 21 22 23 24 25 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 park-like setting and that beautiful old farm house and farm area. And just want to stay in the neighborhood, and minister to people there. We've outgrown our building a long time ago, our sanctuary and plant are inadequate and we would be trading straight across with our -- the police association who would take over our building and which will really meet their needs and so we're -- we're requesting a zoning change that the main reason, of course, would be allowing us to -- our first phase plan would not cover more than 30 percent anyway, but in the Page 24 future, if we would want to develop our -- if the church grows and we'd like to be able to expand, the zoning change would just allow us to do that. And, of course, would keep the restriction with the overlay. So that's why we're here tonight and appreciate your consideration. COMMISSIONER POWELL: Anybody have any questions of the applicant? Ms. Holt. COMMISSIONER HOLT: Yes. Mr. Rmnsey, do you have any plans to show us what it might look like? MR. RAMSEY: Yes. I can show you. This is a site plan that incorporates a potential Phase II development that if we were to grow to the -- our Church runs about 120 right now. And if we were to grow to the six to 800 range and expand some day, some times that happens with churches. Sometimes we stay family size churches throughout the life of the church. And that's -- our church has been at about this level for a number of years. But, of course, in the process of working with an architect, you -- we're hopeful. And this parking that is shown -- I don't know if it shows up that well. This is small area parking is all that would be built in the first phase and this building. Tais is the existing fanrthouse that we would remodel and use for offices and classrooms. This PLANNING AND ZONING MINUTES OCTOBER 27, 2004 Page 2I - Page 24 CondcnscltTM .... P~ge '25 Page 27 1 parking that file architect has drawn in would not go in il 1 The whole element of the spaciousness of 2 the first phase. That would be many years down the line! 2 this plot is certainly going to change the neighborhood 3 in our planning for thc future. 3 that we're in a situation with a great deal of concrete 4 COMMISSIONER POWELL: Any other questions 4 going down, obviously, he said first phase and second 5 of the applicant? See[og no,lc, I thank you very much, 5 phase at this point. But I think you have to look at the 6 sir. 6 total situation here. Again, the total situation taking 7 MR. V~MSe¥: Thank you. 7 the university into account as well as the church into 8 COMMISSIONER POWELL: we have a lot of 8 account, that they said they bought land on Teasley which 9 cards on tbis particular issue. A lot of people have 9 in many ways is exactly what most churches of this size 10 given us cards in support and do not wish to speak. I I0 have done. ~11 Carolyn Brown, Hazel Williams, Dan S~nith, 11 They've gone on to major thoroughfares 12 Ernie Brown, R.L. Spinks, Edward Adcock, Kevin BroWn, John 12 where largc congregations tend to be. So the totality of 13 Brown, Marjorie Chamberlain, Bruce Chamberlain, Emit 13 this project is out of size for this neighborhood. And 14 Dinwiddie, I_ester Williams, Lucillc Dinwiddie. I have ~ 14 thc impact on this neighborhood is potentially grave on 15 person who would like to speak in support, Gary Drumb!. Is 15 something that's there. I've noticed in my own situation 16 Mr. Drumb here? 16 that both on good and bad that our -- tax rate went up 17 MR. DRUMB: I think that got switched to 17 only under the average rate for Denton this year. On my t 8 another agenda item. 18 level, for instance, the amount of money going out is 19 COMMtSSIO~ER POWEr[: Sony, sir. 19 good. But on the other level, I think that this is 20 MR. ORUM~3: The next one on the Agenda is 20 talking about file totality of the neighborhood, and I 21 the one I want. 21 think that the -- approving this church plan will continue 22 COMMISSIONER ~'OWEL[: Thank you. We have 22 to have the tax rate and the valuation of this area go 23 cards in opposition. 23 down. And I'll conclude with that, 24 I bave cards in opposition who would like 24 COMMISSIONER ?OWELL: ~rhank you. Patricia 25 to speak. I have four of them. Lyle and Patricia 25 Nordstrom, will you give us your name and address, please. page 26 Page 28 1 Nordstrom. If Lyle Nordstrom would come down to speak. I MS. NORDSTROM: ?atricia Nordstrom, and I 2 And would Patricia come down to the on-deck site, the 2 live at 1700 Willowwood as well. I wanted to make a 3 on-deck chair. 3 comment for -- in the context of thy l~ttcr thc neighbor 4 MS. NORDSTROM: Call I not speak separately? 4 has sent with us, a neighbor who I believe lives within 5 COMMISSIONER POWELL: Yes, you can. That's 5 this 200 foot distance from the property who was, 6 why I want you down here to get ready to speak right away 6 according to him, given misinformation about the scope of 7 when Mr. Nordstrom is finished. Would you give us your 7 this project. And I just wanted to pass that on verbally 8 name and address, sir? I 8 that he told us just about 45 minutes ago. 9 MR. NORDSTROM: cyle Nordstrom. I live at 9 A number of items. This size of a 10 1700 Willowwood, on the street that we are here. And I: 10 development is inappropriate for an established 11 thank you for lettiog me speak. Living on Willowwood,! we .11 neighborhood. This is the equivalent of putting something 12 moved itl time years ago. And it was a very bucolic 12 down like this down in the middle of Forest Ridge or in 13 neighborhood at that point. And since that time it's 13 file middle of South Ridge. If you'll just think about the 14 hard not to feel that we are under siege. On one level we 14 impact of the potential size of this, which we have to 15 have the university and the whole problem with the 15 consider. This is what -- this is the long-range plan. 16 athletic department ou one side. We've had the street 16 This is far too large to put an established 17 problem on the other and now this. 17 neighborhood. If someone were trying to put a pharmacy in 18fiversityWe're inthe raffchas been as ittuatiionalreadyexpanded If on Willowwood 18 there, then3 would be a huge uproar and probably would not 19 w~th tile m 19 be passed for reasons of the size it's taking up, the 20 you drive down Willowwood, you realize at this point, that 20 paving that's going to be goiug down that's impermeable, 21 there is no parking signs on all portions of Willowwood. 21 th~ light, fl~e nois~, the general traffic. All of these 22 We're in a situation with this development of creating 22 issues would be taken into account if you were talkiug 23 even more of a problem on Willowwood that's going to 23 about something like a pharmacy. .24 expand all the way along. I think you have to take file 24 This is far from a pharmacy. We have a 25 totality of the whole neighborhood into consideration. 25 situation where property values will ccrtainIy fall, so a PLANNING AND ZONING MINUTES OCTOBER 27, 2004 Page 25 - Page 28 CondenseltTM 1 2 3 4 5 6 7 8 9 l0 Il 12 13 14 i5 16 17 18 19 2O 21 22 23 24 25 1 2 5 6 7 8 9 10 11 12 13 14 15 i6 17 18 19 20 21 22 23 24 25 Page 29 nonprofit institution from which the City will not be able to collect tax revenues will be reducing the tax revenues they receive from property owners in the area. I don't know ff their congregation is composed of property owners Page 31 COMMISSIONER POWELL: Thank you. MS. BRANTLEY: My property backs up to the drainage channeI. Two years ago we developed Denia Sinai1 Area Plan. Part of the plan was that the neighborhood or not. But this will have a serious hnpact on the City i itl terms of property tax revenues at a very time when this is tile major issue that seems to come up at all City Council meetings is how are we going to increase our property tax revenue and draw in people who will build larger more high-end, homes, who will have that value. If we don't create a situation that will attract that kind of person, we are just going to be in a situation of treading water infinitely because the City doesn't seem to make any decisions that would encourage this kind of person to come in and be interested m being pal~ of the City and being part of the neighborhood. 1 I'll just close by talking about the loss I of mamm trees that are on that property, consider which! contribute to the aesthetic value of the neighborhood. And they contribute to the sales, to the resell value of the neighborhood as well. That's going to be a great loss. I don't sm anything in their plan which I believe he has already shown to you tlmt's going to allow for that. I think the head of our neighborhood 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 association was to be infom~ed when any development was proposed in our neighborhood. The first we heard of this development was when we got the notice of tho public hearing. We were very upset when wc heard this because we had not been informed as part of the Denia Small Area Plan. We're upset that a cement parking lot is what we're going to look out on now. I have lived at this house for 35 years. I have been able to look out my back yard and that is the reason that we have lived at this property for 35 years because we can look out and see a meadow. We see trees. Now, we are going to look at farm -- we're going to look at buildings and we're going to look at cement. This is going to lower our house value. It is going to lower the value of all of the houses in this neighborhood. We're already having our property values lowered because of what has happened at the -- I'm sorry, of the Eagle Point Development. We would hope that you would consider our neighborhood. We are not against development, but we are page 30 association will speak to this, but it also has completely avoided the whole value of having a neighborhood:plan, small neighborhood plans where the neighborhood !is included in the process of the decision making. Thanks very much for your time. COMMISSIONER POWELL: If I understand: properly, Mr. and Mrs. Condon are not here? I MS. NORDSTROM: NO. They have sent this letter instead. And this was a letter that we just distributed informally this morning to about the teh or 15 houses we had time to provide the information to. IAnd I have a copy of the letter if that is of any ~mportance. COMMISSIONER POWELL: l have it here. Thank you, MS. NORDSTROM: The letter that they referred to -- he's referring to points in the letter if you don't have the letter, you don't have the pointS. COMMISSIONER POWELL: Thank you. Carol Brantiey. MS. BRANTLEY: Thank you. I'm Carol Brantl?y. And I'm president or Dcnta Area CommuniVy Group. Ii COMMISSIONER POWELL: could you give us your address, please?, MS. BRANTLEY: I live at 2106 McCormick. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 22 23 24 25 Page 32 against development that does not concur with wha* our -- what a neighborhood should be because a small area plan stated that we were a family-type neighborhood. Thank you. COMMISSIONER POWELL: Thank yotl, I have additional cards in opposition from a Terry Brantley and a Timothy Tyran. Would either staff or legal discuss with us that this is a church and what that means about whether or not they can build here and why we have a zoning change here. Because I think there's some confusion and t think I could explain it, but I'd rather have a professional MR. REICHHART: well, you want legal then? A church can go in any of the zoning districts. The current zoning of ~R-2, the church could go on that property right now without the zoning change. They would need to leave more open space. The NR-4 zoning diminishes the amount of open space they mxxl. But it's still, I believe, is at 30 percent of the entire parcel that nec& to be left open. So the use is permitted. It's the amount of open space that the zoning change -- would change, th~ zoning rcqu~ would change, COMMISSIONER POWELL: SO I guess I'd like to add to that by saying we're not here to discuss tonight -- we're not bore to vote tonight about whether or not tbe church has a right to build here. We're only discussing PLANNING AND ZON1NG MINLITES OCTOBER 27, 2004 Page 29 - Page 32 CondcnscltTM Page 33 Page 35 whether or not it would change from NR-2 to NR-4; iS that 1 name and address and you're allowed to speak or ask. I 2 correct? 2 don't know that we can answer but you can speak and ask. 3 MR. REICHHART: with the overlay. 3 MS. HARDIN: okay. Well, I got this letter 4 COMMISSIONER POWELL; with the overlay -- 4 today. 5 excuse me, with the -- tliank you v~ much, with an 5 COMMISSIONER POWELL: Give US your name and 6 overlay that says it's just for clmrch purposes. But if 6 address, please. 7 the church decided to buy tile land and build here as it 7 MS. HARDIN: oh, I'm sorry. I'm Judith 8 is, there wouldn't even be a hearing, as I understand 8 Hardin. I live right across from the current church that 9 that, correct? 9 they're going to move. l0 MR. REICHHART: COI'll~t. 10 COMMISSIONER POWELL: And your address 11 COMMISSIONER POWELL: Thank you. Is there 11 is -- 12 anyone else that would like to speak on this issue? 12 MS. HARm~q: That's at 1906 McCormick. 13 MR. SMITH: Can I speak? 13 COMMISSIONER t'OWELL; Thank you, ma'am. 14 COMMISSIONER POWELL: Yes, you may, sir. 14 MS. HARDIN: ^nd we've had nothing but good 15 Come forward and give us your name and address. 15 experiences with these people. The church that I belong 16 MR. SMIIH: My wife told me not to, but -- 16 to builds churches all over the world in the middle of 17 COMMISSIONER ?OWELt.: well, that's your 17 n~ighborhoods. Our temple rlght now is in a very high 18 problem, sir. 18 dollar neighborhood over in Dallas. And it is 19 MR. SMtX~: I'm Dan Smith. I live at 1517 19 esthefieally beautiful. And I can't see any way that it 20 Willowwood. I have lived on that property for about 501 20 brought down the value of those properties. I 21 years. And about ten or twelve years agb, the college was 2t There's nothing that I can think of that 22 going to buy and put seven sorority houses on that piece! 22 would be -- if there has to be a change that would be 23 of property, well, I would a whole lot rather see o~r .23 boiler than a church because it is good for the cormnunity. 24 church down there that provides something for our 24 It does give people a place to gather. It makes me feel 25 conmmnity. And we're not changing anything. We're just 25 good that the police association will be in plainer view Page 34 Page 36 I moving from one corner to the n~xt. But we've lived there t wlieu they move into the other building. I think it will 2 and flint's my old home place. And if there's anything, !I 2 give more security for our neighborhood, which has in my 3 wouldn't want something in there that would tear the value 3 mind become more multi-cultural. And some of the rental 4 of my property. I wouldn't want something that is not 4 properties, I think, are the ones that are puiliag down 5 good for our conmmnity. And I think that -- I mean, some 5 the value of the houses. 6 people may have lived there 30 years, but we've been them 6 My question was -- my main question was -- 7 a lot longer. And that's our old place and it's pretty 7 and the gentleman and -- husband and wife team that spoke 8 sentimental to us. 8 against this, they mentioned in this Ietter the removal of 9 And whichever way it gees, I just want you 9 alt of the trees. That was a big concern for me and I 10 to know Floyd, my brother, he owns property right by t.ae 10 don't take the paper, but I saw something about some new 11 side of it and he's definitely not against it, so I don't 11 tree ordinance or something. And I just wondered if all 12 know. I just wanted to say that this is our -- this is 12 of the trees are going to be removed or how many is going 13 our old home place, and I would love to sm a church 13 to be left because it is a beautiful setting right now. 14 sitting there and it's going to be sitting there, but if' 14 Also, I need to know for my own personal 15 we could build it a little larger it would be better, and 15 knowledge, how far out from the drainage channel will the 16 if it can't, it will have to be, but I just wanted you to 16 parking lot begin? i mean, how far from the drainage 17 know that we live pretty close. I live right next to it, 17 channel to the parking lot? Will them be some kind of ~ 8 so thank you. 18 buffer or are they going to plan to plant other trees or 19 COMM~SSION'~a eoweL[: Thank you, Mr. smith. 19 -- that was my main question. And I'm basically for tile 20 Anyone else would like to speak on this? Sorry. 20 move. 21 MS. HARDIN: I just have a question. 21 COMMISSIONER ~'OWELL: Thank you vea-y much 22 COMMISSIONER POWEEL: YOU may come up and 22 and we'll ask if they're -- ia there anyone else who would 23 ask. 23 like to speak? Yes, sir. 24 MS. HARDIN: Maybe tWO. 24 MR. BROWN: Good evening. My name is Ernie 25 COMMISSIONER t'OW~LL: fast give US your 25 Brown. I live at 2216 Woodbrook here in Denton.. And I've PLANNING AND ZONING MINIJTES OCTOBER 27, 2004 tge [ge CondenseltTM 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 1 2 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 2O 21 22 23 24 25 Page 37 attended fl~e Taylor Park Church of the Nazarene for nearly 40 years. And I definitely have an interest in keeping thc church in the neighborhood. We've had a wonderful relationship with our neighbors. We want to continue to do that. I would llke to make a comment, the tax status! would stay the same because the police association is taX exempt, also. e But we feel like that we will be an asset to the co~mnuuity and not a liability. I don't think there's any proof that I know of that a church lowers th value if it's done properly and when we spend a million! dollars or more, we're going to have a real interest in a quality building. And you can be assured that we wilt do everything that we can working with the architect to sm that that would happen. Thank you. COMMISSIONER POWELL: Thank you. I'll asl~ if there's any other speakers -- any other speakers? MS. NORDSTROM: J"LISt one conunent? COMMISSIONER POWELL: NO ma'am. Any et[ er speakers, raise your hand. Seeing none, Iql ask the applicant if he would like to rebut. MR. RAMSEY: This doesnrt have anything to do with the zoning really, but just to answer the question about the -- we have at least a 20 setback from where channel actually is drawn in and starts. And so there's 1 2 3 4 5 6 7 8 9 10 1 2 3 .4 15 16 17 18 19 20 21 22 23 24 25 Page 39 university doesn't have classes. I wonder the size and scope and whatnot looks like it would be a pretty nice operation to me. Thank you, sir. COMMISSIONER POWELL: Any other couullents or discussion up here? If not, the Chairman is looking for a motion. Mr. Roy. COMMISSIONER ROY: weI1, thinking about some of the issues that were raised, this is rated -- or zoned NR-2 at this time. And if it were to be developed as a residential area, I think that the average traffic impact just intuitively would be much higher on the neighborhood than a Sunday church, although I realize that churches have activities all during the week. But it just seems like that the overall negative impact traffic-wise, would be worse if it were actually developed in residents. And the fact that it's going to be developcd under the new rrm ordinance will protect those trees to a degree or there will be some compensation according to the ordinance. So I'm ready to make a motion -- COMMISSIONER POWELL: I'Ve got one more speaker, if I may, sir. COMMISSIONER ROY: okay. Please. COMMISSIONER POWELL: Then I'1I come back to you, if I may. Page 38 pretty good buffer zone there. We had -- one of our real concerns was to keep every tree we can. If -- anyone who knows that area knows we have these big, giant post oak trees and they're beautiful. We expect to lose two -- two of the big post oak trees where this building will sit and! one other smaller tree. And we'll, of course, be replacing those in keeping the ordinance. But, anyway, just in answer to those questions, that's where -- we're concerned about the same things. So, thanks. COMMISSIONER POWELL: At this time I will close the public hearing and ask for comments, discussion from the Colmnission. I don't see any names yet. Mr. Roy. COMMISSIONER ROY: it's not working. COMMISSIONER POWELL: YeS, it is. Now~ it COMMiSSiONER ROY: On the ~ ordinance, would staff clarify, is this project subject to the new tree ordinance or not? MR. RE[CHHART: It will be when it comes in for platting and site design. COMMiSSiONER POWELL: Mr. Wah~Jns. COMMiSSiONER WATKINS: Thm~k you, Mr. Chairman. Assuming that this congregation meets on Sunday, I don't see where the transportation situation is that bad. That's probably the only day that the 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 Page 40 COMMISSIONER ROY: PleaSe. COMMISSIONER POWELL: Mr. Noble -- excuse me, Dr. Noble. COMMISSIONER NOBLE: I have a question for staff. And it's concerning the note -- the opposition and I don't have that at -- do you have that graph, the color graph available? My question is on the homes that are on McCormick, apparently there's one house there that is opposed on those homes on McCormick. Is there -- did we not receive any information with the other homes that are located on that street? MS. LIANG: The only response we received from that street is that one house there. Staff did not receive any other responses. COMMISSIONER NOBLE: SO yOU have an opposition of 5.18 percent and what about in favor? Do -- will we assume that this is 100 percent and the ones iu favor would be 95 or whatever percentage that would be? MS. LI^Na: would you like to know the percentage for the ones in beer? COMMISSIONER NOBLE; YeS~ please. MR. SNYDER: It*S just the ones in green that arc in favor, not the rest. COMMISSIONER NOBLE: Right. I'm wondering how do they come up with this 5.18 percent in opposition. PLANNING AND ZONING MINUTES OCTOBER 27, 2004 Page 37 - Page 40 CondenseltTM 1 2 3 4 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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 MR. SNYDER: That's percentage of the total land area within the 200 feet. COMMISSIONER NOBLE: I S~. Thank you. MS, LIANG: For yOtlr information tho percentage in favor is 9.43 percent. COMMISSIONER NOBLE: Thank you. Page 41 1 2 3 4 5 6 MS. LIANG: YOU'i~ welcome. I COMMISSIONER POWELL: Any other cormnents at this stage of the gmue? Seeing none, Mr. Roy was about to make a motion and I asked for permission to shut him clown a lllOmellt, COMMISSIONER ROY: I move approval of this zoning change, Item SA. I COMMISSIONER STRANGE: Se~oIld. COMMISSIONER POWELL: I have a motion fron Mr. Roy, a second from Mr. Strange. Any other comments or discussion? Seeing none, I'll cai1 for a vote. Motion passes 7-0. Page 42 7 8 9 10 1I 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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 Page 43 Page 44 PLANNING AND ZON-ING MINUTES OCTOBER 27,2004 Page 41 - Page 44 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 (NR4) ZONING DISTRICT CLASSIFICATION AND USE DESIGNATION, WITH AN OVERLAY DISTRICT, FOR APPROXIMATELY 6.7 ACRES OF LAND LOCATED GENERALLY ON THE SOUTHWEST CORNER OF WlLLOWWOOD STREET AND MCCORMICK STREET IN THE CITY OF DENTON, DENTON COUNTY, TEXAS; SUCH OVERLAY DISTRICT ESTABLISHES DIFFERENT REGULATIONS THAN WOULD BE NORMALLY PERMITTED IN THE NR-4 DISTRICT, RESTRICTING PERMITTED USES TO CHURCHES ONLY; PROVIDING FOR A PENALTY IN THE ~ AMOUNT OF $2,000.00 FOR VIOLATIONS THEREOF, A SEVERABILITY CLAUSE AND AN EFFECTIVE DATE. (Z04-0039) WHEREAS, Taylor Park Church of Nazarene has applied for a change in zoning for approximately 6.7 acres of land particularly described in Exhibit "A" attached hereto and made a part here of 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 with an overlay district; and WHEREAS, on October 27, 2004, the Planning and Zoning Commission recommended approval of the requested change in zoning; and WHEREAS, the City Council makes the following findings: a. The change in zoning, including the overlay district, is consistent with the Comprehensive Plan; and The overlay district will protect and enhance the Property and surrounding area which are distinct from lands and structures outside of the overlay district and the immediate neighborhood; and The regulations imposed in the overlay district serve important and substantial public interests by preserving the integrity of the neighborhood surrounding the overlay district while offering a.different type of residential home to the public and the neighborhood; NOW, THEREFORE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The findings and recitations contained in the preamble of this ordinance are incorporated herein by reference. SECTION 2. The 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 designation, with an overlay district (the "Overlay District") containing the following regulation: Permitted uses are restricted to churches only. The above regulations shall control within the Overlay District over any conflicting regulations for the NR-4 zoning district contained in the Denton Development Code. SECTION 3. The City's official zoning map is amended to show the change in zoning district classification including a reference to the Overlay District. SECTION 4. 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 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. SECTION 6. 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: Page 2 Exhibit A FIELD NOTES to all that certain tract of land situated in the A.N.B. TOMPKINS SURVEY, Abstract No. 1246, in the City of Denton, Denton County, Texas and being a part of Lot 1 and a part of Lot 2, Block 2, HOME ACRES ADDITION, an addition in the City of Denton, Denton County, Texas according to the Plat thereof recorded in Volume 1, Page 7-1/2 of the Plat Records of Denton County, Texas, also being a rcsurvey of a called 6.674 acre tract of land described in tho deed from Mel Wheeler, Inc. to Denton Shop with a Cop, Corporation, as recorded in County Clerk's File No. 97-R0049971 of the Real Property Records of Denton County, Texas; the subject tract being more particularly described as follows: BEGINNING at a ½' iron rod found for the Northeast comer of said 6.674 acre tract in the recognized South line of Willowood Street, from which the Northeast comer of said Lot I bears North 00 degrees 25 minutes 50 seconds East at a distance orS.00 feet; THENCE South 00 degrees 25 minutes 50 seconds West with the East line of said tract and said Lots 1 & 2 a distance of 703.66 feet to the Southeast comer of said tract and said Lot 2; THENCE North 88 degrees 40 minutes 18 seconds West with the South line of said tra~t and said lot a distance of 413.10 feet to the Southwest comer of said lot; THENCE North 00 degrees 25 minutes 52 seconds East with the West line thereof a distance of 704.00 feet to an "X" cut found for the Northwest comer of said tract tract in the recognized South line of Willowood Street; THENCE South 88 degrees 37 minutes 28 seconds East with the North line thereofa distance of 413.09 feet to the PLACE OF BEOINN1NG and enclosing 6.674 acres of land, more or less. I.E. Thompson RPLs_ ,._ ::L--~/485~"~''-'- DATE AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: CM/DCM/ACM: December 7, 2004 Planning and Development Department Jon Fortune, Assistant City Manager SUBJECT - Z04-0042 (Lake Forest Good Samaritan Twin Homes) Hold a public hearing and consider adoption of an ordinance rezoning approximately 38 acres of land from Neighborhood Residential 4 (NR-4), and Neighborhood Residential 6 (NR-6) zoning districts to Neighborhood Residential Mixed Use (NRMU) zoning district with an overlay district. The property is generally located south of Ryan Road at Montecito Drive. The Planning and Zoning Commission recommends approval. BACKGROUND Applicant: CADM Architecture Denton, TX The applicant requests to rezone the subject property from Neighborhood Residential 4 (NR-4) and Neighborhood Residential 6 (NR-6) zoning districts to Neighborhood Residential Mixed Use (NRMU) zoning district with an overlay district. The Planning and Zoning Commission recommended approval with the conditions to 1) restrict the uses allowed to senior housing exclusively and 2) limit the number of permitted units to 444. Staff held a pre-design meeting with the applicant on September 17, 2004. Public notification and property owner responses are provided in Attachment 3. As of this writing, staff has not received written response from property owners within 200 feet of the subject site. RECOMMENDATION The Planning and Zoning Commission recommends approval (7-0). OPTIONS 1. Approve as submitted. 2. Approve with conditions. 3. Deny. 4. Postpone consideration. 5. Table item. RECOMMENDATION See Staff Analysis (Attachment 1). ESTIMATED PROJECT SCHEDULE The subject property is platted. A building permit may be issued provided that the proposed use is permitted. ATTACHMENTS 1. Staff'Analysis 2. Maps 3. Public Notification (Property Owner Notification Map) 4. Site Photo 5. Aerial Photo 6. Letter of Intent 7. Proposed Overlay Content 8. October 27th P&Z Meeting Minutes 9. Ordinance Prepared by: Chingyun (Kay) Liang Planner I Respectfully submitted: Kelly Carpenter, AICP Director of Planning and Development ATTACHMENT 1 Staff Analysis Summary_ of Zoning Request The applicant requests to rezone approximately 38 acres of land from the Neighborhood Residemial 4 (NR-4) and Neighborhood Residemial 6 (NR-6) zoning districts to Neighborhood Residemial Mixed Use (NRMU) zoning district with an overlay district. The intern of the overlay is to restrict the uses allowed to elderly housing only and restrict the number of units allowed to 444. The proposed zoning change would permit the expansion of existing senior housing. Existing Condition of Property The subject property is curremly used for senior housing. The subject property was within PD-22 prior to the adoption of the Denton Development Code. The following is a chronology of PD-22 related to the subject property: Ordinance No. 77-5 - Annexed the subject property imo the City of DeNon, and established the Planned Developmem (PD) District Classification. Ordinance No. 77-39 - Adopted the general concept plan for the PD and established the use of elderly housing on the subject site. Ordinance No. 79-36 - Approved the General Site Plan for the PD. Ordinance No. 81-50 - Changed the zoning designation from Planned Developmem (PD) District Classification to Planned Developmem 22 (PD-22) District Classification. Ordinance No. 88-159 - Approved amended site p lan. Ordinance No. 2002-040 - Established the currem NR-4 and NR-6 zoning designations. Adjacem Zoning North: Neighborhood Residemial 2 (NR-2), Single-Family South: Neighborhood Residemial 2, 4, and 6 (NR-2, 4, and 6), Single-Family and Park Land East: Neighborhood Residemial 6 (NR-6), Park Land West: Extraterritorial Jurisdiction (ET J), Vacam Comprehensive Plan Analysis The subject site is located in the "Existing Neighborhood/Infill Compatibility" and "Neighborhood Center" future land use areas. The Denton Plan states, "Within established residential areas, new development should respond to existing development with compatible 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." In addition, "Within the undeveloped urban and urbanizing areas of the city, new neighborhoods may develop in traditional patterns. Mixed-use and mixed housing types will be allowed to develop in a pattern of 'neighborhood cemers'. Residemial uses may occur at higher density..." The proposed rezoning is in compliance with the Denton Plan. Development Review Analysis Access Access to the subject site is from Ryan Road and Montecito Drive. Ryan Road is classified as a secondary arterial, and Montecito Drive is classified as a collector street. The proposed development will require a new or amended Traffic Impact Analysis (TIA) for determination of additional access improvements during platting of the property. Public Infrastructure Public utilities are in place to serve the site. Wetland and upland forest area exist on the southern portion of the site. Senior housing was a permitted use in PD-22. However, it is not a permitted use in the NR-4 zoning district. NR-6 zoning district allows the senior housing with the approval of an SUP, but the 6 units per acre limitation does not support the existing 237 units. The applicant proposes the rezoning request from NR-4 and NR-6 to NRMU in order to continue and expand the existing use of senior housing. The proposed overlay district would limit the number of dwelling units allowed to 444, which average to approximately 12 units per acre. A comparison among uses allowed in the NR-4, NR-6, and NRMU zoning districts is provided in the following charts. Single Family Dwellings P P N SUP SUP Accessory Dwelling Units L(1 ) L(1 ) N Attached Single Family Dwellings SUP P L(40) Dwellings Above Businesses N N P Live/VVork Units N L(16) P Duplexes L(3) P N Group Homes N N SUP SUP Multi-Family Dwellings N N L(4) Manufactured Housing Developments N SUP N Hotels N N P Bed and Breakfast N N P Retail Sales and Service N N L(17) Restaurant or Private Club N N L(11 ) Drive-through Facility N N SUP Professional Services and Offices N N L(17) Quick Vehicle Servicing N N SUP Laundry Facilities N N P Outdoor Recreation P P SUP Administrative or Research Facilities N N L(14) Broadcasting of Production Studio N N L(14) Bakeries N N L(21 ) Veterinary Clinics N N P Community Service N N P Semi-public, Halls, Clubs, and Lodges SUP SUP P Business / Trade School N N L(14) Adult or Child Day Care SUP SUP P Kindergarten, Elementary School SUP SUP P Middle School N N P High School N N SUP Elderly Housing N SUP P Medical Centers N N P The following limits apply to subdivision of 2 acres or less: Minimum lot area (square feet) 7,000 6,000 2,500 Minimum lot width 50 feet 50 feet 20 feet Minimum lot depth 80 feet 80 feet 50 feet 20 feet Minimum front yard setback L(2) 10 feet None Minimum side yard 6 feet 6 feet 6 feet Minimum side yard adjacent to a street 10 feet 10 feet None Minimum rear yard 10 feet 10 feet None The following limits apply to subdivision of more than 2 acres in lieu of minimum lot size and dimension requirements: Maximum density, dwelling units per acre 4 6 30 Minimum side yard for non-attached buildings 5 feet 4 feet 12 feet The following limits f to all Maximum lot coverage 60% 60% 80% Minimum landscaped area 40% 40% 20% Maximum building height 40 feet 40 feet 65 feet 10 feet 10 feet 20 feet plus 1 plus 1 plus 1 foot for foot for foot for each each each Minimum yard when abutting a single- foot of foot of foot of family use or district building building building height height height above above above 20 feet 20 feet 20 feet L(1) - Accessory dwelling units are permitted, subject to the following additional criteria: 1. The proposal must conform ~vith the over,il n~axin~um lot coverage and setback reqLdrements of the underlying zone. 2. The maximum number of accessory dxvelling un/ts shall not exceed 1 per lot. 3. The maximum gross habitable floor area (GHFA) of the accessory residential structure sh~Jl not exceed 50% of the GHFA of the primary residence on the lot, and shall not exceed 1000 sq. ft. GHFA unless the lot meets the requirements of L(1).5. 4. ()ne addition~J parking space shall be provided that conforms to the off-street parking provisions of this Chapter. 5. The maximum gross habitable floor area (GHFA) of the accessory residential structure sh~Jl not exceed 50% of the GHFA of the primary residence on the lot, xvhere the lot size is equal to or ~eater than ten acres in size. An SUP is not required for such an accessory residential structure xvhere the lot size is equal to or greater than ten acres. 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. L(4) - Permitted as part of a mixed use development of ten (10) acres or more and only in conjunction with office, retail or other permitted commercial or institutional uses. L(ll) - Limited to sit down only, and no drive up service permitted. Limited to no more than 100 seats and no more than 4,000 square feet of restaurant area. L(14) - Uses are limited to no more than 10,000 square feet of gross floor area. L(16) - Uses are limited to no more than 1,500 square feet of gross floor area per lot. L(17) - Uses are limited to no more than 25,000 square feet of gross floor area per use, except grocery stores may be larger with approval of an SUP. L(21) - Bakery and bottling areas not to exceed 2,500 square feet. Sales on premises of products produced required in this zone. L(40) -Limited to a maximum 12 units per acre. Staff Findings The proposed zoning change is compatible with the Existing Neighborhood and Neighborhood Center future land use designations, and is in compliance with the intent of the Denton 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 Neighborhoo ATTACHMENT 3 Notification Map NORTH Limits of 500' Notification Limits of 200' Notification SITE Scale: None Public Notification Date: October 12, 2004 200' Legal Notices* sent via Certified Mail: 15 Number of responses to 200' Legal Notice: · In Opposition: 0 · In Favor: 0 · Neutral: 0 Opposition' 0% *A copy of the notification list can be obtained at City Hall West, 221 N. Elm Denton TX 76201 ATTACHMENT 4 Site Photo Photo 1' View of subject property from Ryan Road. ATTACHMENT 5 Aerial Photo ATTACHMENT 6 Sq:ncmb~ 21, 20~ Lake Forest ~o~ S~ari~x V~ag¢ Twin H~es Phase 2 3 901 Mon~ito Drive ~nt~n, T~as Amhiteet Prqie~l 0247 LETTER OFiNTENT Almproxkmately thxee years ago the Lake Fmmst Good Samaritan VilI~ tec&v.~xt appm'val fm the Ci~ o£Dea~ton to develop s~ea Twin Homes (d~lexes) at the northwest c. omer of the Ryan RoadEvlont~ito Drive interseetiom Follo~g slr~ordy 6hereafler fl~ City remn~ ~e pm~ly from its odgi~l PD-22 to NR4~ Though this rezoning did not affect the original Twin Home d~,~elopment (which was mcenffy completed), it d~s app~_x to have p~aced the majori~ of the uses con~ on tho prope~' in viol~on of its zonir~g ¢l~sificatiom It is for t~s reason that ~¢ O~mer is ~tioning the CiOy of Denton to Imve fins pro~y ~ezoned from ~s c-urrenI NI~.,-4 to a NR~J ~ni~g~ If the requested re~n~g is grant~ i~ is rite O~ner's ~lent to m~ue T~qm Home development, s~I~ m that m~ffy ~let~, ha ~e poffi~ of the pr~ ~di~ as "Pro. seal P~t~'e 2 Twin Home Devd~ment'[ ~e existing ~ent b~l&ngs c~r~fly occKvsqng ~e s~m ;alii ~ mnoved ia ord~ t~ fl~o ~pos~ d~'e~m~t m occ~, Two o¢ ~e ~i~ng ~mnt buildings w~e mow last v~. w~ch mg~¢r those yet m be re~, ~s 26 ~m~ts. ~o pt~ Twin H~ne dev~nent w~ ~mist of 28 new ap~n~, ha ~ ~D~ign M~ng held ~ S~tembet i Z 20~, it was the mn~ of d~m~ ~e~lt thru a net incre~ of e~y 2 ~ent unk~ would presto no M~fi&aat ~,t ~n ~e ~isdng p~lic ~ifles sepdng Ce prope~s We request your favorable cxm~Jcleration oftlhis pefidon, Respectf~ly submit~cd, , INC. BCD:taw Al{A, NCARB l.G, CONNELLY AIA JONf4 g, AgB¢O~ 8L&g. EE¥ C, DUNN A~ BRIAN MONROE AIA FL C:A# gA-2.bt.~14 12 ATTACHMENT 7 October 4, 2(104 Lake Forest Good Sanmritan Village Twin Homes Phase 2 3~1 Montecito Drive Dentov,, Texas Architect Project 0247 LETTER OF INTENT The Owner hereby r~uests that the petition to l~'we thek property rezoned to N~MU ~ amenaed to include ~ Overlay ~et that would li~t development to a m~imm of ~ traits, ~ figare h~ been determined by m~tiplyLng ~e property acreage (37,989 ac~) by ~e maxim~ ckmsity allowed under NRMU-12 requirements (12 u~ts/a~e). Reslx~c.~tly submi~l, CADM AR~ECTURE, INC. Biakely C~ Dmm~ AIA, NCARB BCD:taw CADM ARCHITE~URE, I~¢, 105 No~ Jockmn ~! D~o, ~a~s 71730 ~one (870)~3-7~7 fox (~70) ~l¢cad~rchJt~,,c~m T.G, CONN~LLY AiA JOHN B, ABBOTT AJA §~L¥ C, DUNN W, iI~RIAN MONROE CADM ARCIHTECIURE, Inc. 222 North P!r'~e Moon,olio, Arka~ p~ne (870) 23&7~ FL CA# AA-26OO0814 13 CondenseltTM 6 7 8 9 10 ll 12 13 14 15 16 17 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 t3 14 15 16 17 18 19 20 21 22 23 24 Page 45 COMMISSIO~ POWELL: we'll go to 5B, rezoning of approximately 38 acres of land from Neighborhood Residential 4 and Neighbo&o0d Resldentild zoning districts to Neighborhood Residential Mixed Use zoning district with an overlay district. Ms. Liang, MS. LLANO: Yes, thank you. Good evening again. The applicant has requested a change of zone fr¢ m NR-4 and ~qa-6 to NRMU wit]l an overlay district. The purpose of the overlay district is to restrict the number of units allowed to 444. Prior to the 2002 zoning updat the subject property was within ~,D-22 with a use designation for retirement center. The site is currently dcweloped as a elderly housing facility, The applicant is looking to expansion however, the current NR-4 and NR-6 zoning districts do not allow the expansion, NR-4 zoning does not allow elderlyI housing and NR-6 allows the use with an SU?, but the I maximum density allowed is six units per aero. The applicant requests for NRMU, instead of NgMuq2 due to a limitation in NRMU-12, which bruits development to 55000 square feet. 15 legal notices were mailed out and staff did not receive any written responses at this point. The staff reconunendation is approval. Thank you. COMMISSIONER POWELL: Thank you. MS. LIANG: You're welcome. 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 Page 47 NR-6 and so the unfortunate thing about that change is that not only does it preclude the owner from continuing this development, or continuing the development of the twin homes to meet that need, it essentially rendered the existing uses of the property in violation with the current zoning ordinances. And our petition to you tonight is simply to change the current NR-4. NR-6 designation to one which more accurately reflects the actual use of the property. Through several meetings and conversations with the DRC staff, and I would like to say that they've been extraordinarily helpful to us in this process. It was determined to proceed with the petition in an NRMU zoning designation with an overlay district that would limit the number of units to 444. Initially NRMU-12 was considered but because of the fact that the existing area on sitc exceeded the limit, the maxhntm~ limit for an ~aMU-12. at that point it was determined that an NRMU with the zoning, with the overlay district would be the most appropriate way to proceed. And just so that you'll know how we came up with the 444 cap on the maximum number of units is because initially the thinking was NRMUq2 was the most reflective of the use of the property, we simply took the limit of 12 units per acre that would be afforded under SRMU-12 and COMMISSIONER POWELL: Is the applicant Page 46 here? I'1l open the public liearing and ask for the applicant to come forward. Give us your name and address. MR. DUNN: Good evening, Mr. Chaimmn, members of the Conunission. My name is Blake Dunn &nd with CADM Architecture and we are the architects workin~ with the Lake Forest Good Samaritan Center on this particular project. Just very briefly, just a quick background of the reason we're before you tonight is approximately tht~e years ago, this Conunission granled approval of a proposed project on this campus, that consisted of that point of a seven unit twin home development to be located at the southwest corner of the entrance to the campus. As this project approached its conclusion, it became very evident that the demand for additional housing or demand for housing on this campus restricted to residents 62 years of age or older, exceeded that which was being provided in the initial development. At that point the Lake Forest Good Samaritan Village rcquestcxl me to look into potential options and places upon their property that a phase 2, Twin Home Development could be begun. As we started that process, we found out at that point that the original zoning designation of PD-22 had been changed to NR-4 and 1 2 3 4 5 6 7 8 10 11 12 13 14 15 16 17 18 19. 20 21 22 23 24 25 Page 48 applied that to the number of acres on the property rounding down from just under 38 acres to 37 and multiply it times 12 brought us to tho total of 444. With that I respectfully request your favorable consideration of this petition and ready to answer any questions that you might havc~ COMMISSIONER POWELL: Any questions of the applicant? Mr. Strange followed by Ms. Holt. COMMISSIONER STRANGE: YOU mentioned that this would correct some existing zoning and allow the current uses to fall now under what would be approved zoning. How many existing units would be affected? And then following up with that, how many new units would that then allow you to build? MR. DUNN: The current calculation that we have on the number of units on the property is 297, I believe. Bear with me just a ~noment, 295 units, which is roughly equivalent to 7.76 units per acre. And so what this -- changing it to an NRMU with overlay district at 12 units per acre would increase that by 150 roughly. COMMISSIONER STRANOB: And how many of 38 acres will those 150 go on? MR. DUNN: well, what we've done is we have identified two potential areas for a future phase Il, maybe a phas~ ti and a phase It~ of the twin homo PLANNING AND ZONING MINUTES OCTOBER 27,2004 Page 45 - Page 48 CondenseltTM 5 6 7 8 9 10 Il f2 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 2i 22 23 24 25 Page 49 development. The most desirable for the owner at this point would be to proceed with the southeast comer of the intersection opposite the one that was just recently completed. And that area, we have identified a maximum' number of dwellings or a nmnber of buildings there at 14 which would be a total of 28 units there in that p~ece of property. And just so you'll know currently cx~st~ng on that piece of property there are 26 that are in more bfa townhouse sort of arrangement. / So the adjustment is very minimal, youknow roughly -- COMMISSIONER STRANGE: Kind of a swap-out then? [ MR. DUNN: Just more or less a swap-out, [ that's correct. In fact two of the buildings have already been removed that would -- were included in that ~6. The second area that we're looking at is south of the pr?perty down adjacent to the luke and there are a lot of concerns there, topography is one. You've heard dxscussmnS about flood plain matters. That's a big consideration for us. And I'm going out on a limb here. But I think at that point for a twin home development we were lookin~ at approximately 33 units depending on which schem~ we ultimately went with which would be 66. / So that would be 66 plus 28, I'm not amath Page 50 whiz, but 74, 75. This particular client, the Lake Forest Good Samaritan Center is but a part of a larger organization the Evangelical Lutheran Good Samaritan Society headquartered in South Dakota. And one thing that 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 Page 51 Ideations it's n fit, some Ws not. It's demand driven. If there's not a demand for it, they're not going to build it. COMMISSIONER POWELL: Ally other questions of' the applicant? I'm sorry. Ms. Holt you were up before. COMMISSIONER HOLT: YeS. W~en you talk about twin homes, you mean like a duplex? MR. DLINN: That'S a duplex. That is within the society, the owner, that's what tho refer to, instead ora duplex, it's a twin home. COMMISSIONEP, HOLT: And these would sort of match the ones that are on the southwest corner that are currently built and you want to do these on the southeast corner? MR. DUNN: Thatr$ correl3t. COMMISSIONER HOLT: okay. And how many of those units did you say would be there? MR. DUNN: The maximmn number that we have identified fitting on that parcel, if you will, are 14 buildings, 28 units. But you're absolutely right. The intent is we would use the same floor plans. COMMISSIONER HOLT: Right. MR. DUNN: Plus improvements that we've identified as we've done these things. And obviously, Page 52 we'll have to make some adjustments to the exterior, too, to meet the current rcquimnents. But the plan is to make that ultimate development mirror as much as possible what was recently completed in terms of the esthetics of the they have done as a growing project type have been construction of what they call senior housing services. ltrs a congregate apartment building. But their standard prototype are 12 units. The largest one that I've seen them build has been 55. So that would be one 174 plus the -- or 74 plus the 55, roughly 120, if they were to go to one that large. And if that were to happen, it would go at the southern part of the property. COMMISSIONER STRANOE: well, your first ninth is off, it's 96. MR. DUNN: okay. I'm an architect. We don't do math. Did that answer your question sufficiently? COMMISSIONER STRANGE: BUt your main rims here is to go with what you're referring to as the twin unit concept? MR. DLrNN: Yes, their honestly there's been no discussioo about a future congregate apartment projec~ on this site. I do kuow and I've worked for -- I've worked for them in eight different states now. Some 5 building and landscaping, et cetera. 6 COMMISSIONER HOLT: okay. Now, you're 7 talking about in the back of that piece of property 8 putting possibly the apartment building? 9 MR. DUNN: That would be essentially the 10 only -- the acreage we're talking about right now, that 11 would be the only potential site for that. But ali of our 12 designs at this point, schematic studies have been for 13 continuance of the twin home development in that area. I 14 just mentioned that as that is one thing that we've seen 15 in other campuses. 16 COMMISSIONER HOLT: well, now where are the 17 rest of these going to go then7 I mean, that would be it? 18 That apartment like building would be the other 400 units? 19 MR. DUNS: well, the 444 would include the 20 295 that currently exist there. So ns to what we've 21 identified now it would be 295 plus 28 plus -- 22 COMMISSIONER HOLT: okay. You have two -- 23 I'm sorry. I didn't understand that. You have 295 units 24 on there already? 25 MR. OUNN: That's correct. PLANNING AND ZONING MINUTES OCTOBER 27, 2004 Page 49 - Page 52 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 iCondonsolt Page 53 COMMISSIONER HOLT: Okay. That makes a big difference. MR. DIJNN: We're not requesting to add 444. We're asking to lhnit the total devdopmcnt on that property to no more than 444 inclusive of those which currently exist. COMMISSIONER HOLT: Okay. Thank you. COMMISSIONER POWELL: Mr. Roy. COMMISSIONER ROY: This question is probably best -- is best answered by staff. The request for us is for NRMU with an overlay district or overlay to limit the use to a certain thing, which is basically modifying NRMU. Cannot we go to NRMU-12 and put an overlay on it to reduce that area of restriction? To me, it's the same thing. It's modifying an existing zoning designation by some action on Sur part. MS. LIANG: If I may -- / COMMISSIONER POWELL: oh, yes, absolutely. MS. LIANG: NRMU-12 zoning district restricts the total square footage of the development to 55,000 square feet. And I believe staff needs to / rediscuss the type of overlay ~at actually loosened the restriction within a zoning district and at this point I have to actually refer hSis question to legal or to Larry. MR. REICHHART: We can do it either wayI we 54 believe, not knowing what the total square footage is to develop, you know, we could just totally remove that restriction, but I mean, it works out -- it's about the same either way, but we could have done it the other way, 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 too. COMMISSIONER ROY: well, let me say more clearly why I bring that up. And while I have a great respect for the organization and I have good knowledge, the organization, the NRMU, if something changes, and th, decide not to develop that area, say, in the south, where there's not property -- and we rezone it to NRMU and the only -- well, just look at the uses that NRmJ would allow; in that ama versus NRMUq2 and we just went through thi~ on another zoning case. I'm just uncomfortable with tho! Page 55 appropriate an as Kay mentioned the ~- once we saw that maximum limit of 55,000 square feet, at that point we felt that was not an option for us. The owner is open to either scenario that's being discussed, either to removing or modifying that maximmn square footage under NI~MU-12 as an overlay to an l'mMUq2 or adding to the NRMU overlay district language to limit the nmnber of uses to be reflective of what you would have if you had NRMUq2. Essentially, it seems to me to be two ways to get to the same place, but, yes, we discussed that and we am open to either one of those scenarios would perfeetly suit us. COMMISSIONER ROY: Thank you. COMMISSIONER POWELL: I have one card in support that would like to speak. Mr. Drumb. Please give us your name and address, sir. MR. DRUMa: My name is Gary Dmmb. I live at 3828 La Mancha Lane. That's right on the corner directly across Ryan from the proposal here that y'all are considering. Members of the Cormnission and Mr. Chairman, I don't really have an opinion in support of or in opposition to this. I don't even know if this is the correct forum. I have some questions I want to ask. Is Page 56 this the correct forum for this? COMMISSIONER POWELL: YOU can ask them, sir, and if we're -- if we can answer them, we'll try to help you and perhaps the applicant can. 5 6 7 8 9 10 11 12 13 14 could. NRMU as opposed to NRMU-12 and if we can modify the NRMIJ, it seems like we ought to be able to modify the lqRMVq2. And my understanding is if I understood what the applk ant said, the NRMU-12 is fine except for this limitation. MS. UA~O: ^nd the applicant is actually open to adding on to the overlay district restricting other type of uses, undesirable uses in NRhrO. SO if I may let the applicant address that. MR. DUNS: ^S I've mentioned earlier in our initial review of what would be required for a zoning change, it appeared to us that NRMU-12 was the most MR. DRUMB: Or possibly the architect COMMISSIONER POWELL: YeS. MR. DRUMB: okay. That's fine. COMMISSIONER POWELL: NOW, if yOU can ask the applicant directly you could save us time. But if you think it needs to be public, go to it. MR. DRUMB: yeah. I think it would probably -- if there's anybody else here in the neighborhood that might have these same questions that 15 16 17 18 19 20 21 22 23 24 25 I've got. So first of all, what I would like to ask is how imminent are these building plans with respect to the new duplexes or twin homes that they am building in rite southeast corner of this property? Is this something they're going through with in the near future? Or is this just a proposal? COMMISSIONER EOWELL: I'm going to let the applicant answer that when he comes back up here. He will come back up after you're finished, sir. MR. DRUMB: ^11 right. The other question that I've got, are there any new streets that will have to PLANNING AND ZONING MINUTES OCTOBER 27, 2004 Page 53 - Page 56 CondenseltTM 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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 Page 57 be opening on to Ryan to cover this, because I think in that particular place, with that dangerous hill that we've got there opening on to Ryan off of La Mancha, that's a death trap waiting to happen there. And if you've ever driven there in a car, you understand what I mean. And the other thing -- question that I have is landscaping and benns, if these duplexes are going to be bermed like the existing new duplexes that they've got on the other corner. And I think that is -- needs to be addressed or answered in terms of what -- future four-Inning that Ryan Road is going to have to have. I think all of you would realize one of these days Ryan R )ad probably will be four-laned and when it is, do we lose any of the benns and the landscaping that are up there. And the other question -- well, I guess for tonight, that just about covers it. As a resident, these are just questions that I had. This is the first I heard of this. , So if the architect could answer these, I certainly would appreciate it. COMMISSIONER POWELL: Thank you very much, sir. That's the ouly card I have here. Is there anyone else that would like to speak for the 'issue? Anyone like' to speak against the issue? In that case, I will close the public hearing. Excuse me. No, I won't close it yetI Page 58 I will ask the applicant to come up and rebut or possibly answer some questions that have come up. MR. DUNN: Yes, Mn'. Chairman. I understood that there are tin'ce questions essentially tonight about this project. That's a copy of a preliminary site plan that we have prepared just to identify how many units we could possibly fit, This is Ryan Road running easffwes~. This is the existing Montecito Drive, which is the / entrance to thc Lake Forest Good Samaritan Village. You can barely see it here. But that is the road that was recently completed or recently constructed as part of the! Phase I twin home development. What our plan shows is that - and I'm going to address these out of order as they were presented if you -- if that's okay. But with regards to the streets~ there will be no new skeets that would be connected to Ryan Road. We will simply - we are 1 2 3 4 5 6 7 8 9 10 11 t2 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 1I 12 13 14 15 16 17 Page 59 And I've been on Ryan Road enough to know there's a lot of traffic there. And if we -- we don't want to do that if we can avoid it, and so we've been successful at this point of not doing that. With respect to the second question related to benuing, the intent is and the plans are, and unfortunately, this particular drawing doesn't show that is that this development would be for all practical purposes exactly the same as the previous development and it does indeed include benning along Ryan Road. The residents like that, it's good for them acoustically. It's a good visual barrier for everyone. And the plan is that that would run from the Montecito Drive entrance eastward along the existing property line. We have had conversations about that in our pre-design meeting with the D~tC, the fact that there are some utilities across that and how do we handle that. And so it may be discontinuous in places simply to allow the existing utilities to remain in place. There's some limitations on what we can do there. But the plan is that that berm will be continuous from Montecito Road eastward along the entire frontage. So essentially from east to west along Lake Forest property it would be a berm. And the landscaping, if you've been by there, even yet, this week, it's more of Page 60 this week than it was last week, to their credit. The last question relating to the schedule is that development of these projects is determined by, as I mentioned before, demand, within the society, there is a rule or requirement that they cannot proceed until half of one of the buildings is committed to. And so when that happens, we don't know. It could be something that happens three months from now. It could be something that happens a year from now. That's a factor we just -- we don't know at this point. It's not something that's going to start next week. That would be dependent upon how quickly they're committed to. Another issue is building the infrastructure there, building the road in place first, and so that -- those are things that they're trying to work through right now in terms of the financial aspects that will give fl~em the decision as to when to proceed. proposing to add a new street that would loop in from Montecito directly opposite the current road, the current twin home road would run due east, looping it back around into existing campus circulation roads. ~o them wouid b~ no new traffic from this development injected on to Ryan Road. Again, you know, we're -- that's done I intentionally. These units are reserved for those residents 62 years of age and older. 18 19 20 Z1 22 23 24 25 question. COMMISSIONER STRANOE: That answers my Thank you very much. MR. DUNN: YOU*re welcome. COMMIiS~IONER POWISLL; I8 that it, sir? MR. DUNN: Yes, sir, it is. COMMISSIONER POWELL: Thank you very much. MR. DUNN: YOU're welcome. Thank you. COMMISSIONER POWELL: [ will close the PLANNING AND ZONING MINUTES OCTOBER 27,2004 Page 57 - Page 60 CondcnscltTM 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 page 61 public hearing and open this up for discussion and/or a motion from the Cormnission. Virgil followed by Ms. Holt. COMMISSIONER STRANGE: I want to make sure -- COMMISSIONER POWELL: Is yOUr mike on, sir? COMMISSIONER STRANGE: It iS nOW. I punched it. It didn't come on. When I read this originally, I was thinking the overlay covered the points that iVh'. Roy addressed that it's going to be NRMU limifin the number of units to 444. So it would appear to me that so long as that the official doctm~ents that come out of here indicate that this is an overlay and does limit it to 444, we're covering what the applicant wants to do and correcting a current discrepancy in the land use, so I don't see any issue with it, and therefore, I can either make a motion or i wilt state that I would be in favor of this. COMMISSIONER POWELL: okay. I'm going to let staff jump in here and then i'm going to get to Ms. Holt. MR. REICHHART: The only issue is that within that NRMU which Conmfissioner Roy was pointing, out, there are other uses, the retail uses and wc could limit it to just elderly housing, NRMU with only elderly housing or go to NR~nU-t2 and remove the elderly housing Page 62 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 :24 25 restriction. Those are the two options I think we have. COMMISSIONER STRANGE: That's what I'm saying, I would think that the overlay would have to be restrictive, that it's only for elderly housing and for 444 units and what you give us is an attachment 7 to documents that is clear that's what that says, so that's what I say, ! want to make sure the language of whatever we recolmnend on to City Council is clear that this is for senior housing and it's limited to 444 units. COMMISSIONER POWELL: MS. Holt. COMMISSIONER HOLT: I'm just ready to make a motion. COMMISSIONER POWELL: Let's have a motion -- well, I'm sorry. Yeah. Let's have a motion. We could discuss the lnotion. MR. SNYDER: can I ask a question? COMMISSIONER POWELL: Absolutely. MR. SNYDER: Larry, in our Code, do we define what is meant by senior housing or do we need to M}~. RE~CnU,'mX: It would have to be elderly housing. The Code ideutifies elderly housing. MR. SNYDER: Them is a definition7 MR. REICHHART: Yes. MR. SNYDER: okay. COMMISSIONER POWELL: Yes, Ms. Holt, go PLANNING AND ZONING MINUTES OCT~ 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 63 ahead. COMMISSIONER HOLT: I'lt make the motion for approval of elderly housing overlay, Item 5B. COMMISSIONER POWELL: We have a motion from Ms. Holt. Is there a second? COMMISSIONER STRANOE: second. COMMISSIONER POWELL: second by Mr. Strange. And now Mr. Roy. COMMISSIONER ROY: I did not read the overlay as Commissioner Strange stated it. I read the overlay as proposed by staff to be simply an overlay to restrict the number of units. But not to say that that's the only use of the property; is that correct? I'm confused now. MR. REICBHART: Regardless, right now the motion is for just the elderly housing and 444 units. So, you know, for clarification the applicant is fine with that. And that is -- it serves the stone purpose now as going to ~mMU and as a matter of fact removes other uses, retail uses that you could do in the COMMISSIONER ROY: SO the overlay that we're talking about, just to make sm I understand, is to restrict the land use to elderly housing only and MR. REICHHART: -- cap at 444 units. COMMISSIONER ROY:--cap it at 444 units. 1 2 3 4 5 6 7 8 9 I0 I1 12 13 14 15 16 17 ~8 ~19 20 21 22 23 24 25 Page 64 COMMISSIONER POWELL: If MI, I].oy is finished, legal would like to jump in here. MR. SNYDER: IS the motion for NRMIJ with those restrictions? Okay. COMMISSIONER POWELL: Mr. Roy, have we helped you? COMMISSIONER ROY: YeS. COMMISSIONER POWELL' Any other cormnents or questions on this motion before I call for a vote? COMMISSIONER ROY: I'd just like to say that this is a quality development. This is something that's very much needed in our conmmnity and I'm happy to see the continuing development of this property. It looks good and it's very much the kind of thing we need in Denton. Thank you. COMMISSIONER POWELL: [ have one snlall comment. I caught ahnost an aspersion about people over 62. MR. DIjNN: Not intended that way, COMMISSIONER ?OWE[~: ~'m just kidding you, sir. I'm sorry. Is there any omcr co,reheats or questions? If not, I'm calling for a vote on the motion. Motion passes 7-0. We'll go on to future agenda items. And I tlfink legal has something -- staff does. 3BER 27, 2004 Page 61 - Page 64 ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON, TEXAS, PROVIDING FOR A ZONING CHANGE FROM NEIGHBORHOOD RESIDENTIAL 4 (NR-4) AND NEIGHBORHOOD RESIDENTIAL 6 (NR-6) ZONING DISTRICT CLASSIFICATIONS AND USE DESIGNATIONS TO NEIGHBORHOOD RESIDENTIAL MIXED USE (NRMU) ZONSNG DISTRICT CLASSIFICATION AND USE DESIGNATION, WITH AN OVERLAY DISTRICT, FOR APPROXIMATELY 38 ACRES OF LAND LOCATED GENERALLY SOUTH OF RYAN ROAD AT MONTECITO DRIVE AND LEGALLY DESCRIBED AS LOT 1, BLOCK A OF LAKE FOREST GOOD SAMARITAN Vn,LAGE IN THE CITY OF DENTON, DENTON COUNTY, TEXAS; SUCH OVERLAY DISTRICT ESTABLISHES DIFFERENT REGULATIONS THAN WOULD BE NORMALLY PERMITTED IN THE NR-4 DISTRICT, INCLUDING THE RESTRICTION OF PERMITTED USES TO ELDERLY HOUSiNG ONLY, AND THE RESTRICTION OF THE NUMBER OF PERMITTED UNITS TO 444; PROVIDING FOR A PENALTY IN THE MAXIMUM AMOUNT OF $2,000.00 FOR VIOLATIONS THEREOF, A SEVERABmrrY CLAUSE AND AN EFFECTIVE DATE. (Z04-0042) WHEREAS, CADM Architecture has applied for a change in zoning for approximately 38 acres of land legally described as Lot 1, Block A, Lake Forest Good Samaritan Village (the "Property") from Neighborhood Residential 4 (NR~4) and Neighborhood Residential 6 0'4R-6) zoning district classifications and use designations to Neighborhood Residential Mixed Use (NRMU) zoning district classification and use designation with an overlay district; and WHEREAS, on October 27, 2004, the Planning and Zoning Comlmission recommended approval of the requested change in zoning; and WHEREAS, the City Council makes the following findings: a. The change in zoning, including the overlay district, is consistent with the Comprehensive Plan; and The overlay district will protect and enhance the Property and surrounding area which are distinct from lands and structures outside of the overlay district and the immediate neighborhood; and The regulations imposed in the overlay district serve important and substantial public interests by preserving the integrity of the neighborhood surrounding the overlay district while offering a different type of residential home to the public and the neighborhood; NOW, THEREFORE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The findings and recitations contained in the preamble of this ordinance are incorporated herein by reference. SECTION 2. The zoning district classification and use designation of the Propertyis hereby changed from Neighborhood Residential 4 (NR-4) and Neighborhood Residential 6 (NR-6) zoning district classifications and use designations to Neighborhood Residential Mixed Use (NRMU) zoning district classification and use designation, with an overlay district (the "Overlay District") containing the following regulations: a. The permitted uses are restricted to Elderly Housing only. b. The maximum number of allowed units is 444. The above regulations shall control within the Overlay District over any conflicting regulations for the NRMU zoning district contained in the Denton Development Code. SECTION 3. The City's official zoning map is amended to show the change in zoning district classification including a reference to the Overlay District. SECTION 4. 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 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. SECTION 6. This ordinance shall become effective fourteen (14) days fi.om 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: ,ATTORNEY Page 2 AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: CM/DCM/ACM: December 7, 2004 General Government Betty Williams, Director of Managemem & Public Information Michael A. Conduff, City Manager SUBJECT: Hold a public hearing to afford the public appropriate notice and participation for the purpose of commeming on the cable television franchise application filed by the University of North Texas with the City of DeNon. BACKGROUND: In June of 2004, Charter Communications notified the City that the University of North Texas (UNT) had a bid out for a fiber optic network and satellite television service. After investigation of the facts and legal research, staff concluded that if the fiber optics system was used for satellite television service and any part of the system was in city right-of-ways, UNT would have to apply for a cable television ordinance. UNT representatives did confirm that the fiber optics system would be used for satellite television service to dormitories and other university buildings. UNT also provided us with a map showing that the fiber optic system would be located in city right-of-ways. The DeNon Cable Television Ordinance requires that all multi-channel video providers shall obtain a franchise from the City prior to providing service to any residem, business or person within the City, and shall have a franchise prior to the installation of lines, fibers or facilities that are in or cross any streets or public right-of-ways or other public property within the city. A multi-channel video service means multiple channels of video programming where some or all of the video programming is generally considered comparable to programming provided by a television broadcast station or by a direct to home satellite service. The UNT satellite television service would fall within the definitions of a multi-channel video system. Cable television service has historically been provided to dormitories and other UNT buildings by Charter Communications. UNT and Charter negotiate a bulk rate for this service as part of an annual contract. Charter pays the City a 5% franchise fee from these revenues. The bulk rate contract was due to expire in September 2004, but UNT did extend the contract with Charter for one more year. ADA/EOE/ADEA www.cityofdenton.com (TDD 800-735-2989) 12/1/04 UNT Cable Franchise Public Hearing Page 2 of 2 On November 22, 2004, UNT comacted the City to begin the cable television franchise application process. The application is attached. The Denton Cable Television Ordinance requires a public hearing within ninety (90) days from the filing of a cable television application, to hear all commems from the public on the application. No later than ninety (90) days after the public hearing, the city council shall make a determination to gram or deny the franchise based upon an evaluation of the application, the public hearing, and any other information deem relevant. Staff will conduct an audit of the fiber optics system and begin negotiations with UNT on the terms of a cable television franchise agreement. PRIOR ACTION/REVIEW (Council, Boards, Commission): 1. Legal Status Report on September 3, 2004 2. City Council Closed Session on September 7, 2004 3. Legal Status Report on October 15, 2004 FISCAL INFORMATION: The Demon Cable Television Ordinance requires that a 5 percem franchise fee be paid to the City based on gross revenues. UNT has informed that City that they are not collecting a separate amount from each student to cover the cost of the satellite television service, but that the cost for this service is taken out of the student's housing cost. The City will work with UNT on determining an equitable franchise fee. Respectfully submitted: ~etty Williams Director of Management and Public Information Prepared by: John Cabrales Jr. Public Information Officer Attachments 1. UNT Application ADA/EOE/ADEA www.cityofdenton.com (TDD 800-735-2989) UNIVERSITYoz NORTHTEXAS Vice President for Finance and Business Affairs RECEIVED DEC 2 2OO4 CITY MAI IAGER'S OFFICE December 2, 2004' Mr. John Cabrales Public Information Officer City Hall Denton, Texas 76201 Dear Mr. Cabrales: Enclosed is the $5,000 application fee and a completed franchise application for the University of North Texas. The University would appreciate the City Council's consideration of our application at their earliest convenience. I will look forward to discussing any pertinent issues regarding the University's application at our meeting on Friday, December 3rd. Best regards, Phil Diebel The leading univenity of the D~!!~:-Fort Worth re, on P.O. Box 310500 * Denton. Texas 76203-0500 * (940) 565-2055 Fax (940) 565-4779 * TTY (800) RELAY TX * www. unt. edu l)i~coOnl T~k~n. 0.00 Check No. 037239 ~t~ge CITY OF DENTON, TEXAS APPLICATION FOR A CABLE TELEVISION FRANCHISE This application form is to be completed by any applicant for an initial cable television franchise or by an existing Grantee requesting renewal of the cable television franchise. The City of Denton, Texas ("City") requests that the Applicant complete the following information for its use in reviewing the Applicant's legal, technical, and financial qualifications and its ability to meet the future cable-related needs and interests of the community in accordance with Section 8-31 of the City Code. All applications received by the City fi.om the applicants for an initial cable television franchise or a renewal will become the sole property of the City. The City reserves the right to reject any and all proposals and waive informalities and/or technicalities where the best interest of the City may be served. Before submitting a proposal, each applicant must: Examine the application documents thoroughly. Familiarize himself/herself with local conditions that may in any manner affect performance under the franchise. Familiarize himself/herself with federal, state and local laws, ordinances, roles and regulations affecting performance under the franchise, including Chapter 8 of the City Code. Carefully correlate the application with the requirements of this procedure and the application documents. The City may make such investigations as it deems necessary to determine the ability of the applicant to perform pursuant to the Code of the City, and the applicant shall furnish to the City all such information and data for this purpose as the City may request. City staff may request additional information or revise this application form to fit changing circumstances. The City reserves the right to reject any application if the evidence submitted by, or investigation of, such applicant fails to satisfy the City that such applicant is properly qualified to carry out the obligations of the Code of the City and to complete the work contemplated therein. No cable television franchise will be granted to any applicant unless all requirements and requests of the City regarding the legal, financial and technical qualifications and the plans for the proposed cable television system of the applicant have been met, including compliance with all applicable requirements of the City Code. Applicants, including all shareholders and parties with any interest in the applicant, shall submit all requested information as provided by the terms of this procedure or the application documents. The requested information must be complete and verified as true by the applicant. Applicants, including all shareholders and parties with any interest in the applicant, shall provide the following information regarding other cable systems in which they hold an interest of any nature: Locations of all other franchises and the dates of award for each location.. Estimated construction costs and estimated completion dates for each system. Estimated number of miles of construction and number of miles completed in each system as of the date of this application. Date for completion of construction as promised in the application for each system. Applicants, including all shareholders and parties with any interest in the applicant, shall provide the City with any documents regarding pending applications for other cable systems, including but not limited to, the following: 2. 3. 4. Location of other franchise applications and date of application for each system. Estimated dates of franchise awards. Estimated number of miles of construction. Estimated construction costs. LEGAL Contact Please provide the name, address, telephone number, fax number and e-mail address (if available) of the person that the City should contact regarding this applications. Phil Diebel P O Box 310500 Denton, TX 76203 940 565-2055 940 565-4779 (fax) diebel~unt, edu Identification of Owners: If a corporation, state the names and addresses of all officers and directors and the number of shares held by each officer and director. Also provide identification and ownership interest for each nominal and beneficial owner of one percent (1%) or more of applicant's issued and outstanding stock. If an incorporated association state the names, addresses and outstanding ownership interests of all members and ultimate beneficial owners. bo If a partnership, provide identification and ownership interest for all general and limited partners. c. If a proprietorship or other entity, provide full ownership details. If the applicant is a subsidiary, will its parent corporation guarantee the obligations and performance under the franchise? The University of North Texas ("UNT") is not a corporation, partnership, proprietorship or corporate subsidiary. The UNT is a public university authorized to operate under Chapter 105 of the Texas Education Code and is operating as an arm of the State of Texas. As such, the UNT enjoys the protection of sovereign and Eleventh Amendment immunity. Has the Applicant retained local counsel to represent the company in the renewal process? If so, please identify the firm and indicate which correspondence should be forwarded to them. This is not an application for renewal of a franchise. The UNT is represented by the UNT System Office of General Counsel. Copies of all correspondence should be forwarded to: Michelle Williams Associate General Counsel University of North Texas P.O. Box 310907 Denton, TX 76203-0907 Telephone: (940) 565-3493 Fax: (940) 369-7026 E-mail: mwilliams~unt.edu Has the Applicant or any related entity or principal ever been convicted in a criminal proceeding (felonies or misdemeanors) in which any of the following offenses were charged? The responses provided below are correct based on available information dating back twenty five years. The following responses apply to UNT and to members of the UNT System Board of Regents in regard to actions taken in their official capacity as a director or officer of this institution. YES NO a. Fraud, bribery, extortion, X embezzlement b. Tax evasion X Co Perjury, jury tampering, obstruction of justice, or other misconduct affecting public or judicial officers' performance of their public duties X do False, misleading or deceptive advertising X eo Anti-trust violations, state or federal X Violations of FCC rules and regulations X go Conspiracy to commit any of the foregoing offenses X Disposition of Criminal Charges. If the answer to any question above is yes, attach a .separate statement describing the disposition of each criminal charge, including the 'date, court, sentence, or fine. Is the Applicant, or related entity or any principal a party to or has the Applicant, or related entity or any principal, ever been a party to a civil proceeding in which it was held liable for any of the following? The responses provided below are correct based on available information dating back twenty five years. The following responses apply to UNT and to members of the UNT System Board of Regents in regard to actions taken in their official capacity as a director or officer of this institution. YES NO ao Unfair or anti- competitive business practices X bo Anti-trust violations (state and federal) including instances in which consent decrees were entered X Co Violations of securities laws (state and federal) X do False, misleading or deceptive advertising X eo Violation of FCC roles and regulations X Disposition of Civil Proceedings. If the answer to any question above is yes, attach a separate statement describing the civil proceeding and state the disposition of that case. Does the Applicant contend that any provision of the City Charter or Ordinances applicable to the Applicant or the Proposed cable system serving the City is or may be unlawful or unenforceable? The UNT contends that the City Charter and ordinances of the City of Denton do not apply to the University as a public university authorized to operate under Chapter 105 of the Texas Education Code and operating as an arm of the Stateof Texas. The UNT further contends that the City of Denton does not have jurisdiction over the University's operation of a cable or satellite television system and does not have authority to require the University to obtain a franchise to operate such a system. The UNT is a coeducational institution of higher education and is a component of the UNT System. Tex. Educ. Code §§105.001 and 105.202. The University is an arm of the State of Texas and enjoys the State's protection of sovereign immunity. See Lewis v. Midwestern State University, 837 F.2d 197 (5th Cir. 1988), Further, the University submits Denton Cable Television Ordinance, Ordinance No. 2000-204 and City Charter, Art. XIII, Section 13.01-13.06 (franchises), exceeds any authority granted to the City under §51.012 of the Local Government Code to the extent the cable television ordinance is inconsistent with state law. The UNT submits that the federal law upon which the cable television ordinance is based is unconstitutional, as applied by the City of Denton, to the extent the law abrogates the Eleventh Amendment of the U.S. Constitution. Consequently, the ordinance is unconstitutional as applied to an arm of the State. Finally, even if the statute is constitutional, it is the position of the UNT that in operating a cable television system that will provide cable television solely to students and employees located in University housing, UNT does not meet the definition of a "cable operator" under federal law. Under federal law, an entity is only required to obtain a cable television franchise from the applicable local franchise authority if it is a "cable operator." A cable operator is defined as an entity that provides "cable service" over a "cable system" that it either owns or controls the management and operation of. 47 USC §522 (5). It is the UNT's contention that it will not be providing "cable service" as that term is defined under federal law and, therefore, it is not required to obtain a franchise. Under federal law, an entity provides "cable service" only if it provides video programming to "subscribers." 47 U.S.C. §522 (6). "Subscribers" are defined as members of the general public. 47 C.F.R. 76.5 (33). The UNT does not intend to provide "cable service" because it will not be providing services to "subscribers." Video programming will only be provided to those living in University housing and not to members of the general public. Under similar circumstances in Charter Communications v. University of Connecticut, this issue was considered by a state court in Connecticut and it was determined that the University of Connecticut was not providing cable service and was not required to obtain a franchise. Charter Communications v. University of Connecticut, 2000 Conn. Super. LEXIS 3087, Superior Court of Connecticut, Judicial District of Tolland, at Rockville, Complex Civil Litigation Docket No. X07CV000072038S (November 2, 2000) (Bishop, J). The University also questions whether it will be operating a "cable system" that requires a franchise to be obtained under federal law. Under federal law, a facility that serves subscribers without using any public right of way is exempted from consideration as a "cable system" for which a franchise is needed. 47 U.S.C. §522 (7). This exception is commonly known as the "private cable exemption." Because the UNT will be limiting the provision of services to University housing, UNT contends that it should qualify for the private cable exemption. Submission of this application for a franchise or the award of a franchise by the City of Denton does not waive any rights, privileges and immunities the University has, in law or in equity, as a public university authorized to operate under Chapter 105 of the Texas Education Code and operating as an arm of the State of Texas. Further, in submitting this application for a franchise or accepting the award of a franchise from the City of Denton, the UNT is neither expressly nor implicitly consenting to the jurisdiction of the City of Denton or to its ordinances. The UNT reserves the right to contest the applicability of the City of Denton's Charter and any or all of its ordinances in the future and also specifically reserves the right to contest the premise that it is required to obtain a franchise from the City of Denton. In submitting this application under protest, UNT is not in any way conceding or establishing a precedent that would make City Ordinances applicable to UNT as a public university authorized to operate under Chapter 105 of the Texas Education Code and operating as an arm of the State of Texas and this application should not be construed in such a manner by any party. Such interpretation is expressly denied by the University and the University of North Texas System. FINANCIAL The current financial condition of the Applicant is requested in order to have an understanding of the financial arrangements that may impact the continuing operations of the proposed cable system. 1. What is the source and amount of equity capital? Response - University funds 2. Is any of the equity capital borrowed? Response - No 3. What is the primary source and amount of debt? Response - No debt is being incurred Provide the name of banks and/or lending institutions and specify the name and title of the bank officer or lending officer who has authorized the financing. Response - N/A 5. Please identify the terms of all debt financing. Response - N/A 6. What interest rate? Response - N/A 7. What collateral is involved? Response - N/A 8. Who are the guarantors? Response - N/A 9, Please provide all current financial statements that support financial viability of the proposed cable system's operations Response - Annual Financial Report FY 2003 Annual Financial Report FY 2004 available 12/15/2004 10. Please provide historical financial statements (audited or reviewed, if available) for the past two years for Applicant. Response - Annual Financial Report FY 2003 Annual Financial Report FY 2002 11. Please supply documentation that assures the proposed the Applicant's financial viability, such as letters of commitment from financial institutions, which will demonstrate the availability of sufficient funds to construct, operate and maintain the cable television system in the City. Response - Please refer to question 10 (above) 12. Please provide pro forma financial projections for the operation of the proposed cable television system in the City. Please include detailed revenue and expense projections and assumptions for the operation of the cable television system serving the City for the next five years. Please include a sources and uses of funds. Response - See attached Pro forma 13. The leverage profile of the Applicant is of concern to the City. Please provide information that describes the projected leverage profile of the Applicant and related entities at the end of the next five years. Please include the following ratios in your answer: total debt per subscriber and total debt per the rtmning rate cash flow. Response -All bonded debt information is available in Annual Financial Report with applicable payment schedules. 14. Please provide a narrative that discusses the leverage profile of the Applicant and related entities to include: a comparison of the leverage profile to other multiple system operators in the cable television industry and the anticipated effect of the leverage profile on the financial ability of the Applicant to construct, operate and maintain the proposed cable television system in the City. Response -Refer to response to question 13 (above). 15. Please provide current financial statements for all owners of five percent (5%) or greater ownership interest in the Applicant. Response -N/A Any other information that the Applicant wishes to provide which will help the City develop an accurate picture of the financial condition of the Applicant will be welcomed. TECHNICAL This Section includes technical questions relating to the Applicant's proposed cable system. Describe in detail the geographic area within the City where the Applicant proposes to offer cable television services and a schedule for build out. Indicate the approximate location on a map, or by description, of the fixed system facilities, including tower, satellite earth stations, microwave links. The routes of the wires, cables and other facilities. Response - We plan to provide service within the boundaries of the UNT campus, see the attached map. The fiber cable plant is currently installed to all planned service locations, only minor work within the building is required to complete the build out consisting of installing building distribution amplifiers. The headend distribution system as well as the DirecTV Network satellite dish will be located in the General Academic Building, identified on the attached map. The portions of the fiber cable plant utilized for the video distribution system are identified on the attached map. o If any of the proposed cable television system is to be installed overhead, evidence the surplus space available for locating the proposed cable television system on existing utility poles along the proposed route. Response - N/A ~ Does the Applicant intend to interconnect the proposed cable television system with other cable television systems, telecommunications systems or open video systems? Response - No Presuming the Applicant obtains a cable television franchise from the City, please describe the types of services the Applicant plans to provide through its cable television system or any other system by answering the following questions: a. Does the Applicant plan to offer private, switched telephone services to customers? Response- No b. Does the Applicant plan to offer local switched telephone service to City residents either through its own facilities or as a resale carder? Response - No c. Does the Applicant plan to offer long distance services either through its own facilities or as a resale carder? Response - No d. Does the Applicant plan to offer customers high-speed data transmission services? Response - No e. Does the Applicant plan to offer customers Internet access capabilities? Response - No f. Does the Applicant plan to offer video conferencing services to customers? Response - No g. Does the Applicant plan to offer any type of video programming service to its customers, including cable television, open video system service, or video dial tone? Response - UNT plans to rebroadcast video programming provided by DireeTV service to the students located in University housing units. h. Does the Applicant plan to offer wireless telecommunications services to customers? Response - No i. Does the Applicant intend to lease or sell transmission capacity on its system to other entities? Response - No If any of the questions above were answered "Yes," please describe in detail to whom, how and when such services or facilities are planned to be offered. Provide a schedule and completion dates for development and construction of the Applicant's proposed cable television system. The schedule for build out should set forth the approximate starting and completion dates of construction of the system and the dates service will actually be available to the areas named. Response - As identified above, construction of the fiber cable plant to support the video distribution system is completed; the only construction remaining consists of installing distribution amplifiers in some of the buildings being served. Parts of the distribution system are currently being used to rebroadcast Charter's Cable TV service to Traditions and Sorority Row. Expected completion and service availability is targeted for June 1, 2005 with the provision of service to begin no. later than September 1, 2005. o Please identify and provide the following information regarding the Applicant's proposed cable television system. Beginning date of construction of system. Response - Completed Number of downstream channels. Response - 60 Number of upstream channels, discuss and describe any institutional networks and interconnection services. Response - 0 Channel Format (Check one) X Standard Car~ers Harmonically Related Carriers Other (please describe) eo go ho Number of public access channels. Response - None Complete fee schedule including subscription fees and other charges. Response - Housing fees charge students include an amount sufficient to cover costs represented to the attached pro forma statement. University housing operates on a breakeven basis at best. Quality of service measures including Applicant's procedure for handling customer complaints. Response- No more than 24 hours by Housing Maintenance Office and Computing Information Technology Center. Safety measures and safety programs. Response- Full time Risk Management that provides general over-site for university matters. Hours of Operation. Response - 24 hours/Tdays a week for occupied spaces 7. Indicate the anticipated channel capacity of the proposed cable television system: Downstream 110 0 # of video channels # of audio-only channels # of data channels # of voice channels Upstream 0 # of video channels 0 0 0 # of audio-only channels # of data channels # of voice channels 8. System Design What are the system's design parameters? Response - UNIVERSITY OF NORTH TEXAS LOCAL CABLE TELEVISION SYSTEM - SYSTEM DESIGN PARAMETERS - SCOPE The purpose of this statement is to provide specifications for the design, installation and operation of a Satellite Antenna RF Distribution System to the University of North Texas Housing. GENERAL REQUIREMENTS: All equipment and materials shall be standard products of a manufacturer regularly engaged in the manufacture of such products. Each major equipment component shall have the manufacturer's name, model and serial number secured to the equipment. SYSTEM DESCRIPTION: The Satellite Antenna Television System (SATV) shall originate from DBS Satellite Receive Only Antennas and from programming created within certain departments at the University of North Texas campus. The Digital Broadcast System (DBS) Satellite signals shall be received, modulated to Community Access Television (CATV) channels at a designated radio frequency (RF) between 54 megahertz (channel 2) and 449.75 megahertz (channel 61). These RF signals are combined, and transported to university housing by way of one, single-mode optical fiber. The optical signals shall be received at the University housing units through an oPtical receiver that provides an RF output that can be amplified and distributed to the end users over the existing coaxial cable system within each University housing unit. The SATV system shall also include an Emergency Alert System override allowing the institution to address University specific emergencies. The system shall utilize industry standard, commercially off-the-shelf components consisting of antenna systems, electronic active and passive devices to receive and distribute the RF signals to the end users. The equipment must meet the specifications and requirements listed herein. The system shall be designed to provide continuous entertainment on a series of CATV channels selectable at the television by all users. All satellite and local programming shall be translated to a CATV channel before distribution over the cable network. The system shall not require the use of any converters, descramblers or decoders at the users television for viewing of the CATV channels. System Configuration: The system shall consist of: * Satellite antennas, electronic components and receivers for DBS Satellite Signal Reception * Passive and active electronic components at the Head-End for the processing and modulation of programming on to CATV channels * Electronic components for the signal transmission and receiving over the Optical Trunk System * Electronic components for the RF Distribution System over the existing coaxial cabling within each University housing unit * System Interface in each resident room. * Emergency Alert System DBS Satellite Signal Reception: Antennas and components used for signal reception shall be for commercial Television Receive Only (TVRO) applications. Antenna performance and characteristics shall conform to all ANSI/EIA standards. Satellite antennas shall be fixed-dish and equipped with dual polarized low noise block converters. Head-End: The Head-End equipment and system shall serve as an interface between the receiving antennas and the cable distribution system to allow for signal processing, modulation, and amplification on to standard CATV channels. The Head-End Systems comprises satellite multi-switches and signal receivers, video/audio to channel specific modulators and channel combiners. Optical Trunk System: The cable trunk system shall consist of single-mode optical fiber, optical transmitters, optical receivers and optical splitters and ancillary hardware as required. Optical Transmitters: The optical transmitters shall be used to distribute CATV modulated signals over a single-mode optical fiber. The transmitter shall be used in conjunction with an optical receiver node for further distribution over coaxial cable. The optical transmitter shall comply within the limits of this type of device according to all FCC Rules. Optical Receivers: The optical receiver shall be used in conjunction with the optical transmitter to receive the optical signals at each University housing unit and provide an RF output for further distribution over coaxial cable. RF Distribution System: The cable distribution system shall consist of RF amplifiers, splitters and multi-port taps, and ancillary hardware for the transmission of signals over coaxial cables. RF Amplifiers: RF Distribution Amplifiers shall be state-of-the-art, featuring a die-cast aluminum housing providing high Radio Frequency Interference (RFI) integrity to meet FCC requirements. All amplifiers shall have controls for adjustments of the amplifier RF gain and the bandwidth equalization. Amplifiers' power requirements shall be l l7VAC, 60Hz. RF Splitters and Taps: All splitters and multi-port taps shall be commercial grade with a rugged, weatherproof, precision, die-cast aluminum housing providing high RFI integrity in order to meet FCC requirements. All splitters and taps shall have interchangeable, modular faceplates to maximize design and installation · configurations and to maximize system performance and maintenance. System Interface: All resident rooms shall have a standard TV receiver wall outlet with a female F-type, threaded connection. Emergency Alert System: The Emergency Alert System (EAS) shall provide emergency information override to all channels on the system meeting all FCC requirements. ACTIVE EQUIPMENT SPECIFICATIONS Head-End Channel Modulator Frequency Range: to 110 FCC Frequency Offset: OutpUt Level: Output Impedance: Spurious Outputs: Carrier/Noise Ratio: Broadband Noise: 54 to 706.75 MHz, Standard CATV Channels 2 None +45 dBmV 75 ohm -60dBc typical 60 dB typical -78dBc typical ~ +45 DBmV output Optical Transmitter Channel Loading: Bandwidth: Operating Wavelength: OpticalOutput Power: Input/Output Impedance: Back reflection Tolerance: Carrier to Noise Ratio: Composite Second Order: Composite Triple Beat 110 Channels maximum 40 to 860 MHz 1310 nanometers 6 tol0 dBm 75 ohms -50dB -53dB, worst case -65dB -69dB Optical Receiver Channel Loading: Bandwidth: Operating Wavelength: Input/Output Impedance: Output Return Loss: Back reflection Tolerance: Carrier to Noise Ratio: Composite Second Order: 110 Channels maximum 40 to 860 MHz 1310 nanometers 75 ohms 16dB -50dB -53dB, worst case -63dBc Composite Triple Beat RF Output Level RF Equalization: RF Amplifier Channel Loading: Bandwidth: Amplifier Gain: Gain Control Range: Output Level: Equalizer Control Range: Noise Figure: Return Loss: Composite Triple Beat: Cross Modulation: Second Order Intermod: Hum Modulation: -66dBc +38dBmV 0 to +10 Db 110 Channels maximum 40 to 860 MHz 38dB 20dB 46dBmV 18dB 9dB 8dB -46dB -43dB -52dB -65dB at maximum gain bo Co DESIGN SPECIFICATIONS Head-End System: The combined channel output of the Head-End shall be no less than +23dBmV across all channels. The distortion characteristics shall be equal to the specifications of the Head-end Channel Modulators as described above. Optical Trunk System: All optical receivers at each University housing unit shall receive an optical input between -8.0dBm to +4.5dBm. The RF output of the receiver shall be no more than +38dBmV at the highest frequency (channel 61) RF Distribution System: Each University housing unit shall have no more than one distribution amplifier in cascade. All multi-port taps shall have a port output of no less than +10dBmV at channel 61. System Interface. All system interface wall outlets shall provide an output of no less than 0dBmv at channel 61. The distortion CNR at the last wall outlet shall be greater than 43dB. All other technical standards shall comply within the guidelines of Part 76 of the Federal Communications Commission Code of Federal Regulations. What is the longest trunk amplifier cascade? Response - Two optical transmitters and two optical receivers in cascade How many line extenders in cascade? Response - One line extender at each University Housing Building What are the projected worst-case distortion characteristics? Response - The distortion characteristics and other technical standards will comply and exceed thc guidelines set forth in Part 76 of thc Federal Communications Commission Code of Federal Regulations for Cable Television Systems. Has the Applicant ever had a business license, including a license obtained from the FCC revoked, suspended or the renewal thereof defied, or is the Applicant a party to proceedings that will result in the same? Response - No 10. Has the Applicant ever, as the result of an adjudicated proceeding, been found in violation (other than routine service complaints) of any franchise ordinance or agreement, contract or regulation governing a cable television system owned or operated by it? Response - No 11. Has the Applicant ever initiated litigation against a franchising authority or has a franchising authority initiated litigation against it? If so, identify the franchising authority involved, the court or administrative agency in which that litigation was docketed, the nature of the controversy that was the source of the litigation, the disposition or result of that litigation, and any other relevant facts. Response - No 12. Has the Applicant been cited by any franchising authority for not meeting the Federal Customer Service Standards or Customer Service Standards set out in any local franchise agreement or ordinance? Response - No Any other information that the Applicant wishes to provide which will help us develop an accurate picture of the technical condition of the operation will be welcomed. Response: The University of North Texas has an extensive cable plant and UNT provides Internet services, including wireless data communications (801.1Ih) to students, faculty, and staff (as well Internet service to the City of Denton.) However, the existing data communications network on the UNT campus is not part of this franchise application since the cable TV service covered under this application will reside on a dedicated fiber strand that is one of many in the bundles of fibers connecting buildings on campus. Applicant must submit with the completed application a non-refundable application fee in the amount of $ 5,000.00 to cover the costs of review, issuance and enforcement of the proposed franchise. I certify that I am authorized to execute this Application on behalf of the Applicant. I further understand that if there are material omissions of information requested by this Application or deliberately false answers given to questions on this Application, the City of Denton, Texas, may revoke any franchise, permit or license it has granted in reliance on the answers provided by Date:/°~//'~//~ p/App lie ant to this Applicati on. Y'~.-t~~. ' .~~, ~~. _ Phil Diebel University of North Texas V.P. Finance & Business Affairs Notary Signature Line By. Proforma Operating Plan for Campus Cable Television Academic Years 2005 through 2009 Item 2005 2006 2007 2008 2009 Revenue/Source of Funds Included in students' room rates Cost of signal: Residence Halls, Fall & Sp Residence Halls, Summer Subtotal Sorodty Village, Fall & Sp Sorority Village, Summer Subtotal Total Signal Cost $153,402.93 $164,141.14 $175,631.01 $187,925.19 $201,079.95 7,884.36 8,436.27 9,026.80 9,658.68 10,334.79 161,287.29 172,577.40 184,657.82 197,583.87 211,414.74 2,932.20 3,137.45 3,357.08 3,592.07 3,843.52 977.40 1,045.82 1,119.03 1,197.36 1,281.17 3,909.60 4,183.27 4,476.10 4,789.43 5,124.69 165,196.89 176,760.67 189,133.92 202,373.29 216,539.42 (Signal Cost assumes a contract maximum of 7% increase annually) Amortization of Investment 15,760.13 15,760.13 15,760.13 15,760.13 (Investment of $126,081 amortized over 8 years, using straight line method) Maintenance of System 5,584.16 6,643.24 6,643.24 (Calculated at 3 to 5% of initial investment, plus 50¢ per drop per year) 15,760.13 Administrative Overhead (4% of Signal Cost) 6,607.88 7,070.43 7,565.36 8,094.93 8,661.58 Direct Labor 20,000.00 20,600.00 21,218.00 21,854.54 22,510.18 Franchise Fee Total Cost $ 213,149.05 $ 226,834.46 $240,320.64 $255,986.94 $ 272,636.16 7,904.05 9,164.86 AGENDA DATE: DEPARTMENT: ACM: AGENDA INFORMATION SHEET December 7, 2004 Fiscal Operations Kathy DuBose ~ SUBJECT Consider adoption of an ordinance authorizing the issuance, sale and delivery of City of Demon General Obligation Refunding Bonds, Series 2004, approving and authorizing instruments and procedures relating thereto; and providing an effective date. BACKGROUND On December 7, 2004, David Medanich of First Southwest Company, the City's Financial Advisor, and Ted Brizzolara III of McCall, Parkhurst and Horton, the City's Bond Counsel, will presem the underwriting company of the City of Demon General Obligation Refunding Bonds, Series 2004. The $9,675,000 (plus cost of issuance) will be used to refund a portion of the City's outstanding General Obligation Bonds and Certificates of Obligation Bonds for the purpose of lowering the debt service requirements associated with the debt, and pay the cost of issuance of the Bonds. This refunding (refinancing at a lower imerest rate) will save the City approximately $428,000 over the life of the bonds. PRIOR ACTION/REVIEW (Council, Boards, Commissions) The projects related to the bonds were approved and funded in previous capital budgets and bond issues, respectively. FISCAL INFORMATION This refunding will save the City approximately $428,000 in debt service over the life of the bonds equating to 4.6% present value savings. Respectfully submitted: Diana G. Ortiz Director of Fiscal Operations ORDINANCE NO. 2004- ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF CITY OF DENTON GENERAL OBLIGATION REFUNDING BONDS, SERIES 2004, LEVYING THE TAX TO PAY SAME, AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING THERETO; AND PROVIDING AN EFFECTIVE DATE THE STATE OF TEXAS · COUNTY OF DENTON : CITY OF DENTON : WHEREAS, the City of Denton, Texas, heretofore has duly issued, and there are presently outstanding, the following Series of Tax supported obligations: City of Denton Certificates of Obligation, Series 1995 (the "Series 1995 Certificates of Obligation"), dated February 15, 1995, scheduled to mature on February 15, 2006 through February 15, 2015, aggregating $1,350,000 (and being all of the outstanding certificates of said series scheduled to mature.on and after February 15, 2006); City of Denton General Obligation Bonds, Series 1995 (the "Series 1995 Bonds"), dated February t5, 1995, scheduled to mature on February 15, 2006 through February 15, 2008 and including February 15, 2015, aggregating $350,000 (and being all of the outstanding bonds of said series scheduled to mature on and after February 15, 2006); City of Denton Certificates of Obligation, Series 1996 (the "Series 1996 Certificates of Obligation"), dated May 1, 1996, scheduled to mature on February 15, 2007 through February 15, 2010, aggregating $720,000 (and being all of the outstanding certificates of said series scheduled to mature on and after February 15, 2007); City of Denton General Obligation Bonds, Series 1996 (the "Series 1996 Bonds"), dated May 1, 1996, scheduled to mature on February 15, 2007 through February t5, 2012, aggregating $865,000 (and being all of the outstanding bonds of said series scheduled to mature on and after February 15, 2007); City of Denton General Obligation Bonds, Series 1997 (the "Series 1997 Bonds"), dated April 1, 1997, scheduled to mature on February 15, 2009 through February 15, 2017, aggregating $2,865,000 (and being all of the outstanding bonds of said series scheduled to mature on and after February 15, 2009); City of Denton Certificates of Obligation, Series 2000 (the "Series 2000 Certificates of Obligations"), dated May 1, 2000, scheduled to mature on February 15, 2012 through February 15, 2018 and including February t5, 2020, aggregating $1,395,000 (and being all of the outstanding certificates of said series scheduled to mature on and after February 15, 2012); BRIZ: 0705.064\ 11-29-2004\ ! 1-29-2004-GO-REF-Or dinance November 29, 2004 City of Denton General Obligation Bonds, Series 2000 (the "Series 2000 Bonds"), dated May 1, 2000, scheduled to mature on February 15, 2012 through February 15, 2018 and including February 15, 2020, aggregating $1,665,000 (and being all of the outstanding bonds of said series scheduled to mature on and after February 15, 2012); (collectively, the "Outstanding Obligations"), in the aggregate principal mount of $9,210,000; and WHEREAS, the City Council of the City of Denton deems it necessary and advisable and in the public interest to refund the Outstanding Obligations, and to authorize, issue, and deliver the bonds hereinafter described; and WHEREAS, the bonds hereinafter authorized are to be issued, sold, and delivered pursuant to Chapter I207, Texas Government Code, as amended, the City's Home Rule Charter and other applicable laws; NOW, THEREFORE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: Section 1. AMOUNT AND PURPOSE OF THE BONDS. The bond or bonds of the City of Denton, Texas (the "issuer") are hereby authorized to be issued and delivered in the aggregate principal amount of $9,660,000, FOR THE PURPOSE OF OBTAINING FUNDS REQUIRED TO REFUND $9,210,000 1N AGGREGATE PRiNCIPAL AMOUNT OF TAX SUPPORTED OBLIGATIONS OF THE CITY OF DENTON, TEXAS. Section 2. DESIGNATION OF THE BONDS. Each bond issued pursuant to this Ordinance shall be designated: "CITY OF DENTON GENERAL OBLIGATION REFUNDING BOND, SERIES 2004", and initially there shall be issued, sold, and delivered hereunder a single fully registered bond, without interest coupons, payable in installments of principal (the "Initial Bond"), but the Initial Bond may be assigned and transferred and/or converted into and exchanged 'for a like aggregate principal amount of fully registered bonds, without interest coupons, having serial maturities, and in the denomination or denominations of $5,000 or any integral multiple of $5,000, all in the manner hereinafter provided. The term "Bonds" as used in this Ordinance shall mean and include collectively the Initial Bond and all substitute bonds exchanged therefor, as well as all other substitute bonds and replacement bonds issued pursuant hereto, and the term "Bonds" shall mean any of the Bonds. Section 3. INITIAL DATE, DENOMINATION, NUMBER, MATURITIES, INITIAL REGISTERED OWNER, AND CHARACTERISTICS OF THE INITIAL BOND. (a) The Initial Bond is hereby authorized to be issued, sold, and delivered hereunder as a single fully registered Bond, without interest coupons, dated DECEMBER 1, 2004, in the denomination and aggregate principal mount of $9,660,000, numbered R-l, payable in annual installments of principal to the initial registered owner thereof, to-wit: RBC DAIN RAUSHER INC. or to the registered assignee or assignees of said Bond or any portion or portions thereof (in each case, the "registered owner"), with the annual installments of principal of the Initial Bond to be payable on the dates, respectively, and in the principal amounts, respectively, stated in the FORM OF INITIAL BOND set forth in this Ordinance. BRIZ: 0705.064\ 11-29-2004\ 11-29-2004430-REF-O~dina~ce Nov~m~ 29, 200~ 2 (b) The Initial Bond (i) may be prepaid or redeemed prior to the respective scheduled due dates of installments of principal thereof, (ii) may be assigned and transferred, (iii) may be converted and exchanged for other Bonds, (iv) shall have the characteristics, and (v) shall be signed and sealed, and the principal of and interest on the Initial Bond shall be payable, all as provided, and in the manner required or indicated, in the FORM OF INITIAL BOND set forth in this Ordinance. Section 4. INTEREST. The unpaid principal balance of the Initial Bond shall bear interest from the date of the Initial Bond to the respective scheduled due dates, or to the respective dates of prepayment or redemption, of the installments of principal of the Initial Bond, and said interest shall be payable, all in the manner provided and at the rates and on the dates stated in the FORM OF INITIAL BOND set forth in this Ordinance. Section 5. FORM OF INITIAL BOND. The form of the Initial Bond, including the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be endorsed on the Initial Bond, shall be substantially as follows: FORM OF INITIAL BOND NO. R- $ LrNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON GENERAL OBLIGATION REFUNDING BOND SERIES 2004 THE CiTY OF DENTON, in Denton County, Texas (the "Issuer" or the "City"), being a political subdivision of the State of Texas, hereby promises to pay to RBC DAIN RAUSCHER 1NC. or to the registered assignee or assignees of this Bond or any portion or portions hereof (in each case, the "registered owner") the aggregate principal amount of in annual installments of principal due and payable on FEBRUARY 15 in each of the years, and in the respective principal amounts, as set forth in the following schedule: PRINCIPAL PRINCIPAL YEAR AMOUNT YEAR AMOUNT BRIZ: 0705.064\ll-29-2004\tl-29-2004-GO-REF-Ordlnance November 29, 2(}04 3 and to pay interest, calculated on the basis of a 360-day year composed of twelve 30-day months, from the date of this Bond hereinafter stated, on the balance of each such installment of principal, respectively, from time to time remaining unpaid, at the rotes as follows: per armum on the above installment due in 2006 per annum on the above installment due in 2007 per annum on the above installment due in 2008 per annum on the above installment due in 2009 per annum on the above installment due in 2010 per annum on the above installment due in 2011 per annum on the above installment due in 2012 per annum on the above installment due in 2013 per annum on the above installment due in 2014 per annum on the above installment due in 2015 per annum on the above installment due in 2016 per annum on the above installment due in 2017 per annum on the above installment due in 2018 per annum on the above installment due in 2019 per annum on the above installment due in 2020 with said interest being payable on AUGUST 15, 2005, and semiannually on each FEBRUARY 15 and AUGUST 15 thereafter while this Bond or any portion hereof is outstanding and unpaid. THE iNSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges. The installments of principal and the interest on this Bond are payable to the registered owner hereof through the services of JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, DALLAS, TEXAS, which is the "Paying Agent/Registrar" for this Bond. Payment of all principal of and interest on this Bond shall be made by the Paying Agent/Registrar to the registered owner hereof on each principal and/or interest payment date by check, dated as of such date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance authorizing the issuance of this Bond (the "Bond Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check shall be sent by the Paying Agent/Registrar by United States mail, first-class postage prepaid, on each such principal and/or interest payment date, to the registered owner hereof, at the address of the registered owner, as it appeared at the close of business on the last day of the month next preceding each such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described. The Issuer covenants with the registered owner of this Bond that on or before each principal and/or interest payment date for this Bond it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Bond Ordinance, the amounts required to provide for the payment, in immediately available funds, of ali principal of and interest on this Bond, when due. IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the City where the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. BPZZ: 0705.064\ [ 1-29-2004\ 11-29-2004-GO-P-..EF-Or dimmee Noveraber 29, 2004 4 THIS BOND has been authorized in accordance with the Constitution and laws of the State of Texas FOR TIlE PURPOSE OF OBTAINING FUNDS REQUIRED TO REFUND $9,210,000 IN AGGREGATE PRINCIPAL AMOUNT OF TAX SUPPORTED OBLIGATIONS OF THE CITY OF DENTON, TEXAS. ON FEBRUARY 15, 2014, or on any date whatsoever thereafter, the unpaid installments of principal of this Bond may be prepaid or redeemed prior to their scheduled due dates, at the option of the Issuer, with funds derived from any available source, as a whole, or in part, at the prepayment or redemption price of the par or principal amount thereof, plus accrued interest to the date fixed for prepayment or redemption. If less than all of the Bonds are to be redeemed, the Issuer may select the maturities of the Bonds to be redeemed. If less than all of the Bonds of any maturity are to be redeemed, the Paying Agent/Registrar shall determine by lot the Bonds, or portions thereof, within such maturity to be redeemed. AT LEAST 30 days prior to the date fixed for any such prepayment or redemption a written notice of such prepayment or redemption shall be mailed by the Paying Agent/Registrar to the registered owner hereof. By the date fixed for any such prepayment or redemption due provision shall be made by the Issuer with the Paying Agent/Registrar for the payment of the required prepayment or redemption price for this Bond or the portion hereof which is to be so prepaid or redeemed, plus accrued interest thereon to the date fixed for prepayment or redemption. If such written notice of prepayment or redemption is given, and if due provision for such payment is made, all as provided above, this Bond, or the portion thereof which is to be so prepaid or redeemed, thereby automatically shall be treated as prepaid or redeemed prior to its scheduled due date, and shall not bear interest after the date fixed for its prepayment or redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the prepayment or redemption price plus accrued interest to the date fixed for prepayment or redemption from the Paying Agent/Registrar out of the funds provided for such payment. The Paying Agent/Registrar shall record in the Registration Books all such prepayments or redemptions of principal of this Bond or any portion hereof. THIS BOND, to the extent of the unpaid or unredeemed principal balance hereof, or any unpaid and unredeemed portion hereof in any integral mnltiple of $5,000, may be assigned by the initial registered owner hereof and shall be transferred only in the Registration Books of the Issuer kept by the Paying Agent/Registrar acting in the capacity of registrar for the Bonds, upon the terms and conditions set forth in the Bond Ordinance. Among other requirements for such transfer, this Bond must be presented and surrendered to the Paying Agent/Registrar for cancellation, together with proper instraments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment by the initial registered owner of this Bond, or any portion or portions hereof in any integral multiple of $5,000, to the assignee or assignees in whose name or names this Bond or any such portion or portions hereof is or are to be transferred and registered. Any instrument or instruments of assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of this Bond or any such portion or portions hereof by the initial registered owner hereof. A new bond or bonds payable to such assignee or assignees (which then will be the new registered owner or owners of such new Bond or Bonds) or to the initial registered owner as to any portion of this Bond which is not being assigned and transferred by the initial registered owner, shall be delivered by the Paying Agent/Registrar in conversion of and exchange for this Bond or any portion or portions hereof, but solely in the form and manner as provided in the next paragraph hereof for the conversion and exchange of this Bond or any portion hereof. The.registered owner of this Bond shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for all purposes, including payment and discharge of liability upon this Bond to thc extent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary. BRLZ: 0705.064\ 1 1-29-2004\ 11-29-2004-GO-REF -Or dlnanee November 29, 2004 5 AS PROVIDED above and in the Bond Ordinance, this Bond, to the extent of the unpaid or unredeemed principal balance hereof, may be converted into and exchanged for a like aggregate principal amount of fully registered bonds, without interest coupons, payable to the assignee or assignees duly designated in writing by the initial registered owner hereof, or to the initial registered owner as to any portion of this Bond which is not being assigned and transferred by the initial registered owner, in any denomination or denominations in any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute bond issued m exchange for any portion of this Bond shall have a single stated principal maturity date), upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordance with the form and procedures set forth in the Bond Ordinance. If this Bond or any portion hereof is assigned and transferred or converted each bond issued in exchange for any portion hereof shall have a single stated principal maturity date corresponding to the due date of the installment of principal of this Bond or portion hereof for which the substitute bond is being exchanged, and shall bear interest at the rate applicable to and borne by such installment of principal or portion 'thereof. Such bonds, respectively, shall be subject to redemption prior to maturity on the same dates and for the same prices as the corresponding installment of principal of this Bond or portion hereof for which they are being exchanged. No such bond shall be payable in installments, but shall have only one stated principal maturity date. AS PROVIDED IN THE BOND ORDINANCE, THIS BOND IN ITS PRESENT FORM MAY BE ASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY, and to one or more assignees, but the bonds issued and delivered in exchange for this Bond or any portion hereof may be assigned and transferred, and converted, subsequently, as provided in the Bond Ordinance. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for transferring, converting, and exchanging this Bond or any portion t_hereof, but the one requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto. The Paying Agent/Registrar shall not be required to make any such assignment, conversion, or exchange (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or portion thereof called for prepayment or redemption prior to maturity, within 45 days prior to its prepayment or redemption date. 1N THE EVENT any Paying Agent/Registrar for this Bond is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Bond Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be mailed to the registered owner of this Bond. IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly voted, anthorized, issued, sold, and delivered; that all acts, conditions, and things required or proper to be performed, exist, and be done precedent to or in the authorization, issuance, and delivery of this Bond have been performed, existed, and been done in accordance with law; that this Bond is a general obligation of the Issuer, issued on the full faith and credit thereof; and that annual ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Bond, as such interest comes due and such principal matures, have been levied and ordered to be levied against all taxable property in the Issuer, and have been pledged irrevocably for such payment, within the limit prescribed by law. BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all of the terms and provisions of the Bond Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Bond Ordinance is duly recorded and available for inspection in the official minutes and records of the governing body of the Issuer, and agrees that the terms and provisions of this Bond and the Bond Ordinance constitute a contract between the registered owner hereof and the Issuer. BRIZ: 0705.064-\ 1 t T29-2004\ 1 1-29-2004-GO-REF -Or dinanc, e November 29, 2004 6 IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual or facsimile signature of the Mayor of the Issuer and countersigned with the manual or facsimile signature of the City Secretary of the Issuer, has caused the official seal of the Issuer to be duly impressed on this Bond, and has caused this Bond to be dated DECEMBER 1, 2004. City Secretary, City of Denton, Texas Mayor, City of Denton, Texas (CITY SEAL) (INSERT BOND INSURANCE LEGEND, IF ANY) FORM OF REGISTRATION CERTIFICATE OF THE COMPTROLLER OF PUBLIC ACCOUNTS: (To be attached to Initial Bond only) COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this Bond has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this Bond has been registered by the Comptroller of Public Accounts of the State of Texas. Witness my signature and seal this Comptroller of Public Accounts of the State of Texas (COMPTROLLER'S SEAL) Section 6. ADDITIONAL CHARACTERISTICS OF THE BONDS. Registration and Transfer. (a) The Issuer shall keep or cause to be kept at the pr/ncipal corporate mast office of JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, DALLAS, TEXAS (the "Paying Agent/Registrar") books or records of the registration and transfer of the Bonds (the "Registration Books"), and the issuer hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep such books or records and make such transfers and registrations under such reasonable regulations as the Issuer and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such transfers and registrations as herein provided. The Paying Agent/Registrar shall obtain and record in the Registration Books the address of the registered owner of each Bond to which payments with respect to the Bonds shall be mailed, as herein provided; but it shall be the duty of each registered owner to notify the Paying Agent/Registrar in writing of the address to which payments shall be mailed, and such interest payments shall not be mailed unless such notice has been given. BRIZ: 0705.064\ 11-29-2004\ I 1-29~2004-GO-REF-Ordinan¢¢ November 29, 2004 7 The Issuer shall have the right to inspect the Registration Books during regular business hours of the Paying Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep the Registration Books confidential and, unless otherwise required by law, shall not permit their inspection by any other entity. Registration of each Bond may be transferred in the Registration Books only upon presentation and surrender of such Bond to the Paying Agent/Registrar for transfer of registration and cancellation, together with proper written instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, (i) evidencing the assignment of the Bond, or any portion thereof in any integral multiple of $5,000, to the assignee or assignees thereof, and (ii) the right of such assignee or assignees to have the Bond or any such portion thereof registered in the name of such assignee or assignees. Upon the assignment and transfer of any Bond or any portion thereof, a new substitute Bond or Bonds shall be issued in conversion and exchange therefor in the manner herein provided. The Initial Bond, to the extent of the unpaid or unredeemed principal balance thereof, may be assigned and transferred by the initial registered owner thereof once only, and to one or more assignees designated in writing by the initial registered owner thereof. All Bonds issued and de- livered in conversion of and exchange for the Initial Bond shall be in any denomination or denominations of any integraI multiple of $5,000 (subject to the requirement hereinafter stated that each substitute Bond shall have a single stated principal maturity date), shall be in the form prescribed in the FORM OF SUBSTITUTE BOND set forth in this Ordinance, and shall have the characteristics, and may be assigned, transferred, and converted as hereinafter provided. If the Initial Bond or any portion thereof is assigned and transferred or converted the Initial Bond must be surrendered to the Paying Agent/Registrar for cancellation, and each Bond issued in exchange for any portion of the Initial Bond shall have a single stated principal maturity date, and shall not be payable in installments; and each such Bond shall have a principal maturity date corresponding to the due date of the installment of principal or portion thereof for which the substitute Bond is being ex- changed; and each such Bond shall bear interest at the single rate applicable to and borne by such installment of principal or portion thereof for which it is being exchanged. If only a portion of the Initial Bond is assigned and transferred, there shall be delivered to and registered in the name of the initial registered owner substitute Bonds in exchange for the unassigned balance of the Initial Bond in the same manner as if the initial registered owner were the assignee thereof. If any Bond or portion thereof other than the Initial Bond is assigned and transferred or converted each Bond issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the Bond for which it is exchanged. A form of assigument shall be printed or endorsed on each Bond, excepting the Initial Bond, which shall be executed by the registered owner or its duly authorized attorney or representative to evidence an assignment thereof. Upon surrender of any Bonds or any portion or portions thereof for transfer of registration, an authorized representative of the Paying Agent/Registrar shall make such transfer in the Registration Books, and shall deliver a new fully registered substitute Bond or Bonds, having the characteristics herein described, payable to such assignee or assignees (which then will be the registered owner or owners of such new Bond or Bonds), or to the previous registered owner in case only a portion of a Bond is being assigned and transferred, all in conversion of and exchange for said assigned Bond or Bonds or any portion or portions thereof, in the same form and manner, and with the same effect, as provided in Section 6(d), below, for the conversion and exchange of Bonds by any reg/stered owner of a Bond. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for making such transfer and delivery ora substitute Bond or Bonds, but the one requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto. The Paying Agent/Registrar shall not be required to make transfers of registration of any Bond or any portion thereof(i) daring the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) w/th respect to any Bond or any portion thereof calted for redemption prior to maturity, within 45 days prior to its redemption date. BRIZ: {}705.064~\11-29-2004\11-29-2004-GO-P-~F~Ordlnance November 29, 2004 8 (b) Ownership of Bonds. The entity in whose name any Bond shall be registered in the Registration Books at any time shall be deemed and treated as the absolute owner thereof for all purposes of this Ordinance, whether or not such Bond shall be overdue, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary; and payment of, or on account of, the principal of, premium, if any, and interest on any such Bond shall be made only to such registered owner. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. (c) Payment of Bonds and Interest. The Issuer hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds, and to act as its agent to convert and exchange or replace Bonds, alt as provided in this Ordinance. The Paying Agent/Registrar shall keep proper records of all payments made by the Issuer and the Paying Agent/Registrar with respect to the Bonds, and of all conversions and exchanges of Bonds, and all replacements of Bonds, as provided in this Ordinance. However, in the event of a nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the Issuer. Notice of the Special Record Date and of the scheduled payment date of the past due interest ("Special Payment Date", winch shall be fifteen (15) days after the Special Record Date) shall be sent at least five (5) business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of a Bond appearing on the registration books of the Paying Agent/Registrar at the close of business on the 15th business day next preceding the date of mailing of such notice. (d) Conversion and Exchange or Replacement; Authentication... Each Bond issued and delivered pursuant to this Ordinance, to the extent of the unpaid or unredeemed principal balance or principal amount thereof, may, upon surrender of such Bond at the principal corporate trust office of the Paying Agent/Registrar, together with a written request therefor duly executed by the registered owner or the assignee or assignees thereof, or its or their duly authorized attorneys or representatives, with guarantee of signatures satisfactory to the Paying Agent/Registrar, may, at the option of the registered owner or such assignee or assignees, as appropriate, be converted into and exchanged for fully registered bonds, without interest coupons, in the form prescribed in the FORM OF SUBSTITUTE BOND set forth in this Ordinance, in the denomination of $5,000, or any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute Bond shall have a single stated maturity date), as requested in writing by such registered owner or such assignee or assignees, in an aggregate principal amount equal to the unpaid or unre- deemed principal balance or principal amount of any Bond or Bonds so surrendered, and payable to the appropriate registered owner, assignee, or assignees, as the case may be. If the Initial Bond is assigned and transferred or converted each substitute Bond issued in exchange for any portion of the Initial Bond shall have a single stated princip al maturity date, and shall not be payable in installments; and each such Bond shall have a principal maturity date corresponding to the due date of the installment of principal or portion thereof for which the substitute Bond is being exchanged; and each such Bond shall bear interest at the single rate applicable to and borne by such installment of principal or portion thereof for which it is being exchanged. If a portion of any Bond (other than the Initial Bond) shall be redeemed prior to its scheduled maturity as provided herein, a subshtute Bond or Bonds having the same maturity date, bearing interest at the same rate, in the denomination or denominations of any integral multiple of $5,000 at the request of the registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon surrender thereof for cancellation. If any Bond orportion thereof(other than the Initial Bond) is assigned and transferred or converted, each Bond issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the Bond for which it is being exchanged. Each BRLZ: 0705.064\11-29-2004\t 1-29-2004~GO-REF-Ordinance November 29, 2{304 9 substitute Bond shall bear a letter and/or number to distinguish it from each other Bond. The Paying Agent/Registrar shall convert and exchange or replace Bonds as provided herein, and each fully registered bond delivered in conversion of and exchange for or replacement of any Bond or portion thereof as permitted or required by any provision of this Ordinance shall constitute one of the Bonds for all purposes of this Ordinance, and may again be converted and exchanged or replaced. It is specifically provided that any Bond authenticated in conversion of and exchange for or replacement of another Bond on or prior to the first scheduled Record Date for the Initial Bond shall bear interest from the date of the Initial Bond, but each substitute Bond so authenticated after such first scheduled Record Date shall bear interest from the interest payment date next preceding the date on which such substitute Bond was so authenticated, unless such Bond is authenticated after any Record Date but on or before the next following interest payment date, in which case it shall bear interest fi'om such next following interest payment date; provided, however, that if at the time of delivery of any substitute Bond the interest on the Bond for which it is being exchanged is due but has not been paid, then such Bond shall bear interest from the date to which such interest has been paid in full. THE INITIAL BOND issued and delivered pursuant to this Ordinance is not required to be, and shall not be, authenticated by the Paying Agent/Registrar, but on each substitute Bond issued in conversion of and exchange for or replacement of any Bond or Bonds issued under this Ordinance there shall be printed a certificate, in the form substantially as follows: "PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance described in this Bond; and that this Bond has been issued in conversion of and exchange for or replacement of a bond, bonds, or a portion ora bond or bonds of an issue which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of TeXas. Dated: JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, DALLAS, TEXAS Paying Agent/Registrar By Authorized Representative" An authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Bond, date and manually sign the above Certificate, and no such Bond shall be deemed to be issued or outstanding unless such Certificate is so executed. The Paying Agent/Registrar promptly shall cancel all Bonds surrendered for conversion and exchange or replacement. No additional ordinances, orders, or resolutions need be passed or adopted by the governing body of the Issuer or any other body or person so as to accomplish the foregoing conversion and exchange or replacement of any Bond or portion thereof, and the Paying Agent/Registrar shall provide for the printing, execution, and delivery of the substitute Bonds in the manner prescribed herein, and said Bonds shall be of type composition printed on paper with lithographed or steel engraved borders of customary weight and strength. Pursuant to Chapter 1201, Texas Government Code, as amended, the duty of conversion and exchange or replacement of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of the above Paying Agent/Registrar's Authentication Certificate, the converted and exchanged or replaced Bond shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Initial Bond which originally was issued pursuant to this Ordinance, BRIZ: 0705.064\11-29-2004\ 11-29-2004-GO-REF-Ord[aaace November 29, 2004 ] 0 approved by the Attorney General, and registered by the Comptroller of Public Accounts. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for transferring, converting, and exchanging any Bond or any portion thereof, but the one requesting any such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange. The Paying Agent/Registrar shall not be required to make any such conversion and exchange or replacement of Bonds or any portion thereof (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date. (e) In General. All Bonds issued in conversion and exchange or replacement of any other Bond or portion thereof, (i) shall be issued in fully registered form, without interest coupons, with the principal of and interest on such Bonds to be payable only to the registered owners thereof, (ii) may be redeemed prior to their scheduled maturities, (iii) may be transferred and assigned, (iv) may be converted and exchanged for other Bonds, (v) shall have the characteristics, (vi) shall be signed and sealed, and (vii) the principal of and interest on the Bonds shall be payable, all as provided, and in the manner required or indicated, in the FORM OF SUBSTITUTE BOND set forth in this Ordinance. (f) Payment of Fees and Charges. The Issuer hereby covenants with the registered owners of the Bonds that it will (i) pay the standard or customary fees and charges of the Paying Agent/Registrar for its services with respect to the payment of the principal of and interest on the Bonds, when due, and (ii) pay the fees and charges of the Paying Agent/Registrar for services with respect to the transfer of registration of Bonds, and with respect to the conversion and exchange of Bonds solely to the extent above provided in this Ordinance. (g) Substitute Paying Agent/Registrar. The Issuer covenants with the registered owners of the Bonds that at all times while the Bonds are outstanding the Issuer will provide a competent and legally qualified bank, trust company, financial institution, or other agency to act as and perform the services of Paying Agent/Registrar for the Bonds under this Ordinance, and that the Paying Agent/Registrar will be one entity. The Issuer reserves the right to, and may, at its option, change the Paying Agent/Registrar upon not less than 120 days written notice to the Paying Agent/Registrar, to be effective not later than 60 days prior to the next principal or interest payment date after such nohcc. In the event that the entity at any time acting as Paying Agent/Registrar (or its successor by merger, acquisition, or other method) should resign or other- wise cease to act as such, the Issuer covenants that promptly it will appoint a competent and legally qualified bank, trust company, financial institution, or other agency to act as Paying Agent/Registrar under this Ordinance. Upon any change in the Paying Agent/Registrar, the previous Paying Agent/Registrar promptly shall transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent books and records relating to the Bonds, to the new Paying Agent/Registrar designated and appointed by the Issuer. Upon any change in the Paying Agent/Registrar, the Issuer promptly will cause a written notice thereof to be sent by the new Paying Agent/Registrar to each registered owner of the Bonds, by United States mail, first- class postage prepaid, which notice also shall give the add~ess of the new Paying Agent/Registrar. By accepting the position and performing as such, each Paying Agent/Registrar shall be deemed to have.agreed to the provisions of this Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar. Section 7. FORM OF SUBSTITUTE BONDS. The form of all Bonds issued in conversion and exchange or replacement of any other Bond or portion thereof, including the form of Paying Agent/Registrar's Bond to be pr/nted on each of such Bonds, and the Form of Assignment to be printed on each of the Bonds, BRIZ: 0705.064\ [ 1-29-2004\ 11-29-2004-OO-REF~Ordinaace Nove~mher 29, 2004 1 l shall be, respectively, substantially as follows, with such appropriate variations, omissions, or insertions as are permitted or required by this Ordinance. FORM OF SUBSTITUTE BOND (Book-Entry Only Legend, if appropriate) NO. UNITED STATES OF AMERICA PRINCIPAL AMOUNT STATE OF TEXAS $ COUNTY OF DENTON CITY OF DENTON, TEXAS GENERAL OBLIGATION REFUNDING BOND SERIES 2004 iNTEREST RATE MATURITY DATE DATED CUSIP NO. ON THE MATURITY DATE specified above the CITY OF DENTON, in Denton County, Texas (the "Issuer'T), being a political subdivision of the State of Texas, hereby promises to pay to or to the registered assignee hereof (either being hereinafter called the "registered owner") the principal amount of and to pay interest thereon, calculated on the basis of a 360-day year composed of twelve 30-day months, from DECEMBER 1,2004, to the maturity date specified above, or the date of redemption prior to maturity, at the interest rate per annum specified above; with interest being payable on AUGUST 15, 2005, and semiannually on each FEBRUARY 15 and AUGUST 15 thereafter, except that if the date of anthentication of this Bond is later than the fn'st Record Date (hereinafter defined), such principal amount shall bear interest from the interest payment date next preceding the date of authentication, unless such date of authentication is after any Record Date (hereinafter defined) but on or before the next following interest payment date, in which case such principal amount shall bear interest from such next following interest payment date. THE PRINCIPAL OF AND iNTEREST ON this Bond are payable in lawful money of the United States of America, w/thout exchange or collection charges. The principal of this Bond shall be paid to the registered owner hereof upon presentation and surrender of this Bond at maturity or upon the date fixed for its redemption prior to maturity, at the principal corporate trust office of JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, DALLAS, TEXAS, whichis the "Paying Agent/Registrar" for this Bond. The payment of interest on this Bond shall be made by the Paying Agent/Registrar to the registered owner hereof on each interest payment date by check, dated as of such interest payment date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance authorizing the issuance of the Bonds (the "Bond Ordinance") to be on deposit with the Paying Agent/Registrar for such BtL1Z: 0705.064\[ 1-29-2004\1 1-29-20¢q.-GO-REF-Ordinancc November 29, 20134 1 2 purpose as hereinafter provided; and such check shall be sent by the Paying Agent/Registrar by United States mail, first-class postage prepaid, on each such interest payment date, to the registered owner hereof, at the address of the registered owner, as it appeared at the close of business on the last day of thc month next' preceding each such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described. However, the payment of such interest may be made by any other method acceptable to the Paying Agent/Registrar and requested by, and at the risk and expense of, the registered owner hereof. Any accrued interest due upon the redemption of this Bond prior to maturity as provided herein shall be paid to the registered owner at thc principal corporate trust office of the Paying Agent/Regis- trar upon presentation and surrender of this Bond for redemption and payment at the principal corporate trust office of the Paying Agent/Registrar. The Issuer covenants with the registered owner of this Bond that on or before each principal payment date, interest payment date, and accrued interest payment date for this Bond it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Bond Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Bonds, when due. IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the City where the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. ; THIS BOND is one of an issue of Bonds initially dated DECEMBER t, 2004, authorized in accordance with the Constitution and laws of the State of Texas in the principal mount of $9,660,000, FOR THE PURPOSE OF OBTAINING FUNDS REQUIRED TO REFUND $9,210,000 IN AGGREGATE PRINCIPAL AMOUNT OF TAX SUPPORTED OBLIGATIONS OF THE CITY OF DENTON, TEXAS. ON FEBRUARY 15, 2014, or on any date whatsoever thereafter, the Bonds of this Series may be redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived from any available and lawful source, as a whole, or in part, at the redemption price of the par or principal amount thereof, plus accrued interest to the date fixed for redemption. If less than all of the Bonds are to be redeemed, the Issuer may select the maturities of the Bonds to be redeemed. If less than all of the Bonds of any maturity are to be redeemed, the Paying Agent/Registrar shall determine by lot the Bonds, or portions thereof, within such maturity to be redeemed. AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof prior to maturity a written notice of such redemption shall be sent by the Paying AgentfRegistrar by United States mail, first-class postage prepaid, at least 30 days prior to the date fixed for any such redemption, to the registered owner of each Bond to be redeemed at its address as it appeared on the 45th day prior to such redemption date and to major securities depositories, national bond rating agencies and bond information services; provided, however, that the failure of the registered owner to receive such notice, or any defect therein or in the sending or mailing thereof, shall not affect the validity or effectiveness of the proceedings for the redemption of any Bond. By the date fixed for any such redemption due provision shall be made with the Paying Agent/Registrar for the payment of the required redemption price for the Bonds or portions thereof that are to be so redeemed. If such written notice of redemption is sent and if due provision for such payment is made, all as provided above, the Bonds or portions thereof that are to be so redeemed thereby automatically shall be treated as redeemed prior to their scheduled maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be regarded as being outstanding except for the right of the registered BRIZ: 0705.064\t 1-29-2004\11-29-2004-GO-P~EF-Ordlnanee November 29, 2004 owner to receive the redemption price from the Paying Agent/Registrar out of the funds provided for such payment. Ifa portion of any Bond shall be redeemed, a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000, at the written request of the registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon the surrender thereof for cancellation, at the expense of the Issuer, alt as provided in the Bond Ordinance. THIS BOND OR ANY PORTION OR PORTIONS HEREOF IN ANY INTEGRAL MULTIPLE OF $5,000 may be assigned and shall be transferred only in the Registration Books of the Issuer kept by the Paying Agent/Registrar acting in the capacity of registrar for the Bonds, upon the terms and conditions set forth in the Bond Ordinance. Among other requirements for such assignment and transfer, this Bond must be presented and surrendered to the Paying Agent/Registrar, together with proper instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of this Bond or any portion or portions hereof in any integral multiple of $5,000 to the assignee or assignees in whose name or names this Bond or any such portion or portions hereof is or are to be transferred and registered. The form of Assignment printed or endorsed on this Bond shall be executed by the registered owner or its duty authorized attorney or representative, to evidence the assignment hereof. A new Bond or Bonds payable to such assignee or assignees (which then will be the new registered owner or owners of such new Bond or Bonds), or to the previous registered owner in the case of the assignment and transfer of only a portion of this Bond, may be delivered by the Paying Agent/Registrar in conversion of and exchange for this Bond, all in the form and manner as provided in the next paragraph hereof for the conversion and exchange of other Bonds. The Issuer shall pay the Paying Agent/Registmr's standard or customary fees and charges for making such transfer, but the one requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto. The Paying Agent/Registrar shall not be required to make transfers of registration of this Bond or any portion hereof (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or any portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date. The registered owner of this Bond shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for all purposes, including payment and discharge of liability upon this Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary. ALL BONDS OF THIS SERIES are issuable solely as fully registered bonds, without interest coupons, in the denomination of any integral multiple of $5,000. As provided in the Bond Ordinance, this Bond, or any unredeemed portion hereof, may, at the request of the registered owner or the assignee or assignees hereof, be converted into and exchanged for a like aggregate principal mount of fully registered bonds, without interest coupons, payable to the appropriate registered owner, assignee, or assignees, as the case may be, having the same maturity date, and bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000 as requested in writing by the appropriate registered owner, assignee, or assignees, as the case may be, upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordance with the form and procedures set forth in the Bond Ordinance. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for transferring, converting, and exchanging any Bond or any portion thereof, but the one requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange. The Paying Agent/Registrar shall not be required to make any snch conversion and exchange (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or BRIZ: 0705.064\ I 1-29-2004\ 11-29-2004-GO-REF-Ordinaace November 29, 2004 1 4 interest payment date, or, (ii) with respect to any Bond or portion thereof called for redemption prior to matur- ity, within 45 days prior to its redemption date. IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the issuer, resigns, or otherwise .ceases to act as such, the Issuer has covenanted in the Bond Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be mailed to the registered owners of the Bonds. IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly voted, authorized, issued, sold, and delivered; that all acts, conditions, and things required or proper to be performed, exist, and be done precedent to or in the authorization, issuance, and delivery of this Bond have been performed, existed, and been done in accordance with law; that this Bond is a general obligation of the Issuer, issued on the fifll faith and credit thereof; and that annual ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Bond, as such interest comes due and such principal matures, have been levied and ordered to be levied against all taxable property in the Issuer, and have been pledged irrevocably for such payment, within the limit prescribed by law. BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all of the terms and provisions of the Bond Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Bond Ordinance is duly recorded and available for inspection in the official minutes and records of the governing body of the Issuer, and agrees that the terms and provisions of this Bond and the Bond Ordinance constitute a contract between each registered owner hereof and the Issuer. 1N WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual or facsimile signature of the Mayor of the Issuer and countersigned with the manual or facsimile signature of the City Secretary of the Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed in facsimile, on this Bond. City Secretary, City of Denton, Texas (CITY SEAL) Mayor, City of Denton, Texas (INSERT BOND INSURANCE LEGEND, IF ANY) BPdZ: 0705.064\l [ -29-2004\1 t-29-2004-GO-REF-Ordinanee November 29, 2004 1 5 FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE (To be executed if this Bond is not accompanied by an executed Registration Certificate of the Comptroller of Public Accounts of the State of Texas) It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance described in this Bond; and that this Bond has been issued in conversion of and exchange for or replacement of a bond, bonds, or a portion of a bond or bonds of an issue which originally was approved by the Attorney General of the State of Texas mad registered by the Comptroller of Public Accounts of the State of Texas. JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, DALLAS, TEXAS Paying Agent/Registrar Dated By. Authorized Representative FORM OF ASSIGNMENT: ASSIGNMENT FOR VALUE RECEIVED, the undersigned registered owner of this Bond, or duly authorized representative or attorney thereof, hereby assigns this Bond to / / (Assignee's Social Security or Taxpayer Identification Number) (print or typewrite Assignee's name and address, including zip code) and hereby irrevocably constitutes and appoints attomey to transfer the registration of this Bond on the Paying Agent/Registrar's Registration Books with full power of substitution in the premises. Dated: Signature Guaranteed: NOTICE: The signature to this Assignment must be guaranteed by a financial institution that is a member of the Securities Transfer Agents Medallion Program ("STAMP"), the Stock Exchange Medallion Program ("SEMP") or the New York Stock Exchange, Inc. Medallion Signature Program ("MSP"). Registered Owner NOTE: The signature to this Assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without enlargement or alteration or any change whatsoever. BRIZ: 0705.064~.ll-29-2004\ll-29-2004-GO-lLEF-Ordinanc¢ November 29, 2004 16 Section 8. (a) TAX LEVY. A special Interest and Sinking Fund (the "Interest and Sinking Fund") is hereby created solely for the benefit of the Bonds, and the Interest and Sinking Fund shall be established and maintained by the Issuer at an official depository bank of the Issuer. The Interest and Sinking Fund shall be kept separate and apart from all other funds and accounts of the Issuer, and shall be used only for paying the interest on and principal of the Bonds. All ad valorem taxes levied and collected for and on account of the Bonds, together with any premium received from the sale of the Bonds, shall be deposited, as collected, to the credit of the Interest and Sinking Fund. During each year while any of the Bonds or interest thereon are outstanding and unpaid, the governing body of the Issuer shall compute and ascertain a rate and amount of ad valorem tax which will be sufficient to raise and produce the money required to pay the interest on the Bonds as such interest becomes due, and to provide and maintain a sinking fund adequate to pay the principal of its Bonds as such principal matures (but never less than 2% of the original principal amount of the Bonds as a sinking fimd each year); and said tax shall be based on the latest approved tax rolls of the Issuer, with full allowance being made for tax delinquencies and the cost of tax collection. Said rote and amount of ad valorem tax is hereby levied, and is hereby ordered to be levied, against all taxable property in the Issuer for each year while any of the Bonds or interest thereon are outstanding and unpaid; and said tax shall be assessed and collected each such year and deposited to the credit of the aforesaid Interest and Sinking Fur~d. Said ad valorem taxes sufficient to provide for the payment of the interest on and principal of the Bonds, as such interest comes due and such principal matures, are hereby pledged for such payment, within the limit prescribed by law. (b) APPROPRIATION. There is hereby appropriated from surplus funds of the Issuer now on hand and lawfully available for such purpose, and shall be deposited into the Interest and Sinking Fund for the Bonds, the mount of money required to pay the principal and interest coming due on the Bonds on August 15, 2005. The money thus appropriated and deposited shall be used for no purpose other than to pay said principal and interest on the Bonds. The appropriate officials of the Issuer are hereby authorized and directed do any and all things necessary or convenient to accomplish said appropriation and deposit. Section 9. DEFEASANCE OF BONDS. (a) Any Bond and the interest thereon shall be deemed to be paid, retired, and no longer outstanding (a "Defeased Bond") within the meaning of this Ordinance, except to the extent provided ha subsection (d) of this Section, when payment of the principal of such Bond, plus interest thereon to the due date (whether such due date be by reason of maturity, upon redemption, or otherwise) either (i) shall have been made or caused to be made in accordance with the terms thereof(inc- luding the giving of any required notice of redemption), or (ii) shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying Agent/Registrar for such payment (1) lawful money of the United States of America sufficient to make such payment or (2) Government Obligations which mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money to provide for such payment, and when proper arrangements have been made by the Issuer with the Paying Agent/Registrar for the payment of its services until alt Defeased Bonds shall have become due and payable. At such time as a Bond shall be deemed to be a Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, the ad valorem taxes herein levied and pledged as provided in this Ordinance, and such principal and interest shall be payable solely from such money or Government Obligations. (b) Any moneys so deposited with the Paying Agent/Registrar may at the written direction of the Issuer also be invested in Government Obligations, maturing in the amounts and times as hereinbefore set forth, and all income from such Government Obligations received by the Paying Agent/Registrar which BRIZ: 0705.064\11-29-2004\1 i-29-2004-GO-ILEF-Ordimmee November 29, 2004 17 is not required for the payment of the Bonds and interest thereon, with respect to which such money has been so deposited, shall be turned over to the Issuer, or deposited as directed in writing by the Issuer. (c) The term "Government Obligations" as used in this Section shall mean direct obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, which may be United States Treasury obligations such as its State and Local Government Series, which may be in book-entry form. (d) Until all Defeased Bonds shall have become due and payable, the Paying Agent/Registrar shall perform the services of Paying Agent/Registrar for such Defeased Bonds the same as if they had not been defeased, and the Issuer shall make proper arrangements to provide and pay for such services as required by this Ordinance. Section 10. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a) Replacement Bonds. In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new bond of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in the manner hereinafter provided. (b) Apphcation for Replacement Bonds. Application for replacement of damaged, mutilated, lost, stolen, or destroyed Bonds shall be made by the registered owner thereof to the Paying Agent/Registrar. In every case of loss, theft, or destruction of a Bond, the registered owner applying for a replacement bond shall furnish to the Issuer and to the Paying Agent/Registrar such security or indenmity as may be required by them to save each of them harmless fi-om any loss or damage with respect thereto. Also, in every case of loss, theft, or destruction of a Bond, the registered owner shall furnish to the Issuer and the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of such Bond, as the case may be. In every case of damage or mutilation of a Bond, the registered owner shall surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated. (c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event of any such Bond shall have matured, and no default has occurred which is then continuing in the payment of the principal of, redemption premium, if any, or interest on the Bond, the Issuer may authorize the payment of the same (without surrender thereof except in the ease of a damaged or mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity is furnished as above provided in this Section. (d) Charge for Issuing Replacement B°nds. Prior to the issuance of any replacement bond, the Paying Agent/Registrar shall charge the registered owner of such Bond with all legal, printing, and other expenses in connection therewith. Every replacement bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the Issuer whether or not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and proportionately with any and ail other Bonds duly issued under this Ordinance. (e) Authority for Issuing Re~)lacement Bonds. In accordance with Chapter 1201, Texas Government Code, this Section 10 of this Ordinance shall constitute authority for the issuance of any such replacement bond without necessity of further action by the governing body of the Issuer or any other body or person, and the duty of the replacement of such bonds is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Bonds in the form and BRIZ: 0705.064\t l-29-2004\l l-29-2004-GO-REF-Ordiaance November 29, 2004 manner and with the effect, as provided in Section 6(d) of this Ordinance for Bonds issued in conversion and exchange for other Bonds. Section 11. COVENANTS REGARDING TAX-EXEMPTION. The Issuer covenants to refrain from taking any action which would adversely affect, and to take any action required to ensure, the treatment of the Bonds as obligations described in section 103 of the Code, the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the Issuer covenants as follows: (a) to take any action to assure that no more than 10 percent of the proceeds of the Bonds (less amounts deposited to a reserve fund, if any) are used for any "private business use", as defined in section 141(b)(6) of the Code or, if more than 10 percent of the proceeds are so used, that amounts, whether or not received by the Issuer, with respect to such private business use, do not, under the terms of this Ordinance or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service on the Bonds, in contravention of Section 141(b)(2) of the Code; (b) to take any action to assure that in the event that the "private business use" described in subsection (a) hereof exceeds 5 percent of the proceeds of the Bonds (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent is used for a "private business use" which is "related" and not "disproportionate", within the meaning of sechon 141 (b)(3) of the Code, to the governmental use; (c) to take any action to assure that no amount which is greater than the lesser of $5,000,000, or 5 percent of the proceeds of the Bonds (less amounts deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state or local governmental un/ts, in contravention of Section 141 (c) of the Code; (d) to refrain from taking any action which would otherwise result in the Bonds being treated as "private activity bonds" within the meaning of Section 141(b) of the Code; (e) to refrain from taking any action that would result in the Bonds being "federally guaranteed" within the meaning of Section 149(b) of the Code; (f) to refrain fi.om using any portion of the proceeds of the Bonds, directly or indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire investment property (as defined in Section 148(b)(2) of the Code) which produces a materially higher yield over the term of the Bonds, other than investment property acquired with -- (1) proceeds of the Bonds invested for a reasonable temporary period of 30 days or less until such proceeds are needed for the purpose for which the Bonds are issued, (2) amounts invested in a bona fide debt service fund, within the meaning of Section 1.148-1 (b) of the Treasury Regulations, and (3) mounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the stated principal amount (or, in the case of a discount, the issue price) of the proceeds of the Bonds; BRIZ; 0705.064\t t-2%2004\1 t-29-2004-GO-lLEF-Ordinanee November 29, 20(14 19 (g) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise contravene the requirements of Section 148 of the Code (relating to arbitrage) and, to the extent apphcable, Section 149(d) of the Code (relating to advance refundings); (h) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of the Bonds) an amount that is at least equal to 90 percent of the "Excess Earnings", within the meaning of section 148(I) of the Code andto pay to the United States of America, not later that 60 days after the Bonds have been paid in full, 100 percent of the mount then required to be paid as a result of Excess Earnings under section 148(f) of the Code; and The Issuer understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of the Bonds. It is the understanding of the Issuer that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated which modify, or expand provisions of the Code, as applicable to the Bonds, the Issuer will not be required to comply with any covenant contained herein to the extent that such modification or expansion, in the opinion of nationally-recognized bond counsel, will not adversely affect the exemption fi-om federal income taxation of interest on the Bonds under Section 103 of the Code. In the event that regulations or rulings are hereafter promulgated which impose additional requirements which are applicable to the Bonds, the Issuer agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally-recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Bonds under Section 103 of the Code. In furtherance of such intention, the Issuer hereby authorizes and directs the Mayor of the Issuer to execute any documents, certificates or reports required by the Code and to make such elections, on behalf of the Issuer, which may be permitted by the Code as are consistent with the purpose for the issuance of the Bonds. In order to facilitate compliance with the above covenant (h), a "Rebate Fund" is hereby established by the Issuer for the sole benefit of the United States of America, and such Fund shall not be subject to the claim of any other person, including without limitation the bondholders. The Rebate Fund is established for the additional purpose of compliance with Section 148 of the Code. Section 12. DISPOSITION OF PROJECT. The Issuer covenants that the property constituting the Project originally financed by the Outstanding Obligations will not be sold or otherwise disposed in a transaction resulting in the receipt by the Issuer of cash or other compensation, unless the Issuer obtains an opinion of nationally-recognized bond counsel that such sate or other disposition will not adversely affect the tax-exempt status of the Bonds. For purposes of the foregoing, the portion of the property comprising personal property and disposed in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation. For purposes hereof, the Issuer shall not be obhgated to comply with this covenant if it obtains an opinion that such failure to comply wilt not adversely affect the excludability for federal income tax purposes from gross income of the interest. Section 13. CUSTODY, APPROVAL, AND REGISTRATION OF BONDS; BOND COUNSEL'S OPINION, CUSIP NUMBERS, PREAMBLE AND INSURANCE. The Mayor of the Is suer is hereby author- ized to have control of the Initial Bond issued hereunder and all necessary records and proceedings pertaining to the Initial Bond pending its delivery and its investigation, examination, and approval by the Attorney General of the State of Texas, and its registration by the Comptroller of Public Accounts of the State of Texas. BRIZ: 0705.064\11-29-2004\11-29-2004-GO-KEF~Ordinanee November 29, 2004 20 Upon registration of the Initial Bond said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate on the Initial Bond, and the seal of said Comptroller shall be impressed, or placed in facsimile, on the Initial Bond. Thc approving legal opinion of the Issuer's Bond Counsel and the assigned CUSIP numbers may, at the option of the Issuer, be printed on the Initial Bond or on any Bonds issued and delivered in conversion of and exchange or replacement of any Bond, but neither shall have any legal effect, and shall be solely for the convenience and information of the registered owners of the Bonds. The preamble to this Ordinance is hereby adopted and made a part hereof for all purposes. If insurance is obtained on any of the Bonds, the Initial Bond and all other Bonds shall bear an appropriate legend concerning insurance as provided by the insurer. Section 14. DTC REGISTRATION. The Bonds initially shall be issued and delivered in such manner that no physical distribution of the Bonds will be made to the public, and the Depository Trust Company ("DTC"), New York, New York, initially will act as depository for the Bonds. DTC has represented that it is a limited purpose trust company incorporated under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered under Section 17A of the federal Securities Exchange Act of 1934, as amended, and the Issuer accepts, but in no way verifies, such representations. The Initial Bond authorized by this Ordinance shall be delivered to and registered in the name of the RBC Dain Rauscher Inc., as Underwriter (the "Purchaser"). However, it is a condition of delivery and sale that the Purchaser, immediately after such delivery, shall cause the Paying Agent/Registrar, as provided for in this Ordinance, to cancel said Initial Bond and deliver in exchange therefor a substitute Bond for each maturity of such Initial Bond, with each such substitute BOnd to be registered in the name of CEDE & CO., the nominee of DTC, and it shall be the duty of the Paying Agent/Registrar to take such action. It is expected that DTC will hold the Bonds on behalf of the Purchaser and/or the Direct Participants, as defined and described in the Official Statement referred to and approved in Section 16 hereof(the "DTC Participants"). So long as each Bond is registered in the name of CEDE & CO., the Paying Agent/Registrar shall treat and deal with DTC in all respects the same as if it were the actual and beneficial owner thereof. It is expected that DTC will maintain a book entry system which will identify beneficial ownership of the Bonds by DTC Participants in integral amounts of $5,000, with transfers of ownership being effected on the records of DTC and the DTC Participants pursuant to rules and regulations established by them, and that the substitute Bonds initially deposited with DTC shall be immobilized and not be further exchanged for substitute Bonds except as hereinafter provided. The Issuer is not responsible or liable for any functions of DTC, will not be responsible for paying any fees or charges with respect to its services, will not be responsible or liable for maintaining, supervising, or reviewing the records of DTC or the DTC Participants, or protecting any interests or fights of the beneficial owners of the Bonds. It shall be the duty of the Purchaser and the DTC Participants to make all arrangements with DTC to establish this book-entry system, the beneficial ownership of the Bonds, and the method of paying the fees and charges of DTC. The Issuer does not represent, nor does it in any way covenant that the initial book-entry system established with DTC will be maintained in the future. The issuer reserves the right and option at any time in the future, in its sole discretion, to terminate the DTC (CEDE & CO.) book-entry only registration requirement described above, and to permit the Bonds to be registered in the name of any owner. If the Issuer exercises its right and option to terminate such requirement, it shall give written notice of such termination to the Paying Agent/Registrar and to DTC, and thereafter the Paying Agent/Registrar shall, upon presentation and proper request, register any Bond in any name as provided for in this Ordinance. Notwithstanding the initial establishment of the foregoing book-entry system with DTC, if for any reason any of the originally delivered substitute Bonds is duly filed with the Paying Agent/Registrar with proper request for transfer and substitution, as provided for in this Ordinance, substitute BRIZ: 0705.064\11-29-2004\11-29-2004-GO-REF~Ordi~aace November 29, 2004 2 1 Bonds will be duly delivered as provided in this Ordinance, and there will be no assurance or representation that any book-entry system will be maintained for such Bonds. Section 15. SALE OF INITIAL BONDS. The Initial Bond is hereby sold and shall be delivered to RBC Dain Rausher Inc., as underwriter, in accordance with the Bond Purchase Agreement dated the date of this meeting and presented to the City Council of the City at this meeting. The Mayor of the Issuer is authorized and directed to execute, on behalf of the Issuer, said Bond Purchase Agreement in the form and substance submitted at this meeting. Section 16. OFFICIAL STATEMENT. An Official Statement dated as of the date of this meeting has been prepared in connection with the sale of the Initial Bond and the Bonds, in the form and substance submitted at this meeting. Said Official Statement and any supplement or addenda thereto have been and are hereby approved, and their use in the offer and sale of the Bonds is hereby approved. It is further officially found, determined, and declared that the statements and representations contained in said Official Statement are true and correct in all material respects, to the best knowledge and belief of the Issuer. The distribution and use of the Preliminary Official Statement dated November ,2004, prior to the date hereof is hereby ratified and approved. Section 17. REFUNDING OF OUTSTANDING BONDS. That concurrently with the delivery of the Initial Bond the Issuer shall deposit an amount from the proceeds from the sale of the Initial Bond, with JPMorgan Chase Bank, National Association, as Escrow Agent, sufficient, together with other available amounts, to refund all of the Outstanding Bonds in accordance with Chapter 1207, Texas Government Code, as amended. The Issuer hereby authorizes the execution of the Escrow Agreement dated as of December 1, 2004 between the Escrow Agent and the Issuer. The Mayor of the Issuer is authorized and directed to execute, on behalf of the Issuer, said Escrow Agreement in thc form and substance presented to this meeting. It is hereby found and determined that the refunding of the Outstanding Bonds is advisable and necessary in order to restructure the debt service requirements and procedures of the Issuer, and that the debt service requirements on the Bonds will be less than those on the Outstanding Bonds, resulting in a reduction in the amount of principal and interest which otherwise would be payable both on an actual and a present value basis. Section 18. REDEMPTION OF OUTSTANDING BONDS. There is attached hereto as Exhibit A and made a part hereof for all purposes a list and description of certain City of Denton General Obligation Bonds and City of Denton Certificates of Obligation, which bonds and certificates are hereby called for redemption, and shall be redeemed, prior to their scheduled maturities, on the date, at the place, and at the price, set forth therein; the Issuer shall cause the appropriate notices of such redemption to be given in accordance with the requirements of the respective proceedings authorizing the issuance of such bonds; and due provision shall be made by the Issuer in accordance with law for the payment of the redemption price of said bonds by the place of payment (paying agent) for such bonds. Section 19. REASONS FOR REFUNDING. The City Council of the Issuer deems it advisable to refund the Outstanding Bonds in order to achieve debt service savings on its outstanding tax debt; with a gross debt service savings of approximately $. and a present value savings of $ Section 20. INSURANCE. The Issuer approves the insurance of the Bonds by ., and the payment of such premium and complies with all of the terms of the insurance commitment, which are hereby adopted as part of the Ordinance. BRIZ: 0705.064\ l D29~2004\ 1 1-29-20 ¢~t~G O~REF43rdinance November 29, 2004 Section 21. CONTINUING DISCLOSURE. (a) Annual Reports. (i) The Issuer shall provide annually to each NRMSIR and any SiD, within six months after the end of each fiscal year ending in or after 2004, financial information and operating data with respect to the Issuer of the general type included in the final Official Statement authorized by Section 16 of this Ordinance, being the information described in Exhibit B hereto, which Exhibit is attached to and incorporated in this Ordinance as if written word for word herein. Any financial statements so to be provided shall be (1) prepared in accordance with the accounting principles described in Exhibit B hereto, or such other accounting principles as the Issuer may be required to employ from time to time pursuant to state law or regulation, and (2) audited, if the Issuer commissions an audit of such statements and the audit is completed within the period during which they must be provided. If the audit of such financial statements is not complete within such period, then the Issuer shall provide unaudited financial statements by the required time and will provide audited financial statements for the applicable fiscal year to each NRMSIR and any SID, when and if the audit report on such statements become available. (ii) If the Issuer changes its fiscal year, it will notify each NRMSIR and any SID of the change (and of the date of the new fiscal year end) prior to the next date by which the Issuer otherwise would be required to provide financial information and operating data pursuant to this Section. The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may be included by specific reference to any document (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to eachNRMS1R and any SID or filed with the SEC. (b) Material Event Notices. The Issuer shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such event is material within the meaning of the federal securities laws: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults; 3. Unscheduled draws on debt service reserves reflecting financial chfficulties; 4. Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit or liquidity providers, or their failure to perform; 6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds; 7. Modifications to rights of holders of the Bonds; 8. Bond calls; 9. Defeasances; 10. Release, substitution, or sale of property securing repayment of the Bonds; and 11. Rating changes. BR[Z: 0705,064\t 1-29-2004\ 11-29-2004-GO-REF-Ordinance November 29, 2004 23 The Issuer shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any failure by the Issuer to provide fmancial information or operating data in accordance with subsection (a) of this Section by the time required by such subsection. (c) Limitations, Disclaimers, and Amendments. (i) The Issuer shall be obhgated to observe and perform the covenants specified in this Section for so long as, but only for so long as, the Issuer remains an "obligated person" with respect to the Bonds within the meaning of the Rule, except that the Issuer in any event will give the notice required by Subsection (b) hereof of any Bond calls and defeasance that cause the Issuer to no longer be such an "obligated person". (ii) The provisions of this Section are for the sole benefit of the registered owners and beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The Issuer undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the Issuer's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Section or otherwise, except as expressly provided herein. The issuer does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Bonds at any future date. (iii) UNDER NO CIRCUMSTANCES SHALL THE ISSUER, ITS OFFICERS, AGENTS AND EMPLOYEES, BE LIABLE TO THE REGISTERED OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE ISSUER, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE. (iv) No default by the Issuer in observing or performing its obligations under this Section shall comprise a breach of or default under the Ordinance for purposes of any other provision of this Ordinance. Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the Issuer under federal and state securities laws. (v) The provisions of this Section may be amended by the Issuer from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the Issuer, but only if(i) the provisions of this Section, as so amended, would have permitted an underwriter to purchase or sell Bonds in the primary offering of the Bonds in compliance with the Rule, taking into account any amendments or interpretations of the Rule since such offering as well as such changed circumstances and (2) either (a) the registered owners of a majority in aggregate principal amount (or any greater amount required by any other provision of this Ordinance that authorizes such an amendment) of the outstanding Bonds consent to such amendment or (b) a person that is unaffiliated with the Issuer (such as nationally recognized bond counsel) determined that such amendment will not materially impair/he interest of the registered owners and beneficial owners of the Bonds. If the Issuer so amends the provisions of this Section, it shall include with any amended fmancial information or operating data next provided in accordance with subsection (a) of this Section an explanation, in narrative form, of the reason for the amendment and of the impact of any change in the type of financial information or operating data so provided. The Issuer may also amend or repeal the provisions of this continuing BRIZ: 0705.064\11-29-2004\ 11-29-2004-GO-KEF-Ordinaxtce November 29, 2004 24 disclosure agreement if the SEC amends or repeals the applicable provision of the Rule or a court of final jurisdiction enters judgment that such provisions of the Rule are invalid, but only if and to the extent that the provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling Bonds in the primary offering of the Bonds. (d) Definitions. As used in this Section, the following terms have the meanings ascribed to such terms below: "MSRB" means the Municipal Securities Rulemaking Board. "NRMSIR" means each person whom the SEC or its staff has determined to be a nationally recognized municipal securities information repository within the meaning of the Rule from time to time. "Rule" means SEC Rule 15c2-12, as amended from time to time. "SEC" means the United States Securities and Exchange Commission. "SID" means any person designated by the State of Texas or an authorized department, officer, or agency thereof as, and determined by the SEC' or its staff to be, a state information depository within the meaning of the Rule from time to time. Section 22. REFORMATION OF PRIOR ORDINANCES. Due to clerical errors, the redemption provisions of the ordinances authorizing the Series 1995 Certificates of Obligation, the Series 2000 Bonds and the Series 2000 Certificates of Obhgation (the "Prior Obligations") are inconsistent with the redemption provisions shown in the Official Statements relating to such Prior Obligations. Because the Prior Obligations were sold to investors pursuant to competitive bids at prices calculated and set based on the redemption provisions contained in such Official Statements, and such redemption provisions continue to be reflected in the information shown for such Prior Obligations by Bloomberg LP and other market information services, the ordinances for the Prior Obligations are hereby reformed as follows: (a) the ordinance adopted on May 7, 1995 relating to the Series 1995 Certificates of Obligation is reformed by adding to the Form of Substitute Cert/ficate the following paragraph: "ON FEBRUARY 15, 2005, or on any date whatsoever thereafter, the Certificates of this Series may be redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived from any available and lawful source, as a whole, or in part, and, if in part, the particular Certificates, or portions thereof, to be redeemed shall be selected and designated by the Issuer (provided that a portion of a Certificate may be redeemed only in an integral multiple of $5,000), at the redemption price of the par or principal amount thereof, plus accrued interest to the date fixed for redemption". (b) the ordinance adopted on May 2, 2000 relating to the Series 2000 Bonds is reformed by substituting the following paragraph in the Form of Substitute Bond: "ON FEBRUARY 15, 2009, or on any date whatsoever thereafter, the Bonds of this Series may be redeemed prior to the/r scheduled maturities, at the option of the Issuer, with funds derived from any available and lawful source, as a whole, or in part, and, if in part, the particular Bonds, or portions thereof, to be redeemed shall be selected and designated by the BRIZ: 0705.064\11-29-2004\ 11-29-2004-GO-REF-Ordinance November 29, 2004 25 Issuer (provided that a portion of a Bond may be redeemed only in an integral multiple of $ 5,000), at the redemption price of the par or principal mount thereof, plus accrued interest to the date fixed for redemption". (c) the ordinance adopted on May 2, 2000 relating to the Series 2000 Certificates of Obligation is reformed by substituting the following paragraph in the Form of Substitute Certificate: "ON FEBRUARY 15, 2009, or on any date whatsoever thereafter, the Certificates of this Series may be redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived from any available and lawful source, as a whole, or in part, and, if in part, the particular Certificates, or portions thereof, to be redeemed shall be selected and designated by the Issuer (provided that a portion of a Certificate may be redeemed only in an integral multiple of $5,000), at the redemption price of the par or principal mount thereof, plus accrued interest to the date fixed for redemption". Such reformation corrects the clerical errors in such ordinances and reflects the correct redemption provisions for the Prior Obligations as purchased by the holders of the Prior Obligations. Section 23. FURTHER PROCEDURES. The Mayor of the Issuer, the City Secretary of the Issuer, and all other officers, employees, and agents of the issuer, and each of them, shall be and they are hereby expressly authorized, empowered, and directed from time to time and at any time to do and perform all such acts and things and to execute, acknowledge, and deliver in the name and under the corporate seal and on behalf of the Issuer all such instnuments, whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms and provisions of this Bond Ordinance, the Bonds, the sale of the Bonds, the Bond Purchase Agreement, the Escrow Agreement and the Official Statement; and the Assistant City Manager/Fiscal and Municipal Services of the City shall cause the expenses of issuance of the Bonds to be paid from the proceeds of sale of the initial Bond. In case any officer whose signature shall appear on any Bond shall cease to be such officer before the delivery of such Bond, such signature shall nevertheless be valid and sufficient for all purposes the same as if such officer had remained in office until such delivery. Section 24. OPEN MEETINGS. 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 w/th the provisions of the Texas Open Meetings, Law, Tex. Gov't. Code, Chapter 551, as amended. Section 25. EFFECTIVE DATE. This Ordinance shall become effective immediately upon its passage and approval. BRIZ: 0705,064\ 11-29-2004\ I 1-29-2004-GO-REF-Ordinance Nc, vcmber 29, 2004 26 PASSED AND APPROVED this the 7th day of December, 2004. Euline Brock, Mayor ATTEST: Jennifer Walters, City Secretary By: APPROVED AS TO LEGAL FORM: Herbe~~ By: ~ EXHIBIT A NOTICE OF PRIOR REDEMPTION THE CITY OF DENTON, TEXAS NOTICE IS HEREBY GIVEN that the City of Denton, Texas has called for redemption the outstanding Certificates or Bonds of the City described as follows: THE CITY OF DENTON (TEXAS) CERTIFICATES OF OBLIGATION, SERIES 1996, dated May 1, 1996, scheduled to mature on February 15, 2007 through February 15, 2010, aggregating $720,000 in principal mount (and being all of the outstanding certificates of said Series scheduled to mature on and after Februmy 15, 2007). Call date: February 15, 2006; redeemable at a redemption price of par plus accrued interest at the principal corporate offices of JPMorgan Chase Bank, National Association, Dallas, Texas, only upon presentation by the bearer thereof, plus ali matured interest coupons appertaining thereto. THE CITY OF DENTON (TEXAS) GENERAL OBLIGATION BONDS, SERIES 1996, dated May i, 1996, scheduled to mature on February 15, 2007 through February 15, 2012, inclusive, aggregating $865,000 in principal amount (and being all of the outstanding bonds of said Series scheduled to mature on and after February 15, 2007). Call date: February 15, 2006; redeemable at a redemption price of par plus accrued interest at the principal corporate offices of JPMorgan Chase Bank, National Association, Dallas, Texas, only upon presentation by the bearer thereof, plus all unmatured interest coupons appertaining thereto. THE CITY OF DENTON (TEXAS) GENERAL OBLIGATION BONDS, SERIES 1997, dated April 1, 1997, scheduled to mature on February 15, 2009 through February 15, 2017, inclusive, aggregating $2,865,000 in principal amount (and being all of the outstanding bonds of said Series scheduled to mature on and after February 15, 2009). Call date: February 15, 2007; redeemable at a redemption price of par plus accrued interest at the principal corporate offices of YPMorgan Chase Bank, National Association, Dallas, Texas, only upon presentation by the bearer thereof, plus all urlmatured interest coupons appertaining thereto. THE CITY OF DENTON (TEXAS) CERTWICATES OF OBLIGATION, SERIES 2000, dated May 1, 2000, scheduled to mature on February 15, 2012 through February 15, 2018 and including February 15, 2020, aggregating $1,395,000in principal amount (and being all of the outstanding certificates of said Series scheduled to mature on and aRer February 15, 2012). Call date: February 15, 2009; redeemable at a redemption price of par plus accrued interest at the principal corporate offices of Il'Morgan Chase Bank, National Association, Dallas, Texas, only upon presentation by the bearer thereof, plus all unmatured interest coupons appertaining thereto. THE CITY OF DENTON (TEXAS) GENERAL OBLIGATION BONDS, SERIES 2000, dated May 1, 2000, scheduled to mature on February 15, 2012 through February 15, 2018 and including February 15, 2020, aggregating $1,665,000 in principal amount (and being all of the outstanding bonds of said Series scheduled to mature on and after February 15, 2012). Call date: February 15, 2009; redeemable at a redemption price of par plus accrued interest at the principal corporate offices of IPMorgan Chase Bank, National Association, Dallas, Texas, only upon presentation by the bearer thereof, plus all unmatured interest coupons appertaining thereto. If moneys sufficient for the payment of such redemption price are held by or on behalf of the respective paying agent, the described Bonds shall become due and payable o~ the redemption date specified, and the interest thereon shall cease to accrue f~om and after the redemption date. In comphance with section 3406 of the Internal Revenue Code of 1986, payors making certain payments due on debt securities may be obligated to deduct and withhold 28 percent of such payment from the remittance to any payee who has failed to provide such payor with a valid taxpayer identification number. To avoid the imposition of the withholding of tax, such payees should submit a taxpayer identification number when surrendering the bonds for redemption. NOTICE IS FURTHER GIVEN that all Bonds should be submitted to the following address: JPMorgan Chase Bank, National Association 2001 Bryan Street, 10th Floor Dallas, Texas 75201 Attn: Brad Hounsel JPMORGAN CHASE BANK, NATIONAL ASSOCIATION NOTICE OF PRIOR REDEMPTION THE CITY OF DENTON, TEXAS NOTICE IS HEREBY GIVEN that the City of Demon, Texas has called for redemption the outstanding Certificates or Bonds of the City described as follows: THE CITY OF DENTON (TEXAS) CERTIFICATES OF OBLIGATION, SERIES 1995, dated February 15, 1995, scheduled to mature on February t5, 2006 through February 15, 2015, inclusive, aggregating $1,350,000 in principal amount (and being all of the outstanding certificates of said Series scheduled to mature on and after February 15, 2006). Call date: February 15, 2005; redeemable at a redemption price of par plus accrued interest at the principal corporate offices of The Bank of New York Trust Company, N.A., Jacksonville, Florida, only upon presentation by the bearer thereof, plus all unmatured interest coupons appertaining thereto. THE CITY OF DENTON (TEXAS) GENERAL OBLIGATION BONDS, SERIES 1995, dated February 15, 1995, scheduled to mature on February 15, 2006 through February 15, 2008 and including February 15, 2015, aggregating $350,000 in principal amount (and being all of the outstanding bonds of said Series scheduled to mature on and after February 15, 2006). Call date: Febrnary 15, 2005; redeemable at a redemption price of par plus accrued interest at the principal corporate offices of The Bank of New York Trust Company, N.A., Jacksonville, Florida, only upon presentation by the bearer thereof, plus all unmatured interest coupons appertaining thereto. If moneys sufficient for the payment of such redemption price are held by or on behalf of the respective paying agent, the described Bonds shall become due and payable on the redemption date specified, and the interest thereon shall cease to accrue from and after the redemption date. In compliance with section 3406 of the Internal Revenue Code of 1986, payors making certain payments due on debt securities may be obligated to deduct and withhold 28 percent of such payment from the remittance to any payee who has failed to provide such payor with a valid taxpayer identification number. To avoid the imposition of the withholding of tax, such payees should submit a taxpayer identification number when surrendering the bonds for redemption. NOTICE IS FURTHER GIVEN that all Bonds should be submitted to the following address: The Bank of New York Trust Company, N.A. 111 Sanders Creek Parkway East Syracuse, New York 13057 Attn: Helen Scanlon TIlE BANK OF NEW YORK TRUST COMPANY, N.A. EXHIBIT B DESCRIPTION OF ANNUAL FINANCIAL INFORMATION The following information is referred to in Section 21 of this Ordinance: Annual Financial Statements and Operating Data Thc financial information and operating data with respect to thc Issuer to bc provided annually in accordance with such Section a~e as specified (and included in the Appendix or under thc tables of thc Official Statement referred to) below: Tables numbered 1 through 15, inclusive, under the captions "Tax Information", "Debt Service Requirements" and "Financial Information" in the Official Statement. Appendix B in the Official Statement. Accounting Principles The accounting principles referred to in such Section arc the accounting principles described in thc notes to the financial statements referred to in the paragraph above. B-1 AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: ACM: December 7, 2004 Water Utilities Howard Martin, 349-8232 SUBJECT Consider adoption of an ordinance of the City of DeNon, Texas, authorizing the formation of a Division of Environmental Quality within the Water Utilities Department; pledging that this newly formed division will serve as the main comact, coordinator, and source of information concerning Denton's environmental resources; assuring that the resources of the Division of Environmemal Quality will be directed towards activities that enhance the City of DeMon's responsibility as a steward of the natural environmem; and directing this division to ensure regulatory compliance and conduct related activities that will provide greater environmental benefits to Denton residents and businesses; authorizing the expenditure of funds therefor, and providing and effective date. BACKGROUND The draft Environmental White paper that was presented to the Denton City Council during the August 10, 2004 Planning Session was intended to be a first step towards a more comprehensive approach to environmental management within the City of Denton. During the presentation, reorganization within the Water and Wastewater Utilities was discussed as a possible means of providing more coordination within Denton's current environmental management strategies. It should be noted that the City of Denton currently conducts a large number of environmentally related activities that are dispersed throughout the organization as task-specific elements. Because this organizational structure is in place, functions well, and is comprised of experts within appropriate elements, there does not appear to be a need for significant restructuring. However, the size of the City, the desire for citizen involvemem, the need for rapid information exchange, and the presence of increasingly complex regulatory requirements has created a situation where more coordination is needed between elements. Meetings with the Environment Committee of the City Council were held on September 13~h, October 11~h, and November 8~h to further discuss strategies for coordinating Denton's environmental activities. During these meetings, the Committee examined the benefits of a formal, large-scale reorganization effort, or the use of a smaller reorganization coupled with a "matrix-like approach" for project-specific management. For Denton, the best option was considered to be a small reorganization within Water Utilities, coupled with an increase in matrix approaches to accomplish target specific goals. However, matrix approaches can only work in an environment that has a great degree of coordination and information exchange. Once created, the Division of Environmemal Quality will serve as the main poim of comact, coordinator, and mechanism for information exchange concerning issues related to Denton's environmental resources. The goals of the proposed Division of Environmemal Quality is to provide more cemralized coordination of the policies, strategies, plans, programs, and standards needed for effective environmental management. Other advantages of the proposed Division of Environmental Quality include: · More transparency and coordination when negotiating agreements concerning environmental issues; · More efficient mechanisms for ensuring compliance with federal and state environmental regulations; · Centralized information management for collecting, processing, and disseminating information among various city departments and between the City of Denton and citizens of Denton; · Centralized reporting for "state of the environment" reports; · Easier coordination between the City of Denton, consultants, universities, and other institutions when performing environmental research; · More centralized environmental monitoring; · Less confusion between different departments and between municipal staff and citizens about areas of environmental responsibility; and · Less duplication of effort. OPTIONS 1. Accept the proposed ordinance without modification. 2. Accept the proposed ordinance with modifications. 3. Do not accept the proposed ordinance. RECOMMENDATION Staff recommends Option 1, accepting the proposed ordinance without modification. PRIOR ACTION/REVIEW (Council, Boards, Commissions) An overview of the Environmental White Paper, including the proposed formation of a Division of Environmental Quality, was presented to the Public Utility Board on August 9th, 2004. An overview of the Environmental White paper, including the proposed formation of a Division of Environmental Quality, was presented to City Council on August 10th, 2004. The Environment Committee discussed the process of forming the Division of Environmental Quality during the September 13, 2004 and October 11, 2004 meetings. A draft of the ordinance included as Exhibit 1 was presented to the Council Environment Committee on November 8, 2004, and was unanimously approved. FISCAL INFORMATION None BID INFORMATION None EXHIBITS 1. Ordinance 2. Council Environment Committee Meeting Minutes Respectfully Submitted: Kenneth Banks, Water Res. Prog. Manager 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 50 51 CITY OF DENTON ENVIRONMENT COMMITTEE MEETING MINUTES November 8, 2004 DRAFT After determining that a quorum of the Environment Committee of the City of Denton, Texas was present, the Environment Committee convened into an Open Meeting on Monday, November 8, 2004, at 1:30 p.m. in the City Council Work Session Room, City of Denton City Hall, 215 East McKinney Street, Denton, Texas. PRESENT: Mayor Euline Brock Mayor Pro-Tem Perry McNeill Councilmember and Committee Chair Joe Mulroy Councilmember Jack Thomson EX OFFICIO MEMBERS Howard Martin, ACM Utilities Jim Coulter, Director of Water Utilities Kenneth Banks, Water Resources Program Manager Katherine Barnett, Utilities Special Project Coordinator ALSO PRESENT: Kelly Carpenter, Director of Planning Jeff Harrell, Building Official Dave Wachal, Water Utilities Coordinator Rodney Patterson, Plans Examiner Kiersten Dieterle, Public Information Manager Dedra Ragland, Comprehensive Planning and Research Manager Kelly Parker, Guaranteed Watt Saver Donney Dorton, Guaranteed Watt Saver The Environment Committee convened its Open Session at 1:37 p.m. Committee Chair, Joe Mulroy, informed the Committee that there were seven agenda items for consideration. The order of the agenda items was changed to the following. ITEMS FOR INDIVIDUAL CONSIDERATION: 5) Receive a report, hold a discussion, and give staff direction concerning the formation of an Environmental Division, including the proposed resolution that will accompany a formal presentation to the City Council. Banks stated that the reorganization was going quite well. It is currently being reviewed by the Human Resources department, and should be finalized very soon. Banks asked for any changes, or comments to the resolution that was provided in the packet. The target date for the full Council presentation is scheduled for December 7th . The committee agreed that no changes needed to be made to the resolution. McNeil said there are challenges with working with a matrix organization. He asked how the acceptance has been from other staff members. Banks said that in general it has been 1 EXHIBIT 2 1 2 3 4 5 6 7 8 9 good. We have an environmental group that has been established for a while. Banks presented the same presentation to that group as he presented to the committee last month. Everyone is generally positive, but there will be a learning curve on how the matrix will work. Coulter added that Banks does a great job making sure the flow of information to the employees is complete and thorough. Action Items: · McNeil - Need a vision for the division, with an organization chart to be presented during the council presentation. 2 ORDINANCE NO. 2004- AN ORDINANCE OF THE CITY OF DENTON, TEXAS AUTHORIZING THE FORMATION OF A DIVISION OF ENVIRONMENTAL QUALITY WITHIN THE WATER UTILITIES DEPARTMENT; PLEDGING THAT THIS NEWLY-FORMED DIVISION WILL SERVE AS THE MAIN CONTACT, COORDINATOR, AND SOURCE OF INFORMATION CONCERNING DENTON'S ENVIRONMENTAL RESOURCES; ASSURING THAT THE RESOURCES OF THE DIVISION OF ENVIRONMENTAL QUALITY WILL BE DIRECTED TOWARDS ACTIVITIES THAT ENHANCE THE CITY OF DENTON'S RESPONSIBILITY AS A STEWARD OF THE NATURAL ENVIRONMENT; AND DIRECTING THIS DIVISION TO ENSURE REGULATORY COMPLIANCE AND CONDUCT RELATED ACTIVITIES THAT WILL PROVIDE GREATER ENVIRONMENTAL BENEFITS TO DENTON RESIDENTS AND BUSINESSES; AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City Council of the City of DeNon, Texas believes that every citizen of DeNon has an equal right to a healthy and safe environmem; and that our air, water, and land resources must be of a sufficiemly high standard that individuals and communities can live healthy, fulfilling, and dignified lives; and WHEREAS, a municipality such as the City of DeNon, Texas is a custodian of environmemal resources, whose course of action is necessarily enriched by broadly-based public participation, where a full range of alternatives is considered based on input from diverse individuals and groups, including governmem, residems, citizens and businesses, all of whom bear the ecological and health consequences of environmemal decisions; and WHEREAS, environmemal managemem is extraordinarily challenging and complex, and must therefore be approached holistically, balancing a myriad of values and imerests, in order to create an environment that protects the health and safety of Denton's citizens; and WHEREAS, the City of DeNon, Texas has experienced, and is curremly experiencing, a large amoum of growth, which impacts environmemal resources within a variety of differem areas, including: transportation, construction, land use, planning, water, energy, health care, recreation, purchasing, and public expenditures; and WHEREAS, the City of Denton, Texas faces significant current and future regulatory compliance issues, as well as quality of life issues, that are related to DeMon's environmemal resources; and WHEREAS, the City of DeNon, Texas is curremly a leader in a wide variety of environmentally protective activities, and will remain a leader in the future through a strong commitment to environmental management, and in so doing will provide the infrastructure and quality of life that makes our community a desirable place to live and work; and EXHIBIT 1 WHEREAS, the goal of providing a safe, clean, and healthy environmem for all City of DeNon, Texas residences and businesses can only be effectively accomplished through efficiently implementing federal, state, and local environmental regulations, preserving or enhancing natural environments through responsible development practices, practicing appropriate environmemal stewardship, and making well informed, science-based decisions; the City Council believes that the formation of the Environmemal Quality Division of the Water Utilities Department is in the best interest of the citizens of Denton; NOW THEREFORE, THE COUNCIL OF THE CITY OF DENTON, HEREBY ORDAINS: SECTION 1. That the findings and recitations comained in the preamble of this ordinance are true and correct and are incorporated herewith by reference. SECTION 2. That the City Council of the City of DeNon, Texas hereby forms an Environmental Quality Division within the Water Utilities Department in order to facilitate a more effective means of meeting the myriad of regulatory and non-regulatory challenges related to Denton's environmental resources. SECTION 3. That Denton municipal staff at all levels will cooperate with the Environmemal Quality Division; striving to idemify commonalities and gaps among programs, meeting all state and federal regulatory requirements regarding environmental matters, and committing to supporting activities that will provide greater environmental benefits for our City. SECTION 4. That the Environmemal Quality Division will serve as the main poim of contact, coordinator, and mechanism for information exchange concerning issues related to Denton's environmental resources. SECTION 5. That the expenditure of funds to provide for such Environmemal Quality Division is hereby authorized. SECTION 6. 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: S:\Our Documents\Ordinances\04\Ordinance-Environmental Quality Division-Water Utilities Dept-2004.doc AGENDA INFORMATION SHEET AGENDA DATE: December 7, 2004 DEPARTMENT: ACM: Electric Utility Howard Martin, 349-8232 SUBJECT Consider approval of an ordinance of the City of Demon, Texas amending the Schedule of Rates comained in Ordinance No. 2003-262 for Electric Service; adding the provisions of the Residemial Service Rate Schedule (Schedule RES); adding the provisions of the Residemial Renewable Service Rate Schedule (Schedule RG); amending the General Service Small Rate (Schedule GSS); adding the provisions of the General Service Medium Rate Schedule (Schedule GSM); amending the General Service Large Rate (Schedule GSL); amending the General Service Time of Use Rate (Schedule TGS); amending the provisions of the Local Governmem Rate (Schedule Gl); amending the provisions of the Weekend Rate (Schedule WK); amending the provisions of the Athletic Field Rate (Schedule AF); amending the provisions of the Street Lighting Rate (Schedule LS); amending the provisions of the Traffic Lighting Rate (Schedule LT); amending the Other Lighting Rate (Schedule LO); changing the name of the Dusk-to-Dawn Lighting Rate to Security Lighting Rate and amending the provisions of the Security Lighting Rate (Schedule DD); amending the provisions of the Temporary Service Schedule (Schedule Ti); deleting the reference to availability of the Industrial Developmem Rider by General Service Small Customers (Schedule IDR); rewording the provisions of the Energy Cost Adjustmem Schedule to facilitate the meaning (Schedule ECA); rewording the provisions of the Special Facilities Rider to clarify its meaning (Schedule SFR); amending the provisions of the Discoum Rider for State Universities and Colleges to update and clarify the rider (Schedule UD); adding the Distributed Generation from Renewable Sources Rider (Schedule DGR); deleting the provisions of the following schedules: Residemial Service (Schedule Ri); Residemial Service (Schedule R2); Residemial Time of Use (Schedule TR); Decorative Ground Lighting (Schedule DGL); Imerruptible Primary Service (Schedule Pi); Standby, Supplememary and Maimenance Service (Schedule ES); and Premium-Efficiency Motor Rebate (Schedule MTR); authorizing the Assistam City Manager for Utilities to expend funds to issue rebates to electric customers who are entitled to rebates in accordance with the terms and provisions of Schedule EP; providing for a repealer; providing for a severability clause; and providing for an effective date. And Consider approval of an ordinance of the City of Demon, Texas providing for the amendmem of the Schedule of Miscellaneous Fees, Service Charges, Deposits, Billings and Procedures for Administrative Services to City Customers and Taxpayers comained in Ordinance No. 2004-259; providing for an increase in the delinquem service charge (when service is disconnected at the meter socket); providing for an increase in the reconnect charge after business hours (when service is disconnected at the meter socket); providing for a new return trip charge to reconnect service during business hours; providing for a new return trip charge after business hours to reconnect service; providing for a repealer; providing for a severability clause; and providing for an effective date. BACKGROUND Both DeNon Municipal Electric (DME) and the City of DeNon face significam challenges. Both must find a way to provide reliable and responsive service to a growing city. Both must find a way to meet this challenge at an acceptable cost and provide an environment that will encourage the growth of a strong business tax base for the City. Those needs alone presem a significam challenge. In addition to facing those challenges, the City is obligated, between now and 2018, to pay the remaining $384,388,000 of DeMon's share of the Texas Municipal Power Agency (TMPA) debt. Repayment of that debt will require annual payments of approximately $27 million per year until 2018. These paymems will be required from the City regardless of whether DME cominues to exist. Therefore, it is in the best interest of the citizens of Denton that DME remain a viable utility, able to supply revenue for repayment of the TMPA debt. At the same time, DME rates must remain competitive and its service reliable in order to attract new businesses to Denton. The City and DME set aside a Rate Stabilization Fund designed to assist in coping with the scheduled rise in the TMPA annual debt payments that began in 1997. However, DME still must deal with the rising cost of labor and materials as well as the cost of expanding its system to support Denton's growth. As required by the ordinances passed by DeNon City Councils for over the past 23 years, DME has reviewed its Energy Cost Adjustmem (ECA) rate and adjusted the ECA up or down to recover, on a dollar-for-dollar basis, the actual cost of providing energy to keep the lights of its customers on and to operate the machinery of Denton businesses. However, DME has not adjusted its base rates since 1993. DME's base rates cover the cost of construction, maintenance, and operation of the electric system that delivers energy to its customers. During the first half of 2004, DME reviewed its financial data and had an analysis of its revenue requiremems performed by an outside expert. Beginning in August of 2004, both the PUB and the City Council joined DME staff in this review of DME's financial position. That dialog has resulted in the DME base rate change proposal described in the attached presentation. This proposal strives to maintain the proper balance between providing the citizens of Denton competitive electric rates and reliable, responsive, and personal electric service while preserving the economic viability of DME so that it can carry the burden of repayment of the TMPA debt. OPTIONS 1. Approve the proposed Base and Miscellaneous Rate increases and rate design changes. 2. Approve a portion of the proposed Base and Miscellaneous Rate increases and rate design changes. 3. Do not approve the proposed Base and Miscellaneous Rate increases and rate design changes. RECOMMENDATIONS DME recommends approval of the proposed Electric Base Rate and Miscellaneous Rate increases and rate design changes. ESTIMATED SCHEDULE OF PROJECT Effective date of approved changes proposed to be January 1, 2005 PRIOR ACTION/REVIEW (Council, Boards, Commission) The DME's financial position and potential base rate changes were reviewed in closed session by the Public Utilities Board on August 23, 2004 and by the Council on August 24, 2004. Further discussion of these issues, including review of draft Base and Miscellaneous Rate Schedules developed according to input received from the PUB and Council in August occurred in closed session at the Pubic Utility Board on November 8, 2004. The PUB approved the draft Rate Schedules for presentation to the Council at their November 16, 2004 closed session meeting. At their November 16, 2004 meeting, the Council provided additional input on the rate change proposal and instructed DME staff to bring the Rate Schedules to the Council in open session on December 7, 2004 for their formal consideration. On November 22, 2004, DME staff reported the outcome of Council's November 16, 2004 meeting to the PUB in closed session. FISCAL INFORMATION: Approval of proposed Base and Miscellaneous Rate changes is forecast to provide approximately $3.25 million of additional revenue to DME annually. EXHIBITS 1. Base and Miscellaneous Change Proposal 2. Electric Rate Ordinance 3. Miscellaneous Rate Ordinance Respectfully submitted: Sharon Mays Director of Electric Utilities 0 0 > o U 0 > {- 0 m × EB >~' · 0 0 J~ > 0 U 0 E · > E m X >~ · 0 ~ J H/V~ Jed s~ueo ¢'005 ~00;~ ;~00;~ 1,00;~ 000;~ 6661, 9661, Z66~ 9661, 9661, lz66 ~. ~661, "(D X X 'ID 0 E > 0'~ U · 0 (~ ~.E o o o E 0 J~ W · . U~ ~ 0 C O~- E 0 0 ~ U ~ ~ E 0~ U 0 Q u ~ > u 0 E 0 E W ~ 0 o_o~; ~ ~ ~o >uS~~ b ~ ~ '~ '~ b U l J 0 0 {.s) .. {.s) u~ Q × 0 '~0 u ~ uJ I.D 0 u_ 12 t.~ c- u_ <r 0 E 0 u E E 0 U '"0 0 ._u c ~ ORDINANCE NO. 2004- AN ORDINANCE OF THE CITY OF DENTON, TEXAS AMENDING THE SCHEDULE OF RATES CONTAINED IN ORDINANCE NO. 2003-262 FOR ELECTRIC SERVICE; ADDING THE PROVISIONS OF THE RESIDENTIAL SERVICE RATE SCHEDULE (SCHEDULE RES); ADDING THE PROVISIONS OF THE RESIDENTIAL RENEWABLE SERVICE RATE SCHEDULE (SCHEDULE RG); AMENDING THE GENERAL SERVICE SMALL RATE (SCHEDULE GSS); ADDING THE PROVISIONS OF THE GENERAL SERVICE MEDIUM RATE SCHEDULE (SCHEDULE GSM); AMENDING THE GENERAL SERVICE LARGE RATE (SCHEDULE GSL); AMENDING THE GENERAL SERVICE TIME OF USE RATE (SCHEDULE TGS); AMENDING THE PROVISIONS OF THE LOCAL GOVERNMENT RATE (SCHEDULE Gl); AMENDING THE PROVISIONS OF THE WEEKEND RATE (SCHEDULE WK); AMENDING THE PROVISIONS OF THE ATHLETIC FIELD RATE (SCHEDULE AF); AMENDING THE PROVISIONS OF THE STREET LiGHTiNG RATE (SCHEDULE LS); AMENDING THE PROVISIONS OF THE TRAFFIC LIGHTING RATE (SCHEDULE LT); AMENDING THE OTHER LIGHTING RATE (SCHEDULE LO); CHANGING THE NAME OF THE DUSK-TO-DAWN LIGHTING RATE TO SECURITY LIGHTING RATE AND AMENDING THE PROVISIONS OF THE SECURITY LIGHTING RATE (SCHEDULE DD); AMENDING THE PROVISIONS OF THE TEMPORARY SERVICE SCHEDULE (SCHEDULE Ti); DELETING THE REFERENCE TO AVAILABILITY OF THE INDUSTRIAL DEVELOPMENT RIDER BY GENERAL SERVICE SMALL CUSTOMERS (SCHEDULE iDR); REWORDING THE PROVISIONS OF THE ENERGY COST ADJUSTMENT SCHEDULE TO FACILITATE THE MEANING (SCHEDULE ECA); REWORDING THE PROVISIONS OF THE SPECIAL FACILITIES RIDER TO CLARIFY ITS MEANING (SCHEDULE SFR); AMENDING THE PROVISIONS OF THE DISCOUNT RIDER FOR STATE UNIVERSITIES AND COLLEGES TO UPDATE AND CLARIFY THE RIDER (SCHEDULE UD); ADDING THE DISTRIBUTED GENERATION FROM RENEWABLE SOURCES RIDER (SCHEDULE DGR); DELETING THE PROVISIONS OF THE FOLLOWING SCHEDULES: RESIDENTIAL SERVICE (SCHEDULE Ri); RESIDENTIAL SERVICE (SCHEDULE R2); RESIDENTIAL TIME OF USE (SCHEDULE TR); DECORATIVE GROUND LiGHTiNG (SCHEDULE DGL); INTERRUPTiBLE PRIMARY SERVICE (SCHEDULE Pi); STANDBY, SUPPLEMENTARY AND MAINTENANCE SERVICE (SCHEDULE ES); AND PREMIUM-EFFICIENCY MOTOR REBATE (SCHEDULE MTR); AUTHORIZING THE ASSISTANT CITY MANAGER FOR UTILITIES TO EXPEND FUNDS TO ISSUE REBATES TO ELECTRIC CUSTOMERS WHO ARE ENTITLED TO REBATES IN ACCORDANCE WITH THE TERMS AND PROVISIONS OF SCHEDULE EP; PROVIDING FOR A REPEALER; PROViDiNG FOR A SEVERABiLiTY CLAUSE; AND PROVIDING FOR AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. That the Schedule of Rates for electrical services as provided for in Chapter 26 of the City of Demon Code of Ordinances, is amended to read as follows: EXHIBIT 2 ELECTRIC RATE SCHEDULES PAGE RES RG GSS GSM GSI, TGS G1 VCK AF LS LT ID DD DDI~ 12 IDR Et~ UPS SFR IJD DGR Residential Service Residential Renewable Service General Service Small General Service Medium General Service Large General Service Time of Use Local Government Weekend Athletic Field Street Lighting Traffic Lighting Other Lighting Security Lighting Decorative Downtown Lighting Temporary Service Schedule Industrial Development Rider EnergySave Program Uninterruptible Power Supply Energy Cost Adjustment Special Facilities Rider Discount Rider for State Universities and Colleges Distributed Generation From Renewable Sources Rider 1.t 1_6 18 2O 22 23_ 24 26 28 29 31 32 36 37 38 39 40 CANCELLED ELECTRIC RATE SCHEDULES PAGE R1 R2 TR DGL P1 ES MTR Residential Service (Schedule Canceled) Residential Service (Schedule Canceled) Residential Time of Use (Schedule Canceled) Decorative Ground Lighting (Schedule Canceled) Interruptible Primary Service (Schedule Canceled) Standby, Supplementary and Maintenance Service (Schedule Canceled) Premium-Efficiency Motor Rebate (Schedule Canceled) 42 43 44 45 46 47 48 SCHEDULE RES RESIDENTIAl, SERVICE R ATE (Effective 01/01/05) APPIJCATION Applicable to any Customer for all 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, or to temporary, standby, or supplementary service. NET MONTHLY RATE WINTER SUMMER Billing months of November through April Billing months of May through October (1) Facility Charge Single-Phase $8.25/bill $8.25/bill Three-Phase $16.50/bill $16.50/bill plus; (2) Energy Charge per billing period First 600 KWH Additional KWH 5.70C/KWH 3.79C/KWH All KWH 5.70C/KWH plus; (3) Energy Cost Adjustment Charge See Schedule ECA See Schedule ECA M1NIMI JM BII J lNG For each billing period, the Customer shall be obligated to pay the following charges as a minimum, whether or not any energy was actually used: Single-Phase Three-Phase Facility Charge Facility Charge ENERGY CHARGE Billing for the Energy Charge shall be based on actual KWH consumption during the billing period. Energy Charge = KWH in rate block × Rate per KWH in rate block TYPE OF SERVICE The City will supply single-phase service (or three-phase service if available at the point of delivery) at sixty (60) cycles and at any standard voltages available from the City's distribution system through one standard transformation. Additional contractual arrangements between the City and the Customer, subject to the Special Facilities Rider, may be required where service of the type desired by the Customer is not available at the point of service. PAYMENT The due date for the payment of the bill for utility services shall not be less than ten (10) business days after issuance. SCHEDULE RG RESIDENTIAL RENEWABLE ENERGY SERVICE RATE (Effective 01/01/05) APPI,ICATION 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, or to temporary, standby, or supplementary service. NET MONTHLY RATE plus; plus; WINTER SUMMER Billing Months of November through April Billing Months of May through October (1) Facility Charge $8.25/bill $8.25/bill Energy Charge per billing period First 600 KWH All Additional KWh All KWh (2) (3) Renewable Cost Adjustment Charge MINIM[JM BILLING 5.70C/KWh 3.79C/KWh 5.70C/KWh Variable, see below Variable, see below For each billing period, the Customer shall be obligated to pay the following charges as a minimum, whether or not any energy was actually used: Facility Charge ENERGY CHARGE Billing for the energy charge shall be based on actual KWh consumption during the billing period. Energy Charge = KWh in rate block x rate per KWh in rate block RENEWABLE COST ADJIJSTMENT (RCA) CHARGE The Renewable Cost Adjustment Charge shall be based on actual KWh consumption during the billing period. RCA Charge = KWh x Renewable Cost Adjustment The Renewable Cost Adjustment shall be computed during the last month 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 Adjustment more than once in any three (3) month period. The Renewable Cost Adjustment 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. 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. Additional contractual arrangements between the City and the Customer, subject to the Special Facilities Rider, may be required where service of the type desired by the Customer is not available at the point of service. PAYMENT The due date for the payment of the bill for utility services shall not be less than ten (10) business days after issuance. SCHEDULE GSS GENER Al, SERVICE SMAI J, (Effective 01/01/05) The General Service Small (GSS) rate is applicable to any commercial or industrial customer having a maximum demand of less than 20 KW in each of the previous twelve (12) months for all electric service supplied at one point of delivery and measured through one meter. If the demand in any month exceeds 20 KW, billing will be made under the Rate Schedule GSM and Customer must remain on the GSM rate for a minimum of twelve (12) billing periods. Not applicable to resale service in any event, or to temporary, standby, or supplementary service. NET MONTHI,Y R ATE (1) Facility Charge Single-Phase $15.80/bill Three-Phase $21.10/bill plus; (2) Energy Charge per billing period First 2,500 KWH Additional KWH 7.02C/KWH 3.67C/KWH plus; (3) Energy Cost Adjustment Charge See Schedule ECA MINIMUM BILLING For each billing period, the Customer shall be obligated to pay the following charges as a minimum, whether or not any energy was actually used: Single-Phase Three-Phase Facility Charge Facility Charge ENERGY CHARGE Billing for the Energy Charge shall be based on actual KWH consumption during the billing period. Energy Charge = KWH in rate block x Rate per KWH in rate block TYPE OF SERVICE The City will supply single-phase service (or three-phase service if available at the point of delivery) at sixty (60) cycles and at any standard voltages available from the City's distribution system through one standard transformation. Additional contractual arrangements between the City and the Customer, subject to the Special Facilities Rider, may be required where service of the type desired by the Customer is not available at the point of service. PAYMENT The due date for the payment of the bill for utility services shall not be less than ten (10) business days after issuance. SCHEDULE GSM GENER Al, SERVICE MEDII JM (Effective 01/01/05) The General Service Medium (GSM) rate is applicable to any commercial or industrial customer having a maximum demand of at least 20 KW in any one of the previous twelve (12) months but less than 225 KW in each of the previous twelve (12) months for all electric service supplied at one point of delivery and measured through one meter. Not applicable to resale service in any event, or to temporary, standby, or supplementary service. NET MONTHLY RATE (1) Facility Charge Single-Phase $15.80/bill Three-Phase $21.10/bill plus; (2) Demand Charge $4.00/KW (all KW) plus; (3) Energy Charge (GM1) per billing period First 6,000 KWH Additional KWH 4.43C/KWH 3.66C/KWH plus; (4) Energy Cost Adjustment Charge See Schedule ECA M1NIMI JM BII J lNG For each billing period, the Customer shall be obligated to pay the following charges as a minimum, whether or not any energy was actually used: (1) The Facility Charge, plus; (2) The Demand Charge DETERMINATION OF DEMAND The demand used in calculating the Demand Charge for the billing period shall be the greater off (1) The actual monthly KW demand as measured during the fifteen (15) minute period of maximum use each month; or (2) Seventy percent (70%) of the maximum monthly actual demand for any month during the previous billing months of May through October in the twelve (12) months ending with the current month. ENERGY CHARGE Billing for the Energy Charge shall be based on actual KWH consumption during the billing period. Energy Charge = KWH in rate block x Rate per KWH in rate block PRIMARY SERVICE DISCOI JNT Customers who own, operate, and maintain all facilities necessary to receive three-phase primary voltage service and all transformation facilities required for conversion to utilization voltage shall receive a Energy Charge discount of 0.3C/KWH (GM3). Customers utilizing City owned and operated facilities and transformation equipment and who are metered at primary voltage shall receive an Energy Charge discount of 0.1 C/KWH (GM2). The City shall own, operate and maintain all metering facilities, either at primary or secondary voltage. TYPE OF SERVICE The City will supply single-phase service (or three-phase service if available at the point of delivery) at sixty (60) cycles and at any standard voltages available from the City's distribution system through one standard transformation. Additional contractual arrangements between the City and the Customer, subject to the Special Facilities Rider, may be required where service of the type desired by the Customer is not available at the point of service. The due date for the payment of the bill for utility services shall not be less than ten (10) business days after issuance. 10 SCHEDULE GSL GENER AI~ SERVICE I~ARGE (Effective 01/01/05) The General Service Large (GSL) Rate is applicable to any commercial or industrial customer having a minimum actual demand of 250 KVA or 225 KW for all electric service supplied at one point of delivery and measured through one meter. Customers with an average actual demand equal to or greater than 200 KVA or 180 KW during the previous twelve month period may be allowed service under this rate, subject to the minimum billing provision. Customers other than commercial and industrial may be allowed service under this rate, subject to the minimum billing provision. Customers who elect to discontinue service under this rate are ineligible for service under this rate for twelve months. This rate is not applicable to resale service in any event, or to temporary, standby, or supplementary service. NET MONTHLY RATE (1) Facility Charge $65.55/bill plus; (2) Demand Charge $9.33/KVA (Minimum of 250 KVA billed) plus; (3) Energy Charge (GL1) per billing period First 200,000 KWH Additional KWH 2.14C/KWH 1.21 C/KWH plus; (4) Energy Cost Adjustment Charge See Schedule ECA MINIMUM BILLING For each billing period, the Customer shall be obligated to pay the following charges as a minimum, whether or not any energy was actually used: (1) The Facility Charge, plus; (2) The Demand Charge 11 DETERMINATION OF DEMAND The demand used in calculating the Demand Charge for the billing period shall be the greater off (1) the actual monthly KVA demand as measured during the fifteen (15) minute period of maximum use each month; or (2) 250 KVA; or (3) seventy percent (70%) of the maximum monthly KVA actual demand for any month during the previous billing months of May through October in the twelve (12) month period ending with the current month. ENERGY CHARGE Billing for the Energy Charge shall be based on actual KWH consumption during the billing period. Energy Charge = KWH in rate block × Rate per KWH in rate block PRIMARY SERVICE DISCOUNT Customers who own, operate, and maintain all facilities necessary to receive three-phase primary voltage service and all transformation facilities required for conversion to utilization voltage shall receive an Energy Charge discount of 0.3C/KWH (GL3). Customers utilizing City owned and operated facilities and transformation equipment and who are metered at primary voltage shall receive an Energy Charge discount of 0.1 C/KWH (GL2). The City shall own, operate and maintain all metering facilities, either at primary or secondary voltage. TYPE OF SERVICE The City will supply single-phase service (or three-phase service if available at the point of delivery) at sixty (60) cycles and at any standard voltages available from the City's distribution system through one standard transformation. Additional contractual arrangements between the City and the Customer, subject to the Special Facilities Rider, may be required where service of the type desired by the Customer is not available at the point of service. PAYMENT The due date for the payment of the bill for utility services shall not be less than ten (10) business days after issuance. 12 SCHEDULE TGS GENER Al, SERVICE TIME OF 1 JSE RATE (Effective 01/01/05) Applicable to any customer having a minimum demand of 250 KVA for all electric service supplied at one point of delivery and measured through one meter, with the City providing all facilities necessary to receive primary voltage service. Customers electing this rate must remain on this rate for a minimum of twelve (12) continuous billing months. This rate is not applicable to resale service in any event, or to temporary, standby, or supplementary service. NET MONTHLY RATE plus; plus; plus; plus; (1) Facility Charge $76.45/bill (2) On-Peak Demand Charge $11.87/KVA (3) Off-Peak Demand Charge $2.34/KVA (4) Energy Charge (TG 1) per billing period 0.71 C/KWH (5) Energy Cost Adjustment Charge See Schedule ECA MINIMI JM BII J,1NG For each billing period, the Customer shall be obligated to pay the following charges as a minimum, whether or not any energy was actually used: (1) The Facility Charge, plus; (2) The Off-Peak Demand Charge plus; 13 (3) The On-Peak Demand Charge DEFINITION OF ON-PEAK HOURS The City's on-peak hours, for the purpose of this rate schedule, are designated as being from 2:00 P.M. to 7:00 P.M. each Monday through Friday, for the months of June through September. The City's on-peak hours may be changed from time to time and the Customer will be notified twelve (12) months before such changes become effective. DEFINITION OF OFF-PEAK HOI JRS The City's system (off-pea&) hours, for the purpose of this rate schedule, shall be all hours not designated as on-peak hours. DETERMINATION OF ON-PEAK DEMAND The demand used in calculating the On-Peak Demand Charge for the billing period shall be the greater off (1) The KVA actual demand supplied during the fifteen (15) minute period of maximum use each month during on-peak hours as recorded by the City's demand meter, or (2) One hundred percent (100%) of the actual maximum on-peak demand similarly determined during the billing months of June through September in the twelve (12) months immediately preceding the current month. The On Peak Demand Charge will be applied to each billing period. DETERMINATION OF OFF-PEAK DEMAND The demand used in calculating the Off-Peak Demand Charge for the billing period shall be the actual KVA demand supplied during the fifteen (15) minute period of maximum use during off-peak hours each month as recorded by the City's demand meter. The Off-Peak Demand Charge will be applied to each billing period. DETERMINATION OF DEMAND BILLING FOR CUSTOMERS WITH NO PEAK DEMAND HISTORY DI JRING OFF-PEAK MONTHS If the Customer is new or does not have a history of on-peak use for June through September, and elects to come on the TGS rate, the Customer's billed demand shall be the off-peak demand billed at the GSL demand rate. The off-peak demand will be billed every month at the GSL rate until the customer establishes a separate on-peak and off-peak demand during an on-peak month. At this time, both on-peak and off-peak demand will then begin billing at the TGS rate. PRIMARY SERVICE DISCOI JNT Customers who own, operate and maintain all facilities necessary to receive three-phase primary voltage service and all transformation facilities required for conversion to utilization voltage shall receive an Energy Charge discount of 0.3C/KWH (TG5 and TG6). Customers utilizing City owned and operated facilities and transformation equipment and who are metered at primary voltage shall receive an Energy Charge discount of 0.1 C/KWH (TG3 and TG4). The City shall own, operate and maintain all metering facilities, either at primary or secondary voltage. 14 ENERGY CHARGE Billing for the Energy Charge shall be based on actual KWH consumption during the billing period. Energy Charge = KWH × KWH Rate TYPE OF SERVICE The City will supply single-phase service (or three-phase service if available at the point of delivery) at sixty (60) cycles and at any standard voltages available from the City's distribution system through one standard transformation. Additional contractual arrangements between the City and the Customer, subject to the Special Facilities Rider, may be required where service of the type desired by the Customer is not available at the point of service. PAYMENT The due date for the payment of the bill for utility services shall not be less than ten (10) business days after issuance. 15 SCHEDULE G1 I,OCAI, GOVERNMENT SERVICE (Effective 01/01/05) Applicable to any local City, County or School District for all electric service supplied at one point of delivery and measured through one meter. Not applicable to resale service in any event, or to temporary, standby or supplementary service. NET MONTHI,Y R ATE (1) Facility Charge Single-Phase $15.15/bill Three-Phase $20.20/bill plus; plus; plus; (2) Demand Charge $6.31/KW (3) Energy Charge 3.03C/KWH (4) Energy Cost Adjustment Charge See Schedule ECA MINIMI JM BII,I,ING For each billing period, the Customer shall be obligated to pay the following charges as a minimum, whether or not any energy was actually used: (1)The Facility Charge, plus; (2)The Demand Charge DETERMINATION OF DEMAND The demand used in calculating the Demand Charge for the billing period shall be the greater off (1) The actual KW demand supplied during the fifteen (15)-minute period of maximum use during the current month as determined by City's demand meter; or (2) not less than 50% of the highest monthly actual demand determined during the billing months of May through October in 16 the twelve (12) months immediately preceding the current month. ENERGY CHARGE Billing for the Energy Charge shall be based on actual KWH consumption during the billing period. Energy Charge = KWH × KWH Rate TYPE OF SERVICE The City will supply single-phase service (or three-phase service if available at the point of delivery) at sixty (60) cycles and at any standard voltages available from the City's distribution system through one standard transformation. Additional contractual arrangements between the City and the Customer, subject to the Special Facilities Rider, may be required where service of the type desired by the Customer is not available at the point of service. The due date for the payment of the bill for utility services shall not be less than ten (10) business days after issuance. 17 SCHEDULE WK WEEKEND RATE (Effective 01/01/05) Applicable to any commercial and industrial user whose maximum demand load occurs during the period from Thursday at 12 midnight through Sunday at 12 midnight and does not experience a demand load during the period from Sunday 12 midnight through Thursday 12 midnight that exceeds 80% of the maximum demand load. Customers who violate the 80% requirement more than four (4) times during the month, or more than twice on the same day of the week, during the months of June through September, are ineligible for service under this rate for twelve (12) months. Not applicable to resale service in any event, or to temporary, standby or supplementary service except in conjunction with applicable rider. NET MONTHI,Y R ATE (1) Facility Charge Single-Phase $20.00/bill Three-Phase $25.00/bill plus; (2) Demand Charge $6.40/KW (First 20 KW not billed) plus; (3) Energy Charge per billing period Customer with 20 KW or below: First 2,500 KWH All Additional KWH 6.75C/KWH 3.00C/KWH Customer above 20 KW: First 2,500 KWH Next 3,500 Additional KWH 6.75C/KWH 3.00C/KWH 2.65C/KWH plus; (4) Energy Cost Adjustment Charge See Schedule ECA 18 MIN|M[JM B|LLING (1) The Facility Charge plus; (2) The Demand Charge DETERMINATION OF DEMAND The demand used in calculating the Demand Charge for the billing period shall be the greater off (1) the actual KW demand supplied during the fifteen (15) minute period of maximum use during the current billing period as determined by the City's demand meter less 20 KW; or (2) zero (0). ENERGY CHARGE Billing for the Energy Charge shall be based on actual KWH consumption during the billing period. Energy Charge = KWH in rate block × Rate per KWH in rate block TYPE OF SERVICE The City will supply single-phase service (or three-phase service if available at the point of delivery) at sixty (60) cycles and at any standard voltages available from the City's distribution system through one standard transformation. Additional contractual arrangements between the City and the Customer, subject to the Special Facilities Rider, may be required where service of the type desired by the Customer is not available at the point of service. PAYMENT The due date for the payment of the bill for utility services shall not be less than ten (10) business days after issuance. 19 SCHEDULE AF ATHI,ETIC FIELD (EFFective 01/01/05) Applicable to all electric service metered at one point For use to light specified areas For athletic events. NET MONTHI~Y R ATE (1) Facility Charge Single-Phase $20.20/bill Three-Phase $30.30/bill plus; plus; plus; (2) Energy Charge per billing period Billing months of June through September: 2:00 PM to 7:00 PM (Pea&) 7.58C/KWH All Other Hours (Off Pea&) 3.79C/KWH Billing months of October through May: All hours 3.79C/KWH (3) Demand Charge Billing months of.lune through September: Pea& (2:00 PM - 7:00 PM) $4.70/KW All Other Hours (Off Pea&) $1.11/KW Billin~ months of October through May: All hours $1.11/KW (4) Energy Cost Adjustment Charge See Schedule ECA 20 M1N|M[JM B|LL1NG For each billing period, the Customer shall be obligated to pay the following charges as a minimum, whether or not any energy was actually used: Single-Phase Three-Phase Facility Charge Facility Charge DETERMINATION OF DEMAND The demand used in calculating the Demand Charge for the billing period shall be the actual KW demand supplied during the fifteen (15) minute period of maximum use during the current billing period as determined by the City's demand meter. ENERGY CHARGE Billing for the Energy Charge shall be based on actual KWH consumption during the billing period. Energy Charge = KWH in rate block x Rate per KWH in rate block TYPE OF SERVICE The City will supply single-phase or three-phase service at sixty (60) cycles and at any standard voltages available from the City's distribution system through one standard transformation. Additional contractual arrangements between the City and the Customer, subject to the Special Facilities Rider, may be required where service of the type desired by the Customer is not available at the point of service. PAYMENT The due date for the payment of the bill for utility services shall not be less than ten (10) business days after issuance. 21 SCHEDULE LS STREET 1JGHTING (Effective 01/01/05) AP2LICAIJD~ Applicable to all street lighting owned and maintained by the City of Denton. NET MONTHLY RATE (1) Facility Charge LSA tOO W Sodium Vapor $4.90/bill LSB 250 W Sodium Vapor $6.95/bill LSC 400 W Sodium Vapor $8.75/bill plus; (2) Energy Cost Adjustment Charge Current ECA × Bulb Wattage Factor where the following Bulb Wattage Factors apply; Rate l,uminaire Tvr~e Bulb Wattage Factor LSA tOO W Sodium Vapor 48 KWH LSB 250 W Sodium Vapor 105 KWH LSC 400 W Sodium Vapor 159 KWH TYPE OF SERVICE The City will supply single-phase service (or three-phase service if available at the point of delivery) at sixty (60) cycles and at any standard voltages available from the City's distribution system through one standard transformation. Additional contractual arrangements between the City and the customer, subject to the Special Facilities Rider, may be required where service of the type desired by the customer is not available at the point of service. PAYMENT The due date for the payment of the bill for utility services shall not be less than ten (t0) business days after issuance. 22 SCHEDULE LT TRAFFIC 1JGHTING (Effective 01/01/05) Applicable to State and Local Government agencies that operate and maintain their own traffic signals. NET MONTHI,Y R ATE (1) Energy Charge per billing period plus; (2) Energy Cost Adjustment Charge 5.30C/KWH See Schedule ECA ENERGY CHARGE Billing for the energy charge shall be based on actual KWH consumption during the billing period. Energy Charge = KWH x KWH Rate TYPE OF SERVICE The City will supply single-phase, sixty (60) cycle service at 120 or 240 volts from the City's distribution system through one standard transformation. Additional contractual arrangements between the City and the Customer, subject to the Special Facilities Rider, may be required where service of the type desired by the Customer is not available at the point of service. PAYMENT The due date for the payment of the bill for utility services shall not be less than ten (10) business days after issuance. 23 APPIJCATION SCHEDULE LO OTHER LIGHTING (Effective 01/01/05) Applicable to Texas Department of Transportation unmetered and metered safety lighting systems and continuous lighting systems as those terms are defined in Texas Administrative Code, Title 43, Part 1, Chapter 25, Subchapter A, Rule §25.11. LOA (Unmetered Lighting) plus; NET MONTHI,Y R ATE (1) Energy Charge per billing period (2) Energy Cost Adjustment Charge 5.30C/KWH Current ECA x Bulb Wattage/1000 x Hours of Operation Per Billing Period ENERGY CHARGE Billing for the Energy Charge shall be based on estimated KWH consumption during the billing period. Energy Charge = KWH Rate x Bulb Wattage/1000 x Hours of Operation Per Billing Period where; Hours of Operation Per Billing Period = 333 hours Bulb Wattage is the rated wattage of the luminaire bulb (Metered l,i~htin~ NET MONTHI,Y R ATE (1) Energy Charge per billing period 5.30C/KWH See Schedule ECA plus; (2) Energy Cost Adjustment Charge 24 ENERGY CHARGE Billing for the Energy Charge shall be based on actual KWH consumption during the billing period. Energy Charge = KWH x KWH Rate TYPE OF SERVICE The City will supply single-phase, sixty (60) cycle service at 120 or 240 volts from the City's distribution system through one standard transformation. Additional contractual arrangements between the City and the Customer, subject to the Special Facilities Rider, may be required where service of the type desired by the Customer is not available at the point of service. The due date for the payment of the bill for utility services shall not be less than ten (10) business days after issuance. 25 SCHEDULE DD SECURITY LIGHTING (Effective 01/01/05) Applicable to any customer within the area served by the City's electric distribution system for outdoor area lighting when such lighting facilities are operated as an extension of the City's distribution system. NET MONTHI,Y R ATE (1) Facility Charge Rate l,uminaire Type F2cilJ~ DSA 100 W Sodium Vapor $7.75/bill DSB 250 W Sodium Vapor $10.05/bill DSC 400 W Sodium Vapor $12.35/bill DHA 250 W Metal Halide $12.05/bill DHB 400 W Metal Halide $14.35/bill plus; (2) Energy Cost Adjustment Charge Current ECA × Monthly Bulb Wattage Factor where the following Bulb Wattage Factors apply; Rate Luminaire Type Bulb Wattage Factor DSA 100 W Sodium Vapor 48 KWH DSB 250 W Sodium Vapor 105 KWH DSC 400 W Sodium Vapor 159 KWH DHA 250 W Metal Halide 105 KWH DHB 400 W Metal Halide 159 KWH TYPE OF SERVICE The City shall furnish, install, maintain and deliver electric service to automatically controlled, metal halide or sodium vapor lighting fixtures conforming to the City's standards and subject to its published rules and regulations. Where necessary for proper illumination or where existing poles are inadequate, the City will install or cause to be installed, one (1) wood pole with the necessary lighting hardware and 26 overhead conductor for each installed light, at a distance not to exceed eighty (80') feet from existing lines, at no charge to the Customer. Additional contractual arrangements between the City and the customer, subject to the Special Facilities Rider, may be required where service of the type desired by the Customer is not available at the point of service. TERM OF CONTR ACT A two (2) year contract shall be agreed to and signed by each Customer desiring Security Lighting Service authorizing fixed monthly charges, which may be reviewed annually, and to be applied to the monthly municipal utilities bill. In the event that a Customer requests the removal of the unit or discontinuance of the service prior to completion of two (2) years, the remainder of the contract period shall become due and payable. After the end of the initial two (2) year contract, service shall continue on a month-to-month basis and may be canceled by either party upon thirty (30) days notice. PAYMENT The due date for the payment of the bill for utility services shall not be less than ten (10) business days after issuance. 27 SCHEDULE DDL DOWNTOWN DECOR ATIVE 1JGHT1NG (Effective 01/01/05) Applicable to any Customer on the perimeter of the square served by the City's electric distribution system for outdoor area lighting when such lighting facilities are operated as an extension of the City's distribution system. NET MONTHI,Y R ATE (1) Facility Charge $3.85/bill plus; (2) Energy Cost AdjustmentCurrent ECA x Monthly Bulb Wattage Factor, based on 415 KWH per Customer TYPE OF SERVICE The City shall furnish, install, maintain and deliver electric service to automatically controlled lighting fixtures conforming to the City's standards and subject to its published rules and regulations. The service is provided between dusk and midnight. Additional contractual arrangements between the City and the Customer, subject to the Special Facilities Rider, may be required where service of the type desired by the Customer is not available at the point of service. PAYMENT The due date for the payment of the bill for utility services shall not be less than ten (10) business days after issuance. FACIIJTY CHARGE The Facility Charge shall be assessed on each bill rendered. 28 SCHEDULE TI TEMPORARY SERVICE SCHEDI JI,E (Effective 01/01/05) Applicable when a Customer requests electric service on a short term or temporary basis where a customer has received a permit from the City of Demon's Building Inspections Departmem. This rate is not applicable after the certificate of occupancy or building final has been issued. NET MONTHI,Y R ATE (1) Facility Charge Single-Phase $15.15/bill Three-Phase $20.20/bill plus; plus; (2) Energy Charge per billing period (3) Energy Cost Adjustmem Charge 6.77C/KWH See Schedule ECA MINIMI JM BII,I,ING For each billing period, the Customer shall be obligated to pay the following charges as a minimum, whether or not any energy was actually used: Single-Phase Three-Phase Facility Charge Facility Charge ENERGY CHARGE Billing for the Energy Charge shall be based on actual KWH consumption during the billing period. Energy Charge = KWH × KWH Rate TYPE OF SERVICE The City will supply single-phase service at sixty (60) cycles at a standard secondary voltage available at the site. Additional contractual arrangemems between the City and the Customer, subject to the Special Facilities Rider, may be required where service of the type desired by the Customer is not available at the point of service. 29 ADDITIONAL TEMPORARY SERVICE CHARGES Labor (Regular Time) $60.00 minimum up to one (1) hour. $60.00 for each additional hour (to be measured to the nearest one- quarter hour). Labor (Overtime) $75.00 minimum up to one (1) hour. $75.00 for each additional hour (to be measured to the nearest one- quarter hour). Premium time to be added where applicable. Transportation To be billed by hours or miles, as applicable, according to the estimated cost of operating the equipment. Material Material that cannot be salvaged to be billed at Store's cost plus 25%, plus applicable sales tax. At the time a temporary service is removed or converted, any loss in the material installed due to negligence or willful action by the Customer will be billed separately to the Customer at replacement cost plus 25%, plus applicable sales tax. The due date for the payment of the bill for utility services shall not be less than ten (10) business days after issuance. FLAT RATE TEMPORARY SERVICE Applicable to new construction of underground residential electric service only. Rate: A flat fee of $195 per lot payable when the Customer applies for temporary service. 30 SCHEDULE IDR 1NDI JSTRIAI, DEVEIDPMENT RIDER (Effective 01/01/05) AVAILABILITY This rider is available to the Customers who receive service from Rate Schedules GSL or TGS. This rider is available to electric service supplied at any one location. It is for firm electric service applicable to new and existing Customers as described below, over a five (5) year period. This rider is available to the following classes of Customers: (1) New customers whose electric service represents demand not previously served by the City at any location in the City's service area in the last twelve (12) months, where such metered demand will be in excess of 225 KVA or 200 KW, as estimated and mutually agreed upon by the Director of Electric Utilities and the customer. (2) Existing customers served under Rate Schedules GSL or TGS who increase their prior existing metered demand by 225 KVA or 200 KW. This increase shall be verified by sub-metering (at the Customers expense) the additional load. If sub- metering is not possible, at the discretion of the Director of Electric Utilities, the increase may be verified by comparing a three-month rolling average of the new level of demand to the prior demand averaged for corresponding months. During periods in which this verification method cannot be applied, the Director of Electric Utilities and the Customer may develop a mutually agreed-upon formula to estimate the base and additional demand levels. NET MONTHI~Y R ATE The Customer shall be charged under the appropriate applicable rate schedules with the exception that the monthly billing demand (for GSL) or system demand and on-peak demand (for TGS) will be adjusted in accordance with the following table: Time Period Re&lction to Billin2 Demand First Year 50% Second Year 40% Third Year 30% Fourth Year 20% Fifth Year 10% CONTRACT PERIOD The term of the contract will be for five (5) years. 31 SCHEDULE EP ENERGYSAVE PROGRAM (Effective 01/01/05) APPLICATION/PROGRAM SUMMARY Denton Municipal Electric ("DME") through this program, called "EnergySave", is offering cash payments as incentives in the form of rebates to Customers who purchase and install high- efficiency air conditioners or heat pumps for existing residential or commercial facilities. This program will also provide structure incentives in the form of rebates, in the amount of $2,000 per qualifying structure, to residential builders of single-family residences for meeting specific DME structure requirements. Satisfying these construction requirements will improve a residential structure's heating and cooling system's operating efficiency. Apartments and multiple unit residential structures will qualify for the air conditioner rebates, but will not qualify for the structure incentive, if they meet the applicable EnergySave Program Guidelines. The EnergySave Program's objectives are primarily to reduce energy demand and consumption, thereby allowing the Customers of DME to save dollars on their utility bills, reducing the peak load of the City of Denton's electric system, and promoting energy efficient heating and cooling. The EnergySave Program will be in effect each fiscal year beginning on October 1, until the allotted funding is depleted. At the time the funds are depleted, no additional applications for participation will be accepted until the next fiscal year. PROGRAM GUIDELINES I. Qualification Guidelines for HVAC Eo?ipment All installations must be for accounts served by the DME and must meet all applicable national, local, and manufacturers' codes and specifications. To qualify for the equipment incentive, the equipment must be new when installed. All equipment must be purchased. No leased or lease/purchased equipment will qualify for a cash rebate. D. Installations must be made by licensed contractors and/or dealers. No rebate will be paid on a partial replacement of an air conditioner. The condenser unit and the evaporator coil must be replaced to qualify for a rebate. Requests for payment must be received by DME within thirty (30) days of installation. Equipment and installation must be permitted and inspected by the City's Building Inspection Department before final approval for payment is issued. 32 Ho The EnergySave Program guidelines and payments are subject to change by DME without prior notice. DME may, at any time, discontinue the EnergySave Program, without prior notice. Payments shall be credited to the recipient's utility account with DME. II. Qualification Guidelines for Structure Incentive A. $2,000.00 per qualifying structure is offered to a builder or authorized agent. B. Builder, or authorized agent, must be enrolled in the Denton Municipal Electric EnergySave Program (EnergySave). Co Each home participating in the EnergySave program must be registered with DME prior to construction and must also comply with the 2000 IECC requirements relating to residential structures. D. Install a 1.5-ton or above central air conditioner or heat pump having a minimum efficiency rating of 14 SEER. E. Install minimum insulation off R49 - ceiling (uniform application) R30 - under decking R30 - cathedral or vaulted ceiling R30 - floor R13 - wall cavity Insulation should not contact radiant barrier roof decking. Fo Exterior glass must meet minimum high efficiency standards 0.4 or below - solar heat-gain coefficient 0.4 or below - U-factor G. Programmable Thermostat - EnergyStar approved H. Radiant Barrier Decking Must maintain air gap between insulation and decking I. Acceptable attic ventilation One square inch of ventilation per square foot of attic floor, or rate of air exchange of entire volume of attic air once at per minute 33 iii. J. Structure Incentives for new homebuilders must also comply with the respective restrictions and guidelines set forth by the international Residential Code (iRC). General Procedures A. Application 1. Equipment: An application for equipment incentive must be completed and sent to Denton Municipal Electric within sixty (60) days of installation of new or replacement equipment. Participating dealers have application forms and will complete these forms for the purchaser. It is the purchaser's responsibility to see that the dealer completes the form and submits it to DME. All submissions are subject to lawful verification of identification and entitlement to the EnergySave credit by Denton Municipal Electric. 2. Structure Incentive: To qualify for residential structure incentives, a builder/developer or authorized agent must be registered as an authorized Denton Municipal Electric EnergySave Authorized Builder. To become a recognized EnergySave builder, applicant must complete and submit a Denton Municipal Electric EnergySave Builder Application form to the Director of Electric Utilities. Applicant must also meet the requirements listed in the iECC and EnergySave guidelines. B. inspections Installations of central air-conditioning systems must be permitted and will be inspected by the City's Building inspection Department, and must be approved before rebates will be processed. All submissions are subject to lawful verification of identification and entitlement to the EnergySave credit by Denton Municipal Electric. New structures will be randomly audited to insure adherence to the required energy efficient construction specifications. C. Payments to Participants 1. Equipment Retrofit (Existing residences) Cash payments will be made to the purchaser of the qualifying replacement equipment. Participating retail equipment dealers will receive a cash payment of $20 per unit for the sale of window units, central air conditioning systems, or heat pumps to offset their cost for properly filling out the applications for purchasers of retrofit equipment. All submissions are subject to lawful verification of identification and entitlement to the EnergySave credit by Denton Municipal Electric. 34 IV. 2. New equipment and structure incentive Program participants are responsible for submitting the correct information. DME will not issue any additional payment unless the payment was incorrect due to a mistake in processing by a City employee. The twenty-dollar ($20.00) payments to dealers will be made only if they supply the qualifying equipment to the customer or builder who is paying for the installation of the equipment. Dealers and purchasers may be denied payment for failure to follow program guidelines such as: failing to supply correct SEER/EER figures; installing equipment which is not new; replacing part of a split system; or failure to fill out rebate forms properly. All submissions are subject to lawful verification of identification and entitlement to the EnergySave credit by DME. Payments will be made to customers who purchase and install new qualifying equipment. If a tenant purchases and installs qualifying equipment, the payment is made to the tenant. If the owner of rental property purchases and installs qualifying equipment, the payment is made to the owner. Payment Sche&lle SEER/EER Tyne ofl Jnit Ratine Incentive Central Air Conditioning 14.0 + $600/unit Central Heat Pumps 14.0 + $700/unit Geothermal Heat Pump 14.0 + $700/unit Room Air Conditioners 12.0 + $50/unit Room Heat Pumps 12.0 + $50/unit 35 SCHEDULE UPS ~NINTERRI ~PTIBI ~E PO~VER SI ~PPI ~Y (Effective 01/01/05) APPIJCATION Applicable to any Customer who, by written agreement, receives service for an uninterruptible power supply for a computer or other electrical equipment. Uninterruptible Power Supplies provided by the City of Denton, Texas are of the standby type. NET MONTHLY RATE plus; (1) Facility Charge: 0-300 Watts Uninterruptible Power Supply 301-700 Watts Uninterruptible Power Supply 701-1,200 Watts Uninterruptible Power Supply $7.80/bill $14.90/bill $31.85/bill (2) Installation Charge $25.75 For any Uninterruptible Power Supply other than above, the monthly Customer Charge will be based on the following formula: (1) Monthly Charge: 5% of Annual Maintenance Cost PLUS 12 months 6% Annual Return of Investment 12 months 8% Interest on a Five (5) Year Life TYPE OF SERVICE PLUS The City shall furnish, install, maintain an automatically controlled alternating current power backup unit conforming to the City's standards and subject to its published rules and regulations. PAYMENT Bills are due when rendered, and become past due if not paid within fifteen (15) calendar days from date of issuance. 36 SCHEDULE ECA ENERGY COST AD.Il JSTMENT (ECA) (Effective 01/01/05) ECA CALCULATION The Energy Cost Adjustment (ECA) shall be computed during the last month of each fiscal year quarter (December, March, June and September) to be applied to the quarter immediately following. The City shall in no case change the energy cost adjustment more than once in any three (3) month period. The ECA shall be calculated using the following formula: ECA = (Projected energy costs for next quarter)/(Projected KWH sales for next quarter) In the event that actual plus estimated cumulative costs of fuel, variable costs of Texas Municipal Power Agency (TMPA) energy and purchased energy (excluding TMPA's fixed charges) are greater than or less than the actual and projected ECA revenues by $500,000 or more during the next quarter, the Director of Electric Utilities or her designate shall recalculate the Energy Cost Adjustment and, with Public Utilities Board approval, may establish an ECA that collects or returns such difference over the next three-month period. Such change in ECA shall be applied evenly to each month during the three-month period. ENERGY COST AD.II JSTMENT CHARGE The Energy Cost Adjustment Charge shall be based on actual KWh consumption during the billing period. Energy Cost Adjustment Charge = KWh × Energy Cost Adjustment 37 SCHEDULE SFR SPECIAl, FACILITIES RIDER (Effective 01/01/05) All service shall be offered from available facilities. If a customer service characteristic requires facilities and devices not normally and readily available at the location which the customer requests service, the total cost incurred by the City of all facilities installed, buried, relocated and/or removed shall be the responsibility of the Customer and subject to a special contract entered into between the Utility and the Customer. This contract shall be signed by both parties prior to the City providing service to the Customer. (2) Billing for services beyond the delivery of electricity, utilized by the Customer, may be subject to a special contract entered into between the utility and the Customer. This contract shall be signed by both parties prior to the City providing service to the Customer. 38 SCHEDULE UD DISCOI ~XlT RIDER FOR STATE 1 ~XlIVERSITIES AND COI,I,EGES (Effective 01/01/05) APPIJCATION Service provided herein is applicable to electric service billed under the otherwise applicable tariffed rate for service supplied to a facility of a "four-year state university, upper-level institution, Texas State Technical College, or college" as provided in the Public Utility Regulatory Act of 2003, Chapter 36, Subchapter H, §36.351. CREDIT TO MONTHI~Y BIIJ~ OR MONTHI~Y RATE Per the Public Utility Regulatory Act of 2003, Chapter 36, Subchapter H, §36.351 a discount of 20% shall be applied to the base rate of the applicable rate schedule of an account. "Base Rates" are defined as the sum of the following charges: the Facility Charge, the Energy Charge and/or the Demand Charge of the applicable rate schedule. Base rates do not include recovery of fuel and purchased energy costs, including, without limitation, energy cost adjustments (the ECA rate or its successors). All other charges and calculations in the rate schedule are unchanged. 39 SCHEDULE DGR DISTRIBUTED GENERATION FROM RENEWABLE SOURCES RIDER (Effective 01/01/05) This Rider is available to any retail customer receiving electric service under a City of Demon residential electric rate schedule who owns and operates an on-site generating system powered by a renewable resource capable of producing not more than 3 kW of power, and who interconnects with the City of Denton's electric system. Renewable energy technology is any technology that exclusively relies on an energy source that is naturally regenerated over a short time and derived directly or indirectly from the sun or wind. A renewable energy technology does not rely on energy resources derived from fossil fuels, waste products from fossil fuels, or waste products from inorganic sources. This Rider applies to a Customer-owned generating system that primarily offsets part or all of the Customer's electric service provided by the City of Denton. CONDITIONS OF SERVICE All charges, character of service, and terms and conditions of the City of Denton electric rate schedule under which the Customer receives service apply except as expressly altered by this Rider. The Customer shall comply with the current City of Denton technical requirements for distributed generation imerconnection. The Customer shall obtain approval from the City of Denton before the Customer energizes the customer's on-site generating system or interconnects it with the City of Denton's electric system. The Customer shall submit to the City a completed interconnection application form and signed agreement. The minimum term of an agreement under this Rider is one year, extended automatically unless terminated by either party with sixty days advance written notice The Customer is responsible for the costs of interconnecting with the City of Denton's electric system, including transformers, service lines, or other equipment determined necessary by the City for safe installation and operation of the Customer's equipment with the City's system. The Customer is responsible for any costs associated with required inspections and permits. Metering under this Rider shall be performed by a single meter capable of registering the flow of electricity in two directions (delivered and received) to determine the Customer's net energy flow. RATE Beginning in a billing period after a Customer receives approval to interconnect the Customer's 40 on-site generating system from the City of Denton, if the energy delivered by the Customer's approved system to the City of Denton's electric system exceeds the amount of energy delivered by the City of Denton to the Customer, the City shall credit the Customer's account for the energy generated as described below. The momhly credit, if any, is calculated as follows: Each kWh delivered from the Customer's approved system to the City of Demon's electric system in excess of the kWh delivered by the City of Denton to that Customer is multiplied by the billing period's Energy Cost Adjustmem Rate. Any credit shall be applied to the utility charges due from the Customer to the City of Demon for the billing period. 41 SCHEDULE R1 RESIDENTIAl, SERVICE R ATE Schedule Cancelled 42 SCHEDULE R2 RESIDENTIAl, SERVICE R ATE Schedule Cancelled 43 SCHEDULE TR RESIDENTIAl, TIME OF 1 J-SE RATE Schedule Cancelled 44 SCHEDULE DGL DECOR A TIVE GR Ol JND I,IGHT1NG Schedule Cancelled 45 SCHEDULE P 1 INTERRI JPTIBI,E PRIMARY SERVICE Schedule Cancelled 46 SCHEDULE ES STANDBY; SI JPPI,EMENTARY AND MAINTENANCE SERVICE Schedule Cancelled SCHEDULE MTR PREMII ~M-EFFICIENCY MOTOR REBATE Schedule Cancelled ~ That the Assistant City Manager for Utilities is hereby authorized to expend funds to issue rebates to electric utility customers in the form and type set forth in Schedule EP, as the use of more efficiem air conditioning compressors and heat pumps is in the best imerest of the City of Demon, Texas, as such will reduce the peak-load and conserve energy, which are public purposes of the City. SECTION 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. SECTION 4. That if any section, subsection, paragraph, sentence, clause, phrase or word in this ordinance, or application thereof to any person or circumstances is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of 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 and the rates herein adopted shall become effective, charged, and applied to all electric services rendered by Denton Municipal Electric, and all energy usage by customers of Denton Municipal Electric effective with the first billing issued on or after January 1, 2005; and a copy of said rates shall be maintained on file in the Office of the City Secretary. PASSED AND APPROVED this the day of ,2004. ATTEST: JENNIFER WALTERS, CITY SECRETARY EULINE BROCK, MAYOR By: APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY By: S:\Our Documents\Ordinances\04~2005 Electric Rate Ordinance-Final. doc 49 ORDINANCE NO. 2004- AN ORDINANCE OF THE CITY OF DENTON, TEXAS PROVIDING FOR THE AMENDMENT OF THE SCHEDULE OF MISCELLANEOUS FEES, SERVICE CHARGES, DEPOSITS, BILLINGS AND PROCEDURES FOR ADMINISTRATIVE SERVICES TO CITY CUSTOMERS AND TAXPAYERS CONTAINED IN ORDINANCE NO. 2004-259; PROViDiNG FOR AN iNCREASE IN THE DELINQUENT SERVICE CHARGE (WHEN SERVICE IS DISCONNECTED AT THE METER SOCKET); PROVIDING FOR AN INCREASE IN THE RECONNECT CHARGE AFTER BUSINESS HOURS (WHEN SERVICE IS DISCONNECTED AT THE METER SOCKET); PROVIDING FOR A NEW RETURN TRIP CHARGE TO RECONNECT SERVICE DURING BUSINESS HOURS; PROVIDING FOR A NEW RETURN TRIP CHARGE AFTER BUSINESS HOURS TO RECONNECT SERVICE; PROVIDING FOR A REPEALER; PROVIDING FOR A SEVERABiLiTY CLAUSE; AND PROVIDING FOR AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. That the schedule of charges for general utility services as generally provided for in Chapter 26 of the Code of Ordinances; and for services to other City of Demon customers and taxpayers, are hereby established as follows: SERVICE CHARGES AND PROCEDURES SCHEDULES A. ACCOUNT CONNECTION AND RECONNECTiON CHARGES PAGE Electric Meter Installation Charge Electric and Water Meter Connection Charge Delinquem Service Charge Unauthorized Usage Penalty 3 3 4 4 Bo METER CHARGES Meter Reading Meter Testing Meter Tampering and/or Damage Charge Meter inaccessibility Charge 5 5 5 6 EXHIBIT 3 C. MISCELLANEOUS FEES, CHARGES AND DEPOSITS Returned Payment Charge Service Deposits Late Payment Charge Due on Delinquent Balances Interest Charge on Past Due Account Balance Credit Report Charge Interest Earned on Contract Retainage 7 7 8 8 9 9 Page 2 ACCOUNT CONNECTION AND RECONNECTION CHARGES (Effective 01/01/05) For the purposes of this rate schedule, business hours shall be defined as Monday through Friday, 8:00 AM to 5:00 PM. ELECTRIC METER INSTALLATION CHARGE APPLICATION Applicable when a customer requests electric service on a first time basis where no permanent service previously existed and where a new account number is established. CHARGE First Service Requested First Service Requested, after business hours $22.00 $35.00 ELECTRIC AND WATER METER CONNECTION CHARGE APPLICATION Applicable when a customer requests service at an address which has existing or previous service, with an existing account number and history, and the electric and/or water meter must be installed or activated for readiness. CHARGE Electric Service Requested Water Service Requested $11.00 $11.00 Electric Service Requested, after Business Hours $25.00 Water Service Requested, after Business Hours $25.00 Page 3 DELINQUENT SERVICE CHARGE (Effective 01/01/05) APPLICATION Applicable when a customer's account is processed for disconnection due to nonpayment. CHARGE Delinquent Service Charge $30.00 (When service is disconnected at the meter socket) Delinquent Service Charge $110.00 (When service is disconnected at the transformer) Reconnect Charge, after business hours (When service is disconnected at the meter socket) $55.00 Reconnect Charge, after business hours (When service is disconnected at the transformer) $145.00 When more than one trip, within twenty-four (24) hours, is required to restore a customer's service, a Return Trip Charge, in addition to the Reconnect Charge, shall be applied for each additional trip. Return Trip Charge during business hours $30.00 Return Trip Charge after business hours $55.00 Business hours are defined as from 8:00 a.m. to 5:00 p.m., Monday through Friday. UNAUTHORIZED USAGE PENALTY APPLICATION Applicable to any customer that fails occupancy in a new service location. CHARGE Unauthorized Usage Penalty to request connection of services within 24 hours of $30.00 Page 4 METER CHARGES (Effective 01/01/05) METER READING APPLICATION Applicable to any electric or water utility customer who requests a reading of a city meter due to a contested billing more than twice in the previous twelve (12) months, and no error is found. CHARGE Per Additional Reading $25.00 METER TESTING APPLICATION Applicable to any customer who requests the testing of a city meter previously tested within the past four (4) years and the meter is found to be within accuracy standards. CHARGE Per Test ACCURACY STANDARDS $27.00/KWH Electric Meter $38.00/KW/KWH Electric Meter A meter is defined as within accuracy standards when found to be plus or minus two percent (2%) or less. METER TAMPERING AND/OR DAMAGE CHARGE APPLICATION Applicable to any person that tampers with, damages, or illegally connects to a city electric, water, or wastewater utility system. CHARGE Per Event $200.00 minimum per connection per system Page 5 METER INACCESSIBILITY CHARGE APPLICATION Applicable to any customer who prevents the regular and routine reading, maintenance, repair or removal of any city meter due to inaccessibility of the meter. CHARGE Per event $38.00 Page 6 MISCELLANEOUS FEES, CHARGES, AND DEPOSITS (Effective 01/01/05) RETURNED PAYMENT CHARGE APPLICATION Applicable when a customer's or taxpayer's check, or money order, or bank draft for paymem of fees, fines, court costs, taxes, utilities, or other charges has been dishonored by the maker's bank and returned to the City of DeNon unpaid. CHARGE Per Check $27.00 SERVICE DEPOSITS APPLICATION Applicable when a residemial customer requests utility service in the City of DeNon service area and does not have twelve (12) momhs of good credit standing with the City of DeNon or another utility system for the type of service requested, or does not have a co-signer with twelve (12) months of good credit standing with the City of Denton, or does not request and demonstrate a passing credit rating through a credit reporting agency. Applicable when a commercial customer does not have twenty-four (24) momhs of good credit standing with the City of DeNon, or a commercial letter of good credit from another utility system. Not applicable when a commercial customer provides an irrevocable letter of credit to the City of DeNon as security for paymem. CHARGE Residemial Customer $150.00 or an amoum equal to 1/6 of the last 12 momhs of billing at the service location. If utility service is disconnected for non- paymem, then the customer will be required to pay a deposit sum up to but not greater than 1/6 of the last 12 momhs of billing at the service location. Commercial Customer $300.00 or an amount equal to 1/6 of the last 12 momhs of billing at the service location, whichever is greater. If utility service is disconnected for non-payment, then the customer will be required to pay a deposit Page 7 sum equal to 1/6 of the last 12 months of billing at the service location. Deposits will earn interest for the customer. The applicable rate of interest will be adjusted semi-annually to equal the rate of a one-year United States Treasury Note on October 1 and April 1 of each year. If refund of deposit is made within thirty (30) days of receipt of deposit, no interest payment will be made. If the City retains the deposit more than thirty (30) days, payment of interest, at the current rate, shall be made retroactive to the date the deposit was paid, A. Payment of the interest to the customer shall be made at the time the deposit is returned or credited to the customer's account. B. The deposit shall cease to earn interest on the date it is returned or credited to the customer's account. LATE PAYMENT CHARGE DUE ON DELINQUENT BALANCES APPLICATION To cover a portion of the administrative costs of collecting past due balances, a late payment charge shall be assessed on the fifth business day following the due date. CHARGE $10.00 late payment charge INTEREST CHARGE ON PAST DUE ACCOUNT BALANCE APPLICATION Interest shall be assessed on any past due account balance (excluding late payment charges) that remains unpaid at the time of the current month's billing calculation. The interest provided for and assessed herein shall be due and payable on the due date of the current month's billing statement. CHARGE 1%/month on all past due charges and account balances unpaid at the time of the current month's billing calculation. * * **Under no circumstances shall the interest charge provided for herein exceed the legal rate of interest. To the extent that it does so, the charge is inadvertent, and the City intends only to assess, charge and collect such interest rate that does not exceed the highest la~vful rate. Page 8 CREDIT REPORT CHARGE APPLICATION This fee is applicable if the customer (a) cannot provide a satisfactory credit rating through previous service history with Demon Municipal Utilities or another utility service; or (b) cannot provide the city with a qualified co-signer, and (c) provides written authorization for the city to obtain a credit rating from a credit source available to the city. CHARGE Charge per credit report $13.00 INTEREST EARNED ON CONTRACT RETAINAGE Contract retainage will earn interest for the contractor as provided by TEX. REV. CIV. STAT. ANN. Article 6252, Sec.5b (Vernon Supp. 1992). The rate of imerest will be adjusted semi- annually to equal the interest rate of a one year United States Treasury Note on October 1 and April 1 of each year. Payment of the interest shall be made at the time the retainage is paid to the contractor. Page 9 SECTION 2. 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. SECTION 3. That if any section, subsection, paragraph, sentence, clause, phrase or word in this ordinance, or application thereof to any person or circumstances is held invalid by any court of competem jurisdiction, such holding shall not affect the validity of the remaining portions of this ordinance, and the City Council of the City of Demon, Texas, hereby declares it would have enacted such remaining portions despite any such invalidity. SECTION 4. That this ordinance shall become effective, charged, and applied to all services occurring on and after January 1, 2005; and a copy of said fees and charges shall be maimained on file in the office of the City Secretary. 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\2005 Miscellaneous Rate Ordinance-Amended.doc Page 10 AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: CM/DCM/ACM: December 7, 2004 General Government Betty Williams, Director of Managemem & Public Information Michael A. Conduff, City Manager SUBJECT: Consider adoption of an ordinance of the City Council of the City of Demon, Texas, on first reading, authorizing the City Manager or his designee to execute a one-year extension to the Interim Grant of Authority with Grande Communications Networks, Inc., formerly Denton Telecom Partners I, L.P. d/b/a Advantex Communications; and providing an effective date. BACKGROUND: In December 2001, the City learned that CoServ Communications L.L.C., d/b/a CoServ Communications (CoServ) was providing cable television to the Robson Ranch Developmem. Research revealed that CoServ was using public easements within the Denton city limits to provide cable television service, without a cable television franchise with the City. This was a violation of Ordinance 99-121, Sections 8-164 through 8-167. In January 2002, CoServ was comacted by the City and requested that CoServ apply for a cable television franchise. CoServ met with the City and revealed that they had filed for bankruptcy in November 2001. CoServ did file an application for a cable television franchise on March 4, 2002. In July 2002, the City was notified that CoServ was in the process of coming out of bankruptcy and the assets (system) were to be sold or transferred to the creditor bank. In December 2002, the City received notice that CoServ cable television operations had been assigned by the bankruptcy court to Denton Telecom Partners I, LP d/b/a Advantex Communications (Advamex). In January 2003, the City sero Advamex a proposed Imerim Gram of Authority and a cable television franchise application. The City requested that Advantex begin negotiations on the Imerim Gram of Authority agreemem for the cable service being provided to the Robson Ranch development. The Interim Grant of Authority that was submitted to Advantex contained similar but not identical language that is found in the current cable franchise agreement with Charter Communications. In March 2003, the City did receive a partial cable television franchise application. In April 2003, Advamex rejected the City's proposed Imerim Gram of Authority and instead submitted their own proposal. The City reviewed Advamex's proposal and rejected it because it failed to meet several cable community needs. ADA/EOE/ADEA www.cityofdenton.com (TDD 800-735-2989) 12/1/04 Cable Franchise Extension Page 2 of 3 In April 2003, Advamex comacted the city and questioned whether the Imerim Gram of Authority adhered to the Telecommunications Act of 1996 and portions of the 1984 and 1992 federal acts.. The City researched these issues and found that the Imerim Gram of Authority was in compliance with the federal Communications Act of 1984, as amended 1992 and 1996, and Chapter 8 of the Code of Ordinances of the City of Demon, Texas. In June, The City notified Advantex of our findings and again requested a meeting with them within 30 days to begin the negotiation process. On August 7, 2003, Advantex met with the City and began the negotiation process on the Interim Gram of Authority. Advamex also submitted a paymem for franchise fees and a completed cable television franchise application. On August 19, 2003, the Demon City Council held a public hearing on the application filed by Advantex for a cable television franchise. Robson Ranch development was contacted about the hearing and they put out an information letting residents know of the hearing. Council did not receive any comments by the public at the hearing. On October 7, 2003, the City Council approved an ordinance graining an Imerim Gram of Authority to Denton Telecom Partners I, LP d/b/a Advantex Communications to construct, reconstruct, operate and maintain a cable television system in the Robson Ranch development, to October 29, 2004, or the date upon which the City grams or denies a cable franchise renewal to Advantex, whichever occurs first. On November 24, 2003, the City received notice that Advamex Communications had been purchased by Grande Communications. Grande Communications agreed to assume all rights, authority and obligations under the Imerim Gram of Authority. An extension of the Interim Grant of Authority will allow staff time to visit with Robson Ranch residems to determine if any cable issues need to be addressed with Grande Communications during renewal negotiations. Grande Communications is agreeable to the extension of the terms of the Interim Grant of Authority. OPTIONS: 1) Approve the ordinance graining the extension or the Imerim Gram of Authority agreemem between Grande Communications and the City to October 29, 2005, or a date upon which the City grams or denies a cable franchise renewal, whichever occurs first. 2) Deny the ordinance and direct staff to continue working on renewal negotiations with Grande Communications. RECOMMENDATION Staff recommends option # 1 ADA/EOE/ADEA www.cityofdenton.com (TDD 800-735-2989) 12/1/04 Cable Franchise Extension Page 3 of 3 PRIOR ACTION/REVIEW (Council, Boards, Commission): 1. Legal Status Report on May 2, 2003. 2. Public Hearing at Council Regular Session, August 19, 2003 3. First Reading of IGA at Council Regular Session, September 16, 2003 4. Second Reading oflGA at Council Regular Session, October 7, 2003 5. Legal Status Report on December 3, 2004 FISCAL INFORMATION: City will continue to receive 5% of Grande Communications gross revenues as franchise fees. Respectfully submitted: Betty Williams Director of Management and Public Information Prepared by: John Cabrales Jr. Public Information Officer Attachments 1. Ordinance ADA/EOE/ADEA www.cityofdenton.com (TDD 800-735-2989) S:\Our Documents\Ordinanccs\04\Orande Ordinance ([GA Extension)GR rev clean. DOC ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS, AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO EXECUTE A ONE-YEAR EXTENSION TO THE INTERIM GRANT OF AUTHORITY OF GRANDE COMMUNICATIONS NETWORKS, INC., FORMERLY DENTON TELECOM PARTNERS I, L.P. D/B/A ADVANTEX COMMUNICATIONS; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, on October 7, 2003, the City of Denton and Denton Telecom Partners I, L.P. d/b/a Advantex Corporations entered into an Interim Grant of Authority for Advantex to continue to preserve the asset as ordered by the Bankruptcy Court and provide cable service to the Robson Ranch subdivision either until October 29, 2004 or until such t/me as the City shall formally grant or deny a cable franchise consistent with the provisions of the Cable Communications Pohcy Act of 1984, as amended, whichever occurs first; and WHEREAS, on November 24, 2003, the City of Denton received notice that Denton Telecom Partners I, L.P. d/b/a Advantex Corporations had been purchased by Grande Communications, and they agreed to assume all rights, authority and obligations under the Interim Grant of Authority; and WHEREAS, the City and Grande Communications Networks, Inc. desire to initiate a one-year extension to the Interim Grant of Authority between the City of Denton and Grande Communications, which will begin October 30, 2004 and ending October 29, 2005 or the date upon which the City grants or denies franchise renewal, consistent with the provisions of Section 626 of the Cable Communications Policy Act of 1984, as amended [47 U.S.C. § 546], whichever occurs first; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. Incorporation of Preamble. The above and foregoing preamble is incorporated into the body of this Ordinance as if copied herein in its entirety. SECTION 2. Accordingly, the City and Grande Communications Networks, Inc. agree to extend the terms of the Interim Grant of Authority between the City of Denton and Grande Communications Networks, Inc. to October 29, 2005 or the date upon which the City grants or denies fi:anchise renewal, consistent with the provisions of Section 626 of the Cable Communications Policy Act of 1984, as amended [47 U.S.C. § 546], whichever occurs first. The extension of time, as agreed to by the parties, shall not operate to materially modify, revoke or terminate any rights previously granted in the original franchise contract. SECTION 3. By its signature below, Grande Communications Networks, Inc., the Grantee, hereby agrees that consideration, the receipt and sufficiency of which is hereby acknowledged, has been provided for by the changes made herein, and agrees to be bound by and comply with such changes. Grande Communications Networks, Inc. further represents and agrees that the person signing below on behalf of Grande Communications Networks, Inc. is the properly authorized official of that corporation and has the necessary authority to execute this S:\Our Documents\Ordinances\04\Grande Ordinance (IGA Extension)GR rev clean.DOC document and further certifies to the City that any necessary resolution or other act extending such authority has been duly passed and is now in full force and effect. SECTION 4. This Ordinance shall be cumulative of all other Ordinances and shall not repeal any of the provisions of such Ordinances except for those instances where there are direct conflicts with the provisions of this Ordinance. Ordinances or parts thereof in force at the time this Ordinance shall take effect and that are inconsistent with this Ordinance are hereby repealed to the extent that they are inconsistent with this Ordinance. SECTION 5. All rights and remedies of the City of Denton, Texas, are expressly saved as to any and all violations of the provisions of any other Ordinance affecting cable fi:anchises which have secured at the time of the effective date of this Ordinance; and, as to such accrued violations and all pending litigation, both civil and criminal, whether pending in court or not, under such Ordinances same shall not be affected by this Ordinance but may be prosecuted until final disposition by the courts. SECTION 6. If any section, article, paragraph, sentence, clause, phrase or word in this Ordinance or application thereof to any person or circumstance is held invalid or unconstitutional by a Court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Ordinance, and the City Council hereby declares it would have passed such remaining portions of this Ordinance despite such invalidity, which remaining portions shall remain in full force and effect. SECTION 7. The City Secretary of the City of Denton is hereby directed to engross and enroll this Ordinance by copying the exact caption and effective date in the minutes of the City Council and by filing this Ordinance in the ordinance records of the City. SECTION 8. In accordance with Section 13.02 of the City Charter, this Ordinance shall become effective twenty-one days after final approval. The full text of this Ordinance shall be published once each week for two consecutive weeks in the official newspaper of the City, the entire expense of which shall be borne by Grande Communications. The City Secretary is hereby directed to publish the full text of this Ordinance in such official newspaper of the City once each week for two consecutive weeks immediately following the passage of this ordinance on second reading. PASSED AND APPROVED this the day of ,2004. ATTEST: JENNIFER WALTERS, CITY SECRETARY EULINE BROCK, MAYOR BY: Page 2 of 5 SSOur Documents\Ordinances\04\Grande Ordinance (IGA Extension)GR rev clean. DOC APPROVED AS TO LEGAL FORM: HERBERT L. PROUTY, CITY ATTORNEY The City of Denton, Texas, acting herein by its duly constituted authorities, hereby declares the foregoing Ordinance passed on first reading on the ~ day of , ; and passed on second reading on the __ day of , ; and being finally effective as of the __ day of /si /si Euline Brock, Mayor /s/ Perry McNeitl, Council Member /s/ Joe Mulroy, Council Member /s/ Jack Thomson, Council Member Pete Kamp, Council Member /s/ Bob Montgomery, Council Member /s/ Raymond Redmon, Council Member The above and foregoing ordinance read, adopted on first reading and passed to second reading by the following votes, this the __ day of , __, at a regular session of the City Council. Euline Brock, Mayor, voting Pete Kamp, Council Member, voting Perry McNeill, Council Member, voting Bob Montgomery, Council Member, voting Joe Mulroy, Council Member voting __ Raymond Redmon, Council Member, voting Jack Thomson, Council Member, voting Page 3 of 5 S:\Our DocumenB\Ordinances\04\Grande Ordinance (IGA Extension)GR rev clean. DOC The above and foregoing ordinance read, adopted on the second reading and passed by the following votes, this the __ day of _, ~, at a regular session of the City Council. Euline Brock, Mayor, voting __ Pete Kamp, Council Member, voting_ Perry McNeill, Council Member, voting __ Bob Montgomery, Council Member, voting ~ Joe Mulroy, Council Member voting __ Raymond Redmon, Council Member, voting __ Jack Thomson, Council Member, voting ~ Page 4 of 5 S:\Our Documents\Ordinances\04\Grande Ordinance (IGA Extension)GR rev clean.DOC ACCEPTANCE WHEREAS, the City Council of the City of Denton, Texas, did on the ., __., enact an Ordinance entitled: day of AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS, AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO EXECUTE A ONE-YEAR EXTENSION TO THE INTERIM GRANT OF AUTHORITY OF GRANDE COMMUNICATIONS NETWORKS, INC., FORMERLY DENTON TELECOM PARTNERS I, L.P. D/B/A ADVANTEX COMMUNICATIONS; AND PROVIDING AN EFFECTWE DATE. WHEREAS, said Ordinance was on the ~ day of , __, duly approved and subscribed by the Mayor of said City, and the seal of said City was thereto affixed and attested to by the City Secretary; NOW, THEREFORE, Grande Communications Networks, Inc., hereby in all respects ACCEPTS, APPROVES AND AGREES TO said Ordinance, and the same shall constitute and be a binding contractual obligation of Advantex, and of the City, without waiver of any other remedy by Grande Communications Networks, Inc., does hereby file this, its written acceptance, with the City Secretary of the City of Denton, Texas, in her office. DATED this the __ day of , ~ Grande Communications Networks, Inc. ATTEST: By: Page 5 of 5 AGENDA DATE: DEPARTMENT: ACM: AGENDA INFORMATION SHEET December 7, 2004 Materials Management Kathy DuBose ~% Questions concerning this acquisition may be directed to Ross Chadwick 349-8830 SUBJECT Consider adoption of an Ordinance accepting competitive bids and awarding a contract for purchase of two Bomb Technician Response Vehicles for the City of Denton Fire Department; providing for the expenditure of funds therefore; and providing for an effective date (Bid 3248- Bomb Technician Response Vehicle awarded to Sam Pack's Five Star Ford in the amount of $81,051.06). BID INFORMATION This bid is for the purchase of two bomb technician response vehicles for the City of Denton Fire Department. The vehicles will be used to transport the Bomb Technicians and equipment to emergency incidents. RECOMMENDATION We recommend award of this item to the lowest responsible bidder, Sam Pack's Five Star Ford in the amount of $81,051.06. PRINCIPAL PLACE OF BUSINESS Sam Pack's Five Star Ford Carrollton, TX ESTIMATED SCHEDULE OF PROJECT The vehicles can be delivered within 125 days of receipt of the order. FISCAL INFORMATION This equipment will funded entirely from the 2004 State Homeland Security Grant Program account 342004.8537. Agenda Information Sheet December 7, 2004 Page 2 Attachment 1: Tabulation Sheet Respectfully submitted: Tom Shaw, C.P.M., 349-7100 Purchasing Agent Bid # 3248 Date: November 9, 2004 Attachment 1 Bomb Technician Response Vehicle Lynn Smit ........... Philpott Motors James Woo Chevrolet hive b[ar i-ora L, laSSlC t, nevro~e[ Ltd Autopark Principle Place of Business: Burleson, TX Carrollton, TX Grapevine, TX Nederland, TX Denton, TX _ HorizoR:i:\/~TO~Un~'~4Tvn¢'~/ Tnn 1 2 $ UV '~'~l~ic~;4 T°'n $62,468.00 $58,486.32 $62,469.00 $63,568.00 $62,787.96 Make 2005 Chevy 2005 Ford Chevrolet 2005 Ford Chevrolet qn~ri,_a M°delinm~nt.I !:=m ~!:=m~ CK25906 3/4 Excursion SSV 4 x 4 Suburban 4 x 4 Excursion 3/4 Ton Suburban 22 S ~].~ ec ima Is-3~3~ i&P 'n~ z~ int $7,294.00 $7,934.74 $7,286.74 $7,166.00 $6,484.74 _ Miscellaneous Equipment 3 2 ir?uding $13,200.00 $13,200.00 $13,200.00 $13,200.00 $13,200.00 installation, See Att. "A" i ii i .,wlrrii , 0.00 5 TO2TAL i~FSO.R $87,622.00 $81,051.06 $92,215.74 $84,724.00 $88,442.70 Addendum 1 Yes Yes Yes Yes Yes SH:[PMENT 75 - 90 ARO 125 Days 90 Days 90 Days 69 Days ORDINANCE NO. AN ORDINANCE ACCEPTING COMPETITIVE BIDS AND AWARDING A CONTRACT FOR PURCHASE OF TWO BOMB TECHNICIAN RESPONSE VEHICLES FOR THE CITY OF DENTON FIRE DEPARTMENT; PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFORE; AND PROVIDING FOR AN EFFECTIVE DATE (BID 3248-BOMB TECHNICIAN RESPONSE VEHICLE AWARDED TO SAM PACK'S FIVE STAR FORD IN THE AMOUNT OF $81,051.06). WHEREAS, the City has solicited, received and tabulated competitive bids for the purchase of necessary materials, equipment, supplies or services in accordance with the procedures of STATE law and City ordinances; and WHEREAS, the City Manager or a designated employee has reviewed and recommended that the herein described bids are the lowest responsible bids for the materials, equipment, supplies or services as shown in the "Bid Proposals" submitted therefore; 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, equipment, 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 bids for materials, equipment, supplies, or services, shown in the "Bid Proposals" on file in the office of the City Purchasing Agent, are hereby accepted and approved as being the lowest responsible bids for such items: BID NUMBER VENDOR AMOUNT 3248 Sam Pack's Five Star Ford $81,051.06 SECTION 2. That by the acceptance and approval of the above numbered items of the submitted bids, the City accepts the offer of the persons submitting the bids for such items and agrees to purchase the materials, equipment, supplies or services in accordance with the terms, specifications, standards, quantities and for the specified sums contained in the Bid invitations, Bid Proposals, and related documents. SECTION 3. That should the City and persons submitting approved and accepted items and of the submitted bids wish to enter into a formal written agreement as a result of the acceptance, approval, and awarding of the bids, the City Manager or his designated representative is hereby authorized to execute the written contract which shall be on file in the office of the Purchasing Agent; provided that the written contract is in accordance with the terms, conditions, specifications, standards, quantities and specified sums contained in the Bid Proposal and related documents herein approved and accepted. SECTION 4. That by the acceptance and approval of the above numbered items of the submitted bids, the City Council hereby authorizes the expenditure of funds therefor in the amount and in accordance with the approved bids 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-Bid 3248 AGENDA INFORMATION SHEET AGENDA DATE: DEPARTMENT: CM/DCM/ACM: December 7, 2004 Police Jon Fortune, Assistant City Manager SUBJECT Consider adoption of an ordinance of the City of DeNon, Texas, amending the Code of Ordinances of the City of DeNon, by amending Chapter 18 to add Article IX Automated Traffic Signal Enforcemem; providing a repealing clause; providing a severabiiity clause; providing for the imposition of civil penalties from a minimum of $75 to a maximum of $150 for third and subsequem offenses; and providing an effective date. BACKGROUND On October 4, 2004, Council received a report from staff regarding the potemial use of automated red light enforcement in the City of Denton. Following that presentation, Council directed staff to proceed with the process of implementing red light cameras in the City of Denton. The initial step in this process is the creation and adoption of an ordinance establishing the use of automated red light cameras for enforcemem. Following the adoption of this ordinance, the City will begin the process of evaluating prospective vendors of automated red light camera systems. The proposed ordinance relies heavily on the ordinances adopted in the Cities of Garland, Frisco, and Piano. The ordinance in Garland has been in effect for more than a year. The ordinances in Piano and Frisco were passed within the past few momhs. This proposed ordinance is in keeping with applicable laws of the State of Texas and with existing opinions of the State Attorney General regarding the use of automated enforcement. The proposed ordinance would establish our ability to use automated enforcemem for red light violations at specific intersections to be determined at a later date. It would also establish a civil penalty of seventy-five dollars for such violations, a late fee of twenty- five dollars for delinquent paymem, and a penalty of one hundred-fifty dollars for three or more violations within a year. The proposed ordinance establishes a hearing process for comested violations. Finally, the proposed ordinance provides for the creation of a public safety fund for the deposit of any revenue generated by the red light camera system for the payment of the system contract, related costs, and the expenditure of funds generated over and above the costs of the system. OPTIONS 1. Council can adopt the ordinance as written. 2. Council can direct staff to make revisions or amend the ordinance and present it for future consideration. 3. Council can reject the proposed ordinance. RECOMMENDATION Staff recommends Council adopt the ordinance as written. PRIOR ACTION/REVIEW Council Work Session October 4, 2004. FISCAL IMPACT This ordinance would establish the civil penalty and other related penalties for violations handled through the automated red light cameras. As explained in the previous work session back up material, the red light camera system is intended to generate sufficient revenue to pay for the incurred costs. It can be anticipated that such a system might generate additional revenue over and above the monthly costs, but this revenue must be viewed as a short-term revenue source. Further, as presented in the work session back up material and because of criticism surrounding the use of these cameras, excess revenue should be specifically applied to traffic safety purchases and/or programs, such as improved signage, signals, enforcement, and equipment. Respectfully submitted, Charles Wiley 0 Chief of Police Prepared by: Scott Fletcher Lieutenant Operations Bureau S:\Our Documents\Ordinances\04\Red Light.doe ORDiNANCE NO. AN ORDINANCE OF THE CITY OF DENTON, TEXAS, AMENDING THE CODE OF ORDINANCES OF THE CITY OF DENTON, BY AMENDiNG CHAPTER 18 TO ADD ARTICLE IX AUTOMATED TRAFFIC SIGNAL ENFORCEMENT; PROVIDING A REPEALiNG CLAUSE; PROVIDING A SEVERABILITY CLAUSE; PROVIDING FOR THE IMPOSITION OF CIVIL PENALTIES FROM A MINIMLgVI OF $75 TO A MAXIMUM OF $150 FOR THIRD AND SUBSEQUENT OFFENSES; AND PROVIDiNG AN EFFECTIVE DATE. WHEREAS, the City Council of the city of Denton, Texas ("City Council") under the authority of Article XI, Section 5 of the Texas Constitution, investigated and determined that it would be advantageous and beneficial to the City of Denton, Texas ("Denton") and its inhabitants to implement an automated red light enforcement program; and WHEREAS, upon investigation it has been determined that red light running is the cause of approximately 260,000 collisions and 240,000 injuries each year in the Untied states; and WHEREAS, upon investigation it has been determined that red light running causes the death of approximately 100 people in the State of Texas each year; and WHEREAS, red light enforcement programs have proven to reduce the number of red light runners in that Washington, D.C. has reduced red light nmning by 68 percent and Wilmington, Delaware has reduced red light nnming by 62 percent with their red light enforcement programs; and WHEREAS, the local community of the City of Garland began its automated red light enforcement program in September 2003 and has already experienced a 13 percent reduction in violations; and WHEREAS, it is in the interest of the public health, safety and welfare to implement traffic regulation and safety programs; NOW, THEREFORE; THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAiNS: SECTION 1. The findings set forth above are incorporated into the body of this Ordinance as if fully set forth herein. SECTION 2. Chapter 18 of the Code of Ordinances of the City of Denton, Texas, is hereby amended to add Article IX Automated Traffic Signal Enforcement to read as follows: ARTICLE IX AUTOMATED TRAFFIC SIGNAL ENFORCEMENT Sec. 18-230. Definitions. S:\Our Documents\Ordinanccs\04\Red Light.doc In this article: Department shall mean the Police Department of the City of Denton, Texas. (2) Intersection shall mean the place or area where two or more streets intersect. (3) Owner shall mean the owner of a motor vehicle as shown on the motor vehicle registration records of the Texas Department of Transportation or the analogous department or agency of another state or country. (4) Photographic Traffic Signal Enforcement System shall mean a system that: (a) consists of a camera system installed to work in conjunction with an electrically operated traffic-control signal; and (b) is capable of producing at least two recorded images that depicts the license plate attached to the rear of a motor vehicle that is not operated in compliance with the instructions of the traffic-control signal. (5) Recorded Image means an image recorded by a photographic traffic monitoring system that depicts the rear of a motor vehicle and is automatically recorded on a photograph or digital image. (6) System Location means the approach to an intersection toward which a photographic traffic monitoring system is directed and in operation. (7) Traffic Control Signal shall mean a traffic control device that displays alternating red, amber and green lights that directs traffic when to stop at or proceed through an intersection. Sec. 18-231. Imposition of Civil Penalty for Violations. (a) The City Council finds and determines that a vehicle that proceeds into an intersection when the traffic control signal for that vehicle's direction of travel is emitting a steady red signal damages the public by endangering motor vehicle operators and pedestrians alike, by decreasing the efficiency of traffic control and traffic flow efforts, and by increasing the number of serious accidents to which public safety agencies must respond at the expense of the taxpayers. Page 2 of 8 S:\Our Documents\Ordinances\04LRed Light.doc (b) Except as provided in (c) and (d) below, the owner of a motor vehicle is liable for a civil penalty of seventy-five dollars ($75) if the motor vehicle proceeds into an intersection at a system location when the traffic control signal for that motor vehicle's direction of travel is emitting a steady red signal. (c) For a third or subsequent violation committed by the owner of the same motor vehicle during any 12-month period, the mount of the civil penalty shall be one hundred fifty dollars ($150). (d) A owner who fails to timely pay the civil penalty shall be subject to a late payment penalty of twenty-five dollars ($25). Sec. 18-232. Enforcement; procedures. (a) this article. The Department is responsible for the enforcement and administration of (b) In order to imPose a civil penalty under this article, the Department shall mail a notice of violation to the owner of the motor vehicle liable for the civil penalty not later than the 30th day after the date the violation is alleged to have occurred to: (1) the owner's address as shown on the registration records of the Texas Department of Transportation; or (2) if the vehicle is registered in another state or country, the owner's address as shown on the motor vehicle registration records of the department or agency of the other state or country analogous to the Texas Department of Transportation. (e) A notice of violation issued under this article shall contain the following: (1) a description of the violation alleged; (2) the date, time, and location of the violation; (3) a copy of a recorded image of the vehicle involved in the violation. (4) the amount of the civil penalty to be imposed for the violation; (5) the date by which the civil penalty must be paid; (6) a statement that the person named in the notice of violation may pay the civil penalty in lieu of appearing at an administrative adjudication hearing. Page 3 of 8 S:\Our Documents\Ordinanees\04XRed Light.doc (7) information that informs the person named in the notice of violation: (A) of the right to contest the imposition of the civil penalty in an administrative adjudication; of the manner and time in which to contest the imposition of the civil penalty; and (c) that failure to pay the civil penalty or to contest liability is an admission of liability; (8) a statement that a recorded image is evidence in a proceeding for the imposition of a civil penalty; (9) a statement that failure to pay the civil penalty within the time allowed shall result in the imposition of a late penalty of $25.00; and (10) any other information deemed necessary by the department. (d) A notice of violation under this article is presumed to have been received on the l0th day after the date of notice of violation is mailed. (e) In lieu of issuing a notice of violation, the Department may mail a warning notice to the owner. See. 18-233. Administrative adjudication hearing. (a) A person who receives a notice of violation may contest the imposition of the civil penalty by request in writing an administrative adjudication of the civil penalty within fifteen (15) days after receipt oft he notice of violation. Upon receipt of a timely request, the Department shall notify the person of the date and time of the hearing on the administrative adjudication. The administrative adjudication hearing shall be held before a hearing officer appointed by the City Manager. (b) Failure to pay a civil penalty or to contest liability in a timely manner is an admission of liability in the full amount of the civil penalty assessed in the notice of violation, and is a waiver of the right to appeal under section 18-233(i). (c) The civil penalty shall not be assessed if after a heating, the hearing officer enters a finding of no liability. Page 4 of 8 S:\Our Documents\Ordinances\04LRed Light.doc (d) In an administrative adjudication heating, the issues must be proved at the hearing by a preponderance of the evidence. The reliability of the photographic traffic signal enforcement system used to produce the recorded image of the violation may be attested to in an administrative adjudication hearing by affidavit of an officer or employee of the City or the entity with which the city contracts to install or operate the system and who is responsible for inspecting and maintaining the system. An affidavit of an officer or employee of the city that alleges a violation based on an inspection of the pertinent recorded image, is admissible in a proceeding under this article and is evidence of the facts contained in the affidavit. (e) A person who is found liable after an administrative adjudication hearing or who requests an administrative adjudication heating and thereafter fails to appear at the time and place of the heating is liable for administrative hearing costs in the amount of $25.00 in addition to the amount of the civil penalty assessed for the violation. A person who is found liable for a civil penalty after an administrative adjudication heating shall pay the civil penalty and costs within 10 days of the hearing. (f) It shall be an affirmative defense to the imposition of civil liability under this article, to be proven by a preponderance of the evidence, that; (1) the traffic-control signal was not in proper position and sufficiently legible to an ordinarily observant person; (2) the operator of the motor vehicle was acting in compliance with the lawful order or direction of a police officer; (3) the operator of the motor vehicle violated the instructions of the traffic-control signal so as to yield the right-of-way to an immediately approaching authorized emergency vehicle. (4) the motor vehicle was being operating as an authorized emergency vehicle under Chapter 546 of the Texas Transportation Code and that the operator was acting in compliance with that Chapter; (5) the motor vehicle was a stolen vehicle and being operated by a person other than the owner of the vehicle without the effective consent of the owner; (6) the license plate depicted in the recorded image of the violation was a stolen plate and being displayed on a motor vehicle other than the motor vehicle for which the plate had been issued; (7) the presence of ice, snow, unusual amounts of rain or other unusually hazardous road conditions existed and would make Page 5 of 8 S:\Our Documents\Ordinances\04~ted Light. doc compliance with this article more dangerous under the circumstances than non-compliance; or (8) the person who received the notice of violation was not the owner oft he motor-vehicle at the time of the violation. (g) To demonstrate that at the time of the violation the motor vehicle was a stolen vehicle or the license plate displayed on the motor vehicle was a stolen plate, the owner must submit proof acceptable to the hearing officer that the theft of the vehicle or license plate had been timely reported to the appropriate law enforcement agency. 0a) Notwithstanding anything in this article to the contrary, a person who fails to pay the mount of a civil penalty or to contest liability in a timely manner is entitled to an administrative adjudication heating on the violation if: the person files an affidavit with the hearing officer stating the date on which the person received the notice of violation that was mailed to the person; and (2) within the same period required by Sec. 18-232(c)(7)(B) for a heating to be timely requested but measured from the date the mailed notice was received as stated in the affidavit filed under Subdivision (1), the person requests an administrative adjudication hearing. (i) A person who is found liable after an administrative adjudication hearing may appeal that finding of civil liability to the Municipal Court by filing a notice of appeal with the clerk of the Municipal Court. The notice of appeal must be filed not later than the 31~t day after the date on which the administrative adjudication hearing officer entered the finding of civil liability. Unless the person, on or before the filing of the notice of appeal, posts a bond in the amount of the civil penalty and any late fees, an appeal does not stay the enforcement of the civil penalty. An appeal shall be determined by the Municipal Court by trial de novo. The affidavits submitted under Section i8- 233(d) shall be admitted by the municipal judge in the trial de novo, and the issues must be proved by a preponderance of the evidence. A person found liable by the Municipal Court shall pay an appellate filing fee of $50.00 in addition to the civil penalty and any other fees due the City. Sec. 18-234. Order. (a) The heating officer at any administrative heating under this article shall issue an order stating: whether the person charged with the violation is liable for the violation; and Page 6 of 8 S:\Our Documents\Ordinances\O4q~.efl Light.doc (2) the amount of any civil penalty, late penalty, and administrative adjudication cost assessed against the person. (b) The orders issued under subsection (a) may be filed with the office of the hearing examiner. The hearing examiner shall keep the orders in a separate index and file. The orders may be recorded using microfilm, microfiche, or data processing techniques. Sec. 18-235. Effect of liability; exclusion of civil remedy. (a) The imposition of a civil penalty under this article is not a criminal conviction for any purpose. (b) A civil penalty may not be imposed under this article on the owner of a motor vehicle if the operator of the vehicle was arrested or was issued a citation and notice to appear by a peace officer for the same violation of Section 544.007(d) of the Texas Transportation Code recorded by the photographic traffic signal enforcement system. (c) An owner who fails to pay the civil penalty or to timely contest liability for the penalty is considered to admit liability for the full amount of the civil penalty stated in the notice of violation mailed to the person. (d) The City Attorney is authorized to file suit to enforce collection of a civil penalty imposed under this article. Sec. 18-236. Traffic Safety Fund. The penalties and fees collected from the imposition of civil liability under this article shall be deposited in the Traffic Safety Fund account established by the City Council. Funds from the Traffic Safety Fund may be expended only for the costs of automated signal enforcement under this article, public traffic or pedestrian safety programs, traffic enforcement and intersection improvements. SECTION 3. That ail provisions of the ordinances of the City of Denton in conflict with the provision of this Ordinance be, and the same are hereby, repealed, and all other provisions of the ordinances of the City of Denton not in conflict with the provision of this Ordinance shall remain in full force and effect. SECTION 4. That should any sentence, paragraph, subdivision, clause, phrase or section of this ordinance be adjudged or held to be unconstitutional, illegal or invalid, the same shall not affect the validity of this Ordinance as a whole, or any part or provision thereof other than the part so decided to be invalid, illegal or unconstitutional, and shall not affect the validity of the Code of Ordinances as a whole. Page 7 of 8 S:\Our Documents\Ordinances\04\Red Light,doc SECTION 5. This ordinance providing for a penalty 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, the official newspaper of the City of Denton, Texas, within ten (10) days of the date of its passage. PASSED AND APPROVED this the __day of ,2004. ATTEST: JENNIFER WALTERS, CITY SECRETARY EUL1NE BROCK, MAYOR BY: APPROVED AS TO LEGAL FORM HERBERT L. PROUTY BY: Page 8 of 8 AGENDA DATE: DEPARTMENT: CM: AGENDA INFORMATION SHEET December 7, 2004 City Manager's Office Mike Conduff, City Manager SUBJECT Consider nominations/appointments to the City's boards and commissions. BACKGROUND The following is a list of current board/commission vacancies: Community Development Advisory Commission - Betty Sherman has resigned. This is a nomination for Council Member Kamp. Traffic Safety Commission - Ann Barnett was nominated at the meeting of November 16, 2004. If you require any further information, please let me know. Respectfully submitted: Jennifer Walters City Secretary S:kAgenda Items\Board-Commission vacancies.doc HANDOUT TO CC~UNCIL City Council of Denton and Concerned Citizens of Denton and Denton County: I recently attended "Emerging Topics in Breast Cancer and the Environment" hosted by the National Cancer Institute and the National Institute of Environmental Health Services program. During this three day event, numerous scientists informed the medical and patient advocates about the increasing risks of breast cancer nationally and the emerging data on the early onset of this disease in both post menopausal and alarmingly, the increasing number of premenopausal women diagnosed. There are increasing concerns about the possible links between toxic chemical pollution and the high incidence of breast cancer in this country. There must be environmental impact studies conducted before more hazardous and toxic wastes are stored and transported through our community. I speak specifically about the proposed expansion of the Safety-Kleen storage facility and its possible impact on the health and safety of the surrounding community. I strongly urge the Denton City Council to utilize the Cancer Control Planet publication obtained from the American Cancer Society / Dept. of Health and Human Resources http://cancercontrolplanet.cancer, gov and the Quick Environmental Exposure and Sensitivity Inventory V-1. This may be obtained by calling 210.567.7407 or email millercs @ uthscsa.edu. Thank you for your time and concerns. Suzanne Gauvreau Young Survival Coalition Nat'l Research Committee Project LEAD Graduate National Patient Advocate 214.912.8568 BeAnAdvocate @yahoo.com I I I I I I I I I I I I I I I I I I I HANDOUT TO COUNCIL $9,410,000 GENERAL OBLIGATION REFUNDING BONDS, SERIES 2004 Tuesday, December 7, 2004 The following ratings have been assigned: Moody's Investors Service, Inc. Underlying MBIA Credit Insured Rating "Aaa" "AaY' Standard & Poor's Rating Group A Division of McGraw-Hill, Inc. "AAA" "AA-" PREPARED BY: First Southwest Company Investment Bankers Since 1946 I I I I I I I I I I I I I I I I I I Global Credit Research New Issue 2 DEC 2004 New Issue: Denton (City of) TX MOODY'S ASSIGNS Aa3 RATING TO CITY OF DENTON [TX] $9.7 MILLION IN GENERAL OBLIGATION DEBT Rating Affirmation Affects $110 million in Outstanding Parity Debt, Including Current Issue Municipality TX Moody's Rating ISSUE RATING General Obligation Refunding Bonds, Series 2004 Aa3 Sale Amount $9,675,000 Expected Sale Date 12/06/04 Rating Description General Obligation, Limited Tax Opinion NEW YORK, Dec 2, 2004 - Moody's investors Service has assigned a Aa3 ralJng to the City of Denton's [TX] $9.7 million General Obligation Refunding Bonds, Series 2004. Additionally, Moody's affirms the Aa3 rating on the City's outstanding parity general obligation secured debt. Factom contributing to the high-quality rating include the City's sizable tax base, which continues to experience strong growth. Moody's also censidered the city's high overall debt position offset by a more moderate and manageable direct debt position. Annual principal and interest payments on both issues are secured by the levy and collection of a direct and continuing ad valorem tax, within the limits prescribed by law, on all taxable p~operty within the City. BOTH COMMERCIAL AND RESIDENTIAL DEVELOPMENT AID TAXABLE VALUE GROWTH The City or Denton is located within Denton County (general obligation rating Aa2), approximately equidistant from downtown Dallas and downtown Fort Worth. As a result of healthy residential construction and the resulting retail development, the City's tax base expanded at a rate of 10.5% annually over the past five years to the fiscal 2005 value of $4.4 billion. A continuation of that growth is reflected in the recant taxable values for FY 2005 that reflect an increase of 8.2% or $332.7 million in increased taxable value. City officials noted that new residenital building permits increased 53% in the comparable first half of FY 2004 while new commemial building permits jumped 25%. Moody's believes that as ongoing and planned development add value to the tax mil, the City's assessed valuation will continue to expand at healthy rates. CITY'S POPULATION CONTINUES TO EXPAND Throughout the 1990s, the city's population experienced growth with a total increase, per the 2000 US census, of over 14,000 during the decade from 1990 to 2000. Additionally, city officials indicate that this trend has accelerated in the new century with an estimated increase of over 20,000 since 2000. Recent estimates for FY 2005 indicate that the total population of the city now exceeds 100,000. In conjunction with the increase in total population the city's wealth levels increased during the 1990s with Per Capita Income (PCI) and Median Family Income (MFI) increasing from $12,013 to $19,365 and $35,444 to $51,419. MFI measures for the city are above those for both the state and nation while PCI lags both due to the city's sizeable and growing student population. Enrollment in both the University of North Texas and Texas Women's University (TWU) totals approximately 40,000 with increases at TWU for the two most recent years increasing by approximately 10%. FINANCIAL RESERVES SLATED TO INCREASE WHILE FY 2005 BUDGET IS STRUCTURALLY BALANCED General fund revenues are primarily derived from property taxes (33.2%) and sales taxes (25.2%). In addition to the typic~ 1% sales tax levy received by most Texas cities officials approved in 1993 an additional %% property tax relief levy that further supplements general fund operations. For FY 2004 the sales tax collections trend has reversed and preliminary results indicate that the city will post an increase of 10.2% over the prior year and at $17.7 million this result well exceeds the budget amount of $16.5 million. As a result of these increasing revenues, city officials anticipate an addition to general fund balances of approximately $1 million. For FY 2005 the dty will maintain structural balance with a slight draw of general fund revenues to finance some small one-time expenditures. City officials continue to maintain an annual commitment to increase general fund balances in ~% increments, as a% of general fund budgeted expenditures, with an ultimate goal of 15% in the forecastable future. The City% conservative financial planning and commitment to maintaining adequate general fund reserves is a credit positive and is consistent with the Aa3 rating level. CITY TO REQUEST EXPANDED GO AUTHORIZATION City officials have slated an election for February 2005 to request additional general obligation debt issuance capacity of $42.4 million. This authorization would be primarily comprised of basic city infrastructure as well as quality of life initiatives such as parks and library facilities. Debt burden as a percentage of total assessed value remains consistent with this rating level at 2.0% direct and approximately 9.9% overall The overall burden is affected significantly by the debt issuance undertaken by Denton lSD. Pfincipe~ payout for the city is above average, with over 60% reitred in ten years. The City's current debt burden is manageable, and Moody's believes the structure and timing of future borrowing will be developed prudently. KEY STATISTICS: 2005 Estimated Population: 103,029 2005 Full Valuation: $4.4 billion Direct Debt Ratio: 2.0% Overall Debt Ratio: 9.9% Payout of Principal (10 years): 63.1% FY 2003 General Fund balance: $8.58 million (15.6% of General Fund revenues) Analysts Douglas Benton Analyst Public Finance Group Moody's Investors Service Dwight Bums Backup Analyst Public Finance Group Moody's Investors Service Co,acts Journalists: (212) 553-0376 Research Clients: (212) 553-1653 © Copyright 2004, Moody's Investors Service, Inc. and/or its licensors including Moody's Assurance Company, Inc. (together, "MOODY'S"). All rights reserved. I I STANDARD &POOR'S RATINGSDIEEET I I I I I I I I I I I I I I I Research: Summary: Denton, TX; Tax Secured, General OblEjation Publication date: 03-Dec-2004 Primary Credit Analyst{s): Theodore Chapman, Dallas (1) 214-871-1401; theodore_chapman@standardandpoors.com Secondary Credit Analyst(s): Peter V Murphy, New York (1) 212-438-2065; peter_murphy~standardandpoors.corn Credit Profile US$9.675 mil GO rfdg bnds ser 2004 dtd 12/01/2004 due 02/15/2020 Sale date: 06-DEC-2004 AFFIRMED $240,000 Denton GO $31.135 mil. Denton GO (Ambac) $10,355 mil. Denton GO (FGIC) $22.160 mil. Denton GO (FSA) $31.485 mil. Denton GO (MBIA) AANAA-(SPUR) AANAA-(SPUR) AANAA-(SPUR) AAA/AA-(SPUR) OUTLOOK: STABLE [] Rationale Standard & Poor's Ratings Services assigned its 'AA-' rating, and stable outlook, to Denton, Texas' series 2004 GO refunding bonds. The rating reflects the city's: · Participation in the deep and diverse Dallas-Fort Worth MSA; · Solid financial position with strong reserves; and ,, Stable economic base, which features higher education and public sector employment opportunities and a continually expanding retail sector. The city's growth-driven, high overall net debt burden moderates these strengths. An unlimited ad valorem property tax pledge secures the bonds. The city will use bond proceeds to refund various maturities of its series 1995, 1996, 1997, and 2000 certificates of obligation and GO bonds outstanding. Denton, with a population of about 100,000, is roughly 35 miles north of, and equidistant to, Dallas, Texas and Fort Worth, Texas; Denton has easy access to both cities along Interstate 35. While job opportunities exist in manufacturing and some industry --along with the rapidly growing retail, service, and health care sectors-- seven of the 10 leading employers come from the public sector or are higher education entities. Anchored by University of North Texas, with an estimated enrollment of 30,500; the city and county; local schools; and Texas Women's University, per capita income levels ara slightly less than average at 94% of state and national levels. Assessed valuation (AV) has increased by more than 50% over the past five years to roughly $4.3 billion for fiscal 2005. The city is not dependent on any of its principal taxpayers. Denton's financial position remains strong. In fiscal 2003, the 15% unreserved general fund balance exceeded the city's policy of maintaining a 13% minimum with about a $900,000 surplus projected for 2004. The 2005 budget is balanced; in concert with its adoption, city officials raised the minimum fund balance requirement to 13.5%. General fund revenue sources are diverse with no one source exceeding 30% of total revenues in the 2005 budget. Sales taxes, the leading revenue generator other than property taxes, have rebounded strongly from a brief slump several years ago; management is projecting more than 10.0% growth in fiscal 2004 with another 7.5% forecast for 2005 due, in part, to Denton's continually expanding retail sector. The 52-acre Denton Crossing, which opened in late 2003, includes more than a dozen brand name retailers and department stores. The 2005 tax rate of 60 cents per $100 of AV is a five-cent increase from 2004, the first change in four years. Overall net debt is high at more than 9% of market value due primarily to Denton Independent School District's recent undertaking of very large capital efforts. Debt service as a percent of expenditures has changed little over time, and the direct debt burden of 1.5% of AV has remained unchanged over the past decade. Street and park improvements are the primary focus of the city's five-year capital improvement plan. Management plans to fund the majodty of the estimated $34 million capital program through 2009 with additional debt. [] Outlook The stable outlook reflects the expectation that the city will maintain a sound financial position with growing and diversifying economic and employment bases providing continued momentum. In addition, the stable outlook reflects the expectation that the city's continued healthy levels of future valuation growth should help management mostly offset the debt required to finance any necessary capital requirements needed to support its expansion. If Denton's continued efforts to promote economic development prove successful, it would provide consideration for a future rating change. Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web- based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Seamh. Copyright © 1994-2004 Standard & Poor's a division of The McGraw-Hill Companies. I I I I i I I ! I I I I I I I I I I I I I I I I I I I I I I I I I I I I I $9,410,000 City of Denton, Texas General Obligation Refunding Bonds, Series 2004 Debt Service Comparison Net Series 2004 Debt Refunded Debt Date Service Service Savings 09/30/2005 226,327.28 226,327.28 09/30/2006 639,275.00 688,262.50 48,987.50 09/30/2007 918,462.50 975,075.00 56,612.50 09/30/2008 922,350.00 972,722.50 50,372.50 09/30/2009 1,072,700.00 1,I 19,776.25 47,076.25 09/30/2010 1,083,037.50 1,130,515.00 47,477.50 09/30/2011 878,318~75 924,356.25 46,037.50 09/30/2012 1,208,062.50 1,257,603.75 49,541.25 09/30/2013 1,021,856.25 1,074,305.00 52,448.75 09/39/2014 1,008~250.00 1,058,760.00 50,510.00 09/30/2015 1,088,125.00 1,133,745.00 45,620.00 09/30/2016 806,875.00 836,810.00 29,935.00 09/30/2017 791,125.00 820,645.00 29,520.00 09/30/2018 364,875.00 389,810.00 24,935.00 09/30/2019 343,750.00 369,962.51 26,212.51 09/30/2020 322,875.00 349,987.51 27,112.51 Total $12,696,264.78 $13,328,663.55 $632,398.77 Savings Analysis Net Present Value Benefit $477,470.16 Net PV Benefit / $9,210,000 Refunded P~ncipa] 5.184% $9,410,000 City of Denton, Texas General Obligation Refunding Bonds, Series 2004 Debt Service Schedule Date Principal Coupon Interest Total P+I 09/30/2005 269,892.63 269,892.63 09/30/2006 260,000.00 2.500% 379,275.00 639,275.00 09/30/2007 550,000.00 2.750% 368,462.50 918,462.50 09/30/2008 570,000.00 3.000% 352,350.00 922,350.00 09/30/2009 740,000.00 3.000% 332,700.00 1,072,700.00 09/30/2010 775,000.00 3.500% 308,037.50 1,083,037.50 09/30/2011 595,000.00 3.750% 283,318.75 878,318.75 09/30/2012 955,000.00 4.000% 253,062.50 1,208,062.50 09/30/2013 805,000.00 4.250% 216,856.25 1,021,856.25 09/30/2014 825,000.00 4.000% 183,250.00 1,008,250.00 09/30/2015 945,000.00 5.000% 143,125.00 1,088,125.00 09/30/2016 705,000.00 5.000% I01,875.00 806,875.00 09/30/2017 725,000.00 5.000% 66,125.00 791,125.00 09/30/2018 325,000.00 5.000% 39,875.00 364,875.00 09/30/2019 320,000.00 5.000% 23,750.00 343,750.00 09/30/2020 315,000.00 5.000% 7,875.00 322,875.00 Total $9,410,000.00 $3,329,830.13 $12,739,830.13 True Inter~t Cost (TIC) 3.9089857% 20D4GO Ref 120604 FinalI 121712004 I 1:53PM I I I I I I I I SCE~DULE OF REFUNDED BONDS* Schedule I Certificates of Obligation, Series 1995 Original Maturity Interest Principal Dated Date Date Rate Amount 2/15/1995 2/15/2006 5.50% $ 100,000 2/15/2007 5.50% 105,000 2/15/2008 5.50% 115,000 2/15/2009 5.50% 120,000 2/15/2010 5.50% 130,000 2/I5/2011 5.50% 135,000 2/15/2012 5.50% 145,000 2/15/2013 5.50% 155,000 2/15/2014 5.50% 165,000 2/15/2015 5.25% 180,000 '$1,350,000 The 2006 - 2015 maturities wiIl be redeemed prior to original maturity on February 15, 2005 at par, plus accrued interest, if any. I I I I I I I General Obligation Bonds, Series 1995 Original Maturity Interest Principal Dated Date Date Rate Amount 2/15/1995 2/15/2006 5.50% $ 80,000 2/I5/2007 5.60% 90,000 2/35/2008 5.70% 90,000 2/15/2015 5.50% 90,000 $350,000 The 2006 - 2008 and 2015 maturities will be redeemed prior to original maturity on February 15, 2005 at par, plus accrued interest, if any. Certificates of Obligation, Series 1996 Original Maturity Interest Principal Dated Date Date Rate Amount 5/1/1996 2/15/2007 5.40% $165,000 2/I5/2008 5.50% $175,000 2/15/2009 5.60% 185,000 2/15/2010 5.70% 195,000 $ 720,000 The 2007 - 2010 maturities will be redeemed prior to original maturity on February 15, 2006 at par, plus accrued interest, if any. I I I * Prelimina~, subject to change. I I I I ! I I I I I I I I I I I ! General Obligation Bonds, Series 1996 Original Maturity Interest Principal Dated Date Date Rate Amount 5/1/1996 2/15/2007 5.40% $125,000 2/15/2008 5.50% 130,000 2/15/2009 5.60% 140,000 2/15/2010 5.70% 150,000 2/15/2011 5.75% 155,000 2/15/2012 5.75% 165,000 $ 865,000 The 2007 - 2012 maturities will be redeemed prior to original maturity on February 15, 2006 at par, plus accrued interest, if any. General Obligation Bonds, Series 1997 Original Maturity Interest Principal Dated Date Date Rate Amount 4/I/1997 2/15/2009 5.25% $ 245,000 2/15/2010 5.30% 265,000 2/15/2011 5.40% 280,000 2/15/2012 5.50% 295,000 2/15/2013 5.50% 315,000 2/15/2014 5.50% 335,000 2/15/2015 5.60% 355.000 2/I5/2016 5.60% 375,000 2/15/2017 5.60% 400,000 $2,865,000 The 2009 ~ 2017 maturities will be redeemed prior to original maturity on February 15, 2007 at par, plus accrued interest, if any. Certificates of Obligation, Series 2000 Original Maturity Interest Principal Dated Date Date Rate Amount 5/1/2000 (1) Term Bond 2/15/2012 5.400% $ 155,000 2/15/2013 5.500% 155,000 2/15/2014 5.600% 155,000 2/15/2015 5.650% 155,000 2/15/2016 5.700% 155,000 2/15/2017 5.750% 155,000 2/15/2018 5.800% 155,000 2/15/2020 5.875% 310,000 $1,395,000 The 2012 - 2020 maturities will be redeemed prior to original maturity on February 15, 2009 at par, plus accrued interest, if any. I ! I I I I I I I I General Obligation Bonds, Series 2000 Original Maturity Interest Principal Dated Date Date Rate Amount 5/I/2000 (1) Term Bond. 2/15/2012 5.400% $ 185,000 2/15/2013 5.500% I85,000 2/15/2014 5.600% 185,000 2/I5/2015 5.650% 185,000 2/15/2016 5.700% 185,000 2/15/2017 5.750% 185,000 2/15/2018 5.800% 185,000 2/15/2020 5.875% 370,000 $1,665,000 The 2012 - 2018 and 2020 maturities will be redeemed phor to original maturity on Febraary 15, 2009 at par, plus accrued interest, if any. I I i I I I I I ! I I I m m m I I I I I I I I I I I I I I m NEW ISSUE. Book. Entry-Only PRELIMINARY OFFICIAL STATEMENT Dated November 24, 2004 Ratings: Moody's: "Applied For" S&P: "Applied For** See ("Other Information - Ratings" herein) In the opinion of Bond Counsel, interest on thc Bonds will be excludable from gross income for federal income tax purposes under statutes, regulations, published rulings and court decisions existing on the date thereof, subject to the milers described under "T~x Matters" herein, including the alternative minimum tax on corporations. THE BONDS WILL NOT BE DESIGNATED AS "OUALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS $9,675,000* CITY OF DENTON, TEY. AS (Denton CounB') GENERAL OBLIGATION REFUNDING BONDS, SERIES 2004 Dated Date: December 1, 2004 Due: February 15, as shown below PAYMENT TERMS... Interest on the $9,675,000* City of Denton, Tcxas General Obligation Refunding Bonds, Series 2004 (the "Bonds") will accrue from December I, 2004, (thc "Dated Date") and will be payable August 15 and February 15 of each year commencing August 15, 2005, and will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The definitive Bonds will he initially registered and delivered only to Cede & Co., the nominee of Thc Depository Trust Company ("DTC") pursuant to thc Book-Entry-Only System described herein. Ben~~ala~~wnership~fth~B~mismaybeacqinredinden~minari~ns~f$5~~~~~rintugra~mnllip~~s thereof. Nophysicaldeliveryofthe Bonds will be made to thc ownem thereof. Principal of, preminn~ if any, and interest on thc Bonds will be payable by the Paying Agent/RegisVrar to Cede & Co., which will make disffibution of the mounts so paid to the participating members of DTC for subsequent payment to thc beneficial owners o£the Bonds. See "The Bonds - Book-Entty-Only System" herein. The initial Paying Agen~/Regismir is JPMorgan Chase Bank, National Association, Dallas, Texas (see "The Bonds - Paying Agent/Registrar"). AUTHORITY FOR ISSUANCE... ThC Bonds are issued pursuant to the Consfitotion and general laws of the State of Texas, (the "State") including pardaularly Chapter 1207, Texas Government Code, as mended, and are direct obligations of the City of Denton, Texas (the "City"}, payable from an annual ad valorem tax levied on all taxable property within the City, within the limits prescribed by law, as provided in the ordinance authorizing the Bonds (the "Ordinance") (see "Thc Bonds - Authority for Issuance"). PURPOSE... Proceeds from the sale of thc Bonds will be used to (a) refund a portion of the City's outstanding general obggation debt as shown on Schedule I heretu, for the purpose of lowering the debt service requirements, and Co) to pay the costs of issuance of the Bonds. MATURITY SCHEDULE* P~cipal intent CUSIP ~cipaI ~ount Ma~ Rate Yield Suffix°l ~ount Mamri~ 280,000 2006 $ 860,000 2014 580,000 2007 975,000 2015 595,000 2008 710,000 2016 76~000 2009 725,000 2017 800,000 2010 315,000 2018 625,000 2011 310,000 2019 990,000 2012 os,ooo 2020 .5,00° 2o1 (Accrued lnter~l ~om D~ember 1, 20~ to be added) I CUSIP Prefix: 248865m interest CUSIP Rate Yield SuffixI° (1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by Standard and Poor's CUSIP Service Bmcau, a division of the McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. REDEMPTION... The City reserves the right, at its option, to redeem Bonds having stated maturities on and after February 15, 2015, in whole or in pma in principal amouats of $5,0(10 or any integral multiple thereof, on February 15, 2014, or any date thereafter, at the par value thereof plus accmedinteresttothedateofredemp0on(see TheBonds-OptionaIRedemp0on ). LEGALITY... The Bonds are offered for delivery when, as and if issued and received by the Underwriters and subject to thc approving opinion of the Attorney General of Texas and the opinion of McCall, Parkhurst & Heston, L.LP., Bond Counsel, Dallas, Texas (see Appendix C, "Form of Bond Counsel's Opinions"). Certain legal matters will be passed upon for the Underwriters by Fnlbright & Jaworski L.L.P. Dallas, Texas, Counsel for the Underwriters. DELIVERy. , , It is expected that the Bonds will be available for delive~ through The Depository Tra~t Company on Januacy 12, 2005. RBC DAIN RAUSCHER INC. MORGAN KEEGAN & COMPANY, INC. * Preliminary, subject to change. TABLE OF CONTENTS PRELIMINARY OFFICIAL STATEMENT SUMMARY .............. 3 CITY OFFICIALS, STAFF AND CONSULTANTS ........................ 5 ELECIYD OFFICIALS ..................................................................... SEI~CTED ADivm-ilST~AIIVE STAFF ............................................. CONSULTANTS AND ADVISO~ .................................................... 5 INTRODUCTION ................................................................................. 7 PLAN OF FINANCING ....................................................................... 7 THE BONDS ......................................................................................... TAX INFORMATION ....................................................................... 12 TABLE I - VALUATION, EX'Eb~ON8 AND GENERAL OBLIGATION DEBT .......................................................... 15 TABLE2 - TAXABLEASSF3SEDVALUATIONSBYCATEGORY.. 16 TABLE3- VALUATIONANDGENERALOBLIGATIONDEBT HISTORY ............................................................. ~ ........... 17 TABLE 4 - T~X RATE, LEx/Y AND COLLF. CTION HISTORY ......... 17 TABLE5 - TENL~RGESTTA~AYER$ ...................................... 17 TABLE6 - TAXADEQUACY ...................................................... TABLE7 - ESTIMATEDOVERLAPP~GDEBT ............................. DEBT INFORMATION ..................................................................... 19 TABLE 8 ' Pa.O-FORMA GENI~.AL OBLIGATION DEBT SERVICE REQUIREMEN~ .............................................................. 19 FINANCIAL INFORMATION .......................................................... 22 TABLE 13 - CHANGES INNETASSETS ....................................... 22 TAX MA~E[~ .................................................................................. 27 CONTINUING DISCLOSURE OF INFORMATION .................... 29 OTHER INFORMATION .................................................................. 30 RATfl~GS ..................................................................................... 30 LITgGATION ................................................................................. 30 SCHEDULE OF REFUNDED BONDS ............................... Schedule I APPENDICES GENIg~AL INFORMATION REGARDR4G THE CITY ........................ A The cover page hereof, this page, the appendices included herein and I I i I I I ! I I I ! I I I I I I I I i I I I I I I I I I ! i I I I I I I PRELIMINARy OFFICIAL STATEMENT SUMMARY This summary is subject in all respects to the more complete information and definitions contained or incorporated in this Preliminary Official Statement. The offering of the Bonds to potential investors is made only by means of this entire Preliminary Official Statement. No person is authorized to detach this summary from this Prali~ninary Official Statement or to otherwise use it without the entire Preliminary Official Statement. THE CITY ..................................... The City of Denton is a political subdivision and municipal corporation of the State, located in Denton County, Texas. The City covers approximately 98.09 square miles (see "Introduction - Description of City"). THE Bonns .................................. The Bonds are issued as $9,675,000* General Obligation Refunding Bonds, Series 2004. The Bonds are issued as serial bonds maturing February 15, 2006 through Febmmy 15, 2020 (see "The Bonds - Description of the Bonds"). PAYMENT OF INI~REST .............. Interest on the Bonds accrues from December 1, 2004, and is payable August 15, 2005, and each February 15 and August 15 thereat~er until maturity or prior redemption (see "The Bonds - Description of the Bonds" and "The Bonds - Optional Redemption"). AUTHORITY FOR ISSUANCE .......... The Bonds are issued pursuant to the general laws of the State, including particularly Chapter 1207, Texas Government Code, as amended, and the Ordinance passed by the City Council of the City (see "The Bonds - Authority for Issuance"). SECURITY FOR THE BONDS .......... The Bonds constitute direct obligations of the City, payable from an annual ad valorem tax levied, within the limits prescribed by law, on all taxable property located within the City (see "The Bonds - Security and Source of Payment"). REDEMPTION ............................... The City reserves the fight, at its option, to redeem Bonds having stated maturities on and at, er Febraary 15, 2015, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2014, or any date thereat~er, at the par value thereof plus accrued interest to the date of redemption. TAX EXEMPTION ............................ In the opinion of Bond Counsel, the interest on the Bonds will be excludable from gross income for federal income tax purposes under existing law, subject to the mailers described under the caption "Tax Matters" herein, including the alternative minimum tax on corporations. USE OF PROCEEDS ....................... Proceeds from the sale of the Bonds will be used to (a) refund a portion of the City's outstanding general obligation debt as shown on Schedule I hereto, for the purpose of lowering the debt service requirements, and (b) to pay the costs of issuance of the Bonds. RATINGS ...................................... The presently outstanding general obligation debt of the City is rated "Aa3" by Moody's Investors Service, Inc. ("Moody's") and "AA-" by Standard & Pom's Ratings Services, A Division of The McGraw-Hill Companies, Inc. CS&P"). The City also has issues outstanding which are rated "Aaa" by Moody's and "AAA" by S&P through insurance by various commercial insurance companies. Applications for conlract ratings on the Bonds have been made to Moody's and S&P (see "Other Information - Ratings"). BOOK-ENTRY-ONLY SYSTEM...... The definitive Bonds will be initially registered and delivered only to Cede & Co., thc nominee of DTC pursuant to the Book-Entry-Oaly System described herein. Beneficial ownership of the Bonds may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Bonds will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Bonds will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the mounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds (see "The Bonds - Book-Ent~'-Only System"). PAYMENT RECORD ...................... The City has never defaulted. * Preliminary, subjectto change. I SELECTED FINANCIAL ]~]FORMATION Ratio Funded Fiscal Per Capita Net Funded Per Capita Tax Debt to Year Estimated Taxable Taxable Tax Debt Funded Toxable % of Ended City Assessed Assessed at End of Tax Assessed Total Tax 9/30 Population Valuation Valuation Year Debt Valuation Collections 2001 87,227 $ 3,059,636,733 $35,077 '$ 82,139,222 $ 942 2.68% 100.24% 2002 91,588 3,367,292,025 36,766 99,990,494 1,092 2.97% 99.76% 2003 96,168 3,756,343,085 39,060 103,883,037 1,080 2.77% 99.98% 2004 100,976 4,042,202,871 40,031 109,805,000 1,087 2.72% 100.18% 2005 103,029 4,374,943,831 ol 42,463 101,920,000 a) 989 2.33% N.A. (1) Source: Denton Central Appraisal District as of July 19, 2004. (2) Projected, includes the Bonds, excludes the Refunded Bonds. Preliminary, subject to change. For additional information regarding the City, please contact: Kathy DuBos¢ Assistant City Manager City of Denton 215 E. McKinney Street Denton, Texas 76201 (940) 349-8228 David K. Medanich Laura Alexander First Southwest Company or 777 Main Street, Suite 1200 Fort Worth, Texas 76102 (817) 332-9710 4 I I i I I I I I I I I i I I I ! I i I I i I I I I ! I I ! I I I I I i I ELECTED OFFICIALS CITY OFFICIALS, STAFF AND CONSULTANTS TeFffl City Council Expires Euline Brock May, 2006 Mayor Perry McNeilI May, 2005 Mayor Pro Tem, District 4 Raymond Redmon May, 2005 Couneilmember, District 1 Pete Kamp May, 2005 Couanilmember, District 2 Jack Thomson May, 2005 Councilmember, District 3 Bob Montgomery May, 2006 Councilmember, At Large Place 5 Joe Mulroy May, 2006 Councilmember, At Large Place 6 Name Position Michael A. Conduff Howard Martin Kathy DuBose Jon Fortune Diana Ortiz Jennifer K. Walters Herbert L. Prouty Robin' Ramsay City Manager Assistant City Manager Assistant City Manager Assistant City Manager Director of FiscaI Operations City Secretary City ARomey Municipal Judge CONSULTANTS AND ADVISORS Auditors ........................................................................................................................................................ Deloitte & Touche LLP Fort Worth, Texas Bond Counsel ............................................................................................................................. McCall, Parkhurst & Horton L.L.P. Dallas, Texas Financial Advisor ...................................................................................................................................... First Southwest Company Fort Worth, Texas I THIS PAGE LEFT BLANK INTENTIONALLY I i I I I I ! ,I I ! I ! I I I i I I i I I I I i i I I i ! I I ! i i i I PRELIMINARY OFHCIAL STATEMENT RELATING TO $9,675,000* CITY OF DENTON, TEXAS GENERAL OBLIGATION KEFUNDING BONDS, SERIES 2004 INTRODUCTION This Preliminary Official Statement, which includes the Appendices hereto, provides certain information regarding the issuance of $9,675,000' City of Denton, Texas, General Obligation Refunding Bonds, Series 2004 (the "Bonds")· Capitalized terms used in this Preliminary Official Statement have the same meanings assigned to such terms in the Ordinance to be adopted on the date of sale of the Bonds which will authorize the issuance of the Bonds (the "Ordinance"), except as otherwise indicated herein. There follows in this Prelimintu-j Official Statement descriptions of the Bonds and certain information regarding the City and its finances. All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each such document. Copies of such documents may be obtained from the City's Financial Advisor, First Southwest Company, Dallas, Texas. DESCRIPTION OF THE CITY... The City of Denton, Texas is a political subdivision located in Denton County operating as a home- rule city under the laws of the State of Texas and a charter approved by the voters in 1959. The City operates under the Council/Manager form of goverument in which the Mayor and six Councilmembers me elected for staggered two-year terms. The City Council formulates operating policy for the City while the City Manager is the chief administrative officer· The City is approximately 98·09 sqoare miles in area. PLAN OF FINANCING PUItYOSE... Proceeds from the sale of the Bonds will be used to (a) refund a portion of the City's outstanding general obligation debt as shown on Schedule I hereto (the "Refunded Bonds") for the purpose of lowering the debt service requirements and (b) to pay the costs of issuance of the Bonds. REFUNdeD Bo~s.. · The ptincipal and interest due on the Refunded Bonds are to be paid on the scheduled interest payment dates and thc respective redemption dates of such Refunded Bonds, from funds to be deposited pursuant to a certain Escrow Agreement (the "Escrow Agreement") between the City and JPMorgan Chase Bank, National Association, Dallas, Texas (the "Escrow Agent"). The Ordinance provides that from the proceeds of the sale of the Bonds received fi.om the Underwriters, the City will deposit with the Escrow Agent the amount necessary to accomplish the discharge and final payment of the Refunded Bonds on their respective redemption dates. Such funds will be held by the Escrow Agent in a special escrow account (the "Escrow Fund") and used to purchase direct obhgatmns of the Umted States of America (the Fedem Secutit es"). Under the Escrow Agreement, the Escrow Fund is irrevocably pledged to the payment of the principal of and interest on the Refunded Bonds. Grant Thornton LLP, a nationally recognized accounting rum, will verify at the time of delivery of the Bonds to the Underwriters thereof the mathematical accuracy of the schedules that demonslrate the Federal Securities will mature and pay interest in such mounts which, together with uninvested fimds, if any, in the Escrow Fund, will be sufficient to pay, when due, the principal of and interest on the Refunded Bonds. Such maturing principal of and interest on the Federal Securities will not be available to pay the Bonds (see "Other Infomtion - Verification of Arithmetical and Mathematical Compntafions"). By the deposit of the Federal Securities and cash, if necessary, with the Escrow Agent pursuant to the Escrow Agreement, the City will have effected the defeasance ora0 of the Refunded Bonds in accordance with the law and the respective Ordinance authorizing the issuance of the Refunded Bonds. It is the opinion of Bond Counsel that as a result of such defeasance and in reliance upon the report of Grant Thornton LLP, the Refimded Braids will be outstanding only for the paipose of receiving payments from the Federal Securities and any cash held for such purpose by the Escrow Agent and such Refunded Bonds will not be deemed as being outstanding obligations of the City payable from taxes nor for the purpose of applying any limitation on the issuance of debt. The City has covenanted in the Escrow Agreement to make timely deposits to the Escrow Fund, from lawfully available funds, of any additional amounts required to pay the principal of and interest on the Refunded Bonds if for any reason the cash balances on deposit or scheduled to be on deposit in the Escrow Fund be insufficient to make such payment * Preliminary, subject to change. I USE OF PROCEEDS... ~/lle proceeds from thc sale of the Bonds, together with other available funds, will be applied approximately as follows: Sources of Funds Par Amount of Bonds $ Original Issue Premium Accrued Interest Transfer from Prior Issue Debt Service Funds '$ Total Sources of Funds ~'ses of Funds Deposit to Escrow $ Deposit to Interest and Sinking Fund Cost of Issuance°) Total Uses of Funds $ (1) Indudthg Underwritex's Discount and Insurance Premium. THE BONDS I}ESCRIPTION OF THE BONDS . . . The Bonds are dated December 1, 2004, and mature, or are subject to redemption prior to maturity, on February 15 in each of the years and In the amounts shown on the cover page hereof. Interest on the Bonds will be computed on the basis of a 360-dsy year of twelve 30-day months, and will be payable on August 15 and February 15, commencing August 15, 2005. The definitive Bonds will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity and will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC") pursuant to the Book-Entry-Only System described herein. No physical delivery of the Bonds will be made to the owners thereof, Principal of, premium, if any, and Interest on the Bonds will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the mounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds. See "The Bonds - Book-Eh'ay-Only Systcnn" herein. A~J~OmTY for ISSU.S,~CE... The Bonds are being issued pursuant to the Constitution and general laws of the State of Texas, particularly Chapter 1207, Texas Government Code, as amended; and the Ordinance. SECURITY AND SOURCE OF PAYMENT.., All taxable property within the City is subject to an annual ad valorem tax levied by the City sufficient to provide for the payment of principal of and interest on all Bonds which tax must be levied within the limits proscribed by law. TAX RATE LllmTATIOn... All taxable property within the City is subject to the assessment, levy and collection by the City ora continuing, direct annual ad valorem tax sufficient to pm'vide for the payment of principal of and interest on all ad valorem tax debt within the limits prescribed by law. Article XI, Section 5, of the Texas Constitution is applicable to the City, and limits its maximum ad valorem tax rote to $2.50 per $100 Taxable Assessed Valuation for all City purposes. The Home Rule Charter of the City adopts the constitutionally authorized maximum tax rote of $2.50 per $100 Taxable Assessed Valuation. OVTION~,L R~DEMVTION... The City reserves the right, at its option, to redeem Bonds having stated maturities on and after February 15, 2015, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2014, or any date thereafter, at the par value thereof plus accrued interest to the date ofredempimn. If less than all of the Bonds are to be redeemed, the City may select the maturities of Bonds to be redeemed. If less than all the Bonds of any maturity are to be redeemed, the Paying Agent/Registrar (or DTC while the Bonds are In Book-Entry-Only form) shall determine by lot the Bonds, or portions thereof, within such maturity to be redeemed. Ifa Bond (or any potion of the principal sum thereof) shall have been called for redemption and notice of such redemption shall have been given, such Bond (or the principal amount thereof to be redeemed) shall become due and payable on such redemption date and interest thereon shall cease to accrue from and after the redemption date, provided funds for the payment of the redemption price and accrued interest thereon are held by the Paying Agent/Registrar on the redemption date. NOTICE OF REDEMPTION., . Not less than 30 days prior to a redemption date for the Bonds, the City shall cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to the registered owners of the Bonds to be redeemed, in whole or in part, at the address of the registered owner as it appeared on the registration books of the Paying Agent/Registrar on the 45~ day ptior to such redemption date. ANY NOTICE SO MAILED SHALL BE CONCLUSIVELY pRESUMED TO HAVE BEEN DULY GIVEN NOTWITHSTANDING ONE OR MORE REGISTERED OWNERS MAY HAVE FAILED TO RECEIVE SUCH NOTICE. If a Bond or (or any portion of its principal sum) shall have been duly called for redemption and notice of such redemption duly given, then upon the redemption date such Bond (or the portion of its principal sum to be redeemed) shall become due and payable, and, if moneys for the payment of the redemption price and the interest accrued on the principal amount to be redeemed to the date of redemption are held for the purpose of such payment by the Paying Agent/Registrar, interest shall cease to accrue and be payable from and after the redemption date on the principal amount redeemed. 8 i I I I I I I I I ! I i I i i i I ! ! ! ! ! ! ! I! ! ! ! ! ! I I I I DEFEASANCE . . . The Ordinance provides that any Bond and the interest thereon shall be deemed to be paid, retired, and no !onger outstanding (a "Defensed Bond") within the mean/rig of the Ordinance, when payment of the pnncipal of such Bond, plus interest thereon to the due date (whether such due date be by reason of maturity, upon redempt on, or otherwise) etther have been made or caused to be made m accordance with the terms thereof (includinn tL . . ' (i) shall redemption), or (ii) shall have been provided ~ ne g]wng of any required notice of for on or before such due date by irrevocably depositing with or making available to the Paying Agent/Registrar for such payment (1) lawful money of the United States of America sufficient to make such payment or (2) Govemmant Obligations which mature as to principal and interest in such amounts and at such times as will insure the ava/lability, without reinvestment, of sufficient money to provide for such payment, and when proper arrangements have been made by the City with the Paying Agant/Reg strar for the payment of its services until all Defensed Bonds shall have become due and payable. At such time as a Bond shall be deemed to be a Defensed Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer be secured levied and pledged as provided in the Ordinance, by, payable from, or entitled to the benefits of, the ad valorem taxes herein Government Obligations. and such principal and interest shall be payable solely from such money or e term Government Obhgat]ons" as used above shall mean direct obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, which may be United States Treasury obligations such as its State and Local Government Series, which may be in book~ . BOOK-ENI'RY. ONLy SFSTEM. . . This section describes how owners" entry form of premium, if any, and interest on the Bonds are to . mp of the Bonds are to be transferred and how the principal York, New York, while the Bonds are ra~ .... be pard to and credited by The D~-~:, ~ -.-otsterea tn Jts nominee name· The inf;r~nat,~*;~-~.~'.°fy 'rffst C~mpany ("DTC"), New Book-Entry-Only System has been provided by DTC for use in disclosure documents such as this Official Statement. The ..... , m ~rt~s sectton concerning DTC and the believes the source of such information to be reliable, but takes no responsibility for the accuracy or completeness thereof City The City cannot and does not give any assurance that (1) DTC will distribute payments of debt service on the Bonds, or redemption or other notices, to DTC Participants, (2) DTC Participants or others will distribute debt service payments paid to DTC or its nominee (as the registered owner of the Bonds), or redemption or other notices, to the Beneficial OWners, or that they will do so on a timely basis, or (3) DTC will serve and a ' . . . . in dealing with DTC Participants are on file with DTC ,, ~,t proceaures of DTC to he followed DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's parmersbip nominee) or such other name as may be renuested h ....... u~ . ~ . DTC. One fully-registered Bond certificate will be issued for each matur/ty of the Bonds, in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world's largest depository, is a limited-purpose ' bankin~ organization', within th .... trust company · . * mean ng olthe Ne organ/zed under the New York Banking Law, corp??lon wtthm the meanine of the n~-, v~-,. ,, vYoY°rk Bank ng Law, a member of the F a provzsmns of Sect on 17A nf t~o o ~?'~ ~.,,,~ un rorm Commercia Code . . ederal Reserve System, a "clearin ....... aecuntles exchange Act of 1934 rye,- ~ ;~and a. clearing agency" registered pursuant to Issues of U.S. and non-U.S, equity issues, corporate and municipal ~"~ z,ows anu provtdes asset servtcmg for over 2 mill~'~ · ' ' · . . . . debt issues, and money market instruments from over 85 countries that DTC's parrmzpants ( 'Dzrect Partmzpants,,) dspoan with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S· securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. Corporation ("DTCC"X D'~,-','- · · DTC is a wholly-owned subsidiary of The Depository Trust & Clearing J. -~-% m turn, zs Owned by a number of Direct Participants of DTC and Mom Securities Cle~'ing Corporation, Government Securit' - Markets Cleanng Corporation cnrsr'r, ~t-,-, .... ~es Cleanng Corporatior~ MB~ r,~ . ~ ~ers of the Natxona Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association. of Securitias Dealers, Inc. Access to the -'-'-'~-t, as well as by the New York DTC system is also available to others such as both U.S. and non-U.S securities brokers and dealers, banks, trust compan es, and clearing corporations that clear through or malnta n a custodial relationship w/th a Direct Participant, ether directly or indh'ectly (' Ind'rect Participants ). DTC has Standard & Poor's highest rating: AAA The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commtss~on. More m furmatton about DTC can be found at www. dtac.com. Purchases of Bonds under the DTC system must Bonds on DTC's records The OWnersk:-: - he,made by or through Direct Particinant~ .-.L' · . . recorded on the D~rect and fudtrect Partanpants, records Benefic al Owners roll not receive wnttan confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by enthes made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. . Direct participants with DTC are registered in the name of DTC's facilitate subsequent transfers, all Bonds deposited by ..... .o~ ~ an authorized repmasentative of DTC The dapo? partnership nominee. Cede & Co.. or such other name as may ne rcqu~,~ ~J'' To ..... other DTC nominee do not effect any change in of Bonds · ~,~t- ~ no knowledge of the ,~tu the Beneficial Owners. baneficial ownarsinp. ~'-'-~ ,as identity of the Direct participants to whose accountS such Bonds are credited, which may or may not be The Direct and Indirect participants will remain responsible for keeping account of their holdings on behalf of their customers. ~,~.--. r~i~t parficinants, by Direct participants to Indirect participants, and by Direct participants and indirect participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, For example, Beneficial Owners of Bonds may wish to and proposed amendments to the Bond documents- in and transmit notices to Beneficial Owners. In tenders, defaults, - .~' ,~,o Bonds for their benefit has agreed t.o o.b~ ~o *o the registrar and request that copras of notices be provided directly to them. ' ' Redemption notices shall be sent to DTC. If less than all of the Bonds within a aratunty are being redeemer, DTC's praciace ~s to determine by lot the amount of the mtarast of each D~rect partanpant ar such ~ssu¢ to be redaemed Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct participant in accordance with DTC's Procedures. Undar its usual pmeedrnes, DTC mails an omnibus proxy to the City as soon as possible at'ar the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct participantS to whose accounts Bonds are credited on the record date (identified in a listing attached to the Onmibus Proxy)· and interest paymants on the Bonds will be mada to Coda & Co. or such other nominee as may Redemption proceeds, principal , · credit Direct participants' accounts upon DTC's ...... f DTC DTC s pmactice la to ~ :~,-ar on aayable date ar accordance ~-e re'~uestad by an anthonzed .repr. ese.n.~ ~-~ofion from the City or the Paymg Agant~Keg,~ , -'eel;; of funds and correspondmg oeta~l mto.,,,~ Payments by panunpants to Banefictal Owners will be governed by · · DTC's records. with their respective holdings shown on and not of DTC nor its nominee, the Paying standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in ' street name, and will be the responsibility of such participant effect from time to time· payment AgentfRegistrar, or the City, subject to any statutory or regulatory requirements as may be in of redemption proceeds, principal and interest paymentS to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Paying AgantJRegistrar' disbursement of such paymentS · . . . .,_:,:~, ~r n'r~ and disbursement of such payments to the Beneficial Owners will be the to Direct parnctpants wall be the respous~u-,,y - .... ' responsibility of Direct and lnthrect pa~cipants. DTC may diseonfiune pmoviding its services as depository with respect to the Bonds at any time by giving reasonable notice to · · Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are reqrnre · · Sections of tltis Official Statemant In reedm~ e~sonOsffol;i~hlisSt~f~:an; ~t Stathe°~ledntb:oU~red~7;2r°el Use of Certarn Terms in ?they . Onl S stem, references m othe.r c ...... 'n the Bonds, but 0) all rights of · :,o* -,~hil¢ the Bonds are in the Book Entry ~--Y,~Yinh the participant acqmres an m~,,ot ~ '~'°w~s should be read to include the person x~. ,~,, ~ ....... ,~ iii/except as dasctibed above, notices that are ownership arust be exercised through DTC and the Book-EntrY only ~ys~,u, ,~-~, ~ to be given to registered owncre under the Resolution will be given only to DTC. lnformafiun concerning DTC and the Book-EntrY Only System has been obtained from DTC an~ is not guaranteed as tu k. Entrv Only System is discontinued by DTC or ..... ,-,~ Only system In the event that.thS~i~_a° al he issued to the holders an!_.?e the use of the Book-Entry ~ -~ .ha e~istration proviamns as s~, Paying Agant/Registear is 3PMorgan Chase Bank, National Association, Dallas, an successor Paying Agant/Reg~strar shall be a ..... il first class, postage prepaid, which not,ce shall also g~ve the address of the new Paying Agani/Registrar. 10 I I I I I I I i I I I I I I I i I I I i i I I I I I I i I I I I I I i i I Principal of the Bonds is payable to the registered holder appearing on the registration books of the Paying Agent/Registrar (the "Registered Owner") at the designated corporate trust office of the Paying Agent/Registrar upon surrender of the Bonds for payment. Interest on the Bonds is payable to the Register Owners appearing on the registration books of the Paying Agent/Registrm at the close of business on the Record Date (identified below) and such interest shall be paid by the Paying Agent/Registrar by check mailed, first class postage prepaid, to the Register Owner or by such other arrangement, acceptable to the Paying Agent~Registrar, requested by and at the risk and expense of the Registered Owner. If the date for the payment of the principal of or interest on the Bonds shall be a Saturday, Sunday, a legal holiday, or a day when banking institutions in the city where the designated corporate office of the Paying Agent/Registrar is located is authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day when banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. TRANSFER, EXCHANGE AND REGISTRATION . . . In the evem the Book-Enl~-Only System should be discontinued, printed certificates will be delivered to thc registered owners and thereafter the Bonds may be transferred and exchanged on the registration books of the Paying Agent/Regisirar only upon presentation and surrender of such printed certificates to the Paying Agent/Registrar and such transfer or exchange shall be without expense or service charge to the registered owner, except for any tax or other governmental charges required to be paid with respect to such registration, exchange and transfen Bonds may be assigned by the execution of an assignmmt form on the Bonds or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar. New Bonds will be delivered by the Paying Agent/Registrar, in lieu of the Bonds being transferred or exchanged, at the designated office of the Paying Agent/Registrar, or sent by United States mail, first class, postage prepaid, to the new registered owner or his designee. To thc extent possible, new Bonds issued in an exchange or transfer of Bonds wiI1 be delivered to the registered owner or assignee of the registered owner in not more than three business days after the receipt of the Bonds to be canceled, and the wri'aen instrument of transfer or request for exchange duly executed by the registered owner or his duly authorized agent, in form satisfactory to the Paying Agent/Registrar. New Bonds registered and delivered th an exchange or ~ansfer shall be in any integral multiple of $5,000 for any one maturity and for a like aggregate principal amount as the Bonds surrendered for exchange or transfer. See "The Bonds--Book-Entry-Only System" herein for a description of the system to be utilized initially in regard to ownership and transferability of the Bonds. Neither the City nor the Paying Agent/Registrar shall be required to transfer or exchange any Bond called for redemption, in whole or in part, within 45 days of the date fixed for redemption; provided, however, such limitation of transfer shall not be applicable to an exchange by the registered owner of the uncailed balance of a Bond. RECORD DATE FOR INTEREST PAYMENT . . . The record date ("Record Date") for the interest payable on the Bonds on any interest payment date means the close of business on the last business day of the month next preceding such interest payment date. In the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest ("Special Payment Date", which shall be i5 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of a Bond appearing on the registration books of the Paying Agnnt/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. BONDHOLDERS' REMEDIES . . . The Ordinance does not establish specific events of default with respect to the Bonds. Under State law there is no right to the acceleration of maturity of the Bonds upon the failure of the City to observe any covenant under the Ordinance. Although a registered owner of Bonds could presumably obtain a judgment against the City if a default occurred in the payment of principal of or interest on any such Bonds, such judgment could not be satisfied by execution against any property of the City. Such registered owner's only practinaI remedy, ifa default occurs, is a mandamus or mandatory injunction proceeding to compel the City to levy taxes suffiaient to pay principal of and interest on the Bonds as it becomes due. The enforcement of any such remedy may be difficult and time consuming and a registered owner could be required to enforce such remedy on a periodic basis. The Ordinance does not provide for the appointment ora trustee to represent the interests of the bondholders upon any failure of the City to perform in accordance with the terms of the Ordinance, or upon any other condition. Furthermore, the City is eligible to seek relief from its creditors under Chapter 9 of the U.S. Bankruptcy Code. Chapter 9 provides for the recognition ora security interest represented by a specifically pledged source of revenues, and also includes an automatic stay provision that would prohibit, without Bankruptcy Court approval, the prosecution of any other legal action by creditors or bondholdm of an entity which has sought protection under Chapter 9. Therefore, should the City avail itself of Chapter 9 protection from creditors, the ability to enforce would be subject to the approval of the Bankruptcy Court (which could require that the action be heard in Bankruptcy Court instead of other federal or state court); and the Bankruptcy Code provides for broad discretionary powers of a Bankruptcy Court in administering any proceeding brought before it. The opinion of Bond Counsel will note that all opinions relative to the enforceability of the Ordinance and the Bonds are qualified with respect to the customary rights of debtors relative to their creditors. 1I TAX INFORMATION AD VALOREM TAX LAW... Thc appraisal of pmpotW within thc City is the reaponsibdity of the Denton Central Appraisal Dis~ict (the "Appraisal District"). Excluding agricultural and open-apace land, which may be toxed on the basis ofpmdactive capaalW, thc Appraisal Dis'aict is required under the Texas Ptopert3, Tax Code to appraise all property within the Appraisal District on thc basis of 100% of its market value and is prohinited from applying any assessment ratios. In determining nmrket value of pmpc~'y, different methods of appraisal may be used, including the cost method of appraisal, the income method of appraisal and market date comparison method of appraisal, and the method considered most appropriate by the chief appraiser is to be used. Stete law further limits the appraised value of a residence homestead for a mx year to an amount not to exceed the lesser of (1) the market value of the property, or (2) the sum of (a) l(Y'/o of the appraised value of the property for the last year in which thc property was appraised for taxation times the number of years since thc properey was last appraised, plus Co) the appraised value of the pmperW for the last year in which the property was appraised plus (c) thc market value of all new improvements to thc prapeny. The value placed upon prope~3· within the Appraisal District is subject to review by an Appraisal Review Board, consisting of three members appointed by the Board of Din:ctors of the Appraisal District, The Appraisal Dis~ct is required to review the value of propcrW within thc Appraisal District at least every three years. The City may require annual review at its own expense, and is entitled to chalinngc the determination of appraised value of properW within thc City by petition filed with the Appraisal Review Board. Reference is made to thc V.T.C.A., Property Tox Code, (the "Property Tax Code") for identification of property subject to taxation; property exempt or which may be exempted i~om taxation, if claimed; the appmisui of praperW for ad valorem taxation ptuposas; and the procedures and limitations applicable to the levy and collection of ad valorem taxes. Article VIII of the State Constitution ("Artichi VIII") and State law provide for certain exemptions from property taxes, the valuation of agricultural and open-space lands at productivity value, and the exemption of certain personal property from ad valorem taxation. Under Section l-b, A~ichi VIII, and State law, the governing body of a political subdivision, at its option, may grant: (1) An excmpimn of not less than $3,000 of thc market value of the residence homestead of porsons 65 yenrs of age or older and thc disabled from all ad valorem taxes thereafter levied by the political subdivision; (2) An exemption of up to 20% of the market value of residence homesteads. The minimum exemption under this provision is $5,000. In the case of residence homestead exemptions granted under Section l-b, Article VIII, ad valorem taxes may continue to be lc~'ied against the value ofimmestcads exempted where ad valorem taxes have previously been pledged for the payment of dubt if cessation of the levy would impair thc obligation of the contract by which thc debt was created. As of January 1, 2004, under Article VIII and State law, the governing body of a county, municipality or junior college dish%t may provide for a frenze on totel amount of ad valorem levied on the residence homestead of a disabled person or persons 65 years of age or older above the amount of trax imposed in the year such residence qualified for such exemption. Also, upon receipt of a petition signed by five percent of the registered voters of the county, municipality or junior college district, an election must bc huid to determine by majority vote whether to establish such a limitation on taxes paid on residence homesteads of porsons 65 years of age or who are disabled. Upon providing for such exemption, the totel amount of taxes imposed on such homestead cannot be increased cxcapt for improvements and such freeze is transferable to a different residence homestead and to thc surviving spouse living in such homestead who is disabled or is at least 55 years of age. Once catabliabed such freeze cannot be repealed or resclndcd. State law and Section 2, Axtialc VIII, mandate an additional propexty tax exemption for disabled veterans or the surviving spouse or children of a deceased veteran who died while on aetivc duty in the armed forces; the exemption applies to either real or personal proper~ with the amount of assessed vaintu~on exempted ranging from $5,000 to a maximum of $12,000. Article VIII provides that eligible owners of both agdculteral land (Section l-d) and open-space land (Section l-d-l), including opon-space land devoted to farm or ranch purposes or open-space land devoted to timber production, may uicct to have such property appraised for propo~y taxation on the basis of its productive capacity. The same land may not be qualified under both Section 1 -d and 1-d-l. Nonbusiness personal property, such as automubilcs or light tracks, are exempt from ad valorem taxation unless the governing body ora political subdivision elects to tax this prape~, floats owned as noubosincss property are exempt from ad valorem taxation. Ar~clc VIII, Section l-j, provides for "freeport property" to be exempted from ad valorem taxation. Freeport propexty is defined as goods detuined in Texas for 175 days or less for the purpose of assembly, storage, manufacturing, processing or fabrication. Notwithstanding such exemption, counties, school districts, junior college districts and cities may tax such tangible personal property provided official action to tax the same was taken before April 1, 1990. Decisions to continue to tax may be reversed in the future; decisions to exempt freeport properW am not subject to reversal. The City may create one or more tax increment financing districts ("TIF") within the City and freeze the taxable values of propeV, y in thc TIF at the value at the time of its creation. Other overlapping taxing units levying taxes in thc TIF may agree to contribute all or part of futtuc ad valorem taxes levied and collected against the value of property in the TIF in excess of thc 12 I I I I I I I I I I I I ! I i i I I I I I I I I I I I I I I I I I I I "frozen values" to pay or finance the costs of certain public improvements in the TIF. Taxes levied by the City against the values of real property in the TIF in excess of the "frozen" value are not available for general city use but are restricted to paying or financing "project costs" within the T1F. The City also may enter into tax abatement agreements to encourage economic development. Under the agreements, a property owner agrees to construct certain improvements on its property. The City in mm agrees not to levy a tax on all or part of the increased value at~ibutable to the improvements until the expiration of the agreement. The abatement agreement could last for a period of up to 10 years. EFFECTIVE TAX RATE AND ROLLBACK TAX RATE... By each September 1 or as soon thereafter as practicable, the City Council adopts a tax rate per $100 taxable value for the current year. The tax rate consists of two components: (1) a rate for funding of maintenance and operation expenditures, and (2) a rate for debt service. Under the Property Tax Code, the City must annually calculate and publicize its "effective tax rate" and "rollback tax rate". The City Council may not adopt a tax rate that exceeds the prior year's levy until it has held a public hearing on the proposed increase following notice to the taxpayers and otherwise complied with the Property Tax Code. If the adopted tax rate exceeds the rollback tax rote the qualified voters of the City by petition may require that an election be held to determine whether or not to reduce the tax rate adopted for the current year to the rollback tax rate. "Effective tax rate" means the rate that will produce last year's total tax levy (adjusted) from this year's total taxable values (adjusted). "Adjusted" means lost values are not included in the calculation of last year's taxes and new values are not included in this year's taxable values. "Rollback tax rate" means the rate that will produce last year's maintenance and operation tax lev3, (adjusted) from this year's values (adjusted) multiplied by 1.08 plus a rote that will produce this year's debt service from this year's values (unadjusted) divided by the anticipated tax collection rate. The Property Tax Code provides that certain cities and counties in the State may submit a proposition to the voters to authorize an additional one-half cent sales tax on retail sales of taxable items. If the additional tax is levied, the effective tax rate and the rollback tax rate calculations are required to be offset by the revenue that will be generated by the sales tax in the current year. Reference is made to the Property Tax Code for definitive requirements for the levy and collection of ad valorem taxes and the calculation of the various defined tax rates. PROPERTY ASSESSMENT AND TAX PAYMENT... Property within the City is generally assessed as of January 1 of each year. Business inventory may, at the option of the taxpayer, be assessed as of Soptamber 1. Oil and gas reserves are assessed on the basis of a valuation process which uses an average of thc daily price of oil and gas for the prior year. Taxes become due October I of the same year, and become delinquent on February 1 of the following year. Taxpayers 65 years old or older are permitted by State law to pay taxes on homesteads in four installments with the first due on February 1 of each year and the final installment due on Augast 1. PENALTIES AND INTEREST... Charges for penalty and interest on the unpaid balance of delinquent taxes are made as follows: CumuIative Cumulative Month Penalty Interest Total February 6% 1% 7% March 7 2 9 April 8 3 11 May 9 4 13 June 10 5 15 July 12 6 18 Afier July, penalty remains at 12%, and interest increases at the rate of 1% each month. In addition, a taxing unit may contact with an attorney for the collection of delinquent taxes and the mount of compensation as set forth in such con,act may provide for a fee up to 20% of the amount of delinquent tax, penalty, and interest collected. Under certain circumstances, taxes which become delinquent on the homestead of a taxpayer 65 years old or older incur a penalty of 8% per annum with no additional penalties or interest assessed. In general, property subject to the City's lien may be sold, in whole or in parcels, pursuant to court order to collect the amounts due. Federal law does not allow for the collection of penalty and interest against an estate in bankruptcy. Federal bankruptcy law provides that an automatic stay of action by creditors and other entities, including governmental units, goes into effect with the filing of any petition in bankruptcy. The automatic stay prevents governmental units from foreclosing on property and prevents liens for post-petition taxes from attaching to property and obtaining secured creditor statos unless, in either case, an order lifting the stay is obtained from the bankruptcy court. In many cases post-petition taxes are paid as an administrative expense of the estate in bankruptcy or by order of the bankruptcy court. I3 ! CITY APPLICATION OF TAX COI>E... The City grants an exemption to the market value of the residence homestead of persons 65 years of age or older of $25,000 and those who are disabled of $I0,000. The City grants an additional one-half of one percent, or a minimum of $5,000 exemption of the market value of residence homesteads. See Table 1 for a listing oftha amounts of the exemptions described above. Ad valorem taxes are not levied by the City against the exempt value of residence homesteads for the payment of debt. The City does not tax nonbusiness personal property; and the City collects its own taxes. The City does not permit split payments, and discounts are not allowed. The City does not tax freeport property. The City collects the additional one-half cent sales tax for reduction of ad valorem ta~es. The City has not adopted the tax fi'eeze for citizens who are disabled or are 65 years of age or older, which became a local option and subject to local referendum on January 1, 2004. The City has adopted a tax abatement policy. TAX ABATEMENT POLICY... The City has established a tax abatement program to encourage economic development. In i990 the City Council adopted a resolution setting guidelines and criteria for granting abatamants in reinvestmnat zones created within the City. These guidelines specifically note that incentives are limited to companies which create new wealth and do not adversely affect existing businesses operating within the City. Since 1990, the City has agreed to abate taxes for only one company. On January 6, 1998, the City Council voted to abate taxes on 25% of $37,000,000 in new cons'auction and equipment to United Copper Industries CUnited Copper") for 6 years beginning in 1999. United Copper is a new corporate citizen and began producing copper wine in January 1999. United Copper employs approximately 170 employees and estimates 800 employees in its tenth year. On May 13, 2003, the City Council voted to rebate 40% of ad valorem taxes paid for a new facility and new equipment to Sally Beauty Company for 10 years, beginning in 2004, under a Section 380 Economic Development Program Agreement. The value of new property is estimated at $24,000,000. On September 2, 2003, thc City Council voted to abate taxes on 35% of $30,000,000 for expansion and renovations to an existing facility to Flowers Foods Bakeries Group for 5 years beginning in 2005. Flower Foods is a new corporate citizen and plans to begin construction in 2004. Flower Foods employs approximately 94 employees and estimates 216 employees in its 5th year. The tax abatement agreement provides for a three-year phase-in of the total project. The agreement requires a total threshold of $30,000,000 over the 3-year period. The company will receive a prorated abatement amount based on the percentage increase in taxable valuation. 14 I I I I I I I I I I I I I I I I I I I I I I i I I I I I I I I I I I I I TABLE I - VALUATION, EXEMPTIONS AND GENERAL OBLIGATION DEBT 2004/05 Market Valuation Established by Denton Central Appraisal Disu'ict Less Exemptions/Reductions at 100% Market Value: Residence Homestead Exemptions Over 65 Exemptions Disabled Persons Exemptions Disabled Veterans Exemptions Agricultural Land Use Productivity Historical/Other Exemptions Freeport Exemptions Abatement Exemptions House Bill 366 Prorated Exempt Property Pollution Exemptions Homestead Cap Adjustment 2004/05 Taxable Assessed Valuation (as of 7-19-04) Plus Supplements 2003/04 Taxable Assessed Valuation (as of 7-19-04) City Funded Debt Payable from Ad Valorem Taxes (as of 11 ~1-04) (11(21 General Obligation Bonds Tax and Utility System Ce~ificates of Obligation The Bonds Funded Debt Payable from Ad Valorem Taxes Less Self-Supporting General Obligation Debt(hI Solid Waste System General ObIigation Debt Drainage System General Obligation Debt Motor Pool System General Obligation Debt Net Tax Supported Debt Payable from Ad Valorem Taxes Interest and Sinking Fund as of 11-1-04 $4,716,223,950 $ 70,492,078 81,121,114 2,166,124 3,650,892 162,773,738 4,731,308 102,984,393 3,868,799 82,314 963,948 970,484 12,009,660 445,814,852 $4,270,409,098 104,534,733 $4,374,943,831 $ 52,I95,000 48,400,000 9,675,000 13) $ 110,270,000 $ I 1,209,378 (si 4,393,349 c5) 8,433,579 24,036,306 $ 86,233,694 $ 443,177 Ratio Total Funded Debt to Taxable Assessed Valuation ........................................... Ratio Net Funded Debt to Taxable Assessed Valuation ............................................. 2005 Estimated Population - 103,029 Per Capita Taxable Assessed Valuation - $41,449 Per Capita Total Funded Debt ~ $1,070 Per Capita Net Funded Debt - $837 2.58% 2.02% (1) The above statement of indebtedness does not include currontly outstanding $294,020,000 Utility System Revenue Bonds, as these bonds are payable solely from the net revenues of the Utility System (the "System"), as defined in the ordinances authorizing the bonds. (2) Excludes the Refunded Bonds. (3) Preliminary, subject to change. (4) General Obligation debt in the amounts shown for which repayment is provided from revenues of the respective revenue systems. The amount of self supporting debt is based on the percentages of revenue support as shown in Table 10. It is the City's current policy to provide these payments from respective system revenues; this policy is subject to change in the (5) Includes a portion of the Bonds. 15 I TABLE 2 - TAXABLE ASSESSED VALUATIONS BY CATEGORY Taxable Appraisal Value for Fiscal Year Ended September 30, 2005 m 2004 2003 %of %of Amount Total Amount Total Amount %of Total Category Real, Residential, Single Family $2,445,993,713 51.86% $ 2,243,246~671 51.54% $ 2~016,091,440 48.25% Rca[, Residential, Multi-Family 415,779,403 8.82% 397,690,655 9.14% 395,673,434 9.47% Real, Vacant Lotsfrracts 89,988,573 1.91% 100,332,693 2.31% 72,222,153 1.73% Real, Acreage (Land Only) 218,495,173 4.63% 221,844,869 5.10% 204,320,591 4.89% Real, Farm and Ranch Improvoments 18,670,346 0.40% 17,401,518 0.40% 17,390,233 0.42% Real, Commercial and Indus~rlal 859,873,094 18.23% 747,983,391 17.19% 742,450,124 17.77% Real, Oil, Gas~ and Other Mineral Reserves 22,681,700 0.48% 0.00% 0.00% Rca[ and Tangible Personal, Utilities 71,236,279 1.51% 68,858,670 1.58% 75,691,705 1.81% Tanglble Per sonal, Commercial and Industrial 474,612,410 10.06% 456,589,726 10.49% 556,273,112 13.31% Tangible Personal, Other 27,083,367 0.57% 28,504,241 0.65% 30,663,435 0.73% Rca[ and Special Propc~y, Inventory 71,809,892 1.52% 69,711,912 1.60% 68,060,766 1.63% Total Appraised Value Before Exemptions $4,716,223,950 100.00% $4,352,164,346 100.00% $ 4,178,836,993 100.00% Less: Total Exemptions~nductions (445,814,852) (442,887,140) (475,424,478) Supplements 104,534,733 132,925,665 52,930,570 Taxable Assessed Value $ 4,374,943,831 $ 4,042,202,871 $ 3,756,343,085 Taxable Appraised Value for Fiscal Year Ended September 30, 2002 2001 Ctae$o~ Amount Real, Residential, Single Family $1,745,672,780 Real, Residential, Malti-Family 366,376,170 Real, Vacant Lots~Tracts 102,824,427 Real, Acreage (Land Only) 158,854,088 Rea[, Farm and Ranch Improvements 13,976,287 Real, Commercial and Industrial 693,626,894 Rea[ and Tangible personal, Utilities 65,153,809 Tangible Personal, Commemia[ and Industrial 464,720,534 Tangible Personal, Other 26,830,819 Real ProperS, Inventory 19,973,109 Total Appra[s~d Value Before Exemptions $ 3,658,008,917 Less: Total Exemptions/Reductions (381,281,194) Supplements 90,564,302 Taxable Assessed Value $ 3,367,292,025 %of %of Total Amount Total 47.72% $1,499~810,076 45.72% 10.02% 318,471,031 9.71% 2.81% 93,798,664 2.86% 4.34% 163,090,873 4.97% 0.38% 14,492,037 0.44% 18.96% 637,492,133 19.43% 1.78% 73,159,120 2.23% 12.70% 438,110,750 13.36% 0.73% 23,856,058 0.73% 0.55% 17,998,601 0.55% 100.00% $3,280,279,343 100.00% (365,320,399) 144,677,789 $3,059,636,733 (1) Valuations shown are certified taxable assessed values reported by the Denton Central Appraisal District to the State Comptroller of Public Accounts. Certified values are subject to change throughout the year as contested values are resolved and the Appraisal District updates records. For the Fiscal Year ended 2005 the values are as of July 19, 2004. 16 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I ! I I I I I TABLE 3 - VALUATION AND GENERAL OBLIGATION DEBT HISTORY Ratio Fiscal Taxable Tax Debt Tax Debt Year Taxable Assessed Outstanding to Taxable Ended Estimated Assessed Valuation at End Assessed 9/30 Population Valuation Per Capita of Year Valuation 2001 87,227 $3,059,636,733 $35,077 $82,139,222 2.68% 2002 91,588 3,367,292,025 36,766 99,990,494 2.97% 2003 96,168 3,756,343,085 39,060 103,883,037 2.77% 2004 100,976 4,042,202,871 40,031 109,805,000 2.72% 2005 103,029 4,374,943,83I 0) 42,463 101,920,000 (2) 2.33% Funded Debt Per Capita $ 942 1,092 1,080 1,087 989 (1) Source: Denton Central Appraisal District as of July 19, 2004. (2) Projected, includes the Bonds. Excludes the Refunded Bonds. Preliminary, subject to change. TABLE 4 - TAX RS, I~, LEVY ~ COLLECTION HISTORY Fiscal Year Distribution Ended Tax General Interest and 9/30 Rate Fund Sinkin~ Fund Tax Lev~ 2001 $0.52815 $0.31948 $ 0.20867 $16,159,471 2002 0.54815 0.31948 0.22867 18,457,811 2003 0.54815 0.33816 0.20999 20,590,395 2004 0.54815 0.34928 0.19887 22,542,421 2005 0.59815 0.39928 0.19887 26,168,727 % Current % Total Collections Collections 98.20% 100.24% 98.26% 99.76% 98.57% 99.98% 98.50% o) 100.18% In Process of Collection (1) Preliminary information furnished by City staffi TABLE S - TEN LARGEST TAXPAYERS Name of Taxpayer Columbia Medical Center of Detuon Anderson Merchandisers Verizon Southwest Paccar Inc. United Copper Industries James Wood Motors Tetra Pak Acme Brick Denton Educational Housing Corp. Ortix Hunt Denton Venture Nature of Property 2004/05 % of Total Taxable Taxable Assessed Assessed Valuation Valuation Hospital/Professional Building $76,560,385 1.79% Distribution Center 44,864,451 1.05% Telephone Utility 43,922,068 1.03% Diesel Truck Manufacturing 41,504,638 0.97% Copper Wiring Manufacturer 30,846,200 0.72% Auto Dealership 25,447,293 0.60% Packaging Manufacturer 24,371,452 0.57% Brick Manufacturer 20,461,302 0.48% Student Housing 19,719,410 0.46% Shopping Center 19,385,747 0.45% $ 347,082,946 8.13% Source: Information provided by City Officials. GENERAL OBLIGATION DEBT LIMITATION... No general obligation debt limitation is imposed on the City under current State law or the City's Home RuIe Charter (see "The Bonds- Tax Rate Limitation"). 17 I TABLE6- TAXADEQUACY(1) 2005 Principal and Interest Requirements $0.2432 Tax Rate at 99.00% Collection Produces Average Annual Principal and Interest Requirements, 2005 - 2024 $0.1546 Tax Rate at 99.00% Collection Produces Maximum Principal and Interest Requirements, 2005 $0.2432 Tax Rate at 99.00% Collection Produces $ 10,279,816 $ 10,281,779 $ 6,535,436 $ 6,536,032 $ 10,279,816 $ 10,281,779 (1) Includes the Bonds, less self-supportlng debt, excludes the Refunded Bonds. Preliminapy, subject to change. TABLE 7 - ESTIMATED OVERLAPPING DEBT Expenditures of the various taxing entities within the territory of the City are paid out of ad valorem taxes levied by such entities on properties within the City. Such entities are independent of the City and may incur borrowings to finance their expenditures. This statement of direct and estimated overlapping ad valorem tax bonds ("Tax Debt") was developed from information contained in "Texas Municipal Reports" published by the Municipal Advisory Council of Texas. Except for the mounts relating to the City, the City has not independently verified the accuracy or completeness of such information, and no person should rely upon such information as being accurate or complete. Furthermore, certain of the entities listed may have issued additional Tax Debt since the date hereof, and such entities may have programs requiring the issuance of substantial amounts of additional Tax Debt, the amount of which cannot be determined. The following table reflects the estimated share of overlapping Tax Debt of the City. 2004/05 city's Authorized Taxable 2004/05 Total Estimated Overlapping But Unissued Assessed Tax Funded % Funded Debt Debt As Of Taxin8 Jurisdiction Value Rate Debt Applicable As of 11 - 1 City of Denton $ 4,270,409,098 $0.59815 $ 86,233,694 I~ 100.00% $ 86,233,694 $ 4,467,000 Denton Independent SchooI Disffict 5,513,637,187 1.86400 374,047,329 88.04% 329,311,269 4,713 Denton County 35,027,486,208 0.25480 130,777,571 12.11% 15,837,164 248,845,000 Argyle Independent School Dislrict 604,222,569 1.90000 37,618,156 1.84% 692,174 5,000,000 Kmm Independent School District 439,712,927 1.72000 21,410,000 0.59"/* 126,319 0 Total Direct and Overlapping Funded Debt ~432,200,619 Ratio of Direct and Overlapping Funded Debt to Taxable Assessed Valuation ............................... 10.12% Per Capita Overlapping Funded Debt .............................................................. $ 4,194.94 (1) Includes the Bonds, less self-supporting debt, excludes the Refunded Bonds. Preliminary, subject to change. 18 I I I I I I I I I I I I I I I I I i I I I I I I I i I I I I I I I I I ! I I DEBT INFORMATION TABLE 9 - INTEREST AND SINKING FUND BUDGET PROJECTION Tox Supported Debt Service Requirements, Fiscal Year Ending 9/30/2005 (o ............................... $10,436,532 Interest and Sinking Fund Balance as of 9/30/04 (Unaudited) ............................ 296,731 Interest and Sinking Fund Tax Levy ................................................ 8,700,451 Budgeted Transfers ............................................................. 1,757,357 10,754,539 Estimated Balance, 9/30/05 ..................................................................... $ 318,007 (1) Preliminary, subject to change. TABLE 10 - COMPUTATION OF SELF-SUPPORTING DEBT {l~ Net Revenue from Solid Waste System, Fiscal Year Ended 9-30-04 ....................................... $ 4,627,282 Less: Solid Waste System Revenue Bond Requirements, 2005 Fiscal Year ................................. 0 Balance Available for Other Purposes .............................................................. $ 4,627,282 Solid Waste System General Obligation Bond Requirements, 2005 Fiscal Year .............................. 2,200,814 Balance ..................................................................................... $ 2,426,468 Net Revenue from Drainage System, Fiscal Year Ended 9-30-04 ......................................... $ 1,598,361 Less: Drainage System Revenue Bond Requirements, 2005 Fiscal Year ................................... 0 Balance Available for Other Purposes .............................................................. $ 1,598,361 Drainage System General Obligation Bond Requirements, 2005 Fiscal Year ................................ 514,637 Balance ..................................................................................... $ 1,083,724 Net Revenue from Motor Pool System, Fiscal Year Ended 9-30-04 ................................. . ..... $ 2,991,601 Less: Motor Pool System Revenue Bond Requirements, 2005 Fiscal Year ................................. 0 Balance Available for Other Purposes .............................................................. $ 2,991,601 Motor Fool System General Obligation Bond Requirements, 2005 Fiscal Year .............................. 576,747 Balance ..................................................................................... $ 2,414,854 (1) Unaudited. 20 I I I I I I i I I I I I I I I I I I I I I I I I I I I I I I I I I I I ! I TABLE I 1 - AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS SWeet and Traffic Improvements 12/13/1986 $ 7,736,000 Parks 12/13/1986 5,950,000 Street and Traffic Improvements 2/24/1996 11,112,000 Drainage Improvements 2/24/1996 7,238,000 Amount Date Amount Heretofore Authorized Authorized Issued Unissued Balance $ 6,979,000 $ 757,000 4,550,000 1,400,000 11,110,000 2.000 4,930,000 2,308,000 $32,036,000 $27,569,000 $4,467,000 TABLE 12 - OTHER OBLIGATIONS Thc City has entered into capital lease agreements. The following is a schedule of future minimum lease payments under these capital leases and thc present value of the net mh~imum lease payments as of September 30, 2004: Year Annual Ending Lease 30-Sep payment 2005 $103,651 2006 93,783 2007 93,783 Total Minimum Lease Payment $ 291,217 Less: Amount Representing interest 046,742) Present Value of Net Minimum Lease Payments $144,475 PENSION FUNI0... The City provides pension benefits for all of its full-time employees through the Texas Municipal Retirement System ("TMRS"), a State-wide administered pension plan. The City makes annual contributions to the plan equal to the amounts accraed for pension expense. (For more detailed information concerning the retirement plan, see Appendix B, "Excenpts from the City's Annual Financial Report".) 2I TABLE 13 - CHANGES lNNETASSETS(I} FINANCIAL INFORMATION Fiscal Year Ended September 30, Revenue: 2003 2002 Program Revenue: Charges for Serviees $ 10,175,929 $ 8,193,653 Operating Grants and Contributions 3,221,264 2,480,309 Capital Grants and Contributions 14,023,056 6,379,228 General Revenue: Property Tax 20,964,738 19,075,268 Sales Tax 16,047,297 15,875,935 Other Taxes/Fees 15,099,363 13,063,774 Miscellaneous 5,354,783 7,237,530 Total Revenue $ 84,886,430 $ 72,305,697 GeneralGovemment $ 22,933,107 $ 16,240,418 Public Safety 28,837,158 27,322,153 Public Works 10,274,822 13,691,514 Parks and Recreation 8,419,508 7,362,939 Interest on Long-Term Debt 4,186,051 4,252,970 Total Expenses $ 74,650,646 $ 68,869,994 Increase in Net Assets before Transfers 5; 10,235,784 $ 3,435,703 Transfers 1,000,305 1,073,857 Inerease (Decrease) in Net Assets $ I1,236,089 $ 4,509,560 Net Assets at Beginning of Year 103,254,829 98,745,269 Net Assets at End of Year $114,490,918 $103,254,829 (I) Begim~ing with fiscal year ended September 30, 2002, the Ciw implemented Government Accounting Standards Board Statement No. 34 ("GASB 34"). In accordance with GASB 34, the City's financial statements for the fiscal year ended September 30, 2003, which are a'aached hereto as Appendix B, include a management discussion and analysis of the operating results of such fiscal year. Reference is made to Appendix B for such information. 22 I I I I I I I I I I I I I I I I ! I I I I I I I I I I I I I I I I I I I I TABLE 13-A - GENERAL FUND REVENUES AND EXPENDITURE HISTORY Taxes $ 32,821,600 Licenses and Permits 1,700,044 Franchise Fee 13,274,610 Fines and ForFeitures 3,338,979 Fees for Service 6,178,245 Net (Decrease) Increase in Fair Value of lnvesanents (64,423) Miscellaneous 1,046,517 Total Revenues $ 59,466,646 Fiscal Year Ended September 30, 2003 2002 2001 2000 $29,455,465 $27,264,954 $27,772,653 $ 24,166,751 1,151,169 91,049 233,219 441,831 12,571,989 11,930,612 10,709,710 9,958,500 3,422,952 3,522,895 3,222,517 2,680,352 6,020,190 4,852,845 2,846,339 2,037,392 856,204 1,011,454 843,423 1,005,545 16,805 692,581 458,189 700,137 689,843 418,817 268,673 643,659 1 fi42,097 $54,589,367 $49,417,476 $46,971,657 $ 42,422,311 Expenditures: General Government $19,526,705 Public Safety 29,347,031 Public Works 4,469,628 Parks and Recreation 6,060,086 Capital Outlay 160,077 Total Expenditures $ 59,563,527 $ 16,166,690 $ 10,430,176 $ 12,119,014 $10,706,489 28,081,091 25,913,382 22,836,527 21,230,610 4,342,542 7,866,251 6,760,208 4,738,828 5,873,122 5,610,114 5,156,722 4,367,680 147,196 267,558 422,852 377,614 $54,610,641 $50,087,481 $47,295,323 $41,421,221 Excess (deficiency) of Revenues Over Expenditures $ (96,881) $ (21,274) $ (670,005) $ (323,666) $ 1,001,090 Proceeds of Capital Lease Operating Transfers In Operating Transfers (Out) 1,644,968 529,72I 195,259 668,689 938,904 (497,917) (393,074) (831,469) (43,000) (925,576) Over CClnder) Expenditures and Other Uses $ 1,050,170 $ 115,373 $ (1,306,215) $ 302,023 $ 1,014,418 Beginning Fund Balance 8,579,993 8,464,620 9,770,835 9,468,812 8,454,394 Ending Fund Balance $ 9,630, I63 8 8,579,993 $ 8,464,620 $ 9,770,835 $ 9,468,812 (1) Unaudited. 23 I TABLE 14 - MIYNICIPAL SALES TAX HISTORY The City has adopted the MunicipaI Sales and Use Tax Act, U.T.C.A., Tax Code, Chapter 321, which grants the City the power to impose and levy a 1% Local Sales and Use Tax within the City; the proceeds are credited to the General Fund and are not pledged to the payment of the Bonds. Collections and enforcements are effected through the offices of the Comp~rollar of Public Accounts, State of Texas, who remits the proceeds of the tax, after deduction of a 2% service fee, to the City monthly. In January 1994, the voters of the City approved the imposition of an additional one-half of one percent (½ of 1%) for property tax reduction, ha September 2003, the voters of the City approved the imposition of an additional one-half of one percent (V: of 1%) for the Denton County Transportation Authority. The implementation of this tax began January 2004. Fiscal Year % of Equivalent of Ended Total Ad Valorem Ad Valorem Per 9/30 Collected V) Tax Levy Tax Rate Capita 2000 $15,166,270 112.62% $0.5723 $183 2001 16,095,534 99.60% 0.5261 185 2002 15,875,934 86.01% 0.4715 I73 2003 16,047,298 77.94% 0.4272 167 2004 12) I7,684,899 78.45% 0.4375 I75 (1) Source: City of Denton Annual Program of Services for 2003-04. (2) Colleetions for part year only, ttunugh November 1, 2004. The sales tax breakdown for the City is os fo0ows: Property Tax Relief 0.50¢ Denton County Transportation Authotity 0.50¢ City Sales & Use Tax 1.00¢ State Sales & Use Tax 6.251t Total 8.25¢ FINANCIAL POLICIES Basis of Accounting . . . The accounting policies of the City conform to generally accepted accounting principles of the Governmental Accounting Standards Board and program standards adopted by the Government Finance Officers Association of the United States and Canade. The GFOA has awarded a Certificate nf Achievement for Excellence in Fimmcial Repordng to the City of Denton for each of the fiscal years ended September 30, 1983 through September 30, 2002. The City's cunent report has been submitted to GFOA to determine its eligibility for another Certificate. The City has also received the GFOA's award for Distinguished Budget Presentation each year since 1988. The City has submitted its 2003/04 budget to the GFOA to determine its elig~ility for another Certificate. The measurement focuses for the Enterprise Funds, Internal Service Funds and Nonexpendable Trust Funds are income determination and cost of service, respectively. Accordingly, the accrual basis, whereby revenues and expenses are identified in the accounting period in which they are earned and incun'od and net income, is utilized for these funds. The modified accrual hosis, whereby revenues are recognized when they become both measurable and available for use during the year and expenditures are recognized when the related fund liability is ineuned, is used for all other funds. Budgetary Procedures... As prescribed by City Charter the City Manager, at least 60 days prior to the beginning of each fiscal year, submits to the City Council a proposed budget for the fiscal year beginning the following October 1. The budget Includes proposed expenditures and revenues requi~ed to fund the expenditures. Following Council considerations, amendments and refinements, a public heating is ordered and conducted for the purpose of obtaining taxpayer comments. The budget is finally approved and adopted by passage ofen ordinance by the City Council prior to the beginning of the fiscal year. The budget is adopted on a basis consistent with generally accepted accounting principles. 24 I I I I i I I I I I I I I I I I I I I I i I I I I ! I I I I I I I I I I I INVESTMENTS The City invests its investable funds in investments authorized by Texas law in accordance with investment policies approved by the City Council of the City of Denton. Both state law and the City's investment policies are subject to change. LEGAL INVESTMENTS... Under Texas law, the City is authorized to invest in (I) obligations of the United States or its agencies and instrumentalities, (2) direct obligations of the State of Texas or its agencies and instrumentalities; (3) collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency or instrumentality of the United States; (4) other obligations, the principal and interest of which is guaranteed or insured by or backed by the full faith and credit of, the State of Texas or the United States or their respective agencies and instrumentalities; (5) obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent; (6) bonds issued, assumed or guaranteed by the State of Israel; (7) certificates of deposit issued by a state or national bank domiciled in the State of Texas, a savings bank domiciled in the State of Texas, or a state or federal credit union domiciled in the State of Texas and are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or are secured as to principal by obligations described in clauses (1) through (6) or in any other manner and amount provided by law for City deposits, (8) fully collateralized repurchase agreements that have a defined termination date, are fully secured by obligations described in clause (1), and are placed through a primal- guvemment securities dealer or a financial institution doing business in the State of Thxas, (9) certain bankers' acceptances with the remaining term of 270 days or less, if the short-term obligations of the accepting bank or its parent are rated at least A-I or P-I or the equivalent by at least one nationally recognized credit rating agency, (10) commercial paper with a stated maturity of 270 days or less that is rated at least A-1 or P-I or the equivalent by either (a) two nationally recognized credit rating agencies or (b) one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a U.S. or state bank, (i1) no-loed money market mutual funds registered with and regulated by the Securities and Exchange Commission that have a dollar weighted average stated maturity of 90 days or less and include in their investment objectives the maintenance of a stable net asset value of $1 for each share, and (12) no-load mutual funds registered with the Securities and Exchange Commission that have an average weighted maturity of less than two years, invest exclusively in obligatinns described in the this paragraph, and are continuously rated as to investment quality by at least one nationally recognized investment rating firm of not less than AAA or its equivalent. If specifically authorized in the authorizing document, bond proceeds may be invested in guaranteed investment contracts that have a defined termination date and are secured by obligations of the United States or its agencies and instrumentalities in an amount at least equal to the amount of bond proceeds invested under such contract, other than the prohibited obligations described in the next succeeding paragraph. The City may invest in such obligations directly or through guvemment investment pools that invest solely in such obligations provided that the pools are rated no lower than AAA or AAA-m or an equivalent by at least one nationally recognized rating service. The City is specifically prohibited from investing in: (1) obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage-hacked security collateral and pays no principal; (2) obligations whose payment represents the principal stteam of c~sh flow fTom the underlying mottgage-backed security and bears no interest; (3) collateralized mortgage obligations that have a stated final maturity of greater than 10 years; and (4) collateralized mortgage obligations the interest rate of which is determined by aa index that adjusts opposite to the changes in a market index. Effective September 1, 2003, goverrmaental bodies in the State are authorized to hnplement securities lending programs if(i) thc securities loaned under the program are collateralized, a loan made under the program allows for termination at any time and a loan made under the program is either secured by (a) obligations that are described in clauses (1) through (6) of the first paragraph under this subcaption, (b) irrevocable letters of credit issued by a state or national bank that is continuously rated by a nationally recognized investment rating firm not less than "A" or its equivalent, or (e) cash invested in obligations that are described in clauses (I) through (6) and (10) through (12) of the first paragraph under this subcaption, or an authotized investment pool; (ii) securities held as collateral under a loan are pledged to the governmental body, held in the name of the goveramental body and deposited at the time the investment is made with the City or a third party designated by the City; (iii) a loan made under the program is placed through either a ptima~ government securities dealer or a financial institution doing business in the State of Texas; and (iv) the agreement to lend securities has a term of one year or less. INVESTMENT POLICIES... Under Texas law, the City is required to invest its funds under whtten investment policies that primarily ~mphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability of investment management; and that includes a list of authorized investments for City funds, maximum allowable stated maturity of any !ndividual investment and the maximum average dollar-weighted maturity allowed for pooled fund groups. All City funds must be invested consistent with a formally adopted "Investment Strategy Statement" that specifically addresses each funds' investment~ Each Investment Strategy Statement will describe its objectives concerning: (1) suilabifity of investment type, (2) preservation and safety of principal, (3) liquidity, (4) marketability of each investment, (5) diversification of the portfolio, and (6) yield. 25 Under Texas law, City investments must be made "with judgment and care, under prevailing circumstances, that a person of prudence, discretion, and integigcnce would exercise in the management of the person's own affairs, not for speeulatinn, but for investment, considering thc probable safety of capital and the probable income to be derived." At least quarterly the investment officers of the City shall submit an investment report detailing: (1) the investment position of the City, (2) that all investment officers jointly prepared and signed the report, (3) the beginning market value, any additions and changes to market value and thc ending value of each pooled fund group, (4) the book value and market value of each separately listed asset at the beginning and end of the reporting period, (5) the maturity date of each separately invested asset, (6) the account or fund or pooled flmd group for which each individual investment was acquired, and (7) the compliance of the investment portfolio as it relates to: (a) adopted investment strategy statements and (b) state law. No person may invest City funds without express wrirten authority fi-om die City Council. A~ornONnL paOWSiONS... Under Tex~s law the City is additionally required to: (l) annually review its adopted policies and strategies; (2) require any investment officers' with personal business relationships or relatives with rums seeking to sell securities to the entity to disalose the relationship and file a statement with the Texas Ethics Commission and the City Council; (3) reqdim the registered principal of rums seeking to sell seeuri'des to the City to: (a) receive and review the City's investment policy, (b) acknowledge that reasonable eontxols and procedures have been implemented to preclude imprudent investment ae6vities, and (e) deliver a written statement attesting to these requirements; (4) perform an annual audit of the management controls on investments and adherence to the City's investment policy; (5) provide specific investment training for the Treasurer, Chief Finanalal Officer and investment officers; (6) restrict reverse repurchase agreements to not more than 90 days and restrict the investment of reverse repurebase ag~ement funds to no greater than the term of the reverse repurchase agreement; (7) restrict the investment in no-load mutual funds of any portion of bond proceeds, reserves and funds held for debt service and to no more than 15% of the enlity's monthly average fund balance, excluding bond prcceeds and reserves and other funds held for debt service; and (8) require local government investment pools to conform to the new disclosure, rating, net asset value, yield calculation, and advisory board requirements. TABLE 15 - CURRENT INVESTMENTS AS of September 30, 2004, die City's inveatable funds were invested in the following categories: Market Description Percent Value Federnted/Money Market 2.50% $ 6,500,000 U.S. Federal Agency Coupon 46.93% 122,170,000 U.S. Federal Agency Callables 34.65% 90,200,000 U.S. Federal Agency Discount 1.15% 3,000,000 U.S. Treasury 13.06% 34,000,000 Cash Investments 1.72% 4,469,388 ' 100.00% $260,339,388 26 I I I I I I ! I I I I I I I I I I I I I I I I I I I I I I I TAX MATTERS · On the date of initial delivery of the Bonds, McCall, parkhurst & Horton L.L.P., Dallas, Texas, Bond Counsel, will render its opinion that, in accordance with statutes, regulations, published rulings and court decisions existing on the date thereof OPINION.. · " s income" of the ("Existing Law"), (1) interest on the Bonds for federal income tax purposes wdl be excludable fi.om the eros holders thereof and (2) the Bonds will not be treated as "specified private activity bonds" the interest on which would be · · eference item under section 57(a)(5) of the Internal Revenue Code of 1986 (the included as an alternative mtmmum tax pr . · · ~ ..... *her federal state or ocal tax consequences "Co~;). Except as stated above, Bond Counsel wdl express no opm~un as Lo of the purchase, ownership or disposition of the Bonds. See Appendix C -- Form of Bond Counsel's Opinions. In rendering its opinion, Bond Counsel will rely upon (a) certain information and representations of the City, including information and representations contained in the City's federal tax certificate, and (b) covenants of the City contained in the Bond documents relating to certain matters, including arbitrage and the use of the proceeds of the Bonds and the property financed or refinanced therewith. Failure of the City to comply with these representations or covenants could cause the interest on the Bonds to become includable in gross income retroactively to the date of issuance of the Bonds. The Existing Law is subject to change by the Congress and to subsequent judicial and administrative interpretation by the courts and the Department of the Treasury, There can be no assurance that such Existing Law or the interpretation thereof will not be changed in a manner which would adversely affect the tax treamtent of the purchase, ownership or disposition of thc Bonds. Bond Counsel's opinion is not a guarantee of a result, but represents its legal judgment based upon its review of Existing Law and the representations and covenants of the City described above· No ruling has been sought fi.om the Internal Revenue Service {the "Service") with respect to the matters addressed in the opinion of Bond Counsel, and no assurance can be given that the Service would agree with the opinion of Bond Counsel. if the tax-exempt status of the interest on the Bonds were the subject of an audit· If an audit is commenced, under current procedures the Service is likely to treat the City as the "taxpayer," and the Cwners of the Bonds would have no right to participate in the audit process· In responding to or defending an audit of thc tax- exempt status of the interest on the Bonds, the City may have different or conflicting interests from the owners of the Bonds· FEOE~L INCOME TAX ACCOUNTING TREATMENT OF OmGINAL ISSUE ])ISCOUNT.. · The initial public offering ptice to be paid for one or more maturities of the Bonds (the "Original Issue Discount Bonds") may be less than the principal amount thereof or one or more periods for the payment of interest on the Bonds may not be equal to the accrual period or be in excess of one year. · · · '" ch Original Issue Discount Bond, and (ii) In such event, the difference betwean (t) the ,stated redemption price at mattmty ofea The"stated the initial offering price to the public of such Original Issue Discount Bond would constitute original issue discount. redemption price at maturity" means the sttm of all payments to be made o the Bonds less the amount of all periodic interest payments, periodic interest payments are payments which are made during equal accrual periods (or during any unequal period if it is the initial or final period) and which are made during accrual periods which do not exceed one year. Under existing law, any owner who has purchased such Original Issue Discount Bond in the initial public offering is entitled to exclude from gross income (as defined in Section 61 of the Code) an amount of income with respect to such Original Issue Discount Bond equal to that portion of the amount of such original issue discount allocable to the accrual period· For a discussion of certain collateral federal tax consequences, see discussion set forth below· In the event of the redemption, sale or other taxable disposition of such Original Issue Discount Bond prior to stated maturity, however, the amount realized by such ov~aer in excess of the basis of such Original Issue Discount Bond in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Original Issue Discount Bond was held by such initial owner) is includable in gross income· Under existing law, the original issue discount on each Original Issue Discount Bond is accrued daily to the stated maturity thereof (in amounts calculated as described below for each six-month period ending on the date before the semiannual anniversary dates of the date of the Bonds and ratably within each such six-month period) and the accrued amount is added to an initial owner's basis for such Original Issue Discount Bond for purposes of determining the amount of gain or loss recognized by such owner upon the redemption, sale or other disposition thereof· The amount to be added to basis for each accrual period is equal to (a) the sum of the issue price and the amount of original issue discount accrued in prior periods multiplied by the yield to stated maturity (determined on the basis of compounding at the close of each accrual petiod and properly adjusted for the length of the accrual period) less (b) the amounts payable as current interest during such accrual period on such Bonds. 27 The federal income tax consequences of the purchase, ownership, redemption, sale or other disposition of Or/ginal Issue Discount Bonds which are not purchased in the initial offering at the initial offering price may be determined according to tales which differ from those described above. All owners of Original Issue Discount Bonds should consult their own tax advisors with respect to the determination for federal, state and local income tax purposes of the treatment of interest accrued upon redemption, sale or other disposition of such Original Issue Discount Bonds and with respect to the federal, state, local and foreign tax consequences of the purchase, ownership, redemption, sale or other disposition of such Original Issue Discount Bonds. COLLATER&L I~DERAL INCOME TAX CONSEQUENCES . . . The following discussion is a sununary of certain collateral federal income tax consequences resulting from the purchase, ownership or disposition of the Bonds. This discussion is based on existing statutes, regulations, published ralings and court decisions, al/ of which are subject to change or modification, retroactively. The following discussion is applicable to investors, other than those who are subject to special provisions of the Code, such as financial institutions, property and casualty insurance companies, life insurance companies, individual recipients of Social Security or Radroad Retirement benefits, mthwduals allowed earned income credit, owners of an interest in a FASIT, certain S corporations with Subchapter C earnings and profits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase tax-exempt obligatinns. INVESTORS, INCLUDiNG THOSE WHO ARE SUBJECT TO SPEC/AL PROVISIONS OF TH~ CODE, SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX TREATMENT WHICH MAy BE ANTICIPATED TO RESULT FROM THE PURCHASE, OWNERSHIP AND DISPOSITION OF TAX-EXEMPT OBLIGATIONS BEFORE DETERMINING WHETHER TO PURCHASE THE BONDS AND CERTIFICATES. Interest on the Bonds will be includable as an adjustment for "adjusted current earnings" to calculate the alternative minimum tax imposed on corporations by section 55 of the Code. Section 55 of the Code imposes a tax equal to 20 percent for corporations, or 26 percent for non corporate taxpayers (28 percent for taxable exeass exceeding $175,000), of the taxpayer's "alternative minimum taxable income," if the amount of such alternative minimum tax is greater than the taxpayer's regular income tax for the taxable year. Interest on the Bonds may be subject to the "bumch profits tax" imposed by section 884 of the Code on the effectively-connected earnings and profits of a foreign eorporatinn doing business in the United States. Under section 6012 of the Code, holders of tax-exempt obligations, such as the Bonds, may be required to disclose interest received or accrued during each taxable year on their returns of federal income taxation. Seetinn 1276 of the Code provides for ordinary income tax treatment of gain recognized upon the disposition of a tax-exempt obligation, such as the Bonds, if such obligation was acquired at a "market dlsounnt" and if the fixed maturity of such obhgatmn is equal to or exceeds, one year from the date of issue. Such treatment applies to "market discount bonds" to the extent such gain does not exceed the accrued market d scount of such bonds, although for this purpose, a de minimis amount of market discount is ignored. A "market discount bond" is one which is acquired by the holder at a purchase price which is less than the stated redemption price or, in the case of a bond issued at an original issue discount, the "revised issue price" (i.e., the issue price plus accrued original issue discount.). The" · , . accrued market d seount' ~s the mount whtch bears the same ratio to the market discount as the number of days during which the holder holds the obligation bears to the number of da s between th the final maturity date. Y e acquisition date and STATg, LOCAL AND FOREIGN TAX~S... Investors should consult their own tax advisors concerning the tax implications of the purchase, ownership or disposition of the Bonds under applicable state or local laws. Foreign investors should also consult their own tax advisors regarding the tax consequences unique to investors who are not United States persons. 28 ! I I I I I I I I I I I I I I I I I I I I i I I I I I I I I I I i I I I I CONTINUING DISCLOSURE OF INFORMATION In the Ordinance, the City has made the following agreement for the benefit of the holders and beneficial owners of the Bonds. The City is required to observe the agreement for so long as it remains obligated to advance funds to pay the Bonds. Under the agreement, the City will be obligated to provide certain updated financial information and operating data annually, and timely notice of specified material events, to certain information vendors. This information will be available to securities brokers and others who subscribe to receive the information from the vendors. ~aNNUAL REPORTS . .. The City will provide certain updated financial information and operating data to certain information vendors annually. The information to be updated includes all quantitative financial information and operating data with respect to the City of the general type included in this Official Statement under Tables numbered 1 through 6 and 8 through 15 and in Appendix B. The City will update and provide this information within six months after the end of each fiscal year ending in or after 2004. The City will provide the updated information to each nationally recognized municipal securities information repository ("NRMSIR") approved by the staff of the United States Securities and Exchange Commission ("SEC") and to any state information depository ("SID") that is designated and approved by the State &Texas and by the SEC staff. The City may provide updated information in full text or may incorporate by reference certain other publicly available documents, as permitted by SEC Rule 15c2-12. The updated information will include audited financial statements, if the City comnfissions an audit and it is completed by the required time. ff audited financial statements are not available by the required time, the City will provide unaudited financial statements by the required time, and audited financial statements when and if such audited financial statements become available. Any such fmancial statements will be prepared in accordance with the accounting principles described in Appendix B or such other accounting principles as the City may be required to employ from time to time pursuant to state law or regulation. The City's current fiscal year end is September 30. Accordrngly, it must provide updated information by March 31 in each year, unless the City changes its fiscal year. If the City changes its fiscal year, it will notify each NRMSIR and the SID of the change. The Municipal Advisory Council of Texas has been designated by the State of Texas and approved by the SEC staff as a quaIified SID. The address of the Municipal Advisory Council is 600 West 8th Street, P. O. Box 2177, Austin, Texas 78768- 2177, and its telephone number is 512/476-6947. I~TERIAL EVENT NOTICES... The City will also provide timely notices of certain events to certain information vendors. The City will provide notice of any of the following events with respect to the Bonds, if such event is material to a decision to purchase or sell Bonds: (1) principal and interest payment delinquencies; (2) non-payment related defaults; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions or events affecting the tax-exempt status of the Bonds; (7) modifications to rights of holders of the Bonds; (8) Bond calls; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds; and (11) rating changns. Neither the Bonds or the respective Ordinance make provisions for debt services reserves, credit enhancement or liquidity enhancement. In addition, the City will provide timely notice of any failure by the City to provide information, data, or financial statements in accordance with its agreement described above under "Annual Reports." The City will provide each notice described in this paragraph to the SID and to either each NRMSIR or the Municipal Securities Rulemaking Board ("MSRB"). AVAILABILITY OF INFORMATION FROM NRI~]S[Rs AND SID... The City has agreed to provide the foregoing information only to NRMSIRs (or in the case of material event notices, the MSP..B) and the SLD. The information will be available to holders of Bonds only if the holders comply with the procedures and pay the charges established by such information vendors or obtain the information through securities brokers who do so. AMENDMENTS... Thc City may amend its continuing disclosure agreement from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in Iaw, or a change in the identity, nature, status, or type &operations of the City, if (i) the agreement, as amended, would have permitted an underwriter to purchase or sell Bonds in the offering described herein in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the outstanding Bonds consent to the amendment or (b) any person unaffiliated with the City (such as nationally recognized bond counsel) determines that the amendment will not materially impair thc interests of thc holders and beneficial owners of the Bonds. The City may also amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provisions of the SEC Rule 15c2-12 or a court of final jurisdiction enters judgment that such provisions of thc SEC Rule 15c2-12 are invalid, but only if and to the extent that the provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling Bonds in the primary offering of the Bonds. If the City so amends the agreement, it has agreed to include with the next financial information and operating data provided in accordance with its agreement described above under "Annual Reports" an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of financial information and operating data so provided. COMPLIANCE WITH PmOR UNI)ERTAKINGS... During the last five years, the City has complied in all material respects with all continuing disclosure agreements made by it in accordance with SEC Rule 15c2-12. 29 I OTHER INFORMATION RATINGS The presently outstanding tax supported debt of the City is rated "Aa3" by Moody's and "AA-" by S&P. The City also has issues outstanding which are rated "Aaa" by Moody's and "AAA" by S&P through insurance by various commeralal insurance companies. Applieatinns for contract ratings on the Bonds has been made to Moody's and S&P. An explanation of the significance of such ratings may be obtained from the company furnishing the rating. The ratings reflect only the respective views of such organization and the City makes no representation as to the appropriateness o£the ratings. There is no assurance that such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by either or both of such rating companies, if in the judgment of either or both companies, circumstances so warrant. Any such downward revision or withdrawal of such ratings, or either of them, may have an adverse effect on the market price of the Bonds. LITIGATION It is the opinion of the City Attorney and City Staff that there is no pending litigation against the City that would have a material adverse financial impact upon the City or its operations. REGISTRATION AND QUALIFICATION OF BONDS FOR SALE The sale of thc Bonds has not been registered under the Federal Securities Act of 1933, as amended, in reliance upon the exemption provided thereunder by Section 3(a)(2); and the Bonds have not been qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; nor have thc Bonds been qualified under thc securities acts of any jurisdiction. The City assumes no responsibility for qualification of the Bonds under the securities laws of any jurisdiction in which thc Bonds may be sold, assigned, pledged, hypothecated or otherwise transfen'ed. This disclaimer of responsibility for qualification for sale or other disposition of the Bonds shall not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration provisions. LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS Section 1201.041 of thc Publi~ Security Procedures Act (Chapter 1201, Texas Government Code) provides that the Bonds are ncgntiable instruments gnvemed by Chapter 8, Texas Business and Commerce Code, and arc legal and authorized investments for insurance companies, fiduciaries, and tsustees, and for the sinking fimds of municipalities or other political subdivisions or public agencies of the State of Texas. With respect to investment in the Bonds by municipalities or other political subdivisions or public agencies of thc State of Texas, thc Public Funds Investment Act, Chapter 2256, Texas Government Code, requires that the Bonds bc assigned a rating of "A" or its equivalent as to investment quality by a national rating agency. Sec "Other Information - Ratings" herein. In addition, various provisions of the Texas Finance Code provide that, subject to a prudent investor standard, the Bonds are legal investments for state banks, savings banks, trust companies with at capital of one million dollars or more, and savings and loan associations. The Bonds arc eligible to secure deposits of any public funds of the State, its agencies, and its political subdivisions, and are legal security for those deposits to thc extent of their market value. No review by the City has been made of the laws in other states to determine whether the Bonds are legal investments for various institutions in those states. LEGAL OPINIONS The City will furnish a complete transcript of proceedings had incident to the authorization and issuance of the Bonds, including the unqualified approving legal opinion of the Attorney General of Texas approving the Initial Bond and to the effect that the Bonds are valid and legally binding obligations of the City, and based upon examination of such transcript of proceedings, thc approving legal opinion of Bond Counsel, to ILke effect and to the effect that the interest on thc Bonds will bc excludable from gross income for federal income tax purposes under Section 103(a) of the Code, subject to the matters described under "Tax Matters" herein, including thc alternative minimum tax on corporations. Bond Counsel was not requested to participate, and did not take part, in thc preparation of the Official Statement, and such firm bas not assumed any responsibility with respect thereto or undertaken independently to verify any of the information contained therein, except that, in its capacity as Bond Counsel, such firm has reviewed the information under captions "Plan of Financing", "Thc Bonds" (exclusive of subcaption "Book-Entry-Only System"), "Tax Matters" and "Continuing Disclosure of Information" and the subcaptions "Registration and Qualification of Bonds for Sale", "Legal Opinions" and "Legal Investments and Eligibility to Secure Public Funds in Texas" under the caption "Other Information" in the Official Statement and such firm is of the opinion that the information relating to the Bonds and the legal issues contained under such captions and subcaptions is an accurate and fair description of the laws and legal issues addressed therein and, with respect to the Bonds, such information conforms to the Ordinance. The legal fee to be paid to Bond Counsel for services rendered in connection with the issuance of the Bonds is contingent on the sale and delive~ of the Bonds. The legal opinion will accompany the Bonds deposited with DTC or will be printed on the Bonds in the event of thc discontinuance of the Book-Entry-Only System. Cartaln legal matters will be passed upon for the Underwriters by Futhright & Jaworski, L.L.P., Dallas, Texas, Counsel to the UnderwTitars. The legal fcc of such firm is contingent on the sale and delivery of the Bonds. 3O I I I I I I I I I I I I I i I I ! I I I I I I I I I I I I ! I I I I I I I The legal opinions to be delivered concurrently with the delivery of the Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion, the attorney does not become an insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future performance of the parties to the transaction. Nor does the rendering nfan opinion guarantee the outcome of any legal dispute that may arise out of the transaction. FINANCIAL ADVISOR First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of the Bonds. The Financial Advisor's fee for services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery of the Bonds. Fimt Southwest Company, in its capacity as Financial Advisor, does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Bonds, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. In the normal course of business, the Financial Advisor may also from time to time sell invesWcent securities to the City for the investment of bond proceeds or other funds of the City upon the request of the City. The Financial Advisor to the City has provided the following sentence for inclusion in this Official Statement. The Financial Advisor has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to the City and, as applicable, to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Financial Advisor does not guarantee the accuracy or completeness of such information. AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION The financial data and other information contained herein have been obtained from City records, audited financial statements and other sources which are believed to be reliable. There is no guarantee that any of the assumptions or estimates contained herein will be realized. All nfthe sununaries of the statutes, documents and resolutions contained in this Preliminary Official Statement are made subject to all of the provisions of such statutes, documents and resolutions. These summaries do not purport to be complete statements of such provisions and reference is made to such documents for further information. Reference is made to original documents in all respects. VERIFICATION OF ARITHMETICAL AND MATHEMATICAL COMPUTATION5 The arithmetical accuracy of certain computations included in the schedules provided by First Southwest Company on behalf of the City relating to (a) computation of forecasted receipts nf principal and interest on the Federal Securities and the forecasted payments of principal and interest to redeem the Refunded Bonds and (b) computation oftbe yields of the Refunding Bonds and the res~icted Federal Securities were verified by Grant Thornton, LLP, certified public accountants. Such computations were based solely on assumptions and information supplied by Fh'st Southwest Company on behalf of the City. Grant Thornton LLP has restricted its procedures to verifying the arithmetical accuracy of certain computations and has not made any study or evaluation of the assumptions and information on which the computations are based and, accordingly, has not expressed an opinion on the data used, the reasonableness of the assumptions, or the achievability of the forecasted outcome. Such verification will be relied upon by Bond Counsel in rendering its opinions with respect to the exclusion from gross income of interest on the Bonds for federal income tax proposes and with respect m defeasance of the Refunded Bonds. UNDERWRITING The Underwriters have agreed, subject m certain conditions, to purchase the Bonds from the City, at an underwriting discoum of $ . Thc Underwriters will be obligated to purchase all of the Bonds if any Bonds are purchased. The Bonds to be offered to the public may be offered and sold to cerUfin dealers (including the Underwriters and other dealel~ depositing Bonds into investrannt trusts) at prices lower than the public offering prices of such Bonds and such public offering prices may be changed, from time to time, by the Underwriters. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underv~iters have reviewed the information in this Official Statement in accordance with, and as part of, their responsibility to investors under federal securities laws as applied to the facts and circumstances of this transaction, but the Undervnitars do not guarantee thc accuracy or completeness of the information. 31 FORWARD-LOOKING STATEMENTS DISCLAIMER The statements contained in this Official Statement, and in any other information provided by the City, that are not purely historical, are forward-16oking statements, including statements regarding the City's expectations, hopes, intentions, or strategies regarding thc future. Readers should not place undue reliance on forward-looking statements. All forward-looking statements included in this Official Statement are based on information available to the City on the date hereof, and the CiW assumes no obligation to update any such forward-looking statements. The City's actual results could differ materiatly from those discussed in such forward-looking statements. The forward-looking statements included herein are necessarily based on various assumptions and estimates and are inherently subject to various risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal, and regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including eustomars, suppliers, business pa~ners and competitors, and legislative, judicial, and other governmental authorities and officials. Assumptions related to the foregoing involve judgments with respect to, among other things, future economic, competitive, and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the City. Any of such assumptions could be inaccurate and, therefore, there can be no assurance that the forwardqooking statements included in this Official Statement will prove to be accurate. IVJlSCELLANEOUS The Ordinance authorizing the issuance of the Bonds will also approve the form and contmt of this Official Statement, and any addenda, supplement or amendment thereto, and authorize its further use in the reoffering of the Bonds by the Underwriters. ATTEST: /s/ EULINE BROCK Mayor City of Denton, Texas /s/ JENNIFER IC WALTERS City Secretory 32 I I i I i I I I I I ! I I I I I I I I i I I i I I I I I I I SCHEDULE OF REFUNDED BONDS* Schedule ] Certificates of Obligation, Series 1995 Original Maturity Interest Principal Dated Date Date Rate Amount 2/15/1995 2/15/2006 5.50% $ 100,000 2/15~007 5.50% 105,000 2/15/2008 5.50% 115,000 2/15~009 5.50% 120,000 2/15/2010 5.50% 130,000 2/15/2011 5.50% 135,000 2/15/2012 5.50% 145,000 2/15/2013 5.50% 155,000 2/15/2014 5.50% 165,000 2/15/2015 5.25% 180,000 $1,350,000 The 2006 - 2015 maturities will be redeemed prior to original maturity on February 15, 2005 at par, plus accrued interest, if any. General Obligation Bonds, Series 1995 Original Maturity Interest Principal Dated Date Date Rate Amount 2/15/1995 2/15/2006 5.50% $ 80,000 2/15/2007 5.60% 90,000 2/15/2008 5.70% 90,000 2/15/2015 5.50% 90,000 '$35O,OOO The 2006 - 2008 and 2015 maturities will be redeemed prior to original maturity on February 15, 2005 at par, plus accrued interest, if any. I I i I I I Certificates of Obligation, Series 1996 Original Maturity Interest Principal Dated Date Date Rate Amount 5/1/1996 2/15/2007 5.40% $165,000 2/15/2008 5.50% $175,000 2l 15/2009 5.60% 185,000 2/15/2010 5.70% 195,000 $ 720,000 The 2007 - 2010 maturities will be redeemed prior to original maturity on February 15, 2006 at par, plus accrued interest, if any. * Preliminary, subject to change. I General Obligation Bonds, Series 1996 Original Maturity Interest Principal Dated Date Date Rate Amount 5/1/1996 2/15/2007 5.40% $125,000 2/15/2008 5.50% 130,000 2/i5/2009 5.60% 140,000 2/15/2010 5.70% 150,000 2/15/2011 5.75% 155,000 2/15/2012 5.75% 165,000 $ 865,000 The 2007 - 2012 maturities will be redeemed prior to original maturity on February 15, 2006 at par, plus accrued interest, if any. General Obligation Bonds, Series 1997 Original Maturity Interest Principal Dated Date Date Rate Amount 4/1/1997 2/15/2009 5.25% $ 245,000 2/15/2010 5.30% 265,000 2/15/2011 5.40% 280,000 2/15/2012 5.50% 295,000 2/15/2013 5.50% 315,000 2/15/2014 5.50% 335,000 2/15/2015 5.60% 355,000 2/15/2016 5.60% 375,000 2/15/2017 5.60% 400,000 $ 2,865,000 The 2009 - 20I 7 maturities will be redeemed prior to original maturity on February 15, 2007 at par, plus accrued interest, if any. Certificates of Obligation, Series 2000 I i I I i I I I I I I Original Maturity Interest Principal Dated Date Date Rate Amount 5/1/2000 (1) Term Bond 2/15/2012 5.400% $ I55,000 2/15/2013 5.500% 155,000 2/15/2014 5.600% 155,000 2/15/2015 5.650% 155,000 2/15/2016 5.700% 155,000 2/15/2017 5.750% I55,000 2/15/2018 5.800% 155,000 2/15/2020 5.875% 310,000 $ 1,395,000 The 2012 - 2020 maturities will be redeemed prior to original maturity on February 15, 2009 at par, plus accrued interest, if any. I I I I I I I I I I I I I I I General Obligation Bonds, Series 2000 Original Maturity Interest Principal Dated Date Date Rate Amount 5/1/2000 (1) Term Bond. 2/15/2012 5.400% $ 185,000 2/15/2013 5.500% 185,000 2/15/2014 5.600% 185,000 2/15/2015 5.650% 185,000 2/15/2016 5.700% 185,000 2/I5/2017 5.750% 185,000 2/15/2018 5.800% 185,000 2/15/2020 5.875% 370,000 $1,665,000 The 2012 - 2018 and 2020 maturities will be redeemed prior to original maturity on February 15, 2009 at par, plus accrued interest, if any. I I I I I I I I I I I I THIS PAGE LEFT BLANK INTENTIONALLY I i I I ! I I I I I I I I I I I I I I ! I I I I I I I I i I I I I I I i i I APPENDIX A GENEKAL INFORMATION REGARDING THE CITY LOCATION . . . The City of Denton is located in the northern portion of the Dallas/Fort Worth Consolidated Statistical Area (CSMA). The City is a part of the Dallas/Fort Worth Metroplen, and is situated at the apex of a triangle based by Dallas (38 miles to the southeast) and Fort Worth (36 miles to the southwest). The City has excellent access to and from all parts of the ECONO~... Denton is in the midst of a rich agrieultoral and livestock area; Thc hub city of Texas' new "Land of Lakes" region, which provides Denton and neighboring cities with abundant water for municipal, industrial and recreational purposes; One of the three major university centers in Texas; Thc home of diversified industrial interests; The site of the Nation's first underground Control Center of the Office of Emergency Planning and Office of Civil and Defense Mobilization; One of the key cities in the economically significant Dallas Consolidated Metropolitan Area. ECONOMIC FtrrlJR~... The fiscal year 2002-2003 brought exciting news in economic development. Listed below are just a few of the highlights. Major Employer & Industrial News · In July 2003, Sally Beauty Company broke ground on its new $30 million international headquarters. Plans call for the 200,000 square-foot multi-story building at the corner of Brinker Road and Colorado Boulevard to be completed by January 2005. Flowers Foods Bakeries Group announced that in 2004 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 Tylen Flowers Foods Bakeries were awarded a tax abatement from the City as an incentive to locate in Denton. Additionally, they parmared with North Central Texas College and received a state Skills Development Fund Grant for employee training. In 2003, Thermadyae Holdings Corporation consolidate two operations resulting in adding employees to Victor Equipment of Denton. The merge follows an announcement in 2003 of plans to relocate Tweco Products, Inc.'s Wichita, Kansas facility to the Denton area. Warehouse, shipping and assembly operations for both Victor and Tweco have been moved to an Alliance Gateway warehouse in Roanoke. Machining operations have been combined at the Denton Victor plant. The consolidation brings approximately 120 jobs to the Denton area with approximately 30 employees at the Denton facility. The additional manufacturing at the Denton plant is estimated to bring about $15 million in taxable value to the city." Victor Equipment opened in Denton in 1965. The company manufactures gas-operated cutting and welding torches and gas and flow pressure regalation equipment Victor also makes a variety of medical equipment used in the oxygen therapy market. Victor Equipment is Denton's fourth largest private employer. · Trace Radiochemical moved into the former International Isotopes facility on Shady Oaks. They employ 35 people in the manufacture of radioisotopes for pharmaceutical purposes. Development at Denton Municipal Airport · Denton Municipal Airport became home to U. S Flight Academy in March 2003. · Chelton Flight Systems, an international avionics company, moved to the Denton Municipal Airport in 2003. Employees design and install autopilots in aircraft to gat certification from the FederaI Aviation Administration. A-I I I I I I I I I I I I I I I I I I I I I ! I I I I i I I ! I I I I I I I Retail News · The 52-acre Denton Crossing retail development on Loop 288 has spawned much interest from national retailers and restaurateurs. Golden Triangle Mall and Brinker Plaza have had renewed appeal as a result. The tenants in Denton Crossing began opening for busihess in September 2003. When fuIly occupied, it is estimated that the development wilI create approximately 325 new full-time jobs aud 130 part-time jobs. Some of the new retailers and restaurants in Denton are Foley's Department Store, Barnes & Noble Booksellers, DSW Shoe Warehouse, Pacific Sun Wear, Best Buy, World Market, Michaels. Oshman's, Pier I Imports, Whataburger, Golden Corral, Famous Footwear, Lane Bryant and Bed Bath & Beyond. OId Navy moved into Denton Crossing in June 2004. Texas Roadhouse, On the Border, Olive Garden, Johnny Carino's Italian Restaurant and Chuck E. Cheese make up Denton's new "Restaurant Row." Other new restaurants that have announced they are coming to Denton are Panera Bread, Rudy's BBQ and Hooters. Healthcare in Denton · In 2003, both of Denton's hospitals announced expansion plans. These announcements confirm Denton's stares as a regional center for quality medical services. The hospitals will spend approximately $150 million to expand facilities. Denton Community Hospital announced 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 and construction is underway and on schedule. · Denton Regional Medical Center, which moved into its five-story building in 1999, will add a four-floor wing and surgery suites beginning in summer of 2004. · North Texas Hospital has broken ground on its new surgery center at Interstate 35 and Mahill Road east of Denton Regional Medical Center. North Texas Hospital will include outpatient and short-term facilities for surgical patients. Other Developments · Hampton Inn, a limited service hotel with 82 rooms and suites opened in 2003. Holiday Inn recently received a commercial permit valued at over $9 million to build a new hotel. Three area banks have located in Denton and are building new facilities. Farmers & Merchants Bank built a 30,759 Square foot bank/office building at 1517 Center Place. The project has a penint value of $3,183,556. Point Bank purchased an abandoned building at 1700 N. Carroll. A small portion of the original building was saved and constmcrion 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 building has a permit value of $3,260,400 and is currently under construction. One new movie theatre announced their move to Denton. Cinemark's 14 screen theatre will include high-back rocking chairs with cup holders, digital and wall-to-wall sound and concessions, set in an art deco surrounding The new Cinemark theatre is locating on the southern bounda~, of Interstate 35 and State School road. The Denton School District and the city of Denton partnered on an aquatic center called Waterworks Park. The indoor natatorium includes a competition pool plus a warm water therapy pool for swim lessons, water aerobics and physical therapy year-round. The outdoor portion of the park includes 3 large slides, a children's play pool and a "lazy river" feature. The park opened June 2003. A-2 INDUSTRY ANDBUSINESS Major Employers Appmximata Number of Employer Description Employees University of North Texas Educational Facility 7,100 Denton Independent School Disthct School System 2,000 Peterbilt Motors Diesel Trucks 1,700 Denton State School MHMR Facility 1,473 Denton County County Government 1,200 City of Denton Municipal Government 1,200 Texas Woman's University Educational Facility 1,000 Labinal Aeronautical Company 900 Denton Regional Medical Center Hospital 850 FEMA (Regional HQ & Call Center) Federal Government Call Center 750 Denton Community Hospital HospitaI 575 Victor Equipment Welding Equipment 500 Sally Beauty World HQ Beauty Supply Company 350 C B S Mechanical Construction Services 300 Josten's Class Ring Manufacturer 270 Central Telemarkefing Inc. Call Center 250 Acme Brick Brick Manufacturer 250 Verizon Telephone Company 230 Wells Fargo Banking 212 Morfison Milling Flour/Grain Mill 210 Vacation Tour & Travel Call Center 200 Russell Newman Manufacturing Lingerie Manufacturer 180 Te'a'a Pak Aseptic Packaging 150 United Copper Industries Copper Wire Manufacturer 137 Infinity Parmers Jet Interior Manufacturing I20 Safety Kleen Fuel Recycling 119 Denton Publishing Company Newspaper 111 NucsonSteal Framing Design/Manufacturing 102 Mayday Manufacturing Aerospace Machined parts 100 Ben E. Keith Beers Distribution Center 100 Sanmlna - SCI Plastic Molding 100 Source: City of Denton and Denton Chamber of Commerce Economic Development Offices Denton is proud to boast over 30 companies and institutions that employ 100 or more people, several of them representing a co.orate, regional and international headquarters. Well over 100 companies that produce, manufacture, and distribute goods all over the world call Denton home. More than 3,000 businesses employing I to 6.995 people choose to do business in Denton. With small, medium, and large businesses operating in a variety of industries, diversity is strength in Denton. Statistics show most of these workers are skilled and receive their training right here in Denton. A-3 I I ! I I I I i I I ! I I I. I I I I I I I I I I I I I I I I I I I ! ! I ECONOMIC AND POPULATION GAINS... Denton has noted a consistent population increase and a steady economic growth in thc last four decades. Historical population totals from U.S. Census records are: 1940 Census- 11,192 1950 Census- 21,345 1960 Census- 26,844 1970 Census 39,874 1980 Census-49,079 1990 Census- 66,270 2000 Census- 80,537 The City's ascension toward a top rung on Texas' economic ladder is ath'ibuted partly to the steady influences of governmental activity which includes the year-by-year expansion of the two state-supported universities, and partly because of such environmental factors as its location in a r/ch agricultural region, some oil and gas production in the northwest section of Denton County, its inclusion in the Dallas/Fort Worth Metroplex, its proximity to three of Texas' largest reservoirs (Lake Texoma is only 40 miles from Denton), its mild climate, and the less tangible but influential aspects of social, cultural and educational advantages that have prompted professional workers to choose Denton as a place of residence. ECONOMIC RANKING . . . The following data wos taken from Sales and Marketing Management 2003 Survey of Buying Power, dated August 2004. % of Population Whose Age is: 18-24 23.10% 25-34 17.90% 35-49 18.40% 50 and Over 19.70% Households Median Household Effective Buying Income Total Effective Buying Income 37,700 $ 33,191 $ 1,675,608 % of Households by EBI Group $20,000 - $34,999 23.30% $35,000 - $49,999 17.10% $50,000 and Over 30.40% Retail Sales $1,368,704,000 Food 126,228,000 Eating and Drinking 149,345,000 General Merchandise 257,174,000 Furniture-Home Furnishings-Appliances 71,516,000 Automotive 240,582,000 A-4 EMPLOYMENTfLABOR FORCE . . . The 2003 annual average available workforce in Denton is 63,491. Additionally Denton is formnete to draw workers from the Dallas and Fort Worth/Arlington MSA's representing 5.1 million people, as well as noah to southern Oklahoma. Average Average Average Average Average September Annual Annual Annual Annual Annual City of Denton 2004 2003 2002 2001 2000 1999 Civilian Labor Force 63,388 63,491 62,805 61,530 58,482 56,286 Total Employed 60,048 58,923 58,544 58,918 56,762 54,726 Total Unemployed 3,340 4,568 4,261 2,612 1,720 1,560 Percent of Unemployed 5.27% 7.19% 6.78% 4.25% 2.94% 2.77% Denton County Civilian Labor Force 280,243 278,937 276,295 272,929 260,507 250,861 Total Employed 270,019 264,957 263,253 264,934 255,241 246,086 Total Unemployed 10,224 13,980 13,042 7,995 5,266 4,775 Percent of Unemployed 3.65% 5.01% 4.72% 2.93% 2.02% 1.90% State of Texas Civilian Lalmr Force 10,986,723 10,910,344 10,686,166 10,559,676 10,391,271 10,219,113 Total Employed 10,388,084 10,172,828 10,009,395 10,048,069 9,950,535 9,746,879 Total Unemployed 598,639 737,516 676,771 511,607 440,736 472,234 Percent of Unemployed 5.45% 6.76% 6.33% 4.84% 4.24% 4.62% Source: Texas Employment Commission. Em~CnTION... Denton is home to the University of North Texas, founded in 1890, Texas Woman's University, founded in 1901, and an cxtansion campus site for North Central Texas College, established in 1924. The two universities and community college have a combined enrollment of mom than 36,000 students and approximately 7,788 faculty members. With an enrollment of over 27,000, the University of North Texas exceeds the combined enrollment of Southern Methodist University in Dallas, Texas Christian University in Fort Worth and Rice University in Houston. Texas Woman's University has an approximate enrollment of 6,500 in Denton with an additional 1,500 students attending in Dallas and Houston. The University of North Texas (UNT) campus comprises a land area of more than 425 acres valued in excess of $167 million. The University encompasses nine colleges and schools of study and offers Bachelor's degrees in 93 fields, Master's degrees in 124 areas and Doctoral programs in 47 disciplines. UNT maintains a Iow 16:1 student-faculty mtin more prevalent among private rather than public institutions. UNT is listed in both America's 100 Best College Buys and America's 100 Most Wired Colleges. Texas Woman's University (TWU), a major state-supported teaching and research institution, is the nation's largest public university attended primarily by women, who comprise 90% of attending students. Almost 90% of TWU's faculty members hold a Doetural degree or other appropriate terminal degree in their field. Through its seven schools and colleges, TWU offers 106 programs leading to a Baelmlor's degree, 106 Master's degree fields, and Doctoral degrees in 23 specialization areas. In 2001, TWU's Doctoral health studies program tied with Harvard University for second place nationally in a study of recommended practices by the National Association of Graduate-Professional studies. North Central Texas College (NCTC), established in 1924, offers Associate Degrees in Occupational Therapy Assistance, Criminal Justice, Mid-Management Training and Micro Computer Applications, among other fields. NCTC specializes in training geared directly to business and industry needs. NCTC serves the citizens of Denton with quality education by offering a broad scope of educational choices and offers the local business community educational options as well. The competitive need to keep employees current with modern technology and methodology is easier due to NCTC's customized training which teaches curriculum developed closely with business management to ensure individual company needs are met. A-5 I I I I I I I i I I I I I I I I I I I I I I I I ! I I i t reading drop out and Rya~ StUdents ~ .Deatu~ 600, , based Texas WOman, and analysis o~s University ~ Th col~ltry to fun~new foods an~ .e Uaive~i~, c ~ · . u a positioa res~ ta~te-testin~ ,°~l?ed exn.. · , ae mat ~ ""'ereial~tio.'~ Tex~ ~ ~,voO Sod sci- ~ °~mtellee~a~ ~ M Uaive~;[~Ces lab to aa,. City and enter in WOrld. MUch developm . also be ' ,m~lng it to 7 n~],~urru~g at the ~ 1 began COnstn~cted ,vuu feet. A con~r~t°n Mnnicin , n Clos~ o~ to~,.er and a~ ~,~o.~ rb~ ~ uu~t~°anl p~va~WaY ~ill b~ ~d air "~g~ s~ -~ eXP~ded by 1 5 aa~¢... ~ ~ ~ Onlyl~all,' o~ North... an' B~ of ~ ~ ' mWdem B~ ~e, N.A.' ~el~o ~ A-6 ~ $ 3~ 1% ~59 2%~2 ~0,93l 1999 41 219 23% 24,054 23329 24,913 2003 2004 ~ ctlo~ O'a~'~' Comm'xsslO~' ..._7~ Co~SUX~ ,=.~./o~e~~ 0.~ ~ . ~35,549 2.94% 35J04 63~% 636% 36,59~ ~.19% 530% 3~,05~ 5.10% 39,507 50O cate o~l'Y baseO, o~ :ks 23 - ol Dis~ct b. ave create6 a paxxnetShlP to ! I ! I I I I I I I i I I I I i I i I I APPENDIX B EXCERPTS FROM THE CITY OF DENTON, TEXAS ANNUAL FINANCIAL REPORT For the Year Ended September 30, 2003 The information comained in this Appendix consists of excerpts from the City of Denton, Texas Annual Financial Report for the Year Ended September 30, 2003, and is not intended to be a complete statement of the City's financial condition. Reference is made to the complete Report for further information. THIS PAGE LEFT BLANK INTENTIONALLY I ! I I I I i I ! I I I i I I I I APPENI)IX C FORM OF BOND COUNSEL'S OPINIONS THIS PAGE LEFT BLANK INTENTIONALLY I i I I i I I I I I I I I I I I I I I I I I I 600 CONGRESS AVENUE 1250 ONE AMERICAN CENTER AUSTIN, TEXAS 78701-3248 TELEPHONE: 512478-3805 FACSIMILE: 512472-0871 M=-CALL, PARKHURST & HORTON L.L.P. 717 NORTH HARWOOD NINTH FLOOR DALLAS, TEXAS 75201-6587 700 N. ST. MARY'S STREET 1525 ONE RIVERWALK PLACE SAN ANTONIO, TEXAS 78205-3503 TELEPHONE: 21 O 225-2B00 FACSIMILE: 210225-2984 i I I I i i i I ! I I I I CITY OF DENTON GENERAL OBLIGATION REFUNDING BOND SERIES 2004, DATED DECEMBER 1, 2004 IN TNE PRINCIPAL AMOUNT OF $9,675,000 AS BOND COUNSEL for the City of Denton, in Denton County, Texas (the "Issuer"), we have examined into the legality and validity of the bond issue initially evidenced by the bond described above (the "Initial Bond"), which Initial Bond originally has been issued and delivered as a single fully registered bond, without interest coupons, with the principal amount thereof payable in installments due on FEBRUARY 15 in each of the years 2006 through 2020, and with the unpaid balance of each installment of principal, respectively, bearing interest from the date of the Initial Bond to the scheduled due date ("maturity"), or to the date of prepayment or redemption, of each installment of principal, at the rates per annum for each maturity set forth in the Initial Bond, with interest, calculated on the basis of a 360-day year composed of twelve 30-day months, payable on AUGUST 15, 2005, and semiannually on each FEBRUARY 15 and AUGUST 15 thereafter, and with the then outstanding principal of the Initial Bond being subject to prepayment or redemption, as a whole, or in part, prior to scheduled maturity, in accor- dance with the terms and conditions stated on the face of the Initial Bond. The Initial Bond may, at the request of the registered owner, be transferred and converted into, and/or exchanged for, fully registered bonds, without interest coupons, in the denomination of $5,000 or any integral multiple of $5,000, and such bonds again may be transferred and/or exchanged, all subject to the conditions stated and in the manner provided in the Ordinance authorizing the issuance of the Initial Bond (the "Bond Ordinance"), with any such bonds which are registered, authenticated, and delivered in accordance with the Bond Ordinance being hereinafter called "Definitive Bonds". WE HAVE EXAMINED the applicable and pertinent provisions of the Constitution and laws of the State of Texas, and have examined and relied upon a transcript of certified proceedings of the Issuer and other pertinent instruments furnished by the Issuer relating to the authorization of the Initial Bond and Definitive Bonds and the issuance and delivery of the Initial Bond, including the executed Initial Bond and a printed specimen of the form for Definitive Bonds initially made available by the Issuer for completion and exchange for the Initial Bond; and We have examined and relied upon (i) the Issuer's Federal Tax Certificate, of even date herewith, and (ii) the report and mathematical verifications of Grant Thornton LLP, certified public accountants, with respect to the adequacy of certain escrowed funds to accomplish the refunding purposes of the Initial Bond. BASED ON SAID EXAMINATION, IT IS OUR OPINION that the Initial Bond and Defmitive Bonds have been duly authorized, and the Initial Bond has been duly issued and delivered, all in accordance with law, and that, except as may be limited by laws applicable to the Issuer relating to bankruptcy, reorganization, and other similar matters affecting creditors' rights, the Initial Bond constitutes and the Definitive Bonds will constitute valid and legally binding obligations of the Issuer; and that ad valorem taxes sufficient to provide for the payment of the interest on and principal of the Initial Bond and Definitive Bonds have been levied and pledged for such purpose, within the limit prescribed by law. IN OUR OPINION, except as discussed below, the interest on the Initial Bond and the Definitive Bonds (collectively, the "Bonds") is excludable from the gross income of the owners for federal income tax purposes under the statutes, regulations, published rulings, and court decisions existing on the date of tins opinion. We are further of the opinion that the Bonds are not "specified private activity bonds" and that, accordingly, interest on the Bonds will not be included as an individual or corporate alternative minimum tax preference item under section 57(a)(5) of the Intemal Revenue Code of 1986 (the "Code"). In expressing the aforementioned opinions, we have relied on, and assume compliance by the Issuer with, certain representations and covenants regarding the use and investment of the proceeds of the Initial Bond. We call your attention to the fact that failure by the Issuer to comply with such representations and covenants may cause the interest on the Bonds to become includable in gross income retroactively to the date of issuance of the Bonds. WE CALL YOUR ATTENTION TO THE FACT that the interest on tax-exempt obligations, such as the Initial Bond and the Definitive Bonds, is (a) included in a corporation's alternative minimum taxable income for purposes of determining the alternative minimum tax imposed on corporations by section 55 of the Code, Co) subject to the branch profits tax imposed on foreign corporations by section 884 of the Code, and (c) included in the passive investment income of an S corporation and subject to the tax imposed by section 1375 of the Code. EXCEPT AS STATED ABOVE, we express no opinion as to any federal, state, or local tax consequences of acquiring, carrying, owning, or disposing of the Initial Bond and the Defmitive Bonds. WE HAVE ACTED AS BOND COUNSEL for the Issuer for the sole purpose of rendering an opinion with respect to the legality and validity of the bonds described above under the Constitution and laws of the State of Texas, and with respect to the exemption of the interest on such bonds from federal income taxes, and for no other reason or purpose. We have not been requested to investigate or verify, and have not investigated or verified, any records, data, or other material relating to the financial condition or capabilities of the Issuer, and have not assumed any responsibility with respect thereto. We have relied solely on certificates executed by officials of the Issuer as to the em'rent outstanding indebtedness and assessed valuation of taxable property of said Issuer. Respectfully, McCall, Parkhurst & Horton L.L.P. I I I I I i, I I I ! I i ! i I i I I ORDINANCE NO. 2004- HANDOUT TO COUNCIL ORDINANCE AUTHORIZING TI-IE ISSUANCE, SALE, AND DELIVERY OF CITY OF DENTON GENERAL OBLIGATION REFUNDING BONDS, SERIES 2004, LEVYING THE TAX TO PAY SAME, AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING THERETO; AND PROVIDING AN EFFECTIVE DATE THE STATE OF TEXAS : COUNTY OF DENTON : CITY OF DENTON WHEREAS, the City of Denton, Texas, heretofore has duly issued, and there are presently outstanding, the folloWing Series of Tax supported obligations: City of Denton Certificates of Obligation, Series 1995 (the "Series 1995 Certificates of Obligation"), dated February 15, 1995, scheduled to mature on February 15, 2006 through February 15, 2015, aggregating $1,350,000 (and being all of the outstanding certificates of said series scheduled to mature on and after February 15, 2006); City of Denton General Obligation Bonds, Series 1995 (the "Series 1995 Bonds"), dated February 15, 1995, scheduled to mature on February 15, 2006 through February 15, 2008 and including February 15, 2015, aggregating $350,000 (and being all of the outstanding bonds of said series scheduled to mature on and after February 15, 2006); City of Denton Certificates of Obligation, Series 1996 (the "Series 1996 Certificates of Obligation"), dated May 1, 1996, scheduled to mature on February 15, 2007 through February 15, 2010, aggregating $720,000 (and being all of the outstanding certificates of said series scheduled to mature on and after February 15, 2007); City of Denton General Obligation Bonds, Series 1996 (the "Series 1996 Bonds"), dated May 1, 1996, scheduled to mature on February 15, 2007 through February 15, 2012, aggregating $865,000 (and being all of the outstanding bonds of said series scheduled to mature on and after February 15, 2007); City of Denton General Obligation Bonds, Series 1997 (the "Series 1997 Bonds"), dated April 1, 1997, scheduled to mature on February 15, 2009 thrm~gh February 15, 2017, aggregating $2,865,000 (and being all of the outstanding bonds of said series scheduled to mature on and after February 15, 2009); City of Denton Certificates of Obligation, Series 2000 (the "Series 2000 Certificates of Obligations"), dated May 1, 2000, scheduled to mature on February 15, 2012 through February 15, 2018 and including February 15, 2020, aggregating $1,395,000 (and being all of the outstanding certificates of said series scheduled to mature on and after February 15, 2012); City of Denton General Obligation Bonds, Series 2000 (the "Series 2000 Bonds"), dated May 1, 2000, scheduled to mature on February 15, 2012 through February 15, 2018 and including February 15, 2020, aggregating $1,665,000 (and being all of the outstanding bonds of said series scheduled to mature on and after February 15, 2012); (collectively, the "Outstanding Obligations"), in the aggregate principal mount of $9,210,000; and WHEREAS, the City Council of the City of Denton deems it necessary and advisable and in the public interest to refund the Outstanding Obligations, and to authorize, issue, and deliver the bonds hereinafter described; and WHEREAS, the bonds hereinafter authorized are to be issued, sold, and delivered pursuant to Chapter 1207, Texas Government Code, as amended, the City's Home Rule Charter and other applicable laws; NOW, THEREFORE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: Section 1. AMOUNT AND PURPOSE OF THE BONDS. The bond or bonds of the City of Denton, Texas (the "Is suer") are hereby authorized to be issued and delivered in the aggregate principal amount of $9,410,000, FOR THE PURPOSE OF OBTAINING FUNDS REQUIRED TO REFUND $9,210,000 IN AGGREGATE pRINcIPAL AMOUNT OF TAX SUPPORTED OBLIGATIONS OF THE CITY OF DENTON, TEXAS. Section 2. DESIGNATION OF THE BONDS. Each bond issued pursuant to this Ordinance shall be designated: "CITY OF DENTON GENERAL OBLIGATION REFUNDING BOND, SERIES 2004", and initially there shall be issued, sold, and delivered hereunder a single fully registered bond, without interest coupons, payable in installments of principal (the "Initial Bond"), but the Imtial Bond may be assigned and transferred and/or converted into and exchanged for a like aggregate principal amount of fully registered bonds, without interest coupons, having serial maturities, and in the denomination or denominations of $5,000 or any integral multiple of $5,000, all in the manner hereinafter provided. The term "Bonds" as used in this Ordinance shall mean and include collectively the Imtial Bond and all substitute bonds exchanged therefor, as well as all other substitute bonds and replacement bonds issued pursuant hereto, and the term "Bonds" shall mean any of the Bonds. Section 3. INITIAL DATE, DENOMINATION, NUMBER, MATURITIES, INITIAL REGISTERED OWNER, AND CHARACTERISTICS OF THE INITIAL BOND. (a) The Initial Bond is hereby authorized to be issued, sold, and delivered hereunder as a single fully registered Bond, ~vithout interest coupons, dated DECEMBER 1, 2004, in the denomination and aggregate principal amount of $9,410,000, numbered R-l, payable in annual installments of principal to the initial registered owner thereof, to-wit: RBC DA1N RAUSHER INC. or to the registered assignee or assignees of said Bond or any portion or portions thereof (in each case, the "registered owner"), with the annual installments of principal of the Initial Bond to be payable on the dates, respectively, and in the principal amounts, respectively, stated in the FORM OF INITIAL BOND set forth in this Ordinance. 2 (b) The Initial Bond (i) may be prepaid or redeemed prior to the respective scheduled due dates of installments of principal thereof, (ii) may be assigned and transferred, (iii) may be converted and exchanged for other Bonds, (iv) shall have the characteristics, and (v) shall be signed and sealed, and the principal of and interest on the Initial Bond shall be payable, all as provided, and m the manner required or indicated, in the FORM OF INITIAL BOND set forth in this Ordinance. Section 4. INTEREST. The unpaid principal balance of the Imtial Bond shall bear interest from the date of the Initial Bond to the respective scheduled due dates, or to the respective dates of prepayment or redemption, of the installments of principal of the Initial Bond, and said interest shall be payable, all in the manner provided and at the rates and on the dates stated in the FORM OF INITIAL BOND set forth in this Ordinance. Section 5. FORM OF INITIAL BOND. The form of the Initial Bond, including the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be endorsed on the Initial Bond, shall be substantially as follows: FORM OF INITIAL BOND NO. R-1 $9,4!0,000 UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON GENERAL OBLIGATION REFUNDING BOND SERIES 2004 THE CITY OF DENTON, in Denton County, Texas (the "Issuer" or the "City"), being a political subdivision of the State of Texas, hereby promises to pay to RBC DAIN RAUSCHER INC. or to the registered assignee or assignees of this Bond or any portion or portions hereof (in each case, the "registered owner") the aggregate principal amount of $9,410,000 (NINE MILLION FOUR HUNDRED TEN THOUSAND DOLLARS) in annual installments of principal due and payable on FEBRUARY 15 in each of the years, and in the respective principal amounts, as set forth in the following schedule: PRINCIPAL PRINCIPAL YEAR AMOUNT YEAR AMOUNT 2006 $260,000 2014 $825,000 2007 550,000 2015 945,000 2008 570,000 2016 705,000 2009 740,000 2017 725,000 2010 775,000 2018 325,000 2011 595,000 2019 320,000 2012 955,000 2020 315,000 2013 805,000 3 and to pay interest, calculated on the basis ofa 360-day year composed of twelve 30-day months, from the date of this Bond hereinafter stated, on the balance of each such installment of principal, respectively, from time to time remaining unpaid, at the rates as follows: 2.50% per annum on the above installment due in 2006 2.75% per annum on the above installment due in 2007 3.00% per annum on the above installment due in 2008 3.00% per annum on the above installment due in 2009 3.50% per annum on the above installment due in 2010 3.75% per annum on the above installment due in 2011 4.00% per annum on the above installment due in 2012 4.25% per annum on the above installment due in 2013 4.00% per annum on the above installment due in 2014 5.00% per annum on the above installment due in 2015 5.00% per annum on the above installment due in 2016 5.00% per annum on the above installment due in 2017 5.00% per annum on the above installment due in 2018 5.00% per annum on the above installment due in 2019 5.00% per annum on the above installment due in 2020 with said interest being payable on AUGUST 15, 2005, and seimmmually on each FEBRUARY 15 and AUGUST 15 thereafter while this Bond or any portion hereof is outstanding and unpaid. THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges. The installments of principal and the interest on this Bond are payable to the registered owner hereof through the services of JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, DALLAS, TEXAS, which is the "Paying Agent/Registrar" for this Bond. Payment of all principal of and interest on this Bond shall be made by the Paying Agent/Registrar to the registered owner hereof on each principal and/or interest payment date by check, dated as of such date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance authorizing the issuance of this Bond (the "Bond Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check shall be sent by the Paying Agent/Registrar by United States mail, first-class postage prepaid, on each such principal and/or interest payment date, to the registered owner hereof, at the address of the registered owner, as it appeared at the close of business on the last day of the month next preceding each such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described. The Issuer covenants with the registered owner of this Bond that on or before each principal and/or interest payment date for this Bond it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Bond Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on this Bond, when due. IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the City where the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and pa3nnent on such date shall have the same force and effect as if made on the original date payment was due. 4 THIS BOND has been authorized in accordance with the Constitution and laws of the State of Texas FOR THE PURPOSE OF OBTAINING FUNDS REQUIRED TO REFUND $9,210,000 IN AGGREGATE PRINCIPAL AMOUNT OF TAX SUPPORTED OBLIGATIONS OF THE CITY OF DENTON, TEXAS. ON FEBRUARY 15, 2014, or on any date whatsoever thereafter, the unpaid installments of principal of this Bond may be prepaid or redeemed prior to their scheduled due dates, at the option of the Issuer, with funds derived from any available source, as a whole, or in part, at the prepayment or redemption price of the par or principal mount thereof, plus accrued interest to the date fixed for prepayment or redemption. If less than all of the Bonds are to be redeemed, the Issuer may select the maturities of the Bonds to be redeemed. If less than ail of the Bonds of any maturity are to be redeemed, the Paying Agent/Registrar shall determine by lot the Bonds, or portions thereof, within such maturity to be redeemed. AT LEAST 30 days prior to the date fixed for any such prepayment or redemption a written notice of such prepayment or redemption shall be mmled by the Paying Agent/Registrar to the registered owner hereof. By the date fixed for any such prepayment or redemption due provision shall be made by the Issuer with the Paying Agent/Registrar for the payment of the required prepayment or redemption price for this Bond or the portion hereof which is to be so prepaid or redeemed, plus accrued interest thereon to the date fixed for prepayment or redemption. If such written notice of prepayment or redemption is given, and if due provision for such payment is made, all as provided above, this Bond, or the portion thereof which is to be so prepaid or redeemed, thereby automatically shall be treated as prepaid or redeemed prior to its scheduled duc date, and shall not bear interest after the date fixed for its prepayment or redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the prepayment or redemption price plus accrued interest to the date fixed for prepayment or redemption from the Paying Agent/Registrar out of the funds provided for such payment. The Paying Agent/Registrar shall record in the Registration Books all such prepayments or redemptions of principal of this Bond or any portion hereo£ THIS BOND, to the extent of the unpaid or unredeemed principal balance hereof, or any unpaid and unredeemed portion hereof in any integral multiple of $5,000, may be assigned by the initial registered owner hereof and shall be transferred only in the Registration Books of the Issuer kept by the Paying Agent/Registrar actmg in the capacity of registrar for the Bonds, upon the terms and conditions set forth in the Bond Ordinance. Among other requirements for such transfer, this Bond must be presented and surrendered to the Paying Agent/Registrar for cancellation, together with proper instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment by the initial registered owner of this Bond, or any portion or portions hereof in any integral multiple of $5,000, to the assignee or assignees in whose name or names this Bond or any such portion or portions hereof is or are to be transferred and registered. Any instrument or instruments of assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of this Bond or any such portion or portions hereof by the initial registered owner hereof. A new bond or bonds payable to such assignee or assignees (which then will be the new registered owner or owners of such new Bond or Bonds) or to the initial registered owner as to any portion of this Bond which is not being assigned and transferred by the initial registered owner, shall be delivered by the Paying Agent/Registrar in conversion of and exchange for this Bond or any portion or portions hereof, but solely in the form and manner as provided in the next paragraph hereof for the conversion and exchange of this Bond or any portion hereof. The registered owner of this Bond shall be deemed and treated by the Issuer and the Paymg Agent/Registrar as the absolute owner hereof for all purposes, including payment and discharge of liability upon this Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary. 5 AS PROVIDED above and in the Bond Ordinance, this Bond, to the extent of the unpaid or unredeemed principal balance hereof, may be converted into and exchanged for a like aggregate principal mount of fully registered bonds, without interest coupons, payable to the assignee or assignees duly designated in writing by the imtial registered owner hereof, or to the initial registered owner as to any portion of this Bond which is not being assigned and transferred by the initial registered owner, in any denomination or denominations in any integral multiple of $5,000 (subject to the requirement hereinat'ter stated that each substitute bond issued in exchange for any portion of this Bond shall have a single stated principal maturity date), upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordance with the form and procedures set forth in the Bond Ordinance. If this Bond or any portion hereof is assigned and transferred or converted each bond issued in exchange for any portion hereof shall have a single stated principal maturity date corresponding to the due date of the installment of principal of this Bond or portion hereof for which the substitute bond is being exchanged, and shall bear interest at the rate applicable to and borne by such installment of principal or portion thereof. Such bonds, respectively, shall be subject to redemption prior to maturity on the same dates and for the same prices as the corresponding installment of principal of this Bond or portion hereof for which they are being exchanged. No such bond shall be payable in installments, but shall have only one stated principal maturity date. AS PROVIDED IN THE BOND ORDINANCE, THIS BOND IN ITS PRESENT FORM MAY BE ASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY, and to one or more assignees, but the bonds issued and delivered in exchange for this Bond or any portion hereof may be assigned and transferred, and converted, subsequently, as provided in the Bond Ordinance. The Issuer shall pay the Paying AgenffRegistrar's standard or customary fees and charges for transferring, converting, and exchanging this Bond or any portion thereof, but the one requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto. The Paying Agent/Registrar shall not be required to make any such assignment, conversion, or exchange (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or portion thereof called for prepayment or redemption prior to maturity, within 45 days prior to its prepayment or redemption date. 1N THE EVENT any Paying Agent/Registrar for this Bond is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Bond Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be mailed to the registered owner of this Bond. IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly voted, authorized, issued, sold, and delivered; that all acts, conditions, and things required or proper to be performed, exist, and be done precedent to or in the authorization, issuance, and delivery of this Bond have been performed, existed, and been done in accordance with law; that this Bond is a general obligation of the Issuer, issued on the full faith and credit thereof; and that annual ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Bond, as such interest comes due and such principal matures, have been levied and ordered to be levied against all taxable property in the Issuer, and have been pledged irrevocably for such paYment, within the limit prescribed by law. BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all of the terms and provisions of the Bond Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Bond Ordinance is duly recorded and available for inspection in the official minutes and records of the governing body of the Issuer, and agrees that the terms and provisions of this Bond and the Bond Ordinance constitute a contract between the registered owner hereof and the Issuer. 6 IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual or facsimile signature oft-he Mayor of the Issuer and countersigned with the manual or facsimile signature of the City Secretary of the Issuer, has caused the official seal of the Issuer to be duly impressed on this Bond, and has caused this Bond to be dated DECEMBER 1, 2004. City Secretary, City of Denton, Texas Mayor, City of Denton, Texas (CITY SEAL) (INSERT BOND INSURANCE LEGEND, IF ANY) FORM OF REGISTRATION CERTIFICATE OF THE COMPTROLLER OF PUBLIC ACCOUNTS: (To be attached to Initial Bond only) COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this Bond has been examined, certified as to validity, and approved by the Attomey General of the State of Texas, and that this Bond has been registered by the Comptroller of Public Accounts of the State of Texas. Witness my signature and seal this Comptroller of Public Accounts of the State of Texas (COMPTROLLER'S SEAL) Section 6. ADDITIONAL CHARACTERISTICS OF THE BONDS. Registration and Transfer. (a) The Issuer shall keep or cause to be kept at the principal corporate trust office of JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, DALLAS, TEXAS (the "Paying Agent/Registrar") books or records of the registration and transfer of the Bonds (the "Registration Books"), and the Issuer hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep such books or records and make such transfers and registrations under such reasonable regulations as the Issuer and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such transfers and registrations as herein provided. The Paying Agent/Registrar shall obtain and record in the Registration Books the address of the registered owner of each Bond to which payments with respect to the Bonds shall be mailed, as herein provided; but it shall be the duty of each registered owner to notify the Paying Agent/Registrar in writing of the address to which payments shall be mailed, and such interest payments shall not be mailed unless such notice has been given. The Issuer shall have the right to inspect the Registration Books during regular business hours of the Paying Agent/Registrar, but otherwise the Paying AgenffRegistrar shall keep the Registration Books confidential and, unless otherwise required by law, shall not permit their inspection by any other entity. Registration of each Bond may be transferred in the Registration Books only upon presentation and surrender of such Bond to the Paying Agent/Registrar for transfer of registration and cancellation, together with proper written instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, (i) evidenc- ing the assignment of the Bond, or any portion thereof in any integral multiple of $5,000, to the assignee or assignees thereof, and (ii) the right of such assignee or assignees to have the Bond or any such portion thereof registered in the name of such assignee or assignees. Upon the assignment and transfer of any Bond or any portion thereof, a new substitute Bond or Bonds shall be issued in conversion and exchange therefor in the manner herein provided. The Initial Bond, to the extent of the unpaid or unredeemed principal balance thereof, may be assigned and transferred by the initial registered owner thereof once only, and to one or more assignees designated in writing by the initial registered owner thereof. All Bonds issued and delivered in conversion of and exchange for the Initial Bond shall be in any denomination or denominations of any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute Bond shall have a single stated principal maturity date), shall be in the form prescribed in the FORM OF SUBSTITLrrE BOND set forth in this Ordinance, and shall have the characteristics, and may be assigned, transferred, and converted as hereinafter provided. If the Initial Bond or any portion thereof is assigned and transferred or converted the Initial Bond must be surrendered to the Paying Agent/Registrar for cancellation, and each Bond issued in exchange for any portion of the Initial Bond shall have a single stated principal maturity date, and shall not be payable in installments; and each such Bond shall have a principal maturity date corresponding to the due date of the installment of principal or portion thereof for which the substitute Bond is being exchanged; and each such Bond shall bear interest at the single rate applicable to and borne by such installment of principal or portion thereof for which it is being exchanged. If only a portion of the Initial Bond is assigned and transferred, there shall be delivered to and registered in the name of the initial registered owner substitute Bonds in exchange for the unassigned balance of the Initial Bond in the same manner as if the initial registered owner were the assignee thereof. If any Bond or portion thereof other than the Initial Bond is assigned and transferred or converted each Bond issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the Bond for which it is exchanged. A form of assignment shall be printed or endorsed on each Bond, excepting the Initial Bond, which shall be executed by the registered owner or its duly authorized attorney or representative to evidence an assignment thereof. Upon surrender of any Bonds or any portion or portions thereof for transfer of registration, an authorized representative of the Paying Agent/Registrar shall make such transfer in the Registration Books, and shall deliver a new fully registered substitute Bond or Bonds, having the characteristics herein described, payable to such assignee or assignees (which then will be the registered owner or owners of such new Bond or Bonds), or to the previous registered owner in case only a portion of a Bond is being assigned and transferred, all in conversion of and exchange for said assigned Bond or Bonds or any portion or portions thereof, in the same form and manner, mad with the same effect, as provided in Section 6(d), below, for the conversion and exchange of Bonds by any registered owner of a Bond. The Issuer shall pay the PaYing Agent/Registrar% standard or customary fees and charges for making such transfer and delivery of a substitute Bond or Bonds, but the one requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto. The Paying Agent/Registrar shall not be required to make transfers of registration of any Bond or any portion thereof (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or any portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date. (b) Ownership of Bonds. The entity in whose name any Bond shall be registered in the Registration Books at any time shall be deemed and treated as the absolute owner thereof for ail proposes of this Ordinance, whether or not such Bond shail be overdue, and the Issuer and the Paying Agent/Registrar shail not be affected by any notice to the contrary; and payment of, or on account of, the principal of, premium, if any, and interest on any such Bond shall be made only to such registered owner. All such payments shall be vaiid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. (c) Payment of Bonds and Interest. The Issuer hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the principai of and interest on the Bonds, and to act as its agent to convert and exchange or replace Bonds, all as provided in this Ordinance. The Paying Agent/Registrar shall keep proper records of ail payments made by the Issuer and the Paying Agent/Registrar with respect to the Bonds, and of all conversions and exchanges of Bonds, and all replacements of Bonds, as provided in this Ordinance. However, in the event of a nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a "Speciai Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the Issuer. Notice of the Special Record Date and of the scheduled payment date of the past due interest ("Special Payment Date", which shall be fifteen (15) days after the Speciai Record Date) shall be sent at least five (5) business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of a Bond appearing on the registration books of the Paying Agent/Registrar at the close of business on the 15th business day next preceding the date of mailing of such notice. (d) Conversion and Exchange or Replacement; Authentication. Each Bond issued and delivered pursuant to this Ordinance, to the extent of the unpaid or unredeemed principal balance or principal amount thereof, may, upon surrender of such Bond at the principal corporate trust office of the Paying Agent/Registrar, together with a written request therefor duly executed by the registered owner or the assignee or assignees thereof, or its or their duly authorized attorneys or representatives, with guarantee of signatures satisfactory to the Paying Agent/Registrar, may, at the option of the registered owner or such assignee or assignees, as appropriate, be converted into and exchanged for fully registered bonds, without interest coupons, in the form prescribed in the FORM OF SUBSTITUTE BOND set forth in this Ordinance, in the denomination of $5,000, or any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute Bond shall have a single stated maturity date), as requested in writing by such registered owner or such assignee or assignees, in an aggregate principal amount equal to the unpaid or unredeemed principal balance or principal amount of any Bond or Bonds so surrendered, and payable to the appropriate registered owner, assignee, or assignees, as the case may be. If the Initial Bond is assigned and transferred or converted each substitute Bond issued in exchange for any portion of the lmtial Bond shall have a smgle stated principal maturity date, and shall not be payable in installments; and each such Bond shall have a principal maturity date correspondmg to the due date of the installment of principal or portion thereof for which the substitute Bond is being exchanged; and each such Bond shall bear interest at the single rate applicable to and borne by such installment of principal or portion thereof for which it is being exchanged. If a portion of any Bond (other than the Initial Bond) shall be redeemed prior to its scheduled maturity as provided herein, a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in the denomination or denominations of any integral multiple of $5,000 at the request of the registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon surrender thereof for cancellation. If any Bond or portion thereof (other than the lmtial Bond) is assigned and transferred or converted, each Bond issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the Bond for which it is being exchanged. Each substitute Bond shall bear a letter and/or number to distinguish it from each other Bond. The Paying Agent/Registrar shall convert and exchange or replace Bonds as provided herein, and each fully registered bond delivered in conversion of and exchange for or replacement of any Bond or portion thereof as permitted or required by any provision of this Ordinance shall constitute one of the Bonds for all purposes of this Ordinance, and may again be converted and exchanged or replaced. It is specifically provided that any Bond authenticated in conversion of and exchange for or replacement of another Bond on or prior to the first scheduled Record Date for the Imtial Bond shall bear interest from the date of the Initial Bond, but each substitute Bond so authenticated after such first scheduled Record Date shall bear interest from the interest payment date next preceding the date on which such substitute Bond was so authenticated, unless such Bond is authenticated after any Record Date but on or before the next following interest payment date, in which case it shall bear interest from such next following interest payment date; provided, however, that if at the time of delivery of any substitute Bond the interest on the Bond for which it is being exchanged is due but has not been paid, then such Bond shall bear interest from the date to which such interest has been paid in full. THE INITIAL BOND issued and delivered pursuant to this Ordinance is not required to be, and shall not be, authenticated by the Paying Agent/Registrar, but on each substitute Bond issued in conversion of and exchange for or replacement of any Bond or Bonds issued under this Ordinance there shall be printed a certificate, in the form substantially as follows: "PAY1NG AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance described in this Bond; and that this Bond has been issued in conversion of and exchange for or replacement ora bond, bonds, or a portion ora bond or bonds of an issue which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. Dated: JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, DALLAS, TEXAS Paying Agent/Registrar By Authorized Representative" An authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Bond, date and manually sign the above Certificate, and no such Bond shall be deemed to be issued or outstanding unless such Certificate is so executed. The Paying Agent/Registrar promptly shall cancel all Bonds surrendered for conversion and exchange or replacement. No additional ordinances, orders, or resolutions need be passed or adopted by the governing body of the Issuer or any other body or person so as to accomplish the foregoing conversion and exchange or replacement of any Bond or portion thereof, and the Paying Agent/Registrar shall provide for the printing, execution, and delivery of the substitute Bonds in the manner prescribed herein, and said Bonds shall be of type composition printed on paper with lithographed or steel engraved borders of customary weight and strength. Pursuant to Chapter 1201, Texas Government Code, as amended, the duty of conversion and exchange or replacement of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of the above Paying Agent/Registrar's Authentication Certificate, the converted and exchanged or replaced Bond shall be valid, incontestable, and enfomeable in the same manner and with the same effect as the Initial Bond which originally was issued pursuant to this Ordinance, approved by the Attorney General, and registered by the Comptroller of Public Accounts. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for transferring, converting, and exchanging any Bond or any portion thereof, but the one requesting any such transfer, conversion, and exchange shall pay 10 COmmencin · and exchan e ge. lhe Paym s a Cona~tion r fo/l,----: ~Vaththecloseofh._. g °r replacement~r,. . g Agent/Registr ...... P ecedent to the ,.wing Prmcinal o- ' ~ v~mess on any R .... ,,~non~ or an, .... .o ,~ ~nau not be ren-' - redemnt/o.. _ -" ' interest pav~,... J ~ ~"°ru~Jate and,-ua' -~ l-'ortlon thereof~;~ ~ · uulrea to ~' "~'nor tOmatur/tv ~:~'~,}~.uate, or, Oi) with r~_"'~Umgvaththeopenm u~urmgtheperiod ~, ...,,m~ ,~ days n,4,._.._ --~pect to anv Bo,..: ~ g of business on th · '.,,,- to Its redem--' - ,,u ur portio~ .~ e next mPgon date. "meteor called for (e) All . °r portion thereof (D ~._, . . B°nds zssued in ,.n, · , ~ / o~/all DC ISSued i.g.. . ~-'-~rSlon and · -., may registered for~ ~7.~'~nange or replacem -", W~mout interest coo,,,. ,--} orany Other Bond and interest on Such BOnds to be payable Only to the reg/stered oWners thereof, (ii) may be redeemed prior to · ,,,ns, with the principal o~ the~rscheduledmatunt~es. 0 )maybetransferredandass~gned, OV)maybec°n~erteda~dexchangedf°rother on the Bonds shall be pa a , . Bonds, (v) shall have the ch~)acteristics, (vi) shall be signed and sealed, and (vii) the Principal of and interest SUBSr ruT BO le, as provided. ... ND ~ forth m th/s Ordina~ceaT.d "' the manner required or indfiCated · BOnds , m the OF · . "will (i) pay t~. The Issuerhere_ ~,~,uu or customan, fee by covenants with *n · --.~U Caarges of the Paying ~;;1~]~°,` ~le prlueipaI of and ,n,~ a vi Mle Pav~nn I~ .- ----o ulule ~ ~ "mxeglstrarforservin,~ ?~..,~rest on the BOnds ...L o ,~r ?or Its and w~th respect to the COnversmn and exchange of'Bonds SOlely to the extent above provided in this Oral/nonce (g' ~te / -~w~threspeett°thetrans'feT;~e;7:;ranatid°(nii°)cp~ayth'e BOnds that at all ~i~t/R~;-- '_ ~ o. oOnas, --es wtule the Bo~' lhe Iss bank, trust COmpany, finan i~ · ; , . --~ are outstandmg,~ , Uer COVenants wi~, .u . . - a-,e ~SSUer willnro,~ ~ '*' ,,,e registered OWner° ~h~s?ueegr'Strar for the BonCd~umn;:;?~i:~ of othe~ agent t ~ "~competantan~, ~ofthe ~-~n J rreserves ther;~[.. ""~ urctman ..... y o act as and ,,o.~ ulegallYqualified · ~ uays Writiennotio~,'.~tto, and may, at its n~,Y~' an. clthatthePayin~Ao~rm the services of ' · ~.. m me Pay/no Ag .,~ ?..,on, change the P~-.' ~ -o~"u~eglstrar wilt ~ Pa[rog pnncwal or interest pav~en, a- o ~enu~eglstrar, to be ~,~ . ,ymg Agent/Remo,.~ · oc one entity. Agant/Reg~strar (or its ;'" · ,-ate Offer such notice. -- ~rrect~ve not later th~,, ~-~,,~r Upon not less th SUccessor by merg .... In the event that *~.,~ ,~ ,.~-"~" ,,u oays prior to the nea~ ~ ~, acquisition, .,~ Cnmy at · . act as such, the IsSUer COVenants that promptly it will COmpany, financial instituti or Other method) should re~Ltime acting as Pa in any change in ,h~ ,. . on. or Other a ..... appoint a co.--- - ~gn or Otherwise cea~ t~ · ~,,- raying Agent/Re~;~. o~,,uy [o act as Pay;... a -,~Jerent and legalb ..... s,~rar, the n~,.: :-'s 'Xgent/Reg;o,.~ ~ ~lUUlll~ed bani- ~eI~7 tRoo~lStrati°n Books (or a co . *'-~v,oasPavinga ~,7-,trunderthi .... -~., trust Paying A~en',mme~ n~w Paying Agent/R~P~s.~ ere. of~, along with all o*"~- · o ~eglstrur, the Issu~ - a ~uarrles~gnated a~,~ ~ .~u~pertlnent bool~o ~-~ na~l trans£er and Agent/Registrar to each registered ...... . cause a writien no*~- ~,~ ~ ~ssuer. Upon an~.-~ ' ~-g [o ~'/-~romot/v ,,,m _ ~'~' appointed b,, *~-^ · *-., ,~m records re/a,;_ wh/ch notice also shall give Owner of the Bonds, "~ mereof to be sent by ~;~ange~ m ~he e_?rming as such, eac address of the new bY. United States ma/l, rst-class postage prepaid, "'~umance, and a c .... ~uymg Agent/Re~;-. ~,~ymg Agent/~e~i~.~ ~ new Paying coined Copy of this O.a.~mrar Snail be deemea ,° ~-,~r. t~y accept/n,, ~ . . -u~nance shall b,~ .~ ,. ~ ,o nave agreed *^ .~ ~ "'~ position and ~ ueuvered to each ~... ~, me provisions of ' ;;;dha~tog;eOT~[ea;;mneenat~foa~Ys:ct~ '.-,~ylng AOen."' - this Section 7. FORM OF SUBSTITUTE BONDs. The · o umeglstrar. shall be, oB:;s~ form of all Bonds iSSued in COnversion and inc'u g the form o respective,y, substantially as follows, rm °f Assignment to be .~.u.[~aymg Ag. ent/Registrar,s are perm/tied or required by ' this Ord/nance. with Such apProphate variation~sl~*'~u on each of the Bonds. omissions, or insertions as ll FORM OF SUBSTITUTE BOND (Book-Entry Only Legend, if appropriate) NO. UNITED STATES OF AMERICA PRINCIPAL AMOUNT STATE OF TEXAS $ COUNTY OF DENTON CITY OF DENTON, TEXAS GENERAL OBLIGATION REFUNDING BOND SERIES 2004 INTEREST RATE MATURITY DATE DATED CUSIP NO. ON THE MATURITY DATE specified above the CITY OF DENTON, in Denton County, Texas (the "Issuer"), being a political subdivision of the State of Texas, hereby promises to pay to or to the registered assignee hereof(either being hereinafter called the "registered owner") the principal amount of and to pay interest thereon, calculated on the basis of a 360-day year composed of twelve 30-day months, from DECEMBER 1, 2004, to the maturity date specified above, or the date of redemption prior to maturity, at the interest rate per annum specified above; with interest being payable on AUGUST 15, 2005, and semiannually on each FEBRUARY 15 and AUGUST 15 thereafter, except that if the date of authentication of this Bond is later than the first Record Date (hereinafter defined), such principal amount shall bear interest from the interest payment date next preceding the date of authentication, unless such date of authentication is after any Record Date (hereinafter defined) but on or before the next following interest payment date, in which case such principal amount shall bear interest from such next following interest payment date. THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges. The principal of this Bond shall be paid to the registered owner hereof upon presentation and surrender of this Bond at maturity or upon the date fixed for its redemption prior to maturity, at the principal corporate trust office of JPMORGAN CHASE BANK, NATIONAL AS SOCIATION, DALLAS, TEXAS, which is the "Paying Agent/Registrar" for this Bond. The payment of interest on this Bond shall be made by the Paying Agent/Registrar to the registered owner hereof on each interest payment date by check, dated as of such mterest payment date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance authorizing the issuance of the Bonds (the "Bond Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check shall be sent by the Paying Agent/Registrar by United States mail, first-class postage prepaid, on each such interest payment date, to the registered owner hereof, at the address of the registered owner, as it appeared at the close of business on the last day of the month next 12 preceding each such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described. However, the payment of such interest may be made by any other method acceptable to the Paying Agent/Registrar and requested by, and at the risk and expense of, the registered owner hereof. Any accrued interest due upon the redemption of this Bond prior to maturity as provided herein shall be paid to the registered owner at the principal corporate trust office of the Paying Agent/Registrar upon presentation and surrender of this Bond for redemption and payment at the principal corporate trust office of the Paying Agent/Registrar. The Issuer covenants with the registered owner of this Bond that on or before each principal payment date, interest payment date, and accrued interest payment date for this Bond it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Bond Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Bonds, when due. IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the City where the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. THIS BOND is one of an issue of Bonds initially dated DECEMBER 1, 2004, authorized in accordance with the Constitution and laws of the State of Texas in the principal amount of $9,410,000, FOR THE PURPOSE OF OBTAINING FUNDS REQUIRED TO REFUND $9,210,000 IN AGGREGATE PRINCIPAL AMOUNT OF TAX SUPPORTED OBLIGATIONS OF THE CITY OF DENTON, TEXAS. ON FEBRUARY 15, 2014, or on any date whatsoever thereafter, the Bonds of this Series may be redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived from any available and lawful source, as a whole, or in part, at the redemption pr/ce of the par or principal amount thereof, plus accrued interest to the date fixed for redemption. If less than all of the Bonds are to be redeemed, the Issuer may select the maturities of the Bonds to be redeemed. If less than all of the Bonds of any maturity are to be redeemed, the Paying Agent/Registrar shall detenmne by lot the Bonds, or portions thereof, within such maturity to be redeemed. AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof prior to maturity a written notice of such redemption shall be sent by the Paying Agent/Registrar by United States mail, first-class postage prepaid, at least 30 days prior to the date fixed for any such redemption, to the registered owner of each Bond to be redeemed at its address as it appeared on the 45th day prior to such redemption date and to major securities depositor/es, national bond rating agencies and bond information services; provided, however, that the failure of the registered owner to receive such notice, or any defect therein or in the sending or mailing thereof, shall not affect the validity or effectiveness of the proceedings for the redemption of any Bond. By the date fixed for any such redemption due provision shall be made with the Paying Agent/Registrar for the payment of the required redemption price for the Bonds or portions thereof that are to be so redeemed. If such written notice of redemption is sent and if due provision for such payment is made, all as provided above, the Bonds or portions thereof that are to be so redeemed thereby automatically shall be treated as redeemed prior to their scheduled maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price from the Paying Agent/Registrar out of the funds provided for such payment. Ifa portion of any Bond shall be redeemed, a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000, at the written request 13 of the registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon the surrender thereof for cancellation, at the expense of the Issuer, all as provided in the Bond Ordinance. THIS BOND OR ANY PORTION OR PORTIONS HEREOF 1N ANY INTEGRAL MULTIPLE OF $5,000 may be assigned and shall be transferred only in the Registration Books of the Issuer kept by the Paying Agent/Registrar acting in the capacity of registrar for the Bonds, upon the terms and conditions set forth in the Bond Ordinance. Among other requirements for such assignment and transfer, this Bond must be presented and surrendered to the Paying Agent/Registrar, together with proper instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of this Bond or any portion or portions hereof in any integral multiple of $5,000 to the assignee or assignees in whose name or names this Bond or any such portion or portions hereof is or are to be transferred and registered. The form of Assignment printed or endorsed on this Bond shall be executed by the registered owner or its duly authorized attorney or representative, to evidence the assignment hereof. A new Bond or Bonds payable to such assignee or assignees (which then will be the new registered owner or owners of such new Bond or Bonds), or to the previous registered owner in the case of the assignment and transfer of only a portion of this Bond, may be delivered by the Paying Agent/Registrar in conversion of and exchange for this Bond, all in the form and manner as provided in the next paragraph hereof for the conversion and exchange of other Bonds. The Issuer shall pay the Paying AgentYRegistrar's standard or customary fees and charges for making such transfer, but the one requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto. The Paying Agent/Registrar shall not be required to make transfers of registration of this Bond or any portion hereof (i) during the period commencing with the close of basiness on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or any portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date. The registered owner of this Bond shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for all purposes, including payment and discharge of liability upon this Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary. ALL BONDS OF THIS SERIES are issuable solely as fully registered bonds, without interest coupons, in the denomination of any integral multiple of $5,000. As provided in the Bond Ordinance, this Bond, or any unredeemed portion hereof, may, at the request of the registered owner or the assignee or assignees hereof, be converted into and exchanged for a like aggregate principal amount of fully registered bonds, without interest coupons, payable to the appropriate registered owner, assignee, or assignees, as the case may be, having the same maturity date, and bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000 as requested in writing by the appropriate registered owner, assignee, or assignees, as the case may be, upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordance with the form and procedures set forth in the Bond Ordinance. The Issuer shall pay the Paying AgentYRegistrar's standard or customary fees and charges for transferring, converting, and exchanging any Bond or any portion thereof, but the one requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange. The Paying Agent/Registrar shall not be required to make any such conversion and exchange (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date. 14 IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Bond Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be mailed to the registered owners of the Bonds~ IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly voted, authorized, issued, sold, and delivered; that all acts, conditions, and things required or proper to be performed, exist, and be done precedent to or in the authorization, issuance, and delivery of this Bond have been performed, existed, and been done in accordance with law; that this Bond is a general obligation of the Issuer, issued on the full faith and credit thereof; and that annual ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Bond, as such interest comes due and such principal matures, have been levied and ordered to be levied against all taxable property in the Issuer, and have been pledged irrevocably for such payment, within the limit prescribed by law. BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all of the terms and provisions of the Bond Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Bond Ordinance is duly recorded and available for inspection in the official minutes and records of the governing body of the Issuer, and agrees that the terms and provisions of this Bond and the Bond Ordinance constitute a contract between each registered owner hereof and the Issuer. IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual or facsimile signature of the Mayor of the Issuer and countersigned with the manual or facsimile signature of the City Secretary of the Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed in facsimile, on this Bond. City Secretary, City of Denton, Texas (CITY SEAL) Mayor, City of Denton, Texas (INSERT BOND INSURANCE LEGEND, IF ANY) 15 FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE (To be executed if this Bond is not accompamed by an executed Registration Certificate of the Comptroller of Public Accounts of the State of Texas) It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance described in this Bond; and that this Bond has been issued in conversion of and exchange for or replacement of a bond, bonds, or a portion of a bond or bonds of an issue which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, DALLAS, TEXAS Paying Agent/Registrar Dated By. Authorized Representative FORM OF ASSIGNMENT: AssIGNMENT FOR VALUE RECEIVED, the undersigned registered owner of this Bond, or duly authorized representative or attorney thereof, hereby assigns this Bond to (Assignee's Social Security or Taxpayer Identification Number) (print or typewrite Assignee's nanae and address, including zip code) and hereby irrevocably constttutes and appoints attorney to transfer the registration of this Bond on the Paying AgenffRegistrar's Registration Books with full power of substitution in the prermses. Dated: Signature Guaranteed: NOTICE: The signature to this Assignment must be guaranteed by a financial institution that is a member of the Securities Transfer Agents Medallion Program ("STAMP"), the Stock Exchange Medallion Program ("SEMP") orthe New York Stock Exchange, Inc. Medallion Signature Program ("MSP"). Registered Owner NOTE: The signature to this Assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without enlargement or alteration or any change whatsoever. 16 Section 8. (a) TAX LEVY. A special Interest and Sinking Fund (the "Interest and Sinking Fund") is hereby created solely for the benefit of the Bonds, and the Interest and Sinking Fund shall be established and maintained by the Issuer at an official depository bank of the Issuer. The Interest and Sinking Fund shall be kept separate and apart from all other funds and accounts of the Issuer, and shall be used only for paying the interest on and principal of the Bonds. All ad valorem taxes levied and collected for and on ac, count of the Bonds, together with any premium received from the sale of the Bonds, shall be deposited, as collected, to the credit of the Interest and Sinking Fund. During each year while any of the Bonds or interest thereon are outstanding and unpaid, the governing body of the Issuer shall compute and ascertain a rate and amount of ad valorem tax which will be sufficient to raise and produce the money required to pay the interest on the Bonds as such interest becomes due, and to provide and maintain a sinking fund adequate to pay the principal of its Bonds as such principal matures (but never less than 2% of the original principal amount of the Bonds as a sinking fund each year); and said tax shall be based on the latest approved tax rolls of the Issuer, with full allowance being made for tax delinquencies and the cost of tax collection. Said rate and amount of ad valorem tax is hereby levied, and is hereby ordered to be levied, against all taxable property in the Issuer for each year while any of the Bonds or interest thereon are outstanding and unpaid; and said tax shall be assessed and collected each such year and deposited to the credit of the aforesaid Interest and Sinking Fund. Said ad valorem taxes sufficient to provide for the payment of the interest on and principal of the Bonds, as such interest comes due and such principal matures, are hereby pledged for such payment, within the limit prescribed by law. (b) APpROpRiATION. There is hereby appropriated from surplus funds of the Issuer now on hand and lawfully available for such purpose, and shall be deposited into the Interest and Sinking Fund for the Bonds, the amount of money required to pay the principal and interest coming due on the Bonds on August 15, 2005. The money thus appropriated and deposited shall be used for no purpose other than to pay said principal and interest on the Bonds. The appropriate officials of the Issuer are hereby authorized and directed do any and all things necessary or convenient to accomplish said appropriation and deposit. Section 9. DEFEASANCE OF BONDS. (a) Any Bond and the interest thereon shall be deemed to be paid, retired, and no longer outstanding (a "Defeased Bond") within the meaning of this Ordinance, except to the extent provided in subsection (d) of this Section, when payment of the principal of such Bond, plus interest thereon to the due date (whether such due date be by reason of maturity-, upon redemption, or otherwise) either (i) shall have been made or caused to be made in accordance with the terms thereof(including the giving of any required notice of redemption), or (ii) shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying AgenffRegistrar for such payment (1) lawful money of the United States of America sufficient to make such payment or (2) Government Obligations which mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money to provide for such payment, and when proper arrangements have been made by the Issuer with the Paying Agent/Registrar for the payment of its services until all Defeased Bonds shall have become due and payable. At such time as a Bond shall be deemed to be a Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, the ad valorem taxes herein levied and pledged as provided in this Ordinance, and such principal and interest shall be payable solely from such money or Government Obligations. (b) Any moneys so deposited with the Paying Agent/Registrar may at the written direction of the Issuer also be invested in Government Obligations, maturing in the amounts and times as hereinbefore set forth, and all income from such Government Obligations received by the Paying Agent/Registrar which is not required for the payment of the Bonds and interest thereon, with respect to which such money has been so de- posited, shall be turned over to the Issuer, or deposited as directed in writing by the Issuer. 17 (c) The term "Government Obligations" as used in this Section shall mean direct obligations of the United States of America, inchidmg obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, which may be United States Treasury obligations such as its State and Local Government Series, wNch may be in book-entry form. (d) Until all Defeased Bonds shall have become due and payable, the Paying Agent/Registrar shall perform the services of Paying Agent/Registrar for such Defeased Bonds the same as if they had not been defeased, and the Issuer shall make proper arrangements to provide and pay for such services as required by this Ordinance. Section 10. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a) Replacement Bonds. In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new bond of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in the manner hereinafter provided. (b) Application for Replacement Bonds. Application for replacement of damaged, mutilated, lost, stolen, or destroyed Bonds shall be made by the registered owner thereof to the Paying Agent/Registrar. In every case of loss, theft, or destruction of a Bond, the registered owner applying for a replacement bond shall furnish to the Issuer and to the Paying Agent/Registrar such security or indemnity as may be required by them to save each of them harmless from any loss or damage with respect thereto. Also, in every case of loss, theR, or destruction of a Bond, the registered owner shall furnish to the Issuer and the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of such Bond, as the case may be. In every case of damage or mutilation of a Bond, the registered owner shall surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated. (c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event of any such Bond shall have matured, and no default has occurred which is then continuing in the payment of the principal of, redemption premium, if any, or interest on the Bond, the Issuer may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity is furnished as above provided in this Section. (d) Charge for Issuing Replacement Bonds. Prior to the issuance of any replacement bond, the Paying Agent/Registrar shall charge the registered owner of suer Bond with all legal, printing, and other expenses in connection therewith. Every replacement bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the Issuer whether or not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and proportionately with any and all other Bonds duly issued under this Ordinance. (e) Authority for Issuing Replacement Bonds. In accordance with Chapter 1201, Texas Government Code, this Section 10 of this Ordinance shall constitute authority for the issuance of any such replacement bond without necessity of further action by the governing body of the Issuer or any other body or person, and the duty of the replacement of such bonds is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Bonds in the form and manner and with the effect, as provided in Section 6(d) of this Ordinance for Bonds issued in conversion and exchange for other Bonds. 18 Section 11. COVENANTS REGARDING TAX-EXEMPTION. The Issuer covenants to refrain from taking any action which would adversely affect, and to take any action required to ensure, the treatment of the Bonds as obligations described in section 103 of the Code, the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the Issuer covenants as follows: (a) to take any action to assure that no more than 10 percent ofthe proceeds ofthe Bonds (less mounts deposited to a reserve fund, if any) are used for any "private business use", as defined in section 14 l(b)(6) of the Code or, if more than 10 percent of the proceeds are so used, that amounts, whether or not received by the Issuer, with respect to such private business use, do not, under the terms of this Ordinance or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service on the Bonds, in contravention of Section 141(b)(2) of the Code; (b) to take any action to assure that m the event that the "private business use" described in subsection (a) hereof exceeds 5 percent of the proceeds of the Bonds (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent is used for a "private business use" which is "related" and not "disproportionate", within the meaning of section 141(b)(3) of the Code, to the governmental use; (c) to take any action to assure that no amount which is greater than the lesser of $5,000,000, or 5 percent of the proceeds of the Bonds (less amounts deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state or local governmental units, in contravention of Section 14 l(c) of the Code; (d) to refrain from taking any action which would otherwise result in the Bonds being treated as "private activity bonds" within the meaning of Section 141(b) of the Code; (e) to refrain from taking any action that would result in the Bonds being "federally guaranteed" within the meaning of Section 149(b) of the Code; (f) to refrain from using any portion of the proceeds of the Bonds, directly or indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire investment property (as defined in Section 148(b)(2) of the Code) which produces a materially higher yield over the term of the Bonds, other than investment property acquired with -- (1) proceeds of the Bonds invested for a reasonable temporary period of 30 days or less until such proceeds are needed for the purpose for which the Bonds are issued, (2) amounts invested in a bona fide debt service fund, within the meamng of Section 1.148-1 (b) of the Treasury Regulations, and (3) amounts deposited m any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the stated principal amount (or, in the case of a discount, the issue price) of the proceeds of the Bonds; 19 (g) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise contravene the requirements of Section 148 of the Code (relating to arbitrage) and, to the extent applicable, Section 149(d) of the Code (relating to advance refundings); 0t) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of the Bonds) an amount that is at least equal to 90 pement of the "Excess Earnings", within the meaning of section 148(f) of the Code and to pay to the United States of America, not later that 60 days after the Bonds have been paid in full, 100 pement of the amount then required to be paid as a result of Excess Earnings under section 148(f) of the Code; and The Issuer understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of the Bonds. It is the understanding of the Issuer that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event that regulations or rulings are hereat'ter promulgated which modify, or expand provisions of the Code, as applicable to the Bonds, the Issuer will not be required to comply with any covenant contained herein to the extent that such modification or expansion, in the opimon of nationally-recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest on the Bonds under Section 103 ofthe Code. In the event that regulations or rulings are hereafter promulgated which impose additional requirements which are applicable to the Bonds, the Issuer agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally-recognized bond counsel, to preserve the exemption from f~deral income taxation of interest on the Bonds under Section 103 of the Code. In furtherance of such intention, the Issuer hereby authorizes and directs the Mayor of the Issuer to execute any documents, certificates or reports required by the Code and to make such elections, on behalf of the Issuer, which may be permitted by the Code as are consistent with the purpose for the issuance of the Bonds. In order to facilitate compliance with the above covenant (h), a "Rebate Fund" is hereby established by the Issuer for the sole benefit of the United States of America, and such Fund shall not be subject to the claim of any other person, including without limitation the bondholders. The Rebate Fund is established for the additional purpose of compliance with Section 148 of the Code. Section 12. DISPOSITION OF PROJECT. The Issuer covenants that the property constituting the Project originally financed by the Outstanding Obligations will not be sold or otherwise disposed in a transaction resulting in the receipt by the Issuer of cash or other compensation, unless the Issuer obtains an opimon of nationally-recoguized bond counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Bonds. For purposes of the foregoing, the portion of the property comprising personal property and disposed in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. Section 13. CUSTODY, APPROVAL, AND REGISTRATION OF BONDS; BOND COUNSEL'S OPINION, CUSIP NUMBERS, PREAMBLE AND iNSURANCE. The Mayor of the Issuer is hereby author- ized to have control of the Initial Bond issued hereunder and all necessary records and proceedings pertaining to the Initial Bond pending its delivery and its investigation, examination, and approval by the Attorney General of the State of Texas, and its registration by the Comptroller of Public Accounts of the State of Texas. Upon 20 registration of the Initial Bond said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate on the Initial Bond, and the seal of said Comptroller shall be impressed, or placed in facsimile, on the Initial Bond. The approving legal opinion of the Issuer's Bond Counsel and the assigned CUSIP numbers may, at the option of the Issuer, be printed on the Imtial Bond or on any Bonds issued and delivered in conversion of and exchange or replacement of any Bond, but neither shall have any legal effect, and shall be solely for the convenience and information of the registered owners of the Bonds. The preamble to this Ordinance is hereby adopted and made a part hereof for all purposes. If insurance is obtained on any of the Bonds, the Initial Bond and all other Bonds shall bear an appropriate legend conceming insurance as provided by the insurer. Section 14. DTC REGISTRATION. TheBondsinitiallyshallbeissuedanddeliveredinsuchmanner that no physical distribution of the Bonds will be made to the public, and the Depository Trust Company ("DTC"), New York, New York, initially will act as depository for the Bonds. DTC has represented that it is a limited purpose trust company incorporated under the laws of the State of New York, a member of the Federal Reserve System, a "cleating corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered under Section 17A of the federal Securities Exchange Act of 1934, as amended, and the Issuer accepts, but in no way verifies, such representations. The Initial Bond authorized by this Ordinance shall be delivered to and registered in the name of the RBC Dain Rauscher Inc., as Underwriter (the "Purchaser"). However, it is a condition of delivery and sale that the Purchaser, Immediately afier such delivery, shall cause the Paying Agent/Registrar, as provided for in this Ordinance, to cancel said Initial Bond and deliver in exchange therefor a substitute Bond for each maturity of such Initial Bond, with each such substitute Bond to be registered in the name of CEDE & CO., the nominee of DTC, and it shall be the duty of the Paying Agent/Registrar to take such action. It is expected that DTC will hold the Bonds on behalf of the Purchaser and/or the Direct Participants, as defined and described in the Official Statement referred to and approved in Section 16 hereof (the "DTC Participants"). So long as each Bond is registered in the name of CEDE & CO., the Paying Agent/Registrar shall treat and deal with DTC in all respects the same as if it were the actual and beneficial owner thereof It is expected that DTC will maintain a book entry system which will identify beneficial ownership of the Bonds by DTC Participants in integral amounts of $5,000, with transfers of ownership being effected on the records of DTC and the DTC Participants pursuant to rules and regulations established by them, and that the substitute Bonds initially deposited with DTC shall be immobilized and not be further exchanged for substitute Bonds except as hereinafter provided. The Issuer is not responsible or liable for any functions of DTC, will not be responsible for paying any fees or charges with respect to its services, will not be responsible or liable for maintaining, supervising, or reviewing the records of DTC or the DTC Participants, or protecting any interests or rights of the beneficial owners of the Bonds. It shall be the duty of the Purchaser and the DTC Participants to make all arrangements with DTC to establish this book-entry system, the beneficial ownership of the Bonds, and the method of paying the fees and charges of DTC. The Issuer does not represent, nor does it in any way covenant that the initial book-entry system established with DTC will be maintamed in the future. The Issuer reserves the right and option at any time in the future, in its sole discretion, to terminate the DTC (CEDE & CO.) book-entry only registration requirement described above, and to permit the Bonds to be registered in the name of any owner. If the Issuer exercises its right and option to terminate such requirement, it shall give written notice of such termination to the Paying Agent/Registrar and to DTC, and thereafter the Paying Agent/Registrar shall, upon presentation and proper request, register any Bond in any name as provided for in this Ordinance. Notwithstanding the initial establishment of the foregoing book-entry system with DTC, if for any reason any of the originally delivered substitute Bonds is duly filed with the Paying Agent/Registrar with proper request for transfer and substitution, as provided for in this Ordinance, substitute Bonds will be duly delivered as provided in this Ordinance, and there will be no assurance or representation that any book-entry system will be maintained for such Bonds. 21 Section 15. SALE OF INITIAL BONDS. The Initial Bond is hereby sold and shall be delivered to RBC Daln Rausher Inc., as underwriter, in accordance with the Bond Pumhase Agreement dated the date of this meeting and presented to the City Council of the City at this meeting. The Mayor of the Issuer is authorized and directed to execute, on behalf of the Issuer, said Bond Purchase Agreement in the form and substance submitted at this meeting. Section 16. OFFICIAL STATEMENT. An Official Statement dated as of the date of this meeting has been prepared in connection with the sale of the Imtial Bond and the Bonds, in the form and substance submitted at this meeting. Said Official Statement and any supplement or addenda thereto have been and are hereby approved, and their use in the offer and sale of the Bonds is hereby approved. It is further officially found, determined, and declared that the statements and representations contained in said Official Statement are true and correct in all material respects, to the best knowledge and belief of the Issuer. The distribution and usc of the Preliminary Official Statement dated November 24, 2004, prior to the date hereof is hereby ratified and approved. Section 17. REFUNDING OF OUTSTANDING BONDS. That concurrently with the delivery of the Initial Bond the Issuer shall deposit an amount from the proceeds from the sale of the Initial Bond, with JPMorgan Chase Bank, National Association, as Escrow Agent, sufficient, together with other available amounts, to refund all of the Outstanding Bonds in accordance with Chapter 1207, Texas Government Code, as amended. The Issuer hereby authorizes the execution of the Escrow Agreement dated as of December 1, 2004 beV, veen the Escrow Agent and the Issuer. The Mayor of the Issuer is authorized and directed to execute, on behalf of the Issuer, said Escrow Agreement in the form and substance presented to this meeting. It is hereby found and determined that the refunding of the Outstanding Bonds is advisable and necessary in order to restructure the debt service requirements and procedures of the Issuer, and that the debt service requirements on the Bonds will be less than those on the Outstanding Bonds, resulting in a reduction in the amount of principal and interest which otherwise would be payable both on an actual and a present value basis. Section 18 REDEMPTION OF OUTSTANDING BONDS. There is attached hereto as Exhibit A and made a part hereof for all purposes a list and description of certain City of Denton General Obligation Bonds and City of Denton Certificates of Obligation, which bonds and certificates are hereby called for redemption, and shall be redeemed, prior to their scheduled maturities, on the date, at the place, and at the price, set forth therein; the Issuer shall cause the appropriate notices of such redemption to be given in accordance with the requirements of the respective proceedings authorizing the issuance of such bonds; and due provision shall be made by the Issuer in accordance with law for the payment of the redemption price of said bonds by the place of payment (paying agent) for such bonds. Section 19. REASONS FOR REFUNDING. The City Council of the Issuer deems it advisable to refund the Outstanding Bonds in order to achieve debt service savings on its outstanding tax debt; with a gross debt service savings of approximately $715,991 and a present value savings of $477,470. Section 20. INSURANCE. The Issuer approves the insurance of the Bonds by MBIA Insurance Corporation, and the payment of such premium and complies with all of the terms of the insurance cormmtment, which are hereby adopted as part of the Ordinance. Section 21. CONTINUING DISCLOSURE. (a) Annual Reports. (i) The Issuer shall provide annually to each NRMSIR and any SID, within six months after the end of each fiscal year ending in or after 2004, financial information and operating data with respect to the Issuer of the general type included in the final Official Statement authorized by Section 16 of this O~dmance, being the information described in Exhibit B 22 hereto, which Exhibit is attached to and incorporated in this Ordinance as if written word for word heroin. Any financial statements so to be provided shall be (1) prepared in accordance with the accounting principles described in Exhibit B hereto, or such other accounting principles as the Issuer may be required to employ from time to time pursuant to state law or regulation, and (2) audited, if the Issuer conUmssions an audit of such statements and the audit is compleW, xt within the period during which they must be provided. If the audit of such financial statements is not complete within such period, then the Issuer shall provide unaudited financial statements by the required time and will provide audited financial statements for the applicable fiscal year to each NRMSIR and any SID, when and if the audit report on such statements become available. (ii) If the Issuer changes its fiscal year, it will notify each NRMSIR and any SID of the change (and of the date of the new fiscal year end) prior to the next date by which the Issuer otherWise would be required to provide financial information and operating data pursuant to this Section. The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may be included by specific reference to any document (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to each NRMSIR and any SID or filed with the SEC. (b) Material Event Notices. The Issuer shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such event is material within the meaning of the federal securities laws: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults; 3. Unscheduled draws on debt service reserves reflecting financial difficulties; 4. Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit or liquidity providers, or their failure to perform; 6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds; 7. Modifications to rights of holders of the Bonds; 8. Bond calls; 9. Defeasances; 10. Release, substitution, or sale of property securing repayment of the Bonds; and 11. Rating changes. The Issuer shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any failure by the Issuer to provide financial information or operating data in accordance with subsection (a) of this Section by the time required by such subsection. 23 (c) Limitations, Disclaimers, and Amendments. (i) The Issuer shall be obligated to observe and perform the covenants specified in this Section for so long as, but only for so long as, the Issuer remains an "obligated person" with respect to the Bonds within the meaning of the Rule, except that the Issuer in any event will give the notice required by Subsection (b) hereof of any Bond calls and defeasance that cause the Issuer to no longer be such an "obligated person". (ii) The previsions of this Section are for the sole benefit of the registered owners and beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The Issuer undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the Issuer's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Section or otherwise, except as expressly provided herein. The Issuer does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Bonds at any future date. (iii) UNDER NO CIRCUMSTANCES SHALL THE ISSUER, ITS OFFICERS, AGENTS AND EMPLOYEES, BE LIABLE TO THE REGISTERED OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE ISSUER, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE. (iv) No default by the Issuer in observing or performing its obligations under this Section shall comprise a breach of or default under the Ordinance for purposes of any other provision of this Ordinance. Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the Issuer under federal and state securities laws. (v) The provisions of this Section may be amended by the Issuer from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the Issuer, but only if(l) the provisions of this Section, as so amended, would have pernUtted an underwriter to purchase or sell Bonds in the primary offering of the Bonds in compliance with the Rule, taking into account any amendments or interpretations of the Rule since such offering as well as such changed circumstances and (2) either (a) the registered owners of a majority in aggregate principal amount (or any greater amount required by any other provision of this Ordinance that authorizes such an amendment) of the outstanding Bonds consent to such amendment or {b) a person that is unaffiliated with the Issuer (such as nationally recognized bond counsel) determined that such amendment will not materially impair the interest of the registered owners and beneficial owners of the Bonds. If the Issuer so amends the provisions of this Section, it shall include with any amended financial information or operating data next provided in accordance with subsection (a) of this Section an explanation, in narrative form, of the reason for the amendment and of the impact of any change in the type of financial information or operating data so provided. The Issuer may also amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provision of the Rule or a court of final jurisdiction enters judgment that such provisions of the Rule are invalid, but only if and to the extent that the provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling Bonds in the primary offering of the Bonds. 24 (d) Definitions. As used in this Section, the following terms have the meanings ascribedto such terms below: "MSRB" means the Municipal Securities Rulemaking Board. "NRMSIR" means each person whom the SEC or its staffhas determined to be a nationally recognized municipal securities information repository within the meaning of the Rule from time to time. "Rule" means SEC Rule 15c2-12, as amended from time to time. "SEC" means the United States Securities and Exchange ComnUssion. "SID" means any person designated by the State of Texas or an authorized department, officer, or agency thereof as, and determined by the SEC or its staff to be, a state information depository within the meaning of the Rule from time to time. Section 22. REFORMATION OF PRIOR ORDINANCES. Due to clerical errors, the redemption provisions of the ordinances authorizmg the Series 1995 Certificates of Obligation, the Series 2000 Bonds and the Series 2000 Certificates of Obligation (the "Prior Obligations") are inconsistent with the redemption provisions shown in the Official Statements relating to such Prior Obligations. Because the Prior Obligations were sold to investors pursuant to competitive bids at prices calculated and set based on the redemption provisions contained in such Official Statements, and such redemption provisions continue to be reflected in the information shown for such Prior Obligations by Bloomberg LP and other market information services, the ordinances for the Prior Obligations are hereby reformed as follows: (a) the ordinance adopted on May 7, 1995 relating to the Series 1995 Certificates of Obligation is reformed by adding to the Form of Substitute Certificate the following paragraph: "ON FEBRUARY 15, 2005, or on any date whatsoever thereafter, the Certificates of this Series may be redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived from an5, available and lawful soume, as a whole, or in part, and, if in part, the particular Certificates, or portions thereof, to be redeemed shall be selected and designated by the Issuer (provided that a portion of a Certificate may be redeemed only in an integral multiple of $5,000), at the redemption price of the par or principal amount thereof, plus accrued interest to the date fixed for redemption". (b) the ordinance adopted on May 2, 2000 relating to the Series 2000 Bonds is reformed by substituting the following paragraph in the Form of Substitute Bond: "ON FEBRUARY 15, 2009, or on any date whatsoever thereafter, the Bonds of this Series may be redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived from any available and lawful source, as a whole, or in part, and, if in part, the particular Bonds, or portions thereof, to be redeemed shall be selected and designated by the Issuer (provided that a portion ora Bond may be redeemed only in an integral multiple of $5,000), at the redemption price of the par or principal amount thereof, plus accrued interest to the date fixed for redemption". 25 (c) the ordinance adopted on May 2, 2000 relatmg to the Series 2000 Certificates of Obligation is reformed by substituting the folloWing paragraph in the Form of Substitute Certificate: "ON FEBRUARY 15, 2009, or on any date whatsoever thereafter, the Certificates of this Series may be redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived from any available and lawful source, as a whole, or in part, and, if in part, the particular Certificates, or portions thereof, to be redeemed shall be selected and designated by the Issuer (provided that a portion of a Certificate may be redeemed only in an integral multiple of $5,000), at the redemption price of the par or principal amount thereof, plus accrued interest to the date fixed for redemption". Such reformation corrects the clerical errors in such ordinances and reflects the correct redemption provisions for the Prior Obligations as pumhased by the holders of the Prior Obligations. Section 23. FURTHER PROCEDURES. The Mayor of the Issuer, the City Secretary of the Issuer, and all other officers, employees, and agents of the Issuer, and each of them, shall be and they are hereby expressly authorized, empowered, and directed from time to time and at any time to do and perform all such acts and things and to execute, acknowledge, and deliver in the name and under the corporate seal and on behalf of the Issuer all such instruments, whether or not heroin mentioned, as may be necessary or desirable in order to carry out the terms and provisions of this Bond Ordinance, the Bonds, the sale of the Bonds, the Bond Purchase Agreement, the Escrow Agreement and the Official Statement; and the Assistant City Manager/Fiscal and Municipal Services of the City shall cause the expenses of issuance of the Bonds to be paid from the proceeds of sale of the Initial Bond. In case any officer whose signature shall appear on any Bond shall cease to be such officer before the delivery of such Bond, such signature shall nevertheless be valid and sufficient for all purposes the same as if such officer had remained in office until such delivery. Section 24. OPEN MEETINGS. 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 the provisions of the Texas Open Meetings, Law, Tex. Gov't. Code, Chapter 551, as amended. Section 25. EFFECTIVE DATE. This Ordinance shall become effective immediately upon its passage and approval. 26 PASSED AND APPROVED this the 7th day of December, 2004. ATTEST: Jenmfer Walters, City Secretary By:. APPROVED AS TO LEGAL FORM: Herbert L. Prouty, City Attomey Euline Brock, Mayor By: NOTICE OF PRIOR REDEMPTION THE CITY OF DENTON, TEXAS NOTICE IS HEREBY GIVEN that the City of Denton, Texas has called for redemption the outstanding Certificates or Bonds of the City described as follows: THE CITY OF DENTON (TEXAS) CERTIFICATES OF OBLIGATION, SEPdES 1996, dated May 1, 1996, scheduled to mature on February 15, 2007 through Febrna~ 15, 2010, aggregating $720,000 in principal amount (and being all of the outstanding certificates of said Series scheduled to mature on and after February 15, 2007). Call date: February 15, 2006; redeemable at a redemption price of par plus accrued interest at tbe principal corporate offices of JPMurgan Chase Bank, National Association, Dallas, Texas, only upon presentation by the bearer thereof, plus all unmatured interest coupons appertaining thereto. THE CITY OF DENTON (TEXAS) GENERAL OBLIGATION BONDS, SE1LIES 1996, dated May 1, 1996, scheduled to mature on February 15, 2007 through February 15, 2012, inclusive, aggregating $865,000 in principal amount (and being all of the outstanding bonds of said Series scheduled to mature on and after February 15, 2007). Call date: February 15, 2006; redeemable at a redemption price of par plus accrued interest at the principal corporate offices of JPMurgan Chase Bank, National Association, Dallas, Texas, only upon presentation by the bearer thereof, plus ali unmatured interest coupons appertaining thereto. THE CITY OF DENTON (TEXAS) GENERAL OBLIGATION BONDS, SER1ES 1997, dated April 1, 1997, scheduled to mature on February. 15, 2009 through Febraary 15, 2017, inclusive, aggregating $2,865,000 in principal an~oant ( and being all of the outstanding bonds of said Series scheduled to mature on and after February 15, 2009). Call date: February 15, 2007; redeemable at a redemption price of par plus accraed interest at the principal Corporate offices of JPMorgan Chase Bank, National Association, Dallas, Texas, only upon presentation by the bearer thereof, plus ali unmatured interest coupons appertaining thereto. THE CITY OF DENTON (TEXAS) CERTIFICATES OF OBLIGATION, SERIES 2000, dated May 1, 2000, scheduled to ma~are on Februm~ 15, 2012 through February 15, 2018 and including February 15, 2020, aggregating $1,395,000 in principal amount (and being all of the outstanding certificates of said Series scheduled to mature on and after February. 15, 2012). Call date: February 15, 2009; redeemable at a redemption price of par plus accrued interest at the principal corporate offices of JPMorgan Chase Bank, National Association, Dallas, Texas, only upon presentation by the bearer thereof, plus all unmatured interest coupons appertaining thereto. THE CITY OF DENTON (TEXAS) GENERAL OBLIGATION BONDS, SERIES 2000, dated May 1, 2000, scheduled to mature on February 15, 2012 through February 15, 2018 and including February 15, 2020, aggregating $1,665,000 in principal amount (and being all of the outstanding bonds of said Series scheduled to mature on and after February 15, 2012 ). Call date: February 15, 2009; redeemable at a redemption price of par plus accrued interest at the principal corporate offices of JPMorgan Chase Bank, National Association, Dallas, Texas, only upon presentation by the bearer thereof, plus all unmatured interest coupons appertaining thereto. If moneys sufficient for the payment of such redemption price are held by or on bebalf of the respective paying agent, the described Bonds shall become due and payable on the redemption date specified, and the interest thereon shall cease to accrue from and after the redemption date. In compliance with section 3406 of the Internal Revenue Code of 1986, payors making certain payments due on debt securities may be obligated to deduct and withhold a tax from the remittance to any payee who has failed to provide such payor with a valid taxpayer identification number. To avoid the in,position of the withholding of tax, such payees shunld submit a taxpayer identification number when surrendering the bonds for redemption. NOTICE IS FURTHER GIVEN that all Bonds should be submitted to the following address: JPMorgan Chase Bank, National Association 2001 Bryan Street, 10th Floor Dallas, Texas 75201 Attn: Brad Hounsel JPMORGAN CHASE BANK, NATIONAL ASSOCIATION NOTICE OF PRIOR REDEMPTION THE CITY OF DENTON, TEXAS NOTICE IS HEREBY GIVEN that the City of Denton, Texas has called for redemption the outstanding Certificates or Bonds of the City described as follows: THE CITY OF DENTON (TEXAS) CERTIFICATES OF OBLIGATION, SERIES 1995, dated February 15, 1995, scheduled to mature on February 15, 2006 through Februmy 15, 2015. inclusive, aggregating $1.350,000 in principal amount (and being all of the outstanding certificates of said Series scheduled to mature on and Mler February. 15, 2006). Call date: February 15, 2005; redeemable at a redemption price of par plus accrued interest at the principal corporate offices of The Bank of New York Trust Company, N.A., Jacksonville, Florida, only upon presentation by the bearer thereof, plus all unmatured interest coupons appertaining thereto. THE CITY OF DENTON (TEXAS) GENERAL OBLIGATION BONDS, SERIES 1995, dated February. 15, 1995, scheduled to mature on February 15, 2006 through February 15, 2008 and including February 15~ 2015, aggregating $350,000 in principal amount (and being all of the outstanding bonds of said Series scheduled to mature on and after February 15, 2006). Call date: February 15, 2005; redeemable at a redemption price of par plus accrued interest at the principal corporate offices of The Bank of New York Trust Company, N.A., Jacksonville, Florida, only upon presentation by the bearer thereof, plus all unmatured interest coupons appertaining thereto. If moneys sufficient for the payment of such redemption price are held by or on behalf of the respective paying agent, the described Bonds shall become due and payable on the redemption date specified, and the interest thereon shall cease to accrue from and after the redemption date. In compliance with section 3406 of the Internal Revenue Code of 1986, payors making certain payments due on debt securities ma), be obligated to deduct and withhold a tax from the remittance to any payee who has failed to provide such payor with a valid taxpayer identification number. To avoid the imposition of the withholding of tax, such payees should submit a taxpayer identification number when surrendering the bonds for redemption. NOTICE IS FURTHER GIVEN that all Bonds should be submitted to the following address: The Bank of New York Trust Company, N.A. 111 Sanders Creek Parkway East Syracuse, New York 13057 Attn: Helen Scanlon THE BANK OF NEW YORK TRUST COMPANY, N.A. EXHIBIT B DESCRIPTION OF ANNUAL FINANCIAL INFORMATION The following information is referred to in Section 21 of this Ordinance: Annual Financial Statements and Operating Data The financial information and operating data with respect to the Issuer to be provided annually in accordance with such Section are as specified (and included in the Appendix or under the tables of thc Official Statement referred to) below: Tables numbered I through 15, inclusive, under the captions "Tax Information", "Debt Service Requirements" and "Financial Information" in the Official Statement. Appendix B in the Official Statement. Accounting Principles The accounting principles referred to in such Section are the accounting principles described in the notes to the financial statements referred to in the paragraph above. B-1