Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
March 05, 2013 Agenda
AGENDA CITY OF DENTON CITY COUNCIL March 5, 2013 After determining that a quorum is present, the City Council of the City of Denton, Texas will convene in a Work Session on Tuesday, March 5, 2013 at 3:30 p.m. in the Council Work Session Room at City Hall, 215 E. McKinney Street, Denton, Texas at which the following items will be considered: WORK SESSION 1. Citizen Comments on Consent Agenda Items This section of the agenda allows citizens to speak on Consent Agenda Items only. Each speaker will be given a total of three (3) minutes to address any items he/she wishes that are listed on the Consent Agenda. A Request to Speak Card should be completed and returned to the City Secretary before Council considers this item. 2. Requests for clarification of agenda items listed on the agenda for March 5, 2013. 3. Receive a report, hold a discussion and give staff direction, regarding the Denton Plan Update. 4. Receive a report, hold a discussion, and give staff direction regarding the FY 2011-12 Comprehensive Annual Financial Report and annual audit. 5. Receive a report, hold a discussion and give staff direction regarding the request for City sponsorship of the Third Annual Susan G. Komen for the Cure, North Texas, to be held in Denton on September 28, 2013, in South Lakes Park and the run routed through surrounding neighborhoods. Following the completion of the Work Session, the City Council will convene in a Closed Meeting to consider specific items when these items are listed below under the Closed Meeting section of this agenda. The City Council reserves the right to adjourn into a Closed Meeting on any item on its Open Meeting agenda consistent with Chapter 551 of the Texas Government Code, as amended, or as otherwise allowed by law. CLOSED MEETING 1.Closed Meeting: A. Deliberation regarding Personnel Matters – Under Texas Government Code Section 551.074. 1. Deliberate and discuss the evaluation, duties, discipline, procedures, and contracts of the Municipal Court Judge, City Attorney, City Manager, and Internal Auditor. ANY FINAL ACTION, DECISION, OR VOTE ON A MATTER DELIBERATED IN A CLOSED MEETING WILL ONLY BE TAKEN IN AN OPEN MEETING THAT IS HELD IN COMPLIANCE WITH TEXAS GOVERNMENT CODE, CHAPTER 551, EXCEPT TO THE EXTENT SUCH FINAL ACTION, DECISION, OR VOTE IS TAKEN IN THE CLOSED City of Denton City Council Agenda March 5, 2013 Page 2 MEETING IN ACCORDANCE WITH THE PROVISIONS OF §551.086 OF THE TEXAS GOVERNMENT CODE (THE ‘PUBLIC POWER EXCEPTION’). THE CITY COUNCIL RESERVES THE RIGHT TO ADJOURN INTO A CLOSED MEETING OR EXECUTIVE SESSION AS AUTHORIZED BY TEX. GOV’T. CODE, §551.001, ET SEQ. (THE TEXAS OPEN MEETINGS ACT) ON ANY ITEM ON ITS OPEN MEETING AGENDA OR TO RECONVENE IN A CONTINUATION OF THE CLOSED MEETING ON THE CLOSED MEETING ITEMS NOTED ABOVE, IN ACCORDANCE WITH THE TEXAS OPEN MEETINGS ACT, INCLUDING, WITHOUT LIMITATION §551.071-551.086 OF THE TEXAS OPEN MEETINGS ACT. Regular Meeting of the City of Denton City Council at 6:30 p.m. in the Council Chambers at City Hall, 215 E. McKinney Street, Denton, Texas at which the following items will be considered: REGULAR MEETING 1. PLEDGE OF ALLEGIANCE A. U.S. Flag B. Texas Flag “Honor the Texas Flag – I pledge allegiance to thee, Texas, one state under God, one and indivisible.” 2. PROCLAMATIONS/PRESENTATIONS A.Proclamations/Awards 1. Denton Family Unity Week 2.Severe Weather Awareness Week 3. CITIZEN REPORTS A. Review of procedures for addressing the City Council. B. Receive citizen reports from the following: 1. Ericca Cordier regarding good citizenship. 4. CONSENT AGENDA Each of these items is recommended by the Staff and approval thereof will be strictly on the basis of the Staff recommendations. Approval of the Consent Agenda authorizes the City Manager or his designee to implement each item in accordance with the Staff recommendations. The City Council has received background information and has had an opportunity to raise questions regarding these items prior to consideration. Listed below are bids, purchase orders, contracts, and other items to be approved under the Consent Agenda (Agenda Items A – F). This listing is provided on the Consent Agenda to allow Council Members to discuss or withdraw an item prior to approval of the Consent Agenda. If no items are pulled, Consent Agenda Items A – F below will be approved with one motion. If items are pulled for separate discussion, they may be considered as the first items following approval of the Consent Agenda. City of Denton City Council Agenda March 5, 2013 Page 3 A.Consider approval of the minutes of: January 7, 2013 January 8, 2013 January 14, 2012 January 29, 2013 B.Consider adoption of an ordinance accepting proposals and awarding a public works contract for the replacement of two 10-inch Sewer Crossings as part of the US Hwy 380 Widening Project; providing for the expenditure of funds therefor; and providing an effective date (Bid 5131–awarded to Wilson Contractor Services, LLC in the amount of $202,509.40). The Public Utilities Board recommends approval (5-0). C.Consider adoption of an ordinance of the City of Denton, Texas authorizing the City Manager or his designee to execute on behalf of the city a Deed Without Warranty, from the City of Denton, Texas, as grantor, to Texas SB Holdings, LLC, as grantee, conveying a 0.09 acre tract located in the Eugene Puchalski Survey, Abstract Number 996, City of Denton, Denton County, Texas, being generally located at the northeast intersection of West Hickory Street and North Texas Boulevard (the “Land”); reserving a perpetual Sanitary Sewer Easement in, along, upon, under, over and across a portion of said land; and providing for an effective date. D.Consider adoption of an ordinance approving and authorizing the concession to Fair 2000, Inc. to sell alcoholic beverages at designated locations during the 2013, 2014 and 2015 Denton Air Fair, Inc. Air show events, upon certain conditions; and providing an effective date. E.Consider a request for an exception to the Noise Ordinance for the purpose of the DentonRadio on the Square Music Stage sponsored by the Denton Convention and Visitors Bureau (CVB), DentonRadio.com, and the Denton County Office of History and Culture in collaboration with the 35 Denton Festival. The event will be held on the Denton County Courthouse lawn from Thursday, March 7 through Sunday, March 10, from noon to 11:00 p.m. The exception is specifically requested to increase sound levels from 70 to 75 decibels and for amplified sound on Sunday. Staff recommends approval of the request. F.Consider adoption of an ordinance of the City of Denton, Texas, delegating certain authority to the City Manager, or his designee, to make offers and to accept counter offers to purchase eligible real property interests necessary for City of Denton public works and electric utility capital improvement projects; authorizing the City Manager, or his designee, to execute contracts to purchase said real property interests for and on behalf of the City of Denton; authorizing the City Manager, or his designee, to expend funds in accordance with the terms of said contracts; providing a severability clause; and providing an effective date. City of Denton City Council Agenda March 5, 2013 Page 4 5. ITEMS FOR INDIVIDUAL CONSIDERATION A.Consider adoption of an ordinance directing the publication of Notice of Intention to issue $46,770,000 in principal amount of Certificates of Obligation of the City of Denton for Waterworks and Sewer System and Electric System projects; and providing for an effective date. The Audit/Finance Committee recommends approval (2-0). B.Consider adoption of an ordinance directing the publication of Notice of Intention to issue $21,495,000 in principal amount of Certificates of Obligation of the City of Denton for General Government and Solid Waste projects; and providing for an effective date. The Audit/Finance Committee recommends approval (2-0). C.Consider approval of a resolution creating an Ad-hoc Citizen Advisory Committee to advise the City Council on the development of: goals; strategies; objectives; and growth scenarios for the Denton Plan Update and the composition of such a citizen committee and providing an effective date. D.Consider nominations/appointments to the City’s boards, commissions and/or committees: 1)Zoning Board of Adjustment 2)Citizens Advisory Committee for the Comprehensive Plan E.Hold the first of two (2) readings to consider the adoption of an ordinance annexing an area of land to the City of Denton, Texas, generally identified as DH- 12 of approximately 1,154 acres (less those parcels identified in Exhibit “C”) located south of E. University Drive, east of N. Mayhill Road, north and south of Blagg Road, north and south of Mills Road, and east and west of S. Trinity Road, and more specifically identified in Exhibit “A” attached hereto, which area is adjacent to and abuts the existing city limits of the City of Denton, Texas, and which contains areas of land which are to be annexed pursuant to the City’s 3- Year Annexation Plan; excluding properties within DH-12 subject to non- annexation agreements for agricultural, wildlife management or timberland use from the annexation; providing for correction of the City map to include this annexed area; providing a savings clause; and providing an effective date. (First of two readings.) F.Hold the first of two (2) readings to consider the adoption of an ordinance annexing an area of land to the City of Denton, Texas, generally identified as DH- 9 of approximately 298 acres (less those parcels identified in Exhibit “C”) located north of Pockrus Page Road, north, south and northeast of Edwards Road, and more specifically identified in Exhibit “A” attached hereto, which area is adjacent to and abuts the existing City limits of the City of Denton, Texas, and which contains areas of land which are to be annexed pursuant to the City’s 3-Year Annexation Plan; excluding properties within DH-9 subject to non-annexation agreements for agricultural, wildlife management or timberland use from the annexation; providing for correction of the City map to include this annexed area; providing a savings clause; and providing an effective date. (First of two readings.) City of Denton City Council Agenda March 5, 2013 Page 5 G.Hold the first of two (2) readings to consider the adoption of an ordinance annexing an area of land to the City of Denton, Texas, generally identified as DH- 7 of approximately 143 acres (less those parcels identified in Exhibit “C”) located on the east and north sides of Teasley Lane, south of Teasley Harbor subdivision and west of Southlake Drive, and more specifically identified in Exhibit “A” attached hereto, which area is adjacent to and abuts the existing City limits of the City of Denton, Texas, and which contains areas of land to be annexed pursuant to the City’s 3-Year Annexation Plan; excluding properties within DH-7 subject to non-annexation agreements for agricultural, wildlife management or timberland use from the annexation; providing for correction of the City map to include this annexed area; providing a savings clause; and providing an effective date. (First of two readings.) 6. CONCLUDING ITEMS A. Under Section 551.042 of the Texas Open Meetings Act, respond to inquiries from the City Council or the public with specific factual information or recitation of policy, or accept a proposal to place the matter on the agenda for an upcoming meeting AND Under Section 551.0415 of the Texas Open Meetings Act, provide reports about items of community interest regarding which no action will be taken, to include: expressions of thanks, congratulations, or condolence; information regarding holiday schedules; an honorary or salutary recognition of a public official, public employee, or other citizen; a reminder about an upcoming event organized or sponsored by the governing body; information regarding a social, ceremonial, or community event organized or sponsored by an entity other than the governing body that was attended or is scheduled to be attended by a member of the governing body or an official or employee of the municipality; or an announcement involving an imminent threat to the public health and safety of people in the municipality that has arisen after the posting of the agenda. B. Possible Continuation of Closed Meeting under Sections 551.071-551.086 of the Texas Open Meetings Act. CERTIFICATE I certify that the above notice of meeting was posted on the bulletin board at the City Hall of the City of Denton, Texas, on the ________day of ___________________, 2013 at ________o'clock (a.m.) (p.m.) __________________________________________ CITYSECRETARY NOTE: THECITYOFDENTONCITYCOUNCILCHAMBERSISACCESSIBLEINACCORDANCE WITHTHEAMERICANSWITHDISABILITIESACT.THECITYWILLPROVIDESIGNLANGUAGE INTERPRETERSFORTHEHEARINGIMPAIREDIFREQUESTEDATLEAST48HOURSINADVANCEOF THESCHEDULEDMEETING.PLEASECALLTHECITYSECRETARY'SOFFICEAT349-8309ORUSE TELECOMMUNICATIONSDEVICESFORTHEDEAF(TDD)BYCALLING1-800-RELAY-TXSOTHATA SIGNLANGUAGEINTERPRETERCANBESCHEDULEDTHROUGHTHECITYSECRETARY’SOFFICE. AGENDA INFORMATION SHEET AGENDA DATE: March 5, 2013 DEPARTMENT: Planning & Development ACM: John Cabrales SUBJECT Receive a report, hold a discussion, and give staff direction regarding the Denton Plan Update. BACKGROUND In early 2012, the City hired Wallace, Roberts & Todd (WRT) to assist staff in preparing an update to the Comprehensive Plan (Denton Plan). The Denton Plan update is currently concluding Phase 2 of the approximate 18-month process, which includes stakeholder engagement hosting community forums, and conducting a community survey. WRT is also in the process of assessing the current Denton Plan, identifying issues, conducting an existing condition inventory, performing trend analysis and continuing to meet with stakeholders to understand community dynamics and values as they relate to a vision for Denton. Throughout the Denton Plan update process, the City has been promoting community feedback and input through a variety of public outreach methods. The purpose of this phase is to collect and gather input from the public and all stakeholders in this process on various themes. In order to reach out to the community, staff has created a dedicated website, DentonPlan2030.com, a Facebook account, and twitter account. The City has also hosted several informal community meetings and mobile meetings to inform and update residents. The City is also hosting several conversations on EngageDenton.com. Other public outreach efforts includes: direct emails, flyers, posters, press releases, providing information through DTV and through the Denton Record-Chronicle, interviews with NBC 5, and communicating through local blogs. We have six major communication avenues: DentonPlan2030.comEngageDenton.com FacebookProject email (information@dentonplan2030.com) Twitter DTV’s YouTube Channel The objective of this public outreach is to engage community members throughout this process and receive as much input and feedback as feasible. The following are events that the City has hosted so far in obtaining feedback and input: Agenda Information Sheet March 5, 2013 Page 2 Kickoff Open House On August 9, 2012, the City hosted this event for the Denton Plan update. The Kickoff Open House was an introduction to the Denton Plan update process and a venue for the community to get acquainted with the project team. The event was held at the Center for the Visual Arts where over 160 citizens came out and participated. Community Stakeholders Interviewscommunity stakeholders . WRT interviewed that included the business, neighborhood, and institutional community. Community stakeholders included top 10 private employers, Chambers of Commerce, UNT, and TWU. Community Forum 1 – November Series . On November 1 – 3, 2012, the City hosted the first Community Forum. This forum was held over three days, at three different locations and times to accommodate as many citizens as possible. The meetings were held at the Advanced Technology Complex, MLK Jr. Recreation Center, and at John Guyer High School. The forum provided a venue for the community to voice their opinions about Denton’s strengths and weaknesses, as well as the City’s challenges and opportunities for the future. A total of approximately 100 citizens came out to participate in this event however, due to the lower than anticipated turnout and the expressed feedback that community members were interested but could not attend because of prior engagements, staff initiated a February Series Community Forum 1 – February Series . On February 7 and February 9, 2013 staff held an additional Community Forum 1 series. Referred to as the February Series, the Forum was held at two different locations, days and times. Meetings were held at the Advanced Technology Complex and at John Guyer High School. A total of approximately 60 citizens came out to participate at this event. Community Forum 1 – Spanish Series . In an attempt to engage our Spanish-speaking community in the Denton Plan update process, the City hosted a forum with Spanish- speaking facilitators and recorders on February 2, 2013 to discuss Denton’s strengths, weaknesses, challenges, and opportunities for the future. The Community Forum 1 – Spanish Series was held at Calhoun Middle School where approximately 16 citizens came out to participate at this event. Community Forum 1 – UNTand TWU . Due to a the interest in hosting a Community Forum expressed by UNT and TWU stakeholders, staff has scheduled a series of Forums with each university. Two Community Forums are scheduled at UNT on March 21, 2013 and on March 27, 2013. One Community Forum is scheduled at TWU on April 1, 2013. To update the Denton citizens on the Denton Plan update process and to promote upcoming events, staff has implemented the following additional public outreach efforts: Agenda Information Sheet March 5, 2013 Page 3 Technical Advisory Committee .Staff is working closely with other City departments utilizing an internal group, called the Technical Advisory Committee (TAC). The TAC group meets on a regular basis to discuss and receive an update on the progress of the Denton Plan update. The TAC group also provides input on specific departmental information necessary in staff’s and WRT’s analysis. The committee members also act as ambassadors within the departments and within their community. Board and Commission . Staff is also working closely with Board and Commission staff liaisons to keep these committees apprised of the progress and involve them in the review of information we receive in their respective area of interest. Staff liaisons will continue to update their respective Boards and Commissions throughout the Denton Plan update process with a goal to engage the members of the Boards and Commissions to participate and to also act as an ambassador within their community. Mobile Meetings . Over the last couple of months, staff has presented at various group meetings throughout the community. The goal of the mobile meetings is to provide general information about the current Denton Plan and explain the update process. The mobile meetings are also an opportunity for staff to gather public input and to promote upcoming events. Mobile meetings were coordinated with the following groups: Robson Ranch Neighborhood Master Naturalists oo Denia Neighborhood Airport Road Area oo Southeast Denton Neighborhood Denton Bike Group oo UNT TWU oo Bonnie Brae-Ector Street Township II/Denton Watch Group oo NeighborhoodNeighborhood Braly Heights Neighborhood Avondale Park Area Neighborhood oo West Oak Area and Oak-Hickory Hispanic, Black, and Main oo Historic Districts Neighborhood Chambers Oakmont Neighborhood Forrestridge Neighborhood oo Bell Avenue Conservation District League of Women Voters oo At each of the mobile meetings an average of 15 citizens attended and participated. However, at the two mobile meetings at the universities there were significantly more attendees. At UNT there were close to 100 attendees and at TWU there were approximately 30 attendees. Denton Plan Ambassadors . By communicating with community members and through the CAC application process, it became clear that the sheer volume of Denton stakeholders and citizens who want to take a leadership role in the Denton Plan update could not be accommodated by the CAC. Although the CAC will still provide feedback for the update at key decision points, staff has created an additional venue for citizens to engage in a leadership role in Denton Plan 2030 through becoming a Denton Plan Agenda Information Sheet March 5, 2013 Page 4 Ambassador (DPA). DPA’s will have the opportunity to mesh seamlessly with the CAC as engagement messengers and representatives to and from the community. The role of DPA’s will be to discuss the current status of the comprehensive plan update, bring feedback to the group and staff for discussion, and take information to the community to keep them engaged and informed. The Denton Plan Ambassadors is also a format that Denton’s youth can participate in. The Denton Plan Ambassador program was launched on February 1, 2013. Community Conversation Kit . The Community ConversationKit is an extension of Community Forum 1: Issues and Aspirations. It’s a do-it-yourself mini-forum that asks the same questions presented to participants of the community forum. The Kit is a pre- packaged set of materials for conducting the meeting. The Kit allows volunteers to host a mini-forum in their home, community center, school, church, business, or other venue. These conversations give church groups, civic organizations, businesses, neighbors, students, etc. the chance to have their voices heard. All that is needed are individuals who are willing to print materials, conduct the meetings and send us their reports. The results will then be forwarded to the project team and included with the responses already collected. The Community ConversationKit was made available to citizens on November 29, 2012. Staff has found that the community forum model of outreach has not produced the level of participation necessary for collecting feedback. Although efficient, it has not been highly successful in gathering sufficient data that accurately represents community values and aspirations. However, the TAC, meeting with Boards and Commissions, presenting at Mobile Meetings, and implementing the Denton Plan Ambassador program and the Community Conversation Kit has received a far greater response. This has resulted in staff scheduling additional forums and extending Phase 1 for an additional 45 days. Staff will continue to update the City Council on the progress of the Denton Plan update. The next Phase is drafting the Vision Statement and Policy Framework. The consultants will be drafting a community Vision Statement based on public input received that articulates the community’s goals and aspirations. The Vision Statement will guide the development of each Element of the Denton Plan. PRIOR ACTION/REVIEW 1.August 7, 2012 – City Council Work Session 2.October 12, 2012 – Community on Citizen Engagement 3.December 11, 2012 – City Council Work Session 4.January 15, 2013 – Community on Citizen Engagement AgendaIInformation Sheet March 5,, 2013 Page 5 EXHIBIITS 1.Commmunity Foruum 1 – Noveember Seriess Emerging TThemes 2.Brochhure 3.Openn House Flyeers 4.Commmunity Foruum 1 Flyers 5.Informmational CoommunityMMeeting Flyerr Respectffully Submittted by: John Cabbrales, Assistannt City Manaager Preparedd by: Brian Loockley, AICPP Director,, Planning annd Developmment Exhibit 1 Community Forum 1 – November Series Emerging Themes Strengths – Common themes that emerged from the list of top strengths include: Education and the universities o Sense of community o Small and local business culture o Vibrant downtown o Arts and music – creative culture o Historic character o Diverse neighborhoods o Quality parks and recreation o Transportation access (A-train, I-35) o Denton Municipal Airport o Natural beauty and the environment o Weaknesses – Common themes that emerged from the list of top weaknesses include: Traffic congestion / traffic safety o Street and sidewalk disrepair o Lack of sidewalks o Lack of incentives for infill development o Parking problems (downtown, university areas) o Inconsistent/restrictive development regulations and permitting o Lack of diverse housing opportunities o Conflicts between neighborhoods and universities o Lack of planning for gas wells o Unattractive gateways / streetscapes o Lack of tree preservation o Poor air quality o Low frequency transit service o Not retaining graduates o Tax exempt status of universities o Lack of community involvement o Challenges – Common themes that emerged from the list of top challenges include: Keeping pace with exponential growth (infrastructure, transportation, utilities, o schools, housing, social services) Keeping people in Denton o Threats/barriers to small businesses (codes, taxes, big box) o University expansion into neighborhoods o Maintaining quality education o Staying competitive in the region (jobs, business, skilled workers) o Aging infrastructure o Attracting diverse housing options o Maintaining historic/cultural identity with new growth o Exhibit 1 Community Forum 1 – November Series Emerging Themes Proliferation of gas wells o Lack of connectivity (roads, sidewalks, transit, bike lanes/trails) o Lack of government transparency / disconnect between City leaders and citizens o Opportunities – Common themes that emerged from the list of top opportunities include: Hub of medical and educational facilities o Increase diversity/mix of employment opportunities o Expansion of the rail system o Talents of university graduates o More unique shopping opportunities o Provide resources and venues for artists and musicians o Expand and improve special events o Capitalize on economic development downtown o Nurturing and involving the community/neighborhoods o Encourage entrepreneurship / build on the entrepreneurial spirit o Great regional access o Denton Municipal Airport – opportunity for economic growth o Maintain local character o Improve educational attainment o Increase sustainability programs o Expand economic/tech partnership (Discovery Park) o Improve mobility/transit connections (downtown/universities) o Exhibit 2 Exhibit2 Exhibit3 OpenHouseFliers Open House Exhibit3 OpenHouseFliers Casa Abierta Inaugural Exhibit4 CommunityForum1Fliers Our path to the future Community Forum 1 ssues and Aspirations I Exhibit4 CommunityForum1Fliers Our path to the future Community Forum 1 ssues and Aspirations I Exhibit4 CommunityForum1Fliers Our path to the future Foro Comunitario 1 Asuntos y Aspiraciones Exhibit5 AGENDA INFORMATION SHEET AGENDA DATE: March 5, 2013 DEPARTMENT: Finance ACM: Bryan Langley SUBJECT Receive a report, hold a discussion, and give staff direction regarding the FY 2011-12 Comprehensive Annual Financial Report and annual audit. BACKGROUND financial statements present fairly, in all material respects, the financial position of the City. The annual audit report is comprised of four major components: 1) the Comprehensive Annual Financial Report (CAFR), 2) Management Letter (when appropriate), 3) Single Audits, and 4) Committee. The CAFR represents the entire financial position of the City, specifically for the fiscal year ending September 30, 2012 auditors have provided the City a clean opinion (unqualified), which means that in the opinion of Weaver, LLP., the City financial statements present fairly, in all material respects, the financial position of the City. A clean or unqualified opinion is the best opinion that may be rendered in an audit of the financial statements. The Weaver audit specifically included the following items: . Performance of a Single Audit, Federal grant awards. An e over financial reporting. understanding of the internal control structure to determine the nature, timing, and extent of audit procedures. The auditors did not perform an audit of internal controls, but performed limited tests of internal controls for the purpose of providing an opinion on the financial statements. Additionally, the auditors examined, on a test basis, evidence supporting amounts and disclosures in the combined financial statements. Agenda Information Sheet March 5, 2013 Page 2 As separate items, you will find 1) a 12 CAFR (including Independent the Single Audit report, 3) the Committee. As describe to the Audit Committee, the only material adjustment during the audit process was a reduction in the accounts payable liability for purchased power expense in the Electric System Fund. The outcome of this entry was an increase in the unrestricted assets of the Electric System Fund. There were no audit findings this fiscal year and therefore, no management letter was issued. Representatives from Weaver, LLP, will be present at the City Council meeting to provide their opinion and to answer any questions that you may have. PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS) On February 26, 2013, the Audit/Finance Committee unanimously recommended approval to forward the CAFR and annual audit to the City Council for consideration. Additional information is provided on the fifth slide of the PowerPoint presentation regarding the financial EXHIBITS 1)PowerPoint Presentation 2)Comprehensive Annual Financial Report (CAFR) 3)Single Audit Report 4)the Audit Committee Respectfully Submitted: Chuck Springer Director of Finance FY 2011-12 C A OMPREHENSIVENNUAL F R (CAFR) INANCIALEPORT Presented to City Council March 5, 2013 R O EPORTVERVIEW CAFR is comprised of four distinct sections: Introductory Financial Statistical Other Supplemental Information Report has been designed to comply with GAAP/GASB guidelines Emphasis on transparency and disclosure Conformance with standards very important to financial markets GFOA awards program criteria also drives presentation of material A R UDITESULTS Best possible opinion No Management Letter No recommendations for strengthening controls and/or operational efficiency Single Audit conducted for state and federal grant awards and no findings were noted K F I EYINANCIALNFORMATION Overall strong financial results Net assets of the City Totaled $653.9 million for FY 2011-12 $28.9 million increase from prior year due mainly to business-type activities (utilities) $204.7 million - unrestricted net assets (increase of $11.9 million) General Fund unassigned fund balance $25.2 million 28.5% of FY 11-12 budgeted expenditures $2.3 million increase from prior year. P F F P T ROPRIETARYUNDSINANCIALOLICYARGETS Auditor Comments paving the way City Denton, Texas OF + CITY OF DENTON, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the fiscal year ended September 30, 2012 CITY MANAGER George C. Campbell ASSISTANT CITY MANAGER AND CHIEF FINANCIAL OFFICER Bryan Langley Prepared by: Chuck Springer Director of Finance Antonio Puente Harvey Jarvis Assistant Director of Finance Controller Kevin Ann Mullen, CPA Cody Wood Assistant Controller Assistant Controller David Wilson Diane Chang, CPA Electric Accounting Manager Senior Grants Accountant Kurt Breyfogle Randall Mahaffey, CIA Senior Utilities Accountant Senior Accountant Ed Lane, CPA Cindy Liang, CPA Accountant III Accountant III Lori Allen Mary Billings Accounting Technician Electric Analyst Michelle McCallum Mike Halsema Budget and Municipal Court Manager Senior Financial Analyst Caroline Finley Treasury Administrator City of Denton, Texas Comprehensive Annual Financial Report For Year Ended September 30, 2012 TABLE OF CONTENTS Page INTRODUCTORY SECTION (UNAUDITED): Transmittal Letter ................................................................................................................................................. i Organizational Chart .......................................................................................................................................... vii Certificate of Achievement .............................................................................................................................. viii List of Principal Officials.................................................................................................................................... ix FINANCIAL SECTION: Independent Auditors Report.............................................................................................................................. 1 ............................................................................................................. 3 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets ........................................................................................................................ 13 Statement of Activities .......................................................................................................................... 14 Fund Financial Statements: Governmental Fund Financial Statements: Balance Sheet ................................................................................................................................. 16 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets ...... 17 Statement of Revenues, Expenditures and Changes in Fund Balances .......................................... 18 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities .............................................................. 19 Statement of Revenues, Expenditures and Changes in Fund Balance Budget to Actual General Fund............................................................................................................................... 21 Proprietary Fund Financial Statements: Statement of Net Assets ................................................................................................................. 22 Statement of Revenues, Expenses and Changes in Fund Net Assets ............................................. 26 Statement of Cash Flows ................................................................................................................ 28 Fiduciary Fund Financial Statements: Statement of Assets and Liabilities ................................................................................................ 30 Notes to Basic Financial Statements ........................................................................................................... 31 Required Supplementary Information: Schedule of TMRS Funding Progress and Contributions Last Three Fiscal Years ................................. 65 Sc and Contributions Last Three Valuation Years ................................................................................. 65 Schedule of Other Post Employment Benefits Funding Progress and Contributions Last Three Valuation Years .................................................................................................................. 66 Combining and Individual Fund Financial Statements and Schedules: Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual: Debt Service Fund ................................................................................................................................ 67 Combining Balance Sheet Nonmajor Governmental Funds..................................................................... 70 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds ............................................................................................................ 72 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget to Actual: Recreation....................................................................................................................................... 74 Police Confiscation ........................................................................................................................ 75 Tourist and Convention .................................................................................................................. 76 Street Improvement Fund ............................................................................................................... 77 Gas Well Revenues Fund ............................................................................................................... 78 ........................................................................................................................ 79 City of Denton, Texas Comprehensive Annual Financial Report For Year Ended September 30, 2012 TABLE OF CONTENTS (Continued) Page FINANCIAL SECTION (continued): Combining and Individual Fund Financial Statements and Schedules (continued): Combining Statement of Net Assets Internal Service Funds ................................................................... 82 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets - Internal Service Funds .......................................................................................................................... 84 Combining Statement of Cash Flows Internal Service Funds .................................................................. 86 Combining Statement of Assets and Liabilities Agency Funds ...................................................................... 88 Combining Statement of Changes in Assets and Liabilities Agency Funds ................................................... 89 Capital Assets Used in the Operation of Governmental Funds: Comparative Schedules by Source .............................................................................................................. 91 Schedule by Function and Activity ............................................................................................................. 92 Schedule of Changes by Function and Activity .......................................................................................... 93 STATISTICAL SECTION (UNAUDITED): Table 1 Net Assets by Component ......................................................................................................................... 96 2 Changes in Net Assets ............................................................................................................................... 98 3 Fund Balances of Governmental Funds .................................................................................................... 98 4 Changes in Fund Balances of Governmental Funds ................................................................................ 102 5 Assessed Value and Estimated Actual Value of Taxable Property ......................................................... 106 6 Property Tax Rates (Per $100 of Assessed Value) Direct and Overlapping Governments .................. 107 7 Principal Property Taxpayers .................................................................................................................. 109 8 Property Tax Levies and Collections ...................................................................................................... 110 9 Ratio of Outstanding Debt by Type......................................................................................................... 112 10 Ratio of General Bonded Debt Outstanding ............................................................................................ 114 11 Direct and Overlapping Governmental Activities Debt .......................................................................... 115 12 Pledged Revenue Coverage ..................................................................................................................... 116 13 Demographic and Economic Statistics .................................................................................................... 118 14 Principal Employers ................................................................................................................................ 119 15 Full-Time Equivalent City Government Employees by Function/Program ............................................ 120 16 Operating Indicators by Function/Program ............................................................................................. 122 17 Capital Asset Statistics by Function/Program ......................................................................................... 124 OTHER SUPPLEMENTAL INFORMATION: Schedule of Expenditures - Budget and Actual General Fund ............................................................... 127 --7206 February 20, 2013 The Honorable Mayor and Members of the City Council City of Denton Denton, Texas It is with great pleasure that we present to you a copy of the Comprehensive Annual Financial Report (CAFR) of the City of Denton (the City) for the fiscal year ended September 30, 2012. The purpose of the report is to provide the City Council, management, citizens, and other interested parties with detailed information concern THE REPORT The Texas Local Government Code (103.001) requires an annual audit for municipalities. In addition, the § City Charter (Section 2.13) requires a Certified Public Accountant who, as of the end of the fiscal year, shall make an independent audit of accountsand prepare a report to the City Council and the City Manager.This document fulfills the above mentioned requirements, and topinion is included in the report for the fiscal year ended September 30, 2012. The CAFR is presented in three main sections:Introductory, Financial, and Statistical. The Introductory Financial Discussion and Analysis (MD&A), Basic Financial Statements, Required Supplementary Information, Combining and Individual Fund Financial Statements and Other Supplemental Information, as well as, report. The Statistical Section includes selected financial and demographic information, generally presented on a multi-year basis. The responsibility for both the accuracy of the presented information and the completeness and fairness of the presentation of the data, including all disclosures, rests with the City and is based upon a comprehensive framework for internal control that it has established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. The CAFR is designed to fairly present the results of our operations in each of the various funds reported by the City. All disclosures necessary to enable The accounting firm of Weaver, LLP has issued an unqualified opinion on the City statements for the period ended September 30, 2012. As a recipient of federal and state grant awards, a separate audit is prepared to meet the requirements of the Single Audit Act Amendments of 1996 and related OMB Circular A-nducted to determine that the City has complied with applicable laws and regulations related to federal awards. iscussion and A provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. PROFILE OF THE GOVERNMENT Originally incorporated on September 26, 1866, the City of Denton is now 97.411 square miles and has an estimated population of 115,662.The City is a home rule city and operates under the Council-Manager form of government. The elected seven-member council consists of a Mayor and six Council Members. The Mayor and two Council Members are elected at large, while the remaining representatives are elected from single i member districts.The City Council enacts local laws, determines policy, and adopts the annual budget, and the City Manager is the chief executive officer for the City. The City of Denton is located in the northern portion of the Dallas/Fort Worth Consolidated Metropolitan Statistical Area (CMSA). The City is a part of the Dallas/Fort Worth Metroplex, 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) providing excellent access to and from all parts of the area. The City provides a full range of general government services to its citizens including: public safety (police and fire protection); public works (construction and maintenance of highways, streets and infrastructure); parks and recreation; library; planning and zoning; economic development; and general administrative services. The , solid waste, and airport utility system provides electric, water and wastewater services. The internal service operations consist of the Materials Management, Fleet Services, Risk Retention, Health Insurance, and Technology Services funds. The Materials Management Fund accounts for the financing of Warehouse and Purchasing services which are provided to other City departments. The Fleet Services Fund accounts for the financing of goods and services provided by the municipal garage to other departments within compensation, general liability claims, and insurance policies. The Health Insurance Fund accounts for administration of the self-insurance program in the City. The Technology Services Fund provides support for the various information and computer systems within the City. Reprographics, which is part of the Technology Services Fund, provides imaging, print shop, and office services to City departments. The financial statements presented include all government activities, organizations, and functions for which the City is financially accountable as defined by the Governmental Accounting Standards Board (GASB). LOCAL ECONOMY continues to grow. After declining by approximately 1.55% in FY 2010-11, the grew by 2.93% in FY 2011-12and 4.75% in FY 2012-13. The growth in FY 2012-13 is near the average growth rate of6.23% over the last decade. After property tax revenues, the second largest source of revenue in the General Fund is sales tax. Representing approximately 31% of overall revenue in the General Fund, sales tax is a significant revenue source that is dependent upon a variety of economic factors. For FY 2011-12, total sales tax revenues equaled $25,886,940, which is $3,015,658, or 13.2%, more than theprior year collections of $22,871,282. For FY 2012-13, sales tax collections are conservatively estimated to increase by 2.2% over FY 2011-12receipts. Increased strength in employment andgrowth in new residential and commercial construction are leading . According to the Federal Res2Regional Economic Update, the Texas unemployment rate continues to decline. The State of Texas unemployment rate has droppedfrom 7.3 percent in January 2012 to also declined sharply from 6.0 percent in January of 2012 to4.8 percent as of December 2012. The City of Denton has issued 333residential and commercial building permits for calendaryear 2012, at an estimated value of $254million. This compares to atotal of 299 commercial and residential permits issued for calendar year 2011 at an estimated value of $277million. The following twocharts from the 2Regional Economic Updatehighlight the strong reductionin Texas unemployment levels as well asstrong job growthand also includecomparisonsto the same indicators for the United States. ii Fiscal year 2011-12 brought exciting news in economic development. Listed below are just a few of the highlights: and Wal- valued at $12.2 million and Wal-Mart at $15.4 million. The 30,000 square foot strip center is home to 21 retail and restaurant tenants. Some of the new stores in the development include: Villa Grande and Starb Dress for Less, Famous Footwear and Jo- north east corner of the development. Future plans for the 600,000 square foot Rayzor Ranch Town Golden Triangle Mall was purchased by the Herring Group and the Weitzman Group in 2011. The two major retail companies are making major renovations to the mall to include: the addition of restaurants and stores; improving the building façade; creating a food court; and improving the parking lot and landscaping. A Chapter 380 grant was awarded as an incentive for the renovations to the 1980 mall. The joint venture will invest a minimum of $45 million in the development by October 2014 in order to qualify for the incentive. Work has begun on the interior and a grand reopening is expected in 2013. iii U.S. Aviation completed their 28,400 square foot expansion at a $1.2 million valuation. The company officially gained fixed base operator (FBO) status at the Denton Municipal Airport. The expansion provides space for FBO services and flight training room space. U.S. Aviation is the official flight training school for Chinese commercial aircraft pilots. Approximately 200 students are involved in this flight training program. The company provides a complete package of housing, flight training and other services to the students. Helicopter flight training is also offered through All American Helicopters, a U.S. Aviation company. Denton became the terminus for the Denton County Transportation Authority (DCTA) transit rail line - where riders can transfer to the Dallas Area Rapid Transit (DART) system and continue into the Dallas/ Fort Worth metroplex. The Downtown transit station is expected to generate other development surrounding the site. The Medpark transit station, located near the Denton Regional Medical Center, serves as the main park and ride station. DCTA buses serve both stations, transporting riders to the stations and/or their final Denton locations. Overall 2012 DCTA ridership of 3.0 million passengers increased 17 percent from 2011. Downtown Denton has continued to see new development with 5,500 square feet of new retail construction and 88,106 square feet of new living space constructed. Recent retail includes: Square Donuts, Black Box Theatre, Hickory Street Lounge, Mad World Records, Campus Barbers, Noles General Store, Burguesa, Impressions by DSSLC and Atomic Candy. Fortune 50 Target Corporation completed construction of their 365,853 square foot frozen and refrigerated food distribution center in 2012. The facility is located on the southeast corner of Airport and Corbin Roads. This $100 million project received a 65% tax abatement for five years from the City of Denton to help offset costs to improve Airport and Corbin Roads. This facility will service over 230 stores in eight states with frozen and perishable food products. Target will open in March 2013 and employ 115 to 150 area residents. Schlumberger, a Fortune 500, French-owned oilfield service company, held a grand opening in September 2011 for their 150,000 square foot regional maintenance facility at the Granite Point Industrial Park. Renovation of the building is estimated at $10 million. A Chapter 380 grant previously awarded to Granite Point was transferred to the company as an incentive for the Denton location. Schlumberger employed 105 in 2012. Peerless Manufacturing selected Denton to expand and consolidate some of their Texas operations. The company designs, custom engineers and manufactures highly specialized filtration, separation equipment, industrial silencers, heat exchangers, and air pollution reduction systems to energy industry customers involved in gas and oil production, petrochemical processing, and power generating. They are currently constructing an 80,000 square foot manufacturing facility. The valuation of the proposed project is estimated at $16 million. Peerless received a 40% tax abatement from the City of Denton for the new facility. Peerless plans to employ 126 and is expected to open in late 2013. Labinal, Inc., part of the Safran Group, is a world leader in electrical wiring harness and integration systems for the aviation, space and defense markets. In August 2012, Labinal relocated its North American Wiring and Services Division headquarters, one of four wiring harness and integration system manufacturing sites and over 700 employees to the former Russell Newman facility in Denton. The company received a 50%, three-year tax abatement on increased valuation of at least $5 million at the Denton facility. iv Mayday Manufacturing/Tailwind Technologies manufactures precision bushings, sleeves, pins, and other machine parts used in the aerospace industry. Mayday Manufacturing was acquired by Tailwind equipment and industry-leading operations efficiencies at Mayday Manufacturing resulted in 25% revenue growth in 2011. Solid growth p revenues by 2016 and necessitated the expansion of their facilities to accommodate this growth. The company purchased an 80,000 square foot facility in 2012 and held a groundbreaking at the new site location in February 2013 that includes a 15,000 square foot expansion LONG-TERM FINANCIAL PLANNING In conjunction with this document, interested parties are encouraged to read the 2-13 Annual Budget document. This document details the strategic plan, long-term financial policies, program accomplishments, and other key initiatives. The document also includes the long-term financial forecasts for each of the major funds, and a summary of the assumptions that are included in these plans. In addition, the budget document provides an overview of the adopted Capital Improvement Program and planned future debt issuances. The budget document can be obtained from the City of Denton Department by calling (940)349-8531. The Annual Budget can also be accessed web site at www.cityofdenton.com RELEVANT FINANCIAL POLICIES The City of Denton maintains reserve balances for emergencies. In the General Fund, the target reserve level is 15-20% of budgeted expenditures to provide stability and flexibility for the organization. The actual reserve level has exceeded this target for the current fiscal year. As described in the accompanying CAFR document, the unassigned fund balance is $25.2 million, or 28.5%, of the budgeted General Fund expenditures for the fiscal year ended September 30, 2012. Beginning in FY 2011-12, the City adopted a policy which requires a minimum ending working capital balance (current assets minus current liabilities) of at least 8% of budgeted expenditures for each of the proprietary funds. If the working capital level should fall below the desired minimum, the City will implement necessary corrective action with a five-year plan to restore the working capital balance to 8% of budgeted expenditures. Additionally, the Electric, Water, Wastewater, and Solid Waste funds, also established minimum rate stabilization reserve balance levels in FY 2011-12 according to the unique operational aspects of each utility. The rate stabilization funds are intended to minimize the fluctuation in rates due to unforeseen revenue and expenditure variances. The minimum rate stabilization balance is established as 12% of expenses for the Electric and Wastewater funds, 16% for expenses for the Water fund, and 4% of expenses for the Solid Waste fund. If the rate stabilization balance falls below the desired level, the City will implement necessary corrective action within a five-year plan to restore the rate stabilization balances to the levels outlined above. The City of Denton has adopted an Investment Policy which guides the investment of all City funds. In accordance with State law, the policy is reviewed annually by the City Council to ensure that public funds are being invested in a conservative and prudent fashion. In addition, the City also annually reviews and approves aDebt Management policy. The purpose of this policy is to provide general guidelines regarding the issuance of City debt and the use and limitation of such debt.The City complied with all aspects of the Investment and Debt Management policies during fiscal year 2012. MAJOR INITIATIVES In FY 2011-12, the City created a Street Improvement Fund to account for street maintenance and repair activities. Theone-time contribution from the General Fund. The Street Improvement Fund budgeted revenues of $7.1 million and expenditures of $6.2 million during the fiscal year. The staffing level was twenty-seven full time personnel. v Additional investments in transportation and mobility included two new positions for traffic signal technicians. The City also included funding for update of its comprehensive plan during the fiscal year. Employee compensation was a priority for FY 2011-12 with an average 2% merit increase providedto all employees in addition to eligible step increases for all police and fire civil service personnel. Public safety funding continues to be a priority for the City of Denton as well. In FY 2011-12, the City provided additional funding for personal protective equipment, self-contained breathing apparatuses, lifepak defibrillators, and mobile data communication unitsin the Fire Department.The Police Department received additional funding for uniforms and overtime funding for traffic enforcement. The City also continues to emphasize community service programs. The FY 2011-12budget included additional funding for rental fees for local school gym facilities for the Parks Department, increased funding for additional animal control officer. AWARDS AND ACKOWLEDGEMENTS in Financial Reporting to the City for its Comprehensive Annual Financial Report for the fiscal year ended September 30, 2011, for the twenty-seventh consecutive year. In order to be awarded the Certificate of Achievement in Financial Reporting, the City must publish an easily readable and efficiently organized Comprehensive Annual Financial Report. This report satisfies both generally accepted accounting principles and applicable legal requirements. The Certificate of Achievement is held for a period of one year only. We believe our current Comprehensive Annual Financial Report continues to meet the Certificate of Achievement requirements, and we are submitting it to GFOA to determine its eligibility for another certificate. The City also received the GFOA award for Distinguished Budget Presentation for its fiscal year 2011-12 Annual Budget for the twenty-sixth consecutive year. In order to qualify for the Distinguished Budget is distinguished as an operations guide, financial plan, policy document, and communications device. The City has submitted its fiscal year 2012-13 Annual Budget to GFOA to determine its eligibility for another certificate. We believe it continues to meet the Distinguished Budget Presentation Award criteria. In 2012Department earned the Excellence in Procurement Award from the National Purchasing Institute, Inc. (NPI) for the fourteenth year in a row.This award is achieved by those organizations that demonstrate excellence in procurement by achieving a high score on standardized criteria designed to measure innovation, professionalism, productivity, and leadership. NPI represents purchasing officials employed by national, state, and local governments; educational institutions; and tax-supported and public entities throughout the country. We would like to thank the City Council for their strong leadership and support that helped make the presentation of this report possible. Wewould also like to thank the City Manager, Finance staff, department directors, division heads and especially the Accounting Division staff for their diligent efforts in the preparation of the annual financial report. Bryan Langley Chuck Springer Assistant City Manager & Director of Finance Chief Financial Officer vi CITY OF DENTON CURRENT ORGANIZATIONAL CHART CITY OF DENTON, TEXAS List of Principal Officials September 30, 2012 ELECTED OFFICIALS TitleName MayorMark Burroughs Mayor Pro-TemPete Kamp CouncilmemberJim Engelbrecht CouncilmemberDalton Gregory CouncilmemberJames King CouncilmemberKevin Roden CouncilmemberChris Watts CITY OFFICIALS TitleName City ManagerGeorge C. Campbell Assistant City ManagerHoward Martin Assistant City Manager Jon Fortune Assistant City Manager/ Chief Financial OfficerBryan Langley Assistant City ManagerJohn Cabrales City AttorneyAnita Burgess Municipal Judge Robin Ramsay City SecretaryJennifer Walters ix INDEPENDENT AUDITOR’S REPORT To The Honorable Mayor and Members of City Council City of Denton,Texas We have audited the accompanying financial statements of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the City of Denton, Texas (the City) as of and for the year ended September 30,2012, which collectively comprise the City’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City’s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion,the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities,business-type activities,each major fund, and the aggregate remaining fund information of theCity of Denton,Texas, as of September 30,2012, and the respective changes in financial positionand, where applicable, cash flows,thereofand the budgetary comparison for the General Fund for the year then ended in conformity with accounting principles generallyaccepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated February 20, 2013, on our consideration of the City of Denton's internal control over financial reporting and our testsof its compliance with certain provisions of laws, regulations, contracts and grantagreementsand other matters. The purpose of that report is to describe the scope of our testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standardsand should be considered in assessing the results of our audit. City of Denton Page 2 Accounting principles generally accepted in the United Statesof America require management’s discussion and analysis (on pages 3 through 12) andthe schedules of TMRS funding progress and contributions,Denton’sfiremen’s relief and retirement plan funding progress and contributions, and other post-employment benefits funding progress and contributions (on pages 65and66) be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to ourinquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The introductory section, combining and individual fund financial statements and schedules, capital assets used in the operation of governmental funds schedules, the statistical section, and the other supplementary information as listed in the table of contentsare presented for purposes of additional analysis and are not a required part of the financial statements. The combining and individual fund financial statements and schedules, capital assets used in the operation of governmental funds schedules, and the other supplementary informationare the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit ofthe financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductoryand statistical sectionshave not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. WEAVER AND TIDWELL, L.L.P. Dallas, Texas February 20, 2013 CITY OF DENTON, TEXAS SEPTEMBER 30, 2012 is is designed to (a) assist the reader in focusing material deviations from the financial plan (the approved budget), and (e) identify individual fund issues or concerns. activities, resulting changes and currently known facts, please read it in conjunction with the Transmittal Letter (beginning on page i) and beginning on page 13). FINANCIAL HIGHLIGHTS The assets of the City exceeded its liabilities at the close of the fiscal year ended September 30, 2012 by $653,942,163 (net assets). Of this amount, $204,658,450 (unrestricted net assets) may be used to meet the o citizens and creditors. $28,856,818. This increase can be attributed to the net revenue of the governmental activities, business-type activities and the contribution of capital assets by developers. As of September 30, 2012$78,387,634, an increase of $7,463,629 in comparison with the prior fiscal year. Compared to the prior year, revenues were slightly lower by $0.1 million due primarily to lower intergovernmental revenues of $4.2 million, lower miscellaneous revenues of $0.7 million, offset by higher sales tax and property tax of $4.0 million, higher fines of $0.5 million, and higher fees for service of $0.1 million. Expenditures reflect higher costs for public safety of $1.6 million, higher costs for public works of $1.1 million, higher costs for parks and recreation of $0.4 million, offset by lower costs for general government of $1.4 million, and lower capital expenditures of $1.9 million. New proceeds from the issuance of long-term debt added $8.0 million in new funding. Net transfers out decreased by $6.4 million, from $5.9 million net transfer out in 2011 to a net transfer in of $0.5 million in fiscal year 2012. This is primarily due the creation of a new Airport enterprise fund and the transfer of all Airport related assets and liabilities to the new business-type fund in fiscal year 2011. Approximately 32.0% of the $78,387,634, or $25,080,041, is available for spending at the governmened fund balance). At the end of the fiscal year, the unassigned fund balance for the General Fund was $25,171,186, or 28.5% of budgeted general fund expenditures. increased by $13,560,116 during the fiscal year. The primary reasons for the changes are the issuance of $33.6 million of general obligation refunding bonds, $44.7 million of certificates of obligation, offset by the normal pay down of general obligation bonds and certificates of obligation of $25.6 million, and the normal pay down of revenue bonds of $8.5 million.The general obligation refunding bonds reduced the utility revenue bonds outstanding by $22.2 million while refunding $12.3 million of both general obligation and certificates of obligation bonds. OVERVIEW OF THE FINANCIAL STATEMENTS are comprised of three components: (1) government-wide financial statements, (2) fund financial statements and (3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide Financial Statements. The government-wide financial statements are designed to provide -sector business. The statement of net assets presents information on between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. 3 CITY OF DENTON, TEXAS SEPTEMBER 30, 2012 cash is received or paid. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but not used vacation leave). Both the statement of net assets and the statement of activities are prepared using the accrual basis of accounting as opposed to the modified accrual basis. In its Statement of Net Assets and the Statement of Activities, the City is divided between two kinds of activities: Governmental activities . Most of the libraries, development, public services and operations, public works, building inspection, technology services and general administration. Property taxes, sales taxes, and franchise fees finance most of these activities. Business-type activities . The City charges a fee to customers to cover the cost of services it provides. The s (electric, water and wastewater), solid waste and airport activities are reported here. The government-wide financial statements can be found on pages 13 - 15 of the report. Fund Financial Statements. A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. Fund financial statements provide detailed information about the most significant funds, not the City as a whole. Some funds are required to be established by state law or bond covenants. However, the City Council establishes many other funds to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes, grants and other monies. The below illustration summariz financial statements. 4 CITY OF DENTON, TEXAS SEPTEMBER 30, 2012 All of the funds of the City can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental funds which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method identified as the modified accrual basis of accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short- government operations and the basic services it provides. Governmental fund information helps the reader determine whether there are more or fewer financial resources that can be spent in the near future to finance presented for governmental activities in the government-wide financial statements, readers may better understand the long--term financing decisions. The relationship or differences between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds are detailed in a reconciliation following the fund financial statements. The City of Denton maintains twelve governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures and changes in fund balances for the general fund, debt service fund and capital projects fund, all of which are considered to be major funds. Data from the other nine governmental funds are combined into a single, aggregated presentation. Individual fund data for eight of these non-major governmental funds along with an aggregate of all other is provided in the form of combining statements elsewhere in this report. Proprietary funds . The City charges customers for certain services it provides, whether to outside customers or to other units within the City. These services are generally reported in proprietary funds. Proprietary funds are reported in the same manner that all activities are reported in the Statement of Net funds) are similar to the business-type activities that are reported in the government-wide statements but provide more detail and additional information, such as cash flows. The internal service funds (the other component of proprietary funds) are utilized to report activities that provide supplies and services for the -insurance fund, and equipment maintenance function. Because these services benefit both governmental and business-type functions, they have been included in both the governmental and business-type activities in the government-wide financial statements. The City of Denton maintains five enterprise funds. The City uses enterprise funds to account for its electric, water and wastewater systems, solid waste, and airport operations. The funds provide the same type of information as the government-wide financial statements, only in more detail and include the internal service fund-type activity. The City considers all enterprise funds to be major funds. Fiduciary funds . Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are notting used for fiduciary funds is much like that used for proprietary funds. Agency funds are a component of fiduciary funds. Agency funds differ from other fiduciary funds in that they do not typically involve a formal trust agreement. Agency funds are as receipt, temporary investment and remittance of fiduciary resources to individuals, private organizations, or other governments. The City maintains three fiduciary funds whi, and other agency funds payroll and associated liabilities, employee-purchased insurance and other similar relationships. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 31 - 63 of this report. 5 CITY OF DENTON, TEXAS SEPTEMBER 30, 2012 GOVERNMENT-WIDE FINANCIAL ANALYSIS As of September 30, 2012$653,942,163, of which $140,250,065 can be attributed to governmental activities and $513,692,098 attributed to business-type activities. This analysis - type activities. (63.8%) reflects its investment in capital assets (e.g., land, building, machinery and equipment), less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Table 1 Net Assets (in thousands) GovernmentalBusiness-type ActivitiesActivitiesTotal 201220112012201120122011 Current and other assets $ 187,583 $ 111,150 $ 369,433 $ 354,972 $ 557,016 $ 466,122 Capital assets, net of accumulated depreciation 188,637 195,019 595,433 561,794 784,070 756,813 Total assets 376,220 306,169 964,866 916,766 1,341,086 1,222,935 Long-term liabilities outstanding 121,656 121,808 390,916 377,203 512,572 499,011 Other liabilities 114,314 43,858 60,258 54,981 174,572 98,839 Total liabilities 235,970 165,666 451,174 432,184 687,144 597,850 Net assets: Invested in capital assets, net of related debt 101,785 103,073 315,479 296,007 417,264 399,080 Restricted 3,460 2,840 28,560 30,454 32,020 33,294 Unrestricted 35,005 34,590 169,653 158,121 204,658 192,711 Total net assets $ 140,250 $ 140,503 $ 513,692 $ 484,582 $ 653,942 $ 625,085 6 CITY OF DENTON, TEXAS SEPTEMBER 30, 2012 Governmental activities de$253,629 and business-type activities increased the 29,110,447. The key elements of these increases are contained in Table 2. Table 2 Changes in Net Assets (in thousands) GovernmentalBusiness-type ActivitiesActivitiesTotal 201220112012201120122011 Revenue: Program Revenue: Charges for services$ 15,981$ 15,674$ 218,042$ 215,749$ 234,023$ 231,423 Operating grants and contributions 2,598 4,271 - - 2,598 4,271 Capital grants and contributions 4,293 7,498 4,317 5,053 8,610 12,551 General Revenue: Property tax 45,174 44,145 - - 45,174 44,145 Sales tax 25,887 22,871 - - 25,887 22,871 Franchise tax 19,337 19,324 - - 19,337 19,324 Hotel occupancy tax 1,555 1,513 - - 1,555 1,513 Beverage tax 345 360 - - 345 360 Bingo tax 21 22 - - 21 22 Investment Income 582 459 1,639 1,472 2,221 1,931 Miscellaneous 1,390 2,371 (691) 278 699 2,649 Total revenue 117,163 118,508 223,307 222,552 340,470 341,060 Expenses: General government 29,421 28,199 - - 29,421 28,199 Public safety 52,496 49,154 - - 52,496 49,154 Public works 18,662 16,089 - - 18,662 16,089 12,968 12,422 - - 12,968 12,422 Parks and recreation Interest on long-term debt 4,756 5,047 - - 4,756 5,047 Electric - - 122,429 117,770 122,429 117,770 Water - - 26,823 28,293 26,823 28,293 Wastewater - - 20,891 20,455 20,891 20,455 Solid waste - - 21,695 20,009 21,695 20,009 Airport - - 1,472 1,326 1,472 1,326 118,303 110,911 193,310 187,853 311,613 298,764 Total expenses Increase in net assets before transfers (1,140) 7,597 29,997 34,699 28,857 42,296 Transfers 887 (10,430) (887) 10,430 - - Increase in net assets (253) (2,833) 29,110 45,129 28,857 42,296 Net assets at beginning of year, restated 140,503 143,336 484,582 439,453 625,085 582,789 $ 140,250$ 140,503$ 513,692$ 484,582$ 653,942$ 625,085 Net assets at end of year Governmental activities. Expenses for the governmental activities reflects an increase of $1.2 million in general government, a $3.3 million increase in public safety and a $2.6 million increase in public works. The most significant governmental activities expense was in providing public safety, which incurred expenses of $52,496,010. These expenses were funded by revenues collected from a variety of sources, with the largest being from property taxes, which are $45,174,160 for the fiscal year ended September 30, 2012. The most significant portion of public safety is the cost of personnel, which totaled $41,013,126.Other significant governmental activities expense for the City includes general government, which incurred $29,421,275 in expenses, of which $16,905,142 represented personnel charges.The $4.6 million decrease in governmental program revenues are mainly due to an increase of $0.3 million in charges for services, offset by a decrease of $1.7 million in operating grants and contributions due primarily to a CDBG grant (community development block grant) and an EECBG grant (energy efficiency and conservation block grant), and a decrease of $3.2 7 CITY OF DENTON, TEXAS SEPTEMBER 30, 2012 million in capital grants and contribution due primarily to a funding agreement with Texas Department of Transportation for the distribution of regional toll revenues of $1.5 million and the completion of a grant- funded multi-modal transit center of $1.6 million. Governmental general revenues included an increase of $1.0 million forProperty tax and an increase of $3.0 million for sales tax due to an improving economy. Transfers reflect a $0.9 positive transfer for the current year as compared to a negative transfer of $10.4 million in the prior fiscal year which included the Airport operations being transferred to the business-type funds. Business-type activities . Business-type activities $29,110,447, accounting for all of the growth in the entity-wide net assets. Utility service revenues increased by $5.3 million. Water charges for services provided $1.0 million of the increase in revenues due to a 9.5% rate increase for commercial customers. Wastewater charges provided $2.0 million of the increase due to an 11% rate increase for retail and commercial customers. Solid Waste charges provided $2.0 million of the increase due to a 2.0% to 3.9% rate increase for residential, commercial, and landfill customers. Water and Wastewater collected $2.4 million and $1.1 million in impact fees, respectively. Capital contributions, which arise from new property development within the City, represent a major revenue source for Water and Wastewater during the current fiscal year, producing $4.3 million in revenue. The Airport gas well revenues contributed an additional $1.2 million to the increase in net assets. Total business-operating costs increased by $4.5 million. Electric expenses reflect $3.2 million for increased costs related to personnel, power costs, outside contracted services, and fixed phone costs. Solid Waste expenses reflect $1.4 million in increased costs for personnel, vehicle fuels and maintenance, and outside contracted services. As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. -term inflows, outflows, and balances of resources available to spend.Such information is useful in assessing the assigned fund balance may serve as a useful measure of a As of the end of the c balance of $78.4 million, an increase of $7.5 million in comparison with the prior year. Approximately $25.1 million constitutes unassigned fund balance, which is available The remainder of the fund balance has been classified to indicate that it is not available for new spending because it has already been classified as restricted ($46.6 million), committed ($3.0 million), and assigned ($3.7 million). The General Fund is the chief operating fund of the City. At September 30, 2012, the unassigned fund balance of the General Fund was $25.2 million, or 28.5% of budgeted general fund expenditures. The General Fund also has $0.7 million of fund balance assigned for expenditures in the following fiscal year. The fund balance of the General Fund increased by $1.4 million during the current fiscal year. The change in fund balance is due to expenditures, including other financing uses, of $82.4 million and revenues, including other financing sources, of $83.8 million. Revenues were lower compared to the previous year primarily due to lower franchise fees of $5.6 million being committed and recorded in the new street improvement fund and an offset of higher taxes of $3.7 million.The net change in expenditures was lower ascompared to the previous year. A large reduction in public works expenditures of $4.9 million wasprimarily due to the transfer of street repair and maintenance costs to a new special revenue fund dedicated to the purpose of maintaining and enhancing Associated with the reduction in public works, transfers out reflected a $1.0 million increase due to the transfer of $0.9 million to the new street improvement fund as initial funding.Personnel costs, on a year over year comparison, for general government, public safety, public works, parks and recreation were $2.3 million higher due to an average merit increase of 2% for non-civil service employees and continued step 8 CITY OF DENTON, TEXAS SEPTEMBER 30, 2012 raises for the public safety civil service employees. All personnel costs were also higher due to increased benefit costs. At the end of the fiscal year, the capital projects fund has a total fund balance of $38.7 million, an increase of $4.9 million. The total fund balance is made up of $35.7 million in restricted funds and $3.0 million in assigned funds, both for capital construction and acquisition. In 2012, the City received $8.0 million of proceeds from the issuance of debt and $2.3 million of regional toll revenues from the Texas Department of Transportation for street construction while expending $9.4 million on construction and acquisition. In addition, the capital projects fund received $0.3 million in interest income, and approximately $0.3 million due to gas wells revenues and developers aid in construction. The debt service fund has a total fund balance of $3.8 million, all of which is restricted for the payment of debt service. lts, the overall increase in the debt service fund balance of $0.5 million results from an increase of $0.3 million in tax revenue, a decrease of $0.1 million in principal and interest costs, a decrease of $0.2 million in transfers out, and an offset of an increase of $0.1 million in debt issuance cost. Proprietary funds. government-wide financial statements, but in more detail. Unrestricted net assets at September 30, 2012 in proprietary funds are $94.7 million for Electric, $39.5 million for Water, $19.6 million for Wastewater, $2.0 million for Solid Waste, and $6.8 million for the Airport Fund. The results reflect an increase of unrestricted net assets in the Electric fund of $7.0 million, an increase in the Water fund of $4.6 million, an increase in the Wastewater fund of $2.0 million, a decrease in the Solid Waste fund of $1.1 million, and a decrease in the Airport fund of $0.5 million. Other factors concerning the finances business-type activities. BUDGETARY HIGHLIGHTS During fiscal year 2011-2012, three formal amendments to adjust the City of Denton Annual Program of Services were approved by Council. The Council increased the Traffic Safety Fund by $460,884 to provide for additional funding capacity for costs related to the red light cameras.Additionally, Council increased the Health Insurance Fund expenditure authority two times, for a total of $2,328,251, to provide for increased health care claims. GENERAL FUND BUDGET TO ACTUAL HIGHLIGHT For fiscal year 2011-12, General Fund actual expenditures (including transfers) on a budgetary basis were $87.4 million compared to the budget of $88.5 million. The $1.1 million positive expenditure variance was primarily due to reduced costs of $0.5 million in personnel, $0.3 million in operational costs and $0.2 million in miscellaneous costs. Personnel costs were lower than the budget due to a vacancy management program which produced saving of $0.2 million in general government and public works, $0.1 million in public safety, and $0.2 million in parks and recreation. In addition to personnel savings, general government also saw savings of $0.2 million in miscellaneous costs due to reduced council initiatives and $0.6 million in operation costs due to lower than budgeted economic development costs, outside legal fees, lower consulting fees for internal audit services, and lower development plan reviews. Parks and recreation had $0.2 million higher than budgeted vehicle maintenance and landscape irrigation costs. Actual revenues for the General Fund (including transfers and sale of capital asset) on a budgetary basis were $88.8 million compared to the original budget of $86.9 million. Of the $1.9 million revenue variance, approximately $2.4 million of the revenue variance is due to a recovering economy and increased sales taxes. Offsetting the positive revenue variances are primarily $0.2 million in lower court fines, and $0.3 million in lower fees for service such as ambulance, and recreation fees. 9 CITY OF DENTON, TEXAS SEPTEMBER 30, 2012 General Fund unassigned fund balance at September 30, 2012 is $25.2 million, or 28.5% of budgeted expenditures.Below is a listing of the ending unassigned balances for the prior year, as well as the fiscal year 2011-12 unassigned fund balance. For years where the actual ending balance has exceeded the t amount for one-time expenditures. By using the fund balance primarily for one-time expenditures, the financial impact on future budgets is reduced. ActualActual 9/30/119/30/12 Unassigned balance$22,834,108$25,171,186 % of total budgeted expenditures25.4%28.5% Policy level15-20%15-20% The largest revenue source of the is comprised of two components. The first is the operations and maintenance component that is used to praisal roll shows an increase of 2.93%compared to the prior year certified value.The current property tax year included $134 million of new growth and construction that was added to the tax roll. Excluding those new construction values, property valuesincreased by $38 million due to new annexation and increased by $10 million in existing property values in 2011 as compared to 2010. The fiscal year 2011-12 ad valorem tax rate remained the same as the prior year at $0.68975 per $100 of valuation. CAPITAL ASSET AND DEBT ADMINISTRATION Capital assets. At the end of fiscal year 2012, the City had $784,069,708 invested in a broad range of capital assets, including police and fire equipment, buildings, park facilities, roads, bridges, electrical infrastructure, and water and sewer lines (see Table 3 below). This amount represents a net increase (including additions and deductions) of $27,256,779, or 3.6% over the prior fiscal year. Table 3 Capital Assets at Year-end (Net of Accumulated Depreciation, in Thousands) GovernmentalBusiness-type ActivitiesActivitiesTotals 201220112012201120122011 Land$14,613$ 12,949$ 12,850$ 11,872$27,463$24,821 Landfill improvements--6,0344,6916,0344,691 Buildings and improvements41,41238,44210,1209,51851,53247,960 Plant, machinery and equipment21,16816,237136,843131,322158,011147,559 Water rights--53,61654,31453,61654,314 Infrastructure91,32481,709255,950250,492347,274332,201 Construction in progress20,12045,683120,02099,584140,140145,267 Total capital assets$188,637$195,020$595,433$561,793$784,070$756,813 10 CITY OF DENTON, TEXAS SEPTEMBER 30, 2012 asset additions included: on pages 42 - 44 of this report. Debt. At year-end, the City had $511.4 million in bonds and notes outstanding as compared to $501.7 million at the end of the prior fiscal year, an increase of 2.0%, as shown in Table 4. Table 4 Outstanding Debt at Year-end (in thousands) GovernmentalBusiness-type ActivitiesActivitiesTotals 201220112012201120122011 General obligation bonds$80,014$73,396$ 59,301$ 47,209$139,315$120,605 Certificates of obligation33,91043,036181,315150,554215,225193,590 Revenue bonds--156,855187,525156,855187,525 Total$113,924$116,432$397,471$385,288$511,395$501,720 These amounts do not include net unamortized premiums/(discounts) of $21,142,035 or net deferred gain/(loss) on refunding of ($7,752,842).During the current fiscal year, the City issued debt one time on April 15, 2012.The new debt resulted from the issuance $44.7 million in certificates of obligation, primarily for utility operations, and $33.6 million in general obligation refunding bonds which refunded $22.2 million in revenue bonds, $10.2 million in certificates of obligation, and $2.1 million in general obligation bonds. Normal pay down in general obligation bonds was $12.8 million, $12.9 million in certificates of obligation and $8.5 million in utility revenue bonds. No utility revenue bonds have been issued since 2008 as management has elected to utilize general obligation bonds as a result of lower interest rates. 2 Obligation A- , respectively. The City is permitted by Article XI, Section 5 of the State of Texas Constitution to levy taxes up to $2.50 per $100 of assessed valuation for general governmental services including the payment of principal and interest on general obligation long-term debt. The current ratio of tax-supported debt to certified assessed value of all taxable property is 2.23%. Other long-term liabilities. The City maintains a self-insurance program for general liability, auto liability, publ compensation. Private insurance companies cover claims for property loss over $50,000 per occurrence and 000 per occurrence. The City has a reserve for claims and judgments of $3.9 million outstanding at year-end compared with $2.5 million at the end of the prior fiscal 11 CITY OF DENTON, TEXAS SEPTEMBER 30, 2012 year. Other obligations include accrued vacation pay and sick leave. More detailed information about the -term liabilities is presented in Note IV. G., on pages 47 - 52 of this report. While growth for the Denton community is expected to be moderate in the short term, demands for city services is expected to remain strong over the long term. As a result, the fiscal year 2012-13 Budget includes an ad valorem tax rate of $0.68975/$100 valuation and maintains the same rate in comparison to the prior year. While sales tax has increased over the prior year by 13.2%, financial forecast projects an increase of 2.2% in fiscal year 2012-13.General Fund expenditure enhancements for fiscal year 2012-13 include new positions in the city moffice, fire, police, planning, building inspections and library. An additional $2.1 million has been budgeted in the General Fund for fiscal year 2012-13 in accordance with priorities established through the Strategic Plan for program enhancements. The fiscal year 2012-13 budget includes no base rate increases for electric customers.The water budget includes an 8.0% rate increase for all residential and commercial rates. The base rates changes for wastewater retail or wholesale customers include a9% increase. The solid waste residential standard cart rate increased by $0.85 per month. Commercial dumpster rates include an increase of 1.1% and commercial roll-off increased by 1.0%.Other minor fee adjustments were also approved for the water, wastewater and solid waste fee schedules. REQUESTS FOR INFORMATION for additional financial information should be addressed to the City of Denton Finance Department, 215 E. McKinney, Denton, Texas 76201. 12 CITY OF DENTON, TEXASExhibit I STATEMENT OF NET ASSETS SEPTEMBER 30, 2012 Primary Government GovernmentalBusiness-type ActivitiesActivitiesTotal ASSETS: Current assets: Cash, cash equivalents and investments, at fair value$ 48,508,496$ 164,554,545$ 213,063,041 Receivables, net of allowances: Taxes5,295,906-5,295,906 Accounts-12,853,90512,853,905 Unbilled utility service-9,822,6559,822,655 Interest180,063592,228772,291 Other4,491,028889,8845,380,912 Internal balances(9,512,609)9,512,609- Due from other governments620,617-620,617 Inventory4,224,053-4,224,053 Prepaid items157,57652,294,21352,451,789 Deferred debt issuance costs133,600294,721428,321 Total current assets54,098,730250,814,760304,913,490 Noncurrent assets: Restricted assets: Cash, cash equivalents and investments, at fair value131,102,130116,271,523247,373,653 Escrow deposits1,003,77850,0001,053,778 Accrued interest471,818418,482890,300 Other receivables193,458-193,458 Deferred debt issuance costs713,9321,877,6902,591,622 Capital assets not being depreciated: Land14,612,95712,850,30627,463,263 Construction in progress20,119,548120,019,828140,139,376 Capital assets, net of accumulated depreciation: Buildings41,412,12210,119,82751,531,949 Plant, machinery and equipment21,167,706136,842,952158,010,658 Infrastructure91,324,130255,949,888347,274,018 Landfill improvements-6,033,8916,033,891 Water rights-53,616,55353,616,553 Total noncurrent assets322,121,579714,050,9401,036,172,519 Total assets 376,220,309964,865,7001,341,086,009 LIABILITIES: Current liabilities: Accounts payable6,604,27312,798,04219,402,315 -4,889,0604,889,060 Deposits Accrued interest648,765193,541842,306 Due to other governments220-220 Noncurrent liabilities due within one year17,400,70730,765,97448,166,681 468,283-468,283 Other liabilities Unearned revenue88,790,0054,669,21693,459,221 Payable from restricted assets: Accounts payable396,4461,819,4102,215,856 Retainage payable5,8381,177,6221,183,460 Accrued interest-3,944,7523,944,752 114,314,53760,257,617174,572,154 Total current liabilities Noncurrent liabilities: Noncurrent liabilities due in more than one year121,655,707390,915,985512,571,692 Total liabilities235,970,244451,173,602687,143,846 NET ASSETS: Invested in capital assets, net of related debt101,784,929315,479,026417,263,955 Restricted: Restricted for debt service3,460,02723,180,82926,640,856 Restricted for capital acquisition-5,378,9025,378,902 Unrestricted35,005,109169,653,341204,658,450 Total net assets$ 140,250,065$ 513,692,098$ 653,942,163 The notes to the basic financial statements are an integral part of this statement. 13 CITY OF DENTON, TEXAS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2012 Program Revenues OperatingCapital Charges forGrants andGrants and Functions/ProgramsExpensesServicesContributionsContributions Primary government: Governmental activities: General government$ 29,421,275$ 3,873,349$ 1,935,917$ 201,038 Public safety52,496,0107,069,770557,929389,894 Public works18,662,0291,086,269-3,701,536 Parks and recreation12,968,4263,951,433104,311- Interest expense4,755,938--- Total governmental activities 118,303,67815,980,8212,598,1574,292,468 Business-type activities: Electric system122,428,808132,352,950-- Water system26,822,69036,265,061-881,849 Wastewater system20,890,61424,570,095-3,347,134 Solid waste21,695,32222,944,272-- Airport1,472,1551,909,61988,480 Total business-type activities193,309,589218,041,997-4,317,463 Total primary government$311,613,267$234,022,818$ 2,598,157$ 8,609,931 General revenues: Taxes: Property tax Sales tax Franchise fees Hotel occupancy tax Beverage tax Bingo tax Investment income Miscellaneous Transfers Total general revenues and transfers Change in net assets Net assets at beginning of year Net assets at end of year The notes to the basic financial statements are an integral part of this statement. 14 Exhibit II Net (Expense) Revenue and Changes in Net Assets Primary Government GovernmentalBusiness-type ActivitiesActivitiesTotal $ (23,410,971)$ -$ (23,410,971) (44,478,417)-(44,478,417) (13,874,224)-(13,874,224) (8,912,682)-(8,912,682) (4,755,938)-(4,755,938) (95,432,232)-(95,432,232) -9,924,1429,924,142 -10,324,22010,324,220 -7,026,6157,026,615 -1,248,9501,248,950 525,944525,944 -29,049,87129,049,871 (95,432,232)29,049,871(66,382,361) 45,174,160-45,174,160 25,886,940-25,886,940 19,336,701-19,336,701 1,555,347-1,555,347 345,032-345,032 20,889-20,889 581,8491,638,8302,220,679 1,390,398(690,967)699,431 887,287(887,287)- 95,178,60360,57695,239,179 (253,629)29,110,44728,856,818 140,503,694484,581,651625,085,345 $ 140,250,065$ 513,692,098$ 653,942,163 15 CITY OF DENTON, TEXASExhibit III BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2012 OtherTotal GeneralCapitalGovernmentalGovernmental FundDebt ServiceProjectsFundsFunds ASSETS: Cash, cash equivalents and investments, at fair value$23,512,375$ 3,781,847$127,297,750$ 11,200,285$ 165,792,257 Receivables, net of allowances for uncollectibles: Taxes4,982,573313,333--5,295,906 Accrued interest90,10213,612458,16940,263602,146 Other3,625,856--301,9543,927,810 Interfund receivables101,600--2,504104,104 Due from other governments373,490--247,127620,617 Total assets $32,685,996$ 4,108,792$127,755,919$ 11,792,133$ 176,342,840 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable3,520,042-429,8821,484,4745,434,398 Retainage payable--5,838-5,838 Interfund payables---2,5042,504 Due to other governments220---220 Other liabilities468,283---468,283 Deferred revenues2,861,371284,35488,603,294294,94492,043,963 Total liabilities6,849,916284,35489,039,0141,781,92297,955,206 FUND BALANCES: Restricted for: Debt Service-3,824,438--3,824,438 Parks and recreation--5,265,1115,231,77610,496,887 Streets and drainage projects--22,004,377-22,004,377 Other capital projects--8,444,073-8,444,073 Other grants and purposes---1,789,2411,789,241 Committed to: Streets---991,942991,942 Parks and recreation---570,534570,534 Other purposes---1,468,8371,468,837 Assigned to: Use of reserves664,894---664,894 Capital projects--3,003,344-3,003,344 Other purposes---49,02649,026 Unassigned 25,171,186--(91,145)25,080,041 Total fund balances25,836,0803,824,43838,716,90510,010,21178,387,634 Total liabilities and fund balances$32,685,996$ 4,108,792$127,755,919$ 11,792,133$ 176,342,840 The notes to the basic financial statements are an integral part of this statement. 16 CITY OF DENTON, TEXASExhibit IV RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS AS OF SEPTEMBER 30, 2012 Total fund balances - governmental funds (Exhibit III)$ 78,387,634 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in governmental funds. 188,636,463 Certain receivables will be collected next year but are not available soon enough to pay for the current period's expenditures and therefore are reported as deferred revenues in the funds.3,253,958 An internal charge to business-type activities is not recorded at the fund level.(7,011,771) Several internal service funds are used by the City's management. The assets and liabilities of the internal service funds are included with governmental activities. Total assets of internal service funds$ 29,317,604 Less: Deferred debt issuance costs(15,573) Less: Capital assets reported above(9,291,844) Less: Total liabilities of internal service funds(14,379,436) Liabilities reported below4,938,67210,569,423 Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-term liabilities at year-end consist of: General obligation bonds payable$ (80,013,438) Certificates of obligation payable(33,910,341) Bond (premiums)/discounts(3,272,887) Deferred loss on refunding1,512,515 Deferred charges for issuance costs847,532 Accrued interest on the bonds(648,765) Capital leases payable(1,891,895) Municipal pension obligation(4,468,184) Other post employment benefits liability(2,076,126) Compensated absences (9,664,053)(133,585,642) Total net assets of governmental activities (Exhibit I)$ 140,250,065 The notes to the basic financial statements are an integral part of this exhibit. 17 CITY OF DENTON, TEXASExhibit V STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 OtherTotal GeneralCapitalGovernmentalGovernmental FundDebt ServiceProjectsFundsFunds REVENUES: Taxes$57,148,330$14,214,296$ -$ 1,562,067$ 72,924,693 Licenses and permits1,436,215---1,436,215 Franchise fees13,751,615--5,585,08619,336,701 Fines and forfeitures4,241,395--1,220,7385,462,133 Fees for services5,666,413--2,853,3508,519,763 Investment revenue 187,52733,838306,70353,781581,849 Intergovernmental949,422-2,328,2053,462,2376,739,864 Miscellaneous255,035312347,898568,3731,171,618 Total revenues83,635,95214,248,4462,982,80615,305,632116,172,836 EXPENDITURES: Current: General government20,951,203-25,2823,382,53324,359,018 Public safety46,797,417--1,320,63448,118,051 Public works2,591,517--6,017,0378,608,554 Parks and recreation9,704,075--1,611,87611,315,951 Capital outlay712,055-9,440,260831,67210,983,987 Debt service: Principal retirement78,0929,645,989-46,5799,770,660 Advance refunding escrow-130,111--130,111 Bond issuance costs-93,12970,682-163,811 Interest and other charges-4,739,8996,48811,9184,758,305 Total expenditures80,834,35914,609,1289,542,71213,222,249118,208,448 Excess (deficiency) of revenues over (under) expenditures2,801,593(360,682)(6,559,906)2,083,383(2,035,612) OTHER FINANCING SOURCES (USES): Refunding bonds issued-10,173,303--10,173,303 Payment to refunded bond escrow agent-(11,432,581)--(11,432,581) Issuance of long-term debt--8,020,000-8,020,000 Premium on debt issuance-1,364,093652,100-2,016,193 Insurance recoveries--19,961-19,961 Sale of capital assets153,127---153,127 Transfers in14,301801,2252,719,3231,206,8864,741,735 Transfers out(1,556,944)--(2,635,553)(4,192,497) Total other financing sources (uses)(1,389,516)906,04011,411,384(1,428,667)9,499,241 Net change in fund balances1,412,077545,3584,851,478654,7167,463,629 Fund balance at beginning of year24,424,0033,279,08033,865,4279,355,49570,924,005 Fund balances at end of year$25,836,080$ 3,824,438$38,716,905$ 10,010,211$ 78,387,634 The notes to the basic financial statements are an integral part of this statement. 18 CITY OF DENTON, TEXASExhibit VI RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2012 Net change in fund balances - total governmental funds (Exhibit V) $ 7,463,629 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay ($10,983,987) is different from depreciation and retirement of assets ($15,030,037 = $16,410,735 total governmental minus $1,380,698 internal service portion) in the current period. (4,046,050) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Such amounts are recorded in the funds when considered available.(383,404) The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins and donations) is to increase net assets.(3,604,794) Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net assets. Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. This is the amount by which proceeds exceeded payments.2,348,939 Fund-level financials report costs related to bonds as expenditures; however, these are deferred and amortized on the government-wide financials.(1,051,484) Certain expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. (603,188) Internal service funds are used by management to charge the costs of certain activities, such as insurance and telecommunications, to individual funds. A portion of the net revenue (expense) of certain internal service funds is reported with governmental activities. The amount reported with business-type activities is ($467,122).(377,277) Change in net assets of governmental activities (Exhibit II)$ (253,629) The notes to the basic financial statements are an integral part of this statement. 19 20 CITY OF DENTON, TEXASExhibit VII STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET TO ACTUAL GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 2012 Variance with Adjustments -Actual on aFinal Budget - Budgeted AmountsActualBudgetaryBudgetaryPositive OriginalFinalAmountsBasisBasis(Negative) REVENUES: Taxes$54,746,882$54,746,882$57,148,330$ -$57,148,330$ 2,401,448 Licenses and permits1,390,1261,390,1261,436,215-1,436,21546,089 Franchise fees13,797,10413,797,10413,751,615-13,751,615(45,489) Fines and forfeitures4,502,8854,502,8854,241,395-4,241,395(261,490) Fees for services5,842,3935,842,3935,666,413-5,666,413(175,980) Investment revenue250,000250,000187,527-187,527(62,473) Intergovernmental877,103877,103949,422-949,42272,319 Miscellaneous299,950299,950255,035-255,035(44,915) Total revenues81,706,44381,706,44383,635,952-83,635,9521,929,509 EXPENDITURES: Current: General government27,108,08926,796,03320,951,2034,962,11225,913,315882,718 Public safety46,959,66846,903,98846,797,417-46,797,417106,571 Public works2,854,0202,738,0772,591,517-2,591,517146,560 Parks and recreation9,801,2419,721,8989,704,075-9,704,07517,823 Capital outlay692,953693,184712,055-712,055(18,871) Debt service: Principal retirement81,01681,01678,092-78,0922,924 Total expenditures87,496,98786,934,19680,834,3594,962,11285,796,4711,137,725 Excess (deficiency) of revenues over expenditures(5,790,544)(5,227,753)2,801,593(4,962,112)(2,160,519)3,067,234 OTHER FINANCING SOURCES (USES): --153,127-153,127153,127 Sale of capital assets Transfer in5,166,4125,166,41214,3014,962,1124,976,413(189,999) Transfers out(965,763)(1,528,554)(1,556,944)-(1,556,944)(28,390) Total other financing sources (uses)4,200,6493,637,858(1,389,516)4,962,1123,572,596(65,262) Excess (deficiency) of revenues and other sources over (under) expenditures and other uses(1,589,895)(1,589,895)1,412,077-1,412,0773,001,972 24,424,00324,424,003-24,424,003- Fund balances at beginning of year24,424,003 Fund balance at end of year$22,834,108$22,834,108$25,836,080$ -$25,836,080$ 3,001,972 Adjustments - Budgetary Basis are expenditures allocated to and reimbursed by other funds. These expenditures are recorded in the other funds' financials. The notes to the basic financial statements are an integral part of this statement. 21 CITY OF DENTON, TEXAS STATEMENT OF NET ASSETS PROPRIETARY FUNDS AS OF SEPTEMBER 30, 2012 Business-type Activities - Enterprise Funds Electric WaterWastewater Solid SystemSystemSystemWaste ASSETS: Current assets: Cash, cash equivalents and investments, at fair value$ 99,900,156$ 37,893,499$ 17,231,243$ 2,930,662 Receivables, net of allowances: Accounts 8,345,6622,103,0751,290,9711,086,812 Unbilled utility service6,043,3661,815,2621,037,860926,167 Accrued interest359,560136,35762,01710,546 Other447,215221,000-- Interfund receivables2,244,741184,51771,580- Merchandise inventory---- Prepaid items52,294,213--- Deferred debt issuance costs116,71499,41948,19328,431 Total current assets169,751,62742,453,12919,741,8644,982,618 Noncurrent assets: Restricted assets: Cash, cash equivalents and investments, at fair value40,355,11136,040,13821,758,27418,118,000 Escrow deposit-50,000-- Accrued interest145,245129,71578,31265,210 Total restricted assets 40,500,35636,219,85321,836,58618,183,210 Deferred debt issuance costs806,420678,824257,540125,265 Capital assets, net of accumulated depreciation176,471,071217,377,021160,471,29431,502,046 Total noncurrent assets217,777,847254,275,698182,565,42049,810,521 Total assets 387,529,474296,728,827202,307,28454,793,139 LIABILITIES: Current liabilities: Accounts payable10,650,662851,338455,026825,308 Claims payable---- Compensated absences payable697,922509,243315,193352,139 Leases payable--103,168246,753 Deposits4,410,053307,21686,74385,048 Accrued interest---183,419 Interfund payables---- Unearned revenue4,669,216--- Payable from restricted assets: Accounts payable5,847902,79475,780834,989 Retainage payable46,2881,131,334-- Accrued interest1,760,8871,664,450519,415- Revenue and certificate and general obligation bonds11,702,4647,723,7964,488,5774,455,343 Total current liabilities paid from restricted assets13,515,48611,422,3745,083,7725,290,332 Total current liabilities33,943,33913,090,1716,043,9026,982,999 22 Exhibit VIII Governmental Activities - Total Internal Enterprise Service AirportFundsFunds $ 6,598,985$ 164,554,545$ 13,818,369 27,38512,853,905- -9,822,655- 23,748592,22849,735 221,669889,884756,676 -2,500,838- --4,224,053 -52,294,213157,576 1,964294,7214,306 6,873,751243,802,98919,010,715 -116,271,523- -50,0001,003,778 -418,482- -116,740,0051,003,778 9,6411,877,69011,267 9,611,813595,433,2459,291,844 9,621,454714,050,94010,306,889 16,495,205957,853,92929,317,604 15,70812,798,0421,566,321 --1,863,053 16,1111,890,608261,277 -349,921860,265 -4,889,060- 10,122193,54112,977 --2,602,438 -4,669,216- -1,819,410- -1,177,622- -3,944,752- 155,26528,525,445466,590 155,26535,467,229466,590 197,20660,257,6177,632,921 (continued) 23 CITY OF DENTON, TEXAS STATEMENT OF NET ASSETS PROPRIETARY FUNDS AS OF SEPTEMBER 30, 2012 Business-type Activities - Enterprise Funds Electric WaterWastewater Solid SystemSystemSystemWaste Noncurrent liabilities: Leases payable$ -$ -$ 107,168$ 256,319 Payable from restricted assets: General obligation bonds payable16,647,59020,470,67018,805,8883,588,840 Certificates of obligation126,088,00318,093,14611,997,54021,869,018 Revenue bonds payable, net of premium/discount46,552,59884,375,82015,649,840- Deferred amount on refunding(1,601,703)(2,665,464)(910,499)(124,571) Compensated absences payable119,80743,28251,586128,748 Claims payable---- Municipal pension obligation900,742798,235521,467579,970 Other post employment benefits271,558399,221207,546237,382 Landfill closure/postclosure costs---5,689,750 Total noncurrent liabilities188,978,595121,514,91046,430,53632,225,456 Total liabilities222,921,934134,605,08152,474,43839,208,455 NET ASSETS: Invested in capital assets, net of related debt62,961,648106,442,138124,757,96713,598,604 Restricted for debt service6,912,52512,894,5393,373,765- Restricted for capital acquisition-3,313,8422,065,060- Unrestricted94,733,36739,473,22719,636,0541,986,080 Total net assets$164,607,540$162,123,746$149,832,846$15,584,684 Adjustment to reflect inclusion of internal service fund activities related to enterprise funds. Net assets of business-type activities (Exhibit I) The notes to the basic financial statements are an integral part of this statement. 24 Exhibit VIII Governmental Activities - Total Internal Enterprise Service AirportFundsFunds $ -$ 363,487$ 770,259 1,176,23260,689,2201,754,310 591,214178,638,921232,026 -146,578,258- (29,567)(5,331,804)(86,645) 1,177344,60039,435 --3,408,952 12,7802,813,194466,802 14,6521,130,359161,376 -5,689,750- 1,766,488390,915,9856,746,515 1,963,694451,173,60214,379,436 7,718,669315,479,0265,295,039 -23,180,829- -5,378,902- 6,812,842162,641,5709,643,129 $14,531,511$ 506,680,327$ 14,938,168 7,011,771 $ 513,692,098 (concluded) 25 CITY OF DENTON, TEXAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 Business-type Activities - Enterprise Funds ElectricWaterWastewaterSolid SystemSystemSystemWaste OPERATING REVENUES: Utility services$ 129,619,208$ 30,668,848$ 22,438,930$22,600,944 Charges for goods and services---- Other fees2,733,7423,157,0251,027,524343,328 Miscellaneous---- Total operating revenues132,352,95033,825,87323,466,45422,944,272 OPERATING EXPENSES: Operating expenses before depreciation108,601,67217,351,11213,848,63717,547,663 Depreciation7,173,4275,164,5525,420,3643,106,587 Total operating expenses115,775,09922,515,66419,269,00120,654,250 Operating income (loss)16,577,85111,310,2094,197,4532,290,022 NON-OPERATING REVENUES (EXPENSES): Investment revenue819,583456,001201,968119,274 Interest expense and fiscal charges(6,453,964)(4,665,055)(1,652,044)(921,092) Impact fee revenue-2,439,1881,103,641- Gain (loss) on disposal of capital assets50,503(65,431)38,61432,836 Gas well revenues---- Other non-operating revenues (expenses)(3,084)448,38086,161600 Total non-operating revenues (expenses)(5,586,962)(1,386,917)(221,660)(768,382) Income before contributions and transfers10,990,8899,923,2923,975,7931,521,640 CONTRIBUTIONS AND TRANSFERS: Capital contributions-881,8493,347,134- Transfers in 30,93112,943344,884131,858 Transfers out(112,338)(43,467)(587,752)(604,987) Total contributions and transfers(81,407)851,3253,104,266(473,129) Change in net assets10,909,48210,774,6177,080,0591,048,511 Net assets at beginning of year153,698,058151,349,129142,752,78714,536,173 Total net assets at end of year$ 164,607,540$ 162,123,746$ 149,832,846$15,584,684 Change in fund net assets of proprietary funds Adjustment to reflect inclusion of internal service fund activities related to enterprise funds. Change in net assets of business-type activities (Exhibit II) The notes to the basic financial statements are an integral part of this statement. 26 Exhibit IX Governmental Activities - TotalInternal EnterpriseService AirportFundsFunds $ -$ 205,327,930$ - 665,139665,13943,825,233 -7,261,619- 27,74027,740598,365 692,879213,282,42844,423,598 928,044158,277,12844,246,021 516,90321,381,8331,380,698 1,444,947179,658,96145,626,719 (752,068)33,623,467(1,203,121) 42,0041,638,83078,406 (32,300)(13,724,455)(151,663) -3,542,829- (747,489)(690,967)10,595 1,216,7401,216,740- 8,892540,949- 487,847(7,476,074)(62,662) (264,221)26,147,393(1,265,783) 88,4804,317,46383,335 -520,616667,753 (59,359)(1,407,903)(329,704) 29,1213,430,176421,384 (235,100)29,577,569(844,399) 14,766,611477,102,75815,782,567 $14,531,511$ 506,680,327$ 14,938,168 29,577,569 (467,122) $ 29,110,447 27 CITY OF DENTON, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 Business-type Activities - Enterprise Funds ElectricWaterWastewater SystemSystemSystem CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers $133,679,663$33,883,818$23,381,842 Cash paid to employees for services(8,317,730)(9,711,809)(5,915,517) Cash paid to suppliers(94,805,116)(8,733,877)(7,832,667) Net cash provided (used) by operating activities30,556,81715,438,1329,633,658 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers out(112,338)(43,467) (587,752) Transfers in30,93112,943 344,884 Net cash provided (used) by noncapital financing activities:(81,407)(30,524) (242,868) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Principal payments on capital debt (19,395,363)(7,873,983)(13,836,045) Interest and fiscal charges(6,781,623)(4,623,032)(1,751,525) Principal payments under capital lease obligation -- (99,318) Proceeds from issuance of debt 31,580,0007,125,89516,408,283 Proceeds from gas wells-- - Proceeds from impact fees-2,870,4751,103,641 Proceeds from sale of capital assets58,02837,790 41,526 Acquisition and construction of capital assets (19,945,165)(19,010,316)(4,145,927) Net cash provided (used) by capital financing activities (14,484,123)(21,473,171)(2,279,365) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale and maturities of investment securities 83,367,07361,018,71917,931,442 Purchase of investment securities (99,514,613)(56,484,901)(24,800,406) Interest received on investments 831,974522,909 194,397 Net cash used by investing activities(15,315,566)5,056,727(6,674,567) Net increase (decrease) in cash and cash equivalents675,721(1,008,836) 436,858 Cash and cash equivalents at beginning of year11,690,7007,535,0993,001,152 Cash and cash equivalents at end of year12,366,4216,526,2633,438,010 Investments, at fair value (Note IV.A.)127,888,84667,407,37435,551,507 Cash, cash equivalents and investments, at fair value $140,255,267$73,933,637$38,989,517 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss)$16,577,851$11,310,209$4,197,453 Adjustments: Depreciation expense7,173,4275,164,5525,420,364 Decrease (Increase) in receivables362,26513,014 (87,951) Decrease (Increase) in interfund receivables (20,900)44,930 3,338 Decrease in inventories-- - Decrease in prepaid items4,133,441- 5,865 Decrease in escrow deposits-- - Increase (Decrease) in accounts payable1,077,654(1,248,291) (16,940) Increase in unearned revenue985,348- - Increase (Decrease) in compensated absences payable 120,13222,361 30,306 Increase in municipal pension obligations149,123123,887 80,817 Increase (Decrease) in other post employment benefits(1,524)7,470 406 Increase in closure/postclosure liability-- - Decrease in interfund payables -- - Total adjustments13,978,9664,127,9235,436,205 Net cash provided (used) by operating activities$30,556,817$15,438,132$9,633,658 NONCASH CAPITAL, INVESTING AND FINANCING ACTIVITIES: Increase in fair value of investments66,27523,919 20,432 Capital asset contributions (revaluation)-881,8493,347,134 Increase in capital lease obligations-- - The notes to the basic financial statements are an integral part of this statement. 28 Exhibit X Governmental Activities TotalInternal SolidEnterpriseService WasteAirportFundsFunds $22,824,565$648,207$ 214,418,095$43,887,599 (7,156,829)(399,181) (31,501,066)(5,555,981) (8,756,314)(591,075) (120,719,049)(36,637,007) 6,911,422(342,049) 62,197,9801,694,611 (604,987)(59,359) (1,407,903)(298,773) 131,858- 520,61681,219 (473,129)(59,359) (887,287)(217,554) (3,692,107)(670,396) (45,467,894)(298,944) (974,753)(32,987) (14,163,920)(154,063) (466,404)- (565,722)(893,316) 6,227,927534,450 61,876,555 - -1,591,749 1,591,749 - -- 3,974,116 - 46,1944,925 188,46310,595 (6,679,693)(1,258,535) (51,039,636)(1,046,129) (5,538,836)169,206 (43,606,289)(2,381,857) 14,169,8445,324,901 181,811,9797,216,189 (15,225,774)(5,200,128) (201,225,822)(6,568,961) 114,82346,684 1,710,78789,987 (941,107)171,457 (17,703,056)737,215 1,348 (41,650)(60,745)(167,585) 24,767,609 1,898,074642,5841,385,962 1,856,424581,839 24,768,9571,218,377 19,192,2386,017,146 256,057,11112,599,992 $21,048,662$6,598,985$ 280,826,068$13,818,369 $2,290,022$(752,068)$ 33,623,467$(1,203,121) 3,106,587516,903 21,381,8331,380,698 (162,794)(44,672) 79,862(535,998) -- 27,368 - -- -82,334 -- 4,139,3063,601 43,087- 43,087 - 1,101,620(69,652) 844,3911,959,852 -- 985,348 - 62,9232,350 238,072 (624) 91,4054,767 449,99969,750 2,629323 9,3041,941 375,943- 375,943 - -- -(63,822) 4,621,400410,019 28,574,5132,897,732 $6,911,422$(342,049)$ 62,197,980$1,694,611 8,7912,372 121,7894,641 -(663,934) 3,565,04983,335 - --1,029,976 29 CITY OF DENTON, TEXASExhibit XI STATEMENT OF ASSETS AND LIABILITIES AGENCY FUNDS AS OF SEPTEMBER 30, 2012 Total Agency Funds ASSETS: Cash, cash equivalents and investments, at fair value$ 1,740,619 Accrued interest817 Other assets82,375 Total assets$ 1,823,811 LIABILITIES: Accounts payable1,823,811 Total liabilities$ 1,823,811 The notes to the basic financial statements are an integral part of this statement. 30 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2012 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Denton is a municipal corporation governed by an elected seven-member council consisting of a mayor elected at large and six councilpersons, four representing specific geographical districts and two elected at large. The City receives funding from state and federal government sources and must comply with the requirements of these funding source entities. However, the City is not included in any other pronouncements by the Governmental Accounting Standards Board (GASB) Statement No. the public and have decision-making authority, the authority to levy taxes, the power to designate management, the ability to significantly influence operations, and primary accountability for fiscal matters. The financial statements of the City have been prepared to conform to accounting principles generally accepted (GAAP) in the United States of America as applicable to state and local governments. GASB is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the more significant policies. A.Reporting entity An elected seven-member council consisting of a mayor and six councilpersons govern the City.As required by accounting principles generally accepted in the United States of America, these financial statements present the City (the primary government) and its component units, which are entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the City's operations, and so data from these units are combined with data of the primary government. A discretely presented component unit, on the other hand, is reported in a separate column in the government-wide financial statements to emphasize it is legally separate from the City. The City had no component units, discretely presented or blended, at September 30, 2012. B.Government-wide and fund financial statements The basic financial statements include both government-wide (based on the City as a whole) and fund financial statements. The reporting focus is either the City as a whole (government-wide financial statements) or major individual funds (within the fund financial statements). The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all non-fiduciary activities of the primary government. For the most part, the effect of inter-fund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The government-wide statement of activities demonstrates the degree to which the direct expenses of a functional category (public safety, public works, etc.) or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or applicants who purchase, use or directly benefit from goods, services or privileges provided by a given function or segment; (2) grants and contributions that are restricted to meeting operational requirements of a particular function or segment; and (3) grants and contributions that are restricted to meeting the capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. The net cost (by function or business-type activity) is normally covered by general revenue (property taxes, sales taxes, franchise fees, interest income, etc.). Separate fund financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major governmental funds and major enterprise funds are reported as separate columns in the fund financial statements. GASB Statement No. 34 sets forth minimum criteria (percentage of assets, liabilities, revenues or expenditures/expenses of either fund category and for the governmental and enterprise funds combined) for the determination of major funds. Non-major funds are combined in a column in the fund financial statements. 31 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 Internal service funds, which traditionally provide services primarily to other funds of the government, are presented in summary form as part of the proprietary fund financial statements. The financial statements of internal service funds are allocated (based on the percentage of goods or services provided) between the governmental and business-type activities when presented at the government-wide level. are being held for the benefit of a third party (other local governments, individuals, etc.) and cannot be used to address activities or obligations of the government, these funds are not incorporated into the government- wide statements. The government-wide focus is more on the sustainability of the City as an entity and the change in aggregate financial position resulting from the activities of the fiscal period. The focus of the fund financial statements is on the major individual funds of the governmental and business-type categories, as well as the fiduciary funds (by category). Each presentation provides valuable information that can be analyzed and compared to enhance the usefulness of the information. C. Measurement focus, basis of accounting and financial statement presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund statements. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund-level financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property tax, franchise fees, sales tax and other taxes associated with the current fiscal period are all susceptible to accrual and so have been recognized as revenues of the current fiscal period. All of the other revenue items are considered to be measurable and available only when cash is received. The City reports the following major governmental funds: are not allocated by law or contractual agreement to some other fund are accounted for in this fund. From the fund are paid general operating costs, fixed charges and capital improvement costs that are not paid through other funds. The debt service fund accounts for the accumulation of financial resources for the payment of principal, interest and related costs on general long-term debt, paid primarily by taxes levied by the City. The capital projects fund accounts for financial resources used for the acquisition or construction of capital other than those recorded in the enterprise funds and internal service funds. Other governmental funds is a summarization of all of the non-major governmental funds. 32 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 The City reports the following major proprietary funds: The City utility system is made up of three separate funds as follows: The electric fund accounts for electrical utility services to the residents and commercial establishments of the City. Activities necessary to provide such services are accounted for in the fund, including, but not limited to, administration, operations, maintenance, finance and related debt service. The water fund accounts for water utility services to the residents and commercial establishments of the City. Activities necessary to provide such services are accounted for in the fund, including, but not limited to, administration, operations, maintenance, finance and related debt service. The wastewater fund accounts for sewer and storm water services to the residents and commercial establishments of the City. Activities necessary to provide such services are accounted for in the fund, including, but not limited to, administration, operations, maintenance, finance and related debt service. The City provides additional services through the following funds: The solid waste fund accounts for the provision of solid waste services to the residents of the City. Activities necessary to provide such services are accounted for in the fund, including, but not limited to, administration, operations, maintenance, finance and related debt service. The airport fund accounts for the airport services to the public and is funded through operational and gas well revenues. Activities necessary to provide such services are accounted for in the fund, including, but not limited to, administration, operations, maintenance, finance and related debt service. The City additionally reports the following funds: Internal service funds are used to account for the financing of materials and services provided by one department of the City to other departments of the City on a cost-reimbursement basis. Agency funds are used to account for the payment of payroll, , and other similar liabilities. The City holds the assets in an agency capacity for individuals, private organizations or other governments. The City follows private-sector standards of accounting and financial reporting (as issued by the Financial Accounting Standards Board) issued prior to December 1, 1989 in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the GASB. Governments also have the option of following subsequent private-sector guidance for business-type activities and enterprise funds, subject to this same limitation. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a pr , solid waste, and airport funds are charges to customers for services. Operating expenses for the enterprise funds and internal service funds include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. For deferred charges, the City recognizes, collected and related costs, in compliance with Financial Accounting Standards Board Statement No. 71 Accounting for the Effects of Certain Types of Regulation. resources first, then unrestricted resources as they are needed. 33 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 D.Assets, liabilities and net assets or equity 1. Cash, cash equivalents and investments - term investments with original maturities of three months or less from the date of acquisition. Investments are carried at fair value or cost, if maturities are one year or less. Fair value is determined as the price at which two willing parties would complete an exchange. The City uses a pooled cash and inancial reporting purposes, the investment balances in the pooled fund are allocated back to the individuals funds based on their respective share of the pooled total. Interest earned on investments is also allocated back and recorded directly to the individual funds on a monthly basis. 2. Receivables balances between governmental activities and business-type activities are reported in the government- wide sta Trade and property tax receivables are shown net of an allowance for uncollectibles. The City accrues amounts for utility services provided in September, but not billed at September 30, 2012. 3. Inventories Inventories of supplies are maintained at the City warehouse for use by all City funds and are accounted for by the consumption method. Cost is determined using a moving average method. No inventories exist in the governmental fund types. 4. Prepaid Items Certain costs applicable to future accounting periods are recorded as prepaid items. During 2010 the City prepaid certain contractual obligations to the Texas Municipal Power Agency (TMPA) relating to the cost of TMPA providing energy to the City. The benefit from the prepayment is being amortized over the benefit period of 15 years, of which 12.5 years is remaining. 5. Restricted Assets governmental and proprietary fund revenue bonds, general obligation bonds, and certificates of obligation, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. Assets collected from impact fees are limited by state statute in use and also shown as restricted on the balance sheet of the Water and Wastewater funds. 6. Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks and similar items) are reported in applicable governmental or business-type activities columns in the government-wide financial statements and in the proprietary fund financial statements. The City defines capital assets as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair value at the time received. Major outlays for capital assets and improvements are capitalized as projects are constructed. Net interest incurred during the construction phase of capital assets of business-type activities and enterprise funds is included as part of the capitalized value of the assets constructed. For 2012, net interest capitalization of $1,196,557 was recorded for electric fund projects, $1,102,958 for water fund projects, $215,793 for wastewater fund projects, $141,343 for solid waste fund projects and $48,101 for airport fund projects. 34 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 Capital assets are depreciated using the straight-line method over the following useful lives: AssetsYears Buildings40 Infrastructure2040 General improvements10 Machinery and equipment1020 Furniture and office equipment10 Computer equipment/software310 Plant and equipment5 Underground pipe40 Water storage rights50100 Water recreation rights50 Communication equipment5 Vehicles310 Renewals and betterments of property and equipment are capitalized, whereas normal repair and maintenance are charged to expense as incurred. 7. Compensated Absences The City allows full-time employees to accumulate unused vacation up to 320 hours (480 for Civil Service Fire employees.) Upon termination, any accumulated vacation time will be paid to an employee. Generally, sick leave is not paid upon termination except for civil service fire fighters and police officers. Firefighters and police officers accumulate unused sick leave up to a maximum of 1080 hours and 720 hours, respectively. All other employees are paid only upon illness while employed by the City. Accumulated vacation and sick leave is accrued when incurred in the government-wide, proprietary and fiduciary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements but have not been paid this amount at the end of the fiscal year.The General Fund and Other Governmental Funds are used to record any payout expenditures of the governmental fun employees and related liability, while proprietary fund payouts for their employees are recorded as reductions to the liabilities in those funds. 8. Arbitrage Arbitrage involves the investment of the proceeds from the sale of tax-exempt securities in a taxable money market instrument that yields a higher rate, resulting in interest revenue in excess of interest costs. Federal tax code requires that these excess earnings be rebataed to the federal government. The Capital Projects Fund has been used in prior years to liquidate govern 9. Long-term obligations In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term obligations are reported as liabilities. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount. Gains and losses on refunding are amortized over the life of the refunded debt or the life of the new issue, whichever is shorter. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 35 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 10. Fund equity have changed and are as follows: Nonspendable fund balance includes amounts not in a spendable form or are legally or contractually required to be maintained intact. Examples include inventory or endowments. Restricted fund balance includes amounts that can be spent only for the specific purposes stipulated by external resource providers, creditors, grantors, and contributors or through enabling legislation. Committed fund balance includes amounts that can be used only for the specific purposes determined bythe City Council through an ordinance and may only be changed or lifted through another ordinance.The ordinance must either adopt or rescind the commitment, as applicable, prior to the last day of the fiscal year for which the commitment is made. The amount subject to the constraint may be determined in the subsequent period. Assigned fund balance - comprises amounts intended to be used for specific purposes. Intent can be expressed by the City Council, or per the policy adopted by an ordinance by the City Council, may also make an assignment.In governmental funds other than the general fund, assigned fund balance represents the amount that is not restricted or committed and, at a minimum, is intended for the purpose of that fund. Unassigned fund balance is the residual classification of the general fund and includes all amounts not constrained in the other classifications. Unassigned amounts are technically available for any purpose. When multiple categories of fund balance are available for expenditure and approved for use by the City Council, the City will start with the most restricted category and spend those funds first before moving down to the next category with available funds. Normally this would result in the use of restricted, then committed, then assigned, and lastly, unassigned fund balance. 11. Minimum fund balance policy It is the goal of the City to achieve and maintain an unassigned fund balance in the general fund equal to 20% of budgeted expenditures for unanticipated expenditures, unforeseen revenue fluctuations, or other adverse circumstances. The fund balance level, however, may be reduced to the equivalent of 15% of budgeted expenditures in unusual financial circumstances. However, if such a situation occurs, the City will implement necessary corrective action within a five-year plan to restore the unassigned fund balance to the equivalent of 20% of budgeted expenditures. 12. Net Assets Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt consists of capital assets net of accumulated depreciation and the outstanding balances of any borrowing spent for the acquisition, construction or improvements of those assets. Net assets are reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the City or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. E.Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses/expenditures during the reporting period. Actual results could differ from those estimates. 36 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 II. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS Explanation of certain differences between the governmental fund statement of revenues, expenditures and changes in fund balances and the government-wide statement of activities Another element of tBond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net assets. Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long- The details of this $2,348,939 difference are as follows. Debt issued or incurred: Issuance of general obligationdebt$(13,913,303) Issuance of certificates of obligation(4,280,000) Principal repayments: Certificates of obligation principal retirement4,171,233 General obligation debt principal retirement5,474,756 Refunded debt principal10,771,582 Lease obligations principal retirement124,671 Net adjustment to decrease net changes in fund balances total governmental funds to arrive at changes in net assets of governmental activities$2,348,939 Another involving capital assets (i.e., sales, trade-ins and d $3,604,794 difference are as follows: Net effect of transactions involvingasset retirements/disposals$(2,739,969) Capital assets transferred to business-type activities as capital (2,238,156) contributions Donations of capital assets increase net assets in the statement of activities but do not appear in the governmental funds because 1,373,331 they are not financial resources Net adjustment to increase net changes in fund balances total $(3,604,794) governmental funds not require the use of current financial resources and therefore are not reported as expenditures in governmental fund The details of the $(603,188) difference are as follows: Compensated absences$(42,702) Municipal pension obligation(581,688) Other post employment benefits(27,748) Accrued interest48,950 Net adjustments to decrease netchanges in fund balances total governmental funds to arrive at changes in net assets of governmental activities$(603,188) 37 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 III. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Budgetary information The City Council follows these procedures, as prescribed by City Charter, in establishing the budgets reflected in the financial statements: 1. Within the time period required by law, the City Manager submits to the City Council a proposed budget for the fiscal year beginning on the following October 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted prior to the adoption of the budget in order to obtain taxpayer comments. 3. The annual budget adopted by the City Council covers the general fund, non-major special revenue funds (Recreation Fund, Police Confiscation Fund, Tourist and Convention Fund, Gas Well Revenues Fund, Street Improvement Fund, ), the debt service fund, the enterprise funds, and internal service funds.The budget is legally enacted by the City Council through passage of an ordinance prior to the beginning of the fiscal year. The basic financial statements reflect the legal level of control, (i.e. the level at which expenditures cannot legally exceed the appropriated amount) which is established at the total fund level as approved by City Council. 4. The City Charter provides that the City Manager may transfer any part of the unencumbered appropriation balance or the entire balance thereof between programs or general classifications of expenditures within an office, department, agency or organizational unit. (The City Council defines an organizational unit as set forth in Article VIII, Section 8.07 of the City Charter, to be a fund that has been appropriated by the City Council.) City Council approval is not required up to the fund level. The Charter also provides that at any time during the year, at the request of the City Manager, City Council may by resolution transfer any part of the unencumbered appropriation balances or the entire balance thereof from one office, department, agency, or organizational unit to another, as well as make any increases in fund appropriations. Budgets are adopted on a basis for the governmental funds and the budgeted special revenue funds that is generally consistent with generally accepted accounting principles. Budgets for enterprise funds are prepared on the full accrual basis, except certain noncash transactions such as depreciation expense and amortization on debt issuance costs where it is not budgeted, and debt service payments where it is budgeted. At the beginning of the subsequent year, management reviews all open encumbrances from the prior year and, as provided in the budget ordinance, appropriations for the encumbrances may be carried forward.In the current fiscal year, no appropriations were carried forward for the General Fund or Other Governmental Funds. Also, during the budgetary process, amounts are included in all fund budgets to recognize administrative transfers between funds for goods or services. These amounts are not included in the reporting of actual activity for the funds. For funds reporting required budget-to-actual comparisons, these administrative transfers are included as adjustments budgetary basis. B. Deficit fund equity The Criminal Justice and All Other special revenue funds had a deficit unassigned fund balance of ($2,504) and ($88,641) at September 30, 2012, respectively. The deficits were a result of reimbursement timing of grant or other governmental funding. Elimination of the deficit unassigned fund balances are anticipated in fiscal year 2012-2013. IV. DETAILED NOTES ON ALL FUNDS A.Deposits and investments In order to facilitate effective cash management practices, the operating cash of all funds is pooled into a common account for the purpose of increasing income through combined investment activities. At year- 38 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 end, the City had $40,749,232 in cash and cash equivalents. Of the $40,749,232, $1,533,672 is included in the agency funds. In addition, the City had $14,828 in petty cash at year-end. The Public Funds Investment Act (Texas Government Code) authorizes the City to invest in obligations of the U.S. Treasury, U.S. agencies, fully collateralized repurchase agreements, public fund investment pools, SEC-registered no-load money market mutual funds, investment-grade rated municipal securities of any state, fully collateralized or insured certificates of deposit, and commercial paper rated not less than A-1 or P-1 with a stated maturity of no more than 270 days. those investment options. The investments reported on September 30, 2012 were similar to those held during the fiscal year. The City reports all investments in the financial statements at fair value. At September 30, 2012 investments carried a fair value of $421,413,253. As of September 30, 2012, City investments were as follows: Interest rate risk. In accordance with its investment policy, the City manages its exposure to declines in fair values due to interest rate fluctuations by limiting the weighted average maturity of its investment portfolio to less than eighteen months. Credit risk.mits investments to obligations of the United States of America and its agencies, investment quality obligations of the State of Texas with a rating not less than AA, fully insured or collateralized Certificates of Deposits, and commercial paper that has a maturity of 270 days or less and a rating of A-1 or P-ere rated AA+ by Custodial credit risk. This is the risk that in the event of a bank or counterparty failure, the City may not be returned. The policy states that all bank deposits of City funds shall be secured by pledged collateral with a market value equal to no less than 102 percent of the principal plus accrued interest less an amount insured by FDIC.As of September 30, 2012, the bank balance for deposits was $42,442,431 and was covered by FDIC insurance. Due to the current FDIC program to fully insure non-interest bearing accounts, no additional collateral was necessary. Cash, cash equivalents and investments, at fair value are reported together on the financial statements. Investments, at fair value, by fund were as follows: 39 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 B.Property tax revenue Property taxes attach as an enforceable lien on property as of January 1. Taxes are levied on October 1 and are due and payable at that time; therefore, the legally enforceable claim arises on October 1. A receivable is recorded at that time. All unpaid taxes levied October 1 become delinquent February 1 of the following year. Property taxes at the fund level are recorded as receivables and revenue in the period they become available.Current-year revenues recognized are those ad valorem taxes collected within the current period or soon enough thereafter to pay current liabilities, which is sixty days after year-end. All other outstanding receivables are adjusted from revenue and recognized as deferred for future collections. Current tax collections for the year ended September 30, 2012 were 99.12% of the tax levy. An allowance is provided for delinquent taxes not expected to be collected in the future. At September 30, 2012, the City had a tax rate of $0.68975 per $100 valuation. Based upon the maximum ad valorem tax of $2.50 per $100 valuation imposed by Texas Constitutional law, the City had a tax rate margin of $1.81025. Additional revenues up to $116,080,019 could be raised per year based on the current year's assessed value of $6,412,375,004 before the limit is reached. On December 7, 2011, the City Council approved a Tax Increment Financing (TIF) Reinvestment Zone for the purpose of dedicating the increase in tax revenues generated within the TIF district for development in the downtown area of the City. In fiscal year 2012, the net taxable value of $80,331,050 was an increase of 40 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 $974,196 over the fiscal year 2011 base taxable value. The $6,720 tax revenue is the result of the increase and is recorded as property tax revenue in the TIF Fund as part of All Other Special Revenue Funds. C. Receivables Receivables at September 30, 2012-major funds, internal service funds and fiduciary funds), including the applicable allowancesfor uncollectible accounts, are shown below. 41 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 D. Capital assets Capital asset balances and transactions for the year ended September30, 2012 are summarized below and on the following page. 42 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 Transfers and decreases include $620,033 of capital assets ($33,499 in related accumulated depreciation) due to the transfer of assets from the Business-type activities to the Governmental activities recorded as transfers and $2,066,341 of capital assets due to the transfer of assets from the Governmental activities to the Business-type activities recorded as capital contributions. Depreciation expense was charged to activities of funds/functions/programs as follows: 43 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 Construction commitments: The City has several major construction/capital projects planned or in progress as of September 30, 2012. These projects are evidenced by contractual commitments with contractors and include: Remaining ProjectSpent-to-DateCommitment Lake Lewisville Water Treatment Plant Upgrade$20,621,412$16,437,652 Bonnie Brae Widening Phase 1 Engineering2,955,0372,784,665 Kings Row Substation Construction475,1342,469,405 McKinney Substation Construction671,8892,440,708 Crossroads Substation Construction539,4802,417,805 Mayhill Widening Phase 1 Engineering2,623,8362,345,322 Prairie/Robertson Trail Bridge132,7531,736,967 E. Interfund receivables, payables and transfers A summary of interfund receivables and payables (in thousands) at September 30, 2012, is as follows: The more significant interfund receivables and payables include the following: Interfund receivablesInterfund payablesAmount Electric fundInternal service funds-materials management$2,244,741 WaterfundInternal service funds-materials management184,517 GeneralfundInternal service funds-materials management101,600 WastewaterfundInternal service funds-materials management 71,580 The outstanding balances between the Electric, Water, General Fund and Wastewater Funds and the Materials Management Fund are a result of the cash position in the Materials Management Fund due to inventory purchases. 44 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 Transfers between funds (in thousands) during the year were as follows: The more significant transfers include the following: Transfers from fundTransfers to fundAmount Non--Gas Well RevenuesCapital Projects$1,950,000 General FundNon--Street Improvement921,779 Solid WasteFleet Services604,987 WastewaterDebt Service541,225 General FundCapital Projects508,687 Beginning on October 1, 2011 the City created a Street Improvement Fund to account for all street maintenance operations which was previously reported as part of the General Fund. The Street Improvement Fund was initially funded with a $921,779 transfer from the General Fund on October 1, 2011. Transfers from Gas Well Revenues and the General Fund to the Capital Projects Fund were to fund capital projects. Transfer from the Solid Waste Fund to the Fleet Services Fund is for the Solid Waste Fuel Island. Transfers from the Wastewater Fund to the Debt Service Fund were for related drainage debt service payments. 45 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 F. Leases Leases payable represent the remaining principal amounts payable under lease purchase agreements for the acquisition of equipment through the General, Solid Waste, Tech Services, and Wastewater funds. These leases are recorded as capital leases. Remaining requirements, including interest, under these leases are as follows: YearPayments 2013$1,347,302 20141,228,711 201558,497 58,497 2016 58,497 2017 Total minimum lease payments2,751,504 Less: amount representing interest146,203 Present value of minimum future $2,605,301 arrangements as of September 30, 2012: Equipment$ 12,744,925 Less: Accumulated Depreciation (10,406,556) Total$ 2,338,369 46 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 G.Long-term debt Long-term liabilities transactions for the year ended September 30, 2012, are summarized as follows below and on the following pages: For Internal Service funds, long-term liabilities are included as part of the above totals for governmental activities. Compensated absences payables and municipal pension obligations are based on the assignment of an employee within a fund, with both historically being liquated predominantly by the General Fund. Other post employment benefits are liquidated from the Health Insurance internal service fund, with the retiree subsidy amounts paid predominantly by the General Fund. Claims payable represents an estimate of self-insured claims liability outstanding in the Health Insurance and Risk Retention internal service funds. 47 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 General bonded debt - General bonded debt at September 30, 2012, is comprised of the following: Gross Amount OriginalOutstanding at Interest RateFinalAmountSeptember 30, Bonded Debt(%)Issue DateMaturityof Issue2012 General obligation refunding3.0 to 4.7520032023$ 7,122,999$ 639,700 General obligation refunding 2.5 to 5.0200420207,370,0004,510,000 General obligation 3.0 to 5.0200520255,000,0003,780,000 General obligation 4.25 to 4.875200620263,695,0002,935,000 General obligation4.0 to 4.52007202615,285,00013,205,000 General obligation refunding4.0 to 5.252007202226,025,00024,180,000 General obligation4.0 to 4.75200820287,300,0006,340,000 General obligation refunding3.0 to 5.0200920166,695,0001,490,000 General obligation refunding3.0 to 5.0201020223,350,0002,525,000 General obligation4.0 to 4.3201020304,115,0003,870,000 General obligationrefunding2.0 to 4.75201120312,225,0002,180,000 General obligationrefunding2.0 to 5.02012203214,358,73914,358,739 Total general obligation bonds102,541,73880,013,439 Certificates of obligation3.0 to 4.75200320235,550,000650,227 Certificates of obligation2.0 to 5.02004202412,105,0001,110,115 Certificates of obligation3.0 to 4.375200520255,575,0003,025,000 Certificates of obligation4.0 to 4.75200620266,509,9503,720,000 Certificates of obligation4.7 to 5.0200720278,855,0004,910,000 Certificates of obligation4.0 to 5.02007A20287,065,0006,135,000 Certificates of obligation3.0 to 4.625200820287,865,0004,755,000 Certificates of obligation2.0 to 4.125201020302,750,0002,055,000 Certificates of obligation2.0 to 4.75201120313,455,0003,060,000 Certificates of obligation2.0 to 5.0201220324,490,0004,490,000 64,219,950 Total certificates of obligation33,910,342 Total general bonded debt$166,761,688$113,923,781 [These amounts do not include net unamortized premiums/(discounts) of $3,272,887nor net deferred gain/(loss) on refunding of ($1,512,515).] Proceeds of general bonded debt are restricted to the uses for which they were approved in the bond elections. The City Charter expressly prohibits the use of bond proceeds to fund operating expenses. The general obligations are collateralized by the full faith and credit of the City and, primarily, payable from property taxes. In prior years, the City defeased general obligation bonds and certificates of obligation by placing the proceeds of new debt in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and liabilities for the defeased debt are not included in the City's financial statements. On September 30, 2012 $2,115,000 of general obligation bonds and $10,165,000 of certificates of obligation considered defeased are still outstanding. 48 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 In April 2012, the City issued $44,675,000 ($40,185,000 of which is included as part of business type activities) in certificates of obligation.The debt was issued to pay the costs of various capital improvements in the Capital Projects Fund ($4,490,000), Electric ($21,485,000), Wastewater ($7,165,000), Water ($5,925,000), and Solid Waste ($5,610,000). In April 2012, the City issued $33,590,000 ($19,231,261 of which is included as part of business-type activities) of general obligation refunding and improvement bonds. The reacquisition price exceeded the net carrying amount of the old debt by $2,069,959, ($1,132,808 of which is reported in business-type activities.)This amount is being amortized over the remaining life of the refunded debt, which is shorter than the life of the new debt issued. This advance refunding was undertaken to reduce total debt service payments over the next 12 years by $6,406,129 and resulted in a net present value savings of $3,260,322. The improvement portion of the bonds was issued to pay the costs of various capital improvements in the Capital Projects Fund for $3,740,000. Revenue bonds Revenue bond debt at September 30, 2012, is comprised of the following issues: PrincipalNetNet OriginalOutstanding atUnamortizedOutstanding at Interest RateIssueFinalAmountSeptember30,Premium/September30, Revenue Bonds(%)DateMaturityof Issue2012(Discount)2012 Utility system4.25 to 5.020022022$ 56,710,000$ 2,730,000$ 5,777$ 2,735,777 Utility system5.0 to 6.52002202213,985,000660,000(436)659,564 Utility system 3.625 to refunding5.6252003202250,180,0003,700,00025,2553,725,255 Utility system refunding2.0 to 5.252004202424,850,00023,470,000623,82124,093,821 Utility system refunding3.0 to 5.02005202353,845,00051,450,0002,105,15353,555,153 Utility system refunding4.5 to 5.0200620268,515,0006,725,000 6,725,000 Utility system4.0 to 4.252007202616,740,00013,830,0002,56613,832,566 Utility system refunding4.0 to 4.252007202941,795,00041,200,00042,40541,242,405 Utility System3.50 to 5.002008202715,290,00013,090,00054,30413,144,304 Total revenue Bonds$281,910,000$156,855,000$2,858,845$159,713,845 [These amounts do not include net unamortized gain/(loss) on refunding of ($4,799,986).] The revenue bonds are collateralized by the revenue of the Denton utility system funds (System) and the various special funds established by the bond ordinance. The ordinance provides that the revenue of the System is to be used first to pay operating and maintenance expenses of the System and second to establish and maintain the revenue bond funds. Any remaining revenues may then be used for any lawful purpose. The ordinance also contains provisions, which among other items restrict the issuance of additional revenue bonds unless the special funds noted above contain the required amounts and certain financial ratios are met. Management believes the City is in compliance with all significant requirements. Assets in these accounts consist of cash and U.S. government securities. Following is a summary of the various net asset balances in the funds required by the bond ordinance to be restricted for debt service. Interest and sinking fund$11,690,661 Reserve fund11,490,168 Total net assets restricted for debt service$23,180,829 49 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 In prior years, the City defeased revenue bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and liabilities for the defeased bonds are not included in the City's financial statements.On September 30, 2012, $63,260,000 of revenue bonds considered defeased are still outstanding. Other enterprise obligations General obligation bonds and certificates of obligation issued for electric, water, wastewater, solid waste and airport funds at September 30, 2012, is comprised of the following: Gross Amount OriginalOutstanding at Interest RateFinalAmountSeptember 30, Issue Other Obligations(%)DateMaturityof Issue2012 General obligation refunding3.0 to 4.7520032023$957,001$ 80,300 General obligation refunding2.5 to 5.0200420152,040,000455,000 General obligation refunding4.0 to 5.25200720222,885,0002,820,000 General obligation refunding3.0 to 5.020082016830,000420,000 General obligation refunding3.0 to 5.02010202235,815,00031,685,000 General obligation refunding2.0 to 4.0201120318,620,0004,610,000 General obligation refunding2.0 to 5.02012203219,231,26119,231,261 Total general obligation bonds70,378,26259,301,561 Certificates of obligation3.0 to 4.75200320231,855,00099,773 Certificates of obligation2.0 to 5.0200420241,895,000144,885 Certificatesof obligation3.0 to 4.375200520251,570,000605,000 Certificates of obligation4.0 to 4.75200620266,155,0502,530,000 Certificates of obligation4.7 to 5.0200720272,590,0001,135,000 Certificates of obligation2,820,0001,720,000 3.0 to 4.62520082028 Certificates of obligation58,295,00053,755,000 2.0 to 5.020102030 Certificates of obligation58,820,00053,625,000 2.0 to 5.020102025 Certificates of obligation28,645,00027,515,000 2.0 to 4.020112031 Certificates of obligation40,185,00040,185,000 2.0 to 5.020122032 Total certificates of obligation202,830,050181,314,658 Total other enterprise obligations$273,208,312$240,616,219 [These amounts do not include net unamortized premiums/(discounts) of $15,010,303nor net deferred gain/(loss) on refunding of ($1,440,341).] 50 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 Schedule of long-term debt maturities Aggregate maturities of the long-term debt (principal and interest) for the years subsequent to September 30, 2012 are shown below: Governmental Activities: Business-Type Activities: [These amounts do not include net unamortized premiums/(discounts) of $21,142,035 nor net deferred gain/(loss) on refunding of ($7,752,842).] 51 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 Bonds authorized and unissued There were no general obligation bonds authorized but unissued as of September 30, 2012. A new general obligation bond program was voted and approved by the citizens in November 2012, approving $20,400,000 over the next 5 years.When issued, the proceeds will be allocated to the applicable street projects. H.Landfillclosure and post-closure cost State and federal laws and regulations require the City to place a final cover on its Mayhill Road landfill site upon closure and to perform certain maintenance and monitoring functions at the site for thirty years after closure. Although closure and post-closure care costs will be paid only upon anticipated closure, the City reports a portion of these costs as an operating expense in each period based on landfill capacity used as of each balance sheet date. Based on a model created by a 2009 engineering study, total landfill closure and post-closure cost increased from $14,838,211 at September 30, 2011 to $15,194,328 at September 30, 2012. The $5,689,750 reported as landfill closure and post-closure care liability is a $375,943 increase from the $5,313,807 liability reported on September 30, 2011. This liability represents the cumulative amount incurred to date based on the use of 37.4% of the estimated capacity of the entire landfill at September 30, 2012. Based on this estimate, the remaining potential estimated liability for closure and post-closure care of the entire landfill is $9,504,578. The City will recognize the remaining estimated cost of closure and post- closure care as the remaining capacity is filled. These amounts are based on what it would cost to perform closure and post-closure care in 2012. Actual cost may fluctuate due to inflation, changes in technology, or changes in regulations. The landfill has a remaining life of 37 years, and the City expects to close the landfill in fiscal year 2049. The solid waste fund has provided for a restriction and designation of cash and investments of $5,794,949 at September 30, 2012, and anticipates increasing the reserve in future periods as the closure and post- closure activities are carried out. V.OTHER INFORMATION A.Pension plans Texas Municipal Retirement Plan Plan description The City provides pension benefits for all of its eligible employees (except fire fighters) through a non- traditional, joint contributory, hybrid defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS), one of 847 administered by TMRS, an agent multiple-employer public employee retirement system. Benefits Upon retirement, benefits depend upon the sum of the employee's contributions to the plan, with interest, and the city-financed monetary credits, with interest. City-financed monetary credits are composed of three sources: prior service credits, current service credits, and updated service credits. At the inception the plan, the city granted monetary credits for service rendered before the plan began (or prior service credits) of a theoretical amount at least equal to two times what would have been contributed by the employee, with interest (3% annual), prior to establishment of the plan.Monetary credits for service since the plan began (or current service credits) are a percent (200%) of the employee's accumulated contributions. In addition, the City can grant, either annually or on an annually repeating basis, another type of monetary credit referred to as an updated service credit. This monetary credit is determined by hypothetically recomputing salary using a salary calculation based on the 36-month period ending a year before the effective date of 52 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 calculation. This hypothetical account balance is increased by 3% each year, and increased by the city match currently in effect (200%). The resulting sum is then c balance increased by the actual city match and actual interest credited. If the hypothetical calculation exceeds the actual calculation, the member is granted a monetary credit (or Updated Service Credit) equal to the difference between the hypothetical calculation and the actual calculation times the percentage adopted. At retirement, the benefit is calculated as if the sum of the employee's accumulated contributions with interest and the city-financed monetary credits with interest were used to purchase an annuity. Members can retire at ages 60 and above with 5 or more years of service or with 20 years of service regardless of age. A member is vested after five years. The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS and within the actuarial constraints also in the statutes. Contributions The contribution rate for the employees is 7% of gross earnings, and the City matching percentage is currently 200%, both as adopted by the governing body of the City. Under the state law governing TMRS, the actuary annually determines the city contribution rate using the Projected Unit Credit actuarial cost method. This rate consists of the normal cost contribution rate and the prior service contribution rate, both of which are calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances ually. The prior service contribution rate amortizes the unfunded actuarial liability over the remainder of the plan's 30-year amortization period. Both the normal cost and prior service contribution rates include recognition of the projected impact of annually repeating benefits, such as Updated Service Credits and Annuity Increases. Both the employees and the City make contributions monthly. Since the City needs to know its contribution rate in advance for budgetary purposes, there is a one-year delay between the actuarial valuation that serves as the basis for the rate and the calendar year when the rate goes into effect. Funded status and funding progress r a period of up to eight years in order to recognize the change to a Projected Unit Cost Method in the 2007 valuation. By doing so, the City will contribute less than the actuarially determined annual required contribution (ARC), and as such will need to accrue a net pension obligation on its balance sheet. In subsequent years, this net pension obligation will continue to increase until the full actuarially determined ARC is paid. 09 through fiscal year 2016, but due to the new fund structure approved by the Texas Legislature with Senate Bill 350 (SB 350) and better than expected financial performance, management began paying the full ARC in October 2012. The annual pension cost and net pension obligation are as follows: Net Pension Obligation Annual required contribution$ 11,475,702 Interest on prior year net pension obligation 432,596 Adjustment to annual required contribution (371,860) Annual pension cost 11,536,438 Contributions made 10,435,001 Increase in net pension obligation 1,101,437 Net Pension obligation - beginning of year 6,179,941 Net pension obligation - end of year$ 7,281,378 53 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 Three-Year Trend Information forTMRS Funding Year ending9/30/129/30/119/30/10 Annual pension costs(APC)$11,536,438$11,633,967$11,218,568 Actual contributions$10,435,001$9,579,358$8,849,577 Percent contributed90%82%79% Net pension obligation$7,281,378$6,179,941$4,125,332 Actuarial Assumptions 12/31/11 Actuarial cost methodProjected unit credit Amortization methodLevel percent of payroll Remaining amortization period26.2years closedperiod Amortization period for new Gains/Losses30 years Assetvaluation method10-year Smoothed Market Investment rate of return7.0% Projected salary increasesVaries by age and service Includes inflation at3.0% Cost-of-living adjustments2.1% As of December 31, 2011, the most recent valuation date, the covered payroll (annual payroll of active employees covered by the plan as of the valuation date) was $58,376,960, and the ratio of the UAAL to the covered payroll was 119.3%.The City adopted the Updated Service Credit provision in 1992, on a repeating basis. Additionally, the City adopted annuity increases for its retirees, on a repeating basis in 1992 equal to 70% of the change in consumer price index. The City of Denton is one of 847 municipalities having the benefit plan administered by TMRS. Each of the 847 municipalities has an annual, individual actuarial valuation performed. All assumptions for the December 31, 2011, valuations are contained in the 2011 TMRS Comprehensive Annual Financial Report, a copy of which may be obtained by writing to P.O. Box 149153, Austin, Texas 78714-9153; in addition, www.TMRS.com. Supplemental death benefit fund The City of Denton contributes to a cost-sharing multiple-employer defined benefit group-term life insurance plan known as the Supplemental Death Benefits Fund (SDBF).This is a separate trust administered by the TMRS Board of Trustees and is a voluntary program in which the City elected, by ordinance, to provide group term life insurance coverage to active and retired members. The City may terminate coverage under and discontinue participation in the SDBF by adopting an ordinance before November 1 of any year to be effective the following January 1. Contributions are made monthly based on the covered payroll of employee members of the City. The contractually required contribution rate is determined annually, and the rate is based on the mortality and service experience of all employees covered by the SDBF and the demographics specific to the workforce of the City. There is a one-year delay between the actuarial valuation that serves as the basis for the employer contribution rate and the calendar year when the rate goes into effect. The contributions to the SDBF are pooled for investment purposes with those of the Pension Trust Fund described above. The 54 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 TMRS Act requires the Pension Trust Fund to allocate investment income to the SDBF on an annual basis. The funding policy of the plan is to assure adequate resources are available to meet all death benefit entire careers. As such, contributions are utilized to fund active member deaths on a pay-as-you-go basis; any excess contributions and investment income over payments then become net assets available for postemployment benefits other than pension benefits (OPEB). fiscal years ended September 30, 2010, 2011, and 2012, were $116,414, $123,135, and $106,280, respectively, which equaled the required contributions each year. Payments from this fund are similar to group term life insurance benefits, and are paid to the designated beneficiaries upon the receipt of an approved application for payment. The death benefit for active employees provides a lump- benefit for retirees is considered an OPEB and is a fixed amount of $7,500. The obligations of this plan are payable only from the SDBF and are not an obligation of, or claim against, the Pension Trust Fund. Denton Firemen's Relief and Retirement Plan Plan description of a single- employer defined benefit pension plan. s firefighters in the Denton Fire Department. The table following summarizes the membership of the fund as of December 31, 2009, the most recent biennial actuarial valuation. 12/31/11 1.Retirees and beneficiaries currently receiving benefits and terminated employees entitled to 67 benefits but not yet receiving them 2.Current employees a. Vested95 b. Nonvested66 3.Total228 The withdrawal benefits. These benefits vest after 10 years of credited service. Firefighters may retire at age 50 with 20 years of service. As of the December 31, 2011 actuarial valuation date, the Plan effective January 1, 2011 provided a monthly normal service retirement benefit, payable in a joint and two-thirds to spouse form of annuity, equal to 2.59% of highest 36-month average salary for each year of service. There is no provision for automatic postretirement benefit increases. The fund has the authority to provide, and has periodically in the past provided for, ad hoc postretirement benefit increases. The benefit provisions of this plan are authorized by TLFFRA provides the authority and procedure to amend benefit provisions. Contributions required and contributions made The contribution provisions of this plan are authorized by TLFFRA. The TLFFRA provides the authority and procedure to change the amount of contributions determined as a percentage of pay by each firefighter and a percentage of payroll by the city. 55 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 While the contribution requirements are not actuarially determined, state law requires each plan of benefits adopted by the fund be approved by an eligible actuary.The actuary certifies the contribution commitment by the firefighters and the city provides an adequate financing arrangement. Using the entry age actuarial of the total contribution rate over the normal cost contributio actuarial accrued liability (UAAL) actuarial accrued liability is determined using an open, level percentage of payroll method. The costs of administering the plan are financed from the fund. 12.6% of pay by the firefighters and contributions by the City equal to the same percentage of payroll the City contributes to the Texas Municipal Retirement System for other employees.The December 31, 2011 actuarial valuation assumes the city contribution rate will average 17.50%of payroll in the future.The City contribution rate for calendar year 2011 was 17.17%, for January 2012 through September 2012 was 17.58%, for October 2012 through December 2012 was 18.74%, and for calendar year 2013 is scheduled to be 18.98%. Three- Year ending9/30/129/30/119/30/10 Annual pension costs (APC)$2,253,667$2,141,662$1,976,155 Actual contributions$2,253,667$2,141,662$1,976,155 Percent contributed100%100%100% Weighted average percent contributed as a percent of payroll 17.48%16.73%15.06% 12/31/11 Actuarial cost methodEntry age Amortization methodLevel percent of payroll, open Amortization period for ARC30 years Asset valuation method5-year adjusted market value Investment rate of return7.00% Projected salary increases3.50% plus promotion and longevity (0% to 6%) Includes inflation at3.50% Cost-of-living adjustmentsNone Payroll increases3.50% ARC as percent of payrollBudgeted rates As of December 31, 2011, the most recent valuation date, the plan was 72.0% funded. The actuarial accrued liability for benefits was $75,228,727, and the actuarial value of assets was $54,169,459, resulting in an unfunded actuarial accrued liability (UAAL) of $21,059,268. The covered payroll (annual payroll of active employees covered by the plan as of the valuation date) was $12,938,426, and the ratio of the UAAL to the covered payroll was 162.8%. for further trend information. 56 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 Financial statements are available and can be obtained by contacting the Denton Fire Department at the City of Denton at 332 E. Hickory, Denton, Texas 76201. B. Post-employment benefits other than pensions (OPEB) The cost of post-employment healthcare benefits, from an accrual accounting perspective, similar to the cost of pension benefits, should be associated with the periods in which the cost occurs, rather than in the future year when it will be paid. According to the requirements of GASB Statement No. 45 for the fiscal year ended September 30, 2012, the City recognizes the cost of post-employment healthcare in the year the employee services are received, reports the accumulated liability from prior years, and provides information accumulated from prior years will be amortized over 30 years, the first period commencing with the fiscal year ending September 30, 2008. Plan description The City provides post-employment medical care (OPEB) for retired employees through a single-employer defined benefit medical plan. The plan provides medical benefits for eligible retirees, their spouses and The benefits, benefit levels, and contribution rates are approved annually by the City management as part of the budget process. Any changes in rate subsidies for retirees are approved by the City Council.Since an irrevocable trust has not been established, the plan is not accounted for as a trust fund. The plan does not issue a separate financial report. Benefits provided The City provides post-employment medical, dental, and vision care benefits to its retirees. To be eligible for benefits, an employee must qualify for retirement under the Texas Municipal Retirement System or the Denton Relief and Retirement Plan. Retirees must make a one-time irrevocable decision to chose benefits at the time of retirement, after that their eligibility for the benefits ceases. elf-insured health plan. The benefit levels are the same as those afforded to active employees. As of September 30, 2012, membership consisted of: Retirees and beneficiaries receiving benefits 101 Terminated employees eligible for benefits, but not yet enrolled - Active employees 1,139 Total 1,240 Funding policy The plan premium rates are determined annually by City management and approved by the City Council as part of the annual budget.full amount of the actuarially determined blended premium rate less a subsidy dependent upon years of service at retirement. By providing retirees ates it charges to active employees, the City is in effect providing a subsidy to retirees. This implied subsidy exists because, on average, retiree health care costs are higher than active employee healthcare costs. By the City not contributing anything toward this plan in advance, the City employs a pay-as-you-go method through paying the higher rate for active employees each year. The City contributes $20 per month for each five-year increment of service, up to $100 per month, toward the cost of retiree coverage. The subsidies paid by the City for the fiscal year ended September 30, 2012 totaled $26,640. The full cost for dental and vision is paid by the retiree. Retirees are required to enroll in Medicare Part B once eligible (age 65) and are moved into a fully-insured Medicare Supplement plan at that time. The same City contribution level applies to the supplement. 57 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 the City Council. At the conclusion of these discussions, the City Council concurred with the staff -as-you-go basis. This basis has been recommended since 1) this provides the lowest cost approach, 2) the ARC is relatively small in comparison -as-you-go cost is not forecast to exceed the ARC until approximately the year 2031.This approach will be reevaluated every two years when new valuations are prepared. Annual OPEB costs and Net OPEBobligation -employment benefit (OPEB) cost is calculated based on the annual required contribution of the City (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of accrual that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities over a period not to exceed information are as follows at September 30, 2012: Annual required contribution$ 1,582,219 Interest on prior year Net OPEB obligation 142,537 Adjustment to annual required contribution (204,553) Annual OPEB cost 1,520,203 Contributions made 1,481,210 Increase in net OPEB obligation 38,993 Net OPEB obligation - beginning of year 3,167,492 Net OPEB obligation - end of year$ 3,206,485 Percentage of OPEB costs contributed97.44% Funded status and funding progress The funded status of the plan as of the actuarial measurement date of October 1, 2011 was as follows: Actuarial accrued liability$ 12,565,747 Actuarial value of plan assets - Unfunded actuarial accrued liability$ 12,565,747 Funded ratio0.0% Covered payroll$ 71,315,386 Unfunded actuarial accrued liability as a percentage of covered payroll17.6% Three-Year Trend Information for OPEBFunding Year ending9/30/129/30/119/30/10 Annual OPEB costs$1,520,203$1,270,279$1,284,569 Actual contributions$1,481,210$623,130$370,759 Percent contributed97%49%29% Net OPEB obligation$3,206,485$3,167,492$2,520,343 58 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 The schedule of funding progress, presented as Required Supplementary Information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability of benefits. Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events in the future. Amounts determined regarding the status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. Actuarial methods and assumptions The Projected Unit Credit actuarial c health care plan. Using the plan benefits, the present health premiums and a set of actuarial assumptions, the anticipated future payments are projected. The projected unit credit method then provides for a systematic recognition of the cost of these anticipated payments. The yearly ARC is computed to cover the cost of benefits being earned by covered members as well as to amortize a portion of the unfunded accrued liability. Projections of benefits are based on the substantive plan (the plan understood by the employer and plan members) and include the type of benefits in force at the valuation date and the pattern of sharing benefits between the City and the plan members at that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Significant method and assumptions used for this fiscal year valuation as shown on the following page were as follows: Actuarial Assumptions 10/1/11 Actuarial cost methodProjected Unit credit Amortization methodLevel dollar, closed Amortization period for ARC26years Asset valuation methodN/A Investment rate of return4.5%, net of expenses Includes inflation at3.0% Payroll growth3.0% Healthcare inflation rate8.0%for 2013 declining to an ultimate rate of 4.5%after 7 years Medical reimbursements The federal government may provide the city subsidy per the Medicare Part D Prescription Drug Subsidy Program for providing healthcare for Medicare eligible employees. As the City does not participate in these subsidies, any current and future year subsidies are not recognized as a reduction to the actuarial accrued liability. C. Deferred compensation plan The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. For the calendar 2012 year, the plan, available to all permanent City employees, permitted them to defer, until future years, up to 25% of annual gross earnings not to exceed $17,500. Employees who are age 50 or older may contribute an amount not to exceed $23,000. Employees who are 59 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 within three years of retirement eligibility may elect to participate in a catch-up provision allowed by Section 457, which has an annual maximum contribution amount of $35,000. The withdrawal of deferred compensation funds is only available to employees by loan, termination, until termination, retirement, death, or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property or rights are, until paid or made available to the employee or other beneficiary, solely the property and rights of the employees. Accordingly, the assets and It is the opinion of the City's legal counsel that the City has no liability for losses under the plan. D. Self-insurance plan The City has established a self-insurance plan for liability and workers' compensation benefits in the Risk Retention Fund. Accrued claims payable include provisions for claims reported and claims incurred but not reported. The provision for reported claims is determined by estimating the amount which will ultimately be paid for each claimant. The provision for claims incurred but not yet reported is estimated based on actuarial studies. It is the policy of the City of Denton not to purchase commercial insurance for workers' compensation claims or general liability. Commercial liability insurance coverage is purchased for airport operations, emergency medical services, take-home vehicles, and employee theft and dishonesty. Additionally, excess insurance is purchased for general liability, auto liability, public officials, exposures. The City reports liabilities when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported. Because actual claim liabilities depend on such complex factors as inflation, changes in legal doctrines, and damage awards, the process used in computing claims liability does not necessarily result in an exact amount. In January 2008, the City started a self-insured group employee health insurance plan. Claims are paid from the Health Insurance Fund, which has an annually negotiated stop loss provision. -insurance plans are reported as interfund transactions. Accordingly, they are treated as operating revenues of the Internal Service Risk Retention Fund and Health Insurance Fund and operating expenditures (expenses) of the other funds and employee payroll deductions. Claims liabilities are re-evaluated periodically to take into consideration settlement of claims, new claims and other factors. As of September 30, 2012, the estimated value of these liabilities was $5,272,005. Changes in balances of claims liabilities during fiscal years 2012 and 2011 were as follows: 60 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 Claims LiabilityClaims andClaims Liability Beginning ofChange inClaimsEnd of Fiscal YearEstimatesPaymentsFiscal Year Workers' Compensation 2012$1,858,914$1,582,362 $424,316$3,016,960 20112,053,404276,552471,0421,858,914 General Liability 2012$658,446$398,128$168,582$887,992 2011564,539260,318166,411658,446 Health Insurance 2012$1,129,950$17,561,880$17,324,777$1,367,053 2011826,51014,502,93614,199,4961,129,950 On September 30, 2012, the City of Denton held additional amounts in unrestricted net assets of $2,768,488 in the Risk Retention Fund and $3,472,238 in the Health Insurance Fund for payment of claims. There were no significant reductions in insurance coverage from coverage in the prior year, and the amount of settlements did not exceed insurance coverage in the current year or in any of the past three fiscal years. E. Commitments and contingencies Agreement with TMPA In 1976, the City, along with the cities of Bryan, Greenville, and Garland, Texas (the Cities) entered into a Power Sales Contract with the Texas Municipal Power Agency (TMPA). TMPA was created through concurrent ordinances of the Cities and is governed by a Board of Directors consisting of eight members, two appointed by the governing body of each city. Under the terms of the agreement, TMPA agreed to construct or acquire electric generating plants to supply energy and power to the Cities for a period of not less than 35 years. The Cities in turn agreed to purchase all future power and energy requirements in excess of the amounts generated by their systems from TMPA at prices intended to cover operating costs and retirement of debt. In the event that revenues are insufficient to cover all costs and retire the outstanding debt, each of the Cities has guaranteed a portion of the unpaid debt based, generally, upon its pro rata share of the energy delivered to consumers in the prior operating year. As of September 30, 2012, total TMPA long-term debt outstanding was approximately $856,837,000, and the City's percentage was approximately 21.3%.In December 2009, the City and the other Member Cities entered into a Global Compromise Settlement Agreement. As part of the settlement, the Member Cities 2004, and 2004A Subordinate Lien Bonds. The City Council approved the issuance of $58,820,000 of combination TMPA debt to be refinanced. In the opinion of management, the possibility of a material payment in the near future under this agreement is remote in that TMPA is generating operating profits, and assets exceed liabilities. TMPA operates a 462-megawatt, coal-fired generating plant. In 1996, TMPA switched to an external source of coal to reduce costs. Should TMPA be dissolved, each city would be entitled to an undivided interest in the property. 61 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 Selected financial statement information of TMPA is as follows: September 30 (Unaudited) 20122011 (000s)(000s) Operating revenues$ 162,491$ 180,586 Operating expenses116,368159,862 Operating income46,12320,724 Other non-operating sources (uses)3,3123,291 Current unrestricted assets46,02645,321 Total assets1,157,5721,189,165 Long-term debt Noncurrent758,809826,414 Total liabilities1,105,7141,137,686 Total net assets51,85851,479 Agreement with the City of Dallas During 1985, the City entered into an agreement with the City of Dallas that provides for the purchase of a minimum of 500,000 gallons/day of untreated water from the City of Dallas from Lake Lewisville. This contract will be effective for 30 years. The cost of water purchased under this agreement during fiscal year 2011 was $71,320. F.Litigation Various claims and lawsuits are pending against the City. In accordance with GAAP, those judgments disclosed but not accrued. In the opinion of City management and legal counsel, the maximum amount of all significant claims considered reasonably possible, excluding condemnation proceedings and the item described following, is approximately $500,000 as of September 30, 2012. Potential losses after insurance coverage on all probable claims and lawsuits, excluding the item following, will not have a material effect on the City's financial position as of September 30, 2012. The following information is related to litigation between the Texas Municipal Power Agency, of which the City of Denton has a 21.3% ownership, and the BNSF Railway: Texas Municipal Power Agency BNSF Railway In 2003, the Surface Transportation Board issued an order prescribing rates governing coal transportation services provided to Texas Municipal Power Agency (TMPA) by the BNSF Railway. In 2004, the Surface Transportation Board amended the order. In the Fall of 2010, a dispute arose between TMPA and the BNSF Railway concerning the term over which the rate prescription remained in effect. TMPA was of the view that the term remained in effect until March 31, 2021. BNSF Railway was of the view that the term expired on December 31, 2010. In December 2010, after BNSF established a new tariff for service commencing on January 1, 2011, TMPA filed a petition with the Surface Transportation Board to enforce the order to 2020. On July 27, 2011, the Surface Transportation Board issued an order declaring that the prescribed rate had expired on December 31, 2010. On August 16, 2011, TMPA filed a motion for reconsideration of the with the United States Court of Appeals for the D.C. Circuit, which remains pending. 62 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2012 On April 20, 2012, TMPA filed in the Surface Transportation Board a petition to re-open and modify the 2003/2004 Surface Transportation Board rate prescription. This petition, which remains pending, seeks to extend the rate prescription to 2021. During calendar year 2011, TMPA paid BNSF Railway at the rates established in the 2003/2004 order, and not at the higher rates charged by BNSF Railway commencing on January 1, 2011. As of September 30, 2012, TMPA recorded a liability for the difference between the rates charged and the rates actually paid of approximately $1.273 million commensurate with their 21.3 % ownership percentage in TMPA. In calendar year 2012, TMPA began paying under protest 100% of the amount invoiced by BNSF Railway. On June 20, 2012, BNSF Railway filed a petition against TMPA to collect the Alleged Shortfall Amount in the United States District Court for the Western District of Texas. TMPA has filed an answer, a counterclaim for amounts paid in excess of reasonable rail rates, and a motion to refer the rate te reasonableness issue to the Surface Transportation Board remains pending. The parties are currently engaged in commercial negotiations that are expected to result in resolution of all outstanding issues. G.Subsequent events The City has evaluated all events or transactions that occurred after September 30, 2012 up through February 20, 2013, the date the financial statements were issued. In November 2012, a $20.4 million general obligation bond election was voted and approved by the residents. The election consisted of various streets projects valued at $20 million and public art improvements valued at $0.4 million to begin being issued in FY 2012-13. In December 2012, the City Council adopted an ordinance designating and describing the boundaries of a Tax Increment Reinvestment Zone (TIRZ) Number Two for an industrial district north of the airport. It is estimated the TIRZ will generate approximately $14,275,430 over a 25-year period for infrastructure improvements. In February 2013, the City entered into an agreement with Denton County to participate in the TIRZ. The City and County will contribute $10,033,470 and $4,241,960 into the TIRZ fund, respectively. **** 63 64 CITY OF DENTON, TEXAS REQUIRED SUPPLEMENTARY INFORMATIONExhibit XII SCHEDULE OF TEXAS MUNICIPAL RETIREMENT SYSTEM FUNDING PROGRESS AND CONTRIBUTIONS LAST THREE FISCAL YEARS (Unaudited) ActuarialUnfunded AccruedActuarial ActuarialActuarialLiability (AAL)Accrued FiscalValuationValue ofUnit CreditLiabilityFunded YearDateAssetsMethod(UAAL)Percent 201012/31/2009$ 137,336,828$ 221,022,906$ (83,686,078) 62% 201112/31/2010208,101,143279,659,548(71,558,405)74 201212/31/2011229,285,432298,900,732(69,615,300)77 UAAL as Percent ofAnnual FiscalCoveredCoveredRequiredActualPercent YearPayrollPayrollContributionsContributionsContributed 2010$61,295,163 136.5%$ 11,194,086$ 8,849,577 79% 201158,112,441123.111,580,0859,579,35883 201258,376,960119.311,475,70210,435,00191 SCHEDULE OF DENTON FIREMEN'S RELIEF AND RETIREMENT PLAN FUNDING PROGRESS AND CONTRIBUTIONS LAST THREE VALUATION YEARS (Unaudited) ActuarialUnfunded AccruedActuarial ActuarialActuarialLiability (AAL)Accrued FiscalValuationValue ofUnit CreditLiabilityFunded YearDateAssetsMethod(UAAL)Percent 200812/31/2007$ 41,020,648$ 52,675,541$ (11,654,893) 78% 201012/31/200946,256,61765,874,164(19,617,547)70 201212/31/201154,169,45975,228,727(21,059,268)72 UAAL as Percent ofAnnual FiscalCoveredCoveredRequiredActualPercent YearPayrollPayrollContributionsContributionsContributed 2008$11,320,817103.0$ 1,426,906$ 1,426,906 100% 201012,750,355153.91,976,1551,976,155100 201212,938,426162.82,253,6672,253,667100 65 CITY OF DENTON, TEXAS REQUIRED SUPPLEMENTARY INFORMATIONExhibit XIII SCHEDULE OF OTHER POST EMPLOYMENT BENEFITS FUNDING PROGRESS AND CONTRIBUTIONS LAST THREE VALUATION YEARS (Unaudited) ActuarialUnfunded AccruedActuarial ActuarialActuarialLiability (AAL)Accrued FiscalValuationValue ofUnit CreditLiabilityFunded YearDateAssetsMethod(UAAL)Percent 20087/31/2007-$ 7,926,202$ (7,926,202) 0% 201010/1/2009-10,944,544(10,944,544)0 201210/1/201112,565,747(12,565,747)0 UAAL as Percent ofAnnual FiscalCoveredCoveredRequiredActualPercent YearPayrollPayrollContributionsContributionsContributed 2008$61,668,312 12.9%$ 879,280$ 69,696 8% 201074,045,51814.81,314,901370,75928 201271,315,38617.61,582,2191,481,21094 66 CITY OF DENTON, TEXASExhibit XIV SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUAL DEBT SERVICE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2012 Variance with Adjustments -Actual on aFinal Budget - Budgeted AmountsActualBudgetaryBudgetaryPositive OriginalFinalAmountsBasisBasis(Negative) REVENUES: Taxes$ 14,166,809$ 14,166,809$ 14,214,296$ -$ 14,214,296$ 47,487 Investment revenue50,00050,00033,838-33,838(16,162) Miscellaneous--312-312312 Total revenues14,216,80914,216,80914,248,446-14,248,44631,637 EXPENDITURES: Debt service: Principal, interest and fiscal charges39,075,95239,075,95214,385,88824,712,49439,098,382(22,430) Advance refunding escrow--130,111-130,111(130,111) Bond issuance costs--93,129-93,129(93,129) Total expenditures39,075,95239,075,95214,609,12824,712,49439,321,622(245,670) Deficiency of revenues under expenditures(24,859,143)(24,859,143)(360,682)(24,712,494)(25,073,176)(214,033) OTHER FINANCING SOURCES (USES): Refunding bonds issued--10,173,303-10,173,30310,173,303 Payment to refunded bond escrow agent--(11,432,581)-(11,432,581)(11,432,581) Premium on debt issuance--1,364,093-1,364,0931,364,093 Transfers in25,358,22625,358,226801,22524,712,49425,513,719155,493 Total other financing sources25,358,22625,358,226906,04024,712,49425,618,534260,308 Net change in fund balance499,083499,083545,358-545,35846,275 Fund balance at beginning of year3,279,0803,279,0803,279,080-3,279,080- Fund balance at end of year$ 3,778,163$ 3,778,163$ 3,824,438$ -$ 3,824,438$ 46,275 Adjustments - Budgetary Basis are pass-through debt service payments budgeted as transfers in from enterprise and internal service funds. 67 68 NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Special revenue funds are used to account for specific revenues that are legally restricted to expenditures for particular purposes. Community Development Block Grant (CDBG) to account for the operations of projects utilizing Community Development Block Grant Funds. Such revenues are restricted to expenditures for specified projects by the Department of Housing and Urban Development. Recreation to account for the revenues and expenditures for the recreation programs that are self-supporting. All expenditures will be reimbursed 100%. Various business operations, such as concessions, fall into this account. Criminal Justice to account for revenue received from the State of Texas Criminal Justice Division and other grants administered by the police department. Police Confiscation to account for revenues received from confiscated goods. Expenditures are restricted to enhancing law enforcement. Tourist and Convention to account for taxes received from hotel and motel occupancy for the purpose of promoting tourism. Street Improvement to account for street maintenance and improvement activities. Gas Well Revenues to account for the receipt of royalty, pooling, tax, and lease revenue related to gas wells. to account for several small trust funds that are for park development. All Other to account for miscellaneous special revenue sources that are required to finance specific activities. 69 CITY OF DENTON, TEXAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2012 Special Revenue Funds Community DevelopmentCriminalPolice Block GrantRecreationJusticeConfiscation ASSETS Cash, cash equivalents and investments, at fair value$ 12,087$ 670,312$ -$ 410,261 Receivables (net of allowances): Accrued interest-2,407-1,477 Other-8,329-- Interfund receivables-2,504-- Due from other governments43,223-2,504- Total assets$ 55,310$ 683,552$ 2,504$ 411,738 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable$ 39,186$ 112,084$ -$ - Interfund payables--2,504- Deferred revenues1,4199342,504- Total liabilities40,605113,0185,008- FUND BALANCES: Restricted for: ---- Parks and recreation 14,705--411,738 Other grants and purposes Committed to: ---- Streets -570,534-- Parks and recreation ---- Other purposes Assigned to: ---- Other purposes Unassigned--(2,504)- Total fund balance14,705570,534(2,504)411,738 Total liabilities and fund balances$ 55,310$ 683,552$ 2,504$ 411,738 70 Exhibit XV Special Revenue Funds (continued)Total TouristCitizens'Nonmajor andStreetGas WellParkAllGovernmental ConventionImprovementRevenuesTrustsOtherFunds $ 686,346$ 2,128,877$ 636,299$ 4,550,395$ 2,105,708$ 11,200,285 2,4707,6622,29016,3787,57940,263 134,465-43,375-115,785301,954 -----2,504 ----201,400247,127 $ 823,281$ 2,136,539$ 681,964$ 4,566,773$ 2,430,472$ 11,792,133 $ 24,275$ 1,144,597$ -$ 15,420$ 148,912$ 1,484,474 -----2,504 --12,455-277,632294,944 24,2751,144,59712,45515,420426,5441,781,922 --633,5104,551,35346,9135,231,776 799,006---563,7921,789,241 -991,942---991,942 -----570,534 --35,999-1,432,8381,468,837 ----49,02649,026 ----(88,641)(91,145) 799,006991,942669,5094,551,3532,003,92810,010,211 $ 823,281$ 2,136,539$ 681,964$ 4,566,773$ 2,430,472$ 11,792,133 71 CITY OF DENTON, TEXAS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 Special Revenue Funds Community DevelopmentCriminalPolice Block GrantRecreationJusticeConfiscation REVENUES: Tax revenue$ -$ -$ -$ - Franchise fees---- Fines and forfeitures---361,306 Fees for services-1,567,457-- Investment revenue-4,562-1,851 Intergovernmental1,601,673-54,430- Miscellaneous104,6837,528-24,080 Total revenues1,706,3561,579,54754,430387,237 EXPENDITURES: General government1,339,491--- Public safety--27,904118,442 Public works---- Parks and recreation-1,467,085-- Capital outlay-26,000-10,032 Debt service: ---- Principal retirement ---- Interest and other charges Total expenditures1,339,4911,493,08527,904128,474 Excess (deficiency) of revenues over (under) expenditures366,86586,46226,526258,763 OTHER FINANCING SOURCES (USES): Transfers in--13,953- Transfers out(367,854)(112,266)-- Total other financing sources (uses)(367,854)(112,266)13,953- Net change in fund balances(989)(25,804)40,479258,763 Fund balance at beginning of year15,694596,338(42,983)152,975 Fund balance (deficit) at end of year$ 14,705$ 570,534$ (2,504)$ 411,738 72 Exhibit XVI Special Revenue Funds (continued) Total TouristCitizens'Nonmajor andStreetGas WellParkAllGovernmental ConventionImprovementRevenuesTrustsOtherFunds $ 1,555,347$ -$ -$ -$ 6,720$ 1,562,067 -5,585,086---5,585,086 ----859,4321,220,738 4,223360,961218,783294,915407,0112,853,350 2,0215,2685,91727,9116,25153,781 ----1,806,1343,462,237 ----432,082568,373 1,561,5915,951,315224,700322,8263,517,63015,305,632 1,300,879---742,1633,382,533 ----1,174,2881,320,634 -6,017,037---6,017,037 ----144,7911,611,876 ---419,652375,988831,672 -46,579---46,579 -11,918---11,918 1,300,8796,075,534-419,6522,437,23013,222,249 260,712(124,219)224,700(96,826)1,080,4002,083,383 -1,116,161--76,7721,206,886 --(1,950,000)(64,243)(141,190)(2,635,553) -1,116,161(1,950,000)(64,243)(64,418)(1,428,667) 260,712991,942(1,725,300)(161,069)1,015,982654,716 538,294-2,394,8094,712,422987,9469,355,495 $ 799,006$ 991,942$ 669,509$ 4,551,353$ 2,003,928$ 10,010,211 73 CITY OF DENTON, TEXASExhibit XVII SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUAL SPECIAL REVENUE FUNDS: RECREATION FUND FOR YEAR ENDED SEPTEMBER 30, 2012 Variance with Adjustments -Actual on aFinal Budget - Budgeted AmountsActualBudgetaryBudgetaryPositive OriginalFinalAmountsBasisBasis(Negative) REVENUES: Fees for services$ 1,442,661$ 1,442,661$ 1,567,457$ -$ 1,567,457$ 124,796 Investment revenue15,00015,0004,562-4,562(10,438) Miscellaneous--7,528-7,5287,528 Total revenues1,457,6611,457,6611,579,547-1,579,547121,886 EXPENDITURES: Parks and recreation1,443,9141,225,8711,467,085(161,437)1,305,648(79,777) Capital outlay--26,000-26,000(26,000) Total expenditures1,443,9141,225,8711,493,085(161,437)1,331,648(105,777) Excess of revenues over expenditures13,747231,79086,462161,437247,89916,109 OTHER FINANCING SOURCES (USES): Transfers out(161,437)(379,480)(112,266)(161,437)(273,703)105,777 Total other financing uses(161,437)(379,480)(112,266)(161,437)(273,703)105,777 Net change in fund balance(147,690)(147,690)(25,804)-(25,804)121,886 Fund balance at beginning of year596,338596,338596,338-596,338- Fund balance at end of year$ 448,648$ 448,648$ 570,534$ -$ 570,534$ 121,886 Adjustments - Budgetary Basis are expenditures allocated from and reimbursed to other funds. These expenditures are recorded as operating expenditures but budgeted as cost of service transfers. 74 CITY OF DENTON, TEXASExhibit XVIII SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUAL SPECIAL REVENUE FUNDS: POLICE CONFISCATION FUND FOR YEAR ENDED SEPTEMBER 30, 2012 Variance with Adjustments -Actual on aFinal Budget - Budgeted AmountsActualBudgetaryBudgetaryPositive OriginalFinalAmountsBasisBasis(Negative) REVENUES: Fines and forfeitures$ 189,248$361,306$ -$ 172,058 $ 1 89,248$ 361,306 Investment Revenue1,5001,5001,851-1,851351 Miscellaneous26,00026,00024,080-24,080(1,920) Total revenues216,748216,748387,237-387,237170,489 EXPENDITURES: Public safety207,000207,000118,442-118,44288,558 Capital outlay--10,032-10,032(10,032) Total expenditures207,000207,000128,474-128,47478,526 Net change in fund balance9,7489,748258,763-258,763249,015 Fund balance at beginning of year152,975152,975152,975-152,975- Fund balance at end of year$ 162,723$411,738$ -$ 249,015 $ 1 62,723$ 411,738 75 CITY OF DENTON, TEXASExhibit XIX SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUAL SPECIAL REVENUE FUNDS: TOURIST AND CONVENTION FUND FOR YEAR ENDED SEPTEMBER 30, 2012 Variance with Adjustments -Actual on aFinal Budget - Budgeted AmountsActualBudgetaryBudgetaryPositive OriginalFinalAmountsBasisBasis(Negative) REVENUES: Taxes$1,461,103$1,461,103$1,555,347$1,555,347$ 94,244 $ - Fees for service--4,223-4,2234,223 Investment revenue--2,021-2,0212,021 Total revenues1,461,1031,461,1031,561,591-1,561,591100,488 EXPENDITURES: General government1,315,3601,315,3601,300,879-1,300,87914,481 Total expenditures1,315,3601,315,3601,300,879-1,300,87914,481 Net change in fund balance145,743145,743260,712-260,712114,969 Fund balance at beginning of year538,294538,294538,294-538,294- Fund balance at end of year$ 114,969 $ 684,037$ 684,037$ 799,006$ -$ 799,006 76 CITY OF DENTON, TEXASExhibit XX SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUAL SPECIAL REVENUE FUNDS: STREET IMPROVEMENT FUND FOR YEAR ENDED SEPTEMBER 30, 2012 Variance with Adjustments -Actual on aFinal Budget - Budgeted AmountsActualBudgetaryBudgetaryPositive OriginalFinalAmountsBasisBasis(Negative) REVENUES: Franchise fees$ 5,673,237$ 5,673,237$ 5,585,086$ -$ 5,585,086$ (88,151) Fees for services315,181315,181360,961-360,96145,780 Investment revenue--5,268-5,2685,268 Total revenues5,988,4185,988,4185,951,315-5,951,315(37,103) EXPENDITURES: Public Works6,003,8526,003,8526,017,037(81,856)5,935,18168,671 Debt service: Principal retirement59,16559,16546,579-46,57912,586 Interest and other charges--11,918-11,918(11,918) Total expenditures6,063,0176,063,0176,075,534(81,856)5,993,67869,339 Excess of revenues over expenditures(74,599)(74,599)(124,219)81,856(42,363)32,236 OTHER FINANCING SOURCES (USES): Transfers in1,078,5541,078,5541,116,161-1,116,16137,607 Transfers out(82,176)(82,176)-(81,856)(81,856)320 Total other financing uses996,378996,3781,116,161(81,856)1,034,30537,927 Net change in fund balance921,779921,779991,942-991,94270,163 Fund balance at beginning of year------ Fund balance at end of year$ 921,779$ 921,779$ 991,942$ -$ 991,942$ 70,163 Adjustments - Budgetary Basis are expenditures allocated from and reimbursed to other funds. These expenditures are recorded as operating expenditures but budgeted as cost of service transfers. 77 CITY OF DENTON, TEXASExhibit XXI SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUAL SPECIAL REVENUE FUNDS: GAS WELL REVENUES FUND FOR YEAR ENDED SEPTEMBER 30, 2012 Variance with Adjustments -Actual on aFinal Budget - Budgeted AmountsActualBudgetaryBudgetaryPositive OriginalFinalAmountsBasisBasis(Negative) REVENUES: Fees for service$ 310,000$ 218,783$ -$ 218,783$ (91,217) $ 310,000 Investment revenue16,00016,0005,917-5,917(10,083) Total revenues326,000326,000224,700-224,700(101,300) OTHER FINANCING SOURCES (USES): Transfers out(1,950,000)(1,950,000)(1,950,000)-(1,950,000)- Total other financing uses(1,950,000)(1,950,000)(1,950,000)-(1,950,000)- Net change in fund balance(1,624,000)(1,624,000)(1,725,300)-(1,725,300)(101,300) Fund balance at beginning of year2,394,8092,394,8092,394,809-2,394,809- Fund balance at end of year$ 770,809$ 669,509$ -$ 669,509$ (101,300) $ 770,809 78 CITY OF DENTON, TEXASExhibit XXII SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUAL SPECIAL REVENUE FUNDS: CITIZENS' PARK TRUST FOR YEAR ENDED SEPTEMBER 30, 2012 Variance with Adjustments -Actual on aFinal Budget - Budgeted AmountsActualBudgetaryBudgetaryPositive OriginalFinalAmountsBasisBasis(Negative) REVENUES: Fees for service$ 176,000$ 294,915$ -$ 294,915$ 118,915 $ 176,000 Investment revenue31,50031,50027,911-27,911(3,589) Total revenues207,500207,500322,826-322,826115,326 EXPENDITURES: Capital outlay545,000545,000419,652-419,652125,348 Total expenditures545,000545,000419,652-419,652125,348 Excess (deficiency) of revenues over (under) expenditures(337,500)(337,500)(96,826)-(96,826)240,674 OTHER FINANCING SOURCES (USES): Transfers out--(64,243)-(64,243)(64,243) Total other financing uses--(64,243)-(64,243)(64,243) Net change in fund balance(337,500)(337,500)(161,069)-(161,069)176,431 Fund balance at beginning of year4,712,4224,712,4224,712,422-4,712,422- Fund balance at end of year$4,374,922$ 4,374,922$ 4,551,353$ -$ 4,551,353$ 176,431 79 80 INTERNAL SERVICE FUNDS Internal Service Funds account for the financing of goods or services provided by one department for another. The City has five Internal Service Funds as follows: Materials Management Fund to account for the financing of goods and services provided by Materials Management to other City departments. Such costs provided by Materials Management are billed to the other departments at standard labor charges and cost of parts plus 13 percent. Actual costs include depreciation on machinery and equipment used to provide the service. Fleet Services Fund to account for the financing of goods and services provided by the Municipal Garage and Machine Shop to other City departments. Municipal Garage and Machine Shop billings include labor charges and cost of parts plus 25 percent. Actual costs include depreciation on the building, improvements, machinery, and equipment used to provide the service. Health Insurance Fund to account for the accumulation of resources for the self-insurance activities of the City for employee medical insurance as well as other employee insurance benefits including long-term disability, short-term disability, dental insurance, and vision insurance. Risk Retention Fund to account for the accumulation of resources for the payment of employee insurance claims and insurance policies. Technology Services Fund to account for the accumulation of resources to provide computer programming services, systems analysis, imaging, print shop, and office services to City departments. 81 CITY OF DENTON, TEXAS COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS SEPTEMBER 30, 2012 Materials Fleet HealthRisk ManagementServicesInsuranceRetention FundFundFundFund ASSETS: Current assets: Cash, cash equivalents and investments, at fair value$ 20,992$ 1,280,036$ 3,858,294$ 6,800,758 Receivables, net of allowances: Accrued interest764,60713,88724,477 Other-153,411602,785- Merchandise inventory4,042,641181,412-- Prepaid items1,658-155,918- Deferred debt issuance costs5572,182-- Total current assets4,065,9241,621,6484,630,8846,825,235 Noncurrent assets: Restricted assets: Escrow deposit--241,000- Deferred debt issuance costs3,0817,132-- Capital assets, net of accumulated depreciation775,1204,326,028-- Total noncurrent assets778,2014,333,160241,000- Total assets4,844,1255,954,8084,871,8846,825,235 LIABILITIES: Current liabilities: Accounts payable223,348867,42932,59363,664 Claims payable--1,367,053496,000 Compensated absences payable40,47768,136-22,679 Leases payable---- Accrued interest2,1197,917-- Interfund payables2,602,438--- Certificate and general obligation bonds25,608196,377-- Total current liabilities2,893,9901,139,8591,399,646582,343 Noncurrent liabilities: Leases payable---- Payable from restricted assets: General obligation bonds payable373,9131,294,312-- Certificates of obligation62,37720,451-- Deferred amount on refunding(57,744)(28,964)-- Compensated absences payable1,69513,261-11,446 Claims payable---3,408,952 75,960133,398-40,375 Municipal pension obligation 32,21152,488-13,631 Other post employment benefits Total noncurrent liabilities:488,4121,484,946-3,474,404 Total liabilities3,382,4022,624,8051,399,6464,056,747 NET ASSETS: Invested in capital assets, net of related debt370,9662,843,852-- Unrestricted1,090,757486,1513,472,2382,768,488 Total net assets$ 1,461,723$ 3,330,003$ 3,472,238$ 2,768,488 82 Exhibit XXIII Total Technology Internal ServicesService FundFunds $ 1,858,289$ 13,818,369 6,68849,735 480756,676 -4,224,053 -157,576 1,5674,306 1,867,02419,010,715 762,7781,003,778 1,05411,267 4,190,6969,291,844 4,954,52810,306,889 6,821,55229,317,604 379,2871,566,321 -1,863,053 129,985261,277 860,265860,265 2,94112,977 -2,602,438 244,605466,590 1,617,0837,632,921 770,259770,259 86,0851,754,310 149,198232,026 63(86,645) 13,03339,435 -3,408,952 217,069466,802 63,046161,376 1,298,7536,746,515 2,915,83614,379,436 2,080,2215,295,039 1,825,4959,643,129 $ 3,905,716$ 14,938,168 83 CITY OF DENTON, TEXAS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 Materials Fleet HealthRisk ManagementServicesInsuranceRetention FundFundFundFund OPERATING REVENUES: Charges for goods and services$ 5,016,360$9,614,906$18,882,398$2,493,615 Miscellaneous29,721685547,89317,362 Total operating revenues5,046,0819,615,59119,430,2912,510,977 OPERATING EXPENSES: Operating expenses before depreciation4,982,8729,043,99620,760,6763,673,762 Depreciation28,175136,480-1,081 Total operating expenses5,011,0479,180,47620,760,6763,674,843 Operating income (loss)35,034435,115(1,330,385)(1,163,866) NONOPERATING REVENUES (EXPENSES): Investment revenue-3,92124,90140,238 Interest expense and fiscal charges(14,692)(65,309)-- Loss on disposal of capital assets-10,595-- Total non-operating revenues (expenses)(14,692)(50,793)24,90140,238 Income (loss) before contributions and transfers20,342384,322(1,305,484)(1,123,628) Capital contributions---- Transfers in-604,987-- Transfers out-(4,969)-- Change in net assets20,342984,340(1,305,484)(1,123,628) Total net assets at beginning of year1,441,3812,345,6634,777,7223,892,116 Total net assets at end of year$ 1,461,723$3,330,003$ 3,472,238$2,768,488 84 Exhibit XXIV Total Technology Internal ServicesService FundFunds $ 7,817,954$43,825,233 2,704598,365 7,820,65844,423,598 5,784,71544,246,021 1,214,9621,380,698 6,999,67745,626,719 820,981(1,203,121) 9,34678,406 (71,662)(151,663) -10,595 (62,316)(62,662) 758,665(1,265,783) 83,33583,335 62,766667,753 (324,735)(329,704) 580,031(844,399) 3,325,68515,782,567 $ 3,905,716$14,938,168 85 CITY OF DENTON, TEXAS COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 MaterialsFleetHealth ManagementServicesInsurance FundFundFund CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers$ 5,046,197$ 9,682,636$ 18,827,505 Cash paid to employees for services(905,199)(1,539,838)- Cash paid to suppliers(4,076,857)(7,365,171)(20,518,852) Net cash provided by operations64,141777,627(1,691,347) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers out-(4,969)- Transfers in-18,453- Net cash used by noncapital financing activities-13,484- CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES: Principal payments on capital debt(31,578)(195,260)- Interest and fiscal charges(16,162)(64,342)- Principal payments under capital lease obligation--- Proceeds from the sale of fixed assets-10,595- Acquisition and construction of capital assets(16,488)(88,647)- Net cash used by capital financing activities (64,228)(337,654)- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale and maturities of investment securities(69)228,9951,475,016 Purchase of investment securities-(650,382)- Interest received on investments122,76634,125 Net cash provided (used) by investing activities (57)(418,621)1,509,141 Net increase (decrease) in cash and cash equivalents(144)34,836(182,206) Cash and cash equivalents at beginning of year1,99578,026522,395 Cash and cash equivalents at end of year1,851112,862340,189 Investments, at fair value 19,1411,167,1743,518,105 Cash, cash equivalents and investments, at fair value$ 20,992$ 1,280,036$ 3,858,294 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss)$ 35,034$ 435,115$ (1,330,385) Adjustments: Depreciation expense28,175136,480- Decrease (Increase) in receivables11667,045(602,785) Decrease in inventories62,85419,480- Decrease (Increase) in prepaid items10,9179,469(20,478) Increase (Decrease) in accounts payable(17,154)103,308262,301 Increase (Decrease) in compensated absences(3,528)(12,337)- Decrease in interfund payables(63,822)-- Increase in municipal pension obligation11,35818,220- Increase in other post employment benefits191847 Total adjustments29,107342,512(360,962) Net cash provided by operating activities$ 64,141$ 777,627$ (1,691,347) NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES: Increase in fair value of investments8836203 Capital asset contributions--- Increase in capital lease obligations--- 86 Exhibit XXV Total RiskTechnologyInternal RetentionServicesService FundFundFunds $ 2,510,977$7,820,284$43,887,599 (497,251)(2,613,693)(5,555,981) (1,819,691)(2,856,436)(36,637,007) 194,0352,350,1551,694,611 -(293,804)(298,773) -62,76681,219 -(231,038)(217,554) -(72,106)(298,944) -(73,559)(154,063) -(893,316)(893,316) --10,595 -(940,994)(1,046,129) -(1,979,975)(2,381,857) 4,714,267797,9807,216,189 (4,973,587)(944,992)(6,568,961) 43,2639,82189,987 (216,057)(137,191)737,215 (22,022)1,951(167,585) 621,650161,8961,385,962 599,628163,8471,218,377 6,201,1301,694,44212,599,992 $ 6,800,758$1,858,289$13,818,369 $(1,163,866)$ (1,203,121) $ 820,981 1,0811,214,9621,380,698 -(374)(535,998) --82,334 -3,6933,601 1,341,183270,2141,959,852 9,2515,990(624) --(63,822) 6,16834,00469,750 2186851,941 1,357,9011,529,1742,897,732 $ 194,035$2,350,155$ 1,694,611 2,7728224,641 -83,33583,335 -1,029,9761,029,976 87 CITY OF DENTON, TEXASExhibit XXVI COMBINING STATEMENT OF ASSETS AND LIABILITIES AGENCY FUNDS AS OF SEPTEMBER 30, 2012 Agency Funds OtherTotal PayrollDevelopers'AgencyAgency FundEscrow FundFundsFunds ASSETS: Cash, cash equivalents and investments, at fair value$ 1,213,680$ 226,958$ 299,981$ 1,740,619 Accrued interest-817-817 Other assets--82,37582,375 Total assets$ 1,213,680$ 227,775$ 382,356$ 1,823,811 LIABILITIES: Accounts payable$ 1,213,680$ 227,775$ 382,356$ 1,823,811 Total liabilities$ 1,213,680$ 227,775$ 382,356$ 1,823,811 88 CITY OF DENTON, TEXASExhibit XXVII COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 BalanceBalance October 1, 2011AdditionsDeductionsSeptember 30, 2012 PAYROLL FUND ASSETS Cash and deposits$ 1,141,276$ 41,209,900$ 41,137,496$ 1,213,680 Total assets$ 1,141,276$ 41,209,900$ 41,137,496$ 1,213,680 LIABILITIES Accounts payable$ 1,141,276$ 41,209,900$ 41,137,496$ 1,213,680 Total liabilities$ 1,141,276$ 41,209,900$ 41,137,496$ 1,213,680 DEVELOPERS' ESCROW FUND ASSETS Cash and deposits$ 225,448$ 2,061$ 551$ 226,958 Accrued interest9451,2571,385817 Total assets$ 226,393$ 3,318$ 1,936$ 227,775 LIABILITIES Accounts payable$ 226,393$ 3,318$ 1,936$ 227,775 Total liabilities$ 226,393$ 3,318$ 1,936$ 227,775 OTHER AGENCY FUNDS ASSETS Cash, cash equivalents and investments, at fair value$ 230,336$ 1,752,480$ 1,682,835$ 299,981 Other assets57,516351,028326,16982,375 Total assets$ 287,852$ 2,103,508$ 2,009,004$ 382,356 LIABILITIES Accounts payable$ 287,852$ 2,103,508$ 2,009,004$ 382,356 Total liabilities$ 287,852$ 2,103,508$ 2,009,004$ 382,356 TOTAL AGENCY FUNDS ASSETS Cash, cash equivalents and investments, at fair value$ 1,597,060$ 42,964,441$ 42,820,882$ 1,740,619 Accrued interest9451,2571,385817 Other assets57,516351,028326,16982,375 Total assets$ 1,655,521$ 43,316,726$ 43,148,436$ 1,823,811 LIABILITIES Accounts payable$ 1,655,521$ 43,316,726$ 43,148,436$ 1,823,811 Total liabilities$ 1,655,521$ 43,316,726$ 43,148,436$ 1,823,811 89 90 CITY OF DENTON, TEXASExhibit XXVIII CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS COMPARATIVE SCHEDULES BY SOURCE* SEPTEMBER 30, 2011 AND 2012 20122011 Governmental funds capital assets: Land$ 13,814,315$ 12,149,929 Construction in progress19,892,62044,784,261 Buildings57,660,50953,168,308 Plant, machinery and equipment51,726,03744,900,135 Infrastructure210,713,088192,774,337 Total governmental funds capital assets$ 353,806,569$ 347,776,970 Investments in governmental funds capital assets by source: General fund$ 170,580,857$ 169,877,915 Special revenue funds6,217,0065,804,987 Capital projects funds177,008,706172,094,068 Total governmental funds capital assets$ 353,806,569$ 347,776,970 *This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets. 91 CITY OF DENTON, TEXASExhibit XXIX CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE BY FUNCTION AND ACTIVITY* SEPTEMBER 30, 2012 Plant, MachineryWork andin Function and ActivityLandBuildingsEquipmentInfrastructureProgressTotal General government: Finance$ -$ -$ 23,100$ -$ 47,733$ 70,833 Legal--358,150--358,150 Municipal court/judge/clerks--482,608--482,608 Human resources--6,643-36,00042,643 City manager/economic development-808,462375,445-121,5181,305,425 Facilities management286,07415,529,8556,846,307570,021402,74023,634,997 Library-12,050,4776,495,75114,715-18,560,943 Building inspections--237,710--237,710 Planning/community development-494,500485,31824,057205,6391,209,514 Engineering--359,827769,237-1,129,064 Code Enforcement--209,496--209,496 Gas Well Review--62,349--62,349 Total general government286,07428,883,29415,942,7041,378,030813,63047,303,732 Public works: Traffic operations-14,6001,385,76916,247,1322,120,60719,768,108 Streets792,6655,0003,717,684181,360,82712,979,328198,855,504 Total public works792,66519,6005,103,453197,607,95915,099,935218,623,612 Parks and recreation9,706,80716,248,8377,362,12411,722,0991,379,81646,419,683 Public safety: Fire administration--169,450--169,450 Fire operations2,024,70412,109,98310,411,6925,0001,315,77425,867,153 Fire prevention--989,251--989,251 Emergency medical services--381,368--381,368 Police-11,99311,044,049-847,33111,903,373 Animal services1,004,065386,802321,946-436,1342,148,947 Total public safety3,028,76912,508,77823,317,7565,0002,599,23941,459,542 Total governmental funds capital assets$ 13,814,315$ 57,660,509$ 51,726,037$ 210,713,088$ 19,892,620$ 353,806,569 *This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets. 92 CITY OF DENTON, TEXASExhibit XXX CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITY* FOR THE YEAR ENDED SEPTEMBER 30, 2012 GovernmentalGovernmental Funds CapitalFunds Capital AssetsAssets Function and ActivityOctober 1, 2011AdditionsDeductionsSeptember 30, 2012 General government: Finance$ 23,100$ -$ -$ 23,100 Legal327,49330,657-358,150 Municipal court/judge/clerks292,252190,356-482,608 Human resources6,643--6,643 City manager/economic development1,183,907--1,183,907 Facilities management20,987,3932,270,853(25,989)23,232,257 Library15,803,1273,395,138(637,322)18,560,943 Building inspections237,710--237,710 Planning/community development644,357359,518-1,003,875 Engineering1,129,064--1,129,064 Code Enforcement190,62953,739(34,872)209,496 Gas Well Review-62,349-62,349 Total general government40,825,6756,362,610(698,183)46,490,102 Public works: Traffic operations17,438,434236,613(27,546)17,647,501 Streets167,936,21618,282,158(342,198)185,876,176 Total public works185,374,65018,518,771(369,744)203,523,677 Parks and recreation42,292,9022,893,319(146,354)45,039,867 Public safety: Fire administration119,46749,983-169,450 Fire operations24,297,113352,586(98,320)24,551,379 Fire prevention633,442355,809-989,251 Emergency medical services381,368--381,368 Police8,374,1032,931,678(249,739)11,056,042 Animal services693,9891,058,408(39,584)1,712,813 Total public safety34,499,4824,748,464(387,643)38,860,303 Work in progress44,784,2619,885,308(34,776,949)19,892,620 Total governmental funds capital assets$ 347,776,970$42,408,472$ (36,378,873)$ 353,806,569 *This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets. 93 94 STATISTICAL SECTION for understanding what the information in the financial statements, note disclosures, and required supplementary inform Contents Financial Trends performance and well-being have changed over time. (Tables 1 4) Revenue Capacity source, the property tax. These tables do not include the Electric fund information due to confidentiality of information necessary for competitive rates. (Tables 5 8) Debt Capacity 12) Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the 14) Operating Information These schedules contain service and infrastructure data to help the reader understand how the information (Tables 15 17) Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The city implemented GASB Statement 34 in 2002; schedules presenting government-wide information include information beginning in that year. 95 CITY OF DENTON, TEXAS NET ASSETS BY COMPONENT LAST TEN FISCAL YEARS (accrual basis of accounting) 20032004200520062007 Governmental activities Invested in capital assets, net of related debt$ 100,876,627$ 107,754,576$ 107,112,321$ 107,410,289$ 99,858,383 Restricted428,426296,731451,046439,658886,141 Unrestricted13,185,86514,615,29418,519,18530,352,69130,738,026 Total governmental activities net assets114,490,918122,666,601126,082,552138,202,638131,482,550 Business-type activities Invested in capital assets, net of related debt163,784,452172,589,102193,657,258213,074,701242,015,614 Restricted30,558,41735,812,11730,863,58030,974,92531,015,188 Unrestricted78,074,62978,543,92976,726,02590,843,185107,837,825 Total business-type activities net assets272,417,498286,945,148301,246,863334,892,811380,868,627 Primary government Invested in capital assets, net of related debt264,661,079280,343,678300,769,579320,484,990341,873,997 Restricted30,986,84336,108,84831,314,62631,414,58331,901,329 Unrestricted91,260,49493,159,22395,245,210121,195,876138,575,851 Total primary government net assets$ 386,908,416$ 409,611,749$ 427,329,415$ 473,095,449$ 512,351,177 Source: Comprehensive Annual Financial Reports 96 Table 1 20082009201020112012 $ 102,040,021$ 102,110,134$ 104,636,239$ 103,073,465$ 101,784,929 1,454,5791,947,5532,894,6762,839,5563,460,027 37,610,96638,252,07846,480,56934,590,67335,005,109 141,105,566142,309,765154,011,484140,503,694140,250,065 263,325,859282,463,031277,356,195296,006,601315,479,026 33,087,60933,380,59530,598,92330,454,31428,559,731 107,545,434109,826,810131,497,936158,120,736169,653,341 403,958,902425,670,436439,453,054484,581,651513,692,098 365,365,880384,573,165381,992,434399,080,066417,263,955 34,542,18835,328,14833,493,59933,293,87032,019,758 145,156,400148,078,888177,978,505192,711,409204,658,450 $ 545,064,468$ 567,980,201$ 593,464,538$ 625,085,345$ 653,942,163 97 CITY OF DENTON, TEXAS CHANGES IN NET ASSETS LAST TEN FISCAL YEARS (accrual basis of accounting) 20032004200520062007 EXPENSES Governmental activities: General government$ 22,933,107$ 26,411,608$ 26,675,799$ 22,165,661$ 22,145,804 Public safety28,837,15830,508,76533,642,44536,626,63542,161,674 Public works10,274,82211,053,13111,986,88112,485,28114,008,867 Parks and recreation8,419,5089,418,5809,912,99610,497,24111,564,247 Interest expense4,186,0514,494,8514,175,4664,333,4284,658,128 Total governmental activities expenses74,650,64681,886,93586,393,58786,108,24694,538,720 Business-type activities: Electric system113,674,296119,650,157132,829,976145,368,132123,926,967 Water system20,424,80521,278,79122,380,58926,708,09525,839,614 Wastewater system16,560,30818,528,34818,808,37419,027,92618,785,353 Solid waste12,366,91011,301,94013,168,88013,454,55615,451,025 Airport----- Total business-type activities expenses163,026,319170,759,236187,187,819204,558,709184,002,959 Total primary government expenses237,676,965252,646,171273,581,406290,666,955278,541,679 PROGRAM REVENUES Governmental activities: Charges for services: General government3,654,3873,417,6573,333,8663,904,9413,694,869 Public safety4,371,4073,382,7914,965,0566,023,1006,160,611 Public works1,803,0251,280,4231,086,387802,711800,378 Parks and recreation347,1102,143,7562,613,5673,234,3473,220,837 Operating grants and contributions3,221,2643,264,7772,995,9783,712,8172,991,224 Capital grants and contributions14,023,05614,046,0717,426,1945,536,7865,399,220 Total governmental activities program revenues27,420,24927,535,47522,421,04823,214,70222,267,139 Business-type activities: Charges for services: Electric system105,509,934111,742,276129,343,037149,419,800128,973,477 Water system24,552,65824,331,55524,890,28933,436,65127,830,767 Wastewater system17,144,31219,210,52920,423,42423,670,45822,634,454 Solid waste11,728,02413,172,55613,600,51214,624,13215,967,051 Airport----- Capital grants and contributions19,022,0458,415,4709,808,84210,022,6548,440,634 Total business-type activities program revenues177,956,973176,872,386198,066,104231,173,695203,846,383 Total primary government program revenues205,377,222204,407,861220,487,152254,388,397226,113,522 NET (EXPENSE)/REVENUE Governmental activities(47,230,397)(54,351,460)(63,972,539)(62,893,544)(72,271,581) Business-type activities14,930,6546,113,15010,878,28526,614,98619,843,424 Total primary government program net expense$ (32,299,743)$ (48,238,310)$ (53,094,254)$ (36,278,558)$ (52,428,157) 98 Table 2 20082009201020112012 $ 26,408,949$ 27,482,131$29,569,535$28,198,604$29,421,275 43,426,52645,368,78347,998,90649,154,37152,496,010 15,448,47315,816,06515,767,92616,089,30218,662,029 12,927,02012,755,03712,854,33612,421,89312,968,426 5,372,8685,733,2685,121,3295,046,7244,755,938 103,583,836107,155,284111,312,032110,910,894118,303,678 138,791,009124,901,262114,903,831117,769,599122,428,808 26,226,06828,636,19027,219,94428,293,10926,822,690 19,413,24719,909,22920,560,60020,455,42420,890,614 17,065,29518,036,33118,028,83220,008,74621,695,322 ---1,326,3971,472,155 201,495,619191,483,012180,713,207187,853,275193,309,589 305,079,455298,638,296292,025,239298,764,169311,613,267 3,310,5924,792,8563,551,7334,108,6873,873,349 6,461,0376,554,6196,431,0077,075,3287,069,770 853,091586,3771,425,683525,0241,086,269 3,292,5282,990,9213,372,5793,964,5173,951,433 3,306,3252,281,1363,407,0854,270,6972,598,157 7,308,3983,641,29615,206,4247,497,9084,292,468 24,531,97120,847,20533,394,51127,442,16122,871,446 138,467,222128,511,236119,156,314131,435,554132,352,950 30,843,79730,067,77428,407,95436,790,72036,265,061 23,184,36922,342,17421,917,65123,338,84124,570,095 16,660,37518,386,61618,432,24520,979,96722,944,272 ---3,203,4261,909,619 5,742,1398,099,7225,153,5685,053,0244,317,463 214,897,902207,407,522193,067,732220,801,532222,359,460 239,429,873228,254,727226,462,243248,243,693245,230,906 (79,051,865)(86,308,079)(77,917,521)(83,468,733)(95,432,232) 13,402,28315,924,51012,354,52532,948,25729,049,871 $ (65,649,582)$ (70,383,569)$ (65,562,996)$ (50,520,476)$ (66,382,361) (continued)(continued) 99 CITY OF DENTON, TEXAS CHANGES IN NET ASSETS LAST TEN FISCAL YEARS (accrual basis of accounting) 20032004200520062007 GENERAL REVENUES AND OTHER CHANGES IN NET ASSETS Governmental activities: Taxes: Property tax$ 20,964,738$ 23,149,916$ 26,678,783$ 30,000,847$ 34,756,356 1 16,047,29717,871,38018,998,05720,343,41320,653,932 Sales tax Franchise tax12,571,98913,215,88214,250,48416,499,99415,197,943 Hotel occupancy tax855,879911,505988,5731,132,5001,268,627 Beverage tax192,243208,855215,872257,950294,623 Bingo tax28,14621,12725,46624,26023,708 Investment income1,451,1061,332,5681,148,5171,967,4733,632,744 Miscellaneous5,354,7834,213,1634,218,2453,892,0873,199,131 Transfers1,000,3051,410,947864,493895,106(13,475,571) Total governmental activities58,466,48662,335,34367,388,49075,013,63065,551,493 Business-type activities: Investment income4,143,0392,698,5513,252,3427,298,87012,108,632 Miscellaneous214,563914,0871,035,581627,198548,189 Transfers(1,000,305)(1,410,947)(864,493)(895,106)13,475,571 Total business-type activities3,357,2972,201,6913,423,4307,030,96226,132,392 Total primary government61,823,78364,537,03470,811,92082,044,59291,683,885 CHANGE IN NET ASSETS Governmental activities11,236,0897,983,8833,415,95112,120,086(6,720,088) Business-type activities18,287,9518,314,84114,301,71533,645,94845,975,816 Total primary government$ 29,524,040$ 16,298,724$ 17,717,666$ 45,766,034$ 39,255,728 Source: Comprehensive Annual Financial Reports 1 Sales tax figures in fiscal years 2010 and prior present amounts net of economic incentive payments. 100 Table 2 20082009201020112012 $ 41,499,791$ 43,187,433$43,144,645$44,144,844$45,174,160 21,440,83920,466,77220,484,95422,871,28225,886,940 16,197,04215,669,98117,457,99419,324,24419,336,701 1,369,6671,239,2611,302,6171,513,4681,555,347 319,541338,700347,940359,671345,032 23,65322,91522,61121,96320,889 3,287,2822,413,339684,709459,615581,849 4,214,0283,327,7585,690,9692,370,6821,390,398 323,038846,119482,801(10,430,082)887,287 88,674,88187,512,27889,619,24080,635,68795,178,603 7,817,6716,075,4531,653,5151,472,0781,638,830 195,055557,690257,379278,180(690,967) (323,038)(846,119)(482,801)10,430,082(887,287) 7,689,6885,787,0241,428,09312,180,34060,576 96,364,56993,299,30291,047,33392,816,02795,239,179 9,623,0161,204,19911,701,719(2,833,046)(253,629) 21,091,97121,711,53413,782,61845,128,59729,110,447 $ 30,714,987$ 22,915,733$ 25,484,337$ 42,295,551$ 28,856,818 101 CITY OF DENTON, TEXAS FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) 2003200420052006 General fund Reserved for encumbrances$ 137,051$ 112,292$ 210,818$ 242,088 Unreserved, designated---1,550,000 Committed to streets---- Assigned to use of reserves---- Unreserved, undesignated, unassigned8,442,9429,504,9889,718,36813,264,027 Total general fund8,579,9939,617,2809,929,18615,056,115 All other governmental funds Reserved for: Debt service428,426296,731451,046439,658 Capital projects24,389,22626,548,13027,671,25232,840,640 Encumbrances14,295--- Unreserved, undesignated reported in: Special revenue funds1,678,6203,607,2003,614,4895,534,701 Restricted for: Debt Service---- Parks and recreation---- Streets and drainage projects---- Other capital projects---- Other grants and purposes---- Committed to: Streets---- Parks and recreation---- Other purposes---- Assigned to: Streets and drainage projects---- Other capital projects---- Other purposes---- Unassigned ---- Total all other governmental funds$ 26,510,567$ 30,452,061$ 31,736,787$ 38,814,999 Source: Comprehensive Annual Financial Reports 1 The City adopted GASB Statement No. 54 which changed the classification of governmental fund balances to nonspendable, restricted, committed, assigned, and unassigned. 102 Table 3 1 2011 20072008200920102012 $ -$ 123,696$ -$ -$ -$ - 4,360,649----- ----921,779- ----668,116664,894 18,199,16125,253,79722,794,95521,526,77922,834,10825,171,186 22,559,81025,377,49322,794,95521,526,77924,424,00325,836,080 886,1411,954,9552,414,2883,354,535-- 48,971,61057,887,53135,339,60644,970,571-- -5,515---- 8,896,1119,534,62716,435,44913,838,425-- ----3,279,0803,824,438 ----9,561,24410,496,887 ----21,857,67022,004,377 ----5,907,8778,444,073 ----1,223,8221,789,241 -----991,942 ----1,427,717570,534 ----1,867,6391,468,837 ----724,241- ----1,332,1053,003,344 ----77,34149,026 ----(758,734)(91,145) $ 58,753,862$ 69,382,628$ 54,189,343$ 62,163,531$ 46,500,002$52,551,554 103 CITY OF DENTON, TEXAS CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) 2003200420052006 REVENUES: Taxes: Property tax$20,964,737$ 22,986,590$26,640,930$30,019,657 1 16,047,297 17,684,89918,998,05820,343,413 Sales tax Hotel occupancy tax855,879 911,505988,5731,132,500 Beverage tax192,243 208,855215,872257,950 Bingo tax28,147 21,127 25,46524,260 Licenses and permits1,151,169 1,700,0441,235,3371,383,169 Franchise fees12,571,989 13,215,88214,250,48416,499,994 Fines and forfeitures3,422,952 3,338,9793,959,4764,639,922 Fees for services8,556,002 10,022,0018,255,3426,779,904 Investment revenue 1,451,106 1,332,5681,148,5171,967,473 Intergovernmental5,757,543 6,655,2405,443,5175,254,058 Miscellaneous1,304,367 5,012,6071,931,7623,424,786 Total revenues72,303,431 83,090,29783,093,33391,727,086 EXPENDITURES: General government21,025,986 24,894,43822,272,68120,539,006 Public safety28,406,261 29,689,08333,057,12035,813,329 Public works4,627,292 4,752,4095,247,5465,206,224 Parks and recreation8,094,780 8,404,0749,176,6869,548,416 Capital outlay22,845,204 13,463,61911,760,3569,056,102 Debt service: Principal retirement5,027,222 5,502,8975,642,4875,914,819 Advance refunding escrow- -216,148- Bond issuance costs- -293,66870,745 Interest and other charges4,487,778 4,544,5024,018,7654,210,628 Total expenditures94,514,523 91,251,02291,685,45790,359,269 Excess (deficiency) of revenues over (under) expenditures(22,211,092) (8,160,725)(8,592,124)1,367,817 OTHER FINANCING SOURCES (USES): Refunding bonds issued4,130,000 -7,316,688- Payment to refunded bond escrow agent(4,130,000) -(7,491,938)- Issuance of long-term debt6,913,483 11,805,0009,070,0009,550,000 Premium on debt issuance- -404,36149,644 Insurance recoveries- - -- Proceeds of capital lease- - -- Sale of capital assets- - -- Transfers in2,192,680 3,496,7653,341,0474,095,018 Transfers (out)(1,181,116) (2,162,259)(2,451,402)(2,857,338) Total other financing sources (uses)7,925,047 13,139,50610,188,75610,837,324 NET CHANGE IN FUND BALANCES$(14,286,045)$ 4,978,781$1,596,632$12,205,141 Debt service as a percentage of noncapital expenditures13.3%12.9%12.7%12.5% Source: Comprehensive Annual Financial Reports 1 Sales tax figures in fiscal years 2010 and prior present amounts net of economic incentive payments. 104 Table 4 200720082009201020112012 $34,662,336$41,436,012$ 42,980,209$43,326,427$44,147,706$45,116,485 20,653,93221,440,839 20,466,77220,484,95422,871,28225,886,940 1,268,6271,369,667 1,239,2611,302,6171,513,4681,555,347 294,623319,541 338,700347,940359,671 345,032 23,70823,653 22,91522,61121,963 20,889 1,097,3231,080,580 1,265,7331,198,5521,460,5481,436,215 15,197,94316,197,042 15,669,98117,457,99419,324,24419,336,701 5,065,0495,262,189 4,972,9054,828,1594,929,1105,462,133 7,624,2657,951,665 7,595,44012,244,2588,395,5838,519,763 3,632,7443,287,282 2,415,817684,709459,615 581,849 3,852,5138,094,307 4,049,43916,639,03810,896,0636,739,864 3,006,7513,778,673 3,183,8911,002,1331,911,6341,171,618 96,379,814110,241,450 104,201,063119,539,392116,290,887116,172,836 20,158,73924,110,329 25,223,04126,909,48525,784,29624,359,018 37,755,27240,855,112 42,540,42344,398,44246,561,74748,118,051 5,624,2876,596,191 6,753,3146,517,7177,483,9268,608,554 10,234,36111,557,168 11,444,57711,072,06110,913,45011,315,951 17,237,92223,275,703 21,863,64714,164,66212,937,05310,983,987 6,808,4398,479,136 9,479,2439,277,8049,670,8929,770,660 -- 148,575 -- 130,111 314,286530,137 105,39278,91929,156 163,811 4,389,3075,261,346 5,570,7705,095,2455,070,7344,758,305 102,522,613120,665,122 123,128,982117,514,335118,451,254118,208,448 (6,142,799)(10,423,672) (18,927,919)2,025,057(2,160,367)(2,035,612) 24,780,00024,595,000 6,120,0003,460,000-10,173,303 -(25,117,336) (6,265,255)(3,774,764)-(11,432,581) -22,230,000 -6,905,0005,680,0008,020,000 528,630937,755 246,012498,68232,6282,016,193 -- - -- 19,961 1,108,13169,897 - -- - -582,087 44,865160,495303,307 153,127 12,323,1322,406,678 10,286,4965,815,7691,968,2534,741,735 (5,154,536)(1,833,960) (9,280,022)(8,384,227)(7,915,382)(4,192,497) 33,585,35723,870,121 1,152,0964,680,95568,8069,499,241 $27,442,558$13,446,449$ (17,775,823)$6,706,012$(2,091,561)$7,463,629 13.5%14.7%15.1%14.0%14.0%13.8% 105 CITY OF DENTON, TEXASTable 5 ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS Estimated Market ValueLess:Total TaxableTotal Direct FiscalRealPersonalTax-ExemptAssessedTax YearPropertyPropertyPropertyValueRate 20033,761,322,990654,159,101712,069,5763,703,412,5150.54815 20044,129,344,174659,848,833746,990,1364,042,202,8710.54815 20054,468,428,305695,572,385789,056,8594,374,943,8310.59815 20064,876,565,660733,405,037820,593,8864,789,376,8110.60815 20075,475,770,871952,273,984986,815,9465,441,228,9090.62652 20086,159,567,238969,219,5271,039,286,9906,089,499,7750.66652 20096,443,103,507938,547,0471,090,291,4426,291,359,1120.66652 20106,619,118,472922,539,8011,213,749,2516,327,909,0220.66652 20116,744,096,534879,202,4961,393,181,0726,230,117,9580.68975 20126,903,311,493933,580,1011,424,516,5906,412,375,0040.68975 Source: Denton Central Appraisal District 106 CITY OF DENTON, TEXASTable 6 PROPERTY TAX RATES (PER $100 OF ASSESSED VALUE) 1 DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS Overlapping Rates Denton City of DentonIndependentTotal Direct FiscalOperatingDebt ServiceTotalDentonSchool& Overlapping YearRateRateDirect RateCountyDistrictRates 20030.338160.209990.548151.864002.661120 0.248970 20040.349280.198870.548151.864002.659320 0.247170 20050.399280.198870.598151.864002.716950 0.254800 20060.429280.178870.608151.864002.718630 0.246480 20070.447650.178870.626521.764002.622440 0.231920 20080.447650.218870.666521.490002.392290 0.235770 20090.447650.218870.666521.490002.406320 0.249800 20100.447650.218870.666521.490002.406320 0.249800 20110.470880.218870.689751.530002.493650 0.273900 20120.470880.218870.689751.530002.497107 0.277357 Source: Denton County Tax Office Denton County Central Appraisal District 1 Overlapping rates are those of local and county governments that apply to property owners with the City of Denton. 107 108 CITY OF DENTON, TEXASTable 7 PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO 2012 2003 Percentage ofPercentage of TaxableTotal TaxableTaxableTotal Taxable AssessedAssessedAssessedAssessed Name of TaxpayerValue 1 Name of TaxpayerValue 2 ValueValue Columbia Medical Center of Denton (Denton Regional Verizon Southwest Hospital)(Telephone Company) $ 78,054,2601.22%$ 41,865,7300.96% Columbia Medical Center of Denton PACCAR Inc (Denton Regional (Peterbilt)Hospital) 60,418,4740.94%41,864,5620.96% Inland Western Anderson Crossing (Denton Merchandisers Crossing)(Distribution Center) 45,388,8940.71%32,767,9920.75% Cypress Denton Station LTD (Forum Triad Denton Hospital at Denton Station (Hospital and Apartments)professional building) 38,803,3890.61%24,470,9830.56% Verizon Southwest Robson Denton (Telephone Development (Real Company)estate development) 33,292,7900.52%21,663,1890.50% GEL Timberlinks LLCD (The Timbers PACCAR Inc at Denton)(Peterbilt) 24,197,1650.38%21,311,4590.49% Denton Educational Housing Corp. University Courtyard Denton Mall Company Apartments)(Shopping mall) 23,423,2800.37%17,581,2990.40% SCI Gateway at Denton Fund 25 LLC (Gateway at Denton Tetra Pak (Packaging Apartments)Manufacturing) 20,403,8020.32%16,794,3840.39% Denton Educational CNL Retirement Housing Corp. CRS1 (Retirement (Housing and property center)management) 20,283,6000.32%16,447,4380.38% $ 344,265,654Total$ 234,767,036 Total 5.37%5.40% Source: Denton Central Appraisal District 1 Total taxable assessed value for tax year 2011 (fiscal year 2012) is $6,412,375,004 2 Total taxable assessed value for tax year 2002 (fiscal year 2003) is $4,350,820,231 109 CITY OF DENTON, TEXAS PROPERTY TAX LEVIES AND COLLECTIONS LAST EIGHT FISCAL YEARS Taxes LeviedAdjustmentsAdjustedCollected Within the Within theto Levy inTaxes LeviedFiscal Year of the LevyCollections FiscalFiscal YearSubsequentfor thePercentagein Subsequent Yearof the LevyYearsFiscal YearAmountof LevyYears 2005$ 26,457,399$ 171,624$ 26,629,023$ 26,016,23997.70%$ 551,713 200629,545,033128,31229,673,34529,162,97898.28%454,479 200734,273,862333,00934,606,87133,872,40497.88%670,308 200840,816,25644,35040,860,60640,354,52898.76%353,199 200943,086,12350,16643,136,28942,423,70798.35%530,313 201042,898,41430,99242,929,40642,448,36498.88%302,389 201143,890,121(14,512)43,875,60943,447,50899.02%195,379 201244,856,277-44,856,27744,461,50199.12%- Source: Denton Central Appraisal District Only eight years of data included due to inability to obtain correct data from previous tax software. 110 Table 8 Total Collections to Date Percentage Amountof Levy $ 26,567,95299.77% 29,617,45799.81% 34,542,71299.81% 40,707,72799.63% 42,954,02099.58% 42,750,75399.58% 43,642,88799.47% 44,461,50199.12% 111 CITY OF DENTON, TEXAS RATIO OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Governmental ActivitiesBusiness-Type Activities GeneralCertificatesGeneralCertificates FiscalObligationofOtherRevenueObligationofOther YearBondsObligationObligationsBondsBondsObligationObligations 2002$58,663,791$27,628,284$ 274,875,129$1,508,017$12,188,878$3,141,222 $ 635,442 200359,721,87030,148,929696,508304,366,3522,191,16811,765,6123,328,798 200455,893,37040,540,1621,244,678293,105,0002,046,63011,325,8383,141,222 200558,870,84941,791,5882,210,846281,120,0003,904,1519,233,4123,141,222 200658,742,90046,700,0003,559,742277,305,0003,582,10011,975,0003,141,222 200770,650,31751,355,1002,393,684281,750,0003,099,68313,889,9007,032,986 200880,814,59455,097,5501,819,298282,200,0004,865,40612,952,4505,713,041 200977,358,65048,611,1502,769,671266,705,0004,366,35011,243,8503,161,549 201077,314,65045,727,9501,771,952209,885,000 126,207,0501,824,177 39,600,350 201173,395,65043,036,4191,879,906187,525,000 150,553,5811,279,130 47,209,350 201280,013,43933,910,3421,891,895156,855,000 181,314,658713,408 59,301,561 Source: Comprehensive Annual Financial Reports Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. 1 See Table 13 for personal income and population data. 112 Table 9 TotalPercentage Primaryof PersonalPer 11 Government IncomeCapita $ 378,640,7630.01852%4,062.41 412,219,2370.01945%4,266.57 407,296,9000.01852%4,071.91 400,272,0680.01740%3,869.76 405,005,9640.01665%3,790.66 430,171,6700.01778%3,947.25 443,462,3390.01754%3,989.41 414,216,2200.01678%3,653.25 502,331,1290.01916%4,386.52 504,879,0360.01926%4,408.77 514,000,3030.02065%4,443.99 113 CITY OF DENTON, TEXASTable 10 RATIO OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS General Bonded Debt OutstandingPercentage of GeneralCertificatesLess: AmountsActual Taxable FiscalObligationofAvailable in DebtValue ofPer 12 YearBondsObligationService FundTotal PropertyCapita 200361,913,03841,978,000428,426103,462,6122.79%1,110.04 200457,940,00051,866,000296,731109,509,2692.71%1,133.45 200562,775,00051,025,000451,046113,348,9542.59%1,133.19 200662,325,00058,675,000439,658120,560,3422.52%1,165.55 200773,750,00065,245,000886,141138,108,8592.54%1,292.63 200880,814,59455,097,5501,954,955133,957,1892.20%1,229.19 200977,358,65048,611,1502,414,288123,555,5121.96%1,111.51 201077,314,65045,727,9503,354,535119,688,0651.89%1,055.61 201173,395,65043,036,4193,279,080113,152,9891.82%988.09 201280,013,43933,910,3423,824,438110,099,3431.72%951.91 Source: Comprehensive Annual Financial Reports Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. 1 See Table 5 for property value data. 2 See Table 13 for population data. 114 CITY OF DENTON, TEXASTable 11 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF SEPTEMBER 30, 2012 Estimated EstimatedShare of DebtPercentageOverlapping 1 Governmental UnitOutstandingDebt Applicable Debt repaid with property taxes: Denton Independent School District$ 608,536,27863.32%$ 385,325,171 Denton County553,915,00011.99%66,414,409 Aubrey Independent School District52,495,1830.58%304,472 Krum Independent School District46,344,0333.79%1,756,439 Argyle Independent School District53,390,2699.17%4,895,888 Sanger Independent School District26,226,8101.65%432,742 Ponder Independent School District27,610,0002.49%687,489 Pilot Point Independent School District19,243,2680.07%13,470 Subtotal, overlapping debt459,830,080 City of Denton, direct debt100.00%115,815,676 Total direct and overlappping debt$ 575,645,756 Source: Compiled from data from the "Texas Municipal Report" prepared for the Municipal Advisory Council. Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the city. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City of Denton. This process recognizes that, when considering the City of Denton's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. 1 The percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining the portion of the overlapping government's taxable assessed value that is within the City of Denton's boundaries and dividing it by the overlapping government's total taxable assessed value. 115 CITY OF DENTON, TEXAS PLEDGED REVENUE COVERAGE LAST TEN FISCAL YEARS 1 Utility System Revenue Bonds Less:Add: Fair MarketLess:Franchise Fees ValueOperatingand Return AdjustmentExpenseson Investment FiscalOperatingInvestmentto InvestmentImpact FeeBeforePaid to 23 YearRevenueRevenueRevenueDepreciation RevenueGeneral Fund 2003140,450,8194,320,188(2,599,123)5,150,000125,351,8379,207,505 2004148,512,6892,618,296(1,523,523)6,771,671134,885,3299,596,617 2005170,450,1203,114,254(2,027,258)4,206,630150,549,00710,922,442 2006200,970,5607,061,556721,0585,556,349166,537,86712,839,184 2007173,879,71311,390,1422,710,7425,558,985142,890,60311,283,647 2008185,874,4507,458,60569,2926,620,938158,245,88511,862,151 2009176,464,3575,817,918930,9364,456,827147,392,05611,325,647 2010166,295,6941,593,161(550,830)3,186,225137,201,40212,828,293 2011186,359,2261,340,539(66,712)5,205,889136,774,86614,304,393 2012189,645,2771,477,452110,6263,542,829139,801,42114,414,769 Source: Comprehensive Annual Financial Reports 1 The Utility System includes the Electric, Water, and Wastewater funds. 2 For the coverage calculation, the fair market adjustment to the value of investments is excluded. 3 For the coverage calculation, franchise fees and return on investment payments to the General Fund are excluded from operating expenses. 4 Revenue bond covenants require a times coverage of 1.25 or greater. 5 Total times coverage provided to assess total bond debt related to the Utility System. 116 Table 12 Certificate of Obligation & Revenue Bond DebtGeneral Obligation Bond Debt NetTotal AvailableTimesTimesTimes 45 RevenuePrincipalInterestPrincipalInterestCoverage CoverageCoverage 36,375,7989,965,00014,324,1781.50--N/A1.50 34,137,46711,255,00015,979,9501.25--N/A1.25 40,171,69712,545,00014,429,9251.49--N/A1.49 59,168,72412,330,00013,798,8112.26--N/A2.26 56,511,14213,325,00012,265,4612.21--N/A2.21 53,500,96714,840,00013,088,9281.92--N/A1.92 49,741,75715,670,00013,073,9921.73--N/A1.73 47,252,80115,935,00012,267,7991.68--N/A1.68 70,501,89313,180,0009,208,6823.154,610,0007,315,1895.912.05 69,168,2808,460,0007,982,2844.2111,850,0007,477,2333.581.93 117 CITY OF DENTON, TEXASTable 13 DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS FiscalEstimatedPersonalPer CapitaMedianGrade SchoolUniversityUnemployment 122345 YearIncome PopulationIncomeAgeEnrollmentEnrollmentRate 200393,2062,044,193,99221,93226.915,12838,6127.4% 200496,6162,118,982,11221,93227.116,93239,6185.8% 2005100,0262,199,071,61021,98527.118,39541,2043.3% 2006103,4362,300,106,33222,23727.119,70142,4083.5% 2007106,8432,431,746,68022,76027.120,88043,1333.4% 2008108,9802,419,464,98022,20127.922,22143,7704.4% 2009111,1602,527,667,24022,73928.822,76145,6586.5% 2010113,3832,467,894,37821,76628.924,04747,2366.3% 2011114,5172,621,408,64722,89128.924,90147,7206.7% 2012115,6622,489,161,90221,52127.025,79148,2275.0% Sources: 1 City of Denton Planning and Development Department estimate. Prior population figures have been adjusted to reflect the 2010 census data. 2 United States Census and Denton Chamber of Commerce 3 Denton Independent School District 4 University of North Texas' and Texas Woman's University's Denton campus enrollment 5 Texas Workforce Commission estimate 118 CITY OF DENTON, TEXASTable 14 PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO 20122003 PercentagePercentage of Total Cityof Total City Name of EmployerEmployeesEmploymentName of EmployerEmployeesEmployment University of North Texas8,88714.67%University of North Texas6,99514.52% Denton Independent School Denton Independent 3,3005.45%2,0004.15% DistrictSchool District Peterbilt Motors- 2,1003.47%Peterbilt Motors1,7003.53% Headquarters & Plant Texas Woman's University1,7872.95%Denton State School1,3802.87% Denton CountyDenton County 1,5542.56%1,2252.54% (in Denton)(in Denton) Denton State School1,5002.48%City of Denton1,1002.28% Texas Woman's City of Denton1,3552.24%1,0002.08% University Federal Emergency 1,1001.82%9001.87% Boeing Electronics Management Agency Presbyterian Hospital of Denton Regional Medical 1,0741.77%8501.76% DentonCenter Denton Regional Medical Federal Emergency 9111.50%8001.66% CenterManagement Agency Total 23,56838.91%Total17,95037.26% Source: Office of Economic Development & Denton Chamber of Commerce 119 CITY OF DENTON, TEXAS FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Full-time Equivalent Employees for Fiscal Year Function / Program20032004200520062007 General government202.75202.75211.75192.50192.38 Public safety Police180.14183.73198.23206.23212.23 Fire152.25152.25160.25162.25162.25 Animal services8.008.008.008.008.00 Public works84.0084.0077.0037.0038.00 Parks and recreation136.37152.34149.62141.85142.07 Electric system108.50109.50110.50110.50112.00 Water system113.71120.00130.00161.75164.50 Wastewater system79.1280.1283.2283.1282.87 Solid waste88.5088.5082.5085.0087.00 Airport----- Materials management15.0015.0014.0012.5012.50 Fleet services20.0019.0016.0017.0018.00 Technology services33.7533.7529.7526.0024.50 Risk Retention----5.00 Total1,222.091,248.941,270.821,243.701,261.30 Source: City of Denton Budget Office 120 Table 15 20082009201020112012 197.38208.38212.13213.50223.75 217.23217.23217.23222.23217.23 162.25163.25163.25163.25163.25 8.008.008.008.009.00 39.0039.0039.0039.0041.00 144.15144.15143.08142.58141.08 120.50125.00129.50129.50131.50 165.00160.50158.00158.50158.00 83.3784.8786.3788.3792.37 88.0093.5093.5098.50105.50 ---5.005.50 12.5013.5013.5013.5012.00 19.0021.0021.0021.0022.00 25.0025.0025.0026.0027.00 5.005.005.005.006.00 1,286.381,308.381,314.561,333.931,355.18 121 CITY OF DENTON, TEXAS OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Fiscal Year Function / Program2003200420052006 Public Safety Police Calls for service68,72769,31273,15473,346 Traffic citations issued38,18134,80436,75739,483 Fire Fire calls for service2,8942,9173,0133,495 EMS calls for service8,8087,0126,5276,840 Inspections (Businesses)3,1143,0003,7273,882 Animal Services Animals sheltered4,7695,1664,3204,443 Animals adopted, transferred, or returned1,4871,7772,0912,167 Public Works 1 Street repaving (lane miles)211,11332.4119.4416.41 Pot holes repaired5,1624,0045,4793,971 Cutouts base failures (square feet)94,87679,010124,442171,543 Crack seal maintenance (linear feet)NANA40,33879,314 Parks and Recreation Attendance Leisure Services1,026,309981,883952,866985,778 Water Park102,637107,198141,495162,039 Total Acres Maintained2,1072,1902,2082,262 Water System Number of customers24,08925,30326,71527,884 Annual finished water production (in thousand gallons)5,636,7685,369,9575,901,7507,097,403 Wastewater System Number of customers22,56123,55024,89426,079 Annual wastewater discharge (in thousand gallons)4,689,4504,967,4405,039,2404,428,700 Solid Waste Number of customers (residential and commercial)24,25425,15426,06227,805 MSW Landfilled (tons)107,061122,113122,477114,060 Recycling collections (tons)15,32216,35316,19517,762 Source: Various city departments Note: Fire calls for 1997-2002 were rounded to the nearest hundred by department. 1 square yards of repaving and reconstruction 122 Table 16 200720082009201020112012 74,39780,11783,55783,74684,89981,104 31,13131,61036,59833,99029,16228,327 3,5393,7033,3913,1993,4233,316 6,5446,8627,0177,2557,4587,657 3,1443,5913,6224,7394,3704,310 5,4274,9674,3415,0424,9365,467 2,2972,1192,1933,2643,7304,332 23.3841.2817.4310.278.3315.43 8,1536,84111,59320,98810,53510,807 44,56675,877126,691169,396146,925102,879 42,62440,28855,89453,712116,556117,780 1,048,5001,010,3511,031,5301,153,6321,093,705969,858 163,000169,000179,386193,361200,553212,123 2,2932,6332,6332,6332,5702,405 28,89829,67930,28830,88931,22231,372 5,671,1246,582,1516,210,4726,209,9667,331,9026,750,840 27,18528,01928,64729,10529,51929,772 5,174,1005,263,7804,733,8395,617,4904,852,0974,966,250 28,95430,68031,17332,04432,62133,049 128,644136,024160,378140,284149,930164,436 21,17924,24844,54050,24673,91286,887 123 CITY OF DENTON, TEXAS CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Fiscal Year Function / Program20032004200520062007 Public safety Police Police stations11111 Police patrol units141143148149149 Fire Fire stations66667 Emergency vehicles2122212224 Animal services Animals shelters11111 Public works Lane miles added per year34.9514.7924.5625.3422.66 Streetlights6,0866,9317,1047,1187,008 Parks and recreation Parks3334343730 Park acreage1,1771,2401,2051,2721,218 Recreation centers1112131313 Water system Water mains (miles)478497511520530 Raw water (in thousand gallons)6,168,0396,046,0706,234,0767,322,3615,801,994 Wastewater system Wastewater mains (miles)426442452459470 Maximum daily capacity (in million gallons)1521212121 Solid waste Landfills11111 Source: Various city departments 124 Table 17 20082009201020112012 11111 147149149143139 77777 2426303030 11111 10.1014.7941.771.562.45 7,0117,0157,0166,9966,987 3737373737 1,2921,4381,3411,3321,431 1313131313 533550558560565 6,694,7346,471,2586,416,0867,572,1497,013,351 481488495496501 2125252525 11111 125 126 CITY OF DENTON, TEXASExhibit XXXI SCHEDULE OF EXPENDITURES - BUDGET AND ACTUAL GENERAL FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012 Variance with Actual on aFinal Budget - Budgeted Amounts BudgetaryPositive OriginalFinalBasis(Negative) EXPENDITURES: Personal Service$ 1,839,333$ 1,835,333$ 1,842,719$ (7,386) Materials and Supplies34,20834,20822,28911,919 Maintenance and Repairs4,4284,4281,9932,435 Insurance47,49147,49147,491- Miscellaneous38,07537,78525,02012,765 Operations, Services101,676106,96193,60913,352 Transfers - Interfund124,193124,193123,586607 City Manager's Office2,189,4042,190,3992,156,70733,692 Personal Service208,525208,525206,7851,740 Materials and Supplies950950974(24) Maintenance and Repairs1,5001,5001,187313 Insurance1,6981,6981,698- Miscellaneous349349810(461) Operations, Services13,47113,47110,6692,802 Transfers - Interfund17,22217,22217,450(228) Cable Television243,715243,715239,5734,142 Materials and Supplies--14(14) Insurance863863863- Operations, Services150,000150,00077,69272,308 Internal Audit150,863150,86378,56972,294 Personal Service279,980279,980283,512(3,532) Materials and Supplies16,79516,79525,184(8,389) Insurance2,4112,4112,411- Operations, Services105,751105,75184,93120,820 Transfers - Interfund20,23120,23120,13299 Public Communications425,168425,168416,1708,998 Personal Service1,111,5001,112,9581,095,98516,973 Materials and Supplies24,75024,75032,515(7,765) Maintenance and Repairs500500259241 Insurance10,68010,68010,680- Miscellaneous50,77337,77336,849924 Operations, Services171,522183,064164,06818,996 Transfers - Interfund83,53683,53683,309227 Human Resources$ 1,453,261$ 1,453,261$ 1,423,665$ 29,596 (continued) 127 CITY OF DENTON, TEXASExhibit XXXI SCHEDULE OF EXPENDITURES - BUDGET AND ACTUAL GENERAL FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012 Variance with Actual on aFinal Budget - Budgeted Amounts BudgetaryPositive OriginalFinalBasis(Negative) EXPENDITURES: Personal Service$ 1,553,785$ 1,553,785$ 1,573,124$ (19,339) Materials and Supplies12,90012,90010,6122,288 Insurance10,44410,44410,444- Operations, Services197,553197,55381,511116,042 Transfers - Interfund56,78856,78856,510278 Fixed Assets17,77417,77430,656(12,882) Legal Administration1,849,2441,849,2441,762,85786,387 Personal Service359,349330,768290,59840,170 Materials and Supplies4,9434,9432,1622,781 Insurance3,0873,0873,087- Operations, Services4,4884,4884,331157 Transfers - Interfund24,97524,97524,853122 Municipal Judge396,842368,261325,03143,230 Personal Service1,524,7401,525,1521,492,10733,045 Materials and Supplies37,58234,88451,323(16,439) Insurance54,48354,48354,483- Miscellaneous36,98136,98123,79213,189 Operations, Services228,45035,12934,863266 Transfers - Interfund220,186270,186269,1101,076 Planning2,102,4221,956,8151,925,67831,137 Personal Service1,489,1571,489,1571,496,146(6,989) Materials and Supplies57,62244,72247,190(2,468) Maintenance and Repairs10,0001,9008801,020 Insurance17,85317,85317,853- Operations, Services62,44479,41171,4257,986 Transfers - Interfund158,555168,195168,1932 Building Inspections1,795,6311,801,2381,801,687(449) Personal Service262,819262,819253,1429,677 Materials and Supplies5,9518,9516,1262,825 Maintenance and Repairs100100-100 Insurance1,4791,4791,479- Operations, Services57,62040,6207,81132,809 Transfers - Interfund4,4148,4148,39222 Development Review332,383322,383276,95045,433 Personal Service314,701315,976316,878(902) Materials and Supplies2,20014,01013,250760 Maintenance and Repairs-820820- Insurance2,9582,9582,958- Miscellaneous5050-50 Operations, Services8,87228,95035,749(6,799) Transfers - Interfund20,48547,78747,687100 Gas Well Review$ 349,266$ 410,551$ 417,342$ (6,791) (continued) 128 CITY OF DENTON, TEXASExhibit XXXI SCHEDULE OF EXPENDITURES - BUDGET AND ACTUAL GENERAL FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012 Variance with Actual on aFinal Budget - Budgeted Amounts BudgetaryPositive OriginalFinalBasis(Negative) EXPENDITURES: Personal Service$ 989,691$ 989,691$ 871,494$ 118,197 Materials and Supplies42,61645,91644,6481,268 Insurance11,38411,38411,384- Operations, Services182,972135,672125,21310,459 Transfers - Interfund95,728139,728139,276452 Code Enforcement1,322,3911,322,3911,192,015130,376 Personal Service988,631988,631996,589(7,958) Materials and Supplies57,76952,59451,5601,034 Insurance13,18413,18413,184- Miscellaneous-200200- Operations, Services94,07954,30552,1042,201 Transfers - Interfund71,398141,728140,767961 Municipal Court1,225,0611,250,6421,254,404(3,762) Personal Service2,224,3442,224,3442,210,98113,363 Materials and Supplies73,36374,26393,168(18,905) Maintenance and Repairs6752,3403,023(683) Insurance18,87718,87718,877- Miscellaneous1,4151,9151,190725 Operations, Services785,063782,248790,808(8,560) Transfers - Interfund168,708168,708167,879829 Finance3,272,4453,272,6953,285,926(13,231) Personal Service507,557507,557493,32014,237 Materials and Supplies34,87734,87728,3826,495 Insurance4,1164,1164,116- Miscellaneous82,89782,89772,47910,418 Operations, Services1,105,0801,060,580981,92578,655 Transfers - Interfund30,89575,39530,74444,651 Economic Development1,765,4221,765,4221,610,966154,456 Personal Service5,929,3235,926,3235,687,542238,781 Materials and Supplies630,557621,803622,311(508) Maintenance and Repairs737,273723,762716,4917,271 Insurance153,784153,784153,785(1) Miscellaneous1501508,368(8,218) Operations, Services1,964,7951,910,7172,135,553(224,836) Transfers - Interfund466,375558,884550,6278,257 Fixed Assets-3,00017,535(14,535) Parks & Recreation$ 9,882,257$ 9,898,423$ 9,892,212$ 6,211 (continued) 129 CITY OF DENTON, TEXASExhibit XXXI SCHEDULE OF EXPENDITURES - BUDGET AND ACTUAL GENERAL FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012 Variance with Actual on aFinal Budget - Budgeted AmountsBudgetaryPositive OriginalFinalBasis(Negative) EXPENDITURES: Personal Service$ 1,116,460$ 1,116,460$ 1,115,254$ 1,206 Materials and Supplies52,24852,24841,25510,993 Maintenance and Repairs554,507554,507644,482(89,975) Insurance13,54613,54613,546- Miscellaneous1,5031,5031661,337 Operations, Services1,069,9341,069,9341,054,14915,785 Transfers - Interfund97,44797,44797,001446 Fixed Assets-3,0003,000- Facilities Management2,905,6452,908,6452,968,853(60,208) Personal Service3,088,6133,088,6133,068,59320,020 Materials and Supplies151,197141,433149,512(8,079) Maintenance and Repairs45,22650,35149,871480 Insurance61,98161,98161,981- Operations, Services404,271405,056403,9551,101 Transfers - Interfund777,224777,224773,4233,801 Fixed Assets490,179494,033487,3246,709 Library5,018,6915,018,6914,994,65924,032 Personal Service161,437161,437169,571(8,134) Materials and Supplies4,3324,0825543,528 Insurance740740740- Miscellaneous400400108292 Operations, Services176,192166,192158,9307,262 Transfers - Interfund14,00024,00023,96634 Transportation Operations357,101356,851353,8692,982 Personal Service967,817967,817918,45949,358 Materials and Supplies26,67426,67422,0134,661 Maintenance and Repairs480,394450,185440,03110,154 Insurance17,81317,81317,813- Miscellaneous2,3662,3661,591775 Operations, Services180,670180,670107,86172,809 Transfers - Interfund86,185186,185185,788397 Fixed Assets100,00030,20930,209- Traffic Operations1,861,9191,861,9191,723,765138,154 Operations, Services735,000659,516654,0915,425 Transfers - Interfund-75,48475,484- Street Lighting$ 735,000$ 735,000$ 729,575$ 5,425 (continued) 130 CITY OF DENTON, TEXASExhibit XXXI SCHEDULE OF EXPENDITURES - BUDGET AND ACTUAL GENERAL FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012 Variance with Actual on aFinal Budget - Budgeted Amounts BudgetaryPositive OriginalFinalBasis(Negative) EXPENDITURES: Personal Service$ 20,261,076$ 20,267,060$ 20,387,122$ (120,062) Materials and Supplies140,155161,705166,386(4,681) Maintenance and Repairs184,610187,460188,914(1,454) Insurance317,365317,365317,365- Miscellaneous121,648121,648121,648- Operations, Services893,827863,443943,736(80,293) Transfers - Interfund1,171,2991,171,2991,165,7875,512 Police23,089,98023,089,98023,290,958(200,978) Personal Service519,733519,733554,405(34,672) Materials and Supplies39,39037,12540,340(3,215) Maintenance and Repairs11,41211,41210,3051,107 Insurance7,9977,9977,997- Operations, Services279,286281,551299,398(17,847) Transfers - Interfund38,78438,78438,602182 Animal Services896,602896,602951,047(54,445) Personal Service18,764,24618,764,24618,523,814240,432 Materials and Supplies404,420411,420382,76128,659 Maintenance and Repairs251,892250,892243,2097,683 Insurance241,867241,867241,8661 Miscellaneous46,85046,85027,69519,155 Operations, Services1,153,1721,120,8381,125,156(4,318) Transfers - Interfund532,720532,720530,1982,522 Fixed Assets85,000145,168143,3311,837 Fire21,480,16721,514,00121,218,030295,971 Personal Service189,604189,604188,940664 Insurance1,1011,1011,1001 Miscellaneous112,797112,797132,525(19,728) Operations, Services3,3903,3902,2521,138 Transfers - Interfund27,46527,46527,332133 Agency Contributions334,357334,357352,149(17,792) Personal Service50,00050,00097,230(47,230) Materials and Supplies-5,9651025,863 Miscellaneous408,676408,676219,821188,855 Operations, Services1,172,2711,081,276870,396210,880 Transfers - Interfund1,396,5661,519,3161,523,209(3,893) Miscellaneous/Finance3,027,5133,065,2332,710,758354,475 Personal Service64,702,42164,675,96964,134,310541,659 Materials and Supplies1,855,4991,867,2181,854,63112,587 Maintenance and Repairs2,282,5172,240,1572,301,465(61,308) Insurance1,017,2021,017,2021,017,2011 Miscellaneous904,930892,340672,262220,078 Operations, Services11,301,84910,720,78610,372,186348,600 Transfers - Interfund5,705,3796,355,8946,289,30566,589 Fixed Assets692,953693,184712,055(18,871) TOTAL GENERAL FUND$ 88,462,750$ 88,462,750$ 87,353,415$ 1,109,335 131 132 CITY OF DENTON, TEXAS SINGLE AUDIT REPORTS YEAR ENDED SEPTEMBER 30, 2012 C O N T E N T S Page Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Audit Standards1 Independent Auditor's Report on Compliance with Requirements that Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 and on the Schedule of Expenditures of Federal and State Awards3 Schedule of Findings and Questioned Costs6 Schedule of Expenditures of Federal and State Awards8 Notes to Schedule of Expenditures of Federal and State Awards10 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Honorable Mayor and City Council City of Denton, Texas We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Denton, Texas (the City), as of and for the year ended September 30, 2012,which collectively comprise the City’s basic financial statements,and have issued our report thereon dated February 20, 2013.We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting The management of the City is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the City’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over financial reporting. Adeficiency in internal controlexists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weaknessis a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express suchan opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 1 City of Denton, Texas Page 2 This report is intended solely for the information and use of the audit committee, management, City Council, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. WEAVER AND TIDWELL, L.L.P. Dallas, Texas February 20, 2013 2 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROLOVER COMPLIANCE IN ACCORDANCE WITHOMB CIRCULAR A-133AND ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS The Honorable Mayor and City Council City of Denton, Texas Compliance We have audited theCityof Denton’s(the City), compliance with the types of compliance requirements described in the U. S. Office of Management and Budget(OMB) Circular A-133 Compliance Supplementthat could have a direct and material effect on each of its major federal programs for the year ended September 30, 2012. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the City’s management. Our responsibility is to express an opinion on the City’s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City’s compliance with those requirements. In our opinion, the City, complied, in all material respects, with the requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended September 30, 2012. Internal Control Over Compliance The management of the City is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the City’s internal control over compliance with requirements that could have a direct and material effect on a major federal program to determine theauditing procedures for the purpose of expressing our opinion on compliance but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over compliance. 3 City of Denton, Texas Page 2 Adeficiency in internal control over complianceexists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over complianceis a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. Schedule of Expenditures of Federal and State Awards We have audited the financial statements of thegovernmental activities, the business type activities, eachmajor fund, and the aggregateremaining fund information of theCity of Denton as of and for the year ended September 30, 2012and have issued our report thereon dated February 20, 2013 which contained an unqualified opinion on those financialstatements. Our audit was performed for the purpose of forming our opinionson the financial statements that collectively comprise the City of Denton’s financial statements taken as a whole. The accompanying schedule of expenditures of federal and stateawards is presented for purposes of additional analysis as required by OMB Circular A-133, and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal and state awards is fairly stated in all material respects in relation to the financial statements as a whole. The purpose of this report is solely to describe the scope of our testing of compliance with the types of compliance requirements applicable to each of the City’s major programs and our testing of internal control over compliance and the results of our testing, and to provide an opinion on the City’s compliance but not to provide an opinion onthe effectiveness of the City’s internal control over compliance. 4 City of Denton, Texas Page 3 Thisreport is an integral part of an audit performed in accordance with Government Auditing Standardsin considering the City’s compliance with requirements applicable to each major program and its internal control over compliance. Accordingly, this report is not suitable for any other purpose. WEAVER AND TIDWELL, L.L.P. Dallas, Texas February 20, 2013 5 CITY OF DENTON, TEXAS SCHEDULE OF FINDINGSAND QUESTIONED COSTS FOR THE YEAR ENDED SEPTEMBER 30, 2012 I. Summary of the Auditor's Results : Financial Statements a. An unqualified opinion was issued on the financial statements. b. Internal control over financial reporting: Material weakness(es) identified? Yes X No Significant deficiency(ies) identified that arenot considered a material weakness? Yes X No c. Noncompliance material to financial statements noted Yes X No Major Programs d. Internal control over major programs: Material weakness(es) identified? Yes X No Significant deficiency(ies) identified that are not considereda material weakness? Yes X No e. An unqualified opinion was issued on compliance for major programs. f. Any audit findings disclosed that were required to be reported under Section 510(a) or OMB Circular A-133. Yes XNo g. Identification of major programs: 14.239 Home Investment Partnerships Program 81.086 ARRA - Conservation Research and Development Grant 81.128 ARRA - Energy Efficiency and Conservation Block Grant h. The dollar threshold used to distinguish between type A and type B programs. $300,000 i. Auditee qualified as a low-risk auditee. X Yes No 6 CITY OF DENTON, TEXAS SCHEDULE OF FINDINGSAND QUESTIONED COSTS FOR THE YEAR ENDED SEPTEMBER 30, 2012 II.Findings Relating to the Financial Statements Which Are Required To Be Reported in Accordance with . Generally Accepted Government Auditing Standards None III.Findings and Questioned Costs for Federal Awards None IV. Summary of Prior year Findings. None 7 CITY OF DENTON, TEXAS SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 Federal Grantor/FederalPassed Pass-Through Grantor/GrantCFDAThrough to Program TitleI.D. NumberNumberExpendituresSubrecipients FEDERAL AWARDS U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Community Development Block Grant*B-04-MC-48-003614.218$34,519$- Community Development Block Grant*B-07-MC-48-003614.218129,083- Community Development Block Grant*B-08-MC-48-003614.218139,577- Community Development Block Grant*B-09-MC-48-003614.21848,314- Community Development Block Grant*B-10-MC-48-003614.218368,30912,002 Community Development Block Grant*B-11-MC-48-003614.218309,786103,265 Community Development Block Grant*B-12-MC-48-003614.21822,592- Home Investment Partnerships Program M-03-MC-48-022314.2393,330- Home Investment Partnerships Program M-04-MC-48-022314.2395,006- Home Investment Partnerships Program M-05-MC-48-022314.239109,090- Home Investment Partnerships Program M-06-MC-48-022314.2399,8069,806 Home Investment Partnerships Program M-07-MC-48-022314.239170,45995,560 Home Investment Partnerships Program M-08-MC-48-022314.23967,34139,188 Home Investment Partnerships Program M-09-MC-48-022314.23916,698- Home Investment Partnerships Program M-10-MC-48-022314.239160,30186,086 Home Investment Partnerships Program M-11-MC-48-022314.23990,64220,000 Home Investment Partnerships Program M-12-MC-48-022314.23910,434- ARRA - Community Development Block Grant*B-09-MY-48-003614.2537,549- Total Direct Funding U.S. Department of Housing and Urban Development1,702,836365,907 Passed Through Texas Department of Housing and Community Affairs Emergency Solutions Grant4212000153014.231322- Total U.S. Department of Housing and Urban Development1,703,158365,907 FEDERAL ENVIRONMENTAL PROTECTION AGENCY Denton Brownfield Cleanup Transit Park BF - 96693601-066.8185,163- Passed through Texas Commission of Environmental Quality Nonpoint Source Water Quality Management Planning Implementation Grant582-10-9046366.46046,267- Total Federal Environmental Protection Agency51,430- U. S. DEPARTMENT OF ENERGY ARRA - Energy Efficiency and Conservation GrantDE-SC000268381.128148,504- ARRA - Conservation Research and Development GrantARRA-DOE-0381.086126,889- Total Department of Energy275,393- U. S. DEPARTMENT OF HOMELAND SECURITY Fire Prevention GrantEMW- 2011-FO-0588897.04434,024- Passed through State Department of Public Safety Governor's Division of Emergency Management Emergency Management Performance Grant12TX-EMPG-012297.04275,728- 2009 UASI State Homeland Security Program 2009-SS-T9-006497.00839,818- 2009 UASI-LEAP State Homeland Security Program 2009-SS-T9-006497.00860,474- 2010 UASI State Homeland Security Program 2010-SS-T0-000897.008256,001- 2010 SHSP State Homeland Security Program 2010-SS-T0-000897.00876,373- Total U.S. Department of Homeland Security 542,418- * CDBG Entitlement Grants Cluster (Continued) 8 CITY OF DENTON, TEXAS SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 Federal Grantor/FederalPassed Pass-Through Grantor/GrantCFDAThrough to Program TitleI.D. NumberNumberExpendituresSubrecipients U. S. DEPARTMENT of AGRICULTURE Passed through Texas Department of Health and Human Services Summer Food Services Grant061-100210.559 129,725 - Total U.S. Department of Agriculture 129,725 - U. S. DEPARTMENT OF TRANSPORTATION Federal Transportation GrantTX-03-0293-0020.507 55,249 - Passed through State Department of Transportation STEP - Impaired Driver Mobilization2012-DentonPD-IDM-RFR-SBK-0003720.600 18,609 - STEP - Click It Or Ticket Mobilization2012-DentonPD-CIOT-RFR-0000920.600 6,915 - Total U.S. Department of Transportation 80,773 - U. S. DEPARTMENT OF THE INTERIOR National Park Service passed through the Texas Historical Commission Texas Historical CommissionTX-12-02715.904 6,500 - Total U.S. Department of the Interior 6,500 - TOTAL EXPENDITURES OF FEDERAL AWARDS2,789,397365,907 STATE AWARDS TEXAS DEPARTMENT OF TRANSPORTATION Airport Maintenance GrantM218DNTONN/A 49,985 - Total Texas Department of Transportation 49,985 - TOTAL EXPENDITURES OF STATE AWARDS 49,985 - TOTAL FEDERAL AND STATE FINANCIAL ASSISTANCE EXPENDED$ 2,839,382$ 365,907 (Concluded) 9 CITY OF DENTON, TEXAS NOTES TO SCHEDULE OFEXPENDITURES OF FEDERAL AND STATE AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 1. GENERAL The accompanying schedule of expenditures of federal and state awards presents the activity of all applicable federal and state awards of the City of Denton, Texas (the City). The City’s reporting entity is defined in Note 1 to the City’s basic financial statements. Federal and state awards received directly from federal and state agencies as well as federal and state awards passed through other government agencies are included in the respective schedule. 2. BASIS OF ACCOUNTING The accompanying schedule of expenditures of federal and state awards is presented using modified accrual basis of accounting, which is described in Note 1 to the City’s basic financial statements. 3. RELATIONSHIP TO FEDERAL FINANCIAL REPORTS Grant expenditures reports as of September 30, 2012, which have been submitted to grantor agencies will, in some cases, differ slightly from amounts disclosed herein. The reports prepared for grantor agencies are typically prepared at a later date and often reflect refined estimates of year-end accruals. The reports will agree at termination of the grant as the discrepancies noted are timing differences. 10 February 26, 2013 To the Audit Committee City of Denton 215 E. McKinney Street Denton, Texas 76201 We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Denton, Texas (the City)for the year ended September 30, 2012. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, Government Auditing Standardsand OMB Circular A-133, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated August 7, 2012. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Cityare described in Note I to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during 2012. We noted the following transactionrecorded by the City during the year for which there is a lack of authoritative guidance or consensus: The City recorded a liability of approximately $1.273 million related to an accrual recorded by TMPA for an alleged shortfall of coal transportation rates paid to BNSF Railway, as disclosed in Note F of the City’s financial statements. TMPA recognized a liability for the alleged shortfall amount and is engaged in settlement negotiations. The City recorded an amount commensurate with their 21.3% ownership percentage in TMPA. Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were: Management’s estimates relating to the allowance for uncollectible receivables for property taxes and utility services. We evaluated the key factors and assumptions used to develop the allowancesin determining that it is reasonable in relation to the financial statements taken as a whole. City of Denton February 26, 2013 Page 2 Management’s estimate of useful lives in the calculation of depreciation on capital assets. We evaluated the key factors and assumptions used to develop the estimates in determining that it is reasonable in relation to the financial statements takenas a whole. Management’s estimate relating to the recognition of claims liability for the City’s self-insurance plans was based on actuarial calculations. We evaluated the key factors and assumptions used to develop the claims liability in determining that it is reasonable in relation to the financial statements taken as a whole. Management’s estimates relating to the recognitionof a liability for the City’s other post-employment benefits (OPEB) and municipal pension obligations were based on actuarial calculations. We evaluated the key factors and assumptions used to develop the estimates in determining that it is reasonable in relation to the financial statements taken as a whole. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. An audit adjustment detected during audit procedures was made by management to reduce the accounts payable liability and purchased power expense in the electric fund. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit. City of Denton February 26, 2013 Page 3 Management Representations We have requested certain representations from management that are included in the management representation letter datedFebruary 20, 2013. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the governmental unit’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the governmental unit’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters With respect to the supplementary information accompanying the financial statements, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. This information is intended solely for the use of the audit committee and management of the City of Denton and is not intended to be, and should not be, used by anyone other than these specified parties. Yours truly, WEAVER AND TIDWELL, L.L.P. AGENDA INFORMATION SHEET AGENDA DATE: March 5, 2013 DEPARTMENT: Parks and Recreation Department ACM: John Cabrales SUBJECT Receive a report, hold a discussion and give staff direction regarding the request for City sponsorship of the Third Annual Susan G. Komen for the Cure, North Texas, to be held in Denton on September 28, 2013, in South Lakes Park and the run routed through surrounding neighborhoods. BACKGROUND Last year was the second time for Denton to host the Susan G. Komen for the Cure. The event was held in South Lakes Park and had an attendance of approximately 2,000 due to rainy weather. The City of Denton provided up to $10,000 as in-kind sponsorship, which included Police, and Fire/EMS support, rental of the park, and barricades for street closures. In return, the City was considered to be an event sponsor at a sponsorship level equal to the in-kind value. During the 2011 and 2012 events, NBC Channel 5 televised several scenes promoting the event throughout the morning. This year’s race is expected to attract 3,000 to 5,000 attendees from Denton County and the surrounding seven counties served by the Susan G. Komen for the Cure, North Texas. Last year, 498participants were from the City of Denton – the remaining 1,485 came from the surrounding area to participate in the Denton run. Twenty participants came from out of state. The event will be held in South Lakes Park and the 5K and one mile courses will be routed through the surrounding neighborhoods. Hobson Lane and the neighborhood streets will be closed for approximately one hour during the runs. Guests attending the event will park at Golden Triangle Mall and be shuttled to the park. This same process was used last year and was successful. Trinity Methodist Churchand McMath Middle School will be contacted so see if those lots will be available for parking for the volunteers and survivors. The Susan G. Komen for the Cure, North Texas, is requesting the City to participate as a sponsor at the same level as last year. The City sponsored up to $10,000 of in kind service for the 2011 and 2012 events. Exhibit 1 is a list of in-kind services and resources that allow the City of Denton to be recognized again as a Silver level sponsor. Agenda Information Sheet March 5, 2013 Page 2 ESTIMATED SCHEDULE OF EVENT The proposed timeline for the run/walk activities has the race day registration opening at 6 a.m. and the Survivor Celebration ending at approximately 10:15 a.m. 8:00 Competitive 5k (about 30-45 minutes to complete) 8:05 Casual 5k (about 1 hour to complete) 8:30 1 Mile (about 20 minutes to complete) 9:15 50-yard dash (held in the park) 9:45 Survivor Celebration(held in the park) FISCAL INFORMATION Estimated costs to provide requested services and resources are: Police: $5,643 Fire: $2,000 Barricades: $1,200 Park Rental $ 450 Total $9,293 EXHIBITS In-Kind Services and Resources 2011, 2012, and 2013 Respectfully submitted: Emerson Vorel Director of Parks and Recreation Prepared by: Janie McLeod Community Events Coordinator Exhibit 1 Susan G. Komen In-Kind Services and Resources for 2011 and 2012 Proposed In-Kind Services and Resources for 2013 2011Actual2012Actual2013Actual . ©©z- 7; E© ·©;;· -Ò©; E© ©ÒÅ r . ©©z- 7; E© ·©;;· -Ò©; E© ©ÒÅ . ©©z- 7; E© ·©;;· -Ò©; E© ©ÒÅ r tz-; Ò;7 bÅ tz-;Å r tz-;Å r 9a{Å r 9a{Å r 9a{Å r I;7 · b / ¦ÒÅ w;· E {Ò·w [ ; t ©Å w;· E {Ò·w [ ; t ©Å I· CÒ7Å r TOTAL$ 8,433TOTAL$ 9,293TOTAL$ 19,293 CITY OF DENTON CITY COUNCIL minutes January 7, 2013 After determining that a quorum was present, the City Council convened in a Work Session on Monday, January 7, 2013 at 10:00 a.m. in the Council Work Session Room at City Hall, 215 E. McKinney, Denton, Texas. PRESENT: Council Member King, Council Member Gregory, Council Member Engelbrecht, Council Member Watts, and Mayor Burroughs ABSENT: Mayor Pro Tem Kamp and Council Member Roden Mayor Burroughs announced that a quorum of the Council was present and called the meeting to order. The City Council participated in a tour of Denton Fire Stations departing from City Hall, 215 E. McKinney and proceeding to Fire Station #7, 4201 Vintage Parkway followed by a tour of Fire Station #2, 3309 East McKinney and Fire Station #4, 2110 East Sherman Drive and ending at Fire Station #3, 1204 McCormick Street, Denton, Texas. 1. Receive a report, hold a discussion and give staff direction regarding the 2013 Fire Department Facilities Optimization Study. Ross Chadwick, Fire Chief, stated that during the tour the needs and conditions of the stations were presented. He reviewed the maps of response areas. Stations 2, 3, and 4 were in good locations. He also reviewed the locations for updated/new stations. He felt there might be some open areas in response areas in the next five to ten years and the City should start looking for new property for stations. Stations 2, 3 and 4 were priorities for replacement. Staff was recommending a $13 million bond election in May with a possible tax increase. It was felt that it would the most cost effective to do all three stations at once. Mayor Burroughs questioned what the estimated tax increase would be. Chadwick stated it could possibly be 1.8 cents for a $15 million bond program. Mayor Burroughs asked how that would be with the tax increase proposed in later years. Bryan Langley, Assistant City Manager, stated that the next proposed tax increase would be in 2014-15 and would be in addition to this proposed increase. Mayor Burroughs asked about the bond timeline. Langley stated that the November 2014 bond election would be $50-60 million for five years. The bonds would be sold in 2015 with no tax increase. The fire station proposal would be a stand alone cost with a possible tax increase. Mayor Burroughs stated that two tax increases would be hard to consider. He would like to see a projected master plan for other facilities and those priorities with dollar amounts. City Manager Campbell stated that staff was talking about needs that had been ongoing for City of Denton City Council Minutes January 7, 2013 Page 2 several years but that were not put in the CIP due to the high cost. Mayor Pro Tem Kamp asked why there would be a need for a May election. City Manager Campbell stated that this was a great need. The May election would help when the bond election in November would not have a tax increase. Mayor Pro Tem Kamp asked when the May bond election would have to be called. Chadwick stated that it would have to be the February/March time frame. Council Member Gregory asked if staff had been in contact with the DISD regarding their future bond elections. He was concerned with the frequency of bond elections from 2012-2014. He felt that he had only heard of the fire station needs since the last several months. Mayor Pro Tem Kamp stated that there had been a need for this for many years. Chadwick stated that it had been listed in the CIP projects for several years. Council Member King asked about what factors/growth would need to change in order to not have more taxes. Langley stated that the growth was projected to be 3% this year and 4% in the next year. There would need to be a 5-6% growth to not have a tax increase. Council Member King expressed a concern that citizens would not go for more taxes. Mayor Pro Tem Kamp stated that it had been a long time since the last bond election. She felt streets and fire stations were not extravagant. Council Member Gregory expressed concern about the long term for a 2014 election or a DISD bond election. Council Member Watts stated that the 2014 bond election had not proposed a tax increase for $55 million. He had trouble with the timing for this proposed election. There would be enough debt retired to have $55 million with no tax increase but a year prior, a tax increase would be needed for only $15 million. Langley stated that the $55 million was over a five year period while the $15 million was all at once which made the difference in whether or not there was a tax increase. Mayor Burroughs talked about a fatigue issue both with the voters and with potential members of a bond committee. He questioned about acquiring property first without a tax increase and then proceed with the construction. He was also concerned about pulling the most compelling item from the 2014 election. He questioned if the City could acquire the property without a bond package. City of Denton City Council Minutes January 7, 2013 Page 3 City Manager Campbell stated that could probably be done and that it would diminish the size of the bond election. Langley stated that a small Certificate of Obligation could probably be issued but there were many variables involved. Council Member Watts questioned how the building of the stations would take place. He questioned if they would be done all at once or one after the other. He was concerned with a tax increase in 2014 for operation and maintenance and questioned if the proposal were structured with one station one year and one the next year, etc, would it be the same situation. Langley stated that over two years, the situation would be the same. Over five years there was the possibility of no tax increase. Council Member Watts asked for an analysis of cost savings for doing the stations all at one time. City Manager Campbell stated that part of the reason for doing all of the stations at once was due to the living conditions of the current stations and the cost savings for multiple projects. These were projects that had already been delayed 7-9 years. Council Member Watts stated that if the preference was to do all of them at once, that the forecasted tax increase in 2014 be examined. He questioned if some of that could be offset in the $55 million. City Manager Campbell stated that Council could determine whether to do the proposal in May or include it in the 2014 $55 million bond election which would require a reduction on some of the already proposed projects for the $55 million. Mayor Burroughs asked if $15 million were taken from the $55 million would that reduce the need for a one cent increase in 2014. Council Member Gregory asked how much in taxes a 1.8 cent increase would be. Langley stated that it roughly would be $29 per year for the average homeowner. Council Member Engelbrecht suggested looking at 2014-15 and removing some of the tax so there would only be a 1 ½ cent increase instead of 2.8 cents. He questioned if all three stations would be done at the same time. Chadwick stated they would be done within months of each other. Council Member Watts questioned if Mayor Burroughs was indicating that it would be easier to have the fire stations in 2014-15 or a separate election. Mayor Burroughs felt they should be combined from the standpoint of imposing on a citizen committee. The outreach to citizens had critical elements with items compelling to the citizens. City of Denton City Council Minutes January 7, 2013 Page 4 The recognition of need was diminished with some elements removed. Council Member Watts asked about possible propositions. City Manager Campbell stated that there would be separate propositions. Council Member Gregory asked if one package could be done for the $55 million. Langley stated no as voters would need to know how much was proposed for each proposition. Council Member Gregory asked if there was a possibility of doing the stations now and taking some capacity out of the $55 million. Mayor Burroughs felt multiple votes on tax increases was tough. Council Member Watts stated the voters would be voting on the tax increase. He was not as concerned with voting fatigue as the direction would be coming from the voters. If the projects were delayed, there was no telling what might happen in 2014-15. The current facilities were horrible. City Manager Campbell stated that one of the real issues was when the debt was issued. Mayor Burroughs asked when the debt would be issued if there was a May election. Langley stated it would probably be issued in June. Council Member King stated that on a surface look, people would not understand that a $15 million bond proposal would result in a 1.8 cent tax increase while a $55 million bond proposal would have no associated tax increase. Mayor Pro Tem Kamp stated that a citizens committee would decide the projects for the $55 million proposal. The fire stations were a real need and a need which had been put off for a long time. This was a critical need citizens would recognize and in 1 ½ years a citizens committee would find project needs. Mayor Burroughs stated that taking the fire stations out of the $55 million proposal would remove the most compelling reason for the 2014 package. There was a need for people to care enough to vote for the package. He felt there was value not having it as a standalone package. Council Member Gregory asked about the practical implication for a May election with a single member district election, a possible Charter election and a bond election. Challengers running for office might make an issue of these and Council would not be able to speak in favor of the projects as they were prohibited by law to endorse the bond election. City Attorney Burgess stated that once the Council acted on the bond election, it became a dark period for Council to comment on those issues. Council would not be able to support or oppose the issues. City of Denton City Council Minutes January 7, 2013 Page 5 Council Member Gregory noted that Council would have to be careful answering questions in any type of forum. Mayor Burroughs asked about doing a six year bond program. Langley stated that this item would be discussed in the Council’s upcoming planning session with the possibility of even an eight year program. Council Member Gregory asked about the option of a $45 million proposal in November 2013 and doing the fire stations first, then selling the other bonds. Langley stated that anything over $55 million would need a tax increase regardless of the number of years. Mayor Burroughs felt a November 2013 election would be preferable as there were not many other elections going on at that time. The Congressional elections would be in 2014. City Manager Campbell stated that the DISD’s plans also might have an effect on a November 2013 election. Mayor Burroughs requested information on a projected impact on the bond rates for 2014. Langley stated that he felt the rates would hold through 2015 but that would be also be tied to inflation and unemployment. With no further business, the meeting was adjourned at 1:35 p.m. ________________________________ MARK A. BURROUGHS MAYOR CITY OF DENTON, TEXAS ________________________________ JENNIFER WALTERS CITY SECRETARY CITY OF DENTON, TEXAS CITY OF DENTON CITY COUNCIL MINUTES January 8, 2013 After determining that a quorum was present, the City Council convened in a Special Called Work Session on Tuesday, January 8, 2013 at 4:30 p.m. in the Council Work Session Room at City Hall. PRESENT: Council Member Engelbrecht, Council Member Watts, Council Member King, Mayor Pro Tem Kamp, Council Member Gregory, Council Member Roden and Mayor Burroughs ABSENT: None 1. Citizen Comments on Consent Agenda Items There were no citizen comments on Consent Agenda Items. 2. Requests for clarification of agenda items listed on the agenda for January 8, 2013. There were no requests for clarification of agenda items. 3. Receive a report, hold a discussion, and give staff direction regarding the Neighborhood Empowerment Program. Katia Boykin, Planning Supervisor, presented the four essential elements for healthy neighborhoods. Those included civic empowerment, physical aesthetics, social stability, and economic vitality. In January Council approved an ordinance which established the Neighborhood Empowerment Program (NEP). The NEP established two grants; one was a neighborhood project matching grant for funding up to $10,000 and the other was a neighborhood micro-grant for funding up to $1000.00. Applicants for these grants included neighborhood organizations and neighborhood groups. Grant administration would be done either through the Community Development Department or the Economic Development Department. There would be an advisory board selection process with the Director of Community Development responsible for final approval. The purpose of the NEP was to improve the appearance of the neighborhoods and promote maintenance and enhancement of the neighborhood which would increase the neighborhood’s and adjacent neighborhood’s property value. Other goals included establishing community pride in the neighborhoods by involving residents more directly in all phases of the neighborhood development; improving public safety by establishing traffic control devices, monuments and other improvements; and improving public health by preserving and enhancing the environment to promote the public health, welfare and safety. The City of Denton Neighborhood Planning Program was reviewed in terms of goals and guiding principles. Proposed amendments to Ordinance – the intent of the proposed amendments was to provide flexibility for funding for projects and programs; place specific requirements in the implementation of materials; and have consistency between the ordinance and the implementation materials. The proposed Neighborhood Empowerment Advisory Board would consist of staff from Parks and Recreation, Engineering, Community Development, Planning, City of Denton City Council Minutes January 8, 2013 Page2 Police, Code Enforcement and Economic Development. “Merit based” neighborhood members were removed to provide program objectivity. The current board evaluation criteria had six categories including replicability, self-evaluation, project quality, neighborhood match and neighborhood involvement. These were proposed to be combined into four project categories which would be merit based. Those included physical improvements; public safety programs or initiatives; cultural, educational and recreation programs; and neighborhood master plan or comparable studies. Original matching grant fund requirements included (1) assistance from other city funds could not be counted as part of the match; (2) at least 25% of the neighborhood's match had to come from the neighborhood itself as opposed to other funding entities; (3) volunteer hours were valued at $10 per hour; (4) the match had to be pledged and secured which meant that the donor had to specifically describe the contributions in the contract to confirm the commitment; and (5) individuals who donated professional services or skilled labor as part of the match could not also receive compensation from the City’s match money. The proposed matching grant funds requirement changes were (1) removed the requirements from the ordinance and put them in the implementation materials, (2) assistance from other city funds could be counted as part of the match, (3) at least 25% of the neighborhood’s match must come from neighborhood volunteers as opposed to other funding entities, and (4) volunteer labor would be valued at $12 per hour. Council Member Watts questioned the reason to remove the requirements from the ordinance to the implementation plan. Boykin stated that some of the items were very flexible such as payment for volunteer hours and it was easier to change the information in the implementation plan as opposed to the entire ordinance. She reviewed the statements that were proposed to be removed from the ordinance concerning incomplete applications. The implementation process would involve a three-step grant application process. Projects would be funded four times per fiscal year and applicants could apply twice within a fiscal year. Step one would be to schedule to attend a training workshop, Step 2 would be the completion of the grant application, Step 3 was the submission of one original and seven copies of the proposal. The criteria for disqualification or funding denial were reviewed as well as the criteria for funding approval. The NEP calendar included dates for training workshops, grant cycle opening dates, grant cycle closing dates, distribution dates, advisory board meetings, City Manger meetings and award announcement. A minimum of four training workshops would be held per year with the purpose of informing an applicant on how to complete the application, how to increase their opportunity for funding and how to implement a project. Council Member Gregory stated that it might be difficult for neighborhood groups to open a checking account and an individual might not want his social security number on that account. He asked if staff had suggestions on other means to accomplish that. City of Denton City Council Minutes January 8, 2013 Page3 Boykin stated that the tool kit discouraged individual bank accounts as the individual would be solely responsible for the account. They encouraged the group to have a partner such as a church or non-profit organization to partner with. Staff also discussed with the groups what type of organization they wanted to be. Council Member Gregory questioned if it would be possible to use the Parks Foundation as a partner. Boykin stated that it would depend on what the group wanted to do and what the project was going to be. She detailed the step by step process for the neighborhood project grant award process. Staff was proposing that the City Manager make the final selection and send out information to those awarded and those not awarded. Those groups not awarded would have three opportunities to discuss why their project was not awarded funding. Mayor Burroughs felt that a reason for denial of a project would be from a procedural problem and not one of substance. One of the recommendations was to eliminate neighborhood participants from the advisory board and replace them with staff. He understood representatives from certain neighborhoods had conflicts as a project might be in their neighborhood but he was in favor of keeping as much public input as possible. He suggested an appeal process for a denial to go to the Human Services Advisory Committee or the Community Development Advisory Committee to allow community representatives to evaluate the project. The process would allow for a third party neighborhood wide review. Council Member Roden stated that the first presentation of this program had the Council Committee on Citizen Engagement involved as well as Council. It appeared that had been taken out of the proposal and he questioned why. City Manager Campbell stated that the size of the grants was not very large and with the history of incentive grants, it was felt that it would be best to keep a minimal amount of governmental involvement in order to move the project along. The proposal was changed so as to not make the process burdensome and get projects out the door. Those steps could be added back in but the suggestion by the Mayor was a good back stop. Mayor Burroughs felt it was a good idea to have a citizen committee involved because Council could then be informed if criteria was missing, if there were unintended consequences or if more money was needed for the program. City Manager Campbell stated that part of the charge to the staff committee was to make reports to Council on what funding occurred and to recommend enhanced funding if needed. Staff would also keep Council informed of the success of program. Council Member Engelbrecht stated that he liked either the Community Development Advisory Committee review or the Human Services Advisory Committee review as those committees were already looking at those types of services. He suggested an annual report to know what was happening with the program. He questioned how the funds would be released and how it was proven that the funds were spent correctly. City of Denton City Council Minutes January 8, 2013 Page4 Boykin stated that a majority of the projects were reimbursement grants so the grantee had to submit documentation, receipts of what had done, etc. to get reimbursed. There were some occasions where upfront money was provided but most were reimbursement grants. City Manger Campbell stated that staff would know before the funds were provided that the project was done due to the reimbursement. Consensus of the Council was to proceed with the proposal with an adjustment to provide an appeal process either through the Human Services Advisory Committee or the Community Development Advisory Committee with staff determining which one to use. Mayor Burroughs announced that Council would be convening in Closed Session at this time to discuss Item 1.B.1. as listed on the Closed Session portion of the agenda. 1. Closed Meeting: B. Consultation with Attorneys - Under Texas Government Code Section 551.071. 1. Consult with and provide direction to City's attorneys regarding legal issues and strategies associated with Phase I and proposed Phase II Gas Well Ordinance regulation of gas well drilling and production within the City Limits and the extraterritorial jurisdiction, including Constitutional limitations, statutory limitations upon municipal regulatory authority, moratorium on drilling and production and claims associated therewith, statutory preemption and/or impacts of federal and state law and regulations as it concerns municipal regulatory authority and matters relating to enforcement of the ordinance. Special Called Regular Meeting of the City of Denton City Council at 6:30 p.m. in the Council Chambers of 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 There were no proclamations/awards for this meeting. 3.CITIZEN REPORTS There were no citizen reports for this meeting. City of Denton City Council Minutes January 8, 2013 Page5 4. CONSENT AGENDA Council Member Gregory motioned, Mayor Pro Tem Kamp seconded to adopt the Consent Agenda and accompanying ordinances. On roll call vote: Council Member King, Council Member Watts, Council Member Gregory, Council Member Engelbrecht, Mayor Pro Tem Kamp, Mayor Burroughs, Council Member Roden – “aye”. Motion carried unanimously. Ordinance No. 2013-001 A. Consider adoption of an ordinance of the City of Denton, Texas approving and authorizing the City Manager to execute an Interlocal Cooperation Agreement between the City of Denton and Denton County for Fire Protection Services; and declaring an effective date. Ordinance No. 2013-002 B. Consider adoption of an ordinance of the City of Denton, Texas approving and authorizing the City Manager to execute an Interlocal Cooperation Agreement between the City of Denton and Denton County for Ambulance Services; and declaring an effective date. Ordinance No. 2013-003 C. Consider adoption of an ordinance of the City of Denton, Texas, authorizing the City Manager or his designee to enter into an Interlocal Agreement with Denton County, to provide for participation in the Scofflaw program; providing a savings clause and providing an effective date. Ordinance No. 2013-004 D. Consider adoption of an ordinance of the City of Denton, Texas, authorizing the City Manager or his designee to enter into an Interlocal Agreement with the Texas Department of Motor Vehicles (TxDMV), to provide for participation in the Scofflaw program; providing a savings clause and providing an effective date. 5. CITIZEN REPORTS There were no citizen reports for this agenda. 6. CONCLUDING ITEMS A. Under Section 551.042 of the Texas Open Meetings Act, respond to inquiries from the City Council or the public with specific factual information or recitation of policy, or accept a proposal to place the matter on the agenda for an upcoming meeting AND Under Section 551.0415 of the Texas Open Meetings Act, provide reports about items of community interest regarding which no action will be taken, to include: expressions of thanks, congratulations, or condolence; information regarding holiday schedules; an honorary or salutary recognition of a public official, public City of Denton City Council Minutes January 8, 2013 Page6 employee, or other citizen; a reminder about an upcoming event organized or sponsored by the governing body; information regarding a social, ceremonial, or community event organized or sponsored by an entity other than the governing body that was attended or is scheduled to be attended by a member of the governing body or an official or employee of the municipality; or an announcement involving an imminent threat to the public health and safety of people in the municipality that has arisen after the posting of the agenda. Council Member Watts requested an update his request for information for a pedestrian crosswalk at Welch and Eagle. Mayor Burroughs announced that Council would be returning to the Work Session and following that would be completing the Closed Session. B. Possible Continuation of Closed Meeting under Sections 551.071-551.086 of the Texas Open Meetings Act. Council returned to the Closed Session following the completion of the Work Session. Council considered Work Session Item 4. 4. Receive a report, hold a discussion, and give staff direction on amending Subchapter 22 of the Denton Development Code, relating to Phase II of the Gas Well Drilling and Production Ordinance, Definitions, and Procedures. (DCA12-0005) Darren Groth, Gas Well Administrator, reviewed prior Phase II actions. He stated that the ordinance under consideration this evening was the fifth version drafted during the Phase II th revision. Nine items had changed in the draft ordinance since the December 18 meeting. Ordinance changes Page 4-5 – the reference to mobile homes was deleted since it was a habitable structure and was included in the term dwelling. The word “nonhabitable” was also deleted from the definition. Page 7 – hotel and motel was included in the definition of protected use. Page 13 – Subsection D was deleted and the remaining subsections relettered. Page 20 – the term salt-water disposal wells was revised to Class II injection wells. Page 53, the work “relevant” was inserted before “criteria” on the fifth line. Page 53 – after the heading, the sentence “In deciding variance requests, the Board of Adjustment shall consider, where applicable, the following relevant criteria” was added. Page 54 –the word “and” was deleted at the end of the subsection Page 54 – minor punctuation change was done. Page 54 – a new subsection was added “Where a variance is requested to reduce separation standards in 35.22.5.A.1 in addition to other relevant criteria, the extent to which owners of Protected Uses, or freshwater wells currently in use, or previously platted subdivision where one or more lots have habitable structure, have consented to reduction in separation standards in writing”. City of Denton City Council Minutes January 8, 2013 Page7 DAG concerns – On January 7, 2013, staff met with DAG representative Adam Briggle. DAG presented 16 points of concern that remained from the fifth draft. Each concern was discussed in detail with Dr. Briggle and as a result of the discussion Dr. Briggle provided a statement indicating that they were still unsatisfied with certain elements. Specific recommendations were to (1) include compressor stations in the definition of a drilling production site so as to give the City the authority to regulate certain aspects of any polluting components of the pipeline system and (2) require operators to pay for pre-and post drilling freshwater well tests in the event that the well owner opts for such tests.. Council Member Gregory asked that the definition of dwelling be inclusive enough to included different types of habitable structures such as a barndominium. Groth stated that the specific definition was taken from the from gas well ordinance and moved to the Development Code. The Development Code had specific requirements for zoning elements and code requirements. The definition was taken out of the ordinance so that it did not just apply to the gas well ordinance to make it more uniform with the Development Code. Mayor Burroughs noted that one of the DAG remaining issues dealt with setbacks. He requested staff look into relevant issues with the city that differentiates properties with well drilling with 1000 foot versus 1500 foot issues and if that would affect city interests in that 500 feet. Council Member Engelbrecht asked if staff met with Dr. Briggle representing DAG and discussed the responses with him. Groth stated that DAG presented the City with 16 concerns and he discussed each concern with Dr. Briggle so he could share the information with the DAG group. Council Member Engelbrecht questioned how Council and staff could provide more information to the public regarding the issues with DAG. Council Member Roden stated that Mr. Groth did not provide legal information but rather practical information to DAG. He suggested capturing those responses to the DAG questions and perhaps placing them on the website. Council returned to the Closed Session at 7:05 p.m. to consider the following items: A. Consultation with Attorneys -Under Texas Government Code Section 551.071; and Deliberations regarding Real Property - Under Texas Government Code, Section 551.072. 1. Discuss, deliberate, and receive information from staff and provide staff with direction pertaining to the potential purchase of certain real property interests located in the A.N.B. Tompkins Survey, Abstract Number 1246, Denton County, Texas (located generally in the 2100 block of South Bonnie Brae Street), within the City of Denton, Texas. Consultation with the City's attorney's regarding legal issues associated with the acquisition or condemnation of tracts referenced above where a public discussion of City of Denton City Council Minutes January 8, 2013 Page8 these legal matters would conflict with the duty of the City's attorneys to the City of Denton and Denton City Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas, or would jeopardize the City's legal position in any administrative proceedings or potential litigation. 2. Discuss, deliberate, and receive information from staff and provide staff with direction pertaining to the potential purchase of certain real property interests located in the M.E.P. & P.R.R. Co. Survey, Abstract Number 927, Denton County, Texas (located generally in the 1100 block of South Mayhill Road) within the City of Denton, Texas. Consultation with the City's attorney's regarding legal issues associated with the acquisition or condemnation of tracts referenced above where a public discussion of these legal matters would conflict with the duty of the City's attorneys to the City of Denton and Denton City Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas, or would jeopardize the City's legal position in any administrative proceedings or potential litigation. B. Consultation with Attorneys - Under Texas Government Code Section 551.071. 2. Consult with City's attorneys regarding legal issues and strategies related to the adoption of proposed ordinances regulating Credit Services Organizations and Credit Access Business, where a public discussion of these legal matters would conflict with the duty of the City's attorneys to the City of Denton and the Denton City Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas, or would jeopardize the City's legal position in any potential litigation. The Council returned to Open Session at 7:57 p.m. and with no further business, the meeting was adjourned. _____________________________ MARK A. BURROUGHS MAYOR CITY OF DENTON, TEXAS _____________________________ JENNIFER WALTERS CITY SECRETARY CITY OF DENTON, TEXAS CITY OF DENTON CITY COUNCIL MINUTES January 15, 2013 After determining that a quorum was present, the City Council convened in a Work Session on . Tuesday, January 15, 2013 at 3:00 p.m in the Council Work Session Room at City Hall. PRESENT: Council Member Watts, Council Member King, Mayor Pro Tem Kamp, Council Member Gregory, Council Member Roden and Mayor Burroughs ABSENT: Council Member Engelbrecht 1. Citizen Comments on Consent Agenda Items There were no citizen comments on Consent Agenda Items. 2. Requests for clarification of agenda items listed on the agenda for January 15, 2013. Mayor Burroughs noted that Consent Agenda Items F and H would be pulled from consideration. City Manager Campbell stated that staff was requesting to remove both of those items from the agenda and would bring them back at a later meeting. City Attorney Burgess stated that staff was still waiting for the escrow account in order to complete the agreement for Item H. It would be held over for the next meeting. Council Member Roden asked if the proposed patio area for Consent Agenda Item G was property donated by the Williams family. Julie Glover, Economic Development Program Administrator, stated that it was not the same property but the grassy area next to the building. Mayor Burroughs asked if the intent of staff was to rebid the proposal for Item A dealing with the solar energy. City Manager Campbell stated that staff would re-evaluate the proposal and the resubmit it for a request for proposal. Mayor Burroughs asked how closely aligned the TIF report was for the second year of income as was predicated for Consent Agenda Item B. Julie Glover, Economic Development Program Administrator, stated that it was slightly below what was predicated due to the economy. 3. Receive a report, hold a discussion and give staff direction regarding Airport entry improvements. The Airport Advisory Board recommends approval (4-3). Quentin Hix, Director of Aviation, stated that Denton Airport entrance improvements proposed by staff to accommodate current and future operations of the Airport were presented to Council on December 3, 2012. A part of the proposed entry improvements was a new road entering from Airport Road and connecting south to an extension of Spartan Drive. The Airport Advisory City of Denton City Council Minutes January 15, 2013 Page 2 Board (AAB) discussed these improvements in November and recommended a portion of the improvements but tabled a portion on the southbound entry road. Council discussed the rd improvements at the December 3 Work Session and asked staff to complete the additional actions requested by the AAB. At that meeting, Council also directed staff to move ahead with th improvements north of Airport Road. On December 12, after staff had notified all stakeholders regarding the proposed improvements, the AAB recommended approval for the southbound improvement. Should Council direct staff to move forward with the construction contracts, they would be placed on one of the Council’s February meetings. Council Member Watts questioned the amount of estimated savings if the excavation and drainage work was done in-house. Hix stated that it was estimated that $50,000 would be saved on the southbound portion. Council Member Roden asked why there was a split vote on the AAB. Hix stated that at least 2 of 3 negative votes felt that the improvement was serving only one Airport tenant. The third negative vote was from a new member and Hix did not know that member’s position. Council Member Roden questioned if any other boards had vetted this proposal besides the AAB. Hix stated that as this project dealt with infrastructure improvements it only went to the AAB. Mayor Burroughs asked for the staff’s position on the long term benefit of this proposed improvement to the Airport. Hix stated that the principle benefit for the improved south entrance was that it gave entrance to the Airport directly from Airport Road with direct signage to the different businesses. Many people came into the terminal asking for directions on how to get to a business on the south end of the airport. A direct southbound entrance would provide that benefit. It would also provide direct access into an area not yet developed on the south end of the Airport which fit the 2003 Master Plan for that area. Mayor Burroughs asked if access to the Airport was currently deficient. Hix stated that one of the two major revenue sources for the Airport was fuel consumption. A more direct access would allow for more generation of business which would provide the City was more commissions on the direct sale of fuel. Mayor Pro Tem Kamp felt that these improvements were needed for a long time and that part of the issue dealt with mobility. It had more to do with access to the entire area and to the rest of the people in the area plus the growth of the Airport. Consensus of the Council was to move forward with the proposal. City of Denton City Council Minutes January 15, 2013 Page 3 Council Member King requested to return to Item #2. He questioned the term of the lease for Consent Agenda Item G. Julie Glover, Economic Development Program Administrator, stated that the lease would be for ten years with the rental amount readjusted every three years during the lease term. Mayor Burroughs announced that Council would be going into Closed Session to consider Closed Session Item 1.C.1. Following that discussion, Council would return to the Work Session items. Council went into a Closed Meeting at 3:30 p.m. to consider the following: 1. Closed Meeting: C. Consultation with Attorneys – Under Texas Government Code Section 551.071. 1. Consult with and provide direction to City's attorneys regarding legal issues and strategies associated with Phase I and proposed Phase II Gas Well Ordinance regulation of gas well drilling and production within the City Limits and the extraterritorial jurisdiction, including Constitutional limitations, statutory limitations upon municipal regulatory authority, moratorium on drilling and production and claims associated therewith, statutory preemption and/or impacts of federal and state law and regulations as it concerns municipal regulatory authority and matters relating to enforcement of the ordinance. Council completed the Closed Session at 4:43 p.m. and returned to open session to continue the Work Session. 4. Receive a report, hold a discussion, and give staff direction on amending Subchapter 22 of the Denton Development Code, relating to Phase II of the Gas Well Drilling and Production Ordinance, Definitions, and Procedures. (DCA12-0005) Darren Groth, Gas Well Administrator, reviewed prior Phase II actions, background information on the revisions, the proposed ordinance changes and DAG concerns that were presented in detail at the January 8, 2013 Council meeting. Council Member Watts questioned if Council would be reviewing a discussion of air and water monitoring during the Work Session item or during the regular meeting. Mayor Burroughs indicated that it could be during either portion of the meeting or at both sessions. Council Member Watts stated that Council would be discussing air and water quality monitoring and methods to do that. They were also working on regulations for compressor stations and changing the way “well” was written in the definition of salt water injection wells. One of the questions remaining on the DAG report card was notification to people on wells that were going City of Denton City Council Minutes January 15, 2013 Page 4 to be reworked. He questioned if the wording should be changed to include wells that were producing or not producing so that the same notice would apply to both situations. He wanted to be sure that whether the well was producing or not, the same notice would apply. City Attorney Burgess stated that additional wording could be added to the definition in order to accommodate the suggestion by Council Member Watts. Council Member Roden asked about current provisions in the ordinance for mitigation of spills. Groth stated that there were many regulations in the current ordinance to deal with those types of incidents. Council Member Roden asked about current monitoring of surface water. Ken Banks, Environmental Services and Sustainability Director, stated that surface water was monitored as part of the watershed protection plan. There were approximately 80 monitoring stations placed around the City which sampled the water on a monthly basis. Council Member Roden asked how that sampling would interact with something related to oil and gas. Banks stated that staff could take a monitoring device and move upstream until the source was located. At that point, staff would contact the oil and gas group or whoever needed to take care of the problem. Council Member Roden questioned if the City’s water monitoring program was more robust than other cities in the area. Banks stated it he did not know of any other city the size of Denton that did as much testing as Denton did. Council Member Gregory asked if the monitoring stations were kept at the same place or were they adjusted from time to time. Banks stated that the stations were fixed stations set up on a grid across the watershed but periodic random monitoring could be done if needed. Council Member Gregory requested a staff report on the monitoring stations and the types of elements that were being monitored and if those were ones that also might be associated with possible drilling sites. At the conclusion of the Work Session, the Council went back into Closed Session at 5:08 p.m. to consider the items listed below. 1. Closed Meeting: A. Certain Public Power Utilities: Competitive Matters - Under Texas Government Code Section 551.086; Consultation with Attorneys - Under Texas Government Code Section 551.071. City of Denton City Council Minutes January 15, 2013 Page 5 1. Receive a report and a presentation from Denton Municipal Electric staff regarding certain public power competitive and financial matters regarding Request for Proposals No. 4859 issued by the City soliciting proposals for solar-generated energy and facilities for the City of Denton, Texas; discuss, deliberate, provide staff with direction, and consider such matters. Consultation with the City's attorneys regarding legal advice regarding the matters referenced above. A public discussion of this legal matter would conflict with the duty of the City's Attorneys to the City Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas. B. Consultation with Attorneys - Under Texas Government Code Section 551.071; and Deliberations regarding Real Property - Under Texas Government Code Section 551.072. 1.Discuss, deliberate, and receive information from staff and provide staff with direction pertaining to the potential purchase of certain real property interests located in the M.E.P. & P.R.R. Co. Survey, Abstract Number 927, Denton County, Texas (located generally in the 200 block of North Mayhill Road), within the City of Denton, Texas. Consultation with the City's attorney's regarding legal issues associated with the acquisition or condemnation of tracts referenced above where a public discussion of these legal matters would conflict with the duty of the City's attorneys to the City of Denton and Denton City Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas, or would jeopardize the City's legal position in any administrative proceedings or potential litigation. D.Personnel Matters - Under Texas Government Code Section 551.074. 1.Hold a discussion and deliberate regarding the appointment, employment, evaluation, reassignment, duties, discipline, dismissal, or complaints as may impact the City Manager, the City Attorney, and the Municipal Court Judge. The Council convened in a Regular Meeting of the City of Denton City Council 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 Mayor Burroughs noted that the proclamation for Dr. Bettye Myers would be presented at a different meeting. City of Denton City Council Minutes January 15, 2013 Page 6 A. Proclamations/Awards 1. Dr. Bettye Myers Day 3. CITIZEN REPORTS There were no citizen reports scheduled for this meeting. 4. CONSENT AGENDA Mayor Burroughs noted that Items F and H would not be considered at this meeting. Council Member Roden motioned, Council Member Gregory seconded to approve the Consent Agenda and accompanying ordinances and resolutions with the exception of Items F and H. On roll call vote: Council Member King, Council Member Watts, Council Member Gregory, Mayor Pro Tem Kamp, Mayor Burroughs, Council Member Roden – “aye”. Motion carried unanimously. Ordinance No. 2013-005 A.Consider adoption of an ordinance rejecting any and all competitive proposals for RFP 4859-Solar Generated Energy and Facilities for the City of Denton, or take other appropriate action with regard to such proposals; and providing an effective date. Resolution No. R2013-001 B. Consider approval of a resolution of the City Council of the City of Denton, Texas approving the 2012 Tax Increment Financing Reinvestment Zone Number One (Downtown TIF) Annual Report; and declaring an effective date. Ordinance No. 2013-006 C. Consider adoption of an ordinance approving assignment of a Commercial Operator Airport Lease Agreement between the City of Denton, Texas and John K. Selvidge dated March 7, 1995 to Pedron Aircraft Works, L.L.C.; and providing an effective date. The Council Airport Committee recommends approval (3-0). Ordinance No. 2013-007 D. Consider adoption of an ordinance of the City of Denton, Texas providing for, authorizing, and approving the expenditure of funds for the purchase of certified softball officiating services from the North Texas Umpire Association (NTUA), which are available from only one source and in accordance with Chapter 252.022 of the Texas Local Government Code such purchases are exempt from the requirements of competitive bidding; and providing an effective date (File 5152-Agreement with NTUA in the amount per game as specified in the agreement in the estimated annual award of $85,000 for a three year estimated expenditure of $255,000). City of Denton City Council Minutes January 15, 2013 Page 7 Ordinance No. 2013-008 E. Consider adoption of an ordinance accepting sealed proposals and awarding a contract for drug/alcohol testing services and physicals for the City of Denton; and providing an effective date (RFP 5019-Drug/Alcohol Testing Services and Physicals awarded to Occupational Medicine, Denton Regional Medical Center in the annual estimated amount of $34,930 for a five year estimated expenditure of $174,650). THIS ITEM WAS NOT CONSIDERED F. Consider adoption of an ordinance accepting sealed proposals and awarding a contract to provide Software and Related Services with SHI Government Solutions, Inc., a Microsoft Certified Large Account Reseller with the City of Denton; and providing an effective date (RFP 5121-Microsoft Software Reseller and Related Services awarded to SHI Government Solutions, Inc. in the annual estimated amount of $95,000 for City of Denton expenditures, and a three year estimated expenditure of $285,000). Ordinance No. 2013-009 G. Consider adoption of an ordinance of the City of Denton, Texas approving a Lease Agreement between the City of Denton, Texas and VOW 210 Hickory Partners, LLC for the lease of a portion of land located at the southwest corner of East Hickory and Industrial Streets, being situated within the H. Sisco Survey, Abstract Number 1184 and being described as part of Lot 3, Block 20 of the Original Town of Denton, for the construction, occupancy and maintenance of an outdoor patio, and providing an effective date. THIS ITEM WAS NOT CONSIDERED H. Consider adoption of an ordinance approving a development agreement with HMH Lifestyles, L.P., securing the costs to construct the unbuilt portions of the required perimeter wall for the Villages of Carmel, Phase III subdivision, pursuant to previously approved plans and permits, and authorizing permitting and construction of houses and infrastructure on the remaining unbuilt lots in that subdivision, in accordance with applicable building and development requirements; delegating authority to the City Manager to execute said Development Agreement on behalf of the City; and declaring an effective date. Ordinance No. 2013-010 I. Consider adoption of an ordinance finding that a public use and necessity exists to acquire fee simple to a 0.388 acre tract, located in the M.E.P. & P.R.R. Co. Survey, Abstract Number 927, City of Denton, Denton County, Texas, as more particularly described on Exhibit "A", attached to the ordinance, located generally in the 200 block of North Mayhill Road (the "Property Interests"), for the public use of expanding and improving Mayhill Road, a municipal street and roadway; authorizing the City Manager or his designee to make an offer to (1) Kenneth L. Stoudt and wife, Gladys F. Stoudt (collectively the "Owner"); (2) successors in interest to the Owner to the Property Interests; or (3) any other owners of the Property Interests, as may be applicable, to purchase the Property Interests for the purchase price of Twenty Five Thousand Three Hundred Seventy Seven Dollars City of Denton City Council Minutes January 15, 2013 Page 8 and No Cents ($25,377.00), and other consideration, as prescribed in the Purchase Agreement (the "Agreement"), as attached to the ordinance and made a apart thereof as Exhibit "B"; authorizing the expenditure of funds therefor; and providing an effective date. (Mayhill Road Widening and Improvements project - Parcel M074) Ordinance No. 2013-011 J. Consider adoption of an ordinance finding that a public use and necessity exists to acquire (I) fee simple to a 0.147 acre tract; and (II) a temporary construction, grading and access easement, encumbering a 0.071 acre tract, all tracts located in the M.E.P. & P.R.R. Co. Survey, Abstract Number 927, City of Denton, Denton County, Texas, as more particularly described on Exhibit "A", attached to the ordinance, located generally in the 200 block of North Mayhill Road (the "Property Interests"), for the public use of expanding and improving Mayhill Road, a municipal street and roadway; authorizing the City Manager or his designee to make an offer to (1) Kenneth L. Stoudt and wife, Gladys F. Stoudt (collectively the "Owner"); (2) successors in interest to the Owner to the Property Interests; or (3) any other owners of the Property Interests, as may be applicable, to purchase the Property Interests for the purchase price of Twenty Four Thousand Seven Hundred Twelve Dollars and No Cents ($24,712.00), and other consideration, as prescribed in the Purchase Agreement (the "Agreement"), as attached to the ordinance and made a apart thereof as Exhibit "B"; authorizing the expenditure of funds therefor; authorizing relocation expenditures; and providing an effective date. (Mayhill Road Widening and Improvements project - Parcel M075) Ordinance No. 2013-012 K. Consider adoption of an ordinance finding that a public use and necessity exists to acquire (I) fee simple to a 0.106 acre tract; and (II) a temporary construction, grading and access easement, encumbering a 0.106 acre tract, all tracts located in the M.E.P. & P.R.R. Co. Survey, Abstract Number 927, City of Denton, Denton County, Texas, as more particularly described on Exhibit "A", attached to the ordinance, located generally in the 200 block of North Mayhill Road (the "Property Interests"), for the public use of expanding and improving Mayhill Road, a municipal street and roadway; authorizing the City Manager or his designee to make an offer to (1) Kenneth L. Stoudt (the "Owner"); (2) successors in interest to the Owner to the Property Interests; or (3) any other owners of the Property Interests, as may be applicable, to purchase the Property Interests for the purchase price of Thirty Three Thousand One Hundred Three Dollars and No Cents ($33,103.00), and other consideration, as prescribed in the Purchase Agreement (the "Agreement"), as attached to the ordinance and made a apart thereof as Exhibit "B"; authorizing the expenditure of funds therefor; authorizing relocation expenditures; and providing an effective date. (Mayhill Road Widening and Improvements project - Parcel M076) 5. ITEMS FOR INDIVIDUAL CONSIDERATION City of Denton City Council Minutes January 15, 2013 Page 9 Resolution No. R2013-002 A. Consider approval of a resolution of the City Council of the City of Denton, Texas, requesting the Texas Legislature and the Governor of Texas to enact laws to reduce exploitative payday lending and auto title loan practices; requesting the Texas Municipal League to introduce and support such legislation; expressing support of the cities of Austin, Dallas, and San Antonio in their efforts to regulate these lending practices; and providing an effective date. City Attorney Burgess stated that Council had received input from the public regarding this item and Council directed staff to prepare this resolution. It was felt that the State Legislature would be moving forward with legislation to protect citizens from faulty practices and this resolution encouraged the Legislature to do so. It also provided support for other cities that had supported legislation. th Council Member Gregory noted that on January 8 El Paso also passed an ordinance similar to the one passed by Austin, San Antonio and Dallas. He requested that the resolution be amended to include El Paso in the list of cities to support. Council Member Gregory motioned, Mayor Pro Tem Kamp seconded to approve the resolution with the amendment to include El Paso in the supported cities. On roll call vote: Council Member King, Council Member Watts, Council Member Gregory, Mayor Pro Tem Kamp, Mayor Burroughs, Council Member Roden – “aye”. Motion carried unanimously. Ordinance No. 2013-013 B. Consider adoption of an ordinance amending Article VI "Neighborhood Empowerment Program" of Chapter 14 "Health and Human Services" of the City's Code of Ordinances regarding the Neighborhood Empowerment Program's purpose, establishment of a Neighborhood Empowerment Advisory Board, criteria and guidelines for the approval of matching contributions under applications by eligible persons under the program; setting forth additional details in relation to the program, providing a savings clause; and providing an effective date. Katia Boykin, Planning Supervisor, presented information concerning the Neighborhood Empowerment Program (NEP). The four essential elements for healthy neighborhoods included civic empowerment, physical aesthetics, social stability and economic vitality. The purpose of a NEP was to improve the appearance of the neighborhoods and promote maintenance and enhancement, establish community pride, improve public safety and improve public health. The proposed amendments would provide flexibility for funding for the programs, place specific requirements in the implementation materials and have consistency between the ordinance and implementation material. The Advisory Board would increase membership from three members to seven members with “merit based” neighborhood members removed to provide program objectivity. The amended evaluation criteria would be merit based and include project description and statement of qualifications; implementation, tasks and schedule; and volunteers, participation and donations. The original six project categories would be combined into four project categories. The matching requirements were also being amended and would be placed in the implementation packet and not in the ordinance. The submittal process would have a three step process and an appeal process was now included. As suggested by Council at a prior Work City of Denton City Council Minutes January 15, 2013 Page 10 Session, the Community Development Advisory Committee would review appeals associated with physical improvements. The Human Resources Advisory Committee would review projects associated with public safety programs or initiatives; cultural, educational, and recreation programs; and neighborhood master plan or comparable studies. An applicant would have 30 days to submit an appeal to the appropriate board. nd Council Member Rode stated that the calendar still had the grant cycle opening on January 2. Boykin stated the calendar would be amended after this evenings meeting to reflect that everything had been approved. Council Member Roden asked when the information might be available on the website. Boykin stated it could be added as soon as staff knew that Council had approved the program. Mayor Pro Tem Kamp motioned, Council Member King seconded to adopt the ordinance. On roll call vote: Council Member King, Council Member Watts, Council Member Gregory, Mayor Pro Tem Kamp, Mayor Burroughs, Council Member Roden – “aye”. Motion carried unanimously. 6. PUBLIC HEARINGS Ordinance No. 2013-014 A. Hold a public hearing and consider adoption of an ordinance of the City of Denton, Texas, amending Subchapters 35.22 of the Denton Development Code, relating to Gas Well Drilling and Production, Definitions, and Procedures; providing a cumulative clause; providing a severability clause; providing for a penalty; and an effective date. (DCA12-0005) Darren Groth, Gas Well Administrator, reviewed prior Phase II actions. He stated that the ordinance under consideration this evening was the fifth version drafted during the Phase II th revisions. Nine items had changed in the draft ordinance since the December 18 meeting. Ordinance changes Page 4-5 – the reference to mobile homes was deleted since it was a habitable structure and was included in the term dwelling. The word “non-habitable” was also deleted from the definition. Page 7 – hotel and motel was included in the definition of protected use. Page 13 – Subsection D was deleted and the remaining subsections re-lettered. Page 20 – the term salt-water disposal wells was revised to Class II injection wells. Page 53, the work “relevant” was inserted before “criteria” on the fifth line. Page 53 – after the heading, the sentence “In deciding variance requests, the Board of Adjustment shall consider, where applicable, the following relevant criteria” was added. Page 54 –the word “and” was deleted at the end of the subsection Page 54 – minor punctuation change was done. Page 54 – a new subsection was added “Where a variance is requested to reduce separation standards in 35.22.5.A.1 in addition to other relevant criteria, the extent to which owners of City of Denton City Council Minutes January 15, 2013 Page 11 Protected Uses, or freshwater wells currently in use, or previously platted subdivision where one or more lots have habitable structure, have consented to reduction in separation standards in writing”. There were four additional changes from this evening’s Work Session that the Council would be considering. Those included (1) the definition of compressor station; (2) separation standards apply to sites containing a compressor station; (3) noise management standards would also apply to compressor stations; and (4) “reworking” would be a new definition to include wells whether producing or not with notices to go out 48 hours in advance to the City and public regarding the reworking of the wells. DAG concerns – On January 7, 2013, staff met with DAG representative Adam Briggle. DAG presented 16 points of concern that remained from the fifth draft. Each concern was discussed in detail with Dr. Briggle and as a result of the discussion Dr. Briggle provided a statement indicating that they were still unsatisfied with certain elements. Specific recommendations were to (1) include compressor stations in the definition of a drilling production site so as to give the City the authority to regulate certain aspects of any polluting components of the pipeline system and (2) require operators to pay for pre-and post drilling freshwater well tests in the event that the well owner opts for such tests. The responses to the concerns were posted to the City’s website. Council Member Gregory stated that one of the suggestions was that the City include in the ordinance provisions similar to rules the EPA adopted in Phase 2 of their air quality program called “Green Completions”. Those rules would be effective from the EPA in 2015. Council had asked that those be included in the ordinance and asked Groth to speak on those rules. Groth stated that those standards were included in the ordinance. “Green Completion” was a confusing term based on who was using the term. The EPA was trying to regulate a reduced emission completion. The provisions were inserted in the ordinance and mimicked what the federal regulations would do. Council Member Gregory asked if Denton was more restrictive than the EPA rules. Groth stated it was not more restrictive but mimicked the EPA regulations. Council Member Gregory stated that the City’s regulations then were not more or less restrictive than the EPA but the same. Groth replied correct. Council Member Watts stated that in Section 33.22.5.p.i; the word “well” would be capitalized to clarify that the flow back would not go back into an injection well but into a recycle well. He stated that Council had discussed a number of options for air monitoring and water monitoring and questioned if those should be explained now or after the public hearing. Mayor Burroughs felt that those could be explained now so the public would be aware of the proposed changes and not have to comment on information that the Council was already going to do. City of Denton City Council Minutes January 15, 2013 Page 12 Groth stated that the proposed language regarding the wells would not include Class II injection wells. Council Member Watts stated that two of the top priorities were air and water monitoring for the health and safety of citizens and how to do that effectively was discussed by Council. Flower Mound did air monitoring through their oil inspection and monitoring department and did not include it in their ordinance. The cost of those services were recovered though the oil and gas fees. Water well monitoring had the challenge that with private water wells permission from the owner was needed in order to do the tests. The same paradigm could be applied to the water monitoring as the air monitoring in that the City could do the tests within whatever setback was determined. The oil and gas well division could to do that and it would not have to be placed in the ordinance. Mayor Burroughs stated that the direction given to staff during the Work Session was to develop those initiatives on a departmental basis with the fees to be spread among any development of oil and gas within the city limits rather than defined in the ordinance. Council Member Roden questioned how soon Council could be briefed on what Council could do in that area and how quickly it could be implemented. Groth stated that the scope of the work and fee structure would have to be defined. Perhaps the same consultant that helped with the prior fee structure could be used. Council Member Roden recommended that it be done as quickly as possible to analyze the options and begin the process. Mayor Burroughs noted that a similar study was done in Denton and Flower Mound had such a study also done so would not be a new approach. Council Member Gregory stated that during the Work Session, Council discussed procedures the City was already doing in terms of monitoring water quality on surface water. He requested that Dr. Banks review what the city was currently doing in that area. Dr. Banks stated that the City had been monitoring surface water since 2001. Staff did monthly sampling on a grid network at 80 stations throughout the city. A series of chemistry analysis was done on the water with active monitoring done on a monthly basis. Council Member Gregory asked what happened if something of concern were found in the sampling. Banks stated that that staff would try to find out the source by taking a meter upstream to try and determine source. Council Member Gregory asked what was tested in the water. Banks stated that they could test for all kinds of standard water chemistry. Staff had been doing the testing for so long that they would know what a deviation would be. City of Denton City Council Minutes January 15, 2013 Page 13 Council Member Gregory questioned if the City was concerned about anything unique in the water system because of drilling and would there be any other kind of tests that should be added to the regular testing at the 80 stations. Banks stated that they had dealt with discharges before and looking back, a measure of conductivity could determine discharges from drilling locations. Conductivity testing was probably the best. Council Member Gregory stated if it was determined that other tasks might be appropriate that would help the City in terms of concerns with pollution from well sites that might add to the cost of testing, that would be communicated with the rest of staff so as to review the fee structure and incorporate those into the fees. He asked how Denton compared with other same size population cities in terms of surface water testing. Banks stated that he was not aware of a similar sized city that did the same amount of testing or as often as Denton did. Council Member Roden stated that the gas well inspection team had the authority to inspect standing water on gas well sites and what would they be testing for. Groth stated that the definition of pits included a lot of different pits. There were standards in terms of the water and staff would be looking at what was in the pit and the concentrations of the elements. Those did not pertain to a specific pit but all kinds of pits. Each type of pit was defined and by ordinance allowed for inspection of those pits. If a certain type was used, staff would look at the standards listed in the ordinance. Council Member Roden asked, for example, if a salt water disposal pit was used as was typically done by the industry would that be able to pass the standards staff would be testing. Groth stated if that type of pit was used, it would have to meet the standards in the ordinance. The use of that type of pit was not regulated but rather what was in the pit. Council Member Gregory asked what would be the benefit to citizens to have the definition of compressor stations included in the ordinance Groth stated that the definition would clearly define a compressor station and also included separation and noise standards. Council Member Gregory stated that this ordinance would provide a definition, setback requirements and noise limitations that were not there before. A concern had been expressed by citizens to totally eliminate compression stations. He asked Groth to address why compression stations could not be eliminated on a high power gas transmission line. Groth stated that compression stations helped move the gas and without compression the gas would not flow. If the gas was not flowing the system would not work. City Attorney Burgess stated that compression stations were part of the equipment used by pipeline companies to move the gas into interstate or intrastate commerce. Pipeline companies City of Denton City Council Minutes January 15, 2013 Page 14 were considered public utilities under the Utilities Code in the State of Texas and as such operated with certain powers including the power of eminent domain. The issue then became the city’s regulation of an entity which itself had eminent domain. The Council directed staff to use some of the city’s zoning powers particularly in the areas of setbacks and noise provisions specific to the gas operations to the compressor stations as well. Mayor Pro Tem Kamp stated that staff had direction from Council on what was authorized to do in the City but Council was not authorized nor had the authority to ban compressor stations as it was part of the pipeline. City Attorney Burgess stated that compression stations were part of the pipeline and as pipeline companies were considered public utilities, banning compression stations would be an attempt to ban a public utility. Applying the City’s zoning power was the best solution. Council Member King stated that the City had no legal ability to ban gas wells and had no legal authority to ban fracking. City Attorney Burgess stated that the question went to the interest of the property owners. To disallow the taking of their own property through oil and gas exploration would be considered problematic. Council Member Roden asked what sort of pits would be done away with if a closed loop system were used. Groth stated that reserve pits and mud circulation pits would go away with a closed loop system. This, however, would only apply to new wells. Council Member Roden stated that while pits were not being eliminated and were allowed by law, by definition, they would not be able to be used in the way they typically would be used. Some pits would not be utilized when combined with closed loop system requirements with what was being tested. Groth stated that the operators would have to come up with a new approach as concentrations would not meet the standards and a new solution would have to be devised. Council Member Roden stated that the operator would know the standards and would know how to operate their facility accordingly. Groth stated that every application went through a series of permits. During that process the application was reviewed and staff met with the applicant to go over all the provisions of the ordinance to make sure the applicant knew what was required to be issued the permit. Council Member Watt questioned if the salt water disposal pit was part of fracking process. Groth stated that typically the water from the formation increased the salt content and that was used during the flowback or the production phase. City of Denton City Council Minutes January 15, 2013 Page 15 Council Member Watts questioned if a storage vessel was a pit because if it was not, the paragraph regarding flowback would not allow that flowback to go back into a pit. Groth stated that the definition of a tank was anything that stored the water so a pit would be a storage vessel. The Mayor opened the public hearing. He requested the speakers try to not repeat what was said before, to be respectful of each other, and refrain from demonstrations. Council would not interact while the speakers were speaking. The following individuals spoke during the public hearing: Gilbert Mojica, 804 W. Hickory, Denton, 76201 - opposed Benjamin Butler, 804 W. Hickory, Denton, 76201 - opposed Sharon Wilson, 1121 Belvedere Drive, Allen, 75013 - opposed Pauline Raftestin, 2015 Bowling Green, Denton, 76201 - opposed Bruce and Elma Walker, 9805 Grandview Drive, Denton, 76207 – support with changes Marc McCord, 616 W. Colorado, Celine, 75009 - opposed Lee Stone, 2027 Fordham, Denton, 76201 - opposed Rhonda Love, 1921 Hollyhill, Denton, 76205 - opposed Council Member Roden stated that Ms. Love had indicated that the ordinance was weak and questioned what still was left out of the ordinance that needed to be added. Love stated that she hadn't had time to consider what had been presented this evening. Obviously air and water were a concern but she would defer to others on what was still needed. Raul Rodriguez, 804 Campbell, Denton, 76209 - opposed Crystal Wayne, 1308 Broadway, Denton, 76201 – opposed Michael Wiley, 910 Avenue A, Denton, 76201 - opposed Rebekah Hinojosa, 621 Schmitz, Denton, 76209 - opposed Tom LaPoint, 1900 Highland Park Road, Denton, 76205 - neutral Vicki Oppenheim, 600 Windfields, Denton, 76209 - neutral Council Member Gregory questioned how to address the recycling of water in Mr. LaPoint’s and Ms. Oppenheim’s opinion. LaPoint stated that a closed loop system should be used more as it would use less water which was better. There was a higher cost with that system but it would be better. Council Member Roden asked if they were satisfied with the city’s proposed approach for air and water monitoring. Oppenheim stated that the air monitoring program would have to be done correctly as where the monitors were placed would affect the results. She encouraged best use practices for the program. City of Denton City Council Minutes January 15, 2013 Page 16 LaPoint stated that it was important to have quality control and to have quality firms doing the work. Council Member Roden asked if once the data was collected, would the local scientific community have a use for that data. LaPoint stated that one key use would be for risk assessment to help identify where the real problem areas were located. The data could look at which gas facilities were operating inefficiently and also give data where there were areas of concern and areas with no concerns. Mayor Burroughs asked if the Flower Mound study had any water testing component. LaPoint stated it was only for air. Mayor Burroughs stated that if Denton created a similar testing program for water quality, it would be far ahead of Flower Mound. LaPoint replied that would be correct. Andrew May, 1824 Concord Lane, Denton, 76205 - opposed Cynthia Talbot, 1011 Panhandle, Denton, 76201 - opposed Morgan Larson, no address given - opposed Candice Bernd, 412 ½ Fry, Denton, 76201 - opposed Cathy McMullen, 805 Ector, Denton, 76201 - opposed Kelsey Fryman, 903 McCormick, Denton, 76201 - opposed Adam Briggle, 1315 Dartmouth Place, Denton, 76201 - opposed Council Member Roden asked Dr. Briggle why it would be important that the air quality went in the ordinance rather than as part of policy of inspections. Briggle stated that he would need more information on the proposal and was open to learning about it. Amber Briggle, 1315 Dartmouth Place, Denton, 76201 - opposed Timothy Ruggiero, 10037 Copeland Place, Pilot Point, 76258 – opposed John and Batavia Russell, 2302 Jacqueline, Denton, 76205 - opposed Megan Storie, 804 W. Hickory, Denton, 76201 - opposed Daniel Watts, 516 W. Oak, Denton, 76201 - opposed Jennifer Lane, 2024 Bowling Green, Denton, 76201 - opposed Tera Linn Hunter, 804 W. Hickory, Denton, 76201 - opposed Eamon Danzig, 2300 W. Oak, Denton, 76201 - opposed Laura Abril, 2424 W. Oak, Denton, 76201 - opposed Rachel King, 5301 E. McKinney, Denton, 76208 – opposed Jason Stroud, 118 Bernard, Denton, 76201 - opposed Ricardo Correa, 117 E. Prairie, Denton, 76201 - opposed Tyler Carlton, 1201 Cleveland, Denton, 76201 - opposed Paul Meltzer, 1914 W. Oak, Denton, 76201 - opposed Bonnie Friedman, 1914 W. Oak, Denton, 76201 - opposed Phyllis Wolper, 2616 Hereford Road, Denton, 76210 City of Denton City Council Minutes January 15, 2013 Page 17 David Sanchez, Ruddell, Denton, 76201 - opposed Laura Hernandez, 929 W. Hickory, Denton, 76201 - opposed Comment Cards were received from the following individuals: Mari Metzgar, 2417 Natchez Trace, Denton, 76210 - opposed David Kaplan, 308 Marietta, Denton, 76201 - opposed Mike Kaplan, 308 Marietta, Denton, 76201 - opposed Andrea Schrieber, 308 Marietta, Denton, 76201 - opposed Steven Ford, 2417 Natchez Trace, Denton, 76210 - opposed Marsha Keffer, 815 Ector, Denton, 76201 - opposed Lydia Alexander, 2043 Scripture, Denton, 76201 - opposed Elizabeth Couley, 2004 Williamsburg Row, Denton, 76209 - opposed John Murphy, 1905 Whitefish Court, Denton, 76210 - opposed Ed Meyer, 6015 Fox Point, Dallas, 75249 - opposed Andrew Tolle, 815 Locust, Denton, 76201 – opposed Sebastian Lirschel, 815 N. Locust, Denton, 76201 - opposed Rachel Gunter, no address given - opposed Jose Jaimes, no address given - opposed Shannon Beebe, 742 River Oak Way, Lake Dallas, 75065 - opposed Joey Hawkins, 923 Ridgecrest, Denton, 76205 - support Sara Nickell, 929 W. Hickory, Denton, 76201 – opposed Marie Nuckols, 905 Egan, Denton, 76201 - opposed Maria Saenz, 1606 Pine Hills, Denton, 76210 - opposed Christopher Klatunde, 1604 N. Elm, Denton, 76201 - opposed Jay McElhinney, 605 N. Austin, Denton, 76201 - opposed Chelsea Sherwood, 111 Highview, Double Oak, 75077 - opposed Carol and Ed Soph, 1620 Victoria, Denton, 76209 - opposed Jeff Harris, 1025 Mission, Southlake, 76292 - opposed Cynthia Maguire, 2412 Shenandoah Trail, Denton, 76201 - opposed Jason and Addy Sykes, 1400 La Mirada, Denton, 76208 - opposed Naomi Meier, 1400 La Mirada, Denton, 76208 – opposed Lyila Amine, 2608 Glenwood, Denton, 76209 - opposed Michael Thompson, 2608 Glenwood, Denton, 76209 - opposed Adam Newman, 200 S. Bonnie Brae, Denton, 76201 - opposed Bruce Berg, 602 Emery, Denton, 76201 - opposed Mario Ovalle, 2119 Westwood Drive, Denton, 76205 - opposed Steve Naus, 3320 Masch Branch, Denton, 76207 - opposed Sarah Nobles, 409 Bradley, Denton, 76201 - opposed Brittany Marie DeNoon, 178 Seabern, Ponder – opposed Debbie Taboada, 1308 Dartmouth, Denton – opposed Tricia Dealy, 3704 San Lucas, Denton, 76208 – opposed Sanjukta Pookulandara, 1139 Oakhurst, Denton, 76210 - opposed Jessica Gullian, 1030 Devonshire, Providence Village, 76227 - opposed Diane Harris, 1025 S. Mission, Southlake, 76092 - opposed Mark Muchalica, 600 Windfields, Denton, 76209 - opposed Chelsea Bacher, 5601 Bridge, Fort Worth, 76112 - neutral The Mayor closed the public hearing. City of Denton City Council Minutes January 15, 2013 Page 18 Council Member Roden stated that he would like clarify where the ordinance currently was and what Council had asked of staff. One item added to the ordinance was a setback provision for compressor stations. The other item discussed was to look at the ordinance from a zoning perspective and associated possibilities. Staff was also asked to look at air monitoring outside the ordinance and water monitoring specifically to water wells. He wanted to add to that to look at zoning in its entirety related to gas drilling and where it was allowed and not allowed. Another item discussed for a future discussion was the number of wells that would not fall under the new ordinance and the possibility of some type of incentive program to address those types of wells or a list of best practices. Council Member Gregory stated that good suggestions regarding compressor stations had been noted. Based on where those requirements had been inserted in the ordinance, would the landscaping, screening and tree planting requirements currently in place for drilling production sites now apply to compressor stations. Groth stated that those requirements would only apply to drilling sites but felt that Council Member Roden had asked that staff look at it as a land use for review of Subchapter 5 of the zoning ordinance. Council Member Gregory questioned the insurance requirements and the implications of the requirements. Groth stated that the current insurance requirements would be increased based on a prior suggestion. General commercial liability requirements were already in place. Council Member Gregory asked how that compared to neighboring cities. Groth stated he did not have a direct comparison but that some of the numbers were taken from other communities. Council Member Gregory asked Groth to review the regulations in this draft regarding flaring. Groth stated that the current requirement was that there would be no venting or flaring of gases in residential areas except as allowed by the Railroad Commission or TCEQ. Council Member Gregory asked what those two organizations allowed. Groth stated that there was a permit requirement from the Railroad Commission and the TCEQ set the standards for flaring or emissions. Council Member Gregory asked if flaring could be done for 14 days. Groth stated that the TCEQ allowed for about 10 days with a special permit and the Railroad Commission did allow that. City of Denton City Council Minutes January 15, 2013 Page 19 Council Member Gregory stated that some flaring events were very loud and would be in violation of noise restrictions. He questioned what would happen to the driller if in violation of the city’s noise restriction even with a Railroad Commission permit. Groth stated that the ordinance had a noise violation provision and a citation could be issued for the violation. There was no cure period for this type of violation and a citation could immediately be issued. Council Member Gregory asked about the fine associated with that type of citation. City Attorney Burgess stated that every day would be a separate violation and health and safety violations were up to $2000 with the maximum amount set by the Court. Council Member Gregory asked if the City had the legal authority to raise the fine limit. City Attorney Burgess stated that the $2000 per day was the maximum allowed by State law for health and safety issues. Council also asked the Fire Marshal as to whether changing the direction of flaring was a possibility. Additional language was added if practicable and approved by the Fire Marshal ground flaring that was wholly encased or had masonry screening would be acceptable. Council Member Roden stated that currently setbacks of 1000 feet were in the ordinance around protected uses and that there was a whole context for that. He reviewed the places that were considered protected uses and pointed out that protected use had been increased. Council Member King stated that the 1000 feet was from the edge of the platform versus the drill hole. Mayor Burroughs stated that Denton had a history of protecting air and water quality and led the region in both of those aspects. Denton happened to be in an air shed that was poor but it had been that way for many years before any type of drilling. The problem was vehicular pollution. Cities did not have unlimited authority but had to follow State regulations. Council wanted an ordinance that was defensible and net the results everyone wanted. Several people stated that the industry had more time to speak but that was false. No one from the industry was ever included in any of Council’s Closed Sessions. He had worked hard with Calvin Tillman, the former Mayor of Dish, to work on best practices. Council Member Watts asked what other municipalities had for insurance coverage and how the current levels were determined. Groth stated that many of those levels had been in the ordinance for a long time. Changes in the limits had been made through time. Many of the figures mimicked what other cities were doing. A risk analysis could be done to see if the limits were appropriate. Council Member Roden asked if any of the limits had been changed since the first draft of the ordinance. City of Denton City Council Minutes January 15, 2013 Page 20 Groth stated that automobile liability and workers compensation were increased but there were many other general liability requirements currently in place. Mayor Burroughs stated that someone mentioned that the City should have the ability to notify people when a well existed. He stated that such a provision was already in the proposed ordinance. The site of a well would be recorded so that future or potential owners of nearby property could track that a well existed nearby. Also future property owners would be notified of capped wells when going through a title search. Another issue raised was green completion. The proposed ordinance would include a list derived from EPA and how they defined green issues. The EPA had a 2015 date for implementation while Denton's would be now. The list of items that the EPA adopted was from a list that this region presented to them. Council Member Watts motioned to adopt the ordinance with the following amendments: References to “wells” in the injection well section, would have a capital “w” Compression stations setback requirements and noise regulations already had been included. Add to those landscaping and screening requirements similar to what the oil and gas well pad sites were subject to. Mayor Burroughs asked if that would be included in the definitions. Council Member Watts stated that direction to staff was to consider that in a zoning context but he wanted it included in this ordinance. Changes could be made at a later date in a zoning context if needed. Increase setbacks to 1200 feet as that was the same as the setback from the flood impingement for Lakes Ray Roberts and Lewisville. Insurance coverage to be changed as follows - general liability to $5 million; environmental impairment, seepage or pollution to $5 million if a separate policy and if included in the general liability coverage be increased to $10 million; excessive umbrella liability be increased to $20 million Air and water monitoring would be done through the department Council Member King offered a friendly amendment to keep the general liability at $1 million and making the umbrella liability $24 million. Council Member Watts accepted that change. Mayor Pro Tem Kamp questioned if all of the proposed amendments could be added to the ordinance. City Attorney Burgess stated that they would be included at Council's direction. Mayor Pro Tem Kamp stated that this had been a very long public process. Some statements made at the meeting this evening were wrong. Every council member on this Council cared for the city of Denton and for the citizens of Denton. Council gave respect to the speakers when they were speaking to Council. No one was going to get everything they wanted. The proposed City of Denton City Council Minutes January 15, 2013 Page 21 ordinance was much stricter than what currently was in place and she felt that it would be a model for other cities. The ordinance would continue to be reviewed to see if it needed to be better. Council Member Roden seconded the motion. Council Member Gregory stated that he was in support of the 1200 foot setback as it was consistent with the setbacks from with the flood pool with Lakes Ray Roberts and Lewisville. It made an improvement from what currently was in place. Council Member Watts stated that this was a moving document that would be looked at on a regular basis. He appreciated all who were involved in the process. Mayor Burroughs felt the proposal was as strong as he believed it could do at this time especially with the testing of air and water. He felt there would be revisions in the future after the document had been approved as there would be changes in the industry. Council Member King stated that the goal was to have something workable and defensible. Council Member Watts motioned, Council Member Roden seconded to adopt the ordinance with the amendments as listed by Council Member Watts. On roll call vote: Council Member Watts, Council Member Gregory, Mayor Pro Tem Kamp, Mayor Burroughs, and Council Member Roden – “aye”; Council Member King – “nay”. Motion carried with a 5-1 vote. 7. CITIZEN REPORTS There were no citizen reports for this meeting. 8. CONCLUDING ITEMS A. Under Section 551.042 of the Texas Open Meetings Act, respond to inquiries from the City Council or the public with specific factual information or recitation of policy, or accept a proposal to place the matter on the agenda for an upcoming meeting AND Under Section 551.0415 of the Texas Open Meetings Act, provide reports about items of community interest regarding which no action will be taken, to include: expressions of thanks, congratulations, or condolence; information regarding holiday schedules; an honorary or salutary recognition of a public official, public employee, or other citizen; a reminder about an upcoming event organized or sponsored by the governing body; information regarding a social, ceremonial, or community event organized or sponsored by an entity other than the governing body that was attended or is scheduled to be attended by a member of the governing body or an official or employee of the municipality; or an announcement involving an imminent threat to the public health and safety of people in the municipality that has arisen after the posting of the agenda. City of Denton City Council Minutes January 15, 2013 Page 22 Council Member Roden noted that Martin Luther King, Jr. Day would be celebrated at Fred Moore Park on Saturday with a parade on Monday. B. Possible Continuation of Closed Meeting under Sections 551.071-551.086 of the Texas Open Meetings Act. There was no continuation of the Closed Meeting. Council Member King mentioned the upcoming “You are Beautiful” luncheon to support cancer awareness. With no further business, the meeting was adjourned at 11:37 p.m. _____________________________ MARK A. BURROUGHS MAYOR CITY OF DENTON, TEXAS _____________________________ JENNIFER WALTERS CITY SECRETARY CITY OF DENTON, TEXAS ANNUAL PLANNING SESSION AGENDA CITY OF DENTON CITY COUNCIL January 29, 2013 After determining that a quorum was present, the City Council convened in an Annual Planning Session on Tuesday, January 29, 2013, at 8:30 a.m. in the Facilities Management Department Training Room at 869 S. Woodrow Lane, Denton. PRESENT: Council Member Watts, Council Member King, Mayor Pro Tem Kamp, Council Member Gregory, Council Member Roden, Council Member Engelbrecht and Mayor Burroughs ABSENT: None ITEMS FOR DISCUSSION: 1.Receive a report, hold a discussion, and give staff direction regarding code enforcement programs and practices. City Manager Campbell stated that this item was on the agenda to talk about the practices of Code Enforcement including the history of code enforcement projects and to receive direction from Council on where they wanted to go with the program. Lancine Bentley, Zoning/Code Enforcement Division Manager, stated that in 2002 Council began focusing on neighborhood revitalization, community aesthetics, and sustainable development in conjunction with conversations about the enforcement of code. Since that time, the Property Maintenance Code had been reviewed and rewritten, additional officers had been hired, proactive programming had been established, and program funding had been increased. Program description – the purpose of the Code Enforcement Division was to provide enforcement services to ensure the health, safety and general welfare of the citizens of Denton. Code Enforcement dealt with residential and commercial concerns, specific areas of concern, illegal land use issues, and prevalent property maintenance violations. She reviewed the history of the program since 2002. NCTCOG Code Enforcement Benchmarking analysis – the analysis indicated that regional cities needed to look at sustainable neighborhoods and corridors. The analysis indicated that code enforcement should maintain and strengthen residential property values, influence the quality of life factor in economic development decisions, and support neighborhood revitalization that led to infill housing and income diversity. A suggestion for workload management from the participating cities was to increase the portion of inspector-generated violations to be more pro- active in their code compliance efforts. Leadership Denton conducted a survey regarding code enforcement and found that 72% of the respondents of the survey felt that the codes were not being adequately enforced. Recommendations of the survey were to establish an online system for reporting code violations; evaluate the existing property maintenance code for consistency; consider additional staffing for code enforcement; and provide new residents with a quick-reference guide to property maintenance codes in Denton. City of Denton City Council Minutes January 29, 2013 Page 2 Staff actions – as a result of the above two studies, staff rewrote the ordinances, developed standard operating procedures, instituted best practices enforcement approach, developed new programs in the area of dangerous buildings program, incorporated a complaint officer, developed a collaborative CO inspection program, and a minimum building standards program. Bentley showed photos from the Leadership Denton Survey. 71% of the respondents were concerned with trash and debris, 64% were concerned with substandard housing, 64% were concerned with junk vehicles, 64% were concerned with signs, 61% were concerned with rental property issues, and 52% were concerned with grass and weeds. She also showed pictures of successes of voluntary compliance with code issues. Council Member Engelbrecht asked if there was an organized system for non-profits to help revitalize properties. Bentley stated that there was a resource guide to help residents with various issues. She presented a comparison of proactive versus reactive performance. Proactive performance increased violations addressed/abated, increased protection of property values, protected residents/businesses from complainant status, and decreased selective enforcement. Reactive performance decreased staff, decreased contractor funding, supported selective enforcement, and was counter to the COG findings, Leadership Denton recommendations and Council actions. Council Member Roden noted that 25% of the code enforcement cases were from complaints and questioned if those complaints were from a certain type of neighborhood. Bentley stated that some people in low/moderate income neighborhoods were not comfortable with turning complaints. Staff Recommendation – staff’s recommendation was to continue implementing a proactive Code Enforcement program in keeping with a national ‘best practices’ approach, the community expectations as reflected in the 2007 Leadership Denton Survey, and previous and recent actions by the Council. Mayor Burroughs stated that an issue he had been hearing was that with so many cases and so many expectations there was pressure to continue production. Some people felt the officers were becoming more and more nitpicking with their violations. There was not a problem with safety issues but the problem was with the aesthetics issues. The numbers concerned him because if it was the expectation to generate high numbers it would become incumbent on the officers to find more and more smaller problems. He was also concerned about the warnings issued and problems with errors in the warnings. Bentley stated that any mistake on a warning would be corrected by the officer and not counted against that homeowner. Mayor Burroughs asked what the procedure was if there was a disagreement between the homeowner and the officer regarding the complaint. Bentley stated that the homeowner could talk to the supervisor to get it resolved. City of Denton City Council Minutes January 29, 2013 Page 3 Council Member Gregory asked if a notice was then sent to the homeowner that it had been resolved. Bentley stated not as a standard practice. Council Member Gregory suggested that it be done as a way to make sure the homeowner knew that the error was corrected. Bentley stated that was normally done over the phone but staff could send a follow-up letter. Mayor Burroughs asked if the volume dropped, would that be an issue of concern in the department or a feeling of success. Bentley stated that the goal was compliance, not citations. Council Member Roden asked if staff cross referenced data whether the complaints were for rental homes versus owner occupied homes. Bentley stated that currently that information was not tracked but it had been done in 2006 and showed that there were more cases on rental properties. Council Member Roden asked if there was a different approach in communication with rentals versus owner occupied properties. Bentley stated that as a practice, if it was a rental property, notices were sent to the tenant and the property owner regarding the problem. In 2009 the citizens committee asked to codify that practice as it was not a requirement in the Denton maintenance code to send notice to both property owner and tenant. Council Member Engelbrecht asked about the wording of the notice and whether it was sent in the same fashion as a citation. He also questioned how the notice was addressed. Bentley read the wording of the notice indicating that it was addressed to the resident unless the issue was going to citation. Then they used the utility record for the name for the citation. It was good to send the notice to both the resident and owner in order to get voluntary compliance. Council Member Gregory asked if there was a system in place so that if there were inconsistencies on how officers interpret the regulations or the Judge felt uncomfortable with the case, those could be corrected. Bentley stated that staff made a list during the year in order to update the ordinance to meet those needs. Council Member King expressed a concern that current practices might be too proactive. He questioned lengthening the time of notice and felt there were too many code enforcement officers. Bentley stated that the notice was changed from 7 to 10 days. City of Denton City Council Minutes January 29, 2013 Page 4 Council Member King stated that he had heard of situations where the property owner did not know he could call in. Bentley stated that if the notice was mailed and no response was received or abatement had to be done, the issue would go to citation. Council Member King questioned lengthening the time to go to citation. th Bentley stated that it could not be cited before the 11 day but at times the officers could not get back to the locations until 14 days or more. Council Member Gregory stated that there might be times when cases might have competing interests. On one hand, there was the desire to give a reasonable time to get the problem fixed but on the other hand, neighbors want it completed as soon as possible. There was a balancing needed on both sides. Mayor Pro Tem Kamp stated that about 6% of the cases went to citation and asked how many of those went to court. Bentley stated that about 50% of the citations issued were fixed voluntarily. Council Member Watts stated that he was not in favor of going back to a complaint driven process. He was in favor of modifying the program and consider giving certain violations a different time frame. He felt there was a difference between owner and tenant violations. Bentley stated that staff had a list of owner oriented versus tenant oriented violations. There seemed to be more tenant violations than owner violations. Council Member Watts stated that although he was not in favor of a complaint driven system, he would be agreeable to items that were less of a health and safety issue to be provided more time or have a couple of violations instead of only one violation before going to citation. Mayor Burroughs felt that it should not be one way or the other but rather a mix of proactive and reactive procedures. Safety related issues should be proactive. Aesthetics were important but were more subjective as to what the standards were that should be enforced. Another example were standards that had been the norm for many, many years and now had to changed such as gravel driveways. Bentley stated that the driveway issue went into minimum standards. Staff worked with property owner to get those situations completed. It was incumbent on a property owner to work with Code Enforcement to get violations resolved. Mayor Burroughs stated that he would be supportive of aesthetically related code violations to have an alternate dispute path instead of the next step being a citation. Incorporate some type of intervening step where details of the particular case would be presented. He felt that might be an approach to explore if Council agreed. City of Denton City Council Minutes January 29, 2013 Page 5 Council Member Gregory stated that he would be nervous with some issues such as tall grass and weeds. If there was too long of a process in those cases, they would keep getting taller and taller and keep presenting a problem for the neighborhood. Part of the issue came with the concern people had and he felt most people wanted to be good neighbors. Mayor Pro Tem Kamp felt that a stop gap step would not be abating the problem but talking about the case and any extenuating circumstances. This would provide another step to go through rather than going to court. It would not lengthen the time in the case but might help it from going to court. She questioned what else could be done so the issue would not go to court. Mayor Burroughs felt that some issues were subjective and questioned if those should be the object of repeated code violations. He felt there should be a procedure for aesthetic situations. Council Member Roden stated that if the process was suggested to be outside code enforcement, have an opportunity to talk about a disagreement that is a violation, have Code Enforcement talk with the property owner and it could be resolved. Bentley stated that property owners should start with Code Enforcement rather than going directly to Council with complaints. If there were extenuating circumstances, they could close the case and dismiss the citation. But Code Enforcement only knew of problems if people called and told them about it. Mayor Burroughs encouraged staff to have a mechanism for the Code Enforcement officers to identify absurd results and identify them to Council. Council Member Engelbrecht felt there were several areas to attack at once. One was orientation to the process. He felt the officers were customer friendly. He suggested looking more at communications to the citizens such as publishing photos of before and after situations. Then there was the process of time as the issues worked through the system. Another area was resources. In the past if someone cleaned up property, the City would haul it off at no cost. He felt there would always be some citations issued. If the City did not maintain residential and business districts, then it was letting everyone else down such as the DISD and other entities. Mayor Pro Tem Kamp stated that she was in favor of a proactive approach but that some adjustments needed to be done. One area to adjust might be the notice itself to make it more reader friendly. The notice could explain that the City was trying to keep the neighborhood beautiful and what the purpose was for the community. Council Member Roden stated that there were models where code enforcement had taken a neighborhood by neighborhood approach to take in distinct neighborhood characteristics. They then showed neighborhoods how the changes would make the neighborhoods better. Bentley stated that would be a more comprehensive approach using Keep Denton Beautiful, Code Enforcement and Planning. Council Member Roden suggested showing neighborhoods specific problems and providing a time line on how to fix those problems. He felt that would be a more beneficial building approach. City of Denton City Council Minutes January 29, 2013 Page 6 Council Member Engelbrecht stated that approach would work great with neighbors who wanted to work but what about those areas where the neighbors did not want to be involved. Brian Lockley, Director of Planning and Development, stated that staff was working on just such type of a program. The thought was to identify streets with problems and partner with non- profits to get people to assist in correcting those problems. Mayor Burroughs felt it would be good as long as it was shown as neighborhood betterment and something that the community wanted. The City was here to help the neighborhood and not to be a punishment. Council Member Gregory stated that he was in favor of proactive approach. Mayor Burroughs suggested changing the name of the department to Code Compliance instead of Code Enforcement and to not focus on the outcome in terms of volume of cases. He also suggested looking at the number of personnel and perhaps shift some to a neighborhood building program to help coordinate resources. He noted that Council had also recommended looking at the notices for more customer friendly wording and making a department goal to identify codes or ordinances that did not seem to make sense or needed to be looked at for unfair outcomes. Council also suggested better coordination of resources, looking at an additional way to approach pure aesthetic issues and looking at a neighborhood working together program. 2.Receive a report, hold a discussion, and give staff direction regarding the sign ordinance. Lancine Bentley, Zoning/Code Enforcement Division Manager, presented an overview of some of the issues in the current ordinance. The objective of the review was to give staff direction regarding the sign ordinance. Items for review included off-premise signs, temporary signs, LED, Clarion Associates with scope of work and timeline, and recommendation. Off-Premise signs – the definition, exemptions and prohibited sign definitions as listed in the Development Code were reviewed. One issue concerning off-premise signs dealt with the DCTA and the possibility of off-premise advertising at their bus stops. The question dealt with whether outside advertising at the DCTA bus stops would be third party signage or governmental signage. Council Member Watts clarified that this issue dealt with signs advertising businesses with revenue for DCTA. Bentley stated that was correct. City Manager Campbell stated as opposed to signs advertising DCTA’s own schedules. Bentley stated that another issue was Frenchy’s off-premise signs on his trucks. She showed other examples of off-premise sign issues which included portable billboards and examples of on-premise vehicular signs that were allowed. Mayor Burroughs asked if it would be a violation to have a truck advertising a business that was parked at a location not owned by them but that had permission to be there. City of Denton City Council Minutes January 29, 2013 Page 7 Bentley stated that would still be a violation according to the definition. Mayor Burroughs asked if it would be a violation if the space were leased where the truck was parked. Bentley stated that it did not matter if the property were leased or owned. The principle business had to be there. Council Member Roden asked how the use of the parking lot was a factor as in some of the examples the trucks were not parked in a designated parking space. Bentley stated that Code Enforcement officers have gone to businesses and asked them to park in a parking spot rather than across parking spaces. There were also cases where vehicles became inoperable and had dilapidated signs. The North Texas State Fairgrounds was the site of another issue with their signage and whether it would be a third party signage and be designated as off- premise signs. Options for off-premise signs were to (1) take no action, (2) modify the current ordinance to allow for off-premise signage with limitations, or (3) modify the current ordinance to allow off- premises signage with no limitations. Temporary signs – the definitions for temporary signs were reviewed. Bentley pointed out that there was no definition for a single event and did not know what “temporary in nature” meant. There was nothing in the ordinance indicating how far in advance of an event a sign could be placed. The ordinance did indicate that a temporary sign would have to be removed within 10 days after an event which was the only time frame referenced in the ordinance. Examples of off- premise temporary signs were reviewed. It was noted that off-premise signs were regulated with one off-premise sign per any one premise but temporary signs were exempt from regulation. LED signs – LED signs were permitted but were over-regulated. The goal was to recommend a change in the ordinance to allow full use of LED signs. Mayor Pro Tem Kamp asked if there was an exception for non-profit signage. Council Member King felt that if a regulation worked for a governmental entity, it should be able to work for private entity. Mayor Burroughs suggested addressing the issue of “donated by” for signage to make provisions for that type of situation. He felt that some type of third party signage was expected at certain types of places such as ball fields and other event facilities. However, the current ordinance did not allow for that. Then there was the area of being neighborhood sensitive to signage. He suggested the possibility of an extended permit done by a specific use permit process to allow neighborhood input and a ten- year ability for outdoor advertising. Brian Lockley, Director of Planning and Development, stated that staff would suggest a policy direction in the comprehensive sign policy and with direction to allow those types of signs until the sign issues were resolved. City of Denton City Council Minutes January 29, 2013 Page 8 City Attorney Burgess stated that currently athletic fields were allowed to have advertising on the field side of the fences and the Fairgrounds might be included as an athletic field. Mayor Burroughs suggested a temporary fix to allow for those types of signs but if that were not possible, then include them in the sign study. Clarion Associates – Denton Development Code Review and Revisions - Lockley reviewed the provisions of the Clarion contract for a comprehensive review of the Development Code. The project schedule included code assessment, code amendments, code reorganization, DTIP/Infill development and re-development, and development review process. Additional tasks would include training and education and signage/off-premise signs review and recommendations. Recommendation – prior to receiving Clarion Associates’ review of the signs and advertising devices ordinance, staff was recommending that some modification be made in the interim to provide clear direction to staff and the citizenry for some sign types, such as temporary, real estate, and LED signs. Mayor Burroughs felt that signs should not have a higher status than the infill/redevelopment process as the sign issues were not urgent. Council Member King agreed but felt that there were easy fixes for some of the issues in the interim to make them work. Mayor Pro Tem Kamp stated that she did not want to wait a long time for any changes to be made. Mayor Burroughs noted that there was the possibility to go into Closed Session to discuss this issue if Council wanted. However, he did not see the need to do so as Council was discussing the limited possibility of interim solutions. 3.Receive a report, hold a discussion, and give staff direction regarding future facility planning and space needs. Jon Fortune, Assistant City Manager, stated that the purpose of the briefing was to provide a general overview of the main city public facilities, review current challenges and space needs, and seek Council direction and feedback on short-term and long-term facility planning needs. Key issues – key issues to consider included (1) continued population growth projected for the city, (2) demand for public meeting space strained the existing capacity of main public facilities, (3) limited and inefficient office space, (4) decentralized service delivery, (5) increased maintenance cost with aging facilities, and (6) the current Facilities Master Plan was over 10 years old. City Hall – a facility overview was presented. Challenges for the building were the high cost to renovate due to architectural integrity, space limitations, public meeting space constraints, parking limitations, flood plain restrictions, community concerns regarding the history of the structure, and ADA compliant but not ADA friendly. City of Denton City Council Minutes January 29, 2013 Page 9 Council Member Gregory asked if the original design of the building was to accommodate two stories. Fortune stated that he had heard that and had been told of an artist rendition of a three story structure. However, that was not found in the O’Neill Ford specifications. While the structure might accommodate it, the parking would still be limited. City Hall East – a facility overview was presented. Challenges for this building included parking limitations, the Railroad parking lot needed reconstruction, meaningful expansion only for the Police Department and Municipal Court, ADA compliant but not ADA friendly, public meeting space constraints, mobility in terms of traffic congestion for a one-stop shop, and Railroad activity could separate the facility from other parts of the city. City Hall West – a facility overview was presented. Challenges of City Hall West included heating and cooling issues due to the split levels, city designated historic building, parking limitations, ADA compliant but not ADA friendly, and inefficient use of space due to the split level layout. Council Member Gregory stated that he had asked staff to do research on what the impact a historical designation would have on the building for city use and any modifications and asked when Council would be getting that information. Fortune stated that the city had designated the building as a historical structure. It appeared that if a state designation were added the same type of standards would apply but it would be an additional body to go through for any changes. Council might want to consider a national historic landmark designation as it would be easier to change if needed but still have the designation. Service Center – a facility overview was presented. Challenges included poor accessibility to the general public, parking limitations for the general public, incompatible zoning for optimal expansion, existing operations had additional space needs, the Railroad activity could separate the facility from other parts of the city, and expansion could require realignment of surrounding streets. Key discussion points – (1) Did existing facilities provide adequate space and opportunity to facilitate future growth in the community, (2) was the City providing the best service possible by utilizing decentralized facilitates, (3) how long were the structures able to sustain municipal operations in their current condition and (4) was it necessary to conduct a more detailed space needs assessment based on the current usage and demand. Recommendations – Perform a space needs study to evaluate main city hall structures, identify options and strategies for short-term and long-term space needs, evaluate City Hall West and the old Fire Central for long-term status, and develop a property acquisition policy. Another consideration included the consolidation of core city services through a signature city hall and justice center. Council Member Watts felt that given the status of the current buildings, there would be a problem with expansion. He felt it would be worth looking at a study that identified the City of Denton City Council Minutes January 29, 2013 Page 10 buildings. The challenge with a consolidated services building would be where to put it. Another consideration would be the price of redoing buildings. A careful analysis would be necessary of the options as space was under short supply and maintenance costs could be very costly in the older buildings. Fortune agreed that would be a good starting place. Mayor Pro Tem Kamp agreed that a study was necessary. She indicated that there had been some interest for a private purchase of City Hall West to redo the building. She questioned what the study would look like, who would do it, the cost and how long it would take. Fortune stated that at this point those answers were not known. Staff was needing direction from Council to proceed with such a study. Council Member King stated that other institutions had moved towards virtual employees who would work from home to help reduce the stress on the number of employees in buildings. Fortune stated that currently the City had telecommuting with limited use. Council Member King stated that thinking long term, that might be feasible. Council Member Roden stated that in 20 years people might not be shuffling paperwork like they were doing now and that should also be considered in terms of space. Another topic was the issuance of bonds which needed to be part of the conversation. He questioned when Council might have that financial conversation. Fortune stated that once staff moved forward with the study there would be a basis for considering the bond needs for the future. Council Member Engelbrecht stated that there was information in the backup materials regarding other cities that had a signature city hall. Part of the process needed to consider the fact that Denton did not have such a facility. He felt comfortable in the current City Hall as opposed to a cold impersonal facility. Mayor Burroughs felt that City Hall West was a forced use and it had gone past its time. He felt the need was to look at the relocation of which was the most urgent of the issues. He liked the uniqueness of City Hall due to the historic nature and how it reflected Denton. He questioned if there was a realistic possibility of expanding the building to use the current Council Chambers as a Work Session Room and add on somewhere a new Council Chamber. He would have a hard time changing the major use of the current City Hall but could see expanding the current facility or using the County facility across the street. He felt the City should move out of City Hall West. Council Member Gregory questioned if the City moved out of City Hall West, did it have enough historical value to preserve it. Fortune stated that staff would move ahead with a study for spacing options. City of Denton City Council Minutes January 29, 2013 Page 11 4.Receive a briefing on the City Ethics Policy and updates on State and Federal statutes. City Attorney Burgess stated that the Ethics Committee met in October to consider whether the policy was current and whether any changes were warranted. The Committee also considered whether it would be appropriate to institute an ethics training session at the Council retreat. In December the Council Ethics Committee reported to Council that the policy was still current but that ethics training would be appropriate at the annual retreat to insure all members remained familiar with the ethics rules. The current policy stated that Council would be ethical; act with integrity; have moral courage and be truthful; service oriented and respectful to all; fiscally responsible; communicative; cooperative; progressive and receptive to new ideas; and timely in paying monies owed the City. The controlling statutes for the policy included the Open Meetings Act, the Public Information Act, Conflicts of Interest, Competitive Bidding and Procurement, nepotism, bribery, coercion of a public servant or voter, and improper influence. Mayor Burroughs asked what was the primary weakness of current policy. Burgess stated that the current policy was good and had a procedure for anyone to make a complaint regarding ethics complaints. There were no major weaknesses. Council Member Gregory stated that the Committee would meet at least once a year to review the policy. Mayor Burroughs asked about ways to have citizens know about the ethics policy. Burgess stated that the Human Resources Department was very open to listen to complaints. Council Member Roden stated that there was a general suspicion of politicians. He suggested posting it to the website under the Council site. Council Member Gregory suggested also posting directions on procedures if someone had a concern. Council discussed whether the policy would be more powerful for it to be an ordinance rather than a resolution. Burgess stated that a resolution was a declaration of policy. An ordinance would have the impact of law. If Council wanted the policy to be more stringent than state law it could be amended. It was the choice of Council whether to be an ordinance or a resolution. Mayor Pro Tem Kamp stated that when the policy was drafted as a resolution, there was a citizens committee that worked on it and the advice of the legal staff at that time was to do a resolution. Council Member Roden stated that some of the values in the resolution would be hard to put in an ordinance and to enforce. City of Denton City Council Minutes January 29, 2013 Page 12 5.Receive a report, hold a discussion, and give staff direction regarding future capital improvement bond programs. Bryan Langley, Assistant City Manager, stated that the overview and purpose of the discussion would include (1) presenting key elements of planned bond issuances in 2012-13 and beyond, (2) discussing a proposed process to develop future voter approved bond programs, (3) reviewing potential issues with the Public Art policy, and (4) presenting future bond program options. 2012-13 Bond Program Highlights - in 2013 a total of approximately $87 million in Certificates of Obligation (COs) and General Obligation bonds (GOs) were planned to be issued. Existing debt of approximately $8 million may also be refunded (refinanced) to reduce interest costs. In addition, a $15 million bond program was under consideration for the renovation of three fire stations. This was a proposed election in May 2013 and anticipated a tax rate increase of up to 1.8 cents. The COs would be issued in lieu of Utility System Revenue Bonds for water, wastewater, and electric system projects. The COs were recommended due to lower interest rate costs. While COs were backed by the full faith and credit of the City, debt service was provided by self-supporting revenues where appropriate. In FY 2014-15 approximately $9 million in COs were expected to be sold for the City’s matching requirement associated with the Bonnie Brae and Mayhill projects. This was previously planned for FY 2013-14 and provided some flexibility for debt issuance next fiscal year. Each year, approximately $4 million in COs was also expected to be sold for vehicle replacements and facility improvements. A potential debt issuance associated with the proposed Conference Center was also under consideration. COs were contemplated for this debt issuance as well, but would be supported by revenues from the project. Council Member Watts stated that he would like to take another look at the vehicle replacement policy in terms of when the vehicles were replaced, at what age, at what mileage, etc. Langley indicated that he would get Council that information but some of the issues looked at included mileage, replacement cost and cost of vehicle. th Development of Next Voter Approved Bond Program - on January 7 Council discussed the possibility of calling a city-wide bond election in November 2013 instead of 2014. A November 2013 bond election would need to be called in August of this year. A Bond Advisory Committee would need to be formed in March or April of this year. To allow the Committee to properly vet any proposals, staff would need to present recommendations almost immediately. As a result, staff did not recommend that a multi-project bond program be considered by the voters in November 2013. Staff needed an opportunity to evaluate whether a bond program over a 6-8 year period was appropriate. Mayor Burroughs noted that was the time period for the bond programs anyway due to when the bonds were issued. Council Member Engelbrecht asked about the best way to do this in terms of the public. City of Denton City Council Minutes January 29, 2013 Page 13 Council Member Gregory stated that not as much would need to be borrowed which could result in a tax increase. Langley stated that if it was to be a seven year program, the City would have to stick with that figure and not let it extend beyond that. Public Art Policy – in 2006 Council approved a public art policy which stated that the City would include a base of 2% for the arts from all future Capital Improvement Programs, with the option and flexibility to increase that to a 4% maximum based on needs and economic conditions. After much discussion, the Citizens Bond Advisory Committee and Council recommended up to $400,000 in public art improvements for the 2012 bond program. During a July 2012 Hotel Occupancy Tax Committee meeting, staff was asked to initiate a discussion with the Council regarding possible amendments to the Public Art Policy. The Committee had a concern regarding whether all debt issuances (COs, GOs Revenue Bonds, etc,) were subject to the policy. As written, the policy did not provide Council with any flexibility to limit, increase or reduce public art funding based on the size of future bond programs. An option to the current policy may be the creation of a separate fund for public art projects. The fund would maintain a minimum balance of $500,000 but not more than $1 million for eligible projects. The source of the funds would be voter approved bonds or any other source deemed appropriate by the Council. This would provide more immediate ability to fund worthy projects and allowed funds to be replenished periodically based on need. Mayor Burroughs felt that nothing other than GOs were considered in the policy. COs were not applicable. Mayor Pro Tem Kamp stated that it was never the intention to have anything other than GOs. Mayor Burroughs suggested directing staff to clarify the resolution to just be GOs. Council Member Engelbrecht did not think the CO issue was addressed at the time of the policy. Discussion was for GOs as that was the funding mechanism. Mayor Burroughs stated that he had no interest in using the policy for COs and asked what the rest of Council felt. Council Member Roden agreed with not using COs. He questioned a legal distinction for a single issuance. City Manager Campbell stated that even if just GOs were considered, the language stated capital improvement program. Mayor Burroughs felt that the Council’s direction was to clarify the intent to eliminate budget constraints and only use the policy for GOs. He felt the consensus of Council was to only apply the policy to GOs, then move to single purpose GOs. City of Denton City Council Minutes January 29, 2013 Page 14 Council Member Watts stated he wanted this methodology of funding through the public voting mechanism or create some other funding mechanism without the controversy of the single issue election. The Public Art Committee would like a consistent level of funding with direction. There was a work session scheduled in February on this item and felt it would be good to hear from the Public Art Committee on feedback on the policy. The street bond program was the first issuance with questions concerning a single proposition ballot or multi-proposition ballot. The Committee was looking for flexibility and consistency in funding. Council Member Gregory suggested that between this meeting and the February meeting, to look at HOT funds for consistent funding. Council Member Watts stated that if HOT funds were used, they would have to be spent within a year. Council Member Roden felt that there was a need for a master plan on what was being suggested to know how much to fund. Mayor Pro Tem Kamp stated that the policy came about due to the fact there was no funding for public art. However, she felt that the policy needed to be reviewed. Mayor Burroughs suggested that the direction was to hone the current policy as this Council interpreted it as GOs only with a sub-question as to whether single purpose GOs would apply. Council Member Watts stated that another issue of importance he discovered in his meeting with the Public Art Committee was a master plan study. He suggested bringing back the cost of such a study and a scope of study. Council Member Engelbrecht stated that he would like more information on the inventory process the Committee was going to conduct. Langley continued that the Public Art Committee currently served in an advisory capacity to the Parks, Recreation, and Beautification Board. Since potential public art projects may be at the Airport, Conference Center and other facilities, there was a question if this committee should advise the Council directly. Based on Council direction, staff would bring back more detailed recommendations on the public art policy in a February work session. Consensus of Council was to have the Committee report directly to Council. Bond program options - staff was proposing a bond election in May 2013 to renovate three fire stations. If this debt was issued in 2013 or 2014, a tax rate increase would likely be necessary. th As a result of discussions with Council on January 7, staff had prepared options for consideration. Mayor Burroughs did not feel there should be a May 2013 election. The next best choice would be to wrap it into the next bond election so there would not be a tax increase. This did not rise to the level of having a major tax increase by doing it in May. Langley stated that the four options for Council consideration were: City of Denton City Council Minutes January 29, 2013 Page 15 Option 1 – hold an election in May or November 2013 for fire station improvements. This included an anticipated tax rate increase of up to 1.8 cents. Also proceed with a separate 2014- 15 bond program. Option 2 – issue $1 million in COs in 2013 for fire station land acquisition and design services; $3 million in COs for 2014 for construction of the first station. The second and the third station renovations would be considered by the voters as part of the 2014-15 bond program. This required no tax rate increase. Option 3 – hold a multi-purpose bond program election in November 2013. Include fire stations and other recommended projects. This would have an anticipated tax rate increase. Option 4 – do not issue additional debt at this time, and include station renovations in the next voter approved bond program in 2014-15. Issue a minimal amount of COs for required design services. Mayor Burroughs stated that he liked Option 2 as it was the most creative. Council Member Gregory asked if staff had received feedback from the DISD regarding their schedule of upcoming bond elections. He felt it was important to coordinate those elections to insure success. With Option 2 he questioned if there would be questions that one station would be done with COs but not all of the stations done with COs. Langley stated that Council had the discretion as to whether or not to bring that to the voters. Council Member King stated that he liked Option 2. The stations were needed but he liked the idea of no tax increase. Council Member Roden asked if the no tax rate increase applied to the 2014 bond program. Langley replied yes. City Manager Campbell stated that the second and third station renovations would have an impact on the 2014-15 bond programs. The funding would be carved out from the part of the funds from other projects. Council Member Watts stated that he liked Option 2. All of the station needs were critical but he struggled with the 1.8 cent tax increase. Voters would decide on whether or not to have tax increase. Council Member Roden stated that waiting until 2014-15 the citizens committee could say the fire stations would not be a critical need. Mayor Burroughs stated that the Citizens Bond Committee was just a recommending committee. Council set the specific projects to be considered. Council Member Roden stated that this Council would be setting that priority now but it might be a totally different Council in the future with a different direction. City of Denton City Council Minutes January 29, 2013 Page 16 Consensus of the Council was to proceed with Option 2. 6.Receive a report, hold a discussion, and give staff direction regarding a possible citizen election to allow for the sale of gas and the marketing plans associated with the approval of gas sales as it relates to the Combined Heat & Power Economic Development District (CHP-EDD). City Attorney Burgess stated that this discussion would center on whether Council wanted to move forward with a potential election regarding the sale of gas and the combined heat and power economic development district. She reviewed the provisions of the Charter regarding utilities. The identified problem was that the Airport Industrial Park was gas starved. The Economic Development Department indicated that the City lost several prospects because gas was not readily available to this area. SB 1230 provided support of Denton’s combined heat and power project, authorized the City to sell gas in a limited area for industrial purposes, and required the City to establish a CHP district where the City could then sell gas within that district. Council Member Roden asked if the City could legally sell gas without an election. Burgess stated only for the CHP project and only in that designated area. She continued that after the passage of SB 1230 Council enacted an ordinance that established a CHP-EDD and designated the boundaries. The city could sell gas to industrial customers within the CHP-EDD boundaries. Possible election – there were two options for an election. One was a Charter amendment calling for voters to delete the provision requiring an election for the City to own a utility. The second was an election under the Charter calling for voters to allow the City to operate a utility per Charter requirements. A question to consider was where would gas be sold; whether in the CH-EDD or another limited area of the city or city wide. Another question would be the purpose of the gas sales whether non-residential or other. Council Member Watts noted that when Atmos gave a blessing for the gas sales it was because the sales would be limited to that designated area. Also, part of the reason the city was able to get the legislation was that Atmos supported that it would be only sold in a limited area. Burgess stated that was correct. City Manager Campbell stated that if there was an election under the Charter, the voters could give the City authority be sell beyond that. Council Member Watts asked if Council could give direction for just the limited area. City Manager Campbell stated that could be affected as to whether or not the plant was in the area needed. City of Denton City Council Minutes January 29, 2013 Page 17 Council Member Engelbrecht stated that part of the boundary would move because it would be outside city limits Burgess stated that if the issue went to the voters, it would not be tied to the CHP project. Council Member Gregory stated that he was completely satisfied that selling chilled water was not a utility by all of the definitions including that in the Charter. Burgess stated that staff had done research and also consulted outside counsel and it was not an issue. Council Member Engelbrecht asked if the City would get push back from Atmos with the new area. Phil Williams, General Manager-DME, stated that the lines were moved in order to make it easier for voters to decide. Mayor Burroughs stated that if the lines were not that much different there might not be an objection from Atmos. But if it was a lot different and Atmos objected, that might be a voter consideration. Council Member Engelbrecht stated that if the boundaries were going to be changed, Atmos needed to know. Burgess stated that the recommendation was to sell for non-residential purposes so as to include manufacturing and commercial operations. Council Member Gregory stated that his first choice was to amend the Charter or hold an election to authorize the City to sell the gas. In either of those cases, the issue would most likely end up during candidate forums. He questioned if the current council members were restricted in making comments on the issue. Burgess stated that the Council could give factual information. There were restrictions in the Ethics Code and Election Code related to limitations on the use of monies for political advertising. The limitation was the use of city funds including a cell phone or piece of paper for the promotion of the proposition. Council Member Gregory stated that if a current council member was at a candidate forum and was asked a question if he/she supported this ballot whether by a change in the Charter or an election proposition, what would be the legal way to answer and the reasons why. Burgess stated that the difficulty would be if a staff member was present, whether held on city property and if any tie at all to the city. She would proceed with a cautionary note on that restriction. Mayor Burroughs presented a concept for the ballot proposition. Wording could be that if a commercial entity failed to establish adequate service in the CHP-EDD, can the city of Denton City of Denton City Council Minutes January 29, 2013 Page 18 provide for sale and distribution of natural gas within the CHP-EDD only. This would not compete with anyone. Burgess stated that would be under the terms of the Charter and not a Charter amendment. Council Member Gregory agreed with having an election and not a Charter election. He felt that the Mayor’s proposed language opened the possibility that if the condition was me, the City put in a pipeline and was providing gas in the area that if another entity put in gas, what would happen. He felt the wording would have to be changed. Mayor Burroughs stated that the proposed wording was for initiation of service only. Once initiated, the condition would change. This wording was for initiation of service only. Burgess stated that her office would work on crafting the ballot proposition. There was merit to not having language for the limitation. Mayor Burroughs stated that he would like to have a condition in the ballot language to make it clear that if adequate service had already been established or was underway, that condition would be referenced. It was not the intent of the City to compete with another entity. Council Member Watts stated that he had a concern with the definition. Council had just passed a TIRZ in the area and in some discussion with the landowners, Atmos could build pipeline to service a certain amount of gas needs. Based on the Mayor’s condition, the City would be precluded from selling gas to other people. Gas could be sold to the CHP but not to other entities. Council Member Gregory stated that one could argue that an unintended consequence would be that there was adequate service that everyone there was getting the gas needed. He suggested the possibility of having a preamble above the ordinance with that type of language. Burgess stated that language could be added to the ordinance but not on the ballot proposition. Staff would examine the proposal and bring it back to Council. If Council wanted a May th election, it would have to be called on February 12. Mayor Burroughs stated that the election could be either May or November and asked if there was a difference for the dates. Burgess stated that there was not a big difference. Williams stated that the difference would be talking with potential customers. Mayor Pro Tem Kamp stated that the City had a long history of turning down people in the area. Atmos and CoServ said no to the project and no to gas in the area. This was the solution the City devised. Council Member Engelbrecht stated that he had no problem with May but given the issue with limitation on Council discussion, it would be important to get talking points out to provide for information such as how it would be paid for and what was out there now. City of Denton City Council Minutes January 29, 2013 Page 19 Council Member Roden stated that this was economic development and he was comfortable putting it on the ballot. Council Member Gregory stated that he was comfortable doing a May election. He requested facts to make reference with in discussions. 1. Closed Meeting: A.Consultation with Attorneys – Under Texas Government Code Section 551.071. 1.Receive a report and hold a discussion with the city’s attorneys regarding the City of Denton sign ordinance. Council did not meet in Closed Session. With no further business, the meeting was adjourned at 3:55 p.m. _______________________ MARK A. BURROUGHS MAYOR CITY OF DENTON, TEXAS _________________________ JENNIFER WALTERS CITY SECRETARY CITY OF DENTON, TEXAS AGENDA INFORMATION SHEET AGENDA DATE: March 5, 2013 Questions concerning this acquisition may be directed DEPARTMENT: Materials Management to Frank Payne at 349-8946 ACM: Bryan Langley SUBJECT Consider adoption of an ordinance accepting proposals and awarding a public works contract for the replacement of two 10-inch Sewer Crossings as part of the US Hwy 380 Widening Project; providing for the expenditure of funds therefor; and providing an effective date (Bid 5131- awarded to Wilson Contractor Services, LLC in the amount of $202,509.40). The Public Utilities Board recommends approval (5-0). BID INFORMATION The US 380 Urban Utility Relocation Phase 2 project consists primarily of the replacement of two existing 10-inch sewer crossings with two new 10-inch sewer crossings (refer to Exhibit 1). The total footage of sewer to be replaced is approximately 600 feet. The project is required due to the widening of US 380 west of I-35 and the installation of new and larger drainage structures that conflict with the existing crossings. Standard City of Denton purchasing procedures were utilized. Bid notices were advertised in the local paper, posted on the internet, and emailed to prospective bidders. Bids for the construction phase of this project were opened on January 17, 2013. Seven responses were received. The bids ranged from a low base bid of $202,509.40 to a high base b opinion of probable construction cost for the project was approximately $186,000. The bid summary is enclosed as Exhibit 2. The low bidder for this project, Wilson Contractor Services, LLC, appears to meet all of the necessary requirements for qualification on this project and is also a local vendor. PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS) On February 25, 2013, the Public Utilities Board recommended approval to forward this item to the City Council for consideration. RECOMMENDATION Award Bid 5131 to the lowest responsible bidder meeting specification, Wilson Contractor Services, LLC in the amount of $202,509.40. Agenda Information Sheet March 5, 2013 Page 2 PRINCIPAL PLACE OF BUSINESS Wilson Contractor Services, LLC Denton, TX ESTIMATED SCHEDULE OF PROJECT The replacement of the sewer crossings is estimated to be completed within sixty calendar days of issuance of the Notice to Proceed. FISCAL INFORMATION This project will be funded from Bond fund account 640036542.1365.21100. Requisition #112127 has been entered in the Purchasing software system. EXHIBITS Exhibit 1: Map of Location Exhibit 2: Bid Tabulation Exhibit 3: Public Utilities Board Draft Minutes Respectfully submitted: Antonio Puente, Jr., 349-7283 Assistant Director of Finance 1-AIS-Bid 5131 9ãwz,z· 9ãwz,z· t©;-· [- ·z EXHIBIT 2 IFB # 5131 DATE: January 17, 2013 Description: US 380 Utility Relocation Phase 2 No.Qty.DESCRIPTIONVENDORVENDORVENDORVENDORVENDORVENDORVENDOR WILSON DICKERSON CANARY ARK SMB JAGOE PUBLIC CONTRACTOR CONSTRUCTION CPS CIVIL LLCCONSTRUCTION CONTRACTING ENTERPRISES, COMPANY SERVICES, LLCCOMPANY, INCINCSERVICES, LLCINC Principle Place of Business: Denton, TXCelina, TXDuncanville, TXDenton, TXCoppell, TXKennedale, TXDenton, TX Total Base Bid $202,509.40$215,344.00$219,969.00$223,802.00$260,625.00$356,335.00$357,202.00 Bid Bond YESYESYESYESYESYESYES Addendum #1 YESYESYESYESYESYESYES Addendum #2 YESYESYESYESYESYESYES EXHIBIT 3 DRAFT MINUTES 1 PUBLIC UTILITIES BOARD 2 3 February 25, 2013 4 5 After determining that a quorum of the Public Utilities Board of the City of Denton, Texas is 6 present, the Chair of the Public Utilities Board will thereafter convene into an open meeting on 7 Monday, February 25, 2013 at 9:00 a.m. in the Service Center Training Room, City of Denton 8 Service Center, 901A Texas Street, Denton, Texas. 9 10 Present: Chairman Dick Smith, Vice Chair Billy Cheek, Secretary Randy 11 Robinson, Phil Gallivan, Barbara Russell, Leonard Herring and Lilia 12 Bynum (arrived at 9:11) 13 14 Ex Officio Members: Howard Martin, ACM Utilities; George Campbell, CM 15 OPEN MEETING: 16 17 CONSENT AGENDA: 18 19 20 1)Consider recommending approval of Bid No. 5131 to Wilson Contracting Services, Inc. for 21 the construction of the US 380 Urban Utility Relocation Phase 2 project, in an amount not to 22 exceed $202,509.40. 23 Cheek recused himself on this item. 24 25 Board Member Robinson made a motion to approve item #1 with a second by Board 26 Member Gallivan. The vote was 5-0. 27 28 29 Adjournment 10:33 a.m. ORDINANCE NO. _________ AN ORDINANCE ACCEPTING PROPOSALS AND AWARDING A PUBLIC WORKS CONTRACT FOR THE REPLACEMENT OF TWO 10-INCH SEWER CROSSINGS AS PART OF THE US HWY 380 WIDENING PROJECT; PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE (BID 5131-AWARDED TO WILSON CONTRACTOR SERVICES, LLC IN THE AMOUNT OF $202,509.40). WHEREAS, the City has solicited, received and tabulated competitive bids for the construction of public works or improvements in accordance with the procedures of State law and City ordinances; and WHEREAS, the City Manager or a designated employee has received and recommended that the herein described bids are the lowest responsible bids for the construction of the public works or improvements described in the bid invitation, bid proposals and plans and specifications therein; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The following competitive bids for the construction of public works or improvements, as described in the "Bid Invitations", "Bid Proposals" or plans and specifications on file in the Office of the City's Purchasing Agent filed according to the bid number assigned hereto, are hereby accepted and approved as being the lowest responsible bids: BID NUMBER CONTRACTOR AMOUNT 5131 Wilson Contractor Services, LLC $202,509.40 SECTION 2. The acceptance and approval of the above competitive bids shall not constitute a contract between the City and the person submitting the bid for construction of such public works or improvements herein accepted and approved, until such person shall comply with all requirements specified in the Notice to Bidders including the timely execution of a written contract and furnishing of performance and payment bonds, and insurance certificate after notification of the award of the bid. SECTION 3. The City Manager is hereby authorized to execute all necessary written contracts for the performance of the construction of the public works or improvements in accordance with the bids accepted and approved herein, provided that such contracts are made in accordance with the Notice to Bidders and Bid Proposals, and documents relating thereto specifying the terms, conditions, plans and specifications, standards, quantities and specified sums contained therein. SECTION 4. The City Council of the City of Denton, Texas hereby expressly delegates the authority to take any actions that may be required or permitted to be performed by the City of Denton under Bid 5131 to the City Manager of the City of Denton, Texas, or his designee. SECTION 5. Upon acceptance and approval of the above competitive bids and the execution of contracts for the public works and improvements as authorized herein, the City Council hereby authorizes the expenditure of funds in the manner and in the amount as specified in such approved bids and authorized contracts executed pursuant thereto. SECTION 6. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2013. ______________________________ MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: _________________________________ 5-ORD-Bid 5131 AGENDA INFORMATION SHEET AGENDA DATE: March 5, 2013 DEPARTMENT: Utilities Engineering ACM: Howard Martin, 349-8323 ______________________________________________________________________________ SUBJECT Consider adoption of an ordinance authorizing the City Manager or his designee to execute on behalf of the city a Deed Without Warranty, from the City of Denton, Texas, as grantor, to Texas SB Holdings, LLC, as grantee, conveying a 0.09 acre tract located in the Eugene Puchalski Survey, Abstract Number 996, City of Denton, Denton County, Texas, being generally located at the Northeast intersection of West Hickory Street and North Texas Boulevard (the “Land”); reserving a perpetual Sanitary Sewer Easement in, along, upon, under, over and across a portion of said land; and providing for an effective date. BACKGROUND Staff has been contacted by Texas SB Holdings, LLC, landowners adjoining a section of North Texas Boulevard, to acquire excess right-of-way located at the northeast intersection of West Hickory Street and North Texas Boulevard. A Street Right-of-way Abandonment application was processed by the Development Review Committee. Staff performs an analysis on the request for sale of excess right-of-way as follows: Is the right-of-way tract requested for sale considered “excess right-of-way”? Does the right-of-way tract requested for sale have a continued public use? Is it in the best interest of the general public to sell the government’s rights in the subject right-of-way tract? Would the granting of this request establish a precedent for sale of excess right-of-way for future requests? Staff findings on this analysis are as follows: The requested right-of-way tract fits the criteria of “excess right-of-way”. Excess right- of-way is defined as: Property acquired or used by the City for right-of-way, subsequently declared excess (i.e., not needed: for any public project or the continuation of operation and maintenance of public facilities, and/or no public use in the foreseeable future). The right-of-way tract area is not slated for utilization of any future utility facilities. The right-of-way tract sale is in the public interest because the area is no longer needed by the public and/or has not been utilized for public uses. A public sanitary sewer line does exist within a portion of the contemplated sale tract; however a sanitary sewer easement shall be reserved by the City to preserve the land rights necessary for that use. This right-of-way sale will not set precedent because the above three standards have been met. OPTIONS 1.Approve the proposed Ordinance. 2.Decline to approve the proposed Ordinance. 3.Table for future consideration. RECOMMENDATION Recommend approval of the Ordinance. PRIOR ACTION/REVIEW (Council, Boards, Commissions) Executive Session, City Council February 5, 2013 FISCAL INFORMATION Sales Price of the subject 0.09 acre tract to be $11,000.00, of which the City is in receipt of those funds, acceptance and deposit thereof pending City Council consideration of the matter. BID INFORMATION Not applicable EXHIBITS 1.Location Map 2.Site Map 3.Ordinance Respectfully submitted, Jimmy D. Coulter Prepared by, Director of Water/Wastewater Water Administration LuAnne Oldham Real Estate Specialist Real Estate and Capital Projects THIRD DOWNTOWN DENTON SITE SYCAMORE SYCAMORE UNION NTS EAGLE WILSHIRE FANNIN LOCATION MAP 2036 W. Hickory St. Subject 0.09 Ac. Tract NTS SITE MAP 2036 W. Hickory St. EXHIBIT 3 AGENDA INFORMATION SHEET AGENDA DATE : March 5, 2013 DEPARTMENT : Airport ACM: Jon Fortune SUBJECT Consider adoption of an ordinance approving and authorizing the concession to Fair 2000, Inc. to sell alcoholic beverages at designated locations during the 2013, 2014 and 2015 Denton Air Fair, Inc. Air Show events, upon certain conditions; and providing an effective date. BACKGROUND The sale of alcoholic beverages at the Denton Air Show requires specific approval from the City Council. Attached is the ordinance that will authorize alcoholic beverage sales on Airport property during the Air Shows. The Air Fair Committee has recommended Fair 2000, Inc. (Fair 2000) to be the exclusive vendor for alcoholic beverages at the Air Shows. Fair 2000 is the business entity associated with the not-for-profit North Texas Fair and Rodeo Association to conduct alcohol and other vendor sales. The alliance with Fair 2000 is a continuation of the successful association which began in 2012 and it is proposed to continue for the next three annual Air Shows. This represents an ongoing alliance between the North Texas Fair and Rodeo Association and Denton Air Fair, Inc. In addition to the alcohol vendor experience which Fair 2000 provides, there are other areas of mutually beneficial cooperation with the North Texas Fair and Rodeo Association. Denton Air Fair Inc. meets throughout each year to plan the annual Denton Air Show, as does the North Texas Fair and Rodeo Association to plan their annual event. Each organization will benefit from opportunities to share resources, promotional activities and event planning experience to enhance their respective community service events. FISCAL INFORMATION All expenses and revenue from conduct of the annual air show at Denton Airport are the responsibility of the Denton Air Fair Committee, a 501(c) 3 non-profit corporation. The alcoholic beverage vendor is one of many food and non-alcoholic beverage vendors at the Air Fair. EXHIBITS 1.Ordinance to approve the alcoholic beverage vendor. Respectfully submitted: Andrea Sumner Airport Operations Coordinator AGENDA INFORMATION SHEET AGENDA DATE: March5, 2013 DEPARTMENT: Parks and Recreation ACM: John Cabrales ________________________________________________________________________ SUBJECT Consider a request for an exception to the Noise Ordinance for the purpose of the DentonRadio on the Square Music Stage sponsored by the Denton Convention and Visitors Bureau (CVB), DentonRadio.com, and the Denton County Office of History and Culture in collaboration with the 35 Denton Festival. The event will be held on the Denton County Courthouse lawn from Thursday, March 7 through Sunday, March 10, from noon to 11 p.m. The exception is specifically requested to increase sound levels from 70 to 75 decibels and for amplified sound on Sunday. Staff recommends approval of request. BACKGROUND The first time event will showcase local Denton musicians playing on the Denton County Courthouse lawn during 35 Denton’s music festival. Live music will be performed by local artists as guests are enjoying the activities around the Downtown Square. PRIOR ACTION/REVIEW This is a first time event. EXHIBITS Letter of Request Respectfully submitted: Emerson Vorel, Director Parks and Recreation Department Prepared by: Janie McLeod Community Events Coordinator February 15, 2013 Mayor Mark Burroughs City Council Members 215 E. McKinney Denton, Texas 76201 Dear Mayor Burroughs and City Council: The Denton Convention & Visitors Bureau, DentonRadio.com; and the Denton County Office of History & Culture are teaming up to showcase local Denton musicians on a small 16’ x 16’ stage on the Denton County Courthouse lawn during the 35 Denton Festival March 7-10, 2013. We are collaborating with the 35 Denton festival organizers, Kyle LaValley and Natalie Davila, to utilize this opportunity when media attention from across the globe is focused on Denton. 35 Denton cannot accommodate a “solely Denton artist line-up” or musical genres beyond those specific to their audience. However, they and we are all in agreement regarding the importance of making Denton’s musical diversity, such a vital element of Denton’s sense of place, available to media and the many visitors who will frequent the Courthouse Square throughout the festival weekend. We see the Courthouse lawn as Denton’s living room and our goal is to turn on the stereo in the background as our guests are passing in and out of the room. We are calling our stage "DentonRadio on the Square." We will have no food, art or craft vendors and expect our attendance will be somewhat sporadic, people coming and going through the square, stopping and listening during a break from 35 Denton, or families enjoying the Square as they do on any weekend year- round. We believe the big crowds will largely remain in the 35 Denton event gates, but with no real history for this stage, it is possible a group may gather on the lawn at times. In accordance with City of Denton rules, we are electing to err on the side of caution and go ahead with this request for a Noise Ordinance variance not to exceed 75 dba between the hours of 12:00 Noon and 11:00 pm on March 7-10, 2013. We feel having the variance in place is the safest course of action should this one-time effort exceed our expectations relative to crowd size. All of our music will be family-friendly and will end by 10:00 p.m. Thank you for your consideration. Sincerely, Kim Phillips Jake Laughlin, CEO Vice President DentonRadio.com 414 Parkway * Denton, Texas 76201 * 940-382-7895 * discoverdenton.com AGENDA INFORMATION SHEET AGENDA DATE: March 5, 2013 DEPARTMENT: Finance ACM: Bryan Langley SUBJECT Consider adoption of an ordinance directing the publication of Notice of Intention to issue $46,770,000 in principal amount of Certificates of Obligation of the City of Denton for Waterworks and Sewer System and Electric System projects; and providing for an effective date. Audit/Finance Committee recommends approval (2-0) BACKGROUND This ordinance provides the Notice of Intention to issue $46,770,000 in principal amount of Certificates of Obligation (COs) for Wastewater and Electric projects, as required by state law. The notice will be published once a week for two consecutive weeks in the Denton Record Chronicle, with the date of the first publication to be at least thirty-one (31) days before the date tentatively set for the passage of the ordinance authorizing the issuance of the bonds. These bonds will provide funding of $5,400,000 for Wastewater and $40,915,000 for Electric project costs. The additional $455,000 is for issuance costs and to allow flexibility in marketing and pricing the bond sale. Staff recommends the sale of $5,400,000 in COs for Wastewater projects, which is a decrease from the $13,500,000 included in the FY 2012-13 Capital Improvements Program (CIP). Below is a listing of recommended CO funded projects for WastewaterFY 2012-13 CIP: 1.Co-Digestion at Reclamation Plant $ 1,950,000 2.Oversize Wastewater Lines $ 200,000 3.Graveyard Lift Station/Force Main $ 1,200,000 4.Regulatory Compliance $ 2,000,000 5.Compost Concrete Improvements $ 25,000 6.Effluent Reuse Line $ 25,000 Total $ 5,400,000 Agenda Information Sheet March 5, 2013 Page 2 Staff recommends the sale of $40,915,000 in COs for Electric projects, which is a slight increase from the $40,000,000 included in the FY 2012-13 CIP. Below is a listing of recommended CO funded projects for ElectricFY 2012-13 CIP, which is broken down between transmission and distribution projects. Transmission Costs of Service (TCOS) recovery through rates charged to other utilities as mandated by the Public Utilities Commission of Texas. 1.Automated Meter Reading $ 665,000 2.Automated Meter Reading $ 2,200,000* 3.Distribution Transformers $ 211,000 4.Distribution Transformers $ 740,000* 5.Feeder Extension & Improvements $ 4,172,000* 6.New Res./Comm. Distribution Lines $ 537,000 7.New Res./Comm. Distribution Lines $ 2,000,000* 8.Communication Equipment $ 424,000* 9.Over to Under Conversions $ 350,000* 10.Power Factor Improvements $ 180,000* 11.Street Lighting $ 140,000 12.Mayhill Overhead Line Rebuild Phase I $ 825,000* 13.Rebuild US 380 Double Circuit $ 477,000 14.Tools & Equipment $ 134,000 Total Distribution Projects $13,055,000 15.Bonnie Brae Magnetic Gates $ 165,000* 16.Audra/Crossroads New East Substation $ 3,898,000 17.Pockrus Substation $ 5,644,000 18.Substation Engineering $10,296,000* 19.Land Acquisition $ 1,650,000* 20.Transmission Lines $ 4,400,000* 21.Kings Row 69 kV Line Reconstruction $ 1,197,000 22.Kings Row Substation Exit Feeder $ 610,000* Total Transmission Projects $27,860,000 Grand Total $40,915,000 Of the $46.8 million CO issuance, $32 million was previously authorized for Electric through a Reimbursement Ordinance. The City sells bonds in accordance with the useful life of the asset that is being acquired. For example, vehicles are typically sold with bonds that will be paid within five years. For the FY 2012-13 proposed debt issuance for Wastewater and Electric: $46,315,000 will be 20 year debt. In addition, the 20 year debt issues will also have a 10 year call feature. Agenda Information Sheet March 5, 2013 Page 3 Concurrently with the sale of the COs for Wastewater and Electric projects, the City anticipates the sale of approximately $21,495,000 of COs for General Government and Solid Waste projects and approximately $16.2 million in General Obligation Refunding and Improvement Bonds to fund the first year ($4 million) of street projects approved by voters in November 2012 and refund existing utility system and general policy requirements. If approved by the City Council, staff will proceed with the publication of the Notice of Intention and will schedule the Bond Ordinance for consideration and adoption on April 16, 2013. At that time, it is th arrangement, staff will be permitted to execute the bond sale within six (6) months of April 16, provided certain interest rate parameters are met. Using this process, staff intends to obtain the most favorable interest rate possible either through a negotiated sale. PRIOR ACTION/REVIEW (Council, Boards or Commissions) On February 26, 2013, the Audit/Finance Committeeunanimously recommended approval to forward the upcoming bond issuance to the City Council for consideration. FISCAL INFORMATION The ordinance is for the authorization to publish the Notice of Intention to sell $46,770,000 of Certificates of Obligation for Wastewater and Electric projects. A notice is only required for the Certificates of Obligation. There is no statutory requirement to post such a notice for the General Obligation Refunding and Improvement Bonds, which will include the first year ($4 million) of street projects approved by voters in November 2012 and the refunding of existing utility system and general obligation debt. EXHIBITS 1.Preliminary Debt Schedule Certificates of Obligation for Wastewater & Electric 2.Ordinance Respectfully submitted: Chuck Springer Director of Finance Prepared by: Antonio Puente, Jr. Assistant Director of Finance Preliminary $46,770,000 City of Denton, Texas Combination Tax & Revenue Certificates of Obligation, Series 2013 Wastewater and Electric Total Issue Sources And Uses Dated 05/01/2013 | Delivered 05/01/2013 Wastewater - Electric - 20 Issue 20 yearyearSummary Sources Of Funds Par Amount of Bonds$5,455,000.00$41,315,000.00$46,770,000.00 Total Sources $5,455,000.00$41,315,000.00$46,770,000.00 Uses Of Funds Total Underwriter's Discount (0.700%)38,185.00289,205.00327,390.00 Costs of Issuance12,343.64110,046.36122,390.00 Deposit to Project Construction Fund5,400,000.0040,915,000.0046,315,000.00 Total Uses $5,455,000.00$41,315,000.00$46,770,000.00 2013 Utility for notice | Issue Summary | 2/25/2013 | 5:14 FirstSouthwest Public Finance Page 1 Preliminary $46,770,000 City of Denton, Texas Combination Tax & Revenue Certificates of Obligation, Series 2013 Wastewater and Electric Debt Service Schedule DatePrincipalCouponInterestTotal P+I 09/30/2013---- 09/30/20141,215,000.003.000%2,148,010.563,363,010.56 09/30/20151,750,000.003.000%1,618,000.003,368,000.00 09/30/20161,800,000.003.000%1,564,750.003,364,750.00 09/30/20171,855,000.003.000%1,509,925.003,364,925.00 09/30/20181,915,000.003.000%1,453,375.003,368,375.00 09/30/20191,970,000.003.000%1,395,100.003,365,100.00 09/30/20202,030,000.003.000%1,335,100.003,365,100.00 09/30/20212,095,000.003.000%1,273,225.003,368,225.00 09/30/20222,155,000.003.000%1,209,475.003,364,475.00 09/30/20232,225,000.003.000%1,143,775.003,368,775.00 09/30/20242,305,000.004.000%1,064,300.003,369,300.00 09/30/20252,400,000.004.000%970,200.003,370,200.00 09/30/20262,495,000.004.000%872,300.003,367,300.00 09/30/20272,600,000.004.000%770,400.003,370,400.00 09/30/20282,705,000.004.000%664,300.003,369,300.00 09/30/20292,815,000.004.000%553,900.003,368,900.00 09/30/20302,925,000.004.000%439,100.003,364,100.00 09/30/20313,045,000.004.000%319,700.003,364,700.00 09/30/20323,170,000.004.000%195,400.003,365,400.00 09/30/20333,300,000.004.000%66,000.003,366,000.00 Total$46,770,000.00-$20,566,335.56$67,336,335.56 Yield Statistics Bond Year Dollars$541,041.33 Average Life11.568 Years Average Coupon3.8012503% Net Interest Cost (NIC)3.8617614% True Interest Cost (TIC)3.8516954% Bond Yield for Arbitrage Purposes3.7733012% All Inclusive Cost (AIC)3.8818369% IRS Form 8038 Net Interest Cost3.8012503% Weighted Average Maturity11.568 Years 2013 Utility for notice | Issue Summary | 2/25/2013 | 5:14 FirstSouthwest Public Finance Page 2 Preliminary $5,455,000 City of Denton, Texas Combination Tax & Revenue Certificates of Obligation, Series 2013 Wastewater - 20 year Debt Service Schedule DatePrincipalCouponInterestTotal P+I 09/30/2013---- 09/30/2014140,000.003.000%250,586.67390,586.67 09/30/2015205,000.003.000%188,775.00393,775.00 09/30/2016210,000.003.000%182,550.00392,550.00 09/30/2017215,000.003.000%176,175.00391,175.00 09/30/2018225,000.003.000%169,575.00394,575.00 09/30/2019230,000.003.000%162,750.00392,750.00 09/30/2020235,000.003.000%155,775.00390,775.00 09/30/2021245,000.003.000%148,575.00393,575.00 09/30/2022250,000.003.000%141,150.00391,150.00 09/30/2023260,000.003.000%133,500.00393,500.00 09/30/2024270,000.004.000%124,200.00394,200.00 09/30/2025280,000.004.000%113,200.00393,200.00 09/30/2026290,000.004.000%101,800.00391,800.00 09/30/2027305,000.004.000%89,900.00394,900.00 09/30/2028315,000.004.000%77,500.00392,500.00 09/30/2029330,000.004.000%64,600.00394,600.00 09/30/2030340,000.004.000%51,200.00391,200.00 09/30/2031355,000.004.000%37,300.00392,300.00 09/30/2032370,000.004.000%22,800.00392,800.00 09/30/2033385,000.004.000%7,700.00392,700.00 Total$5,455,000.00-$2,399,611.67$7,854,611.67 Yield Statistics Bond Year Dollars$63,123.39 Average Life11.572 Years Average Coupon3.8014620% Net Interest Cost (NIC)3.8619547% True Interest Cost (TIC)3.8519081% Bond Yield for Arbitrage Purposes3.7733012% All Inclusive Cost (AIC)3.8820414% IRS Form 8038 Net Interest Cost3.8014620% Weighted Average Maturity11.572 Years 2013 Utility for notice | Wastewater - 20 year | 2/25/2013 FirstSouthwest Public Finance Page 3 Preliminary $41,315,000 City of Denton, Texas Combination Tax & Revenue Certificates of Obligation, Series 2013 Electric - 20 year Debt Service Schedule DatePrincipalCouponInterestTotal P+I 09/30/2013---- 09/30/20141,075,000.003.000%1,897,423.892,972,423.89 09/30/20151,545,000.003.000%1,429,225.002,974,225.00 09/30/20161,590,000.003.000%1,382,200.002,972,200.00 09/30/20171,640,000.003.000%1,333,750.002,973,750.00 09/30/20181,690,000.003.000%1,283,800.002,973,800.00 09/30/20191,740,000.003.000%1,232,350.002,972,350.00 09/30/20201,795,000.003.000%1,179,325.002,974,325.00 09/30/20211,850,000.003.000%1,124,650.002,974,650.00 09/30/20221,905,000.003.000%1,068,325.002,973,325.00 09/30/20231,965,000.003.000%1,010,275.002,975,275.00 09/30/20242,035,000.004.000%940,100.002,975,100.00 09/30/20252,120,000.004.000%857,000.002,977,000.00 09/30/20262,205,000.004.000%770,500.002,975,500.00 09/30/20272,295,000.004.000%680,500.002,975,500.00 09/30/20282,390,000.004.000%586,800.002,976,800.00 09/30/20292,485,000.004.000%489,300.002,974,300.00 09/30/20302,585,000.004.000%387,900.002,972,900.00 09/30/20312,690,000.004.000%282,400.002,972,400.00 09/30/20322,800,000.004.000%172,600.002,972,600.00 09/30/20332,915,000.004.000%58,300.002,973,300.00 Total$41,315,000.00-$18,166,723.89$59,481,723.89 Yield Statistics Bond Year Dollars$477,917.94 Average Life11.568 Years Average Coupon3.8012224% Net Interest Cost (NIC)3.8617359% True Interest Cost (TIC)3.8516673% Bond Yield for Arbitrage Purposes3.7733012% All Inclusive Cost (AIC)3.8818099% IRS Form 8038 Net Interest Cost3.8012224% Weighted Average Maturity11.568 Years 2013 Utility for notice | Electric - 20 year | 2/25/2013 | FirstSouthwest Public Finance Page 4 AGENDA INFORMATION SHEET AGENDA DATE: March 5, 2013 DEPARTMENT: Finance ACM: Bryan Langley SUBJECT Consider adoption of an ordinance directing the publication of Notice of Intention to issue $21,495,000 in principal amount of Certificates of Obligation of the City of Denton for General Government and Solid Waste projects; and providing for an effective date. Audit/Finance Committee recommends approval (2-0). BACKGROUND This ordinance provides the Notice of Intention to issue $21,495,000 in principal amount of Certificates of Obligation (COs) for General Government and Solid Waste projects, as required by state law. The notice will be published once a week for two consecutive weeks in the Denton Record Chronicle, with the date of the first publication to be at least thirty-one (31) days before the date tentatively set for the passage of the ordinance authorizing the issuance of the bonds. These bonds will provide funding of $13,455,000 forGeneral Government and $7,810,000 for Solid Waste project costs. The additional $230,000 is for issuance costs and to allow flexibility in marketing and pricing the bond sale. Staff recommends the sale of $13,455,000 in COs for General Government, which is an increase from the $11,155,000 included in the FY 2012-13 Capital Improvements Program (CIP). The increase is due to the addition of Fire Station Improvements, Hickory Street Railroad Improvements, increased funding for LEED certification design of Animal Care & Adoption Center, and increased funding for the Public Safety Training Facility. Below is a listing of recommended CO funded projects for General FY 2012-13 CIP: 1.Vehicle Replacements/Additions $ 3,000,000* 2.Fire Station Improvements $ 1,000,000 3.Public Safety Training Facility $ 1,500,000 4.Traffic Signals $ 1,100,000 5.Facilities Maintenance Program $ 1,500,000 6.Hickory Street Railroad Improvements $ 600,000 7.Airport Land Acquisitions $ 2,000,000* 8.Animal Care & Adoption Center (Design) $ 200,000* 9.Animal Care & Adoption Center (Construction) $ 2,555,000 Total $13,455,000 *Previously authorized through a Reimbursement Ordinance. Agenda Information Sheet March 5, 2013 Page 2 Staff recommends the sale of $7,810,000 in COs for Solid Waste projects, which is slightly less than the $7,811,000 included in the FY 2012-13 CIP. Below is a listing of recommended CO funded projects for FY 2012-13 CIP: 1.Auto Side Load Truck $ 245,000 2.Auto Side Load Truck $ 245,000 3.Auto Side Load Truck $ 245,000 4.Rear Load Truck $ 220,000 5.Rear Load Truck $ 220,000 6.Front Load Truck $ 260,000 7.Front Load Truck $ 260,000 8.Home Chemical Building Improvements $ 25,000 9.Knuckle Boom Truck $ 145,000 10.Recycling Carts $ 130,000 11.Recycling Commercial Containers $ 100,000 12.Residential Refuse Carts $ 130,000 13.Solid Waste Processing & Recycling Equipment $ 250,000 14.Leachate Recirculation $ 50,000 15.Landfill Security Fence $ 50,000 16.Recycling Facility Upgrades $ 20,000 17.Cell 4AB Excavation $2,275,000 18.Compressed Natural Gas Fueling Facility $ 900,000 19.Landfill Site Improvements $ 50,000 20.Ground Water Wells $ 25,000 21.Landfill Property $ 550,000 22.Site Master Plan/Facility Design $ 400,000 23.Grease and Grit Trap Facility $ 900,000 24.Technology Research & Development $ 40,000 25.SCADA Landfill Anaerobic Digester $ 25,000 26.Landfill Gas (LFG) Line Construction $ 50,000 Total $7,810,000 Approximately $5.2 million in General Government projects of the $21.3 million CO issuance has been previously authorized through Reimbursement Ordinances. The City sells bonds in accordance with the useful life of the asset that is being acquired. For example, vehicles are typically sold with bonds that will be paid within five years. For the FY 2012-13 proposed debt issuance for General Government and Solid Waste: $5,475,000 will be 5 year debt, $4,870,000 will be 10 year debt, and $10,920,000 will be 20 year debt. In addition, the 20 year debt issues will also have a 10 year call feature. Concurrently with the sale of the COs for General Government and Solid Waste projects, the City anticipates the sale of approximately $46,770,000 of COs for Wastewater and Electric projects and approximately $16.2 million in General Obligation Refunding and Improvement Bonds to fund the first year ($4 million) of street projects approved by voters in November 2012 and refund existing utility Agenda Information Sheet March 5, 2013 Page 3 system and general obligation debt. The refunding is contingent upon market conditions and it must meet . If approved by the City Council, staff will proceed with the publication of the Notice of Intention and will schedule the Bond Ordinance for consideration and adoption on April 16, 2013. At that time, it is th arrangement, staff will be permitted to execute the bond sale within six (6) months of April 16, provided certain interest rate parameters are met. Using this process, staff intends to obtain the most favorable interest rate possible either through a negotiated sale. PRIOR ACTION/REVIEW (Council, Boards or Commissions) On February 26, 2013, the Audit/Finance Committeeunanimously recommended approval to forward the upcoming bond issuance to the City Council for consideration. FISCAL INFORMATION The ordinance is for the authorization to publish the Notice of Intention to sell $21,495,000 of Certificates of Obligation for General Government and Solid Waste projects. A notice is only required for the Certificates of Obligation. There is no statutory requirement to post such a notice for the General Obligation Refunding and Improvement Bonds, which will include the first year ($4 million) of street projects approved by voters in November 2012 and the refunding of existing utility system and general obligation debt. EXHIBITS 1.Preliminary Debt Schedule Certificates of Obligation for General Government & Solid Waste 2.Notice of Intent Ordinance Respectfully submitted: Chuck Springer Director of Finance Prepared by: Antonio Puente, Jr. Assistant Director of Finance Preliminary $21,495,000 City of Denton, Texas Combination Tax & Revenue Certificates of Obligation, Series 2013 General Government and Solid Waste Total Issue Sources And Uses Part 1 of 2 Dated 05/01/2013 | Delivered 05/01/2013 General Govt - General Govt - General Govt - Airport - 20 5 year10 year20 yearyear Sources Of Funds Par Amount of Bonds$3,035,000.00$1,515,000.00$7,030,000.00$2,020,000.00 Total Sources $3,035,000.00$1,515,000.00$7,030,000.00$2,020,000.00 Uses Of Funds Total Underwriter's Discount (0.700%)21,245.0010,605.0049,210.0014,140.00 Costs of Issuance13,755.004,395.0025,790.005,860.00 Deposit to Project Construction Fund3,000,000.001,500,000.006,955,000.002,000,000.00 Total Uses $3,035,000.00$1,515,000.00$7,030,000.00$2,020,000.00 2013 general for notice | Issue Summary | 2/25/2013 | 5:06 FirstSouthwest Public Finance Page 1 Preliminary $21,495,000 City of Denton, Texas Combination Tax & Revenue Certificates of Obligation, Series 2013 Total Issue Sources And Uses Part 2 of 2 Dated 05/01/2013 | Delivered 05/01/2013 Solid Waste - Solid Waste - Solid Waste - Issue 5 year10 year20 yearSummary Sources Of Funds Par Amount of Bonds$2,500,000.00$3,405,000.00$1,990,000.00$21,495,000.00 Total Sources $2,500,000.00$3,405,000.00$1,990,000.00$21,495,000.00 Uses Of Funds Total Underwriter's Discount (0.700%)17,500.0023,835.0013,930.00150,465.00 Costs of Issuance7,500.0011,165.0011,070.0075,000.00 Deposit to Project Construction Fund2,475,000.003,370,000.001,965,000.0021,265,000.00 Total Uses $2,500,000.00$3,405,000.00$1,990,000.00$21,495,000.00 2013 general for notice | Issue Summary | 2/25/2013 | 5:06 FirstSouthwest Public Finance Page 2 Preliminary $21,495,000 City of Denton, Texas Combination Tax & Revenue Certificates of Obligation, Series 2013 General Government and Solid Waste Debt Service Schedule DatePrincipalCouponInterestTotal P+I 09/30/2013---- 09/30/20141,680,000.003.000%890,297.772,570,297.77 09/30/20151,945,000.003.000%630,725.002,575,725.00 09/30/20162,000,000.003.000%571,550.002,571,550.00 09/30/20172,060,000.003.000%510,650.002,570,650.00 09/30/20182,120,000.003.000%447,950.002,567,950.00 09/30/2019965,000.003.000%401,675.001,366,675.00 09/30/20201,000,000.003.000%372,200.001,372,200.00 09/30/20211,030,000.003.000%341,750.001,371,750.00 09/30/20221,060,000.003.000%310,400.001,370,400.00 09/30/20231,090,000.003.000%278,150.001,368,150.00 09/30/2024545,000.004.000%250,900.00795,900.00 09/30/2025570,000.004.000%228,600.00798,600.00 09/30/2026590,000.004.000%205,400.00795,400.00 09/30/2027610,000.004.000%181,400.00791,400.00 09/30/2028635,000.004.000%156,500.00791,500.00 09/30/2029665,000.004.000%130,500.00795,500.00 09/30/2030690,000.004.000%103,400.00793,400.00 09/30/2031720,000.004.000%75,200.00795,200.00 09/30/2032745,000.004.000%45,900.00790,900.00 09/30/2033775,000.004.000%15,500.00790,500.00 Total$21,495,000.00-$6,148,647.77$27,643,647.77 Yield Statistics Bond Year Dollars$170,897.17 Average Life7.951 Years Average Coupon3.5978641% Net Interest Cost (NIC)3.6859083% True Interest Cost (TIC)3.6641229% Bond Yield for Arbitrage Purposes3.5561027% All Inclusive Cost (AIC)3.7184482% IRS Form 8038 Net Interest Cost3.5978641% Weighted Average Maturity7.951 Years 2013 general for notice | Issue Summary | 2/25/2013 | 5:06 FirstSouthwest Public Finance Page 3 Preliminary $3,035,000 City of Denton, Texas Combination Tax & Revenue Certificates of Obligation, Series 2013 General Govt - 5 year Debt Service Schedule DatePrincipalCouponInterestTotal P+I 09/30/2013---- 09/30/2014550,000.003.000%109,103.33659,103.33 09/30/2015595,000.003.000%65,625.00660,625.00 09/30/2016610,000.003.000%47,550.00657,550.00 09/30/2017630,000.003.000%28,950.00658,950.00 09/30/2018650,000.003.000%9,750.00659,750.00 Total$3,035,000.00-$260,978.33$3,295,978.33 Yield Statistics Bond Year Dollars$8,699.28 Average Life2.866 Years Average Coupon3.0000000% Net Interest Cost (NIC)3.2442156% True Interest Cost (TIC)3.2565189% Bond Yield for Arbitrage Purposes3.5561027% All Inclusive Cost (AIC)3.3872178% IRS Form 8038 Net Interest Cost3.0000000% Weighted Average Maturity2.866 Years 2013 general for notice | General Govt - 5 year | 2/25/2013 FirstSouthwest Public Finance Page 4 Preliminary $1,515,000 City of Denton, Texas Combination Tax & Revenue Certificates of Obligation, Series 2013 General Govt - 10 year Debt Service Schedule DatePrincipalCouponInterestTotal P+I 09/30/2013---- 09/30/2014120,000.003.000%56,780.00176,780.00 09/30/2015135,000.003.000%39,825.00174,825.00 09/30/2016140,000.003.000%35,700.00175,700.00 09/30/2017145,000.003.000%31,425.00176,425.00 09/30/2018150,000.003.000%27,000.00177,000.00 09/30/2019155,000.003.000%22,425.00177,425.00 09/30/2020160,000.003.000%17,700.00177,700.00 09/30/2021165,000.003.000%12,825.00177,825.00 09/30/2022170,000.003.000%7,800.00177,800.00 09/30/2023175,000.003.000%2,625.00177,625.00 Total$1,515,000.00-$254,105.00$1,769,105.00 Yield Statistics Bond Year Dollars$8,470.17 Average Life5.591 Years Average Coupon3.0000000% Net Interest Cost (NIC)3.1252041% True Interest Cost (TIC)3.1382972% Bond Yield for Arbitrage Purposes3.5561027% All Inclusive Cost (AIC)3.2087488% IRS Form 8038 Net Interest Cost3.0000000% Weighted Average Maturity5.591 Years 2013 general for notice | General Govt - 10 year | 2/25/2013 FirstSouthwest Public Finance Page 5 Preliminary $7,030,000 City of Denton, Texas Combination Tax & Revenue Certificates of Obligation, Series 2013 General Govt - 20 year Debt Service Schedule DatePrincipalCouponInterestTotal P+I 09/30/2013---- 09/30/2014185,000.003.000%322,798.33507,798.33 09/30/2015265,000.003.000%243,075.00508,075.00 09/30/2016270,000.003.000%235,050.00505,050.00 09/30/2017280,000.003.000%226,800.00506,800.00 09/30/2018285,000.003.000%218,325.00503,325.00 09/30/2019295,000.003.000%209,625.00504,625.00 09/30/2020305,000.003.000%200,625.00505,625.00 09/30/2021315,000.003.000%191,325.00506,325.00 09/30/2022325,000.003.000%181,725.00506,725.00 09/30/2023335,000.003.000%171,825.00506,825.00 09/30/2024345,000.004.000%159,900.00504,900.00 09/30/2025360,000.004.000%145,800.00505,800.00 09/30/2026375,000.004.000%131,100.00506,100.00 09/30/2027390,000.004.000%115,800.00505,800.00 09/30/2028405,000.004.000%99,900.00504,900.00 09/30/2029425,000.004.000%83,300.00508,300.00 09/30/2030440,000.004.000%66,000.00506,000.00 09/30/2031460,000.004.000%48,000.00508,000.00 09/30/2032475,000.004.000%29,300.00504,300.00 09/30/2033495,000.004.000%9,900.00504,900.00 Total$7,030,000.00-$3,090,173.33$10,120,173.33 Yield Statistics Bond Year Dollars$81,295.89 Average Life11.564 Years Average Coupon3.8011434% Net Interest Cost (NIC)3.8616754% True Interest Cost (TIC)3.8516073% Bond Yield for Arbitrage Purposes3.5561027% All Inclusive Cost (AIC)3.8909947% IRS Form 8038 Net Interest Cost3.8011434% Weighted Average Maturity11.564 Years 2013 general for notice | General Govt - 20 year | 2/25/2013 FirstSouthwest Public Finance Page 6 Preliminary $2,020,000 City of Denton, Texas Combination Tax & Revenue Certificates of Obligation, Series 2013 Airport - 20 year Debt Service Schedule DatePrincipalCouponInterestTotal P+I 09/30/2013---- 09/30/201455,000.003.000%92,619.44147,619.44 09/30/201575,000.003.000%69,725.00144,725.00 09/30/201680,000.003.000%67,400.00147,400.00 09/30/201780,000.003.000%65,000.00145,000.00 09/30/201885,000.003.000%62,525.00147,525.00 09/30/201985,000.003.000%59,975.00144,975.00 09/30/202090,000.003.000%57,350.00147,350.00 09/30/202190,000.003.000%54,650.00144,650.00 09/30/202295,000.003.000%51,875.00146,875.00 09/30/202395,000.003.000%49,025.00144,025.00 09/30/2024100,000.004.000%45,600.00145,600.00 09/30/2025105,000.004.000%41,500.00146,500.00 09/30/2026110,000.004.000%37,200.00147,200.00 09/30/2027110,000.004.000%32,800.00142,800.00 09/30/2028115,000.004.000%28,300.00143,300.00 09/30/2029120,000.004.000%23,600.00143,600.00 09/30/2030125,000.004.000%18,700.00143,700.00 09/30/2031130,000.004.000%13,600.00143,600.00 09/30/2032135,000.004.000%8,300.00143,300.00 09/30/2033140,000.004.000%2,800.00142,800.00 Total$2,020,000.00-$882,544.44$2,902,544.44 Yield Statistics Bond Year Dollars$23,233.56 Average Life11.502 Years Average Coupon3.7985768% Net Interest Cost (NIC)3.8594370% True Interest Cost (TIC)3.8491797% Bond Yield for Arbitrage Purposes3.5561027% All Inclusive Cost (AIC)3.8887406% IRS Form 8038 Net Interest Cost3.7985768% Weighted Average Maturity11.502 Years 2013 general for notice | Airport - 20 year | 2/25/2013 | FirstSouthwest Public Finance Page 7 Preliminary $2,500,000 City of Denton, Texas Combination Tax & Revenue Certificates of Obligation, Series 2013 Solid Waste - 5 year Debt Service Schedule DatePrincipalCouponInterestTotal P+I 09/30/2013---- 09/30/2014450,000.003.000%89,916.67539,916.67 09/30/2015490,000.003.000%54,150.00544,150.00 09/30/2016505,000.003.000%39,225.00544,225.00 09/30/2017520,000.003.000%23,850.00543,850.00 09/30/2018535,000.003.000%8,025.00543,025.00 Total$2,500,000.00-$215,166.67$2,715,166.67 Yield Statistics Bond Year Dollars$7,172.22 Average Life2.869 Years Average Coupon3.0000000% Net Interest Cost (NIC)3.2439969% True Interest Cost (TIC)3.2562886% Bond Yield for Arbitrage Purposes3.5561027% All Inclusive Cost (AIC)3.3868691% IRS Form 8038 Net Interest Cost3.0000000% Weighted Average Maturity2.869 Years 2013 general for notice | Solid Waste - 5 year | 2/25/2013 FirstSouthwest Public Finance Page 8 Preliminary $3,405,000 City of Denton, Texas Combination Tax & Revenue Certificates of Obligation, Series 2013 Solid Waste - 10 year Debt Service Schedule DatePrincipalCouponInterestTotal P+I 09/30/2013---- 09/30/2014270,000.003.000%127,610.00397,610.00 09/30/2015310,000.003.000%89,400.00399,400.00 09/30/2016320,000.003.000%79,950.00399,950.00 09/30/2017325,000.003.000%70,275.00395,275.00 09/30/2018335,000.003.000%60,375.00395,375.00 09/30/2019345,000.003.000%50,175.00395,175.00 09/30/2020360,000.003.000%39,600.00399,600.00 09/30/2021370,000.003.000%28,650.00398,650.00 09/30/2022380,000.003.000%17,400.00397,400.00 09/30/2023390,000.003.000%5,850.00395,850.00 Total$3,405,000.00-$569,285.00$3,974,285.00 Yield Statistics Bond Year Dollars$18,976.17 Average Life5.573 Years Average Coupon3.0000000% Net Interest Cost (NIC)3.1256049% True Interest Cost (TIC)3.1387197% Bond Yield for Arbitrage Purposes3.5561027% All Inclusive Cost (AIC)3.2093874% IRS Form 8038 Net Interest Cost3.0000000% Weighted Average Maturity5.573 Years 2013 general for notice | Solid Waste - 10 year | 2/25/2013 FirstSouthwest Public Finance Page 9 Preliminary $1,990,000 City of Denton, Texas Combination Tax & Revenue Certificates of Obligation, Series 2013 Solid Waste - 20 year Debt Service Schedule DatePrincipalCouponInterestTotal P+I 09/30/2013---- 09/30/201450,000.003.000%91,470.00141,470.00 09/30/201575,000.003.000%68,925.00143,925.00 09/30/201675,000.003.000%66,675.00141,675.00 09/30/201780,000.003.000%64,350.00144,350.00 09/30/201880,000.003.000%61,950.00141,950.00 09/30/201985,000.003.000%59,475.00144,475.00 09/30/202085,000.003.000%56,925.00141,925.00 09/30/202190,000.003.000%54,300.00144,300.00 09/30/202290,000.003.000%51,600.00141,600.00 09/30/202395,000.003.000%48,825.00143,825.00 09/30/2024100,000.004.000%45,400.00145,400.00 09/30/2025105,000.004.000%41,300.00146,300.00 09/30/2026105,000.004.000%37,100.00142,100.00 09/30/2027110,000.004.000%32,800.00142,800.00 09/30/2028115,000.004.000%28,300.00143,300.00 09/30/2029120,000.004.000%23,600.00143,600.00 09/30/2030125,000.004.000%18,700.00143,700.00 09/30/2031130,000.004.000%13,600.00143,600.00 09/30/2032135,000.004.000%8,300.00143,300.00 09/30/2033140,000.004.000%2,800.00142,800.00 Total$1,990,000.00-$876,395.00$2,866,395.00 Yield Statistics Bond Year Dollars$23,049.89 Average Life11.583 Years Average Coupon3.8021658% Net Interest Cost (NIC)3.8626000% True Interest Cost (TIC)3.8526370% Bond Yield for Arbitrage Purposes3.5561027% All Inclusive Cost (AIC)3.8919644% IRS Form 8038 Net Interest Cost3.8021658% Weighted Average Maturity11.583 Years 2013 general for notice | Solid Waste - 20 year | 2/25/2013 FirstSouthwest Public Finance Page 10 AGENDA INFORMATION SHEET AGENDA DATE: March 5, 2013 DEPARTMENT: Planning and Development ACM: John Cabrales SUBJECT: Consider approval of a resolution creating an Ad-hoc Citizen Advisory Committee to advise the City Council on the development of: goals; strategies; objectives; and growth scenarios for the Denton Plan Update and the composition of such a citizen committee; and providing an effective date. BACKGROUND On Aug. 18, 2012, City Council directed staff to establish a Citizens Advisory Committee (CAC) to help facilitate the update to the Denton Plan. The membership of the CAC will be broad-based and represent the diverse constituencies within the community. The CAC will be comprised of up to 33 members and represent the following interest groups: Denton Plan Citizens Advisory Committee Composition Interest GroupRepresentativesInterest GroupRepresentatives Boards and Commissions8Denton County1 Denton Plan3Denton Downtown1 Development 1Extraterritorial Jurisdiction3 Community Chamber of Commerce1Bicycle Pedestrian Interest1 Neighborhood5Large landowner1 Associations Environmental Interests2Business Interest (Small)1 Institutional Uses3Business Interest (Large)1 Denton County 1 Transportation Authority Total Possible Representatives33 Role of the Citizen Advisory Committee The expressed role of the CAC will be to assume the following responsibilities: • Act in an advisory role to Council • Represent broad community interests • Model community consensus and encourage others to participate • Promote citizen ownership / ensure “buy-in” • Guide development of Vision Statement, Alternative Scenarios, and Strategic Directions Agenda Information Sheet March 5, 2013 Page 2 • Champion the Comprehensive Plan During the Denton Plan update process, there will be considerable input received from the public which will be reviewed and synthesized into objective goals for City Council’s consideration. The CAC will receive this input and offer their recommendations on which goals should move forward and be included in the update to the Denton Plan. Composition of the CAC The committee should broadly represent the diverse constituencies within the community and consist of a membership up to 33 members. It was recommended that the members of the CAC be a resident, business, or land owner of the City of Denton or within the City’s Extraterritorial Jurisdiction. Once formed, the CAC will be provided clearly defined responsibilities and consent to a Chairperson and Vice Chairperson to make decisions and move the process forward. The CAC will also be briefed on the Denton Plan, its importance, and how it has and will continue to shape land-use decision making in the City. It is important that members understand the “30,000- foot” perspective of the comprehensive plan. The structure of the CAC will consist of eight (8) members from the existing membership of the following City Council appointed Board or Commission to utilize their knowledge and experience, who would serve for the duration of the update process: 1.Airport Board 2.Community Development Advisory Committee 3.Denton Housing Authority Board 4.Historic Landmark Commission 5.Park Board 6.Planning and Zoning Commission 7.Public Utilities Board 8.Traffic Safety Commission The job description includes attending 2-3 hour monthly or bi-monthly meetings, as well as reviewing extensive technical reports and analyses prepared by the consultant team, and assisting as facilitators at community forums and other outreach activities. It is the experience of WRT, consistent with the comprehensive planning best practices nationally, that the best way to ensure a successfully adopted and implemented comprehensive plan is for citizens to take ownership of the plan and the planning process. This gives credibility to the planning process and to the final plan document that it represents the best interests of all citizens. This CAC will provide consensus-based direction at key decision points to ensure that City Council remains current on the input being received, (adoption of a vision statement, selection of a preferred growth scenario, and determination of action priorities) and staff will present a quarterly update to City Council so the staff can change course as City Council may direct. Once the Denton Plan has been adopted it is advisable that the Ad-hoc Citizen Advisory Committee to the Denton Plan update shall be dissolved. AgendaIInformation Sheet March 5,, 2013 Page 3 RECOMMMENDATIION The Plannning and Deevelopment Departmentt recommendds approval of the resoluution creatinng the Citizens Advisory Coommittee forr the Comprrehensive Plaan. EXHIBIITS 1.Resolution RRespectfully Submitted bby: JJohn Cabralees, AAssistant Citty Manager Preparedd by: Brian Loockley, AICPP Director,, Planning annd Developmment Exhibit1 AGENDA INFORMATION SHEET AGENDA DATE: March 5, 2013 DEPARTMENT: City Secretary’s Office CM: Bryan Langley, AssistantCity Manager SUBJECT Consider nominations/appointments to the City’s boards, commissions and/or committees: 1) Zoning Board of Adjustment BACKGROUND Millard Heath has resigned from the Zoning Board of Adjustment. In the case of a vacancy on this board, the First Alternate moves into the regular position, the Second and Third Alternates move up an alternate position, creating a vacancy in the Third Alternate position. The vacancy from the regular position is a nomination for Council Member Roden who has indicated that he would like to nominate Marshall Surratt. Mr. Surratt has completed his application and has met all of the requirements for a nomination. Council can vote on the proposed nomination at this meeting. If you require any further information, please let me know. Respectfully submitted: Jennifer Walters City Secretary AGENDA INFORMATION SHEET AGENDA DATE: February 28, 2013 DEPARTMENT: Planning and Development ACM: John Cabrales SUBJECT: Consider nominations/appointments to the City’s boards, commissions and/or committees: 2) Citizens Advisory Committee for the Comprehensive Plan BACKGROUND On Aug. 18, 2012 City Council directed staff to establish a Citizens Advisory Committee (CAC) to help facilitate the update to the Denton Plan. The membership of the CAC will be broad-based and represent the diverse constituencies within the community. The CAC will be comprised of up to 33 members and represent the following interest groups: Denton Plan Citizens Advisory Committee Composition Interest GroupRepresentativesInterest GroupRepresentatives Boards and Commissions8Denton County1 Denton Plan3Denton Downtown1 Development 1Extraterritorial Jurisdiction3 Community Chamber of Commerce1Bicycle Pedestrian Interest1 Neighborhood5Large landowner1 Associations Environmental Interests2Business Interest (Small)1 Institutional Uses3Business Interest (Large)1 Denton County 1 Transportation Authority Total Possible Representatives33 Attached for your review and consideration are the nominations to serve on the CAC. The nominees represent a cross section of the community and are prepared to serve. Staff has received significant interest from representatives of the various interest groups and has identified individuals to serve on the CAC however, due to the commitment to serve on this committee for the duration of the project, staff has not received confirmation from one (1) potential area of interest (Business Interest (Large). In lieu of an appointment being named, staff requests that this position be confirmed to allow staff to move forward but continue to reach out to prospective representatives. Staff will update Council on any additional recommendations once received. AgendaIInformation Sheet March 5,, 2013 Page 2 EXHIBIITS 1.Dentoon Plan Upddate Ad-Hoc Citizen Advvisory Commmittee Nomiinees RRespectfully Submitted bby: JJohn Cabralees, AAssistant Citty Manager Preparedd by: Brian Loockley, AICPP Director,, Planning annd Developmment Exhibit 1 Denton Plan Update Ad-Hoc Citizens Advisory Committee Recommended Appointments for City Council Consideration Boards and CommissionsInstitutional Uses 1. Bob Eames – Airport Board 1. Paul Andress – Denton ISD 2. Gerard Hudspeth – Comm. Dev. Advisory 2. Andrew Harris - UNT Comm. 3. Harold Johnson – TWU 3. Bill Giese – Denton Housing Authority Board 4. Michelle L. Tangora - Historic Landmark Comm. Denton County Transportation Authority 5. Russ Stukel – Park Board 6. Jean Schaaake – Planning and Zoning Comm. 1. Dee Leggett – V.P. Program Development, 7. Dick Smith – Public Utilities Board DCTA; and alternate Cheri Soileau,Senior Transit 8. Wally Campbell – Traffic Safety Commission Planner, DCTA Denton PlanDenton County 1. Virgil Strange 1. Micheal Tubiolo – Denton County Construction 2. Pati Hayworth Manager 3. Alan Nelson Denton Downtown Development Community 1. Marty Rivers - V.P. First State Bank 1. Lee Ramsey – Owner, Links Construction, LLC Extraterritorial Jurisdiction Chamber of Commerce 1. Brandon Martino –Investor, The Martino Group 1. Greg Johnson – V.P. Verus Real Estate 2. Michael Seman 3. Larry Parker, Pres. Denton Mainstreet Assoc. Neighborhood AssociationsBicycle Pedestrian Interest 1. Emily Rozell – Represents Dist. 1 1. Darren Smitherman – Bicycle/Pedestrian Interest 2. Tara Mills – Represents Dist. 2 Large Landowner 3. Jan Johnson – Represents Dist. 3 4. Jason Boder – Represents Dist. 4 5. Patrice Lyke – Represents At-Large 1. Don Frazier – Owner, Frazier Commercial Real Estate Services Environmental Interest Business Interest (Small) 1. Adam Briggle – Assistant Professor UNT 2. Dr. Yong Tao, Dept. Chair UNT Mechanical & 1. Alex Payne – Owner/Broker Axis Realty Group Energy Engineering Business Interest (Large) (1) 1.TBD- This selection reserves this position AGENDA INFORMATION SHEET AGENDA DATE: March 5, 2013 DEPARTMENT: Planning and Development ACM: John Cabrales SUBJECTMunicipal Annexation Plan – First Reading of the Annexation Ordinance – Hold the first of two (2) readings to consider the adoption of an ordinance annexing an area of land to the City of Denton, Texas, generally identified as DH-12 of approximately 1,154 acres (less those parcels identified in Exhibit “C”) located south of E. University Drive, east of N. Mayhill Road, north and south of Blagg Road, north and south of Mills Road, and east and west of S. Trinity Road, and more specifically identified in Exhibit “A” attached hereto, which area is adjacent to and abuts the existing city limits of the City of Denton, Texas, and which contains areas of land which are to be annexed pursuant to the City’s 3-Year Annexation Plan; excluding properties within DH-12 subject to non-annexation agreements for agricultural, wildlife management or timberland use from the annexation; providing for correction of the City map to include this annexed area; providing a savings clause; and providing an effective date. (First of two readings). BACKGROUND In 2009, via several City Council Work Sessions, staff recommended the annexation of eighteen (18) areas totaling approximately 9,035 acres of land within Division 1 of the City of Denton’s Extra- Territorial Jurisdiction (ETJ). Of the 18 areas identified, fifteen (15) areas were exempted from the requirement of the 3-Year Annexation Plan and were annexed on May 4, 2010, save and except those properties that qualified for and returned Non-Annexation Agreements (NAA) due to them being appraised for ad valorem tax purposes as land for agricultural use, timber land or wildlife management. Owners of these qualified properties were offered, and most accepted a Five-Year NAA. The aforementioned NAAs will expire on February 9, 2015, unless extended by mutual agreement. These NAAs are governed under Section 212.172 of the Tx. LGC. Three (3) of the aforementioned areas are not exempt from the 3-Year Annexation Plan requirement under Section 43.052 of the Texas Local Government Code (Tx. LGC) because of the number of residential structures. These areas are identified as DH-7, DH-9 and DH-12. On April 6, 2010, the Denton City Council adopted an Annexation Ordinance to initiate the annexation of these 3 areas. On June 30, 2010, in accordance with Tx.LGC 43.052, staff sent Notice of Intent (NOI) to all property owners, public/private entities, and railroad companies within the proposed annexation areas informing them of the City’s intent to annex the areas. The NOI was also posted on the City’s website. Agenda Information Sheet March 5, 2013 Page 2 On November 24, 2010, in accordance with Tx.LGC 43.053.g and Tx.LGC 43.056j, staff completed an Inventory of Services and Facilities (ISF). Subsequent to the completed ISF, staff posted the ISF on the City’s website. On January 14, 2011, in accordance with Tx.LGC 43.0561.c, staff sent Notices to affected property owners of the first Public Hearing, which was held on February 1, 2011. Notices of the first Public Hearing were also posted on the City’s website. On January 26, 2011, in accordance with Tx. LGC 43.0561c, staff sent Notices to affected property owners of the second Public Hearing, which was held on February 15, 2011. Notices of the second Public Hearing were also posted on the City’s website. Although not required, a third Public Hearing was held on February 17, 2011. Preliminary service plans were also explained at each of the three (3) public hearings and were made available for public inspection on the City’s website. On July 12, 2011; in accordance with Tx.LGC, 43.0562, negotiations for the provision of services began with City staff and committee representatives selected by the Commissioner’s Court of Denton County to negotiate for the provision of services for DH-7. Negotiations ended on July 26, 2011, with an agreed upon service plan. Negotiations for DH-9 began on July 6, 2011 and ended on August 15, 2011, and ended with an agreed upon service plan. On August 16, 2011, in accordance with Tx.LGC 43.056, final service plans were adopted via ordinance for DH-7 and DH-9 and were made available on the City’s website for public inspection. Negotiations for DH-12 began on July 7, 2011, and ended on October 13, 2011, without an agreed upon service plan. Instead, the DH-12 Committee representatives requested arbitration pursuant to Tx.LGC, 43.0564. The arbitration hearings were held on October 17 and October 18, 2012, with the arbitrator ruling in favor of the City on October 30, 2012. Despite the inability to agree to a service plan with DH-12, the City Council adopted a service plan on August 16, 2011. Subsequent modifications were proposed to the service plan for DH- 12 in anticipation that the City and DH-12 Committee representatives could continue to negotiate and possibly agree on the terms of a service plan. However, those negotiations ended October 13, 2011 because the parties could not agree upon the terms of the service plan, and the committee members requested arbitration. Please see Exhibits 4, 8 and 12 for the adopted service plans for each area. In accordance with TxLGC, 43.035, on December 18, 2012, ordinances providing for the acceptance of eligible non- annexation agreements (NAAs) for agricultural, wildlife management or timberland use properties within each area were adopted by the City Council. The NAAs for DH-7, DH-9 and DH-12 will expire on August 1, 2020, unless extended by mutual agreement. The Texas Local Government Code requires one (1) reading of the annexation ordinance. However, Section 1.03 of the City’s Charter requires two (2) readings of the annexation ordinance. Agenda Information Sheet March 5, 2013 Page 3 Each provision above is explained in greater detail below. ANNEXATION PROCEDURE UNDER TEXAS LOCAL GOVERNMENT CODE Tx.LGC §43.052 establishes the standards by which municipalities must abide with regards to annexation of areas which are not exempted from being placed in a 3-Year Plan. The following is a description of the steps that must be followed during the annexation procedure. Adoption of an Annexation Plan: Per Tx.LGC §43.052, a home-rule municipality such as the City of Denton (the City) must adopt an Annexation Plan. The Annexation Plan must identify all areas proposed for annexation and rd annexation of the area may not occur prior to the 3 anniversary of the date the plan is adopted or amended. Id. at §43.052(c). The "three-year waiting period" is a misnomer, because the City must begin notice, hearing and negotiation procedures almost immediately after placing an area in the Annexation Plan. st The annexation of the areas identified in the Annexation Plan must be completed before the 31 rd day after the third (3) anniversary of the date the area was included in the annexation plan. If the annexation is not completed within the prescribed period, the City may not annex the areas th proposed for annexation before the fifth (5) anniversary of the last day for completing the annexation. Written Notice and Internet Posting Requirement : Written Notice Requirement: th Prior to the 90 day after the date the City adopts or amends the Annexation Plan, the City shall give written notice to (1) each property owner in the affected area, as indicated by the appraisal records furnished by the appraisal district for each county in which the affected area is located: (2) each public entity, as defined by Tx.LGC §43.053, or private entity that provides services in the area proposed for annexation; and (3) each railroad company that serves the municipality and is on the municipality's tax roll if the company's right-of-way is in the area proposed for annexation. The notice shall state that the area has been included in or removed from the municipality's annexation plan. A "public entity" includes a municipality, county, fire protection service provider, including a volunteer fire department, emergency medical services provider, including a volunteer emergency medical services provider, or a special district, as that term is defined by Tx.LGC §43.052.Id. at Tx.LGC §43.053(a). The City must also provide the written notice to all school districts located in an area to be annexed within the period prescribed for publishing of the first public hearing. The notice must include any financial impact on the district that may result from the annexation and the City's proposal to limit the effects of that financial impact. (Id. at Tx.LGC§43.905) Agenda Information Sheet March 5, 2013 Page 4 Internet Posting Requirement: In addition to the above written notice requirement, since the City has an internet website, the City is required to: (1) post and maintain the posting of the Annexation Plan on the City’s Internet website; (2) post and maintain the posting of any amendments to include all areas in the Annexation Plan until the date the areas are annexed; and (3) post and maintain the posting of any amendments to remove any areas from the Annexation Plan until the date the City may again include the area in the Annexation Plan. Inventory of Services and Facilities - Tx.LGC § 43.053: Prepare an Inventory of Services and Facilities: Per Tx.LGC §43.053, the City of Denton must compile a comprehensive Inventory of Services and Facilities (ISF) provided by public and private entities, directly or by contract, in each area proposed for annexation, after adopting or amending the Annexation Plan. The ISF must include all services and facilities the City is required to provide or maintain following the annexation. th This ISF must be completed, and made available for public inspection, on or before the 60 day after the date the City receives the required information from service providers in the area. Id. at Tx.LGC §43.053(g). To accomplish this task, the City is required to request, in the notice required under Tx.LGC § 43.05(1), the information necessary to complete the inventory from all public and private providers. Additionally, the public and private providers are required to provide the information requested by the City within 90 days of receipt of the request; however, the service provider and the City may agree to extend the period for providing the information. Should a provider fail to provide the necessary information within the 90 day period, the City is not required to include the information in the inventory. Id. at Tx.LGC §43.053(c). The City may monitor the services provided and verify the information provided. Id. at Tx.LGC §43.053(h). Information required to be Included in the Inventory of Services: The information required in the ISF shall be based on the services and facilities provided during the year preceding the date the City adopts the Annexation Plan or amended the Annexation Plan to include additional areas. Per Tx.LGC 43.053(e), the information required to be provided by service providers, and included in the ISF must include the type of service provided, the method of service delivery, and the following information: (e)For utility facilities, roads, drainage structures and other infrastructure provided or maintained by public or private entities, the inventory must include: (1)an engineer's report that describes the physical condition of all infrastructure elements in the area; and Agenda Information Sheet March 5, 2013 Page 5 (2)a summary of capital, operational and maintenance expenditures for that infrastructure. (f)For police, fire and emergency medical services provided by public or private entities, the inventory must include: (1)the average dispatch and delivery time; (2)a schedule of equipment including vehicles; (3)a staffing schedule that discloses the certification and training levels of personnel; and (4)a summary of operating and capital expenditures. Tx.LGC § 43.053(c),(e) and (f). Prepare a Service Plan: Tx.LGC § 43.056 sets forth the requirements relative to scheduling for the provision of municipal services. The City must complete a Service Plan for the areas included in the stth Annexation Plan before the first (1) day of the 10 month after the month in which the ISF is completed. Id. at §43.056(a).Tx.LGC §43.056(c) defines "full municipal services" as "services provided by the annexing municipality within its full-purpose boundaries, including water and wastewater services and excluding gas or electrical service." Immediate Services: The City is required to provide the following services on the effective date of the annexation: (1)police protection; (2)fire protection; (3)emergency medical services; (4)solid waste collection, except as provided by subsection (o). Subsection (o) provides that a municipality is not required to provide collection service to a person who continues to use the collection services of a privately owned collection service; (5)operation and maintenance of water and wastewater facilities in the annexed area that are not within the service area of another water or wastewater utility; (6)operation and maintenance of roads and streets, including road and street lighting; (7)operation and maintenance of parks; and (8)operation and maintenance of any other publicly owned facility, building or service. Level of Services: The Service Plan may not provide for services in the annexed area that would reduce the level of fire, police and emergency medical services within the City. Id. at Tx.LGC § 43.056(t)(3). Second, the service plan must provide the area with a level of services comparable to or superior to the level of services available in other parts of the City with land uses and population densities Agenda Information Sheet March 5, 2013 Page 6 similar to those reasonably contemplated or projected in the area; however, if the area had a level of services equal to the services provided within the corporate boundaries of the City the Service Plan must maintain that same level of services. Finally, if the annexed area had a level of services for maintaining the infrastructure of the area superior to the level of services provided within the City, the Service Plan must maintain the infrastructure of the annexed area at a level of services that is equal or superior to the level of services previously enjoyed in the annexed area.Id. at Tx.LGC § 43.056(g). Timing of Extending Utilities: Tx.LGC §43.056 does not require that the City provide a "uniform level of full municipal services" to each area of the municipality if different characteristics of topography, land use and population density constitute a sufficient basis for providing different levels of service. Id. at §43.056(m). The analogous subsection in the prior law was the basis of a Texas Attorney General's Opinion, which stated that differences in the levels of services provided in annexed areas and existing areas of the City must be based on differences in topography, land use, and population density. Please see Exhibit 5. It is apparent that a City is not required to extend its services to a newly annexed territory prior to the extension of services to like areas within the City; however, to the extent that services in the annexed area are equal to or superior to those provided in the City boundaries (Id. at §43.056(g)) applies and the City must maintain that level of services. Length of Validity of Service Plan: A Service Plan is effective for ten (10) years. A person residing or owning land in an annexed area in a municipality with a population of less than 1.6 million such as the City of Denton, may nd enforce the Service Plan by applying for a writ of mandamus no later than the second (2) anniversary of the date the person knew or should have known the municipality was not complying with the Service Plan. Upon application for a writ of mandamus, the City has the burden of proving the services have been provided in accordance with the Service Plan. Id. at Tx.LGC §43.056(1). Negotiations for Services: After conducting the public hearings required by Section 43.0561, the City and the property owners of the area proposed for annexation shall negotiate for the provision of services to the area after annexation or for the provision of services to the area in lieu of annexation. For purposes of these negotiations, the Commissioner’s Court of Denton County shall select five (5) representatives to negotiate with the City. Id. at Tx.LGC §43.0562(a)(1) & (b). Arbitration: Per Tx.LGC §43.0564, if the City and the representatives of the area proposed for annexation cannot reach an agreement for the provision of services, either party by majority decision of the party's representatives may request the appointment of an arbitrator to resolve the service plan th issues in dispute. The request must be made in writing to the other party before the 60 day after Agenda Information Sheet March 5, 2013 Page 7 the date the service plan is completed. The municipality may not annex the area during the pendency of the arbitration proceeding or an appeal from the arbitrator's decision. th If the parties cannot agree on the appointment of an arbitrator before the 11 business day after the date arbitration is requested, the Mayor of the City of Denton shall immediately request a list of seven (7) neutral arbitrators from the American Arbitration Association or the Federal Mediation and Conciliation Service. If the parties cannot agree on the appointment of an th arbitrator from this list before the 11 business day after the date the list is provided to the parties, each party or the party's designee may alternately strike a name from the list. The remaining person on the list shall be appointed as the arbitrator. th The arbitrator shall set a hearing to be held not later than the 10 day after the date he or she is appointed, and shall notify the parties to the arbitration in writing of the time and place of the th hearing not later than the 8 day before the date of the hearing. The authority of the arbitrator is limited to issuing a decision relating only to the service plan issues in dispute. The arbitrator may: (1) receive in evidence any documentary evidence or other information the arbitrator considers relevant; (2) administer oaths; and (3) issue subpoenas to require: 1.the attendance and testimony of witnesses; and 2.the production of books, records, and other evidence relevant to an issue presented to the arbitrator for determination. Unless the parties to the dispute agree otherwise, the arbitrator shall complete the hearing within two (2) consecutive days. The arbitrator shall permit each party one (1) day to present evidence and other information. The arbitrator, for good cause shown, may schedule an additional hearing to be held not later than the seventh day after the date of the first hearing. Unless otherwise agreed to by the parties, the arbitrator must issue a decision in writing and deliver a copy of the th decision to the parties not later than the 14 day after the date of the final hearing. If the City does not agree with the terms of the arbitrator's decision, the City may not annex the th area proposed for annexation before the fifth (5) anniversary of the date of the arbitrator's decision. Except as provided by the Tx.LGC, the City shall pay the cost of arbitration. If the arbitrator finds that the request for arbitration submitted by the representatives of the area proposed for annexation was groundless or requested in bad faith or for the purposes of harassment, the arbitrator may require the area proposed for annexation to pay all or part of the cost of arbitration. Annexation of Area Qualified for Agricultural Use: Per Tx.LGC §43.035, a municipality is prohibited from annexing land that is appraised for ad valorem tax purposes as land for agricultural use under Chapter 23 of the Texas Tax Code unless the municipality offers to make a fifteen (15) year development agreement with the landowner under Tx.LGC §212.172 of the Texas Local Government Code and the landowner refuses. The proffered development agreement may not exceed forty-five (45) years, and must guarantee the Agenda Information Sheet March 5, 2013 Page 8 continuation of the ETJ status of the qualifying area and authorize the enforcement of all regulations and planning authority of the municipality that do not interfere with the use of the area for agriculture. Id. at §43.035(b). The development agreement restricting the municipality's right to annex all or part of the property is void if the landowner files any type of subdivision plat or related development document for the area regardless of how the area is appraised for ad valorem tax purposes, and that such a development agreement is not a permit under the Vested Rights Act. Id. at §43.035(d) and (3). PRIOR ACTION/REVIEW 1. October 6, 2009 Planning and Zoning Commission Meeting 2. February 1, 2011 City Council Public Hearing 3. February 15, 2011 City Council Public Hearing 4. February 17, 2011 City Council Public Hearing OPTIONS 1. Approve as submitted. 2. Approve with conditions. 3. Deny. 4. Postpone consideration. 5. Table Item. RECOMMENDATION The Planning and Zoning Commission recommends APPROVAL of the annexation of areas identified as DH-7, DH-9, and DH-12, excepting those parcels subject to a Non-Annexation Agreement. The Development Review Committee recommends APPROVAL of the annexation of areas identified as DH-7, DH-9 and DH-12, excepting those parcels subject to a Non-Annexation Agreement. EXHIBITS 1. 3-Year Annexation Plan Ordinance 2. Comprehensive Location Map of Annexation Areas; DH-7, DH-9 & DH-12 3. Map of Annexation Area – DH-12 4. Ordinance Adopting Service Plan – DH-12 5. Ordinance Adopting Non-Annexation Agreements – DH-12 6. Annexation Ordinance- DH-12 7. 3-Year Annexation Schedule Agenda Information Sheet March 5, 2013 Page 9 Respectfully submitted: Brian Lockley, AICP, CPM Planning and Development Director Prepared by: Johnna Matthews Senior Planner Exhibit1 3-YearAnnexationPlanOrdinance (DH-7, DH-9 and DH-12) Exhibit5 OrdinanceAdoptingNon-AnnexationAgreementsDH-12 Exhibit 6 Annexation Ordinance DH-12 ActionActionTimelineActionDateStatus 1 AdoptAnnexationPlanandpost4/6/2010Completed planonwebsite(Tx.LGC43.052) th 2 NoticeofIntenttoallpropertyPriortothe90dayafter6/30/2010Completed owners,public/privateentities,theCCadoptstheplan railroadcompaniesandposton website(Tx.LGC43.052.f) 3 RequestInventoryofServicesShallberequestedatthe6/30/2010Completed andFacilitiesprovidedbytimeoftheNoticeofIntent public/privateentities(Tx.LGC 43.053c) 4 Receiveinformationprovided90daysafterrequestis9/27/2010Completed bypublicandprivateservicemade providers(Tx.LGC43.053.c) th 5 CompleteInventoryofServicesOnorbeforethe60day11/24/2010Completed andFacilitiesandmakeaftertheinformationis availableforpublicinspectionreceived (Tx.LGC43.053.gandTx.LGC 43.056j) stth 6 Noticeof1PublicHearingOnorafterthe20day,but1/14/2011Completed th (Tx.LGC43.0561.c)beforethe10daybefore thedateofthehearing ndth 7 Noticeof2PublicHearingOnorafterthe20day,but1/26/2011Completed th (Tx.LGC43.0561.c)beforethe10daybefore thedateofthehearing 8 ProposedServicePlanmustbePriortopublichearings1/25/2011Completed madeavailableforpublic inspectionandexplainedatthe publichearings(Tx.LGC 43.056.j) stth 9 1PublicHearing(Tx.LGCNotlaterthanthe90day2/1/2011Completed 43.0561.a&Tx.LGC43.0561.c)aftertheInventoryismade availabletothepublic ndth 10 2PublicHearing(Tx.LGCNotlaterthanthe90day2/15/2011Completed 43.0561.a&Tx.LGC43.0561.c)aftertheInventoryismade availabletothepublic. Mustalsoconsiderthat publichearingsmusttake th placeonorbeforethe20 th day,butafterthe10day afterthedateofthenotice ofpublichearingin accordancewith43.0561.C. Therefore,bothhearings musttakeplaceby2/15/20, whichis20daysafter 1/26/2011publichearing noticedate. th 11 Noticeof3rdPublicHearingOnorafterthe20day,but2/4/2011Completed th (Tx.LGC43.0561.c)beforethe10daybefore thedateofthehearing rdth 12 3PublicHearing(Tx.LGCNotlaterthanthe90day2/17/2011Completed 43.0561.a&Tx.LGC43.0561.c)aftertheInventoryismade availabletothepublic. Mustalsoconsiderthat publichearingsmusttake th placeonorbeforethe20 th day,butafterthe10day afterthedateofthenotice ofpublichearingin accordancewith43.0561.C. Therefore,bothhearings musttakeplaceby2/15/20, whichis20daysafter 1/26/2011publichearing noticedate. nd 13 NegotiationsforProvisionofAfterthe2publichearing,PriortoCompleted Servicesafterannexationorinbutbeforeadoptionofthe8/26/2011 lieuofannexation(Tx.LGCAnnexationOrdinance 43.0562) st 14 FinalServicePlan(Tx.LGCBeforethe1dayofthe8/26/2011Completed th 43.056.a)10monthafterthemonth (ForDH7and DH9only) inwhichtheinventoryis prepared. th 15 RequestarbitrationregardingBeforethe60dayafter10/10/2011Requested negotiations(ifrequired)thedatetheserviceplanisbyDH12 (Tx.LGC43.0564)completed. 16 NonAnnexationAgreements1/11/2012Completed offeredtopropertyownerswith (ForDH7and DH9only Ag.exemptions(Tx.LGC43.035) 17 Arbitration(DH12)10/17Completed 10/18/2012 18 BriefCityCouncilonDH1211/13/2012Completed Arbitration 19 MailNAAsforDH1211/14/2012Completed 20 NAAsforDH12DuetoLegal12/1/2012Completed Department 21 CouncilApprovalofNAA12/18/2012Completed OrdinancesforDH7,DH9& DH12 22 OrdinancePublicationTheordinanceorany3/10/2013 amendmentthereofshall notbeacteduponuntilat least30daysafter newspaperpublication date.(Charter) 23 CourtesyPresentationtoEarlyMarch, PlanningandZoning2013 Commission st 24 1ReadingoftheOrdinance3/5/2013 ndnd 25 2ReadingoftheAnnexationApproveon2Reading4/16/2013 Ordinancebefore3years+31days Mustoccurpriorto5/7/13. AGENDA INFORMATION SHEET AGENDA DATE: March 5, 2013 DEPARTMENT: Planning and Development ACM: John Cabrales SUBJECTMunicipal Annexation Plan – First Reading of the Annexation Ordinance – Hold the first of two (2) readings to consider the adoption of an ordinance annexing an area of land to the City of Denton, Texas, generally identified as DH-9 of approximately 298 acres (less those parcels identified in Exhibit “C”) located north of Pockrus Page Road, north, south and northeast of Edwards Road, and more specifically identified in Exhibit “A” attached hereto, which area is adjacent to and abuts the existing city limits of the City of Denton, Texas, and which contains areas of land which are to be annexed pursuant to the City’s 3-Year Annexation Plan; excluding properties within DH-9 subject to non-annexation agreements for agricultural, wildlife management or timberland use from the annexation; providing for correction of the City map to include this annexed area; providing a savings clause; and providing an effective date. (First of two readings). BACKGROUND In 2009, via several City Council work sessions, staff recommended the annexation of eighteen (18) areas totaling approximately 9,035 acres of land within Division 1 of the City of Denton’s Extra-Territorial Jurisdiction (ETJ). Of the 18 areas identified, fifteen (15) areas were exempted from the requirement of the 3-year annexation plan and were annexed on May 4, 2010, save and except those properties that qualified for and returned Non-Annexation Agreements (NAA) due to them being appraised for ad valorem tax purposes as land for agricultural use, timber land or wildlife management. Owners of these qualified properties were offered, and most accepted a 5- Year NAA. The aforementioned NAAs will expire on February 9, 2015, unless extended by mutual agreement. These NAAs are governed under Section 212.172 of the Tx. LGC. Three (3) of the aforementioned areas are not exempt from the 3-year annexation plan requirement under Section 43.052 of the Texas Local Government Code (Tx. LGC) because of the number of residential structures. These areas are identified as DH-7, DH-9 and DH-12. On April 6, 2010, the Denton City Council adopted an Annexation Ordinance to initiate the annexation of these 3 areas. On June 30, 2010, in accordance with Tx.LGC 43.052, staff sent Notice of Intent (NOI) to all property owners, public/private entities, and railroad companies within the proposed annexation areas informing them of the City’s intent to annex the areas. The NOI was also posted on the City’s website. Agenda Information Sheet March 5, 2013 Page 2 On November 24, 2010, in accordance with Tx.LGC 43.053.g and Tx.LGC 43.056j, staff completed an Inventory of Services and Facilities (ISF). Subsequent to the completed ISF, staff posted the ISF on the City’s website. On January 14, 2011, in accordance with Tx.LGC 43.0561.c, staff sent Notices to affected property owners of the first Public Hearing, which was held on February 1, 2011. Notices of the first Public Hearing were also posted on the City’s website. On January 26, 2011, in accordance with Tx. LGC 43.0561c, staff sent Notices to affected nd property owners of the 2 Public Hearing, which was held on February 15, 2011. Notices of the second Public Hearing were also posted on the City’s website. rd Although not required, a 3 Public Hearing was held on February 17, 2011. Preliminary service plans were also explained at each of the three (3) public hearings and were made available for public inspection on the City’s website. On July 12, 2011; in accordance with Tx.LGC, 43.0562, negotiations for the provision of services began with city staff and committee representatives selected by the Commissioner’s Court of Denton County to negotiate for the provision of services for DH-7. Negotiations ended on July 26, 2011, with an agreed upon service plan. Negotiations for DH-9 began on July 6, 2011 and ended on August 15, 2011, and ended with an agreed upon service plan. On August 16, 2011, in accordance with Tx.LGC 43.056, final service plans were adopted via ordinance for DH-7 and DH-9 and were made available on the City’s website for public inspection. Negotiations for DH-12 began on July 7, 2011 and ended on October 13, 2011 without an agreed upon service plan. Instead, the DH-12 committee representatives requested arbitration pursuant to Tx.LGC, 43.0564. The arbitration hearings were held on October 17 and October 18, 2012, with the arbitrator ruling in favor of the City on October 30, 2012 Despite the inability to agree to a service plan with DH-12, the City Council adopted a service plan on August 16, 2011. Subsequent modifications were proposed to the service plan for DH- 12 in anticipation that the City and DH-12 committee representatives could continue to negotiate and possibly agree on the terms of a service plan. However, those negotiations ended October 13, 2011 because the parties could not agree upon the terms of the service plan, and the committee members requested arbitration. Please see Exhibits 4, 8 and 12 for the adopted service plans for each area. In accordance with TxLGC, 43.035, on December 18, 2012, ordinances providing for the acceptance of eligible non- annexation agreements (NAAs) for agricultural, wildlife management or timberland use properties within each area were adopted by the City Council. The NAAs for DH-7, DH-9 and DH-12 will expire on August 1, 2020, unless extended by mutual agreement. The Texas Local Government Code requires one (1) reading of the annexation ordinance. However, Section 1.03 of the City’s Charter requires two (2) readings of the annexation ordinance. Agenda Information Sheet March 5, 2013 Page 3 Each provision above is explained in greater detail below. ANNEXATION PROCEDURE UNDER TEXAS LOCAL GOVERNMENT CODE Tx.LGC §43.052 establishes the standards by which municipalities must abide with regards to annexation of areas which are not exempted from being placed in a 3-Year Plan. The following is a description of the steps that must be followed during the annexation procedure. Adoption of an Annexation Plan: Per Tx.LGC §43.052, a home-rule municipality such as the City of Denton (the City) must adopt an Annexation Plan. The Annexation Plan must identify all areas proposed for annexation and rd annexation of the area may not occur prior to the 3 anniversary of the date the plan is adopted or amended. Id. at §43.052(c). The "three-year waiting period" is a misnomer, because the City must begin notice, hearing and negotiation procedures almost immediately after placing an area in the Annexation Plan. st The annexation of the areas identified in the Annexation Plan must be completed before the 31 rd day after the third (3) anniversary of the date the area was included in the annexation plan. If the annexation is not completed within the prescribed period, the City may not annex the areas th proposed for annexation before the fifth (5) anniversary of the last day for completing the annexation. Written Notice and Internet Posting Requirement : Written Notice Requirement: th Prior to the 90 day after the date the City adopts or amends the Annexation Plan, the City shall give written notice to (1) each property owner in the affected area, as indicated by the appraisal records furnished by the appraisal district for each county in which the affected area is located: (2) each public entity, as defined by Tx.LGC §43.053, or private entity that provides services in the area proposed for annexation; and (3) each railroad company that serves the municipality and is on the municipality's tax roll if the company's right-of-way is in the area proposed for annexation. The notice shall state that the area has been included in or removed from the municipality's annexation plan. A "public entity" includes a municipality, county, fire protection service provider, including a volunteer fire department, emergency medical services provider, including a volunteer emergency medical services provider, or a special district, as that term is defined by Tx.LGC §43.052.Id. at Tx.LGC §43.053(a). The City must also provide the written notice to all school districts located in an area to be annexed within the period prescribed for publishing of the first public hearing. The notice must include any financial impact on the district that may result from the annexation and the city's proposal to limit the effects of that financial impact. (Id. at Tx.LGC§43.905) Agenda Information Sheet March 5, 2013 Page 4 Internet Posting Requirement: In addition to the above written notice requirement, since the City has an internet website, the City is required to: (1) post and maintain the posting of the Annexation Plan on the city’s Internet website; (2) post and maintain the posting of any amendments to include all areas in the Annexation Plan until the date the areas are annexed; and (3) post and maintain the posting of any amendments to remove any areas from the Annexation Plan until the date the City may again include the area in the Annexation Plan. Inventory of Services and Facilities - Tx.LGC § 43.053: Prepare an Inventory of Services and Facilities: Per Tx.LGC §43.053, the City of Denton must compile a comprehensive Inventory of Services and Facilities (ISF) provided by public and private entities, directly or by contract, in each area proposed for annexation, after adopting or amending the Annexation Plan. The ISF must include all services and facilities the City is required to provide or maintain following the annexation. th This ISF must be completed, and made available for public inspection, on or before the 60 day after the date the City receives the required information from service providers in the area. Id. at Tx.LGC §43.053(g). To accomplish this task, the City is required to request, in the notice required under Tx.LGC § 43.05(1), the information necessary to complete the inventory from all public and private providers. Additionally, the public and private providers are required to provide the information requested by the City within 90 days of receipt of the request; however, the service provider and the City may agree to extend the period for providing the information. Should a provider fail to provide the necessary information within the 90 day period, the City is not required to include the information in the inventory. Id. at Tx.LGC §43.053(c). The City may monitor the services provided and verify the information provided. Id. at Tx.LGC §43.053(h). Information required to be Included in the Inventory of Services: The information required in the ISF shall be based on the services and facilities provided during the year preceding the date the City adopts the Annexation Plan or amended the Annexation Plan to include additional areas. Per Tx.LGC 43.053(e), the information required to be provided by service providers, and included in the ISF must include the type of service provided, the method of service delivery, and the following information: (e)For utility facilities, roads, drainage structures and other infrastructure provided or maintained by public or private entities, the inventory must include: (1)an engineer's report that describes the physical condition of all infrastructure elements in the area; and Agenda Information Sheet March 5, 2013 Page 5 (2)a summary of capital, operational and maintenance expenditures for that infrastructure. (f)For police, fire and emergency medical services provided by public or private entities, the inventory must include: (1)the average dispatch and delivery time; (2)a schedule of equipment including vehicles; (3)a staffing schedule that discloses the certification and training levels of personnel; and (4)a summary of operating and capital expenditures. Tx.LGC § 43.053(c),(e) and (f). Prepare a Service Plan: Tx.LGC § 43.056 sets forth the requirements relative to scheduling for the provision of municipal services. The City must complete a Service Plan for the areas included in the stth Annexation Plan before the first (1) day of the 10 month after the month in which the ISF is completed. Id. at §43.056(a).Tx.LGC §43.056(c) defines "full municipal services" as "services provided by the annexing municipality within its full-purpose boundaries, including water and wastewater services and excluding gas or electrical service." Immediate Services: The City is required to provide the following services on the effective date of the annexation: (1)police protection; (2)fire protection; (3)emergency medical services; (4)solid waste collection, except as provided by subsection (o). Subsection (o) provides that a municipality is not required to provide collection service to a person who continues to use the collection services of a privately owned collection service; (5)operation and maintenance of water and wastewater facilities in the annexed area that are not within the service area of another water or wastewater utility; (6)operation and maintenance of roads and streets, including road and street lighting; (7)operation and maintenance of parks; and (8)operation and maintenance of any other publicly owned facility, building or service. Level of Services: The Service Plan may not provide for services in the annexed area that would reduce the level of fire, police and emergency medical services within the city. Id. at Tx.LGC § 43.056(t)(3). Second, the service plan must provide the area with a level of services comparable to or superior to the level of services available in other parts of the City with land uses and population densities similar to those reasonably contemplated or projected in the area; however, if the area had a level Agenda Information Sheet March 5, 2013 Page 6 of services equal to the services provided within the corporate boundaries of the City the Service Plan must maintain that same level of services. Finally, if the annexed area had a level of services for maintaining the infrastructure of the area superior to the level of services provided within the City, the Service Plan must maintain the infrastructure of the annexed area at a level of services that is equal or superior to the level of services previously enjoyed in the annexed area.Id. at Tx.LGC § 43.056(g). Timing of Extending Utilities: Tx.LGC §43.056 does not require that the City provide a "uniform level of full municipal services" to each area of the municipality if different characteristics of topography, land use and population density constitute a sufficient basis for providing different levels of service. Id. at §43.056(m). The analogous subsection in the prior law was the basis of a Texas Attorney General's Opinion, which stated that differences in the levels of services provided in annexed areas and existing areas of the city must be based on differences in topography, land use, and population density. Please see Exhibit 5. It is apparent that a city is not required to extend its services to a newly annexed territory prior to the extension of services to like areas within the City; however, to the extent that services in the annexed area are equal to or superior to those provided in the City boundaries (Id. at §43.056(g)) applies and the City must maintain that level of services. Length of Validity of Service Plan: A Service Plan is effective for ten (10) years. A person residing or owning land in an annexed area in a municipality with a population of less than 1.6 million such as the City of Denton, may nd enforce the Service Plan by applying for a writ of mandamus no later than the second (2) anniversary of the date the person knew or should have known the municipality was not complying with the Service Plan. Upon application for a writ of mandamus, the City has the burden of proving the services have been provided in accordance with the Service Plan. Id. at Tx.LGC §43.056(1). Negotiations for Services: After conducting the public hearings required by Section 43.0561, the City and the property owners of the area proposed for annexation shall negotiate for the provision of services to the area after annexation or for the provision of services to the area in lieu of annexation. For purposes of these negotiations, the Commissioner’s Court of Denton County shall select five (5) representatives to negotiate with the City. Id. at Tx.LGC §43.0562(a)(1) & (b). Arbitration: Per Tx.LGC §43.0564, if the City and the representatives of the area proposed for annexation cannot reach an agreement for the provision of services, either party by majority decision of the party's representatives may request the appointment of an arbitrator to resolve the service plan th issues in dispute. The request must be made in writing to the other party before the 60 day after the date the service plan is completed. The municipality may not annex the area during the pendency of the arbitration proceeding or an appeal from the arbitrator's decision. Agenda Information Sheet March 5, 2013 Page 7 th If the parties cannot agree on the appointment of an arbitrator before the 11 business day after the date arbitration is requested, the Mayor of the City of Denton shall immediately request a list of seven (7) neutral arbitrators from the American Arbitration Association or the Federal Mediation and Conciliation Service. If the parties cannot agree on the appointment of an th arbitrator from this list before the 11 business day after the date the list is provided to the parties, each party or the party's designee may alternately strike a name from the list. The remaining person on the list shall be appointed as the arbitrator. th The arbitrator shall set a hearing to be held not later than the 10 day after the date he or she is appointed, and shall notify the parties to the arbitration in writing of the time and place of the th hearing not later than the 8 day before the date of the hearing. The authority of the arbitrator is limited to issuing a decision relating only to the service plan issues in dispute. The arbitrator may: (1) receive in evidence any documentary evidence or other information the arbitrator considers relevant; (2) administer oaths; and (3) issue subpoenas to require: 1.the attendance and testimony of witnesses; and 2.the production of books, records, and other evidence relevant to an issue presented to the arbitrator for determination. Unless the parties to the dispute agree otherwise, the arbitrator shall complete the hearing within two (2) consecutive days. The arbitrator shall permit each party one (1) day to present evidence and other information. The arbitrator, for good cause shown, may schedule an additional hearing to be held not later than the seventh day after the date of the first hearing. Unless otherwise agreed to by the parties, the arbitrator must issue a decision in writing and deliver a copy of the th decision to the parties not later than the 14 day after the date of the final hearing. If the City does not agree with the terms of the arbitrator's decision, the City may not annex the th area proposed for annexation before the fifth (5) anniversary of the date of the arbitrator's decision. Except as provided by the Tx.LGC, the City shall pay the cost of arbitration. If the arbitrator finds that the request for arbitration submitted by the representatives of the area proposed for annexation was groundless or requested in bad faith or for the purposes of harassment, the arbitrator may require the area proposed for annexation to pay all or part of the cost of arbitration. Annexation of Area Qualified for Agricultural Use: Per Tx.LGC §43.035, a municipality is prohibited from annexing land that is appraised for ad valorem tax purposes as land for agricultural use under Chapter 23 of the Texas Tax Code unless the municipality offers to make a fifteen (15) year development agreement with the landowner under Tx.LGC §212.172 of the Texas Local Government Code and the landowner refuses. The proffered development agreement may not exceed forty-five (45) years, and must guarantee the continuation of the ETJ status of the qualifying area and authorize the enforcement of all regulations and planning authority of the municipality that do not interfere with the use of the area for agriculture. Id. at §43.035(b). Agenda Information Sheet March 5, 2013 Page 8 The development agreement restricting the municipality's right to annex all or part of the property is void if the landowner files any type of subdivision plat or related development document for the area regardless of how the area is appraised for ad valorem tax purposes, and that such a development agreement is not a permit under the Vested Rights Act. Id. at §43.035(d) and (3). PRIOR ACTION/REVIEW 1. October 6, 2009 Planning and Zoning Commission Meeting 2. February 1, 2011 City Council Public Hearing 3. February 15, 2011 City Council Public Hearing 4. February 17, 2011 City Council Public Hearing OPTIONS 1. Approve as submitted. 2. Approve with conditions. 3. Deny. 4. Postpone consideration. 5. Table Item. RECOMMENDATION The Planning and Zoning Commission recommends APPROVAL of the annexation of areas identified as DH-7, DH-9, and DH-12, excepting those parcels subject to a Non-Annexation Agreement. The Development Review Committee recommends APPROVAL of the annexation of areas identified as DH-7, DH-9 and DH-12, excepting those parcels subject to a Non-Annexation Agreement. EXHIBITS 1. 3-Year Annexation Plan Ordinance 2. Comprehensive Location Map of Annexation Areas; DH-7, DH-9 & DH-12 3. Map of Annexation Area – DH-9 4. Ordinance Adopting Service Plan- DH-9 5. Ordinance Adopting Non-Annexation Agreements – DH-9 6. Annexation Ordinance – DH-9 7. 3-Year Annexation Schedule Agenda Information Sheet March 5, 2013 Page 9 Respectfully submitted: Brian Lockley, AICP, CPM Planning and Development Director Prepared by: Johnna Matthews Senior Planner Exhibit1 3-YearAnnexationPlanOrdinance Exhibit 2 Comprehensive Location Map of Annexation Areas (DH-7, DH-9 and DH-12) Exhibit3 Exhibit 7 AnnexationAreaDH-9 Annexation Area DH-9 Exhibit4 Exhibit8 OrdinanceAdoptingServicePlanDH-9 OrdinanceAdoptingServicePlanDH-9 CITY OF DENTON SERVICE PLAN DH-9 Final - August 16, 2011 I.AREA ANNEXED The area to be annexed encompasses approximately 298 acres of land and is bounded by current city limits on all sides; north, south, east and west. It is located north of Pockrus Page Road, north, south and northeast of Edwards Road. The area is an unincorporated pocket located , and is identified as DH-9. The proposed annexation contains multiple owners. A general description of the area is attached. II.INTRODUCTION This service plan has been prepared in accordance with the Texas Local Government Code, Sections 43.021; 43.065; and 43.056(b)-(o) (Vernon 2008, as amended). Municipal facilities and services to the annexed areas described above will be provided or made available on behalf of the City of Denton in accordance with the following plan. The City of Denton shall provide the annexed tract the levels of service, infrastructure, and infrastructure maintenance that are comparable to the levels of service, infrastructure, and infrastructure maintenance available in other parts of the City of Denton with similar topography, land use, and population density. III.AD VALOREM (PROPERTY OWNER) TAX SERVICES A.Police Protection Police protection from the City of Denton Police Department shall be provided to the areas annexed at a level consistent with current methods and procedures presently provided to similar areas on the effective date of the ordinance. Some of these services include: 1.Normal patrols and responses; 2.Handling of complaints and incident reports; 3.Special units, such as traffic enforcement, investigations and special weapons; and 4.Coordination with other public safety support agencies. As development commences in these areas, sufficient police protection, including personnel and equipment will be provided to furnish these areas with the level of police services consistent with the characteristics of topography, land utilization and population density of the areas. Upon ultimate development, police protection will be provided at a level consistent with other similarly situated areas within the city limits. 1 B.Fire Protection The Denton Fire Department (DFD) will provide emergency and fire prevention services to the annexation areas. These services include: 1.Fire suppression and rescue; 2.Pre-hospital medical services including triage, treatment and transport by Advanced Life Support (ALS) fire engines, trucks and ambulances; 3.Hazardous materials response and mitigation; 4.Emergency prevention and public education efforts; 5.Technical rescue response; and 6.Construction Plan Review and required inspections. Fire protection from the City of Denton shall be provided to the areas annexed at a level consistent with current methods and procedures presently provided to similar areas of the City of Denton on the effective date of the ordinance. As development commences in these areas, sufficient fire protection, including personnel and equipment will be provided to furnish these areas with the level of services consistent with the characteristics of topography, land utilization and population density of the areas. It is anticipated that fire stations planned to serve areas currently within the City of Denton will be sufficient to serve areas now being considered for annexation. Upon ultimate development, fire protection will be provided at a level consistent with other similarly situated areas within the city limits. C.Emergency Medical Service The Denton Fire Department (DFD) will provide the following emergency and safety services to the annexation areas. These services include: 1.Emergency medical dispatch and pre-arrival First Aid instructions; 2.Pre-hospital emergency Advanced Life Support (ALS) response; and transport; 3.Medical rescue services. Emergency Medical Services (EMS) from the City of Denton shall be provided to the areas annexed at a level consistent with current methods and procedures presently provided to similar areas of the City of Denton on the effective date of the ordinance. As development commences in these areas, sufficient EMS, including personnel and equipment will be provided to furnish these areas with the level of services consistent with the characteristics of topography, land utilization and population density of the areas. 2 Upon ultimate development, EMS will be provided at a level consistent with other similarly situated areas within the city limits. D.Roads and Streets Emergency street maintenance shall be provided within the annexation areas on the effective date of the applicable ordinance of acceptance. Routine maintenance will be provided within the annexation areas and will be scheduled as part of the defined by the ordinance and/or as established by the City Council. Any construction or reconstruction will be considered within the annexation areas budgetary allotments by the City Council. Roadway signage and associated posts will be replaced in priority of importance starting with regulatory signs, then warning signs, then informational signs and in conformance with fiscal allotments by the City Council. If a sign remains, it will be rev All exiting signs will be reviewed for applicability and based upon an engineering study. New signs will be installed when necessary and based upon an engineering study. Routine maintenance of road/street markings will be placed on a priority listing and scheduled within the yearly budgetary allotments by the City Council. E.Parks, Playgrounds, Swimming Pools Residents within the areas annexed may utilize all existing park and recreation facilities, on the effective date of this ordinance. Fees for such usage shall be in accordance with current fees established by ordinance. As development commences in these areas, additional park and recreation facilities shall be constructed based on park policies defined in the Park Master Plan and as specified in the Park Dedication and Development Ordinance. The general planned locations and classifications of parks will ultimately serve residents from the current City limits and residents from areas being considered for annexation. F.Publicly Owned Facilities Any publicly owned facility, building, or service located within the annexed area, and not otherwise owned or maintained by another governmental entity, shall be maintained by the City of Denton on the effective date of the annexation ordinance. 3 G.Other Services Except as provided in Section V. Other services that may be provided by the City of Denton, such as municipal and general administration will be made available on the effective date of the annexation. The City of Denton shall provide level of services, infrastructure, and infrastructure maintenance that is comparable to the level of services, infrastructure, and infrastructure maintenance available in other parts of the City of Denton with topography, land use, and population density similar to those reasonably contemplated or projected in the area. IV.ENTERPRISE ACTIVITY (UTILITY CUSTOMER) SERVICES A.Solid Waste Solid Waste and Recycling Collection Services will be provided to the newly annexed property immediately upon the effective date of the annexation at a level consistent with current methods and procedures presently provided to similar areas within the city. Private solid waste collection service providers operating in the affected area immediately prior to annexation and currently providing customers with service may continue to provide their existing service for up to 2 years in accordance with Texas Local Government Code. B.Wastewater Facilities Except as provided in Section V. The proposed annexation areas are within the City of Denton Sewer Service Area as defined by Certificate of Convenience and Necessity (CCN) Number 20072 as issued by the Texas Commission on Environmental Quality (TCEQ). As development commences in these areas, sanitary sewer mains will be extended s, ordinances and regulations. City participation in the costs of these extensions shall be in accordance with applicable City ordinances and regulations. Capacity shall be provided consistent with the characteristics of topography, land utilization, and population density of the areas. Sanitary sewer mains and lift stations installed or improved to City standards within the annexed areas which are located within dedicated easement, rights-of- way, or any other acceptable location approved by the City Engineer, shall be maintained by the City on the effective date of this ordinance. Operation and maintenance of wastewater facilities in the annexed areas that are within the service area of another water utility will be the responsibility of that utility. Operation and maintenance of private wastewater facilities in the annexed area will be the responsibility of the owner. 4 C.Water Facilities Except as provided in Section V. The proposed annexation areas are within the City of Denton Water Service Area as defined by Certificate of Convenience and Necessity (CCN) Number 10195 as issued by the Texas Commission on Environmental Quality (TCEQ). Connections to existing City of Denton water distribution mains for water service will be provided in accordance with existing City ordinances and policies. Upon connection to existing distribution mains, water service will be provided at rates established by city ordinance. As new development occurs within these areas, water distribution mains will be extended in accordance with Denton Codes, ordinances and utility service policies. City participation in the costs of these extensions shall be in accordance with s codes and ordinances. Water service capacity shall be provided consistent with the characteristics of topography, land use and population density of the area. Operation and maintenance of water facilities in the annexed area that are within the service area of another water utility will be the responsibility of that utility. Existing developments, businesses or homes that are on individual water wells or private water systems will be allowed to continue to remain on these systems until a request for water service is made to the City. These requests for service will be handled in accordance with the applicable utility service line extension and connection policies currently in place at the time the request for service is received. V.ADDITIONAL SERVICES A.Non -Annexation Agreements The City has agreed to offer Non-Annexation Agreements to eligible property owners in DH-9 for a term to last seven years. Eligible property owners are those individuals who currently receive an agricultural property tax exemption on their property. From the effective date of the annexation, currently projected as May, 2013, the seven year Non-Annexation Agreement will extend the time period for non-annexation to 2020. B.Pedestrian Path - Pending the receipt of right-of-way or a pedestrian access easement, the City agrees to construct a pedestrian path on the east side of Swisher from Edwards Road south to the Pecan Creek Elementary School. In designing the pathway, the City shall seek to utilize the most reasonable alignment to provide safe access to the school along Swisher and to minimize the impact on existing trees. 5 C.Traffic Calming Devices The City is agreeing to install traffic calming devices ¯¤£¨¦ along the frontage of school property on Swisher Road until theEdwards road extension is complete and functional for a period of one year or as determined necessary. D.Private Water Service Tap - Within two years from date of annexation, the City will allow one to four water taps to be permitted for residential service from the closest tap point at Capetown Road. The Grimes family will be required to grant a 20 foot easement across the southern boundary of their property (running east to west). The Grimes Family will be responsible for tap and impact fees for each of the requested water taps as well as the cost to run their individual private service Grimes Family will also provide a 10 foot wide private water service line easement between the cit that is extended between the proposed point of connection at Capetown Road to cover each private water service line extended to connect each single family home on the Grimes Property. The city will require a customer service inspection for water tap and meter will provide water service to one single family residential structure and must be physically and permanently removed from the private well system that serves the adjacent home on the Grimes property. The city reserves the right to discontinue service from any water meter if it is discovered that the water supplied through this meter is subsequently extended to serve more than ordinance and service policies. E.Wastewater line Extension along Shiloh and Swisher - City will design and construct these sewer lines including all taps from the sewer main up to the private property line. The total project will include survey, design, construction, staking, installation of the sewer main and taps, and testing and inspection during construction. City will enter into an agreement to extend these sewer lines based on the following provisions: 1. The cost per single family connection to the City sewer main will be based on the following: If a minimum of 80 percent of the lots connect to the sewer main then per connection charge will be $5,300 plus the $1,700 impact fee, for a total charge of $7,000. 6 If a minimum of 70 percent and less than 80 percent of the lots connect to the sewer main then per connection charge will be $6,300 plus the $1,700 impact fee, for a total charge of $8,000. If a minimum of 60 percent and less than 70 percent of the lots connect to the sewer main then per connection charge will be $7,500 plus the $1,700 impact fee, for a total charge of $9,200. If a minimum of 50 percent and less than 60 percent of the lots connect to the sewer main then per connection charge will be $9,300 plus the $1,700 impact fee, for a total charge of $11,000. 2. City will establish a Pro-Rata Agreement to recoup the cost of the sewer line in the future from the lots that initially do not tie to the City sewer line. This pro rata cost will be based on the frontage of each lot and will be either sixty (60) percent or one hundred (100) percent of the per foot cost of sewer line installation. 3. Any easements needed from private property to construct the public sewer system must be donated by the property owner to the City at no cost to the City. 4. Homeowners are responsible for the rerouting of the private lateral sewer within their property to connect to the sewer tap at their property line. 5. City will extend this offer for extension of the sewer lines for a period of three years from the date of execution of the annexation. F.Grant Funding Opportunities for Wastewater Service on Swisher, Shiloh and Pockrus Page Roads The City agrees to seek grant funding opportunities to fund the wastewater services as described below. 1. The City agrees to aggressively pursue alternate funding options for the benefit of the property owners currently being served by the City of Denton water supply along Pockrus Page, Swisher, and Shiloh Roads, that may be available through the Community Development Block Grant, the RCAP program or ANY other grant program that may be available to the City of Denton officials, that would effectively provide a sewer line that parallels the existing City of Denton water line on the above mentioned three roads. 2. The City agrees to pay 100% of the costs of the off-site sewer line beyond the frontage of the last property up to the connection with the existing City sewer, 7 in the event the Grant dollars do not cover the entire costs of the wastewater pipeline system. 3. The City will assign a contact department official and phone number for full disclosure and updates regarding the Grant process. 4. Payment of wastewater Impact fees if not covered by the Grant funding will be the responsibility of the property owner. G.No Parking Signage on Edwards Road In accordance with the City of Denton Municipal Code Section 18-93, the City will evaluate the feasibility of establishing parking restrictions along the section of Edwards Road from Desert Willow Road to Lakeview Boulevard. This may include the area being stripped with a broken yellow centerline pavement marking in accordance with City standards such that the north side of the Edwards Road is to have an 8-foot wide on-street parking area and the remainder of the street width evenly divided for both directions of travel. Associated parking restriction signs may be included utilizing City standards for such signage. H.Future Access to Water and Wastewater Lines As development occurs in DH-9, water and wastewater mains will be extended in accordance with the ion in ordinances as described in IV.B and IV.C. Such future development activity will expand the infrastructure network in DH-9 and provide additional opportunities for current property owners to have access to complete extensions or connect to existing water or sewer lines following established City policy. An example of an area likely to benefit from future development is the property along Pockrus Page Road. I.Water service to Green Tree Estates Subdivision - The Green Tree Estates has an existing community water system serving this subdivision that is currently listed under the TCEQ Public Water System database as an inactive system. Prior to the city considering offering water service to this system, the owners of this community water system must register this water system with the TCEQ as an active public water system and must obtain compliance with current TCEQ regulations for Public Water Systems (Chapter 30 TAC 290). After compliance with the above referenced section, the city will offer water supply through an air tank through a water tap and meter to be installed at a point of connection to the 8 The owner of the Green Tree Estates Public Water Supply System shall provide the city with adequate wellpumping records to determine the appropriate water meter size, tap size, and associated water impact fees. The owner of the Green Tree Estates Public Water System will be responsible for paying the tap fees, meter set fees and water impact fees necessary to provide thiswater supply as well as the cost to extend the private water service line from the point of metering and the ground storage tank within the Green Tree Estates public Water System. This private water service line shall be located within a 10 foot wide private water service line easement provided by the owners of the Green Tree Estates Pubic Water System. VI.UNIFORM LEVEL OF SERVICES IS NOT REQUIRED Nothing in this plan shall require the City of Denton to provide a uniform level of full municipal services to each area of the City, including the annexed area, if different characteristics of topography, land use, and population density are considered a sufficient basis for providing different levels of service. VII.TERM This service plan shall be valid for a term of ten (10) years. Renewal of the service plan shall be at the discretion of City Council. VIII.AMENDMENTS The service plan may be amended if the City Council determines at a public hearing that changed conditions or subsequent occurrences make this service plan unworkable or obsolete. The City Council may amend the service plan to conform to the changed conditions or subsequent occurrences pursuant to Texas Local Government Code, Section 43.056. 9 EXHIBIT 1 Proposed Annexation Area DH-9 DH-9 encompasses approximately 298 acres of land and is bounded by ent city limits on all sides; north, south, east and west. DH-9 is located north of Pockrus Page Road, north, south and northeast of Edwards Road. This area is the aerial map below. 10 Exhibit5 Exhibit9 OrdinanceAdoptingNon-AnnexationAgreementsDH-9 Ordinance Adopting Non-Annexation Agreements DH-9 Exhibit 6 Annexation Ordinance DH-9 Exhibit7 Exhibit 15 3-YearAnnexationSchedule 3-Year Annexation Schedule ActionActionTimelineActionDateStatus 1 AdoptAnnexationPlanandpost4/6/2010Completed planonwebsite(Tx.LGC43.052) th 2 NoticeofIntenttoallpropertyPriortothe90dayafter6/30/2010Completed owners,public/privateentities,theCCadoptstheplan railroadcompaniesandposton website(Tx.LGC43.052.f) 3 RequestInventoryofServicesShallberequestedatthe6/30/2010Completed andFacilitiesprovidedbytimeoftheNoticeofIntent public/privateentities(Tx.LGC 43.053c) 4 Receiveinformationprovided90daysafterrequestis9/27/2010Completed bypublicandprivateservicemade providers(Tx.LGC43.053.c) th 5 CompleteInventoryofServicesOnorbeforethe60day11/24/2010Completed andFacilitiesandmakeaftertheinformationis availableforpublicinspectionreceived (Tx.LGC43.053.gandTx.LGC 43.056j) stth 6 Noticeof1PublicHearingOnorafterthe20day,but1/14/2011Completed th (Tx.LGC43.0561.c)beforethe10daybefore thedateofthehearing ndth 7 Noticeof2PublicHearingOnorafterthe20day,but1/26/2011Completed th (Tx.LGC43.0561.c)beforethe10daybefore thedateofthehearing 8 ProposedServicePlanmustbePriortopublichearings1/25/2011Completed madeavailableforpublic inspectionandexplainedatthe publichearings(Tx.LGC 43.056.j) stth 9 1PublicHearing(Tx.LGCNotlaterthanthe90day2/1/2011Completed 43.0561.a&Tx.LGC43.0561.c)aftertheInventoryismade availabletothepublic ndth 10 2PublicHearing(Tx.LGCNotlaterthanthe90day2/15/2011Completed 43.0561.a&Tx.LGC43.0561.c)aftertheInventoryismade availabletothepublic. Mustalsoconsiderthat publichearingsmusttake th placeonorbeforethe20 th day,butafterthe10day afterthedateofthenotice ofpublichearingin accordancewith43.0561.C. Therefore,bothhearings musttakeplaceby2/15/20, whichis20daysafter 1/26/2011publichearing noticedate. th 11 Noticeof3rdPublicHearingOnorafterthe20day,but2/4/2011Completed th (Tx.LGC43.0561.c)beforethe10daybefore thedateofthehearing rdth 12 3PublicHearing(Tx.LGCNotlaterthanthe90day2/17/2011Completed 43.0561.a&Tx.LGC43.0561.c)aftertheInventoryismade availabletothepublic. Mustalsoconsiderthat publichearingsmusttake th placeonorbeforethe20 th day,butafterthe10day afterthedateofthenotice ofpublichearingin accordancewith43.0561.C. Therefore,bothhearings musttakeplaceby2/15/20, whichis20daysafter 1/26/2011publichearing noticedate. nd 13 NegotiationsforProvisionofAfterthe2publichearing,PriortoCompleted Servicesafterannexationorinbutbeforeadoptionofthe8/26/2011 lieuofannexation(Tx.LGCAnnexationOrdinance 43.0562) st 14 FinalServicePlan(Tx.LGCBeforethe1dayofthe8/26/2011Completed th 43.056.a)10monthafterthemonth (ForDH7and DH9only) inwhichtheinventoryis prepared. th 15 RequestarbitrationregardingBeforethe60dayafter10/10/2011Requested negotiations(ifrequired)thedatetheserviceplanisbyDH12 (Tx.LGC43.0564)completed. 16 NonAnnexationAgreements1/11/2012Completed offeredtopropertyownerswith (ForDH7and DH9only Ag.exemptions(Tx.LGC43.035) 17 Arbitration(DH12)10/17Completed 10/18/2012 18 BriefCityCouncilonDH1211/13/2012Completed Arbitration 19 MailNAAsforDH1211/14/2012Completed 20 NAAsforDH12DuetoLegal12/1/2012Completed Department 21 CouncilApprovalofNAA12/18/2012Completed OrdinancesforDH7,DH9& DH12 22 OrdinancePublicationTheordinanceorany3/10/2013 amendmentthereofshall notbeacteduponuntilat least30daysafter newspaperpublication date.(Charter) 23 CourtesyPresentationtoEarlyMarch, PlanningandZoning2013 Commission st 24 1ReadingoftheOrdinance3/5/2013 ndnd 25 2ReadingoftheAnnexationApproveon2Reading4/16/2013 Ordinancebefore3years+31days Mustoccurpriorto5/7/13. AGENDA INFORMATION SHEET AGENDA DATE: March 5, 2013 DEPARTMENT: Planning and Development ACM: John Cabrales SUBJECTMunicipal Annexation Plan – First Reading of the Annexation Ordinance – Hold the first of two (2) readings to consider the adoption of an ordinance annexing an area of land to the City of Denton, Texas, generally identified as DH-7 of approximately 143 acres (less those parcels identified in Exhibit “C”) located on the east and north sides of Teasley Lane, south of Teasley Harbor subdivision and west of Southlake Drive, and more specifically identified in Exhibit “A” attached hereto, which area is adjacent to and abuts the existing city limits of the City of Denton, Texas, and which contains areas of land which are to be annexed pursuant to the City’s 3-Year Annexation Plan; excluding properties within DH-7 subject to non-annexation agreements for agricultural, wildlife management or timberland use from the annexation; providing for correction of the City map to include this annexed area; providing a savings clause; and providing an effective date. (First of two readings). BACKGROUND In 2009, via several City Council work sessions, staff recommended the annexation of eighteen (18) areas totaling approximately 9,035 acres of land within Division 1 of the City of Denton’s Extra-Territorial Jurisdiction (ETJ). Of the 18 areas identified, fifteen (15) areas were exempted from the requirement of the 3-year annexation plan and were annexed on May 4, 2010, save and except those properties that qualified for and returned Non-Annexation Agreements (NAA) due to them being appraised for ad valorem tax purposes as land for agricultural use, timber land or wildlife management. Owners of these qualified properties were offered, and most accepted a 5- Year NAA. The aforementioned NAAs will expire on February 9, 2015, unless extended by mutual agreement. These NAAs are governed under Section 212.172 of the Tx. LGC. Three (3) of the aforementioned areas are not exempt from the 3-year annexation plan requirement under Section 43.052 of the Texas Local Government Code (Tx. LGC) because of the number of residential structures. These areas are identified as DH-7, DH-9 and DH-12. On April 6, 2010, the Denton City Council adopted an Annexation Ordinance to initiate the annexation of these 3 areas. On June 30, 2010, in accordance with Tx.LGC 43.052, staff sent Notice of Intent (NOI) to all property owners, public/private entities, and railroad companies within the proposed annexation areas informing them of the City’s intent to annex the areas. The NOI was also posted on the City’s website. Agenda Information Sheet March 5, 2013 Page 2 On November 24, 2010, in accordance with Tx.LGC 43.053.g and Tx.LGC 43.056j, staff completed an Inventory of Services and Facilities (ISF). Subsequent to the completed ISF, staff posted the ISF on the City’s website. On January 14, 2011, in accordance with Tx.LGC 43.0561.c, staff sent Notices to affected property owners of the first Public Hearing, which was held on February 1, 2011. Notices of the first Public Hearing were also posted on the City’s website. On January 26, 2011, in accordance with Tx. LGC 43.0561c, staff sent Notices to affected nd property owners of the 2 Public Hearing, which was held on February 15, 2011. Notices of the second Public Hearing were also posted on the City’s website. rd Although not required, a 3 Public Hearing was held on February 17, 2011. Preliminary service plans were also explained at each of the three (3) public hearings and were made available for public inspection on the City’s website. On July 12, 2011; in accordance with Tx.LGC, 43.0562, negotiations for the provision of services began with city staff and committee representatives selected by the Commissioner’s Court of Denton County to negotiate for the provision of services for DH-7. Negotiations ended on July 26, 2011, with an agreed upon service plan. Negotiations for DH-9 began on July 6, 2011 and ended on August 15, 2011, and ended with an agreed upon service plan. On August 16, 2011, in accordance with Tx.LGC 43.056, final service plans were adopted via ordinance for DH-7 and DH-9 and were made available on the City’s website for public inspection. Negotiations for DH-12 began on July 7, 2011 and ended on October 13, 2011 without an agreed upon service plan. Instead, the DH-12 committee representatives requested arbitration pursuant to Tx.LGC, 43.0564. The arbitration hearings were held on October 17 and October 18, 2012, with the arbitrator ruling in favor of the City on October 30, 2012 Despite the inability to agree to a service plan with DH-12, the City Council adopted a service plan on August 16, 2011. Subsequent modifications were proposed to the service plan for DH- 12 in anticipation that the City and DH-12 committee representatives could continue to negotiate and possibly agree on the terms of a service plan. However, those negotiations ended October 13, 2011 because the parties could not agree upon the terms of the service plan, and the committee members requested arbitration. Please see Exhibits 4, 8 and 12 for the adopted service plans for each area. In accordance with TxLGC, 43.035, on December 18, 2012, ordinances providing for the acceptance of eligible non- annexation agreements (NAAs) for agricultural, wildlife management or timberland use properties within each area were adopted by the City Council. The NAAs for DH-7, DH-9 and DH-12 will expire on August 1, 2020, unless extended by mutual agreement. The Texas Local Government Code requires one (1) reading of the annexation ordinance. However, Section 1.03 of the City’s Charter requires two (2) readings of the annexation ordinance. Agenda Information Sheet March 5, 2013 Page 3 Each provision above is explained in greater detail below. ANNEXATION PROCEDURE UNDER TEXAS LOCAL GOVERNMENT CODE Tx.LGC §43.052 establishes the standards by which municipalities must abide with regards to annexation of areas which are not exempted from being placed in a 3-Year Plan. The following is a description of the steps that must be followed during the annexation procedure. Adoption of an Annexation Plan: Per Tx.LGC §43.052, a home-rule municipality such as the City of Denton (the City) must adopt an Annexation Plan. The Annexation Plan must identify all areas proposed for annexation and rd annexation of the area may not occur prior to the 3 anniversary of the date the plan is adopted or amended. Id. at §43.052(c). The "three-year waiting period" is a misnomer, because the City must begin notice, hearing and negotiation procedures almost immediately after placing an area in the Annexation Plan. st The annexation of the areas identified in the Annexation Plan must be completed before the 31 rd day after the third (3) anniversary of the date the area was included in the annexation plan. If the annexation is not completed within the prescribed period, the City may not annex the areas th proposed for annexation before the fifth (5) anniversary of the last day for completing the annexation. Written Notice and Internet Posting Requirement : Written Notice Requirement: th Prior to the 90 day after the date the City adopts or amends the Annexation Plan, the City shall give written notice to (1) each property owner in the affected area, as indicated by the appraisal records furnished by the appraisal district for each county in which the affected area is located: (2) each public entity, as defined by Tx.LGC §43.053, or private entity that provides services in the area proposed for annexation; and (3) each railroad company that serves the municipality and is on the municipality's tax roll if the company's right-of-way is in the area proposed for annexation. The notice shall state that the area has been included in or removed from the municipality's annexation plan. A "public entity" includes a municipality, county, fire protection service provider, including a volunteer fire department, emergency medical services provider, including a volunteer emergency medical services provider, or a special district, as that term is defined by Tx.LGC §43.052.Id. at Tx.LGC §43.053(a). The City must also provide the written notice to all school districts located in an area to be annexed within the period prescribed for publishing of the first public hearing. The notice must include any financial impact on the district that may result from the annexation and the city's proposal to limit the effects of that financial impact. (Id. at Tx.LGC§43.905) Agenda Information Sheet March 5, 2013 Page 4 Internet Posting Requirement: In addition to the above written notice requirement, since the City has an internet website, the City is required to: (1) post and maintain the posting of the Annexation Plan on the city’s Internet website; (2) post and maintain the posting of any amendments to include all areas in the Annexation Plan until the date the areas are annexed; and (3) post and maintain the posting of any amendments to remove any areas from the Annexation Plan until the date the City may again include the area in the Annexation Plan. Inventory of Services and Facilities - Tx.LGC § 43.053: Prepare an Inventory of Services and Facilities: Per Tx.LGC §43.053, the City of Denton must compile a comprehensive Inventory of Services and Facilities (ISF) provided by public and private entities, directly or by contract, in each area proposed for annexation, after adopting or amending the Annexation Plan. The ISF must include all services and facilities the City is required to provide or maintain following the annexation. th This ISF must be completed, and made available for public inspection, on or before the 60 day after the date the City receives the required information from service providers in the area. Id. at Tx.LGC §43.053(g). To accomplish this task, the City is required to request, in the notice required under Tx.LGC § 43.05(1), the information necessary to complete the inventory from all public and private providers. Additionally, the public and private providers are required to provide the information requested by the City within 90 days of receipt of the request; however, the service provider and the City may agree to extend the period for providing the information. Should a provider fail to provide the necessary information within the 90 day period, the City is not required to include the information in the inventory. Id. at Tx.LGC §43.053(c). The City may monitor the services provided and verify the information provided. Id. at Tx.LGC §43.053(h). Information required to be Included in the Inventory of Services: The information required in the ISF shall be based on the services and facilities provided during the year preceding the date the City adopts the Annexation Plan or amended the Annexation Plan to include additional areas. Per Tx.LGC 43.053(e), the information required to be provided by service providers, and included in the ISF must include the type of service provided, the method of service delivery, and the following information: (e)For utility facilities, roads, drainage structures and other infrastructure provided or maintained by public or private entities, the inventory must include: (1)an engineer's report that describes the physical condition of all infrastructure elements in the area; and Agenda Information Sheet March 5, 2013 Page 5 (2)a summary of capital, operational and maintenance expenditures for that infrastructure. (f)For police, fire and emergency medical services provided by public or private entities, the inventory must include: (1)the average dispatch and delivery time; (2)a schedule of equipment including vehicles; (3)a staffing schedule that discloses the certification and training levels of personnel; and (4)a summary of operating and capital expenditures. Tx.LGC § 43.053(c),(e) and (f). Prepare a Service Plan: Tx.LGC § 43.056 sets forth the requirements relative to scheduling for the provision of municipal services. The City must complete a Service Plan for the areas included in the stth Annexation Plan before the first (1) day of the 10 month after the month in which the ISF is completed. Id. at §43.056(a).Tx.LGC §43.056(c) defines "full municipal services" as "services provided by the annexing municipality within its full-purpose boundaries, including water and wastewater services and excluding gas or electrical service." Immediate Services: The City is required to provide the following services on the effective date of the annexation: (1)police protection; (2)fire protection; (3)emergency medical services; (4)solid waste collection, except as provided by subsection (o). Subsection (o) provides that a municipality is not required to provide collection service to a person who continues to use the collection services of a privately owned collection service; (5)operation and maintenance of water and wastewater facilities in the annexed area that are not within the service area of another water or wastewater utility; (6)operation and maintenance of roads and streets, including road and street lighting; (7)operation and maintenance of parks; and (8)operation and maintenance of any other publicly owned facility, building or service. Level of Services: The Service Plan may not provide for services in the annexed area that would reduce the level of fire, police and emergency medical services within the city. Id. at Tx.LGC § 43.056(t)(3). Second, the service plan must provide the area with a level of services comparable to or superior to the level of services available in other parts of the City with land uses and population densities similar to those reasonably contemplated or projected in the area; however, if the area had a level Agenda Information Sheet March 5, 2013 Page 6 of services equal to the services provided within the corporate boundaries of the City the Service Plan must maintain that same level of services. Finally, if the annexed area had a level of services for maintaining the infrastructure of the area superior to the level of services provided within the City, the Service Plan must maintain the infrastructure of the annexed area at a level of services that is equal or superior to the level of services previously enjoyed in the annexed area.Id. at Tx.LGC § 43.056(g). Timing of Extending Utilities: Tx.LGC §43.056 does not require that the City provide a "uniform level of full municipal services" to each area of the municipality if different characteristics of topography, land use and population density constitute a sufficient basis for providing different levels of service. Id. at §43.056(m). The analogous subsection in the prior law was the basis of a Texas Attorney General's Opinion, which stated that differences in the levels of services provided in annexed areas and existing areas of the city must be based on differences in topography, land use, and population density. Please see Exhibit 5. It is apparent that a city is not required to extend its services to a newly annexed territory prior to the extension of services to like areas within the City; however, to the extent that services in the annexed area are equal to or superior to those provided in the City boundaries (Id. at §43.056(g)) applies and the City must maintain that level of services. Length of Validity of Service Plan: A Service Plan is effective for ten (10) years. A person residing or owning land in an annexed area in a municipality with a population of less than 1.6 million such as the City of Denton, may nd enforce the Service Plan by applying for a writ of mandamus no later than the second (2) anniversary of the date the person knew or should have known the municipality was not complying with the Service Plan. Upon application for a writ of mandamus, the City has the burden of proving the services have been provided in accordance with the Service Plan. Id. at Tx.LGC §43.056(1). Negotiations for Services: After conducting the public hearings required by Section 43.0561, the City and the property owners of the area proposed for annexation shall negotiate for the provision of services to the area after annexation or for the provision of services to the area in lieu of annexation. For purposes of these negotiations, the Commissioner’s Court of Denton County shall select five (5) representatives to negotiate with the City. Id. at Tx.LGC §43.0562(a)(1) & (b). Arbitration: Per Tx.LGC §43.0564, if the City and the representatives of the area proposed for annexation cannot reach an agreement for the provision of services, either party by majority decision of the party's representatives may request the appointment of an arbitrator to resolve the service plan th issues in dispute. The request must be made in writing to the other party before the 60 day after the date the service plan is completed. The municipality may not annex the area during the pendency of the arbitration proceeding or an appeal from the arbitrator's decision. Agenda Information Sheet March 5, 2013 Page 7 th If the parties cannot agree on the appointment of an arbitrator before the 11 business day after the date arbitration is requested, the Mayor of the City of Denton shall immediately request a list of seven (7) neutral arbitrators from the American Arbitration Association or the Federal Mediation and Conciliation Service. If the parties cannot agree on the appointment of an th arbitrator from this list before the 11 business day after the date the list is provided to the parties, each party or the party's designee may alternately strike a name from the list. The remaining person on the list shall be appointed as the arbitrator. th The arbitrator shall set a hearing to be held not later than the 10 day after the date he or she is appointed, and shall notify the parties to the arbitration in writing of the time and place of the th hearing not later than the 8 day before the date of the hearing. The authority of the arbitrator is limited to issuing a decision relating only to the service plan issues in dispute. The arbitrator may: (1) receive in evidence any documentary evidence or other information the arbitrator considers relevant; (2) administer oaths; and (3) issue subpoenas to require: 1.the attendance and testimony of witnesses; and 2.the production of books, records, and other evidence relevant to an issue presented to the arbitrator for determination. Unless the parties to the dispute agree otherwise, the arbitrator shall complete the hearing within two (2) consecutive days. The arbitrator shall permit each party one (1) day to present evidence and other information. The arbitrator, for good cause shown, may schedule an additional hearing to be held not later than the seventh day after the date of the first hearing. Unless otherwise agreed to by the parties, the arbitrator must issue a decision in writing and deliver a copy of the th decision to the parties not later than the 14 day after the date of the final hearing. If the City does not agree with the terms of the arbitrator's decision, the City may not annex the th area proposed for annexation before the fifth (5) anniversary of the date of the arbitrator's decision. Except as provided by the Tx.LGC, the City shall pay the cost of arbitration. If the arbitrator finds that the request for arbitration submitted by the representatives of the area proposed for annexation was groundless or requested in bad faith or for the purposes of harassment, the arbitrator may require the area proposed for annexation to pay all or part of the cost of arbitration. Annexation of Area Qualified for Agricultural Use: Per Tx.LGC §43.035, a municipality is prohibited from annexing land that is appraised for ad valorem tax purposes as land for agricultural use under Chapter 23 of the Texas Tax Code unless the municipality offers to make a fifteen (15) year development agreement with the landowner under Tx.LGC §212.172 of the Texas Local Government Code and the landowner refuses. The proffered development agreement may not exceed forty-five (45) years, and must guarantee the continuation of the ETJ status of the qualifying area and authorize the enforcement of all regulations and planning authority of the municipality that do not interfere with the use of the area for agriculture. Id. at §43.035(b). Agenda Information Sheet March 5, 2013 Page 8 The development agreement restricting the municipality's right to annex all or part of the property is void if the landowner files any type of subdivision plat or related development document for the area regardless of how the area is appraised for ad valorem tax purposes, and that such a development agreement is not a permit under the Vested Rights Act. Id. at §43.035(d) and (3). PRIOR ACTION/REVIEW 1. October 6, 2009 Planning and Zoning Commission Meeting 2. February 1, 2011 City Council Public Hearing 3. February 15, 2011 City Council Public Hearing 4. February 17, 2011 City Council Public Hearing OPTIONS 1. Approve as submitted. 2. Approve with conditions. 3. Deny. 4. Postpone consideration. 5. Table Item. RECOMMENDATION The Planning and Zoning Commission recommends APPROVAL of the annexation of areas identified as DH-7, DH-9, and DH-12, excepting those parcels subject to a Non-Annexation Agreement. The Development Review Committee recommends APPROVAL of the annexation of areas identified as DH-7, DH-9, and DH-12, excepting those parcels subject to a Non-Annexation Agreement. EXHIBITS 1. 3-Year Annexation Plan Ordinance 2. Comprehensive Location Map of Annexation Areas; DH-7, DH-9 & DH-12 3. Map of Annexation Area – DH-7 4. Ordinance Adopting Service Plan – DH-7 5. Ordinance Adopting Non-Annexation Agreements – DH-7 6. Annexation Ordinance – DH-7 7. 3-Year Annexation Schedule Agenda Information Sheet March 5, 2013 Page 9 Respectfully submitted: Brian Lockley, AICP, CPM Planning and Development Director Prepared by: Johnna Matthews Senior Planner Exhibit1 3-YearAnnexationPlanOrdinance (DH-7, DH-9 and DH-12) Exhibit4 OrdinanceAdoptingServicePlanDH-7 Exhibit5 Ordinance Adopting Non-Annexation Agreements DH-7 Exhibit 6 Annexation Ordinance - DH-7 ActionActionTimelineActionDateStatus 1 AdoptAnnexationPlanandpost4/6/2010Completed planonwebsite(Tx.LGC43.052) th 2 NoticeofIntenttoallpropertyPriortothe90dayafter6/30/2010Completed owners,public/privateentities,theCCadoptstheplan railroadcompaniesandposton website(Tx.LGC43.052.f) 3 RequestInventoryofServicesShallberequestedatthe6/30/2010Completed andFacilitiesprovidedbytimeoftheNoticeofIntent public/privateentities(Tx.LGC 43.053c) 4 Receiveinformationprovided90daysafterrequestis9/27/2010Completed bypublicandprivateservicemade providers(Tx.LGC43.053.c) th 5 CompleteInventoryofServicesOnorbeforethe60day11/24/2010Completed andFacilitiesandmakeaftertheinformationis availableforpublicinspectionreceived (Tx.LGC43.053.gandTx.LGC 43.056j) stth 6 Noticeof1PublicHearingOnorafterthe20day,but1/14/2011Completed th (Tx.LGC43.0561.c)beforethe10daybefore thedateofthehearing ndth 7 Noticeof2PublicHearingOnorafterthe20day,but1/26/2011Completed th (Tx.LGC43.0561.c)beforethe10daybefore thedateofthehearing 8 ProposedServicePlanmustbePriortopublichearings1/25/2011Completed madeavailableforpublic inspectionandexplainedatthe publichearings(Tx.LGC 43.056.j) stth 9 1PublicHearing(Tx.LGCNotlaterthanthe90day2/1/2011Completed 43.0561.a&Tx.LGC43.0561.c)aftertheInventoryismade availabletothepublic ndth 10 2PublicHearing(Tx.LGCNotlaterthanthe90day2/15/2011Completed 43.0561.a&Tx.LGC43.0561.c)aftertheInventoryismade availabletothepublic. Mustalsoconsiderthat publichearingsmusttake th placeonorbeforethe20 th day,butafterthe10day afterthedateofthenotice ofpublichearingin accordancewith43.0561.C. Therefore,bothhearings musttakeplaceby2/15/20, whichis20daysafter 1/26/2011publichearing noticedate. th 11 Noticeof3rdPublicHearingOnorafterthe20day,but2/4/2011Completed th (Tx.LGC43.0561.c)beforethe10daybefore thedateofthehearing rdth 12 3PublicHearing(Tx.LGCNotlaterthanthe90day2/17/2011Completed 43.0561.a&Tx.LGC43.0561.c)aftertheInventoryismade availabletothepublic. Mustalsoconsiderthat publichearingsmusttake th placeonorbeforethe20 th day,butafterthe10day afterthedateofthenotice ofpublichearingin accordancewith43.0561.C. Therefore,bothhearings musttakeplaceby2/15/20, whichis20daysafter 1/26/2011publichearing noticedate. nd 13 NegotiationsforProvisionofAfterthe2publichearing,PriortoCompleted Servicesafterannexationorinbutbeforeadoptionofthe8/26/2011 lieuofannexation(Tx.LGCAnnexationOrdinance 43.0562) st 14 FinalServicePlan(Tx.LGCBeforethe1dayofthe8/26/2011Completed th 43.056.a)10monthafterthemonth (ForDH7and DH9only) inwhichtheinventoryis prepared. th 15 RequestarbitrationregardingBeforethe60dayafter10/10/2011Requested negotiations(ifrequired)thedatetheserviceplanisbyDH12 (Tx.LGC43.0564)completed. 16 NonAnnexationAgreements1/11/2012Completed offeredtopropertyownerswith (ForDH7and DH9only Ag.exemptions(Tx.LGC43.035) 17 Arbitration(DH12)10/17Completed 10/18/2012 18 BriefCityCouncilonDH1211/13/2012Completed Arbitration 19 MailNAAsforDH1211/14/2012Completed 20 NAAsforDH12DuetoLegal12/1/2012Completed Department 21 CouncilApprovalofNAA12/18/2012Completed OrdinancesforDH7,DH9& DH12 22 OrdinancePublicationTheordinanceorany3/10/2013 amendmentthereofshall notbeacteduponuntilat least30daysafter newspaperpublication date.(Charter) 23 CourtesyPresentationtoEarlyMarch, PlanningandZoning2013 Commission st 24 1ReadingoftheOrdinance3/5/2013 ndnd 25 2ReadingoftheAnnexationApproveon2Reading4/16/2013 Ordinancebefore3years+31days Mustoccurpriorto5/7/13.