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December 1, 2015 Agenda
tru�Rltl �'� � k, Tuesday, December 1, 2015 City of Denton Meeting Agenda City Council City Hall 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com 12:00 PM Work Session Room & Council Chambers After determining that a quorum is present, the City Council of the City of Denton, Texas will convene in a Work Session on Tuesday, December 1, 2015 at 12:00 p.m. in the Council Work Session Room at City Hall, 215 E. McKinney Street, Denton, Texas at which the following items will be considered: 1. Citizen Comments on Consent Auenda 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 December 1, 2015. 3. Work Session Reports A. ID 15 -962 Receive an update, hold a discussion, and give staff direction on the Road Impact Fee implementation. Attachments: Exhibit 1 PowerPoint Presentation B. ID 15 -1171 Receive a report, hold a discussion, and give staff direction on the Denton Renewable plan, activities, and possible financial options related to the future power supply plans to meet the City's growth and needs. Attachments: Exhibit 1 December 1 Renewable Denton presentation Exhibit 2 November 10 Renewable Denton presentation C. ID 15 -1202 Receive a report, hold a discussion and give staff direction regarding a policy for valet parking. D. ID 15 -1235 Receive a report, hold a discussion, and give staff direction regarding a proposed ordinance of the City of Denton, Texas, setting Planning and Development Fees as it concerns gas well drilling and production in the City of Denton and its extraterritorial jurisdiction. Attachments: Exhibit 1 Fee Schedule Ordinance No. 2013 -248 Exhibit 3 Findings from Gas Well Fee Analysis Exhibit 4 Gas Well Fees - Presentation E. ID 15 -1258 Receive a report and hold a discussion regarding the recall petition as against Joey Hawkins, Council Member for District 4, and the reasons therefor; and regarding the insufficiency of the recall petition and the City Secretary's declination of certification to the City Council. Attachments: Exhibit 1 Recall Petition City ofDenton Page I Printed on 1112.512015 City Council Meeting Agenda December 1, 2015 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. 1. Closed Meeting: A. ID 15 -554 Deliberations regarding Real Property - Under Texas Government Code Section 551.072; Consultation with Attorneys - Under Texas Government Code Section 551.071. Receive information from staff, discuss, deliberate, and provide staff with direction regarding the potential acquisition of real property interests generally located in Denton, Denton County, Texas, for the construction, expansion and use of electric power transmission lines, beginning at the North Lakes Substation of Denton Municipal Electric and proceeding east along Riney Rd, then turning north along Nicosia St., then east along W. Hercules Lane and terminating at the Denton North Substation of Denton Municipal Electric. Consultation with the City's attorneys regarding legal issues associated with the acquisition of the real property interests described 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 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 administrative proceeding or potential litigation. [North Lakes to Denton North transmission route] B. ID 15 -1106 Deliberations Regarding Certain Public Power Utilities: Competitive Matters - Under Texas Government Code Section 551.086. Receive a presentation from Denton Municipal Electric staff ( "DME ") regarding public power competitive and financial matters pertaining to plans, strategies, opportunities, and developments for generation improvements to the DME system; discuss and deliberate strategies regarding same; discuss and deliberate opportunities and strategies for the City to acquire purchased power and enter into agreements regarding the same, in order to meet its future energy needs. Discuss, deliberate and provide Staff with direction. C. ID 15 -1242 Deliberations Regarding Real Property - Under Texas Government Code Section 551.072; Deliberations Regarding Economic Development Negotiations - Under Texas Code Section 551.087; Consultation with Attorneys - Under Texas Government Code Section 551.071. Receive information from staff, discuss, deliberate and provide staff with direction regarding the potential acquisition, exchange, lease or value of real property located generally in the 200 block of West Hickory in the City of Denton, Denton County, Texas. Consultation with the City's attorneys regarding legal issues associated with the potential real property matter 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 City ofDenton Page 2 Printed on 1112.512015 City Council Meeting Agenda December 1, 2015 the State Bar of Texas, or would jeopardize the City's legal position in any administrative proceeding or potential litigation. D. ID 15 -1244 Deliberations regarding Economic Development Negotiations - Under Texas Government Code Section 551.087. Receive a report and hold a discussion regarding a proposed economic development program grant agreement between the City of Denton and BUC -EE's, LTD. This discussion shall include commercial and financial information the City Council has received from BUC -EE's, LTD, a business prospect which the City Council seeks to have locate, stay, or expand in or near the territory of the city, and with which the City Council is conducting economic development negotiations; deliberate the economic development program grant agreement between the City of Denton and BUC -EE's, LTD. E. ID 15 -1248 Deliberations regarding Real Property - Under Texas Government Code Section 551.072; Consultation with Attorneys - Under Texas Government Code Section 551.071. Receive information from staff, discuss, deliberate, and provide staff with direction regarding the potential acquisition of real property interests located along the east side of Bernard St. between Eagle Drive to the north and Collins Street to the south, in the City of Denton, Texas; where discussions had, deliberation, and direction given in an open meeting would have a detrimental effect on the position of the governmental body in negotiations with a third party. Consultation with the City's attorneys regarding legal issues associated with the acquisition of the real property interests described above; where 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 administrative proceeding or potential litigation. [Eagle Substation] F. ID 15 -1274 Consultation with Attorneys - Under Texas Government Code Section 551.071. Consult with City's attorneys regarding ID 15 -1235 of the December 1, 2015 Work Session Agenda, as it concerns legal issues associated with that item where a public discussion of this legal matter would conflict with the duty of the City's attorneys under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas City ofDenton Page 3 Printed on 1112.512015 City Council Meeting Agenda December 1, 2015 ANY FINAL ACTION, DECISION, OR VOTE ON A MATTER DELIBERATED IN A CLOSED MEETING WILL ONLY BE TAKEN IN AN OPEN MEETING THAT IS HELD IN COMPLIANCE WITH TEXAS GOVERNMENT CODE, CHAPTER 551, EXCEPT TO THE EXTENT SUCH FINAL ACTION, DECISION, OR VOTE IS TAKEN IN THE CLOSED MEETING IN ACCORDANCE WITH THE PROVISIONS OF §551.086 OF THE TEXAS GOVERNMENT CODE (THE `PUBLIC POWER EXCEPTION'). THE CITY COUNCIL RESERVES THE RIGHT TO ADJOURN INTO A CLOSED MEETING OR EXECUTIVE SESSION AS AUTHORIZED BY TEX. GOV'T. CODE, §551.001, ET SEQ. (THE TEXAS OPEN MEETINGS ACT) ON ANY ITEM ON ITS OPEN MEETING AGENDA OR TO RECONVENE IN A CONTINUATION OF THE CLOSED MEETING ON THE CLOSED MEETING ITEMS NOTED ABOVE, IN ACCORDANCE WITH THE TEXAS OPEN MEETINGS ACT, INCLUDING, WITHOUT LIMITATION §551.071- 551.086 OF THE TEXAS OPEN MEETINGS ACT. Regular Meeting of the City of 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: 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 ID 15 -1278 Police Appreciation Day 3. PRESENTATION FROM MEMBERS OF THE PUBLIC A. Review of procedures for addressing the City Council. B. Receive Scheduled Citizen Reports from Members of the Public. 1. ID 15 -1247 William Jones regarding various issues concerning the City of Denton. 2. ID 15 -1275 Kim McKibben regarding a proposed building in the Fry Street Overlay District. C. Additional Citizen Reports - This section of the agenda permits any person not registered for a citizen report to make comments regarding public business on items not listed on the agenda. This is limited to four speakers per meeting with each speaker allowed a maximum of four (4) minutes. 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 — H). 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 — H 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 ofDenton Page 4 Printed on 1112.512015 City Council Meeting Agenda December 1, 2015 A. ID 15 -967 Consider approval of a resolution of the City Council of the City of Denton, Texas approving a policy for aircraft tax abatement for the City of Denton to establish guidelines and criteria governing aircraft incentive agreements and aircraft tax abatement agreements; and declaring an effective date. Attachments: Exhibit 1 - Resolution Exhibit 2 - Aircraft Incentive Policv B. ID 15 -1064 Consider adoption of an ordinance amending Ordinance No. 2012 -366, as amended by Ordinance 2014 -039, relating to Tax Increment Reinvestment Zone (TIRZ) Number Two, to add to the membership of the Board of Directors; repealing all conflicting ordinances and portions thereof, and providing an effective date. Attachments: Exhibit 1- Revised TIRZ Ordinance C. ID 15 -1065 Consider appointments to the Tax Increment Reinvestment Zone (TIRZ) Number Two Board of Directors. D. ID 15 -1199 Consider adoption of an ordinance approving a City sponsorship in an amount not to exceed $6,000 of in -kind services and supplies for the 27th Annual Denton Holiday Lighting Festival to be held on the Downtown Square on December 4, 2015; and providing an effective date. Attachments: Exhbit 1 Letter of Request Exhibit 2 2014 In -kind Costs Exhibit 3 2015 -16 Running Total of Requested Support Exhibit 4 Ordinance E. ID 15 -1225 Consider approval of a resolution reviewing and adopting revisions to the Investment Policy regarding funds for the City of Denton; and providing an effective date. The Audit /Finance Committee recommends approval (2 -0). Attachments: Exhibit 1 - Red -lined FY 2015 -16 Investment Policv Exhibit 2 - Resolution F. ID 15 -1226 Consider approval of a resolution revising Administrative Policy No. 403.07 "Debt Service Management" and providing for an effective date. The Audit /Finance Committee recommends approval (2 -0). Attachments: Exhibit 1 - Redlined FY 2015 -16 Debt Service Management Policy Exhibit 2 - Debt Summary Report for 2015 Exhibit 3 - Resolution G. ID 15 -1227 Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and Music Theater of Denton (PY2016) for the payment and use of hotel tax revenue; and providing an effective date. ($5,250 - Hotel Occupancy Tax Committee recommends approval 3 -0) Attachments: Exhibit 1 - Ordinance H. ID 15 -1228 Consider adoption of an ordinance of the City of Denton authorizing the City Manager or his designee to execute a contract through the Buy Board Cooperative Purchasing Network for the acquisition of an asphalt recycling machine for the City City ofDenton Page 5 Printed on 1112.512015 City Council Meeting Agenda December 1, 2015 of Denton Street Department; and providing an effective date (File 5995- awarded to Cooper Equipment Company in the amount of $185,815). Attachments: Exhibit 1 -Quote Exhibit 2- Vendor Sole Source Exhibit 3 -Fleet Memo Exhibit 4- Ordinance 5. ITEMS FOR INDIVIDUAL CONSIDERATION A. ID 15 -1212 Consider approval of resolution casting votes for membership to the Board of Directors of the Denton Central Appraisal District; and declaring an effective date. Attachments: Exhibit 1 DCAD Memorandum Exhibit 2 DCAD 2015 Board Exhibit 3 DCAD Resolution B. ID 15 -1222 Consider adoption of an ordinance approving an Economic Development Agreement under Chapter 380 of the Local Government Code to promote economic development and to stimulate business activity in the city of Denton between the City of Denton and BUC -EE's LTD, regarding the development of an approximate 38 -acre parcel of land generally located on the west side I -35 E, north of Wind River Lane, in south Denton; authorizing the expenditure of funds therefor; and providing an effective date. Attachments: Exhibit 1 - Preliminary Staff Report Exhibit 2 - Aerial Map Exhibit 3 - Zoning Map Exhibit 4 - Future Land Use Map Exhibit 5 - Preliminary Concept Site Plan Exhibit 6 - Elevations Exhibit 7 - Public Infrastructure Costs Exhibit 8 - Buc -ee's Presentation C. ID 15 -1269 Consider nominations /appointments to the City's Boards and Commissions: Community Development Advisory Committee and Traffic Safety Commission. 6. PUBLIC HEARINGS A. S 15 -0009a Hold a public hearing and consider an ordinance regarding a Specific Use Permit to allow a multi- family development on an approximately 16.061 acre property generally located on the south side of East McKinney Street (FM 426), approximately 1,500 feet east of Woodrow Lane. The Planning and Zoning Commission recommends approval of this request (6 -0), subject to conditions. Due to written opposition from property owners of at least 20% of the area immediately adjoining and within 200 feet of the subject property, a supermajority vote of all members of the City Council is necessary to approve the request. City ofDenton Page 6 Printed on 1112.512015 City Council Meeting Agenda December 1, 2015 Attachments: Exhibit 1 Staff Analysis Exhibit 2 Aerial Map Exhibit 3 Zoning Map Exhibit 4 Future Land Use Map Exhibit 5 Applicant Narrative Exhibit 6 Site Plan Exhibit 7 Landscape Plan Exhibit 8 Type A Elevations Exhibit 9 Type B Elevations Exhibit 10 Type C Elevations Exhibit 11 Type D Elevations Exhibit 12 Type E1 Elevations Exhibit 13 pe E2 Elevations Exhibit 14 Type F Elevations Exhibit 15 Site Photos Exhibit 16 Notification Map and Responses Exhibit 17 November 4, 2015, Planning and Zoning Commission Meeting MinutE Exhibit 18 Draft Ordinance 7. PRESENTATION FROM MEMBERS OF THE PUBLIC A. Review of procedures for addressing the City Council. B. Receive Scheduled Citizen Reports from Members of the Public. 1. ID 15 -1251 Willie Hudspeth regarding City Hall. 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. B. Possible Continuation of Closed Meeting topics, above posted. 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 , 2015 at o'clock (a.m.) (p.m.) City ofDenton Page 7 Printed on 1112.512015 City Council Meeting Agenda December 1, 2015 CITY SECRETARY NOTE: THE CITY OF DENTON CITY COUNCIL WORK SESSION ROOM AND COUNCIL CHAMBERS ARE ACCESSIBLE IN ACCORDANCE WITH THE AMERICANS WITH DISABILITIES ACT. THE CITY WILL PROVIDE SIGN LANGUAGE INTERPRETERS FOR THE HEARING IMPAIRED IF REQUESTED AT LEAST 48 HOURS IN ADVANCE OF THE SCHEDULED MEETING. PLEASE CALL THE CITY SECRETARY'S OFFICE AT 349 -8309 OR USE TELECOMMUNICATIONS DEVICES FOR THE DEAF (TDD) BY CALLING 1 -800 - RELAY -TX SO THAT A SIGN LANGUAGE INTERPRETER CAN BE SCHEDULED THROUGH THE CITY SECRETARY'S OFFICE. City ofDenton Page 8 Printed on 1112.512015 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON File #: ID 15 -962, Version: 1 Legislation Text Agenda Information Sheet DEPARTMENT: Utility Administration CM/ ACM: Howard Martin Date: December 1, 2015 SUBJECT Receive an update, hold a discussion, and give staff direction on the Road Impact Fee implementation. BACKGROUND In the May 12 and July 28 City Council meetings staff presented the road impact fee calculation methodology, impact fee calculations for each of the five Service Areas, compared what other cities are charging for road impact fees, and discussed road impact fee policy options. Based on these presentations and discussions, on September 21 staff presented and discussed with the Mobility Committee the following items for further direction. 1. 10 -year growth driven needs per the land use projections (Total 319 million) 2. Costs of existing capacity deficiencies (Total 122 Million) 3. Road impact fee rebates for specific areas in the city 4. Road impact fees rebates as economic development incentives for new businesses that reach a minimum threshold of investment in the City 5. Policy direction The projected 10 -year road capacity improvement dollars for all of the capacity related projects needed per the land use are shown below. Service Area 10 Year Growth Driven CIP Costs A $119 Million B $20 Million C $91 Million D $29 Million E $60 Million Total 10 -Year Impact Fee CIP = $319 Million In addition, there has been insufficient funding of projects to enhance capacity in existing arterial and collector roads in the city. State law requires calculation of this capacity deficiency for the implementation of road impact fees, as impact fees cannot be charged for the existing deficiency. The existing road capacity deficiency City of Denton Page 1 of 3 Printed on 11/25/2015 File #: ID 15 -962, Version: 1 and the dollars needed to correct this deficiency are shown below. Service Area Deficiency A $7 Million B $47 Million C $19 Million D $10 Million E $39 Million Total Deficiency = $122 Million The Mobility Committee reviewed the above funding needs for the existing and future capacity expansion projects. In addition, how some other cities in the DFW Metroplex provide rebates for nonresidential development, and how the road impact fees stack up for various uses around the metroplex cities was discussed. The incentives comparison matrix is attached as Exhibit 1. The impact fee cost comparison for various uses is shown in Exhibit 2. Based on review of the above data and discussion, the Mobility Committee provided staff the following recommendations and direction to proceed on impact fee implementation. 1. Use $612 per Vehicle Mile that equates to $3,000 road impact fee for a Single Family home. 2. Provide a rebate of 25 percent for all nonresidential developments that equates to $459 per Vehicle Mile ($612 x 0.75 = $459). 3. After one year of implementation of the road impact fees, staff will provide specific examples on how impact fees were assessed for various proposed developments. This will allow adjustments to the road impact fee ordinance as necessary. 4. Staff will present the road impact fee study and the Mobility Committee recommendations to the Developer's Committee and provide any feedback to the City Council. Staff will present the above information and the Mobility Committee recommendations for the City Council discussion, and will meet the state mandated public hearing timelines by establishing dates for the public hearings. OPTIONS N/A RECOMMENDATION Staff is seeking guidance and recommendations for implementing Road Impact Fees. ESTIMATED SCHEDULE OF PROJECT N/A PRIOR ACTION/REVIEW (Council, Boards, Commissions) December 5, 2011: Staff presentation to the City Council regarding supplemental street funding February 6, 2012: Staff presentation to the City Council to provide an update regarding supplemental street funding September 10, 2013: Staff presentation to the City Council to provide an update and seek direction regarding supplemental street funding November 15, 2013: Staff presentation of proposed road impact fees to the Developer's Committee City of Denton Page 2 of 3 Printed on 11/25/2015 File #: ID 15 -962, Version: 1 December 10, 2013: Work Session on Kimley -Horn and Associates, Inc consultant contract for implementation of road impact fees January 7, 2014: Approval of the Kimley -Horn and Associates, Inc consultant contract for implementation of road impact fees May -, 2014: Approval of the amendment to the Kimley -Horn and Associates, Inc consultant contract for implementation of road impact fees December 9, 2014: Presentation of the Travel Demand Model and proposed changes to the Mobility Plan to the Mobility Committee January 5, 2015: Presentation of the Travel Demand Model and proposed changes to the Mobility Plan to the Traffic Safety Commission January 13, 2015: Update to Mobility Committee on the proposed changes to the Mobility Plan and street sections conforming to context sensitive solution design March 23, 2015: Presentation of the Travel Demand Model and proposed changes to the Mobility Plan to the City Council April 14, 2015: Presentation of the 10 -Year Land Use Projections and Capital Improvements Plan to the City Council May 12, 2015: Presentation on Road Impact Fee calculations, and comparison with other cities July 28, 2015: Update on Road Impact Fees to the City Council September 16, 2015: Update on the implementation of the Travel Demand Model of the Denton roadway system and the resulting proposed updates to the current Mobility Plan to the Planning and Zoning Commission September 21, 2015: Update on Road Impact Fees to the Mobility Committee FISCAL INFORMATION N/A BID INFORMATION N/A EXHIBITS 1. PowerPoint Presentation Respectfully submitted: P.S. Arora Division Manager City of Denton Page 3 of 3 Printed on 11/25/2015 �,,, „ �' ���N t �� a , w _. �' ., �,,, „ �' ���N t �� a , I I CL ro 2 r J% U) CD c s -, �> c c, m 0 ca 0 w z ri o of IVA/ a II I I I I E m U. CL E 0 CL E x uj CL E kn ti iiiiii 11111P 8 8 8 Vlk Vl� I I I I q 2 C^ q I I Do k / \ / k \ \ N o m « # V4 V4 I I Do I I I I I I E I I I I City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON Legislation Text File #: ID 15 -1171, Version: 1 Agenda Information Sheet DEPARTMENT: DME ACM: Howard Martin, 349 -8232 Date: December 1, 2015 SUBJECT Receive a report, hold a discussion, and give staff direction on the Denton Renewable plan, activities, and possible financial options related to the future power supply plans to meet the City's growth and needs. BACKGROUND Over the past five years the City of Denton has secured its place as a national leader in public power by providing 40% wind energy to its customers with no corresponding increase in rates. DME is responding to the future energy needs of its customers with the Renewable Denton Plan, a plan that will enable us to increase Denton's renewable energy from 40% to 70% by the year 2019. Renewable energy has desirable qualities due to a lower environmental impact than other conventional energy sources, and because wind and solar power can be naturally replenished. However, one undesirable quality of renewable generation is that it is intermittent and difficult to predict thereby introducing reliability or financial risks. A reliable source of dispatchable on- demand power is needed and staff has proposed using quick start generation using reciprocating internal combustion engines which would minimize the use of natural gas. This option manages risks while at the same time increasing our renewable energy footprint and providing safe, reliable power without increased rates. DME held a press conference on October 6, 2015, and has been engaging in public outreach by mailers, publishing information via website, and conducting open house meetings with the public on October 19 and 27, 2015, as well as attending Council Members community meetings. DME briefed the Council on the feedback and comments at the November 10th meeting and at Council direction will discuss future options during this presentation. EXHIBITS 1. December 1 Renewable Denton draft presentation 2. November 10 Renewable Denton Council presentation Respectfully submitted: Phil Williams DME, General Manager Prepared by: City of Denton Page 1 of 2 Printed on 11/25/2015 File #: ID 15 -1171, Version: 1 Smith Day Compliance Manager City of Denton Page 2 of 2 Printed on 11/25/2015 1 r i Icy .�1 �rW RVe � I� h� 1� ^� W • P...rJ R© VV C C',a 4 G7 4 tf� 4 lf� lL*A W N ♦W v�W H C? QY 00 r- .0 4 Olt +n et M CJ H A N :3 WE IN III (3) _0 .R 0 _0 c 0 0 0 C/) 0 U) C: CD 7- 4--1 a) 1� C/) C E 0) > 0- .. ...... 0 C.......... 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McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON File #: ID 15 -1202, Version: 1 Legislation Text Agenda Information Sheet DEPARTMENT: Development Services /Economic Development CM /ACM: Jon Fortune DATE: December 1, 2015 SUBJECT Receive a report, hold a discussion and give staff direction regarding a policy for valet parking. BACKGROUND The increase in restaurants and night time activity in downtown has increased the demand for parking. In 2013, Economic Development was approached by Queenie's Steakhouse, 115 E. Hickory, to request a permit to valet park cars for their patrons. We explored several options with them, including designating a loading zone, leasing spaces in the public right -of -way, or allowing them to use the spaces until a valet parking policy could be put into place. Staff granted a temporary permit to Queenie's to allow them to offer service to their customers. The restaurant is currently operating under the following guidelines: • The valet stand may be placed on the sidewalk facing the public parking spaces along East Hickory Street, in front of Queenie's • The valet service may utilize one or two public parking spaces to facilitate valet parking if the spaces are open and available • The valet service may politely ask a citizen if they would move their vehicle from a parking space in order to accommodate the valet • The valet service may not require a citizen to move their vehicle and may not block any public parking spaces We have been asked to formalize this process through an ordinance that would address valet parking. Staff researched other cities' valet parking policies and discovered the following commonalities: • Valet Box Location Map • Business name (i.e., Queenie's) • Service Company name (valet) City of Denton Page 1 of 3 Printed on 11/25/2015 File #: ID 15 -1202, Version: 1 • Insurance, naming city as additional insured • Hours of operation 0 Where vehicles are being parked • Annual fees, processing fees • Written notice to owners within a certain distance • Moveable valet stand We also looked at their fee structure and notification requirements: Plano • $1 mil insurance • $25 application fee • $250 annual fee (interest rates apply to expired licenses) • Written notice to owners within 100 ft. 0 Valet stand must be moveable Dallas • $300,000 insurance • $25 application fee • $250 annual per space for first six spaces, plus $1,000 for each space over six annual fee • $25 for each sign or curb marking • Additional $50 for placing stand on ROW • Written notice to owners within 50 ft. Ft. Worth • $1 mil insurance • $25 application fee City of Denton Page 2 of 3 Printed on 11/25/2015 File #: ID 15 -1202, Version: 1 • $500 annual fee up to two spaces; $150 per additional spaces over two • Written notice to owners within 100 ft. • Allowed in ROW, no larger than 4 x 4 feet 0 Valet stand must be moveable Austin • May operate entirely on private parking lot without permit • $250 annual per space 0 Currently revamping ordinance. Considering between .50 -$1 per hour (based on approx. lost revenue) The City of Denton is considering developing an ordinance to address the needs of this particular business and to provide a process for future requests for this type of activity. PRIOR ACTION/REVIEW (Council, Boards, Commissions) City Council reviewed this item at a work session on October 1, 2013. At that time, capital improvements were about to begin on E. Hickory. It was suggested that we wait until the work was complete before moving ahead with this item. Respectfully submitted: Aimee Bissett Director, Development Services Prepared by: Julie Glover Economic Development Program Administrator City of Denton Page 3 of 3 Printed on 11/25/2015 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON File #: ID 15 -1235, Version: 1 Legislation Text Agenda Information Sheet DEPARTMENT: Development Services CM/ ACM: Jon Fortune Date: December 1, 2015 SUBJECT Receive a report, hold a discussion, and give staff direction regarding a proposed ordinance of the City of Denton, Texas, setting Planning and Development Fees as it concerns gas well drilling and production in the City of Denton and its extraterritorial jurisdiction. BACKGROUND On August 4, 2015, the City adopted comprehensive changes to the Gas Well Drilling and Production Ordinance, under Ordinance No. 2015 -233, in order to comply with HB 40 (Texas Natural Resources Code, Sec. 81.0523) enacted by the Texas Legislature on May 18, 2015. Ordinance No. 2015 -233 went into effect on August 18, 2015 after the required two -week publication period. On August 18, 2015, a corresponding fee schedule modification was proposed. During deliberations for the August 18, 2015, City Council meeting, further discussions were requested on the revised Development Review Fee Schedule once a third -party consultant completed a detailed review of the fees. After the August 18 discussion, NewGen Strategies & Solutions, LLC began an update to the 2013 Gas Well Fee Study (2013 Study) to incorporate the changes in City employee activities resulting from the passage of Ordinance No. 2015 -233. A summary memo and the findings of the update to the 2013 Study are included in the Exhibits to this report. In addition to the findings from the Study, City staff proposes an incentive to gas well operators that apply for a new Gas Well Development Site Plan within a short period of time. The proposal is to reduce the currently studied fee amounts by 50 percent for 90 days. Based on discussions with Operators conducted during the process to revise Ordinance No. 2015 -233, City staff learned most Operators are more likely to apply for a new Gas Well Development Site Plan with this financial incentive and the City would benefit by enabling new Gas Well Development Site Plans to replace a multitude of older Gas Well Development Plats. The Study calculates a $3,960 fee for Gas Well Site Plan reviews during the first two years after the fee schedule is adopted. Under Staff's proposal, the fee would be reduced to $1,980 for 90 days to encourage the necessary updates to older Gas Well Development Plat records. The City currently has records for 343 total gas well site applications. Of those applications, only 212 of the records have been approved. The remaining 131 application records are either still pending approval, awaiting resubmittal, or have been closed. There are currently 311 drilling and Production Sites within the city of Denton and its extraterritorial jurisdiction (ETJ). The city contains 153 sites and 158 are located in the ETJ. Since only 212 site applications have been approved, City of Denton Page 1 of 3 Printed on 11/25/2015 File #: ID 15 -1235, Version: 1 it is likely that at least 99 Drilling and Production Sites exist without any corresponding site approval documents. The number may actually be higher than 99 because 71 of the 343 applications were submitted as amended applications. The proposal to incentivize the respective gas well operators to apply for a Gas Well Development Site Plan is intended as a solution to the current problem that exists regarding the lack of complete records for what exists today. This incentive also encourages fewer long -term sites because the new Gas Well Development Site Plans will act to group multiple wells together. Another recommended change to the annual fee will also incentivize gas well Operators to locate multiple wells on each Drilling and Production Site. The proposed Fee Schedule would also assess the per -well fee under the Annual Inspection and Administrative Review program based on the number of wells at each Drilling and Production Site. The current Annual Inspection and Administrative Review fee assesses the charge for each well, whether the well is singularly located on its own Drilling and Production Site or is located with multiple wells on a shared facility. To incentivize Operators to drill multiple wells and possibly plug older, single -well sites, the annual fee charge would be reduced for each well located on a multi -well Drilling and Production Site. Two additional revisions to the Fee Schedule were proposed in August. While these two items were not specifically addressed in the consultant's review, both items are included herein for discussion. One proposal was to amend the Development Review Fee Schedule by providing an ability to cover a portion of the administrative costs of collecting past due balances. Collecting P &I requires the City to invoice Annual Inspections on a monthly basis, versus the previous annual invoicing schedule and current bi- annual invoicing schedule. The increase in staff time necessary to generate and mail monthly invoices could be off -set by the City's ability to assess the ETJ Annual Inspection fees per Drilling and Production Site instead of the current per well basis. The final recommended change is to continue the current road damage remediation calculation formula and associated fee; however, the administration of the fee would be established by Ordinance and no longer by an Agreement. The Road Remediation Fee will be due and owing at the time an Operator provides notice to the City of Denton of their intent to perform any applicable activities specific in Ordinance No. 2015- 233. OPTIONS 1. Propose Modifications to Gas Well Fee Study 2. Schedule Public Hearing for new Fee Schedule, as presented 3. Conduct further discussions regarding the new Fee Schedule RECOMMENDATION Staff is seeking guidance on their request to pursue a repeal of Fee Schedule Ordinance No. 2013 -248 by replacing it with a new Fee Schedule that is consistent with the revised Gas Well Ordinance and is based on the updated Gas Well Fee Study conducted by NewGen Strategies & Solutions LLC. PRIOR ACTION/REVIEW (Council, Boards, Commissions) September 4, 2001, Ord. 2001 -316 amended Ord. 2000 -098 by adding a Development Plats for Gas Extraction fee to the Development Review Fee Schedule. February 5, 2002, combined gas well plat fees into the Development Review Fee Schedule via Ord. 2002 -041. September 6, 2005, under Ord. 2005 -237, adopted new gas well related fees for Gas Well Plat, Amendment to a Gas Well Plat, Watershed Protection Permit, Gas Well Inspection Fee, and Tree Mitigation. City of Denton Page 2 of 3 Printed on 11/25/2015 File #: ID 15 -1235, Version: 1 June 7, 2011, adopted Ord. 2011 -100 to approve a cost of services analysis that established new planning and development fees relating to gas well drilling and production in the City of Denton and its Extraterritorial Jurisdiction (ETJ). September 17, 2013, adopted Ord. 2013 -248 to set a Fee Schedule that revised the cost of services analysis conducted after the creation of the Gas Well Inspections Division. FYHIRITC 1. Fee Schedule Ordinance No. 2013 -248 2. NewGen Memo (Provided Under Separate Cover) 3. Findings from Gas Well Fee Analysis 4. Gas Well Fees - Presentation 12 -1 -15 Respectfully submitted: Aimee Bissett Director of Development Services Prepared by: Darren Groth, AICP, CPM, REP Manager, Gas Well Inspections Division City of Denton Page 3 of 3 Printed on 11/25/2015 s: \legal \our documents \ordinances \13 \amended gas well fees - 091713 alternate version 2.doc ORDINANCE NO. 2013 -248 AN ORDINANCE OF THE CITY OF DENTON, TEXAS, SETTING PLANNING AND DEVELOPMENT FEES AND ROAD DAMAGE REMEDIATION FEE CALCULATION FORMULA RELATING TO GAS WELL DRILLING AND PRODUCTION IN THE CITY OF DENTON AND ITS EXTRATERRITORIAL JURISDICTION; REPEALING SECTION 2 OF ORDINANCE 2011 -100; AND SETTING AN EFFECTIVE DATE. WHEREAS, pursuant to Ordinance No. 2011 -100, the City Council of the City of Denton, Texas amended the Planning and Development Fee Schedule established by prior ordinances, by amending fees relating to gas well drilling and production within the city limits and extraterritorial jurisdiction; and WHEREAS, since the adoption of Ordinance No. 2011 -100, the City established the Gas Well Inspections Division to perform gas well permitting, annual inspection services and other services and overhead related to the City's oversight of gas well drilling and production activities; and WHEREAS, on January 15, 2013, the City Council adopted comprehensive changes to the Gas Well Drilling and Production Ordinance, of which a particular change involves the addition of a new permitting activity, specifically the Erosion Control and Sedimentation Plan Review, and a resulting post - permit Erosion Control and Sedimentation Plan Annual Inspection as required by this Ordinance; and WHEREAS, given these changes, the City undertook a comprehensive review and analysis of the fees, standards and procedures associated with gas well drilling and production to determine that whether the fees, both existing and newly proposed, resulting from the January 15, 2013 Gas Well Drilling and Production Ordinance, are reasonable; and WHEREAS, as part of the Gas Well Drilling and Production Ordinance, gas well drilling operators are required to enter into a Road Damage Remediation Agreement to cover the cost to repair damages to the City's roadways caused by the heavy truck traffic associated with the operators' gas well drilling activities; and WHEREAS, the road damage data and formula used to determine the appropriate Road Damage Remediation Fee also underwent a comprehensive review this year to determine the current reasonable cost to repair the City's roadways resulting from the heavy truck traffic associated with typical gas well drilling operations; and WHEREAS, based on the gas well permitting and inspection fees and road damage remediation fee comprehensive reviews, the City Council finds that the fees relating to gas well drilling and production, and the road damage data and formula associated with the Road Damage Remediation Agreement requirement, as set forth herein, are reasonable, and do not exceed the reasonable cost to the City in providing the scheduled services, and are in the public interest; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: Page 1 sAlegal \our documents\ ordinances \13 \amended gas well fees- 0917I3 alternate version 2.doc SECTION 1. The findings and recitations contained in the preamble of this ordinance are incorporated herein by reference and found to be true. SECTION 2. The Planning and Development Fee Schedule for gas well production is adopted, as set forth in the table below: Mvity The following fees shall be charged for the first two (2) reviews Fee ..... Gas .._..�.� ....._ ......�_...__ ...._.....�.�... ._�, ....._. _ .. Well SUP Review (includes Engineering Fee) $12,840 Gas Well Development Site Plan 5 $7,575 ... ... �,_.. .... _ .. .,..___ .. -_____ _. . Ad�onal Engineering Fee $390.. Additional Fee for Full Landscape Plan Review includes initial and one follow- _ � llow- $350 up inspection) . .. _. m.... W dditionpal Fee for Second Follow -Up inspectionthird site visit) "' ' ' ( it} for Full $265 andsca e Plan Review — � ( 1 a aw , ditinal Fee for F Tree Mitigation Review includes initial and one follow- $240 u inspection) t - ... Up inspection (third site visit) for Full Tree $165 Mitigation Review Additional Fee for Erosion and Sediment Control Plan Review (includes initial and one follow -up inspection), which fee is included as part of the Initial Gas $285 Well Inspections category below ........., ' for Erosion Additional Fee for Second Follow-Up (third site visit) f $130 and Sediment Control Ilan Review ..._.m._. Initial Gas Well Inspections (includes Erosion and Sediment Control Plan Review, ..m.....__. __ _ .. $1,620 and initial adnefoow up i sp ectio ) L onissuance of a G as Well Permit and �.....,. ...,.. _. ..... , ... _..m._. _. as Well Development Plat Review _ $5,215 _..�........t, .. .._.... ...... Additional Engineering Fee $ 390 � .... -_ -_ - —1– ndment - --- ..- ...,..... Gas Well Site Plan Plat Amendment .......... $7,575/$5,215. Additional Engineeri..... .._____ �...� �...... Engineering Fee �........ �,.._ .........3.... $ m � flan category The same fees listed under the Gas Well Development Site a category above - shall be charged, if applicable The following fees shall be charged annually, per gas well Annual Inspection and Administration Fee (within City) (covers two annual ,055 inspections) Additional Fee for each follow -up inspection beyond the two annual inspections $485 - -.... Ann. . _�...m.. -. ._ .. ..... � _..�..__..._ _ ..... .... �........�. ual Inspection and Administration Fee (within ETJ) (covers two annual ......m_ $395 inspections follow -u- -"ins ection b.... �.-- - -.....Additional Fee for each e p p . yond . _ the two annual inspections $35 m Corol ( Inspection covers initial and one follow-up m °..._.. Anual F sion—and Sed' ent nt $285 inspection) __. tioni inspection beyond d the initial and one follow -up Annual ........._ $130 Erosion and Sedment Control Inspection - - �- The following fees shall be charged per each application p -._ -- - �� Page 2 s:\Iegal\our documents\ordiiiances\13\amended gas well fees-091713 alternate version 2,doc . .......... . . . ................ ... . . ..... . . ........... Transfer of Operation $315 .. .... . ..... . ..... . ........... . ...... -.1---- Watershed Protection Permit $195 Gas Well Per=t $500 sEcTION 3. The Road Damage Remediation Fee Calculation Formula, which appears and is based on the road damage remediation calculations set forth in Exhibit "A", for gas well drilling and production is adopted. SECTION 4. Section 2 of Ordinance 2011-100 is hereby superseded and repealed. SECTION 5. This ordinance shall become effective at 12:01 a.m., September 18, 2013 PASSED AND APPROVED this, the Tjt�l day of _September 2013. ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPR6, ED AS 0 LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: ....... MARK A. I.1 J ROB -JGHS, MAYOR Page 3 z 0 V z QO W X 2 LU W 0: w cn S LL LL V r m E U) 4- '3' M 04 U) 69 CL to LO 00 rZ Lo o - o ca o2 0 of m E a) o Lo a) Lo C CD f oo N ca Gq a) d. lu x 04 a) a) r W c O to o o L M- a) C,) 64 c,4 co C', Iq m .0 cq mo w r- 06 0 -�l w a) r00 E) 0) 04 0 d) I_ U) co 64 U) as (D no 9 - A co Zt (D I-- co (D m -� 0 :D Z: 00 0 0 U r 0 . . . . ..................... -j r— r- N 04 04 04 E w c6 (,i 6 6 e2 T m c .c 0 12 LL C) 000 ::1- 00 0 C� CD 00 CD U) 0 C� 0 C� � 0 0 05 w I LO m S 9 0 LL r 0 U LL Ln (U E (U (U re (U _0 E 0 (U z 0 _0 (U _0 CL D Ln (U (U U- (U Ln E 0 I- 4— bn Ln C: k -o E .T E P \f\ to 2 7 \£ \1 \) \ \ t2 Eo 12 t5 12 A L, S L, s k -o E .T E 2 'to t2 -o • Updated personnel costs and overhead using 2015- 2016 Budget and Indirect Cost Study • Updated time requirements based on anticipated activities required pursuant to Ordinance No. 2015- 233 • Expanded fee schedule to include charges by gas well pad sites to encourage co- location of wells • A SUP will only be required if a Watershed Protection Permit is required. Current Fees New: Proposed Fees $7,575 SUP Processing Fee $12,840 SUP Processing Fee $12,925 Engineering Fee Included Engineering Fee Included Additional Full Landscape Study $350 Additional Full Landscape Study $495 Additional Full Tree Mitigation Study $240 Additional Full Tree Mitigation Study $395 Third Site Visit for Landscape Issues $265 Third Site Visit for Landscape Issues $265 Third Site Visit for Tree Issues $165 Third Site Visit for Tree Issues $165 Site Plan Amendment (non SUP) $3,960* New: * —nd.,- filed a ft, 2 years will has —,fee , ft, plan —1— a ft, 2 years. Gas Wellll Reviiew iin FID /MFIC Reviiew $500 • Based on Ordinance No. 2015 -233 changes, it is anticipated that there will be a number of Gas Well Development Site Plans filed in the first two years, with a significant reduction in filings thereafter. Current Fees Proposed Fees Site Plan Review Engineering Fee Additional Full Landscape Study Additional Full Tree Mitigation Study Third Site Visit for Landscape Issues Third Site Visit for Tree Issues Site Plan Amendment 21 New: $7,575 Site Plan Reviiew (Hrst 2 years) $3,960 Site Plan Reviiew (After 2 years) $7,570 Site Plan wiMi SUP Amendment $5,470 $390 Engineering Fee $415 $350 Additional Full Landscape Study $495 $240 Additional Full Tree Mitigation Study $395 $265 Third Site Visit for Landscape Issues $265 $165 Third Site Visit for Tree Issues $165 $7,575 Site Plan Amendment (non SUP) $3,960* * —nd.,- filed a ft, 2 years will has —,fee , ft, plan —1— a ft, 2 years. 21 • Based on changes in activities per discussions with City Staff and an increased number of anticipated filings, the proposed fee for Gas Well Development Plat Reviews has been significantly reduced. Current Fees Proposed Fees Plat Review $5,215 Plat Review $2,880 Engineering Fee $390 Engineering Fee $415 Plat Review Amendment $5,215 Plat Review Amendment $2,880 • Annual Inspections and Administration Fees have been updated to provide for a tiered approach based on the number of gas wells at a gas well site. Current Fees Annual Inspection (City) per Well $1,055 Third Follow -up Site Inspection (City) $485 Annual Inspection (ETJ) per Well $395 Third Follow -up Site Inspection (ETJ) $35 Proposed Fees New: Annuall Vnspec:Liion (City) per Wellll wirLh J. 2 Wells $1,125 Annuall Vnspec:Liion (City) per Wellll Wth 3 5 Wells $900 Annuall Vnspectbn (City) per Wellll Wth 5 k. Wells $500 Third Follow -up Site Inspection (City) $490 Annuall Vnspec:Liion (E fl) per Siinglle Wellll SirLes $325 Annuall Vnspec:Liion (EF.1)'for VVIuIMplle Wellll SirLes $720 Third Follow -up Site Inspection (ETJ) $40 5 9 Current Fees Proposed Fees New: Transfer of Operations (per Well) $315 Transfer of Operations (per Well) $300 Transfer of Operations IMlaxii,nurn IFee $760 Watershed Protection Permit $195 Watershed Protection Permit $265 New: Gas Well Permit $500 First IPe i,nit Under Gas Well PDeveloprne7t Site (Plan $530 Gas Well IPerrnil Subsequent IPerrnits for Site $370 Initial Gas Well Inspection with Erosion Control Review $1,620 Initial Gas Well Inspection with Erosion Control Review $1,720 Third Site Visit for Erosion Control $130 Third Site Visit for Erosion Control $175 Annual Erosion Control Review $285 Annual Erosion Control Review $205 Third Site Visit for Annual Erosion Control $130 Third Site Visit for Erosion Control $175 7 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON File #: ID 15 -1258, Version: 1 Legislation Text Agenda Information Sheet DEPARTMENT: Legal Department CM/ ACM: Anita Burgess, City Attorney Date: December 1, 2015 SUBJECT Receive a report and hold a discussion regarding the recall petition as against Joey Hawkins, Council Member for District 4, and the reasons therefor; and regarding the insufficiency of the recall petition and the City Secretary's declination of certification to the City Council. UvuTUTmc Exhibit 1 Recall Petition Respectfully submitted: Anita Burgess, City Attorney City of Denton Page 1 of 1 Printed on 11/25/2015 sa,�(8o2� PETITION FOR THE RECALL OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS MEMBERS OF THE COMMITTEE OF ELECTORS PETITIONING FOR THE RECALL Theron Palmer 1700 Willowwood Street, Denton, Texas 76205 James Carr 1526 Willowwood Street, Denton, Texas 76205 Nancy Condon 1514 Willowwood Street, Denton, Texas 76205 Cynthia Spoon 2210 Westwood Street, Denton, Texas 76205 Violet Palmer, 3901 Montecito Drive, #601, Denton, Texas 76210 GROUNDS FOR THE REMOVAL FROM OFFICE OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS RFASON #1 COUNCILMAN HAWKINS FAILS TO COMMUNICATE WITH HIS CONSTITUENTS IN MATTERS CONCERNING THE CITY OF DENTON, TEXAS. REASON #2 COUNCILMAN HAWKINS VOTED TO RELAX RESTRICTIONS ON DRILLING OPERATORS IN RESIDENTIAL AREAS, REDUCING THE OFFSET TO AS LITTLE AS 250 FEET. F"'. iS011 '1 J COUNCILMAN HAWKINS IS OPPOSED TO TRANSPARENCY IN MUNICIPAL AFFAIRS IN THE CITY OF DENTON. At. .� cb �?3w.. :f— r 0, ,()'S r 7 21 iewtth 22.10 U/est,,4 '7 AFFIDAVIT I SWEAR THAT], ANA) I ONLY, PERSONALLY CIRCULATED THIS PETITION, ALL THE SIGNATURES NUMBERING[ (0 WERE AFPENDED HERETO IN MY PRESENCE AND I BELIEVE THEM TO BE THE GENUINE SIGNATURES OF THE NAMES OF THE PERSONS THEY PURPORT TO BE. Sworn to Irv_ .— (Jl f%..` V i.� _.,m... R _ ...._.. in my presence this__ _day cP..— .m.... ..._,._2015 NOTARY PUBLIC 1KYt l I g k gvly i$t,r7�ski'xlrork O kl4 Lo Al'to tc AFFIDAVIT I SWEAR THAT], ANA) I ONLY, PERSONALLY CIRCULATED THIS PETITION, ALL THE SIGNATURES NUMBERING[ (0 WERE AFPENDED HERETO IN MY PRESENCE AND I BELIEVE THEM TO BE THE GENUINE SIGNATURES OF THE NAMES OF THE PERSONS THEY PURPORT TO BE. Sworn to Irv_ .— (Jl f%..` V i.� _.,m... R _ ...._.. in my presence this__ _day cP..— .m.... ..._,._2015 NOTARY PUBLIC 1KYt l I g k gvly i$t,r7�ski'xlrork O kl4 Lo PETITION FOR THE RECALL OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS MEMBERS OF THE COMMITTEE QF ELECTORS PETITIONING FOR THE RECALL Theron Palmer 1700 Willowwood Street, Denton, Texas 76205 James Carr 1526 Willowwood Street, Denton, Texas 76205 Nancy Condon 1514 Willowwood Street, Denton, Texas 76205 Cynthia Spoon 2210 Westwood Street, Denton, Texas 76205 Violet Palmer 3901 Montecito Drive, #601, Denton, Texas 76210 GROUNDS FOR THE REMOVAL FROM OFFICE OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS REASON # 1 COUNCILMAN HAWKINS FAILS TO COMMUNICATE WITH HIS CONSTITUENTS IN MATTERS CONCERNING THE CITY OF DENTON, TEXAS. REASON #2 COUNCILMAN HAWKINS VOTED TO RELAX RESTRICTIONS ON DRILLING OPERATORS IN RESIDENTIAL AREAS, REDUCING THE OFFSET TO AS LITTLE AS 250 FEET. REASON #3 COUNCILMAN HAWKINS IS OPPOSED TO TRANSPARENCY IN MUNICIPAL AFFAIRS IN THE CITY OF DENTON R N I"U E DATE PRINTED ADDRESS ' NAME Feu � � q ':.� ... .:..... ...__ m 4 Le u , M 3� vi w s Le A. 6. �` � L1 L- Valq 00 �.M. ....a,._ M1� � .. . �(J I AFFIDAVIT fAc 1'1�lLL.Vi T ►o. o`i I SWEAR THAT I, AND I ONLY, PERSONALLY CIRCULATED THIS PETITION, ALL THE SIGNATURES NUMBERING LO WERE APPENDED HERETO IN MY PRESENCE AND I BELIEVE THEM TO BE THE GENUINE SIGNATURES OF THE NAMES OF THE PERSONS THEY PURPORT TO BE. ' 1 1�7 " Sworn to I (?- ku+/-) � DEBORAH D. youNG N tart' Public *' Mate of Texa$ Pty Corn m, E'xpl ,s 02-16-2019 my presence this day of `v O ✓ - 2015 1�f -, E/ OTARY PUBLIC f i 9 I � 3 n PETITION FOR THE RECALL OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS MEMBERS OF THE COMMITTEE OF ELECTORS PETITIONING.FOR THE RECALL Theron Palmer 1700 Willowwood Street, Denton, Texas 76205 James Carr 1526 Willowwood Street, Denton, Texas 76205 Nancy Condon 1514 Willowwood Street, Denton, Texas 76205 Cynthia Spoon 2210 Westwood Street, Denton, Texas 76205 Violet Palmer 3901 Montecito Drive, #601, Denton, Texas 76210 GROUNDS FOR THE REMOVAL FROM OFFICE OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS REASON #1 COUNCILMAN HAWKINS FAILS TO COMMUNICATE WITH HIS CONSTITUENTS IN MATTERS CONCERNING THE CITY OF DENTON, TEXAS. REASON #2 COUNCILMAN HAWKINS VOTED TO RELAX RESTRICTIONS ON DRILLING OPERATORS IN RESIDENTIAL AREAS, REDUCING THE OFFSET TO AS LITTLE AS 250 FEET. REASON #3 COUNCILMAN HAWKINS IS OPPOSED TO TRANSPARENCY IN MUNICIPAL AFFAIRS IN THE CITY OF DENTON. SIGNATURE � r -r DATE PRINTED NAME ....m_. 7. /l_7 _Zo 1 s L85 to " SIGNATURE � r -r DATE PRINTED NAME ....m_. _..... 1- 17C /l_7 _Zo 1 s " 1117 z °1 s M _ G1 c5 MR AFFIDAVIT S C i v ADDRESS I SWEAR THAT 1, AND I ONLY, PERSONALLY CIRCULATED THIS PETITION, ALL THE SIGNATURES NUMBERING_ 0 WERE APPENDED HERETO IN MY PRESENCE AND I BELIEVE TI EM TO BE THE GENUINE SIGNATURES OF THE NAMES OF THE PERSONS THEY PURPORT TO BE. �, ram Iva v . Sworn to by, —..r „ { IV.. Pa" � ...........................in my presence this day of _ _201E a w NOTARY PUBLIC �,4r.�t�ary 4�uial9�:. e'I Ia xis My CcN�a�ira L.xpir� 02-16-2019 1,6. W oS It ■ u� tHo3y`f .49 7e3 4. -- F-T PETITION FOR THE RECALL OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS MEMBERS OF THE COMMITTEE OF ELECTORS PETITIONING FOR THE RECALL Theron Palmer 1700 Willowwood Street, Denton, Texas 76205 James Carr 1526 Willowwood Street, Denton, Texas 76205 Nancy Condon 1514 Willowwood Street, Denton, Texas 76205 Cynthia Spoon 2210 Westwood Street, Denton, Texas 76205 Violet Palmer 3901 Montecito Drive, #601, Denton, Texas 76210 GROUNDS FOR THE REMOVAL FROM OFFICE OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS REASON #1 COUNCILMAN HAWKINS FAILS TO COMMUNICATE WITH HIS CONSTITUENTS IN MATTERS CONCERNING THE CITY OF DENTON, TEXAS. REASON #2 COUNCILMAN HAWKINS VOTED TO RELAX RESTRICTIONS ON DRILLING OPERATORS IN RESIDENTIAL AREAS, REDUCING THE OFFSET TO AS LITTLE AS 250 FEET. REASON #3 COUNCILMAN HAWKINS IS OPPOSED TO TRANSPARENCY IN MUNICIPAL AFFAIRS IN THE CITY OF DENTON. SIGNATURE DATE .5 — I / V.) PRINTED NAME ADDRESS 0LG A ,_atlo_.. TLytti I n . k e ": � 1 807 AFFIDAVIT l > G��l.�owc✓a�D S . I SWEAR THAT], AND I ONLY, PERSONALLY CIRCULATED THIS PETITION, ALL THE SIGNATURES NUMBERING-10 WERE APPENDED HERETO IN MY PRESENCE AND 1 BELIEVE THEM TO BE THE GENUINE SIGNATURES OF THE NAMES OF THE PERSONS THEY PURPORT TO BE. Sworn to hry,. �/V � � W_ _.,. in my presence this � day of __2015 m...�.... ... k . w J . Y` .0 . .... + � ' e' J k k NotfVY Pulac NOTARY . ... PUBLIC }`1r 4�tate of Texas r aaw "4' Y co rini 1 nPirr s 02-16-2019 . 1 to PETITION FOR THE RECALL OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS MEMBERS OF THE COMMITTEE OF ELECTORS PETITIONING FOR THE RECALL Theron Palmer 1700 Willowwood Street, Denton, Texas 76205 James Carr 1526 Willowwood Street, Denton, Texas 76205 Nancy Condon 1514 Willowwood Street, Denton, Texas 76205 Cynthia Spoon 2210 Westwood Street, Denton, Texas 76205 Violet Palmer 3901 Montecito Drive, #601, Denton, Texas 76210 GROUNDS FOR THE REMOVAL FROM OFFICE OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS REASON #1 COUNCILMAN HAWKINS FAILS TO COMMUNICATE WITH HIS CONSTITUENTS IN MATTERS CONCERNING THE CITY OF DENTON, TEXAS. REASON #2 COUNCILMAN HAWKINS VOTED TO RELAX RESTRICTIONS ON DRILLING OPERATORS IN RESIDENTIAL AREAS, REDUCING THE OFFSET TO AS LITTLE AS 250 FEET. REASON #3 COUNCILMAN HAWKINS IS OPPOSED TO TRANSPARENCY IN MUNICIPAL AFFAIRS IN THE CITY OF DENTON. SIGNATI..' -Is DATE PRINTED NAME ADDRESS .�... _ . _r _...w ........ _" �..� 11 2-4 �AFFIDAVIT I SWEAR THAT 1, AND I ONLY, PERSONALLY CIRCULATED THIS PETITION, ALL THE SIGNATURES NUMBERING—/O WERE APPENDED HERETO IN MY PRESENCE AND I BELIEVE THEM TO BE THE GENUINE SIGNATURES OF THE NAMES OF THE PERSONS THEY PURPORT TO BE. - ----,, Z-? , , /Y Sworn to by CHELSEA L WOOD q Notary Public ( . b� State of Texas ... w t my Comm. Expires 01 -25 -2011 Jay of �jagUL&V2015 NOTARY PUB. ]f R] PETITION FOR THE RECALL OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS MEMBERS OF THE COMMITTEE OF ELECTORS PETITIONING FOR THE RECALL Theron Palmer 1700 Willowwood Street, Denton, Texas 76205 James Carr 1526 Willowwood Street, Denton, Texas 76205 Nancy Condon 1514 Willowwood Street, Denton, Texas 76205 Cynthia Spoon 2210 Westwood Street, Denton, Texas 76205 Violet Palmer 3901 Montecito Drive, #601, Denton, Texas 76210 GROUNDS FOR THE REMOVAL FROM OFFICE OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS REASON #1 COUNCILMAN HAWKINS FAILS TO COMMUNICATE WITH HIS CONSTITUENTS IN MATTERS CONCERNING THE CITY OF DENTON, TEXAS. REASON #2 COUNCILMAN HAWKINS VOTED TO RELAX RESTRICTIONS ON DRILLING OPERATORS IN RESIDENTIAL AREAS, REDUCING THE OFFSET TO AS LITTLE AS 250 FEET. REASON #3 COUNCILMAN HAWKINS IS OPPOSED TO TRANSPARENCY IN MUNICIPAL AFFAIRS IN THE CITY OF DENTON. SIGN TURE DATF" PRINTED NAME ADDRESS :1r/9 ._ . ._ .." _ .. c atti W O �o D r .......... a a 1 0111- 1....w. S W. 1288® 1 will AFFI V 'Q r ..rro I SWEAR THAT I, AND 1 ONLY, PERSONALLY CIRCULATED THIS PETITION, ALL THE SIGNATURES NUMBERING—/ 1) WERE APPENDED HERETO IN MY PRESENCE AND 1 BELIE. THEM TO BE THE GENUINE SIGNATURES OF THE NAMES OF THE PERSONS THEY PURPORT TO BE. / 1 117 Sworn to by CHELSEA L WOOD ` - Notary Public r State of Texas "fir aae w my Comm. Expires 01- 25- 2017'f my presence this day of 015 N )'I'ARY PU13 11 w e- Vm" 'D e /vat ak/ too art 10o'� 0 19-69- 9 PETITION FOR THE RECALL OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS MEMBERS OF THE COMMITTEE OF ELECTORS PETITIONING FOR THE RECALL Theron Palmer 1700 Willowwood Street, Denton, Texas 76205 James Carr 1526 Willowwood Street, Denton, Texas 76205 Nancy Condon 1514 Willowwood Street, Denton, Texas 76205 Cynthia Spoon 2210 Westwood Street, Denton, Texas 76205 Violet Palmer 3901 Montecito Drive, #601, Denton, Texas 76210 GROUNDS FOR THE REMOVAL FROM OFFICE OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS REASON #1 COUNCILMAN HAWKINS FAILS TO COMMUNICATE WITH HIS CONSTITUENTS IN MATTERS CONCERNING THE CITY OF DENTON, TEXAS. REASON #2 COUNCILMAN HAWKINS VOTED TO RELAX RESTRICTIONS ON DRILLING OPERATORS IN RESIDENTIAL AREAS, REDUCING THE OFFSET TO AS LITTLE AS 250 FEET. REASON #3 COUNCILMAN HAWKINS IS OPPOSED TO TRANSPARENCY IN MUNICIPAL AFFAIRS IN THE CITY OF DENTON. ��� N A 1 1� .M,� .a � � r le, ",� "� DATE 1 RINTED NAM! ADDRESS _.. ) w..,...._....,.... -.w—. 1.� ."...,^'. .,.,.�...„ ,,m_. „:,_m.,c” ._ W1 �...___r— t— e?'.:_..'i:'.�i ..,.,,. ........_'.- o. �u � m __ ...._ 74 r P� . --- -._..�. P / w d. Q10 �,�. 0 1. -�¢ _jjj W-� AFFIDAVIT I SWEAR THAT I, AND I ONLY, PERSONALLY CIRCULATED THIS PETITION, ALL THE SIGNATURES NUMBERING 10 WERE APPENDED HERETO IN MY PRESENCE AND I BELIEVE'I HEM TO BE THE GENUINE SIGNATURES OF THE NAMES OF THE PERSONS THEY PURPORT TO BE. ,✓ N Sworn to Icy_ !�. �.._..in my presence this day ol_ �, ,,.':2015 � 0 lip �- _. ", " " 0 " N 'i" R 11 I�7 t(:" W ire PETITION FOR THE RECALL OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS MEMBERS,OF THE COMMITTEE OF ELECTORS PETITIONING FOR THE RECALL Theron Palmer 1700 Willowwood Street, Denton, Texas 76205 James Carr 1526 Willowwood Street, Denton, Texas 76205 Nancy Condon 1514 Willowwood Street, Denton, Texas 76205 Cynthia Spoon 2210 Westwood Street, Denton, Texas 76205 Violet Palmer 3901 Montecito Drive, #601, Denton, Texas 76210 GROUNDS FOR THE REMOVAL FROM OFFICE OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS REASON # 1 COUNCILMAN HAWKINS FAILS TO COMMUNICATE WITH HIS CONSTITUENTS IN MATTERS CONCERNING THE CITY OF DENTON, TEXAS. REASON #2 COUNCILMAN HAWKINS VOTED TO RELAX RESTRICTIONS ON DRILLING OPERATORS IN RESIDENTIAL AREAS, REDUCING THE OFFSET TO AS LITTLE AS 250 FEET. REASON #3 y COUNCILMAN HAWKINS IS OPPOSED TO TRANSPARENCY IN MUNICIPAL AFFAIRS IN THE CITY OF DENTON. SIGNATURE DATE PRINTED NAME ADDRESS 61b ?I A..... �G q50 1.!.. _ _ 7-oS .A ................ �_...... y . M . it p r too 9116 tl� AFFIDAVIT I SWEAR THAT LAND I ONLY, PERSONALLY CIRCULATED THIS PETITION, ALL THE SIGNATURES NUMBERING1 O WERE APPENDED HERETO IN MY PRESENCE AND I BELIEVE THEM TO 7,171" GENUINE SIGNATURES OF THE NAMES OF THE PERSONS THEY PURPORT TO BE. m .__1�i . Y P -_, y �� fat Sworn to by ... this dal in m esence " w r k � TAI Y PUBLIC ^. . 0113e N PETITION FOR THE RECALL OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS MEMB1 RS OF THE COMMITTEE OF ELECTORS PETITIONING FOR THE RECALL Theron Palmer 1700 Willowwood Street, Denton, Texas 76205 James Carr 1526 Willowwood Street, Denton, Texas 76205 Nancy Condon 1514 Willowwood Street, Denton, Texas 76205 Cynthia Spoon 2210 Westwood Street, Denton, Texas 76205 Violet Palmer 3901 Montecito Drive, #601, Denton, Texas 76210 GROUNDS FOR THE REMOVAL FROM OFFICE OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS REASON # 1 COUNCILMAN HAWKINS FAILS TO COMMUNICATE WITH HIS CONSTITUENTS IN MATTERS CONCERNING THE CITY OF DENTON, TEXAS. REASON #2 COUNCILMAN HAWKINS VOTED TO RELAX RESTRICTIONS ON DRILLING OPERATORS IN RESIDENTIAL AREAS, REDUCING THE OFFSET TO AS LITTLE AS 250 FEET. REASON #3 COUNCILMAN HAWKINS IS OPPOSED TO TRANSPARENCY IN MUNICIPAL AFFAIRS IN THE CITY OF DENTON. �� � D � d�•� 4.*�:�irNATURE DATE PRINTED NAME ADDRESS AFFIDAVIT I SWEAR THAT I, AND I ONLY, PERSONALLY CIRCULATED THIS PETITION, ALL THE SIGNATURES NUMBERING l D WERE APPENDED HERETO IN MY PRESENCE AND I BELIEVE THEM TO BE THE GENUINE SIGNATURES OF THE NAMES OF THE PERSONS THEY PURPORT TO BE. Sworn to by g e" %• h 4 b 'P" i -R ^. d`'9° 4 G '! r 4' ' . C J d i,,., i* COI If-y I �kJ�ili¢ Slu'kr c9 9xd "k y r,„(ur 0j. E x lr¢�w d 5 V R k— ,,,m --in my presence this_ day of NUM 2015 NOTARY PUI11 WC w' lb PETITION FOR THE RECALL OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS MEMBERS OF THE COMMITTEE OF ELECTORS PETITIONING FOR THE RECALL Theron Palmer 1700 Willowwood Street, Denton, Texas 76205 James Carr 1526 Willowwood Street, Denton, Texas 76205 Nancy Condon 1514 Willowwood Street, Denton, Texas 76205 Cynthia Spoon 2210 Westwood Street, Denton, Texas 76205 Violet Palmer 3901 Montecito Drive, #601, Denton, Texas 76210 GROUNDS FOR THE REMOVAL FROM OFFICE OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS REASON #1 COUNCILMAN HAWKINS FAILS TO COMMUNICATE WITH HIS CONSTITUENTS IN MATTERS CONCERNING THE CITY OF DENTON, TEXAS. REASON #2 COUNCILMAN HAWKINS VOTED TO RELAX RESTRICTIONS ON DRILLING OPERATORS IN RESIDENTIAL AREAS, REDUCING THE OFFSET TO AS LITTLE AS 250 FEET. REASON #3 COUNCILMAN HAWKINS IS OPPOSED TO TRANSPARENCY IN MUNICIPAL AFFAIRS IN THE CITY OF DENTON. SIGNATURE DATE PRINTED NAME ADDRESS ss 26 24 � l6t J Jc s a �.... aw ..,: ...__ .,..,_ ........ .......m ry,.,.,.�1,_ . n d:. 9`ter d 0 w - AFFIDAVIT I SWEAR THAT I, AND I ONLY, PERSONALLY CIRCULATED THIS PETITION, ALL THE SIGNATURES NUMBERING Iv WERE APPENDED HERETO IN MY PRESENCE AND I BELIEVE THEM TO BE THE GENUINE SIGNATURES OF THE NAMES OF THE PERSONS THEY PURPORT TO BE. . _. . 14 ��wwwuui��rii Sworn to by h °� (ll ll3^..._ _ in my presence this / day of U'� 2015 `0 r 2 rw C 7., NO' I' R BwUII.aIC: ..W ..................._ o/794d•° O.,'e r��ta�rPa�wu�wtww�`''� N ul, PETITION FOR THE RECALL OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS MEMBERS OF THE COMMITTEE.OF ELECTORS PETITIONING FOR THE RECALL Theron Palmer 1700 Willowwood Street, Denton, Texas 76205 James Carr 1526 Willowwood Street, Denton, Texas 76205 Nancy Condon 1514 Willowwood Street, Denton, Texas 76205 Cynthia Spoon 2210 Westwood Street, Denton, Texas 76205 Violet Palmer 3901 Montecito Drive, #601, Denton, Texas 76210 GROUNDS FOR THE REMOVAL FROM OFFICE OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS REASON #1 COUNCILMAN HAWKINS FAILS TO COMMUNICATE WITH HIS CONSTITUENTS IN MATTERS CONCERNING THE CITY OF DENTON, TEXAS. REASON #2 COUNCILMAN HAWKINS VOTED TO RELAX RESTRICTIONS ON DRILLING OPERATORS IN RESIDENTIAL AREAS, REDUCING THE OFFSET TO AS LITTLE AS 250 FEET. REASON #3 _ PUNCI,MAN HAWKINS IS OPPOSED TO TRANSPARENCY IN MUNICIPAL AFFAIRS IN THE CITY OF DENTON. Ur► T 9ti`�`� I n,.'�. ) .SIGNATURE DATE PRINTED NAME ADDRESS 161142- 13 p 7,. Fl.__.... M._....._... ........ ..... 9.. 1tD. �� ��� mm - -- ► (t _. _ . �- '�. 1.1.3µ. z �P Ck �n . AFFIDAVIT I SWEAR THAT 1, AND I ONLY, PERSONALLY CIRCULATED THIS PETITION, ALL THE SIGNATURES NUMBERING_J�2_WERE APPENDED HERETO IN MY PRESENCE AND I BELIEVE THEM TO BE THE GENUINE SIGNATURES OF THE NAMES OF THE PERSONS THEY PURPORT TO BE. Sworn to h �. _. y 1 " _tom _ a� my presence lla�s..,._ cEa�y�I °�bk�� -� 201." AP X14 ATtY PUBLIC ^ - + 4:g tLI r °."IRE xj �:g ) PETITION FOR THE RECALL OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS MEMBERS OF THE COMMITTEE OF ELECTORS PETITIONING FOR THE RECALL Theron Palmer 1700 Willowwood Street, Denton, Texas 76205 James Carr 1526 Willowwood Street, Denton, Texas 76205 Nancy Condon 1514 Willowwood Street, Denton, Texas 76205 Cynthia Spoon 2210 Westwood Street, Denton, Texas 76205 Violet Palmer 3901 Montecito Drive, #601, Denton, Texas 76210 GROUNDS FOR THE REMOVAL FROM OFFICE OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS REASON #1 COUNCILMAN HAWKINS FAILS TO COMMUNICATE WITH HIS CONSTITUENTS IN MATTERS CONCERNING THE CITY OF DENTON, TEXAS. REASON #2 COUNCILMAN HAWKINS VOTED TO RELAX RESTRICTIONS ON DRILLING OPERATORS IN RESIDENTIAL AREAS, REDUCING THE OFFSET TO AS LITTLE AS 250 FEET. REASON #3 COUNCILMAN HAWKINS IS OPPOSED TO TRANSPARENCY IN MUNICIPAL AFFAIRS IN THE CITY OF DENTON. �'�`t 4u' 4,L,, SIGNATURE DATE PRINTED NAME ADDRESS zfI ' 3 30 5 3.. t J, -�- JA* j, � � 7, - 6 5 Igo 1 AFFIDAVIT 1 SWEAR THAT I, AND I ONLY, PERSONALLY CIRCULATED THIS PETITION, ALL THE SIGNATURES NUMBERING_. WF;RE APPENDED .HERETO IN MY PRESENCE AND 1 BELIEVE THEM TO BE THE GENUINE SIGNATURES OF THE NAMES OF THE PERSONS THEY PURPORT TO BE. iI ? t- .Z' Sworn to by k V ' ,� �in my presence this It) day of k _ , V MMW2015 CHELSEA L WOOD Notary Public i State of Texas Mil" Comm. Expires 01 -25 -2017 V ' ,� �in my presence this It) day of k _ , V MMW2015 P' PETITION FOR THE RECALL OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS MEMBERS OF THE COMMITTEE OF ELECTORS PETITIONING FOR THE RECALL Theron Palmer 1700 Willowwood Street, Denton, Texas 76205 James Carr 1526 Willowwood Street, Denton, Texas 76205 Nancy Condon 1514 Willowwood Street, Denton, Texas 76205 Cynthia Spoon 2210 Westwood Street, Denton, Texas 76205 Violet Palmer 3901 Montecito Drive, #601, Denton, Texas 76210 GROUNDS FOR THE REMOVAL FROM OFFICE OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS REASON #1 COUNCILMAN HAWKINS FAILS TO COMMUNICATE WITH HIS CONSTITUENTS IN MATTERS CONCERNING THE CITY OF DENTON, TEXAS. REASON #2 COUNCILMAN HAWKINS VOTED TO RELAX RESTRICTIONS ON DRILLING OPERATORS IN RESIDENTIAL AREAS, REDUCING THE OFFSET TO AS LITTLE AS 250 FEET. REASON #3 COUNCILMAN HAWKINS IS OPPOSED TO TRANSPARENCY IN MUNICIPAL AFFAIRS IN THE CITY OF DENTON, SIGNATURE DATE PRINTED NAME ADDRESS 9. AFFIDAVIT I SWEAR THAT I, AND I ONLY, PERSONALLY CIRCULATED THIS PETITION, ALL THE SIGNATURES NUMBERING--5--WERE APPENDED HERETO IN MY PRESENCE AND I BELIEVE THEM TO BE THE GENUINE SIGNATURES OF THE NAMES OF THE PERSONS THEY PURPORT TO BE. Sworn to by- _. ►�i [/� b 1 r __--in my presence this 17+1--'day of � � � 2015 Nc D. YOB RAH UNG __ .�_.w .....��.�. Notary Publi N c NOTARY PUBLIC �) State of Texas ' �4 r N. y Comm Expires 02-16-2019 rc a PETITION FOR THE RECALL OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS MEMBERS OF THE COMMITTEE OF ELECTORS PETITIONING FOR THE RECALL Theron Palmer 1700 Willowwood Street, Denton, Texas 76205 James Carr 1526 Willowwood Street, Denton, Texas 76205 Nancy Condon 1514 Willowwood Street, Denton, Texas 76205 Cynthia Spoon 2210 Westwood Street, Denton, Texas 76205 Violet Palmer 3901 Montecito Drive, #601, Denton, Texas 76210 GROUNDS FOR THE REMOVAL FROM OFFICE OF DISTRICT FOUR COUNCILMAN JOEY HAWKINS REASON #1 COUNCILMAN HAWKINS FAILS TO COMMUNICATE WITH HIS CONSTITUENTS IN MATTERS CONCERNING THE CITY OF DENTON, TEXAS. REASON #2 COUNCILMAN HAWKINS VOTED TO RELAX RESTRICTIONS ON DRILLING OPERATORS IN RESIDENTIAL AREAS, REDUCING THE OFFSET TO AS LITTLE AS 250 FEET. REASON #3 COUNCILMAN HAWKINS IS OPPOSED TO TRANSPARENCY IN MUNICIPAL AFFAIRS IN THE CITY OF DENTON, LiATF" PRINTED NAME ADDRESS i�C -: ��s e m 7 9 1 p� "�'2, AFFIDAVIT I SWEAR THAT 1, AND I ONLY, PERSONALLY CIRCULATED THIS PETITION, ALL THE SIGNATURES NUMBERING WERE APPENDED HERETO IN MY PRESENCE AND I BELIEVE THEM TO BE THE GENUINE SIGNATURES OF THE NAMES OF THE PERSONS THEY PURPORT TO BE. ry MiPP�"fl'P/ � Sworn to by, . in my presence this day a' °rl'� ✓... „��I015 ,��„� � ,� � _��.�...���� „ a 31 kP �rrr�daxwr� NO °VARY P41KIC 2— City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com DEN'FON File #: ID 15 -554, Version: 1 Legislation Text Agenda Information Sheet SUBJECT Deliberations regarding Real Property - Under Texas Government Code Section 551.072; Consultation with Attorneys - Under Texas Government Code Section 551.071. Receive information from staff, discuss, deliberate, and provide staff with direction regarding the potential acquisition of real property interests generally located in Denton, Denton County, Texas, for the construction, expansion and use of electric power transmission lines, beginning at the North Lakes Substation of Denton Municipal Electric and proceeding east along Riney Rd, then turning north along Nicosia St., then east along W. Hercules Lane and terminating at the Denton North Substation of Denton Municipal Electric. Consultation with the City's attorneys regarding legal issues associated with the acquisition of the real property interests described 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 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 administrative proceeding or potential litigation. [North Lakes to Denton North transmission route] City of Denton Page 1 of 1 Printed on 11/25/2015 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com DEN'FON File #: ID 15 -1106, Version: 1 Legislation Text Agenda Information Sheet SUBJECT Deliberations Regarding Certain Public Power Utilities: Competitive Matters - Under Texas Government Code Section 551.086. Receive a presentation from Denton Municipal Electric staff ( "DME ") regarding public power competitive and financial matters pertaining to plans, strategies, opportunities, and developments for generation improvements to the DME system; discuss and deliberate strategies regarding same; discuss and deliberate opportunities and strategies for the City to acquire purchased power and enter into agreements regarding the same, in order to meet its future energy needs. Discuss, deliberate and provide Staff with direction. City of Denton Page 1 of 1 Printed on 11/25/2015 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com DEN'FON Legislation Text File #: ID 15 -1242, Version: 1 Agenda Information Sheet SUBJECT Deliberations Regarding Real Property - Under Texas Government Code Section 551.072; Deliberations Regarding Economic Development Negotiations - Under Texas Code Section 551.087; Consultation with Attorneys - Under Texas Government Code Section 551.071. Receive information from staff, discuss, deliberate and provide staff with direction regarding the potential acquisition, exchange, lease or value of real property located generally in the 200 block of West Hickory in the City of Denton, Denton County, Texas. Consultation with the City's attorneys regarding legal issues associated with the potential real property matter 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 administrative proceeding or potential litigation. City of Denton Page 1 of 1 Printed on 11/25/2015 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com DENT' IN File #: ID 15 -1244, Version: 1 Legislation Text Agenda Information Sheet SUBJECT Deliberations regarding Economic Development Negotiations - Under Texas Government Code Section 551.087. Receive a report and hold a discussion regarding a proposed economic development program grant agreement between the City of Denton and BUC-EE's, LTD. This discussion shall include commercial and financial information the City Council has received from BUC-EE's, LTD, a business prospect which the City Council seeks to have locate, stay, or expand in or near the territory of the city, and with which the City Council is conducting economic development negotiations; deliberate the economic development program grant agreement between the City of Denton and BUC-EE's, LTD. City of Denton Page 1 of 1 Printed on 11/25/2015 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com DEN'FON File #: ID 15 -1248, Version: 1 Legislation Text Agenda Information Sheet SUBJECT Deliberations regarding Real Property - Under Texas Government Code Section 551.072; Consultation with Attorneys - Under Texas Government Code Section 551.071. Receive information from staff, discuss, deliberate, and provide staff with direction regarding the potential acquisition of real property interests located along the east side of Bernard St. between Eagle Drive to the north and Collins Street to the south, in the City of Denton, Texas; where discussions had, deliberation, and direction given in an open meeting would have a detrimental effect on the position of the governmental body in negotiations with a third party. Consultation with the City's attorneys regarding legal issues associated with the acquisition of the real property interests described above; where 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 administrative proceeding or potential litigation. [Eagle Substation] City of Denton Page 1 of 1 Printed on 11/25/2015 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com DEN'FON Legislation Text File #: ID 15 -1274, Version: 1 Agenda Information Sheet SUBJECT Consultation with Attorneys - Under Texas Government Code Section 551.071. Consult with City's attorneys regarding ID 15 -1235 of the December 1, 2015 Work Session Agenda, as it concerns legal issues associated with that item where a public discussion of this legal matter would conflict with the duty of the City's attorneys under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas City of Denton Page 1 of 1 Printed on 11/25/2015 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com DENTO Legislation Text File #: ID 15 -1278, Version: 1 Agenda Information Sheet SUBJECT Police Appreciation Day City of Denton Page 1 of 1 Printed on 11/25/2015 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com DENTO File #: ID 15 -1247, Version: 1 Legislation Text Agenda Information Sheet SUBJECT William Jones regarding various issues concerning the City of Denton. City of Denton Page 1 of 1 Printed on 11/25/2015 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com DENTO File #: ID 15 -1275, Version: 1 Legislation Text Agenda Information Sheet SUBJECT Kim McKibben regarding a proposed building in the Fry Street Overlay District. City of Denton Page 1 of 1 Printed on 11/25/2015 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON File #: ID 15 -967, Version: 1 Legislation Text Agenda Information Sheet DEPARTMENT: Economic Development CM/ ACM: Jon Fortune Date: December 1, 2015 SUBJECT Consider approval of a resolution of the City Council of the City of Denton, Texas approving a policy for aircraft tax abatement for the City of Denton to establish guidelines and criteria governing aircraft incentive agreements and aircraft tax abatement agreements; and declaring an effective date. BACKGROUND The City is required to renew and adopt a Tax Abatement Policy every two years in accordance with Chapter 312 of the Texas Tax Code. The Tax Abatement Policy adopted by City Council in May 2014 was broadened to apply Chapter 380 of the Texas Local Government Code to implement a wider range of incentive programs for targeted industries /opportunities. Denton Enterprise Airport (DTO) was established as an Enterprise Fund by the Denton City Council with approval of the FY 2010 -11 Airport Fund Budget. This action was in conformance with the DTO 2010 Business Plan goal to stimulate investment and development at the Airport. Attracting aircraft to base at DTO stimulates fuel sales, hangar construction/leases and longer -term development of private aviation business. In May 2015, Council approved Business Air's Chapter 380 capital investment tax incentive. By aggressively attracting new based aircraft valuation to its facility Business Air may incrementally extend the term of its grant and receive 5% of the new based aircraft valuation. Most aircraft currently based at DTO to not meet the City Tax Abatement Policy $5 million investment threshold. An incentive attractive to a wider range of aircraft owners would differentiate Denton and stimulate existing and new businesses to recruit based aircraft to DTO. PRIOR ACTION/REVIEW The Economic Development Partnership Board (EDPB) reviewed the Aircraft Incentive request at their August 25, 2015 meeting and recommended approval unanimously: 9 -0. FISCAL INFORMATION The Aircraft Incentive Policy establishes a framework for considering the length and percentage of incentive according to assessed property value of newly based aircraft located on the basing provider's real property at City of Denton Page 1 of 2 Printed on 11/25/2015 File #: ID 15 -967, Version: 1 Denton Enterprise Airport. The policy establishes a minimum aircraft valuation threshold of $1 million. A total incentive of 30 %, constituting a 25% incentive to the aircraft owner and a 5% incentive to the basing provider, may not exceed 30% annually for ten years. EXHIBITS 1- Resolution 2- Aircraft Incentive Policy Respectfully submitted: Aimee Bissett Development Services Director Prepared by: Michelle Cunningham Business Development Officer City of Denton Page 2 of 2 Printed on 11/25/2015 sAlegal \our documentsVesolutionsA 5\aircraft incentive policy.docx RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS, APPROVING A POLICY FOR AIRCRAFT TAX ABATEMENT FOR THE CITY OF DENTON TO ESTABLISH GUIDELINES AND CRITERIA GOVERNING AIRCRAFT INCENTIVE AGREEMENTS AND AIRCRAFT TAX ABATEMENT AGREEMENTS; AND DECLARING AN EFFECTIVE DATE. WHEREAS, the Property Development and Tax Abatement act, Chapter 312 of the Texas Tax Code, allows the city to establish its own criteria for tax abatement and the City has previously adopted guidelines for tax abatement by passing Resolutions Nos. R- 90018, R98 -004, R2000 -028, R2001 -020, R2003 -021, R2005 -057, R2008 -003, R2010 -009, R2012 -009, R2014 -016; and WHEREAS, the Tax Abatement Policy R2014 -016 adopted by the City Council in May 2014 was broadened to apply a Chapter 380 of the Texas Local Government Code to implement a wider range of incentive programs for targeted industries and opportunities; and WHEREAS, attracting aircraft to base at Denton Enterprise Airport constitutes an identified targeted opportunity to stimulate investment and development at the Airport; NOW, THEREFORE, THE COUNDIL OF THE CITY OF DENTON HEREBY RESOLVES: SECTION 1. The policies, guidelines and criteria found in the Denton Aircraft Incentive Policy, attached hereto as Exhibit A and made part of this Resolution and incorporated herein for all purposes, are in all things approved and adopted. From and after the effective date of this Resolution, the attached Denton Aircraft Incentive Policy shall constitute policy guidelines and criteria governing the attraction and basing of aircraft at Denton Enterprise Airport for the City of Denton in accordance with Chapter 312 of the Texas Tax Code. SECTION 2. Pursuant to Texas Tax Code Section 312.002 (c) the guidelines and criteria adopted herein shall be effective for two (2) years, during which time the guidelines may be amended or repealed by a vote of three- fourths of the members of the Council. SECTION 3. This Resolution shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of 12015. CHRIS WATTS, MAYOR sAlegal \our documents \resolutions \l5\aircraft incentive policy.docx ATTEST: JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY:f Page 2 Draft Aircraft Incentive Policy CITY OF DENTON AIRCRAFT INCENTIVE POLICY L GENERAL PURPOSE AND OBJECTIVES The City of Denton (City) Tax Abatement and Incentive Policy (Policy) provides for the City to consider financial incentives to projects that accomplish one or more of the following economic development objectives: development and diversification of the economy, eliminate unemployment or underemployment, expand transportation or commerce, attract major investment, expand primary employment and stimulate agricultural innovation. The Policy additionally provides for the City to establish targeted incentive programs to accomplish one or more of these objectives. The Denton City Council has the authority under Chapter 380 to create a custom incentive in order to accomplish specific economic development goals. Chapter 380 incentives will be considered on a case - by -case basis, and may be considered for one or more of the following criteria: • A certain number of net new jobs with wages above Denton's median household income • The relocation of a company that promotes the growth of targeted industry clusters such as high - tech companies, aviation/aerospace industry, or supply chain clusters that support Denton's existing primary employers • Incentives for businesses that cause infill redevelopment or other desirable development objectives • Any other activity which the City Council determines meets a specific public purpose for economic development The purpose of this Aircraft Incentive Policy (Policy) is to define the financial incentive, establish the standards by which the incentive will be considered for implementation by Denton City Council and provide an application process under which an incentive will be considered. The new basing of aircraft at Denton Enterprise Airport (DTO) may be considered for financial incentives. IL ECONOMIC DEVELOPMENT PARTNERSHIP BOARD Requests for an Aircraft Incentive shall be reviewed by the Economic Development Partnership (EDP) board, on a case -by -case basis unless otherwise directed by City Council, the EDP board being comprised of two City Council members, two Chamber of Commerce board members, two representatives from the top twenty taxpayers, one representative from the University of North Texas, one member with aviation experience, and one member at- large. The EDP board serves as a recommending body to the City Council regarding whether economic development incentives should be offered in each individual case. Its recommendation shall be based upon an evaluation of information submitted in the incentive application and any additional information requested by the EDP board or presented to the EDP board. The Incentive Application shall be substantially in the form of Exhibit A of this Policy. All meetings of the EDP board shall be held in compliance with the Texas Open Meetings Act, Chapter 551 of the Texas Government Code. III. VALUE OF INCENTIVES Draft Aircraft Incentive Policy The criteria outlined in the Aircraft Incentive application will be used by the EDP board in determining whether or not it is in the best interests of the City to recommend that incentives be offered to a particular project. Specific considerations will include the degree to which the individual project furthers the goals and objectives of the community as described in the Denton Comprehensive Plan, as well as the relative impact on growth, employment, expansion of the tax base, economic development and human health and the environment. Newly based aircraft may be eligible for an incentive if the minimum threshold, as described in Table 1 below, is met. Once a determination has been made that a project is eligible for a Chapter 380 incentive, the following table will serve as a basis for determining amount and term of incentive: TABLE l: Establishes a framework for considering the length and percentage of incentive according to assessed property value of newly based aircraft located on the basing provider real property at Denton Municipal Airport. VALUE OF PERSONAL PROPERTY IN NIILLION DOLLARS YEARS OF INCENTIVE PERCENTAGE OF INCENTIVE TO ELIGIBLE AIRCRAFT OWNER PERCENTAGE OF INCENTIVE TO BASING PROVIDER 100 10 25% 5% 80 9 25% 5% 65 8 25% 5% 50 7 25% 5% 35 6 25% 5% 20 5 25% 5% 15 4 25% 5% 10 3 25% 5% 1 TO >10 2 25% 5% To qualify, companies must meet the minimum threshold of the Policy in the first 24 months from the execution of the agreement or as specified in the incentive agreement. The total incentive of 30 %, that constitutes a 25% incentive to the aircraft owner and a 5% incentive to the basing provider, may not exceed 30% annually for ten years. All incentives are subject to final approval of the City Council. Even though a project may meet the criteria as set forth in this Policy, an application may be denied at the discretion of the City. The thresholds as described in Table 1 are considered guidelines for establishing the Chapter 380 Incentive terms. However, the City may determine that a lower or higher percentage and/or a shorter or longer term of incentive may be more appropriate for an individual project. If the incentive is approved, the City may consider applying all or a portion of the incentive in the first year or during any shorter period within the term of the incentive agreement. For example, an approved incentive of 30 percent for four years may be applied as 100 percent abatement for one year. Page 2 of 11 Draft Aircraft Incentive Policy Aircraft incentives hereunder will only apply to the increased valuation attributable to "Eligible Based Aircraft" located on the "Basing Provider" property at Denton Enterprise Airport in each year covered by the incentive agreement over the valuation attributable to the applicant's existing "Eligible Based Aircraft" located on any property at Denton Enterprise Airport in the year prior to the year in which the Aircraft Incentive agreement is executed. The City may also consider other tax incentives authorized by law. Definitinnc- Eligible Based Aircraft refers to aircraft that are newly based for the first time at Denton Enterprise Airport and upon which ad valorem tax is collected. Basing Provider refers to the business or individual providing space for the Eligible Based Aircraft at Denton Enterprise Airport. Preliminary Application IV. PROCEDURAL GUIDELINES Any person, organization or corporation desiring that the City consider providing incentives to encourage location or expansion of facilities within the limits of the jurisdictions shall be required to comply with the following procedural guidelines. Nothing within these guidelines shall imply or suggest that the City is under any obligation to provide an incentive to any applicant. A. Applicant shall complete the attached "Aircraft Incentive Application." B. Applicant shall prepare a map or other documents providing the Basing Provider name and precise location at Denton Enterprise Airport. C. Applicant shall complete all forms and information detailed in the Application and submit all information to the City Manager (or his /her designee), City of Denton, 215 E. McKinney, Denton, TX 76201. D. All information in the application package detailed above will be reviewed for completeness and accuracy. Additional information may be requested as needed. E. The application will be distributed to the appropriate City departments for internal review and comments. Additional information may be requested as needed. F. Copies of the complete application package and staff comments will be provided to the EDP board. G. Fiscal agents of the City will review the application for comments and recommendation. Additional information may be requested as needed. Consideration of the Application Page 3 of 11 Draft Aircraft Incentive Policy H. The EDP board will consider the application at a regular or special- called meeting(s). Additional information may be requested as needed. The recommendation of the EDP board will be forwarded, with all relevant materials, to the City Council. The City Council may consider adoption of an ordinance or resolution approving the terms and conditions of a contract between the City and the applicant governing the provision of the incentive and the commitments of the applicant, including all the terms required by Section 312.205 of the Tax Code and such other terms and conditions as the City Council may require. Should the commitments subsequently not be satisfied, the incentive shall be null and void (unless the agreement provides for a recapture of the ad valorem tax revenue lost proportionate to a partial failure to meet the minimum thresholds set forth in the agreement). Provisions to this effect shall be incorporated into the agreement. N. The City reserves the authority to enter into incentive agreements under Chapter 380 of the Texas Local Government Code and with differing percentages and or /terms as set forth in the guidelines of this policy. Any incentive agreement will address various issues, including but not limited to, the following: 1. General description of the property project 2. Amount of the incentive and percent of value to be incentivized each year 3. Method of calculating the value of the incentive 4. Duration of the incentive, including commencement date and termination date 5. Legal description of the property 6. Kind, number, location and timetable of planned improvements 7. Specific terms and conditions to be met by applicant 9. Contractual obligations in the event of default, violation of terms or conditions, delinquent taxes, recapture, any decrease in valuation, administration and assignment Annual Evaluation Upon completion of threshold criteria, the City Council shall receive from the City Manager (or his/her designee) an annual evaluation of each incentive to insure compliance with the agreement and to report possible violations of the agreement to the appropriate taxing entities. After new tax base numbers are received in July of each year, the City Manager and his staff will have ninety (90) days to review and prepare a breakdown of those figures. Local Businesses and Historically Underutilized Businesses Businesses receiving an incentive are asked to use diligent efforts to purchase all goods and services from Denton businesses whenever such goods and services are comparable in availability, quality and price. The City of Denton also encourages the use, if applicable, of qualified contractors, subcontractors and suppliers who are historically underutilized businesses based on information provided by the General Page 4 of 11 Draft Aircraft Incentive Policy Services Commission pursuant to Chapter 2161 of the Government Code. In the selection of subcontractors, suppliers or other persons or organizations proposed for work on this Agreement, the OWNERS agree to consider this Policy and to use their reasonable and best efforts to select and employ such companies and persons for work on this Agreement. Job Recruiting from Low - Moderate Income Census Tracts Businesses receiving incentives are asked to endeavor to make available, or endeavor to cause lessees or assignees to make available, full -time or part -time employment with on-the-job training for Denton citizens. In this effort, the business, lessee or assignee is encouraged to recruit from the low - moderate income Census tracts as further defined by the U.S. Department of Housing and Urban Development's (HUD) Qualified Census Tracts (QCT) map shown in Figure 1. HUD defines QCTs as "census tracts in which one -half or more of the households have incomes below 60 percent of the area median income or the poverty rate is 25 percent of [or] higher. Page 5 of 11 Draft Aircraft Incentive Policy FIGURE 1: DENTON, TEXAS 2010 -2011 Qualified Census Tracts �ft US. Pent of Hou offkR9 of "kV DeveJop � ll, i.a L SE.R s � � - ..w . - ,.„ Nw� "�w M7ao Terre6t t2 92 �mrrrru ., ..- LW gym, E b NmrL7 s 0205. 0205.02 020A,02 Lnkfla Pil`0204.02 5 "• 204.03 « 0204,00' 6 "" 0200.02 �Alll ���llll�� 1M6111 Page 6 of 11 �-- Tract Ountiine Qualified Ceunsus Tracts (201 G -2011) Draft Aircraft Incentive Policy EXHIBIT A The City of Denton Aircraft Incentive Annlication About the Application... The Aircraft Incentive Application provides the City with specific information regarding your request. The information requested in the Application is designed to address the criteria developed within the City of Denton's Aircraft Incentive Policy. The information serves as the basis for fiscal analysis and overall project evaluation. This evaluation is provided to the Economic Development Partnership (EDP) board and Council Members and serves as a source document during EDP board and City Council deliberations. The Application and the Agreement.. Specific information from the Application (such as value of new investment and employment commitments) is incorporated into the Incentive Agreement. In fact, the Application is an attachment to the Agreement. Since the Agreement is a binding contract, it is important that each question on the application be answered in full and as realistically as possible. Simply put, the application is part of the process from start to finish so you'll want to make sure you're comfortable with the contents. When Is The Application Final? The answer to this question is very simple: When you tell us, "It's final." It is not uncommon for a business entity to submit numerous Applications as drafts for informational and evaluative purposes only. As conversations continue, the business entity will submit a finalized version of the Application that includes all of the commitments agreed to during the discussions. What about Confidentiality? Section 312.003 of the Texas Tax Code makes confidential information provided to the City as a part of this application that describes the specific processes or business activities to be conducted or the Eligible Aircraft or other equipment to be located on the Basing Provider property. This information is not subject to public disclosure until the incentive agreement is executed. Section 522.131 of the Texas Government Code (Texas Public Information Act) makes confidential information which relates to economic development negotiations between the City and a business prospect that the City seeks to have locate, stay or expand in or near the territory of the City. The information must relate to a trade secret of the business prospect, commercial or financial information which the business prospect can demonstrate based on specific factual evidence that disclosure would cause substantial competitive harm to the person from whom the information was obtained or information about a financial or other incentive being offered to the business prospect by the City or by another person. Information about a financial or other incentive being offered to the business prospect is required to be disclosed when an agreement is made with a business prospect. The City is subject to disclosing most records and documents upon request under the Public Information Act. Accordingly, please clearly indicate and mark any information you consider proprietary. This would include anything in your application which you consider a trade secret, commercial or financial information which you can demonstrate by specific factual evidence that would cause substantial competitive harm if disclosed, information which describes the specific processes or business activities to be conducted or the equipment or other property for which the incentive is sought, any financial or other incentive you may be seeking from the City or any other information you deem to be confidential under the law. Who is Authorized To Sign the Application? Because the Application itself is non - binding, the person signing need not be the property owner or even an individual duly authorized to sign on behalf of the property owner. However, if an Agreement is reached, the Application will be an attachment to the Agreement and its contents will be binding through the authorized signature required on the Agreement. Page 7 of 11 Draft Aircraft Incentive Policy OF City of Denton Aircraft Incentive Application City of Denton Department of Development Services, Economic Development Division Denton, Texas 76201 (940) 349 -7776 (940) 349 -8596 FAX www.cityofdenton.com Caroline .Booth(cr�cityofdenton.com Page 8 of 11 Draft Aircraft Incentive Policy INCENTIVE APPLICATION CITY OF DENTON, TEXAS 1. Aircraft Owner Company or Project Name Mailing Address Telephone Fax No. Website Contact Name Title Mailing Address Telephone Fax No. Email Address 2. List each aircraft to be newly based at Denton Enterprise Airport by type, make, model, most recent or estimated valuation, current base location and aircraft intended use(s) Type Make Model Current Value (Attach copy of latest property Tax statement) Current Base Location Annual Fuel & Maintenance Costs 3. Provide a chronology of any aircraft base relocations during the past 5 years Page 9 of 11 Draft Aircraft Incentive Policy 5. Estimated total value of Eligible Aircraft 6. Indicate incentive number of years requested. Percent Requested Years Requested 7. List any other financial incentives this project will request /receive 8. Denton Enterprise Airport Basing Provider Specific Basing site Mailing Address Telephone Fax No. Website Contact Name Title Mailing Address Telephone Fax No. Email Address 9. Describe any on -site service requirements: 10. If applicable, provide employment information for the number of years the incentive is requested. Page 10 of 11 Draft Aircraft Incentive Policy F. Types of jobs created. List the job titles and number of positions in each category that will be employed in support of Eligible Aircraft operations. Provide average wage for each category. G. Indicate the number of shifts 11. Describe any other direct benefits to the City of Denton as a result of this project (e.g., sales tax revenue). 12. Provide specific detail of any businesses /residents that will be displaced and assistance that will be available from the requesting company. 13.. Justification for Incentive Request: Substantiate and more fully describe the justification for this request. Include the amount of the incentive requested and show how it will contribute to the financial viability of your aircraft operations. Submit attachments if necessary. This Incentive Application is submitted with the acknowledgement that additional information may be required. Authorized Signature Date: Page 11 of 11 At Project Existing Start Date At Term of Employment Information Operation (mo /yr) Incentive (if applicable) / A. Total number of permanent, full -time jobs B. Employees transferred from outside Denton C. Net permanent full -time jobs (A. minus B.) E. Total annual payroll for all permanent, full -time jobs (A.) F. Types of jobs created. List the job titles and number of positions in each category that will be employed in support of Eligible Aircraft operations. Provide average wage for each category. G. Indicate the number of shifts 11. Describe any other direct benefits to the City of Denton as a result of this project (e.g., sales tax revenue). 12. Provide specific detail of any businesses /residents that will be displaced and assistance that will be available from the requesting company. 13.. Justification for Incentive Request: Substantiate and more fully describe the justification for this request. Include the amount of the incentive requested and show how it will contribute to the financial viability of your aircraft operations. Submit attachments if necessary. This Incentive Application is submitted with the acknowledgement that additional information may be required. Authorized Signature Date: Page 11 of 11 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON File #: ID 15 -1064, Version: 1 Legislation Text Agenda Information Sheet DEPARTMENT: Development Services, Economic Development Division CM/ ACM: Jon Fortune Date: November 17, 2015 SUBJECT Consider adoption of an ordinance amending Ordinance No. 2012 -366, as amended by Ordinance 2014 -039, relating to Tax Increment Reinvestment Zone (TIRZ) Number Two, to add to the membership of the Board of Directors; repealing all conflicting ordinances and portions thereof, and providing an effective date. BACKGROUND On December 17, 2012, the City Council adopted an Ordinance No. 2012 -366 designating and describing the boundaries of Tax Increment Reinvestment Zone Number Two (Westpark) to provide the public infrastructure necessary to encourage development in the largest industrially zoned area in the City. The TIRZ Number Two board Ordinance was amended to establish term limits concurrent with the Economic Development Partnership (EDP) board on February 4, 2014 (Ordinance No. 2014 -039). On September 15, 2015, Ordinance No. 2015 -074 added two new members to be appointed to serve, bringing the EDPB Board membership to eleven total. The following changes to Section 4 A and B of Ordinance No. 2012 -366 and 2014 -039 to establish a TIRZ Number Two board composition that incorporates the current Economic Development Partnership Board: A. The Board of Directors shall consist of thirteen (13) members, eleven (11) of whom shall be appointed by the City Council of the City. All members appointed to the board shall meet the eligibility requirements set forth in the Act. Board membership shall consist of the following: 1. The eleven members of the Economic Development Partnership Board; 2. One member shall be appointed by the governing body of Denton County; and 3. One member shall be appointed by the "Developer," Rayzor Investments, LLP. B. The terms of the board members shall be two -year terms; the eleven (11) members appointed by City Council will serve terms concurrent with their EDP terms. A board member may serve no more than three consecutive terms. PRIOR ACTION/REVIEW On February 14, 2014, the City Council adopted Ordinance 2014 -039 to establish term limits concurrent with the Economic Development Partnership Board. City of Denton Page 1 of 2 Printed on 11/25/2015 File M ID 15 -1064, Version: 1 On February 12, 2013, the City Council appointed the TIRZ Two board. The City Council adopted Ordinance 2013 -033 accepting an Agreement with Denton County to participate in Tax Increment Reinvestment Zone, Number Two on February 5, 2013. The City Council adopted Ordinance No. 2012 -366 designating and describing the boundaries of a TIRZ Number Two; established the duration of the Zone; established a Tax Increment Fund and established a Board of Directors for the Tax Increment Reinvestment Zone on December 18, 2012. The City Council also received reports on the TIRZ proposal at the July 17, 2012, September 11, 2012 and December 7, 2012 (Closed Session) meetings. FISCAL INFORMATION There will be no fiscal impact as a result of this Amendment. This Ordinance documents the addition of new members to the Board and repeals all conflicting Ordinances. FYHIRITC 1. Ordinance Respectfully submitted: Aimee Bissett Director of Development Services Department Prepared by: Erica Sullivan Economic Development Analyst Development Services, Economic Development Division City of Denton Page 2 of 2 Printed on 11/25/2015 Exhibit I sAlegal\our documents\ordinances\1 5 \revised tirz oral to match edp.doc ORDINANCE NO. AN ORDINANCE AMENDING ORDINANCE No. 2012-366, AS AMENDED BY ORDINANCE 2014-039, RELATING TO 'FAX INCREMENT REINVESTMENT ZONE NUMBER TWO, TO ADD TO THE MEMBERSHIP OF 'THE BOARD OF DIRECTORS; REPEALING ALL CONFLICTING ORDINANCES AND PORTIONS THEREOF; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, on December 18, 2012, the City Council of the City of Denton, Texas, (the "City"), adopted Ordinance 2012-366, which designated and described the boundaries of a Tax Increment Reinvestment Zone ( "'TIRZ ") Number Two; established the duration of the TIRZ; established a Tax Increment Fund and established a Board of Directors for the TIRZ; and WHEREAS, on February 4, 2014, the City adopted Ordinance 2014-039, which established term limits concurrent with the Economic Development Partnership ("EDP") Board for the TIRZ Number Two; and WHEREAS, on September 15, 2015, Ordinance No. 2015-074 added two new members to be appointed to serve on the EDP Board, bringing the board membership to eleven; and WHEREAS, it is deemed proper to establish a TIRZ Number Two board composition that incorporates the current EDP Board; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. Subsection A and B of Section 4 of Ordinance 2012-366 and 2014-039 are amended as follows: A. The Board of Directors shall consist of thirteen (13) members, eleven (11) of whom shall be appointed by the City Council of the City. All members appointed to the Board shall meet the eligibility requirements set forth in the Act. Board membership shall consist of the following: I The eleven members of the Economic Development Partnership Board ("EDP"); 2. One member shall be appointed by the governing body of Denton County; and 3. One member shall be appointed by the "Developer," Rayzor Investments, LLP. B. The terms of the board members shall be two-year terms; the eleven (11) members appointed by City Council will serve terms concurrent with their EDP terms. A board member may serve no more than three (3) consecutive terms. Exhibit I sAlegahour docutnents\ordinances\1 5\revised tirz ord to match edp.doc SECTION 2. All of the other provisions of Ordinance 2012-366 remain in full force and effect. SECTION 3. If any section, paragraph, clause or provision of this Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or unent'orceability of such section, paragraph, clause or provision shall not affect any of the remaining provisions of this Ordinance. SECTION 4. This Ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of 2015. ATTEST: JENNIFER WALTERS, CITY SECRETARY FUN APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: CHRIS WATTS, MAYOR Page 2 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON File #: ID 15 -1065, Version: 1 Legislation Text Agenda Information Sheet DEPARTMENT: Development Services, Economic Development Division CM/ ACM: Jon Fortune Date: December 1, 2015 SUBJECT Consider appointments to the Tax Increment Reinvestment Zone (TIRZ) Number Two Board of Directors. BACKGROUND On December 17, 2012, the City Council adopted an Ordinance No. 2012 -366 designating and describing the boundaries of Tax Increment Reinvestment Zone Number Two (Westpark) to provide the public infrastructure necessary to encourage development in the largest industrially zoned area in the City. Current TIRZ Two Board Structure: The TIRZ board is comprised of thirteen members. The City Council appointed eleven members, which comprise the Economic Development Partnership Board (EDPB), on September 15, 2015 (Ordinance 2015 -074). The governing body of Denton County, which levies taxes on real property in TIRZ Number Two, appointed one board member, Everette Newland. Rayzor Investments LLP, the "Developer," appointed Selwyn Rayzor. The current TIRZ Two board is presented below. Member Company Category John Baines John E. Baines PC CPAs Black Chamber of Commerce Cleve Breedlove Access First Capital Bank Aviation Dianne Costa CEMA of North Texas, LLC Hispanic Chamber of Commerce Jim Fykes Peterbilt Top 20 Taxpayer John Gilmer Flowers Baking Company Top 20 Taxpayer Greg Johnson City of Denton ity Council Larry Parker 5enton Depot hamber of Commerce Marty Rivers First State Bank --hamber of Commerce Carrell Ann Simmons Meridian Bank At Large Neal Smatresk University of North Texas University of North Texas Chris Watts City of Denton City Council TIRZ Board members serve two -year terms and may serve as many as three terms. The eleven members City of Denton Page 1 of 2 Printed on 11/25/2015 File #: ID 15 -1065, Version: 1 appointed by City Council serve terms concurrent with the EDPB. A member may serve no more than three terms. Everette Newland and Selwyn Rayzor's terms will expire, but are eligible for reappointment. Selwyn Rayzor has expressed an interest in serving another term. Everette Newland has notified staff that he will not be able to serve another term. Staff contacted Denton County and Commissioner Eads' Office will nominate another individual, as Mr. Newland was appointed by the Precinct 1 Commissioner. Staff will present the County nomination at the meeting. FISCAL INFORMATION There will be no fiscal impact as a result of the appointments to the TIRZ Number Two board. Respectfully submitted: Aimee Bissett, Director Development Services Department Prepared by: Erica Sullivan, Economic Development Analyst Development Services, Economic Development Division City of Denton Page 2 of 2 Printed on 11/25/2015 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON File #: ID 15 -1199, Version: 1 Legislation Text Agenda Information Sheet DEPARTMENT: Parks and Recreation CM /ACM: John Cabrales, Jr. DATE: December 1, 2015 SUBJECT Consider adoption of an ordinance approving a City sponsorship in an amount not to exceed $6,000 of in -kind services and supplies for the 27th Annual Denton Holiday Lighting Festival to be held on the Downtown Square on December 4, 2015; and providing an effective date. BACKGROUND The City Council approved $4,700 of in -kind services and resources in 2014. This included Police and Parks and Recreation staff overtime, rental of tables, chairs, and barricades for street closures. The actual cost for the City's sponsorship was $5,970. Increased costs were due to an increase in staff overtime. The Denton Holiday Lighting Festival is organized by the Denton Holiday Festival Association. It is composed of local business, representatives from Texas Woman's University, the University of North Texas, Denton County, the City of Denton, and various community volunteers. The 2015 attendance is expected to be approximately 4,000 with over 30 booths and activities. PRIOR ACTION/REVIEW The City Council authorized an agreement for the City's sponsorship of the Annual Denton Holiday Lighting Festival on December 2, 2014, under Ordinance 2014 -410, in the amount of $4,700. The 2013 sponsorship was approved on December 3, under Ordinance No. 2013 -320, in the amount of $13,700: it was canceled due to inclement weather. FISCAL INFORMATION The Festival received Hotel/Motel Occupancy Tax (HOT) funds in the amount of $7,700 to promote their event for 2015. The total cost of in -kind services not to exceed $6,000 and HOT Funds is $13,700, for which the City is recognized as a sponsor at a level equal to this value. EXHIBITS 1. Letter of Request 2. 2014 Proposed Costs Versus Actual Costs 3. Running Total of Requested Support 4. Proposed Ordinance Respectfully submitted: City of Denton Page 1 of 2 Printed on 11/25/2015 File #: ID 15 -1199, Version: 1 Emerson Vorel, Director Parks and Recreation Prepared by: Janie McLeod Community Events Coordinator City of Denton Page 2 of 2 Printed on 11/25/2015 October 19, 2015 City of Denton City Council Re: Request for support Exhibit 1 The Denton Holiday Festival Association is once again diligently organizing the Denton Holiday Lighting Festival, held on the historic Courthouse -on- the - Square. This December 4th will mark the 27th year of the event. As you know, the Holiday Lighting Festival is operated entirely by a volunteer board of directors and is funded completely by donations from the community. We appreciate the support of individuals, businesses and local government for this yearly event. The Denton Holiday Festival Association is requesting the City of Denton to continue its support of the Holiday Lighting Festival by providing barricades for street closures around the Square, tables and chairs for the musicians, information booth, and children's arts & crafts area, as well as approval for various city staff members to assist with the event. Thank you for your past support of the Denton Holiday Lighting Festival and we hope to see all of you at the event on Friday, December 4, 2015. Sincerely, Kelley Pound, Chair Denton Holiday Festival Association 940-453-6854 PO Box 2765 Denton, Texas 76202 www.dentonholidaylighting.com Holiday Lighting Exhibit 2 2014 Proposed Costs Versus Actual Costs 2014 Proposed Budget City In -Kind Contribution Personnel Reg. Time Personnel OT Equipment & Supplies Waived Fees Total In -Kind Costs PARD Staff $ 1,808 City Facilities Park Fee Total Parks and Recreation $ 1,808 $ 2,126 $ 3,934 Total Police $ 672 $ 672 Total In -Kind Services $ 2,480 $ 2,126 $ 4,606 HOT Funds $ 7,700 Total $ - $ 2,480 $ 2,126 $ - $ 12,306 2014 Actual Costs City In -Kind Contribution Personnel Reg. Time Personnel OT Equipment & Supplies Waived Fees Total In -Kind Costs PARD Staff $ 3,120 $ 3,120 City Facilities $ - Park Fee $ - Parks and Recreation $ 3,120 $ 1,590 $ 4,710 Police $ 1,260 $ 1,260 Total In -Kind Services $ 4,380 $ 1,590 $ 5,970 HOT Funds $ 7,700 Grand Total $ - $ 4,380 $ 1,590 $ - $ 13,670 HOT funds are approved in a separate budget. HOT Funds are included to show the total City contribution to the Holiday Lighting Festival. M >C W R O N V] N 0" N O N W a3 U N 0A A i O N cC3 N U M M O N 00 — C1 v r— oc W') d N � N `O 69 69 O O �I R3 69 69 69 69 O H O O O ct 0 ran ran Q > U O � O 000 000 CIS 69 69 6R 6R cn oc N � m 00 N N 69 69 w 69 69 6n N M 01 in t— N 69 69 69 r 69 6n O O O 69 69 69 6n ti O O O ^C 000 w O 00 roq r�oq U ct D ct N � 69 ran c t p � U A 69 6n In � 69 69 th ct p O � 69 69 69 69 V-M N � a O A r H � c-I N M Ln l0 n DD HACity Council\2015\City sponsorships \Holiday Lighting\2015 \Holiday Lighting Festival Sponsorship '15.docx Exhibit 4 ORDINANCE NO. AN ORDINANCE APPROVING A CITY SPONSORSHIP IN AN AMOUNT NOT TO EXCEED $6,000 OF IN -KIND SERVICES AND SUPPLIES FOR THE 27TH ANNUAL DENTON HOLIDAY LIGHTING FESTIVAL TO BE HELD ON THE DOWNTOWN SQUARE ON DECEMBER 4,2015; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the Denton Holiday Lighting Festival is requesting the City of Denton to participate as a sponsor, at the same level as in previous years, for the event to be held on the Downtown Square on December 4, 2015; and WHEREAS, the City of Denton has sponsored up to $4,700.00 of in -kind services and supplies for the event which included police, park staff and the use of park equipment, rental of barricades, tables and chairs; and WHEREAS, in exchange for the said support the City of Denton was considered to be an event sponsor of the said event at a sponsorship level equal to the value of the in -kind service tendered; and WHEREAS, the City Council finds that it is in the public interest and benefit to the citizens of the City of Denton to participate as a sponsor at a level not to exceed $6,000.00 of in -kind services for the event to be held on the Downtown Square on December 4, 2015; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Council finds that it is in the public interest and benefit to the citizens of the City of Denton to participate as a sponsor at a level not to exceed $6,000.00 of in- kind services and supplies, including but not limited to police, park staff and the use of park equipment, rental of barricades, tables and chairs, and the said participation is hereby approved. SECTIQN.2. This ordinance shall be effective immediately upon its passage and approval. PASSED AND APPROVED this the day of _........ ,.,....._ — ................... ., 2015. CHRIS WATTS, MAYOR SALegahOur Documents\Ordinances\l 5\Holiday Ligh(ing Festival Sponsorship.dom JENNIFER WALTERS, CITY SECRETARY Iff," BY! 7 Exhibit 4 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON Legislation Text File #: ID 15 -1225, Version: 1 Agenda Information Sheet DEPARTMENT: Finance ACM: Bryan Langley Date: December 1, 2015 SUBJECT Consider approval of a resolution reviewing and adopting revisions to the Investment Policy regarding funds for the City of Denton; and providing an effective date. The Audit/Finance Committee recommends approval (2 -0). BACKGROUND The City of Denton has had a formal Investment Policy to guide decision making in managing and investing public funds. The City's Policy is modeled after, and in compliance with, the provisions of the Public Funds Investment Act (PFIA) of Texas, Government Code Chapter 2256. In accordance with the Code, and in order of importance, are the following prioritized objectives for managing the portfolio's fixed income investments: safety of principal, liquidity, and yield. It is the City's practice to hold securities until they mature, making temporary gains and losses in value unlikely to be realized. The general investment strategy, while taking into account the current interest rate environment, is to ladder out securities to meet cash flow needs. At least annually, the Audit/Finance Committee and the City Council are requested to review and approve the Investment Policy as required by the PFIA. Although few Policy modifications were made this year, staff did incorporate the passage of a new bill by the Texas legislature that reduced the amount of PFIA training for those involved in the investment process from ten hours every two fiscal years to eight hours. However, the stipulation that initially all must complete at least ten hours of training within 12 months of assuming investment duties did not change. The assistant city manager of finance, the finance and assistant finance director, as well as the treasury administrator are required to receive training. This adjustment is found on page six of the red -lined version of the Investment Policy. Other revisions shown on pages 11, 12, and 15 were minor in nature and made for clarification purposes only. First Southwest Asset Management, Inc. (the City's investment advisor) and the Investment Committee have reviewed and approved the revised Investment Policy. RECOMMENDATION Staff recommends approval of Investment Policy 403.06 with the advised revisions. PRIOR ACTION/REVIEW (Council, Boards, Commissions) City of Denton Page 1 of 2 Printed on 11/25/2015 File M ID 15 -1225, Version: 1 On November 17, 2015 the Audit/Finance Committee unanimously approved that the revised Investment Policy be forwarded to the City Council for consideration and approval. EXHIBITS 1. Red -lined FY 2015 -16 Investment Policy 2. Resolution Respectfully submitted: Chuck Springer, 349 -8260 Director of Finance Prepared by: Antonio Puente, Jr. Assistant Director of Finance City of Denton Page 2 of 2 Printed on 11/25/2015 Exhibit I CITY OF DENTON Page 1 of 16-7 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE SECTION: FINANCE POLICIES REFERENCE NUMBER: 403.06 SUBJECT: INVESTMENTS INITIAL EFFECTIVE DATE: 02/17/1987 TITLE: INVESTMENT POLICY REVISION DATE: ," �'rnz-84�12-1-15 L PURPOSE It is the objective of the City of Denton to invest public funds in a manner which will provide maximum security and the best commensurate yield while meeting the daily cash flow demands of the City and conforming to all federal, state, and local statutes, rules, and regulations governing the investment of public funds. This Policy serves to satisfy the statutory requirements of defining and adopting a formal investment policy. The Policy and investment strategies shall be reviewed annually by the Audit/Finance Committee and City Council who will formally approve any modifications. This Investment Policy, as approved, is in compliance with the provisions of the Public Funds Investment Act of Tex. Gov't. Code Chapter 2256. II. SCOPE A. This Investment Policy applies to the investment activities of the City of Denton, Texas. The specific funds cited hereafter in Section II(D), shall be excluded from this Investment Policy. All financial assets of all funds, including the General Fund and any other accounts of the City not specifically excluded in these policy guidelines are included. These funds are accounted for in the City's Comprehensive Annual Financial Report (CAFR). These funds, as well as others that may be created from time -to -time, shall be administered in accordance with the provisions of this Policy. All funds will be pooled for investment purposes except for those listed under Section II(C). In addition to this Policy, the investment of bond proceeds and other bond funds (including debt service and reserve funds) shall be governed and controlled by their governing ordinance and by the provisions of the Tax Reform Act of 1986, including all regulations and rulings promulgated there under applicable to the issuance of tax- exempt obligations. B. Funds covered by this Policy and managed as a pooled fund group: General Fund - used to account for resources traditionally associated with government, which are not required to be accounted for in another fund. 2. Special Revenue Funds — used to account for the proceeds from specific revenue sources which are restricted or committed to expenditures for specific purposes other than debt service or capital projects. Debt Service Fund used to account for resources to be used for the payment of principal, interest and related costs on general obligation debt. 4. Capital Project Funds — used to account for resources to enable the acquisition or construction of major capital facilities which are not financed by enterprise funds, internal service funds, or trust funds. Page 2 of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 Enterprise Funds — used to account for operations that are financed and operated in a manner similar to private business enterprises. 6. Internal Service Funds — used to account for the cost of providing goods or services between City departments. 7. Trust and Agency Funds — used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, other governments, and /or other funds. Bond Reserve Funds — funds set at prescribed levels by certain bond ordinances to pay principal and /or interest if required to prevent default. 9. New funds available for investment by the City, such as (but not limited to) resources associated with Public Improvement Districts or Tax Increment Financing zones, unless specifically excluded herein. C. Funds covered by this Policy and managed as separately invested assets: Bond Funds — funds established with the proceeds from specific bond issues when it is determined that segregating these funds from the pooled funds' portfolio will result in maximum interest earning retention under the provisions of the Tax Reform Act of 1986. 2. Endowment Funds — funds given to the City with the instructions that the principal is to remain intact, unless otherwise agreed to, and the income generated by the investments will be used for specified purposes. Trust, Escrowed Funds & Security Deposits — funds held outside the City by a trust, escrow agent, or other entity but belonging to the City. D. This Policy shall not govern funds, which are managed under separate investment programs in accordance with the Tex. Gov't. Code Sec. 2256.004. Such programs currently include all funds related to employee retirement programs, other funds established by the City for deferred employee compensation, and certain private donations. The City shall and will maintain responsibility for these funds to the extent required by federal and state law, the City Charter, and donor stipulations. This Policy also does not apply to monies held in escrow to retire bonds which are subject to defeasance requirements stated under their respective bond ordinances. III. INVESTMENT OBJECTIVES & STRATEGIES It is the policy of the City that, giving due regard to the safety and risk of investments, all available funds shall be invested in conformance with state and federal regulations, applicable bond ordinance requirements, adopted Investment Policy and investment strategies. In accordance with the Public Funds Investment Act, the following prioritized objectives (in order of importance) in accordance with the Tex. Gov't. Code Sec. 2256.005(d) apply for each of the City's investment strategies. Page 3 of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 A. Suitability — Understanding the suitability of the investment to the financial requirements of the City is important. Any investment eligible in the Investment Policy is suitable for all City funds. B. Safety — Preservation and safety of principal are the primary objectives of the Investment Policy. All investments will be in high quality securities with no perceived default risk. C. Liquidity — The City's investment portfolio will remain sufficiently liquid to meet operating requirements that might be reasonably anticipated. Liquidity shall be achieved by matching investment maturities with forecasted cash flow requirements and by investing in securities with active secondary markets. Short -term investment pools and money market mutual funds provide daily liquidity and may be utilized as a competitive investment alternative to fixed income instruments. D. Marketability — Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. Historical market "spreads" between the bid and offer prices of a particular security type of less than a quarter of a percentage point shall define an efficient secondary market. E. Diversification — Investment maturities shall be staggered to provide cash flow based on the anticipated needs of the City. Diversifying the appropriate maturity structure will reduce market cycle risk. F. Yield — Attaining a competitive market yield, commensurate with the City's investment risk constraints and the cash flow characteristics of the portfolio, is the desired objective. The goal of the City's investment portfolio is to regularly meet or exceed the average rate of return on U.S. Treasury bills at a maturity level comparable to the portfolio's weighted average maturity in days. The yield of an equally weighted, rolling twelve month moving average of a one year U.S. Treasury bill portfolio shall be the minimum yield objective or "benchmark ". One year U.S. Treasury bill information is derived from the Federal Reserve Statistical Release H.15 for constant maturities. A secondary objective will be to obtain a yield equal to or in excess of a local government investment pool or money market mutual fund. The first measure of success in this area will be the attainment of enough income to offset inflationary increases. Although steps will be taken to obtain this goal, the City's staff will follow the "Prudent Person" statement relating to the standard of care that must be exercised when investing public funds as expressed in the Tex. Gov't. Code Sec. 2256.006(a -b). The Investment Officers shall avoid any transactions that might impair public confidence in the City's ability to govern effectively. The governing body recognizes that in adequately diversifying the maturity structure within the portfolio to meet the City's expenditure needs, occasional measured unrealized losses due to market volatility and rising interest rates are inevitable, and must be considered within the context of the overall portfolio's investment return. The prudence of the investment decisions shall be measured in accordance with the tests set forth in the Tex. Gov't. Code Sec. 2256.006(b). IV. INVESTMENT STRATEGY FOR SPECIFIC FUND GROUPS In order to better diversify, maximize interest earnings and otherwise meet stated objectives, fund groups may be combined into one or more internal investment pools. Although fund monies may be combined into a single asset portfolio, proportional fund ownership will be accounted for separately. The City maintains separate portfolios for some individual funds or groups of funds (as listed under Page 4 of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 Section II) that are managed in accordance with the terms of this Policy and by the corresponding investment strategies listed below. A. Investment Pool Strategy — The City's Investment Pool is an aggregation of the majority of City funds which includes tax receipts, enterprise fund revenues, fine and fee revenues, reserve funds for outstanding utility system revenue bonds, as well as some, but not necessarily all, bond proceeds, grants, gifts and endowments. This portfolio is maintained to meet anticipated daily cash needs for the City's operations, capital projects and debt service. In order to ensure the ability of the City to meet obligations and to minimize potential liquidation losses, the dollar- weighted average stated maturity of the investment pool shall not exceed 1.5 years or 550 days. The objectives of this portfolio are to: 1. Ensure safety of principal by investing in only high quality securities for which a strong secondary market exists. 2. Ensure that anticipated cash flow needs are matched with adequate investment liquidity. 3. Limit market and credit risk through diversification. 4. Attain the best feasible yield commensurate with the obj ectives and restrictions set forth in this Policy by actively managing the portfolio to meet or exceed the twelve month moving average yield on a one year U.S. Treasury bill as derived from the Federal Reserve Statistical Release H.15 for constant maturities. B. Bond Funds Strategy - Occasionally, separate non - pooled portfolios are established with the proceeds from bond sales in order to maximize earnings within the constraints of arbitrage regulations. The objectives of the portfolios are to: Ensure safety of principal by investing in only high quality securities for which a strong secondary market exists. 2. Ensure that anticipated cash flow needs are matched with adequate investment liquidity. Limit market and credit risk through diversification. 4. Attain the best feasible yield commensurate with the objectives and restrictions set forth in this Policy and the bond ordinance by actively managing the portfolio to meet or exceed the bond yield. C. Endowment Fund Strategy - Funds received as gifts to the City with instructions that the income generated by the investment of said funds be used for specified purposes are invested as separate non - pooled portfolios in order to maximize return. The objectives of the portfolios are to: Ensure safety of principal by investing in only high quality securities for which a strong secondary market exists. 2. Ensure that anticipated cash flow needs are matched with adequate investment liquidity. Page 5 of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 Limit market and credit risk through diversification. 4. Attain the best feasible yield commensurate with the objectives and restrictions set forth in this Policy. D. Trust, Escrowed Funds & Security Deposit Strategy - Funds that are held outside the City by a trust, escrow agent, or as a security deposit, but belonging to the City are governed by their respective trust, escrow, or security deposit agreement and are subject to the provisions of this Policy. The objectives of the portfolios are to: Ensure safety of principal by investing in only high quality securities for which a strong secondary market exists. 2. Ensure that anticipated cash flow needs are matched with adequate investment liquidity. Limit market and credit risk through diversification. 4. Attain the best feasible yield commensurate with the objectives and restrictions set forth in this Policy and the trust, escrow, or security deposit agreement. V. INVESTMENT COMMITTEE Members — The Investment Committee will consist of the City Manager, Assistant City Manager for Finance, Assistant City Manager for Utilities, Director of Finance, Assistant Director of Finance, City Controller, Treasury Administrator, and the City's investment advisor. The investment advisor is a non - voting member. When needed, the City Attorney will act as a legal advisor to the Investment Committee. Scope — The Investment Committee shall meet at least quarterly to determine general strategies, investment guidelines and to monitor results. Included in its deliberations will be such topics as: economic outlook, portfolio diversification, maturity structure, potential risk to the City's funds, authorized broker /dealers (if applicable) and depository institutions, as well as the target rate of return on the investment portfolio. Procedures - The Investment Committee shall provide meeting summations to all members. Any two members of the Investment Committee may request a special meeting, and four members shall constitute a quorum. The Investment Committee shall establish its own rules of procedures. VI. RESPONSIBILITY AND STANDARD OF CARE A. Delegation & Training — The management responsibility for the investment program is delegated to the Director of Finance. The primary individual who shall be involved in investment activities will be his designee. The designee may delegate the day to day activities to a responsible individual(s) who has received the appropriate training required by state statute. The Director of Finance and department designees will use this Policy as the primary guideline for the City's investment program, procedures, and internal control issues. The Assistant City Manager who oversees financial operations and the Director of Finance are designated as the Investment Officers, pursuant to Tex. Gov't. Code Sec. 2256.005(f). Accordingly, the Investment Officers and persons authorized to execute investment transactions shall attend at least one training session relating to their responsibilities under the Page 6 of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 Public Funds Investment Act within 12 months after assuming duties and receive no less than 10 hours of instruction relating to investment functions. Thereafter, eight hours of investment trainin is s required in every two year period that begins on the first day of the fiscal year and consists of the two consecutive fiscal years after that date. The training must include education in investment controls, security risks, strategy risks, market risks, and compliance with the Public Funds Investment Act. The investment training session shall be provided by an independent source approved by the Investment Committee. For purposes of this policy, an "independent source" from which investment training shall be obtained shall include a professional organization, an institute of higher learning or any other sponsor other than a business organization with whom the City may engage in an investment transaction. Thus, these independent sources will be training sessions sponsored, accredited or endorsed by the Government Treasurers Organization of Texas (GTOT), Center For Public Management at the University of North Texas (UNT), Government Finance Officers Association of Texas (GFOAT), Texas Municipal League (TML), North Central Texas Council of Governments (NCTCOG), Association of Public Treasurers United States & Canada (APT US & C), and Government Finance Officers' Association (GFOA). No persons may engage in investment transactions except as provided under the terms of this Policy. The Assistant City Manager shall require an annual compliance review by an external auditor that will consist of an audit of management controls on investments, adherence to the City's Investment Policy and a review of the quarterly investment reports. The reviews will provide internal control by assuring compliance with policies and procedures. The Assistant City Manager, Director of Finance, Mayor, City Council, City Manager and other Finance Department employees shall be personally indemnified in the event of investment loss provided the Investment Policy has been followed. B. Conflicts of Interest — All participants in the investment process shall seek to act responsibly as custodians of public assets. Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Investment Committee members shall be required to complete an annual ethics statement noting any known conflicts of interest as outlined in Section VI(C) below. C. Disclosure — Anyone involved in investing City funds shall file with the Investment Committee a statement disclosing any personal business relationship with a business organization offering to engage in investment transactions with the City or is related within the second degree by affinity or consanguinity as determined under the Tex. Gov't. Code Ch. 573, to an individual seeking to transact investment business with the City. A disclosure statement must also be filed with the Texas Ethics Commission and the City Council. An Investment Officer or other employee has a personal business relationship with a business organization if any one of the following three conditions is met: The Investment Officer or employee owns 10% or more of the voting stock or shares of the business organization or owns $5,000 or more of the fair market value of the business organization. 2. Funds received by the Investment Officer or employee from the business organization exceed 10% of the investment officers gross income for the prior year. Page 7 of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 The Investment Officer or employee has acquired from the business organization during the prior year investments with a book value of $2,500 or more for their personal account. D. Prudence — The standard of prudence to be used by the investment officials shall be the "Prudent Person Rule ", as set forth in Tex. Gov't. Code Sec. 2256.006, and will be applied in the context of managing an overall portfolio: "Investments shall be made with judgment and care under prevailing circumstances, that a person of prudence, discretion and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived." Investment officials acting in accordance with the Investment Policy and exercising due diligence shall be relieved of personal responsibilities for an individual security's credit risk or market price change, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. In determining whether an investment official has exercised prudence with respect to an investment decision, the determination shall be made taking into consideration the investment of all funds over which the official had responsibility rather than consideration as to the prudence of a single investment and whether the investment decision was consistent with the City's Investment Policy. E. Reporting Quarterly — Not less than quarterly, the Director of Finance shall submit to the City Manager, Mayor and City Council a written report of the City's investment transactions within one hundred twenty (120) days of the preceding reporting period. The report shall: 1) describe in detail the investment position of the City as of the end of the reporting period, 2) be prepared jointly by all Investment Officers, 3) be signed by each Investment Officer, 4) contain a summary statement, prepared in compliance with generally accepted accounting principles, of each pooled fund group including a) beginning market value for the reporting period; b) additions and changes to the market value during the period; c) ending market value for the period; and d) fully accrued interest for the reporting period, 5) state the book value and market value of each separately invested asset at the beginning and end of the reporting period by type of asset and fund type invested, 6) state the maturity date of each separately invested asset that has a maturity date, 7) state the account or fund or pooled fund group for which each individual investment was acquired, and 8) state the compliance of the investment portfolio as it relates to the investment strategy expressed in the Investment Policy and with relevant provisions of the Tex. Gov't. Code Ch. 2256. Annually - The City Council shall review and approve the Investment Policy and investment strategies at least annually and be documented by rule, order, ordinance or resolution which shall include any changes made. Compliance Audit — The City's external independent auditor will conduct an annual review of the quarterly reports in conjunction with the annual financial audit. The results of the audit will be reported to City Council. The audit will also review compliance with management controls on investments and adherence to this Policy. F. As recommended by the Texas State Library and Archives Commission, the guidelines of retaining records for five years from the applicable fiscal year end should be followed for Page 8 of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 investment funds other than bond proceeds. Since the City manages the majority of its investments, including bond funds, using an internal pool consisting of combined fund groups, records shall be retained in accordance with the Administrative Policy No. 403.07 "Debt Service Management." The Director of Finance shall oversee the filing and /or storing of investment records. G. Market prices for all public fund investments will be obtained and monitored through the use of Interactive Data Inc., an on -line data service or a similarly qualified successor agency or experienced competitor. VII. SUITABLE AND AUTHORIZED INVESTMENT SECURITIES A. Active Portfolio Management — The City intends to pursue an active versus a passive investment management philosophy. That is, securities may be sold before they mature if market conditions present an opportunity for the City to benefit from the trade. (Refer to Section VIII of this Policy.) In addition, the Investment Officers may at times restrict or prohibit the purchase of specific types of investments or issuers due to current market conditions. The City shall take all prudent measures consistent with this Investment Policy to liquidate an investment that no longer meets the required minimum rating standards, as per the Tex. Gov't. Code Sec. 2256.021. However, if it is determined by the Investment Committee that the City would benefit from holding the securities to maturity to recapture its initial investment then the Investment Officers may act accordingly. The City is not required to liquidate investments that were authorized investments at the time of purchase. (Tex. Gov't. Code Sec. 2256.017) B. Authorized Investments & Maximum Maturities — City funds governed by this Policy may be invested in the instruments described below, all of which are authorized by the Public Funds Investment Act. Direct obligations of the United States of America, its agencies and instrumentalities and maturing in less than five years. 2. Other obligations, the principal and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the United States of America, or any obligation fully guaranteed or insured by the Federal Deposit Insurance Corporation and maturing in less than five years. Direct obligations of the State of Texas or its agencies thereof, Counties, Cities and other political subdivisions rated as to investment quality by a nationally recognized investment rating firm not less than AA or its equivalent and maturing in less than three years. 4. Other obligations, the principal and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the State of Texas, rated as to investment quality by a nationally recognized investment rating firm not less than AA or its equivalent and maturing in less than three years. Fully insured or collateralized certificates of deposit/share certificates issued by state and national banks or savings bank or a state or federal credit union (having its main or branch office in Texas) guaranteed or insured by the Federal Deposit Insurance Page 9 of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 Corporation or its successor or the National Credit Union Share Insurance Fund or its successor. Any uninsured portion of collateralized certificates of deposit must be secured by obligations in accordance with Section XII herein. Banks or credit unions offering collateralized certificates of deposit/share certificates, or are proposing a standby letter of credit as security for deposits, must be pre- approved by the Investment Committee. Certificates of deposits /share certificates fully insured by the Federal Deposit Insurance Corporation or National Credit Union Share Insurance Fund (including successor organizations) do not require prior approval by the Investment Committee. Both insured and collateralized instruments, including those backed by a standby letter of credit, must mature in less than three years. In addition to the City's authority to invest funds in certificates of deposit and share certificates stated above, an investment in certificates of deposit made in accordance with the following conditions is an authorized investment under Tex. Govt. Code Sec. 2256.010(b): (1) the funds are invested by the City through a clearing broker registered with the Securities and Exchange Commission (SEC) and operating pursuant to SEC rule 15c3 -3 (17 C.F.R. Section 240.15c3 -3) with its main office or branch office in Texas and selected from a list adopted by the Investment Committee as required by Section 2256.025; or a selected depository institution that has its main office or a branch office in this state; (2) the selected broker or depository institution arranges for the deposit of the funds in certificates of deposit in one or more federally insured depository institutions, wherever located for the account of the City; (3) the full amount of the principal and accrued interest of each of the certificates of deposit is insured by the United States or an instrumentality of the United States; (4) the selected broker or depository institution acts as custodian for the City with respect to the certificates of deposit issued for the account of the City. 6. Fully collateralized repurchase agreements provided the City has on file a signed Master Repurchase Agreement, approved by the City Attorney, which details eligible collateral, collateralizations ratios, standards for collateral custody and control, collateral valuation, and conditions for agreement termination. The repurchase agreement must have a defined termination date and be secured by obligations in accordance with Section XII of this Policy. It is required that the securities purchased by the City be assigned to the City, held in the City's name and deposited at the time the investment is made with the City or with a third party selected and approved by the City. Repurchase agreements must be purchased through a primary government securities dealer, as defined by the Federal Reserve or a financial institution doing business in this State and the termination date must be 30 days or less. An exception to the 30 days or less termination date may be made with respect to bond proceeds. The City may specifically authorize in the bond ordinance investments in repurchase agreements, such as a flexible repurchase agreement, with maturities in excess of 30 days subject to any required approvals from bond insurers. 7. Commercial paper that has a stated maturity of 270 days or less from the date of issuance and is rated not less than A -1 or P -1 or an equivalent rating by at least two nationally recognized rating agencies. Public (local) fund investment pools with a dollar weighted average maturity of 60 days or less. The pool must be approved through resolution by the City Council to provide services to the City and be continuously rated no lower than Aaa or AAAm or at an equivalent rating by at least one nationally recognized rating service. A public funds Page 10 of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 investment pool created to function as a money market mutual fund must mark to market daily and stabilize at a $1 net asset value. The City may not invest an amount that exceeds 10 percent of the total assets of any one local government investment pool. To be eligible to receive funds from and invest funds on behalf of the City, an investment pool must furnish to the Investment Officer or other authorized representative an offering circular or other similar disclosure instrument that contains information required by the Tex. Gov't. Code Sec. 2256.016. Investments will be made in a local government investment pool only after a thorough investigation of the pool and approval by the Investment Committee which shall at least annually review, revise and adopt the local government investment pool(s). 9. A Securities and Exchange Commission (SEC) registered, no load money market mutual fund which has a dollar weighted average stated maturity of 60 days or less and whose investment objectives includes the maintenance of a stable net asset value of $1 for each share. Furthermore, it must be rated not less than Aaa, AAAm or an equivalent rating by at least one nationally recognized rating service. A rating will not be required of money market mutual funds that invest exclusively in U.S. government securities or a combination ofU.S. government securities and repurchase agreements backed by U.S. government securities. The City must be provided with a prospectus and other information required by the SEC Act of 1934 or the Investment Company Act of 1940. This can be supplied either through website access or in hard copy form. The City may not invest an amount that exceeds 10 percent of the total assets of any one fund. Investments will be made in a money market mutual fund only after a thorough investigation of the fund and approval by the Investment Committee which shall, at least annually, review, revise and adopt the money market mutual fund(s). C. Denton Municipal Electric (DME) Authorized Investments — DME engages in the distribution and sale of electric energy to the public and, in accordance with Tex. Gov't Code Sec. 2256.0201, may enter into a hedging contract and related security and insurance agreements in relation to fuel oil, natural gas, coal, nuclear fuel, and electric energy to protect against loss due to price fluctuations. "Hedging" is defined by the buying and selling of futures, options or similar contracts and related transportation costs of the aforementioned commodities as a protection against adverse price movements. A hedging transaction must comply with the regulations of the Commodity Futures Trading Commission and the Securities and Exchange Commission. A payment received under a hedging contract or related agreement in relation to fuel supplies or fuel reserves is a fuel expense, and, thus, DME may credit any amounts received against fuel expenses. The City Council may set and review policies regarding hedging transactions, as per Tex. Gov't. Code Sec. 2256.0201(c). D. Prohibited Investments — The City's authorized investment options are more restrictive than those allowed by state law. Furthermore, this Policy specifically prohibits investment in the securities listed below: Obligations, whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage- backed security collateral and pays no principal. Page 11 of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 2. Obligations whose payment represents the principal stream of cash flow from the underlying mortgage- backed security collateral and bears no interest. All collateralized mortgage obligations. 4. Reverse repurchase agreements. E. Diversification - It is the policy of the City to diversify its investment portfolios. The diversification will protect interest income from the volatility of interest rates and the avoidance of undue concentration of assets in a specific maturity sector; therefore, portfolio maturities shall be staggered. In establishing specific diversification strategies, the following general policies and constraints shall apply: Risk of market price volatility shall be controlled through maturity diversification and by controlling unacceptable maturity extensions and a mismatch of liabilities and assets. The maturity extension will be controlled by limiting the weighted average maturity of the internal investment pool portfolio to 550 days. All long -term maturities will be intended to cover long -term liabilities. In addition, at least 5 percent of the funds in the investment pool portfolio will be liquid at all times. Investment pool liquidity, which consists of immediately available funds, is defined as shares in a local government investment pool and money market mutual fund, as well as bank demand deposit balances. Although there is no maximum defined portfolio liquidity position, it is the intent of this Policy to seek out higher yielding alternative investments in accordance with the prioritized objectives of preservation and safety of principal, meeting liquidity needs and yield enhancement as stated throughout the Public Funds Investment Act. 2. The Investment Committee shall establish strategies and guidelines for the percentage of the total portfolio that may be invested in U.S. Treasury securities, federal agencies /instrumentalities, repurchase agreements, insured /collateralized certificates of deposit and other securities or obligations. The Investment Committee shall conduct a quarterly review of these guidelines, and shall evaluate the probability of market and default risk in various investment sectors as part of its considerations. Risk of principal loss in the portfolio as a whole shall be minimized by diversifying investment types according to the following limitations based on book values: Investment Type % of Portfolio • U.S. Government Treasury Notes /Bills & Obligations 100% • U.S. Government Agencies & Instrumentalities 100% • State of Texas Obligations, Agencies & Local Gov't. 15% • Local Government Investment Pools 50% • Repurchase Agreements 20% • Certificates of Deposit (fully insured /- m- collateralized /SLOC *) 35% • U.S. Money Market Mutual Funds 35% • Callable U.S. Agencies /Instrumentalities 20% • Commercial Paper By Institution: 5% Page 12 of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 Repurchase Agreements No more than 15% Collateralized Certificates of Deposit No more than 15% SLOC* Backed Certificates of Deposit No more than 15% All Other (except U.S. Treasuries) No more than 35% *Standby Letter of Credit 4. Purchases of securities with stated maturities greater than the maximum authorized under Section VII(B) require prior City Council approval. VIII. SALE OF SECURITIES The City's policy is to hold all securities to maturity. However, securities may be sold to minimize the potential loss of principal on a security whose credit quality has declined, to swap into another security which would improve the quality, yield or target duration of the portfolio or to meet unanticipated liquidity needs. A horizon analysis is required for each swap proving benefit to the City before the trade decision is made, and will be held in the file for record keeping. IX. COMPETITIVE BIDDING It is the policy of the City to require competitive bidding for all individual security purchases and sales, as well as for certificates of deposit. Exceptions include: A. Transactions with money market mutual funds and local government investment pools which are deemed to be made at prevailing market rates. B. Treasury and agency securities purchased as new issues through an approved broker /dealer, financial institution or investment advisor. C. Automatic overnight "sweep" transactions with the City's depository bank. At least three bids or offers must be solicited for all other transactions involving individual securities. The City's investment advisor is also required to solicit at least three bids or offers when transacting trades on the City's behalf In situations where the exact security is not offered by other broker /dealers, offers on the closest comparable investment may be used to establish a fair market price for the security. In the case of a certificate of deposit purchase, at least two other offers should be solicited to provide a comparison. When few, if any, banks wish to participate then staff may use another authorized investment of similar maturity for evaluation purposes. The quotes may be accepted orally, in writing, electronically, or any combination of these methods. The Investment Committee may approve exceptions on a case by case basis or on a general basis in the form of guidelines. These guidelines shall take into consideration the investment type, maturity date, amount and potential disruptiveness to the City's investment program. X. ARBITRAGE The Tax Reform Act of 1986 provided limitations restricting the City's investment of tax - exempt bond proceeds. Revised arbitrage rebate provisions require that the City compute earnings on investment from each issue of bonds on an annual basis to determine if a rebate is required. To determine the City's arbitrage position, the City is required to perform specific calculations relative to the actual yield earned on the investment of the funds and the yield that could have been earned if the funds had been invested at a rate equal to the yield on the bonds sold by the City. The rebate provision states that Page 13 of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 periodically (not less than once every five years, and not later than sixty days after maturity of the bonds), the City is required to pay the U.S. Treasury a rebate of excess earnings based on the City's positive arbitrage position. The Tax Reform restrictions require precision in the monitoring and recording facets of investments as a whole, and particularly as they relate to yields and computations so as to insure compliance. Failure to comply may dictate that the bonds become taxable, retroactively from the date of issuance. The City's investment position, relative to the revised arbitrage restrictions, is the continued pursuit of maximizing yield on applicable investments while ensuring the safety of capital and liquidity. It is fiscally prudent to continue the maximization of yield and rebate excess earnings, if necessary. XL SELECTION OF BANKS, BROKER/DEALERS AND INVESTMENT ADVISORS A. Depository — City Council shall, by ordinance, "select and designate one or more banking institutions as the depository for the monies and funds of the City" in accordance with the requirement of Tex. Loc. Gov't. Code Ch. 105. At least every five years a depository shall be selected through the City's banking services procurement process, which shall include a formal request for proposal (RFP). The selection of a depository will be determined by a competitive process and evaluated on the following criteria: Qualified as a depository for public funds in accordance with state and local laws. 2. Provided requested information or financial statements for the periods specified. Complied with all requirements in the banking RFP. 4. Completed responses to all required items on the proposal form. Offered lowest net banking service cost, consistent with the ability to provide an appropriate level of service. 6. Met credit worthiness and financial standards. B. Investment Broker /Dealers — If the City has not retained an investment advisor, then the Investment Committee shall be responsible for adopting the list of qualified brokers /dealers and financial institutions authorized to engage in investment transactions with the City. Authorized firms may include primary dealers or regional broker /dealers that qualify under SEC Rule 15C3 -1 (uniform net capital rule) and qualified depositories as established by the Tex. Loc. Gov't. Code Ch. 105. The Investment Committee shall base its evaluation of security broker /dealers and financial institutions upon: Financial condition, strength and capability to fulfill commitments. 2. Overall reputation with other broker /dealers or investors. Regulatory status of the broker /dealer. 4. Background and expertise of the individual representatives. Ability to provide additional advisory services. Page 14 of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 The Investment Committee must annually review, revise, and adopt the list of qualified broker /dealers authorized to engage in investment transactions with the City. Investment Officers, or their authorized representatives, shall not conduct business with any firm with whom public entities have sustained realized losses on investments or whose name the Investment Committee has removed from an approved list. C. Investment Advisor — The City may retain the services of an investment advisory firm registered under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b -I et seq.) or with the State Securities Board to assist in the review of the investment policy, cash flow requirements, the formulation of investment strategies, the execution of security purchases, sales and deliveries, as well as attend quarterly investment meetings, provide periodic security valuations, market updates, and to generally service the investment needs of the City. The investment advisor will also be responsible for performing broker /dealer financial due diligence on the City's behalf and provide a list of its authorized broker /dealers on an annual basis. The investment advisory contract may not be for a term longer than two years and its renewal or extension must be approved by the City Council by ordinance or resolution as required by the Tex. Gov't. Code Sec2256.003(b). D. Compliance — A qualified representative from any firm offering to engage in investment transactions with the City is required to sign a written instrument upon receiving and reviewing a copy of the Investment Policy. Investments shall only be made with those business organizations (including money market mutual funds, local government investment pools, and investment advisory firms) which have provided the City with this written instrument executed by a qualified representative of the firm, acknowledging that the business organization has: Received and reviewed the City's Investment Policy. 2. Implemented reasonable procedures and controls in an effort to preclude investment transactions conducted between the City and the organization that are not authorized by the Investment Policy, except to the extent that this authorization is dependent on an analysis of the makeup of the City's entire portfolio or requires an interpretation of subjective investment standards. XII. COLLATERALIZATION, SAFEKEEPING AND CUSTODY A. Collateralization - The City requires that all uninsured collected balances plus accrued interest, if any, in depository accounts be secured in accordance with the requirements of state law. Financial institutions serving as City depositories will be required to sign a depository agreement with the City which details eligible collateral, collateralization ratios, standards for collateral custody and control, collateral valuation, rights of substitution and conditions for agreement termination. The City requires that all securities purchased under the terms of a repurchase agreement be assigned to the City in accordance with state law. Dealers and financial institutions wishing to transact repurchase agreements with the City will be required to sign a Master Repurchase Agreement which details eligible collateral, collateralization ratios, standards for collateral custody and control, collateral valuation, rights of substitution, and conditions for agreement termination. Page 15 of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 The City requires that all uninsured certificates of deposit plus accrued interest held with a depository be secured in accordance with the requirements of state law. Financial institutions will be required to sign a written depository and security agreement which stipulates eligible collateral, collateralization ratios, standards for collateral custody and control, collateral valuation, rights of substitution, and conditions for agreement termination. Collateral will always be held by an independent third party with which the City has a current custodial agreement and shall be reviewed at least monthly to ensure that the market value of the pledged securities is adequate. All deposits and investments of City funds (other than direct security purchases, money market mutual funds and local government investment pools) shall be secured by pledged collateral set at no less than 102 percent of the market value of the principal and accrued interest on the deposits or investments, less an amount insured by FDIC. Eligible collateral to secure the City's deposits include: Direct obligations of the United States government. 2. Other obligations, the principal and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the United States government. Direct obligations of agencies or instrumentalities of the United States government, including standby letters of credit. 4. Cash The City will reject adjustable rate mortgages (ARMS), collateralized mortgage obligations (CMOs), step -ups, variable rate instruments (except U.S. Treasury variable rate instrunientsififlation pFateeted seeti hies) or securities that are not found on common pricing systems. B. Safekeeping and Custody — Safekeeping and custody of the City's investment securities shall be in accordance with state law. All security transactions, except local government investment pool and money market mutual fund transactions, shall be conducted on a delivery versus payment (DVP) basis. Investment securities will be held by a third party custodian designated by the City, and be required to issue safekeeping confirmation notices clearly detailing that the securities are owned by the City. Safekeeping and custody of collateral pledged to the City shall be in accordance with state law. Collateral will be held by a third party custodian designated by the City. The custodian is required to issue safekeeping confirmation notices clearly showing that the securities are pledged to the City. C. Subject to Audit — All collateral shall be subject to inspection and audit by the Director of Finance, or designee, as well as the City's independent auditors. XIIL MANAGEMENT AND INTERNAL CONTROLS Controls shall be designed to prevent losses of public funds arising from fraud, employee error, and misrepresentation by third parties, unanticipated changes in financial markets, or imprudent actions by employees or Investment Officers of the City. Page 16 of 16 n1l7 YeIX7/ A Y'%X4T1%,TTCC'7'n A'1rTXT • nnnrP.i\TTnU/ A Y'%X4T1%,TTCC'7'n A'1rTXT • i\7nU e1'1 TXTU TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 Controls and managerial emphasis deemed most important that shall be employed include the following: Imperative Controls - Custodian safekeeping confirmation notices records management - Avoidance of bearer -form securities - Documentation of investment bidding events - Written confirmation of telephone transactions - Reconcilements and comparisons of security confirmation notices with the investment records - Compliance with Investment Policy - Verification of all interest income and security purchase and sell computations Controls Where Practical - Control of Collusion - Separation of duties - Separation of transaction authority between Accounting and record - keeping - Clear delegation of authority - Accurate and timely reports - Validation of investment maturity decisions with supporting cash flow data - Adequate training and development of Investment Officers and staff authorized to execute investment transactions - Review of financial conditions of all broker /dealers and depository institutions - Access to information about market conditions, changes and trends that require adjustments to investment strategies. XIV. INVESTMENT POLICY ADOPTION The Investment Policy shall be formally approved and adopted by resolution of the City Council and reviewed annually in accordance with the provisions of the Public Funds Investment Act of the Texas Government Code Chapter 2256. s: \legal \our documents \reso1uti011s \15 \i1lvestment policy.doe Exhibit 2 RESOLUTION NO. A RESOLUTION REVIEWING AND ADOPTING REVISIONS TO THE INVESTMENT POLICY REGARDING FUNDS FOR THE CITY OF DENTON; AND PROVIDING AN EFECTIVE DATE. WHEREAS, the City Council passed Resolution No. R96 -061 on October 15, 1996, which adopted an Investment Policy for the City, in compliance with the Public Funds Investment Act, 74t1i Leg., ch. 402, 1995 Tex. Sess. Law Serv. 2958 (Vernon) (TEX. GOV'T CODE Ann. Ch. 2256); and WHEREAS, the Investment Policy was most recently amended on the 18t1i day of November, 2014, when the City Council passed Resolution No. R2014 -042 adopting the current version of the Investment Policy; and WHEREAS, the City Council desires to revise the Investment Policy in order to reflect changes in the Public Funds Investment Act (PFIA), as well as incorporate needed administrative and procedural modifications which have occurred over time; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY RESOLVES: SECTION 1. The following policy entitled "Policy No. 403.06 "Investment Policy ", attached hereto and made a part hereof, is hereby adopted as an official policy of the City of Denton, Texas and shall replace the existing Investment Policy. SECTION 2. The attached Policy shall be filed in the official records with the City Secretary. SECTION 3. This resolution shall become effective inunediately upon its passage and approval. PASSED AND APPROVED this the day of , 2015. CHRIS WATTS, MAYOR 0' ATTEST: JENNIFER WALTERS, CITY SECRETARY i APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: �� CITY OF DENTON Page I of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE SECTION: FINANCE POLICIES REFERENCE NUMBER: 403.06 INITIAL EFFECTIVE DATE: SUBJECT: INVESTMENTS 02/17/1987 REVISION DATE: TITLE: INVESTMENT POLICY 12/1/2015 L PURPOSE It is the objective of the City of Denton to invest public funds in a manner which will provide maximum security and the best commensurate yield while meeting the daily cash flow demands of the City and conforming to all federal, state, and local statutes, rules, and regulations governing the investment of public funds. This Policy serves to satisfy the statutory requirements of defining and adopting a formal investment policy. The Policy and investment strategies shall be reviewed annually by the Audit /Finance Committee and City Council who will formally approve any modifications. This Investment Policy, as approved, is in compliance with the provisions of the Public Funds Investment Act of Tex. Gov't. Code Chapter 2256. II. SCOPE A. This Investment Policy applies to the investment activities of the City of Denton, Texas. The specific funds cited hereafter in Section II(D), shall be excluded from this hnvestment Policy. All financial assets of all funds, including the General Fund and any other accounts of the City not specifically excluded in these policy guidelines are included. These funds are accounted for in the City's Comprehensive Annual Financial Report (CAFR). These funds, as well as others that may be created from time -to -time, shall be administered in accordance with the provisions of this Policy. All funds will be pooled for investment purposes except for those listed under Section II(C). In addition to this Policy, the investment of bond proceeds and other bond funds (including debt service and reserve funds) shall be governed and controlled by their governing ordinance and by the provisions of the Tax Reform Act of 1986, including all regulations and rulings promulgated there under applicable to the issuance of tax- exempt obligations. B. Funds covered by this Policy and managed as a pooled fund group: General Fund - used to account for resources traditionally associated with government, which are not required to be accounted for in another fund. 2. Special Revenue Funds — used to account for the proceeds from specific revenue Sources which are restricted or committed to expenditures for specific purposes other than debt service or capital projects. Debt Service Fund used to account for resources to be used for the payment of principal, interest and related costs on general obligation debt. 4. Capital Project Funds — used to account for resources to enable the acquisition or construction of major capital facilities which are not financed by enterprise funds, internal service funds, or trust funds. Page 2 of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE REFERENCE NUMBER: TITLE: INVESTMENT POLICY 403.06 Enterprise Funds — used to account for operations that are financed and operated in a manner similar to private business enterprises. Internal Service Funds — used to account for the cost of providing goods or services between City departments. Trust and Agency Funds — used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, other governments, and /or other funds. Bond Reserve Funds — funds set at prescribed levels by certain bond ordinances to pay principal and /or interest if required to prevent default. New funds available for investment by the City, such as (but not limited to) resources associated with Public Improvement Districts or Tax Increment Financing zones, unless specifically excluded herein. C. Funds covered by this Policy and managed as separately invested assets: Bond Funds — funds established with the proceeds from specific bond issues when it is determined that segregating these funds from the pooled funds' portfolio will result in maximum interest earning retention under the provisions of the Tax Reform Act of 1986. 2. Endowment Funds — funds given to the City with the instructions that the principal is to remain intact, unless otherwise agreed to, and the income generated by the investments will be used for specified purposes. Trust, Escrowed Funds & Security Deposits — funds held outside the City by a trust, escrow agent, or other entity but belonging to the City. D. This Policy shall not govern funds, which are managed under separate investment programs in accordance with the Tex. Gov't. Code Sec. 2256.004. Such programs currently include all funds related to employee retirement programs, other funds established by the City for deferred employee compensation, and certain private donations. The City shall and will maintain responsibility for these funds to the extent required by federal and state law, the City Charter, and donor stipulations. This Policy also does not apply to monies held in escrow to retire bonds which are subject to defeasance requirements stated under their respective bond ordinances. III. INVESTMENT OBJECTIVES & STRATEGIES It is the policy of the City that, giving due regard to the safety and risk of investments, all available funds shall be invested in conformance with state and federal regulations, applicable bond ordinance requirements, adopted Investment Policy and investment strategies. In accordance with the Public Funds Investment Act, the following prioritized objectives (in order of importance) in accordance with the Tex. Gov't. Code Sec. 2256.005(d) apply for each of the City's investment strategies. Page 3 of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE REFERENCE NUMBER: TITLE: INVESTMENT POLICY 403.06 A. Suitability — Understanding the suitability of the investment to the financial requirements of the City is important. Any investment eligible in the Investment Policy is suitable for all City funds. B. Safety — Preservation and safety of principal are the primary objectives of the Investment Policy. All investments will be in high quality securities with no perceived default risk. C. Liquidity — The City's investment portfolio will remain sufficiently liquid to meet operating requirements that might be reasonably anticipated. Liquidity shall be achieved by matching investment maturities with forecasted cash flow requirements and by investing in securities with active secondary markets. Short -term investment pools and money market mutual funds provide daily liquidity and may be utilized as a competitive investment alternative to fixed income instruments. D. Marketability — Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. Historical market "spreads" between the bid and offer prices of a particular security type of less than a quarter of a percentage point shall define an efficient secondary market. E. Diversification — Investment maturities shall be staggered to provide cash flow based on the anticipated needs of the City. Diversifying the appropriate maturity structure will reduce market cycle risk. F. Yield — Attaining a competitive market yield, commensurate with the City's investment risk constraints and the cash flow characteristics of the portfolio, is the desired objective. The goal of the City's investment portfolio is to regularly meet or exceed the average rate of return on U.S. Treasury bills at a maturity level comparable to the portfolio's weighted average maturity in days. The yield of an equally weighted, rolling twelve month moving average of a one year U.S. Treasury bill portfolio shall be the minimum yield objective or "benchmark ". One year U.S. Treasury bill information is derived from the Federal Reserve Statistical Release H.15 for constant maturities. A secondary objective will be to obtain a yield equal to or in excess of a local government investment pool or money market mutual fund. The first measure of success in this area will be the attainment of enough income to offset inflationary increases. Although steps will be taken to obtain this goal, the City's staff will follow the "Prudent Person" statement relating to the standard of care that must be exercised when investing public funds as expressed in the Tex. Gov't. Code Sec. 2256.006(a -b). The Investment Officers shall avoid any transactions that might impair public confidence in the City's ability to govern effectively. The governing body recognizes that in adequately diversifying the maturity structure within the portfolio to meet the City's expenditure needs, occasional measured unrealized losses due to market volatility and rising interest rates are inevitable, and must be considered within the context of the overall portfolio's investment return. The prudence of the investment decisions shall be measured in accordance with the tests set forth in the Tex. Gov't. Code Sec. 2256.006(b). IV. INVESTMENT STRATEGY FOR SPECIFIC FUND GROUPS In order to better diversify, maximize interest earnings and otherwise meet stated objectives, fund groups may be combined into one or more internal investment pools. Although fund monies may be combined into a single asset portfolio, proportional fund ownership will be accounted for separately. The City maintains separate portfolios for some individual funds or groups of funds (as listed under Page 4 of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 Section II) that are managed in accordance with the terms of this Policy and by the corresponding investment strategies listed below. A. Investment Pool Strategy — The City's Investment Pool is an aggregation of the majority of City funds which includes tax receipts, enterprise fund revenues, fine and fee revenues, reserve funds for outstanding utility system revenue bonds, as well as some, but not necessarily all, bond proceeds, grants, gifts and endowments. This portfolio is maintained to meet anticipated daily cash needs for the City's operations, capital projects and debt service. In order to ensure the ability of the City to meet obligations and to minimize potential liquidation losses, the dollar- weighted average stated maturity of the investment pool shall not exceed 1.5 years or 550 days. The objectives of this portfolio are to: Ensure safety of principal by investing in only high quality securities for which a strong secondary market exists. Ensure that anticipated cash flow needs are matched with adequate investment liquidity. 3. Limit market and credit risk through diversification. Attain the best feasible yield commensurate with the objectives and restrictions set forth in this Policy by actively managing the portfolio to meet or exceed the twelve month moving average yield on a one year U.S. Treasury bill as derived from the Federal Reserve Statistical Release H.15 for constant maturities. B. Bond Funds Strategy - Occasionally, separate non - pooled portfolios are established with the proceeds from bond sales in order to maximize earnings within the constraints of arbitrage regulations. The objectives of the portfolios are to: Ensure safety of principal by investing in only high quality securities for which a strong secondary market exists. 2. Ensure that anticipated cash flow needs are matched with adequate investment liquidity. Limit market and credit risk through diversification. 4. Attain the best feasible yield commensurate with the objectives and restrictions set forth in this Policy and the bond ordinance by actively managing the portfolio to meet or exceed the bond yield. C. Endowment Fund Strategy - Funds received as gifts to the City with instructions that the income generated by the investment of said funds be used for specified purposes are invested as separate non - pooled portfolios in order to maximize return. The objectives of the portfolios are to: Ensure safety of principal by investing in only high quality securities for which a strong secondary market exists. 2. Ensure that anticipated cash flow needs are matched with adequate investment liquidity. Page 5 of 16 P0J JCV /ADMTNrfiTRATIVV PROCEDURE /ADMINISTRATIVE DIRECTIVE REFERENCE NUMBER: TITLE: INVESTMENT POLICY 403.06 Limit market and credit risk through diversification. Attain the best feasible yield commensurate with the objectives and restrictions set forth in this Policy. D. Trust, Escrowed Funds & Security Deposit Strategy - Funds that are held outside the City by a trust, escrow agent, or as a security deposit, but belonging to the City are governed by their respective trust, escrow, or security deposit agreement and are subject to the provisions of this Policy. The objectives of the portfolios are to: Ensure safety of principal by investing in only high quality securities for which a strong secondary market exists. 2. Ensure that anticipated cash flow needs are matched with adequate investment liquidity. Limit market and credit risk through diversification. 4. Attain the best feasible yield commensurate with the objectives and restrictions set forth in this Policy and the trust, escrow, or security deposit agreement. V. INVESTMENT COMMITTEE Members — The Investment Committee will consist of the City Manager, Assistant City Manager for Finance, Assistant City Manager for Utilities, Director of Finance, Assistant Director of Finance, City Controller, Treasury Administrator, and the City's investment advisor. The investment advisor is a non - voting member. When needed, the City Attorney will act as a legal advisor to the Investment Committee. Scope — The Investment Committee shall meet at least quarterly to determine general strategies, investment guidelines and to monitor results. Included in its deliberations will be such topics as: economic outlook, portfolio diversification, maturity structure, potential risk to the City's funds, authorized broker /dealers (if applicable) and depository institutions, as well as the target rate of return on the investment portfolio. Procedures - The Investment Committee shall provide meeting summations to all members. Any two members of the Investment Committee may request a special meeting, and four members shall constitute a quorum. The Investment Committee shall establish its own rules of procedures. VI. RESPONSIBILITY AND STANDARD OF CARE A. Delegation & Training — The management responsibility for the investment program is delegated to the Director of Finance. The primary individual who shall be involved in investment activities will be his designee. The designee may delegate the day to day activities to a responsible individual(s) who has received the appropriate training required by state statute. The Director of Finance and department designees will use this Policy as the primary guideline for the City's investment program, procedures, and internal control issues. The Assistant City Manager who oversees financial operations and the Director of Finance are designated as the hnvestment Officers, pursuant to Tex. Gov't. Code Sec. 2256.005(f). Accordingly, the Investment Officers and persons authorized to execute investment transactions shall attend at least one training session relating to their responsibilities under the Page 6 of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 Public Funds Investment Act within 12 months after assuming duties and receive no less than 10 hours of instruction relating to investment functions. Thereafter, eight hours of investment training is required in every two year period that begins on the first day of the fiscal year and consists of the two consecutive fiscal years after that date. The training must include education in investment controls, security risks, strategy risks, market risks, and compliance with the Public Funds Investment Act. The investment training session shall be provided by ail independent source approved by the Investment Committee. For purposes of this policy, an "independent source" fro►n which investment training shall be obtained shall include a professional organization, an institute of higher learning or any other sponsor other than a business organization with whom the City may engage in an investment transaction. Thus, these independent sources will be training sessions sponsored, accredited or endorsed by the Government Treasurers Organization of Texas (GTOT), Center For Public Management at the University of North Texas (UNT), Government Finance Officers Association of Texas (GFOAT), Texas Municipal League (TML), North Central Texas Council of Governments (NCTCOG), Association of Public Treasurers United States & Canada (APT US & C), and Government Finance Officers' Association (GFOA). No persons may engage in investment transactions except as provided under the terms of this Policy. The Assistant City Manager shall require an annual compliance review by an external auditor that will consist of an audit of management controls on investments, adherence to the City's Investment Policy and a review of the quarterly investment reports. The reviews will provide internal control by assuring compliance with policies and procedures. The Assistant City Manager, Director of Finance, Mayor, City Council, City Manager and other Finance Department employees shall be personally indemnified in the event of investment loss provided the Investment Policy has been followed. B. Conflicts of Interest — All participants in the investment process shall seek to act responsibly as custodians of public assets. Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Investment Committee members shall be required to complete an annual ethics statement noting any known conflicts of interest as outlined in Section VI(C) below. C. Disclosure — Anyone involved in investing City funds shall file with the Investment Committee a statement disclosing any personal business relationship with a business organization offering to engage in investment transactions with the City or is related within the second degree by affinity or consanguinity as determined under the Tex. Gov't. Code Ch. 573, to an individual seeking to transact investment business with the City. A disclosure statement must also be filed with the Texas Ethics Commission and the City Council. An Investment Officer or other employee has a personal business relationship with a business organization if any one of the following three conditions is met: The Investment Officer or employee owns 10% or more of the voting stock or shares of the business organization or owns $5,000 or more of the fair market value of the business organization. 2. Funds received by the Investment Officer or employee from the business organization exceed 10% of the investment officers gross income for the prior year. Page 7 of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 The Investment Officer or employee has acquired from the business organization during the prior year investments with a book value of $2,500 or more for their personal account. D. Prudence — The standard of prudence to be used by the investment officials shall be the "Prudent Person Rule ", as set forth in Tex. Gov't. Code Sec. 2256.006, and will be applied in the context of managing an overall portfolio: "Investments shall be made with judgment and care under prevailing circumstances, that a person of prudence, discretion and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived." Investment officials acting in accordance with the Investment Policy and exercising due diligence shall be relieved of personal responsibilities for an individual security's credit risk or market price change, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. In determining whether an investment official has exercised prudence with respect to an investment decision, the determination shall be made taking into consideration the investment of all funds over which the official had responsibility rather than consideration as to the prudence of a single investment and whether the investment decision was consistent with the City's Investment Policy. E. Reporting Quarterly — Not less than quarterly, the Director of Finance shall submit to the City Manager, Mayor and City Council a written report of the City's investment transactions within one hundred twenty (120) days of the preceding reporting period. The report shall: 1) describe in detail the investment position of the City as of the end of the reporting period, 2) be prepared jointly by all Investment Officers, 3) be signed by each Investment Officer, 4) contain a summary statement, prepared in compliance with generally accepted accounting principles, of each pooled fund group including a) beginning market value for the reporting period; b) additions and changes to the market value during the period; c) ending market value for the period; and d) fully accrued interest for the reporting period, 5) state the book value and market value of each separately invested asset at the beginning and end of the reporting period by type of asset and fund type invested, 6) state the maturity date of each separately invested asset that has a maturity date, 7) state the account or fund or pooled fund group for which each individual investment was acquired, and 8) state the compliance of the investment portfolio as it relates to the investment strategy expressed in the Investment Policy and with relevant provisions of the Tex. Gov't. Code Ch. 2256. Annually - The City Council shall review and approve the Investment Policy and investment strategies at least annually and be documented by rule, order, ordinance or resolution which shall include any changes made. Compliance Audit — The City's external independent auditor will conduct an annual review of the quarterly reports in conjunction with the annual financial audit. The results of the audit will be reported to City Council. The audit will also review compliance with management controls on investments and adherence to this Policy. F. As recommended by the Texas State Library and Archives Commission, the guidelines of retaining records for five years from the applicable fiscal year end should be followed for Page 8 of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 investment funds other than bond proceeds. Since the City manages the majority of its investments, including bond funds, using an internal pool consisting of combined fund groups, records shall be retained in accordance with the Administrative Policy No. 403.07 "Debt Service Management." The Director of Finance shall oversee the filing and /or storing of investment records. G. Market prices for all public fund investments will be obtained and monitored through the use of Interactive Data Inc., an on -line data service or a similarly qualified successor agency or experienced competitor. VII. SUITABLE AND AUTHORIZED INVESTMENT SECURITIES A. Active Portfolio Management — The City intends to put-sue an active versus a passive investment management philosophy. That is, securities may be sold before they mature if market conditions present an opportunity for the City to benefit from the trade. (Refer to Section VIII of this Policy.) In addition, the Investment Officers may at times restrict or prohibit the purchase of specific types of investments or issuers due to current market conditions. The City shall take all prudent measures consistent with this Investment Policy to liquidate an investment that no longer meets the required minimum rating standards, as per the Tex. Gov't. Code Sec. 2256.021. However, if it is determined by the Investment Committee that the City would benefit from holding the securities to maturity to recapture its initial investment then the Investment Officers may act accordingly. The City is not required to liquidate investments that were authorized investments at the time of purchase. (Tex. Gov't. Code Sec. 2256.017) B. Authorized Investments & Maximum Maturities — City funds governed by this Policy may be invested in the instruments described below, all of which are authorized by the Public Funds Investment Act. Direct obligations of the United States of America, its agencies and instrumentalities and maturing in less than five years. 2. Other obligations, the principal and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the United States of America, or any obligation fully guaranteed or insured by the Federal Deposit Insurance Corporation and maturing in less than five years. Direct obligations of the State of Texas or its agencies thereof, Counties, Cities and other political subdivisions rated as to investment quality by a nationally recognized investment rating firm not less than AA or its equivalent and maturing in less than three years. 4. Other obligations, the principal and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the State of Texas, rated as to investment quality by a nationally recognized investment rating firm not less than AA or its equivalent and maturing in less than three years. Fully insured or collateralized certificates of deposit/share certificates issued by state and national banks or savings bank or a state or federal credit union (having its main or branch office in Texas) guaranteed or insured by the Federal Deposit Insurance Page 9 of 16 Pnr.rrV/AJIMiNVCTRATIVF. PIZ0C VDIIRF, /ADMINISTRATIVE DIRECTIVE REFERENCE NUMBER: TITLE: INVESTMENT POLICY 403.06 Corporation or its successor or the National Credit Union Share Insurance Fund or its successor. Any uninsured portion of collateralized certificates of deposit must be secured by obligations in accordance with Section XII herein. Banks or credit unions offering collateralized certificates of deposit/share certificates, or are proposing a standby letter of credit as security for deposits, must be pre - approved by the Investment Committee. Certificates of deposits /share certificates fully insured by the Federal Deposit Insurance Corporation or National Credit Union Share Insurance Fund (including successor organizations) do not require prior approval by the Investment Committee. Both insured and collateralized instruments, including those backed by a standby letter of credit, must mature in less than three years. In addition to the City's authority to invest funds in certificates of deposit and share certificates stated above, an investment in certificates of deposit made in accordance with the following conditions is an authorized investment under Tex. Govt. Code Sec. 2256.010(b): (1) the funds are invested by the City through a clearing broker registered with the Securities and Exchange Commission (SEC) and operating pursuant to SEC rule 15c3 -3 (17 C.F.R. Section 240.15c3 -3) with its main office or branch office in Texas and selected from a list adopted by the Investment Committee as required by Section 2256.025; or a selected depository institution that has its main office or a branch office in this state; (2) the selected broker or depository institution arranges for the deposit of the funds in certificates of deposit in one or more federally insured depository institutions, wherever located for the account of the City; (3) the full amount of the principal and accrued interest of each of the certificates of deposit is insured by the United States or an instrumentality of the United States; (4) the selected broker or depository institution acts as custodian for the City with respect to the certificates of deposit issued for the account of the City. Fully collateralized repurchase agreements provided the City has on file a signed Master Repurchase Agreement, approved by the City Attorney, which details eligible collateral, collateralizations ratios, standards for collateral custody and control, collateral valuation, and conditions for agreement termination. The repurchase agreement must have a defined termination date and be secured by obligations in accordance with Section XII of this Policy. It is required that the securities purchased by the City be assigned to the City, held in the City's name and deposited at the time the investment is made with the City or with a third party selected and approved by the City. Repurchase agreements must be purchased through a primary government securities dealer, as defined by the Federal Reserve or a financial institution doing business in this State and the termination date must be 30 days or less. An exception to the 30 days or less termination date may be made with respect to bond proceeds. The City may specifically authorize in the bond ordinance investments in repurchase agreements, such as a flexible repurchase agreement, with maturities in excess of 30 days subject to any required approvals from bond insurers. 7. Commercial paper that has a stated maturity of 270 days or less from the date of issuance and is rated not less than A -I or P -1 or an equivalent rating by at least two nationally recognized rating agencies. 8. Public (local) fund investment pools with a dollar weighted average maturity of 60 days or less. The pool must be approved through resolution by the City Council to provide services to the City and be continuously rated no lower than Aaa or AAAm or at an equivalent rating by at least one nationally recognized rating service. A public funds Page 10 of 16 POI,ICV /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE REFERENCE NUMBER: TITLE: INVESTMENT POLICY 403.06 investment pool created to function as a money market mutual fund must mark to market daily and stabilize at a $1 net asset value. The City may not invest an amount that exceeds 10 percent of the total assets of any one local government investment pool. To be eligible to receive funds from and invest funds on behalf of the City, an investment pool must furnish to the Investment Officer or other authorized representative an offering circular or other similar disclosure instrument that contains information required by the Tex. Gov't. Code Sec. 2256.016. Investments will be made in a local government investment pool only after a thorough investigation of the pool and approval by the Investment Committee which shall at least annually review, revise and adopt the local government investment pool(s). 9. A Securities and Exchange Commission (SEC) registered, no load money market mutual fund which has a dollar weighted average stated maturity of 60 days or less and whose investment objectives includes the maintenance of a stable net asset value of $1 for each share. Furthermore, it must be rated not less than Aaa, AAAm or an equivalent rating by at least one nationally recognized rating service. A rating will not be required of money market mutual funds that invest exclusively in U.S. government securities or a combination of U.S. government securities and repurchase agreements backed by U.S. government securities. The City must be provided with a prospectus and other information required by the SEC Act of 1934 or the Investment Company Act of 1940. This can be supplied either through website access or in hard copy form. The City may not invest an amount that exceeds 10 percent of the total assets of any one fund. Investments will be made in a money market mutual fund only after a thorough investigation of the fund and approval by the Investment Committee which shall, at least annually, review, revise and adopt the money market mutual fimd(s). C. Denton Municipal Electric (DME) Authorized Investments — DME engages in the distribution and sale of electric energy to the public and, in accordance with Tex. Gov't Code Sec. 2256.0201, may enter into a hedging contract and related security and insurance agreements in relation to fuel oil, natural gas, coal, nuclear fuel, and electric energy to protect against loss due to price fluctuations. "Hedging" is defined by the buying and selling of futures, options or similar contracts and related transportation costs of the aforementioned commodities as a protection against adverse price movements. A hedging transaction must comply with the regulations of the Commodity Futures Trading Commission and the Securities and Exchange Commission. A payment received under a hedging contract or related agreement in relation to fuel supplies or fuel reserves is a fuel expense, and, thus, DME may credit any amounts received against fuel expenses. The City Council may set and review policies regarding hedging transactions, as per Tex. Gov't. Code Sec. 2256.0201(c). D. Prohibited Investments — The City's authorized investment options are more restrictive than those allowed by state law. Furthermore, this Policy specifically prohibits investment in the securities listed below: Obligations, whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage- backed security collateral and pays no principal. Page I I of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 Obligations whose payment represents the principal stream of cash flow from the underlying mortgage- backed security collateral and bears no interest. All collateralized mortgage obligations. Reverse repurchase agreements. E. Diversification — It is the policy of the City to diversify its investment portfolios. Tile diversification will protect interest income from the volatility of interest rates and the avoidance of undue concentration of assets in a specific maturity sector; therefore, portfolio maturities shall be staggered. In establishing specific diversification strategies, the following general policies and constraints shall apply: Risk of market price volatility shall be controlled through maturity diversification and by controlling unacceptable maturity extensions and a mismatch of liabilities and assets. The maturity extension will be controlled by limiting the weighted average maturity of the internal investment pool portfolio to 550 days. All long -term maturities will be intended to cover long -term liabilities. In addition, at least 5 percent of the funds in the investment pool portfolio will be liquid at all times. Investment pool liquidity, which consists of immediately available funds, is defined as shares in a local government investment pool and money market mutual fund, as well as bank demand deposit balances. Although there is no maximum defined portfolio liquidity position, it is the intent of this Policy to seek out higher yielding alternative investments in accordance with the prioritized objectives of preservation and safety of principal, meeting liquidity needs and yield enhancement as stated throughout the Public Funds Investment Act. The Investment Committee shall establish strategies and guidelines for the percentage of the total portfolio that may be invested in U.S. Treasury securities, federal agencies /instrumentalities, repurchase agreements, insured /collateralized certificates of deposit and other securities or obligations. The Investment Committee shall conduct a quarterly review of these guidelines, and shall evaluate the probability of market and default risk in various investment sectors as part of its considerations. Risk of principal loss in the portfolio as a whole shall be minimized by diversifying investment types according to the following limitations based on book values: Iirvestmeizt Type % of Portfolio • U.S. Government Treasury Notes /Bills & Obligations 100% • U.S. Government Agencies & Instrumentalities 100% • State of Texas Obligations, Agencies & Local Gov't. 15% • Local Government Investment Pools 50% • Repurchase Agreements 20% • Certificates of Deposit (insured /collateralized /SLOC *) 35% • U.S. Money Market Mutual Funds 35% • Callable U.S. Agencies /Instrumentalities 20% • Commercial Paper 5% Page 12 of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 By Institution: Repurchase Agreements No more than 15% Collateralized Certificates of Deposit No more than 15% SLOC* Backed Certificates of Deposit No more than 15% All Other (except U.S. Treasuries) No more than 35% *Standby Letter of Credit 4. Purchases of securities with stated maturities greater than the maximum authorized under Section VII(B) require prior City Council approval. VIII. SALE OF SECURITIES The City's policy is to hold all securities to maturity. However, securities may be sold to minimize the potential loss of principal on a security whose credit quality has declined, to swap into another security which would improve the quality, yield or target duration of the portfolio or to meet unanticipated liquidity needs. A horizon analysis is required for each swap proving benefit to the City before the trade decision is made, and will be held in the file for record keeping. IX. COMPETITIVE BIDDING It is the policy of the City to require competitive bidding for all individual security purchases and sales, as well as for certificates of deposit. Exceptions include: A. Transactions with money market mutual funds and local government investment pools which are deemed to be made at prevailing market rates. B. Treasury and agency securities purchased as new issues through an approved broker /dealer, financial institution or investment advisor. C. Automatic overnight "sweep" transactions with the City's depository bank. At least three bids or offers must be solicited for all other transactions involving individual securities. The City's investment advisor is also required to solicit at least three bids or offers when transacting trades on the City's behalf. In situations where the exact security is not offered by other broker /dealers, offers on the closest comparable investment may be used to establish a fair market price for the security. In the case of a certificate of deposit purchase, at least two other offers should be solicited to provide a comparison. When few, if any, banks wish to participate then staff may use another authorized investment of similar maturity for evaluation purposes. The quotes may be accepted orally, in writing, electronically, or any combination of these methods. The Investment Committee may approve exceptions on a case by case basis or on a general basis in the form of guidelines. These guidelines shall take into consideration the investment type, maturity date, amount and potential disruptiveness to the City's investment program. X. ARBITRAGE The Tax Reform Act of 1986 provided limitations restricting the City's investment of tax - exempt bond proceeds. Revised arbitrage rebate provisions require that the City compute earnings on investment from each issue of bonds on an annual basis to determine if a rebate is required. To determine the City's arbitrage position, the City is required to perform specific calculations relative to the actual yield Page 13 of 16 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE TITLE: INVESTMENT POLICY REFERENCE NUMBER: 403.06 earned on the investment of the funds and the yield that could have been earned if the funds had been invested at a rate equal to the yield on the bonds sold by the City. The rebate provision states that periodically (not less than once every five years, and not later than sixty days after maturity of the bonds), the City is required to pay the U.S. Treasury a rebate of excess earnings based on the City's positive arbitrage position. The Tax Reform restrictions require precision in the monitoring and recording facets of investments as a whole, and particularly as they relate to yields and computations so as to insure compliance. Failure to comply may dictate that the bonds become taxable, retroactively from the date of issuance. The City's investment position, relative to the revised arbitrage restrictions, is the continued pursuit of maximizing yield on applicable investments while ensuring the safety of capital and liquidity. It is fiscally prudent to continue the maximization of yield and rebate excess earnings, if necessary. XI. SELECTION OF BANKS, BROKER/DEALERS AND INVESTMENT ADVISORS A. Depository — City Council shall, by ordinance, "select and designate one or more banking institutions as the depository for the monies and funds of the City" in accordance with the requirement of Tex. Loc. Gov't. Code Ch. 105. At least every five years a depository shall be selected through the City's banking services procurement process, which shall include a formal request for proposal (RFP). The selection of a depository will be determined by a competitive process and evaluated on the following criteria: Qualified as a depository for public funds in accordance with state and local laws. 2. Provided requested information or financial statements for the periods specified. Complied with all requirements in the banking RFP. 4. Completed responses to all required items on the proposal form. Offered lowest net banking service cost, consistent with the ability to provide an appropriate level of service. 6. Met credit worthiness and financial standards. B. Investment Broker /Dealers — If the City has not retained an investment advisor, then the Investment Committee shall be responsible for adopting the list of qualified brokers /dealers and financial institutions authorized to engage in investment transactions with the City. Authorized firms may include primary dealers or regional broker /dealers that qualify under SEC Rule 150 -1 (uniform net capital rule) and qualified depositories as established by the Tex. Loc. Gov't. Code Ch. 105. The Investment Committee shall base its evaluation of security broker /dealers and financial institutions upon: Financial condition, strength and capability to fulfill commitments. 2. Overall reputation with other broker /dealers or investors. Regulatory status of the broker /dealer. 4. Background and expertise of the individual representatives. Page 14 of 16 Pn1.1CV/A1) MJN1QTRATIVF. PROCEDURFW)MINISTRATIVE DIRECTIVE REFERENCE NUMBER: TITLE: INVESTMENT POLICY 403.06 Ability to provide additional advisory services. The Investment Committee must annually review, revise, and adopt the list of qualified broker /dealers authorized to engage in investment transactions with the City. Investment Officers, or their authorized representatives, shall not conduct business with any firm with whom public entities have sustained realized losses on investments or whose name the Investment Committee has removed from ail approved list. C. Investment Advisor — The City may retain the services of an investment advisory firm registered under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b -I et seq.) or with the State Securities Board to assist in the review of the investment policy, cash flow requirements, the formulation of investment strategies, the execution of security purchases, sales and deliveries, as well as attend quarterly investment meetings, provide periodic security valuations, market updates, and to generally service the investment needs of the City. The investment advisor will also be responsible for performing broker /dealer financial due diligence on the City's behalf and provide a list of its authorized broker /dealers on an annual basis. The investment advisory contract may not be for a term longer than two years and its renewal or extension must be approved by the City Council by ordinance or resolution as required by the Tex. Gov't. Code Sec.2256.003(b). D. Compliance — A qualified representative from any firm offering to engage in investment transactions with the City is required to sign a written instrument upon receiving and reviewing a copy of the Investment Policy. Investments shall only be made with those business organizations (including money market mutual funds, local government investment pools, and investment advisory firms) which have provided the City with this written instrument executed by a qualified representative of the firm, acknowledging that the business organization has: Received and reviewed the City's Investment Policy. Implemented reasonable procedures and controls in an effort to preclude investment transactions conducted between the City and the organization that are not authorized by the Investment Policy, except to the extent that this authorization is dependent on an analysis of the makeup of the City's entire portfolio or requires an interpretation of subjective investment standards. XII. COLLATERALIZATION, SAFEKEEPING AND CUSTODY A. Collateralization - The City requires that all uninsured collected balances plus accrued interest, if any, in depository accounts be secured in accordance with the requirements of state law. Financial institutions serving as City depositories will be required to sign a depository agreement with the City which details eligible collateral, collateralization ratios, standards for collateral custody and control, collateral valuation, rights of substitution and conditions for agreement termination. The City requires that all securities purchased under the terms of a repurchase agreement be assigned to the City in accordance with state law. Dealers and financial institutions wishing to transact repurchase agreements with the City will be required to sign a Master Repurchase Agreement which details eligible collateral, collateral ization ratios, standards for collateral custody and control, collateral valuation, rights of substitution, and conditions for agreement termination. Page 15 of 16 POLY V / ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE REFERENCE NUMBER: TITLE: INVESTMENT POLICY 403.06 The City requires that all uninsured certificates of deposit plus accrued interest held with a depository be secured in accordance with the requirements of state law. Financial institutions will be required to sign a written depository and security agreement which stipulates eligible collateral, collateralization ratios, standards for collateral custody and control, collateral valuation, rights of substitution, and conditions for agreement termination. Collateral will always be held by an independent third party with which the City has a current custodial agreement and shall be reviewed at least monthly to ensure that the market value of the pledged securities is adequate. All deposits and investments of City funds (other than direct security purchases, money market mutual finds and local government investment pools) shall be secured by pledged collateral set at no less than 102 percent of the market value of the principal and accrued interest on the deposits or investments, less an amount insured by FDIC. Eligible collateral to secure the City's deposits include: Direct obligations of the United States government. Other obligations, the principal and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the United States government. Direct obligations of agencies or instrumentalities of the United States government, including standby letters of credit. 4. Cash The City will reject adjustable rate mortgages (ARMS), collateralized mortgage obligations (CMOs), step -ups, variable rate instruments (except U.S. Treasury variable rate instruments), or securities that are not found on common pricing systems. B. Safekeeping and Custody — Safekeeping and custody of the City's investment securities shall be in accordance with state law. All security transactions, except local government investment pool and money market mutual fund transactions, shall be conducted on a delivery versus payment (DVP) basis. Investment securities will be held by a third party custodian designated by the City, and be required to issue safekeeping confirmation notices clearly detailing that the securities are owned by the City. Safekeeping and custody of collateral pledged to the City shall be in accordance with state law. Collateral will be held by a third party custodian designated by the City. The custodian is required to issue safekeeping confirmation notices clearly showing that the securities are pledged to the City. C. Subject to Audit — All collateral shall be subject to inspection and audit by the Director of Finance, or designee, as well as the City's independent auditors. XIII. MANAGEMENT AND INTERNAL CONTROLS Controls shall be designed to prevent losses of public funds arising from fraud, employee error, misrepresentation by third parties, unanticipated changes in financial markets, or imprudent actions by employees or Investment Officers of the City. Page 16 of 16 P01.1f V/ADMIIN1,gTRAT1VF. PROCE,DIJRE /ADMINISTRATIVE DIRECTIVE REFERENCE NUMBER: TITLE: INVESTMENT POLICY 403.06 Controls and managerial emphasis deemed most important that shall be employed include the following: Imperative Controls - Custodian safekeeping confirmation notices records management - Avoidance of bearer -form securities - Documentation of investment bidding events - Written confirmation of telephone transactions - Reconcilements and comparisons of security confirmation notices with the investment records - Compliance with Investment Policy - Verification of all interest income and security purchase and sell computations Controls Where Practical - Control of Collusion - Separation of duties - Separation of transaction authority between accounting and record- keeping - Clear delegation of authority - Accurate and timely reports - Validation of investment maturity decisions with supporting cash flow data - Adequate training and development of Investment Officers and staff authorized to execute investment transactions - Review of financial conditions of all broker /dealers and depository institutions - Access to information about market conditions, changes and trends that require adjustments to investment strategies. XIV. INVESTMENT POLICY ADOPTION The Investment Policy shall be formally approved and adopted by resolution of the City Council and reviewed annually in accordance with the provisions of the Public Funds Investment Act of the Texas Government Code Chapter 2256. City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON File #: ID 15 -1226, Version: 1 DEPARTMENT: ACM: Date: Finance Bryan Langley December 1, 2015 Legislation Text Agenda Information Sheet SUBJECT Consider approval of a resolution revising Administrative Policy No. 403.07 "Debt Service Management" and providing for an effective date. The Audit/Finance Committee recommends approval (2 -0). BACKGROUND qty's Debt Service Management Policy was originally developed in 1995 and adopted by the City Council on March 5, 1996. On April 20, 2010, the City Council adopted revisions to the policy, including the requirement that the policy be reviewed at least annually to ensure compliance with statutory and Securities and Exchange Commission (SEC) requirements. The Debt Service Management Policy provides general guidelines by which the City will issue debt and addresses the issues of process, use and limitations. eeviewing the existing Debt Service Management Policy with the City's Financial Advisor, Bond Counsel and internal Debt Management Committee, the following revisions are being proposed: 1. Section II, G - Updated date of latest Independent Registered Municipal Advisor (IRMA) Certificate filed with the Municipal Advisory Council of Texas (MAC). (Page 4) 2. Section III - Deleted language that will be moved to another section of the policy to improve readability. (Page 4) 3. Section IV, A - Inserted language previously located in Section III to improve readability. (Page 4) 4. Section IV, C - Deleted language in former subsection C since the Municipal Securities Rulemaking Board (MSRB) has not fully implemented the previously mentioned requirement nor do those requirements require an action from the City. (Pages 5 & 6) 5. Section XI, C - Addition of language to be effective January 1, 2016 which the Texas Legislature enacted during the 84h Legislative Session prohibiting the issuance of Certificates of Obligation (COs) if a bond proposition for the same purpose failed within the preceding three years unless issued for certain cases as allowed by state law. (Page 13) 6. Section XI, G - Addition of language which the Texas Legislature enacted during the 84h Legislative Session prohibiting the issuance of Capital Appreciation Bonds (CABs) that are secured by ad valorem taxes unless issued for certain cases as allowed by state law. (Page 14) 7. Glossary - Addition/clarification of the terms to be consistent with state law. (Pages 22 & 23) Additionally, other minor changes are recommended to clarify language, reduce redundancy, and improve City of Denton Page 1 of 2 Printed on 11/25/2015 File #: ID 15 -1226, Version: 1 sentence structure. The changes outlined above represent changes that allow for both flexibility and accountability in meeting the City's financing needs. RECOMMENDATION Staff recommends approval of the revised Debt Service Management Policy. PRIOR ACTION/REVIEW (Council, Boards, Commissions) On November 17, 2015, the Audit/Finance Committee unanimously approved that the resolution and revised Debt Service Management Policy be forwarded to the City Council for consideration and approval. EXHIBITS 1. Red -lined FY 2015 -16 Debt Service Management Policy 2. Debt Summary Report for 2015 3. Resolution Respectfully submitted: Chuck Springer, 349 -8260 Director of Finance Prepared by: Antonio Puente, Jr. Assistant Director of Finance City of Denton Page 2 of 2 Printed on 11/25/2015 Exhibit 1 CITY OF DENTON Page I of 2427 POLICY /ADMINISTRATIVE PROCEDURE /ADMINISTRATIVE DIRECTIVE SECTION: FINANCE REFERENCE NUMBER: 403.07 SUBJECT: DEBT MANAGEMENT INITIAL EFECTIVE DATE: 03/05/96 TITLE: DEBT SERVICE MANAGEMENT LAST REVISION DATE: 12/1/15 POLICY STATEMENT This policy shall provide general guidelines by which the City of Denton (the "City ") will issue debt. In as much as this policy may be in conflict or inconsistent with state law, state law will prevail. Furthermore, state law will prevail on matters not specifically addressed in this policy. It is the objective of this policy that (1) the City obtain financing only when necessary, (2) the process for identifying the timing and amount of debt or other financing proceed as efficiently as possible, and (3) the City seek the most favorable interest rate and competitive costs in accordance with this policy while maintaining financial flexibility. This debt management policy applies to the financing activities of the City of Denton, Texas. It also addresses the issues of process, use and limitations. Proceeds from debt issuances will be delivered as closely as possible to the time that contracts are expected to be awarded so that the proceeds are spent efficiently. In addition, the City Council may, through adoption of a Rreimbursement Oordinance, authorize the expenditure of funds prior to the bond sale for certain capital expenses. The Rreimbursement Gordinance is required by Federal Law 6 se Ito document the City's intent to reimburse expenses from the future sale of debt obligations. The City Council shall review and approve the debt management policy at least annually and be documented by ordinance or resolution, which shall include any changes made. ADMINISTRATIVE PROCEDURES I. DEBT MANAGEMENT COMMITTEE A. Members The Debt Management Committee (the "Committee ") will consist of the City Manager, two (2) Assistant City Managers, and the Director of Finance. The City's financial advisor and bond counsel shall act as consultants to the Committee. B. Scope The Committee shall meet at least annually to review the debt program or as necessary. Topics for discussion should include: the Capital Improvement Program (CIP), acquisition of fixed assets, status of outstanding debt, unspent Page 2 of 27 bond proceeds, unissued voter authorized debt, timing of additional financing needs and financing options, and the effect of proposed financing activity on the related rates supporting the debt (i.e., property tax rate, utility rates, user fees, etc.). II. RESPONSIBILITY AND STANDARD OF CARE The Finance Department will coordinate all activities required for the issuance of all debt. A. Delegation The Director of Finance shall have primary responsibility for developing financing recommendations. The Director of Finance shall: • Meet at least annually during budget development with Department Directors to consider the need for financing, review debt capacity and assess progress on the Capital Improvement Program; • Periodically review changes in state and federal legislation; • Periodically review the provisions of ordinances authorizing issuance of debt obligations; • Periodically review the City's Charter to ensure compliance with state law; and • Periodically review services provided by the financial advisor, bond counsel, paying agent, and other service providers to evaluate the extent and effectiveness of the services being provided. B. Conflicts of Interest All participants in the debt management process shall act responsibly as custodians of public assets. Officers and employees involved in the debt management process shall refrain from personal business activity that could conflict with proper execution of the financing program, or which could impair their ability to make impartial financing decisions. C. Reporting The Director of Finance shall include in the Comprehensive Annual Financial Report ( "CAFR ") a report summarizing all debt outstanding by type (tax - supported and self - supported general obligation debt, and revenue debt), remaining balance of bond proceeds, update of arbitrage liability, and update of pertinent legislative changes. Additionally, the Director of Finance shall annually publish on the City's website a Debt Report summarizing the City's total outstanding principal and interest for all long -term debt as of the end of the last fiscal year. Page 3 of 27 D. Investor Relations The City shall endeavor to maintain a positive relationship with the investment community. The Director of Finance and the City's financial advisor shall, as necessary, prepare reports and other forms of communications regarding the City's indebtedness, as well as its future financing plans. This includes information presented to the press and other media. The information includes, but is not limited to, the annual program of services, CAFR, financial plans, capital improvement plans, and comprehensive development plans. All forms of media deemed appropriate and immediately available to the City will be utilized to disseminate information to all investors. Examples include the Texas Bond Reporter and the Texas Municipal Reports published by the Municipal Advisory Council of Texas (the "MAC "), The Bond Buyer, and the Electronic Municipal Market Access system ( "EMMA ") maintained by the Municipal Securities Rulemaking Board (the "MSRB "). Bond counsel will advise on the use of electronic media in connection with the City's debt program. E. Financial Advisor The City shall retain an independent financial advisor for advice on the structuring of new debt, financial analysis of various options, including refunding opportunities, the rating review process, the marketing and marketability of City debt obligations, issuance and post- issuance services, the preparation of offering documents (each, an "Official Statement ") and other services, as necessary. The City will seek the advice of the financial advisor on an ongoing basis. The financial advisor will perform other services as defined by the agreement approved by the City Council. The financial advisor will not bid on nor underwrite any City debt issues in accordance with MSRB rules. F. Bond Counsel The City shall retain bond counsel for legal and procedural advice on all debt issues. Bond counsel shall advise the City in all matters pertaining to its bond ordinance(s) and /or resolution(s). No action shall be taken with respect to any obligation until a written instrument (e.g., Certificate for Ordinance or other legal instrument) has been prepared by the bond attorneys certifying the legality of the proposal. The bond attorneys shall prepare all ordinances and other legal instruments required for the execution and sale of any bonds issued which shall then be reviewed by the City Attorney and the Director of Finance. The City will also seek the advice of bond counsel on all other types of debt and on any other questions involving federal tax or arbitrage law. Special counsel may be retained to protect the City's interest in complex negotiations. G. Communications with Underwriters The Dodd -Frank Wall Street Reform and Consumer Protection Act of 2010 mandated the Securities and Exchange Commission to establish the Municipal Page 4 of 27 Advisor Rules (the "MA Rules ") which were finalized in September of 2013 and became effective July 1, 2014. Under the MA Rules, any person that provides certain advice to the City with respect to the issuance of bonds or municipal financial projects (including investment strategies involving the investment of bond proceeds) is, absent an exemption under the MA Rules, deemed to be a ,'municipal advisor." Any person that is a municipal advisor under the MA Rules is subject to a fiduciary duty to the City and would be precluded from acting as an underwriter for bonds issued by the City. The City receives deal ideas, analysis, suggestions and related services for bond issues from underwriter banks that may be considered "advice" for purposes of the MA Rules. So that the City may continue to receive this type of advice from underwriters /- banks, the Director of Finance may provide whatever communications to an underwriter/-bank--& r'-r the Director of Finances determines to be necessary to establish an exemption under the MA Rules so that those underwriters / —banks are not considered a ,'municipal advisor" for purposes of the MA Rules. On SeptembeF 5�4�4'June 29, 2015, the Director of Finance filed an Independent Registered Municipal Advisor (IRMA) Certificate with the Municipal Advisory Council of Texas (MAC) to be made available to underwriters / -banks desiring to communicate with the City. The IRMA Certificate is also available on the City's website. III. OFFICIAL STATEMENT The preparation of the Official Statement is the responsibility of the financial advisor in concert with the Director of Finance. Information for the Official Statement is gathered from departments /divisions throughout the City. IV. DISCLOSURE r including, but not limited to, Securities and Exchange Commission ("SEC") Rule 15c2-12 (the "Rule"). The Cily will make annual and event disclosure filings to the MSRB via EMMA as reguired by the Rule and its continuing disclosure undertakingL 1 =�. With each bond offering, in the preparation of a CAFR Official Statement or any other offering document, and with the City's annual filings required by its continuing disclosure undertakings pursuant to the Rule, the City will follow a policy of full and complete disclosure of operating, financial and legal conditions of the City, in conformance with the Government Finance Officers Association best practice, "Understanding Your Continuing Disclosure Responsibilities (2010) ", and as advised by the City's bond counsel or financial advisor. .�;, Notice of Disclosure Events . . . . . . . . . . . . . . . . . . . . . . . . . . Page 5 of 27 The Rule and the City's continuing disclosure undertakings list certain events that must be reported in a timely fashion to the MSRB via EMMA and, if required by the Rule and the City's continuing disclosure undertakings, to the MAC in its capacity as the State Information Depository ( "SID") for the state. On May 26, 2010, the SEC made amendments to the Rule, which only apply to primary offerings that occur on or after December 1, 2010. While not required, the City will make every effort to apply the new requirements to previously issued bonds since the amendments make the Rule more stringent. The amended Rule requires that events be reported to the MSRB within 10 business days after the occurrence of the event. 1. The events that must be reported, if material, are: a. Nonpayment related defaults; b. Modifications of rights of security holders; c. Bond calls; d. Release, substitution, or sale of property securing repayment of the securities; e. Mergers, consolidations, acquisitions, the sale of all or substantially all of the assets of the City or other obligated entity or their termination; and f. Appointment of a successor or additional trustee or paying agent or the change of the name of a trustee or paying agent. 2. The events that must be reported, regardless of materiality, are: a. Principal and interest payment delinquencies; b. Unscheduled draws on debt service reserves reflecting financial difficulties; c. Unscheduled draws on credit enhancements reflecting financial difficulties; d. Substitution of credit or liquidity providers, or their failure to perform; e. Adverse tax opinions, the issuance by the IRS of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701 -TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; f. Tender offers; g. Defeasances; h. Rating changes; and i. Bankruptcy, insolvency, receivership or similar proceeding. The Rule also requires the City to report to the MSRB the failure of the City to provide the required annual financial information or operating data on or before the dates specified under a continuing disclosure undertaking. Tr a AA -O *'�� Page 6 of 27 V. RATING AGENCY COMMUNICATIONS & CREDIT OBJECTIVES The City will seek to maintain and improve its current bond ratings so its borrowing costs are reduced to a minimum and its access to credit is preserved. In conjunction with the financial advisor, the City shall maintain a line of communication with at least two of the rating agencies (Moody's, Standard & Poor's, or Fitch), informing them of major financial events in the City as they occur. The CAFR, Annual Program of Services, and Capital Improvement Program shall be distributed to the rating agencies after they have been accepted and adopted by the City Council on an annual basis. When necessary, a conference call or personal meeting with representatives of the rating agencies will be scheduled when a major capital improvement program is initiated, or to discuss economic and /or financial developments which might impact credit ratings. The following documents may be required by the rating agencies: • Most recent annual audit reports, including a description of accounting practices. Accounting changes in the past three years and the impact on financial results should be explained; • Current budget; • Current Capital Improvement Program; • Official Statements for new financings; • Description of projects being financed; • Sources and uses statement for bond issuance. If additional funds are required to complete specific projects being financed, the source of the funds and any conditional requirements may be discussed; • Engineering and feasibility report (if applicable); • Zoning or land -use map (if applicable); • Cash flow statement, in the case of interim borrowing. Statement of long— and short -term debt with annual and monthly maturity dates as appropriate. Also, a report of any lease obligations, their nature and term; • Indication of appropriate authority for debt issuance; • Investment policy (if applicable); and • Statement concerning remaining borrowing capacity plus tax rate and levy capacity or other revenue capacity. _r V. RATING AGENCY COMMUNICATIONS & CREDIT OBJECTIVES The City will seek to maintain and improve its current bond ratings so its borrowing costs are reduced to a minimum and its access to credit is preserved. In conjunction with the financial advisor, the City shall maintain a line of communication with at least two of the rating agencies (Moody's, Standard & Poor's, or Fitch), informing them of major financial events in the City as they occur. The CAFR, Annual Program of Services, and Capital Improvement Program shall be distributed to the rating agencies after they have been accepted and adopted by the City Council on an annual basis. When necessary, a conference call or personal meeting with representatives of the rating agencies will be scheduled when a major capital improvement program is initiated, or to discuss economic and /or financial developments which might impact credit ratings. The following documents may be required by the rating agencies: • Most recent annual audit reports, including a description of accounting practices. Accounting changes in the past three years and the impact on financial results should be explained; • Current budget; • Current Capital Improvement Program; • Official Statements for new financings; • Description of projects being financed; • Sources and uses statement for bond issuance. If additional funds are required to complete specific projects being financed, the source of the funds and any conditional requirements may be discussed; • Engineering and feasibility report (if applicable); • Zoning or land -use map (if applicable); • Cash flow statement, in the case of interim borrowing. Statement of long— and short -term debt with annual and monthly maturity dates as appropriate. Also, a report of any lease obligations, their nature and term; • Indication of appropriate authority for debt issuance; • Investment policy (if applicable); and • Statement concerning remaining borrowing capacity plus tax rate and levy capacity or other revenue capacity. Page 7 of 27 Full disclosure of the City's operations will be made to the bond rating agencies. The City staff, with the assistance of the financial advisors and bond counsel, will prepare the necessary materials for and presentation to the rating agencies. VI. LIMITATIONS OF INDEBTEDNESS AND AFFORDABILITY STATEMENT City staff, in conjunction with the financial advisor and bond counsel, will present to the City Council, and any City committee, as appropriate, a comprehensive analysis of debt capacity prior to issuing bonds. This analysis should include relevant information such as: • Legal debt limits, tax or expenditure ceilings; • Coverage requirements or additional bonds tests in accordance with bond covenants; • Measures of the tax and revenue base, such as projections of relevant economic variables (e.g., assessed property values, employment base, unemployment rates, income levels, and retail sales); • Population trends; • Utilization trends for services underlying revenues; • Factors affecting tax collections, including types of property, goods, or services taxed, assessment practices and collection rates, evaluation of trends relating to the City's financial performance, such as revenues and expenditures, net revenues available after meeting operating requirements; • Reliability of revenues expected to pay debt service; • Unreserved fund balance levels; • Debt service obligations, such as existing debt service requirements; • Debt service as a percentage of expenditures or tax or system revenues; • Measures of debt burden on the community, such as debt per capita, debt as a percentage of full or equalized assessed property value, and overlapping or underlying debt; and • Tax - exempt and taxable market factors affecting interest costs, such as interest rates, market receptivity, and credit rating. Annual debt service on general obligation debt (tax - supported), which excludes self - supported debt, shall be limited to no more than 30% of budgeted expenditures in the City's General Fund. The City has revenue bonds and other indebtedness of the Electric, Water, and Wastewater Funds, which are collectively known as the City's "Utility System." The City will maintain coverage ratios as dictated by the City's outstanding bond covenants, including any other indebtedness of the Utility System. In addition, the City will follow a policy that the Utility System will maintain a debt service coverage ratio of at least 1.25 on all outstanding revenue bonds and other indebtedness of the Utility System. For this purpose, the debt coverage ratio is defined as the net revenue of the Utility System (gross revenue less operating expenses) for a fiscal year (as set out in the audited financial statements for that fiscal year) divided by the maximum annual debt service for all then outstanding revenue bonds and other indebtedness of the Utility System. The City will strive to further maintain this debt service coverage ratio for each separate utility. Page 8 of 27 The Electric, Water, and Wastewater Funds' total long -term debt outstanding shall not exceed the amount of combined fund equity. VII. CAPITAL IMPROVEMENT PROGRAM A. The City will seek all possible federal and state reimbursement for mandated projects and /or programs. The City will pursue a balanced relationship between issuing debt and pay -as- you -go financing as dictated by prevailing economic factors and as directed by the City Council. B. Current operations will not be financed with long -term debt. C. Debt incurred to finance capital improvements will be repaid within the useful life of the asset. D. High priority will be assigned to the replacement of capital improvements and fixed assets when they have deteriorated to the point there they are hazardous, incur high maintenance costs, negatively affect property values, or no longer serve their intended purposes. E. An updated Capital Improvement Program will be presented to the City Council for approval on an annual basis. This plan will be used as a basis for the long - range financial planning process. VIII. TYPES OF DEBT The City's bond counsel and financial advisor will present the different types of debt best suited and legally permissible under state law for each debt issue and assist in analyzing the use of capital lease purchases or the use of lines of credit. These types may include, but are not limited to: • Short -term vs. long -term debt, • General obligation debt vs. revenue debt, • Fixed rate debt, • Lease - backed debt, • Special obligation debt, such as assessment district debt, • Certificates of obligation, • Combination tax and revenue debt, • Tax Increment Reinvestment Zone (TIRZ) debt, • Public Improvement District (PID) debt, • Conduit issues, • Tax Notes, and • Taxable debt. The issuance of long -term variable rate debt and interest rate swaps are expressly prohibited by this policy. The Director of Finance will be responsible for evaluating this Page 9 of 27 type of debt and will present a variable rate debt policy or interest rate swap policy to the City Council for approval as necessary. IX. BOND STRUCTURE Factors that may be considered when structuring debt include the following: • Final maturity of the debt; • Setting the final maturity of the debt equal to or less than the useful life of the asset(s) being financed; • Use of zero coupon bonds, capital appreciation bonds, deep discount bonds or premium bonds; • Principal and interest payment structure (e.g., level debt service payments, level principal payments, bullet and term maturities, interest only, or other payment structures); • Redemption provisions (e.g., mandatory and optional call features); • Use of credit enhancement (e.g., bond insurance); • Use of senior lien and junior lien obligations; • Capitalized interest; and • Other factors as deemed appropriate in consultation with the City's financial advisor and bond counsel. X. SHORT -TERM DEBT A. General Short -term obligations may be issued to finance projects or portions of projects for which the City ultimately intends to issue long -term debt (i.e., it will be used, when appropriate, to provide interim financing which will eventually be refunded with the proceeds of long -term obligations). Short -term obligations may be backed with a tax and /or revenue pledge or a pledge of other available resources. Interim financing may be appropriate when long -term interest rates are forecasted to decline in the future. In addition, some forms of short -term obligations may be obtained more quickly than long -term obligations and, thus, may be used until long -term financing is secured. B. Commercial Paper Due to the financing costs associated with the marketing and placement of commercial paper, programs of less than $25 million may not be cost effective. Should the opportunity to participate in a commercial paper issuance pool present itself or if the establishment of a program becomes cost effective, the advantages Page 10 of 27 and disadvantages shall be evaluated by the Director of Finance. The use of a commercial paper program requires approval by the City Council. C. Anticipation Notes Anticipation notes do not require giving a notice of intent. Anticipation notes may be secured and repaid by a pledge of revenue, taxes, or the proceeds of a future debt issue and have a maximum maturity of seven (7) years. Anticipation notes may be authorized by an ordinance adopted by the City Council. Anticipation notes may be used to finance projects or acquisitions that could also be financed using certificates of obligation and have the following restrictions: 1) Anticipation notes may not be used to repay interfund borrowing or a borrowing that occurred up to /or more than 24- months prior to the date of issuance, and 2) The City may not issue anticipation notes that are payable from general obligation bond proceeds unless the proposition authorizing the issuance of the general obligation bonds has already been approved by the voters. D. Line of Credit To the extent authorized by state law and with the approval of the City Council, the City may establish a tax - exempt line of credit with a financial institution selected through a competitive process. Draws shall be made on the line of credit when (1) the need for financing is so urgent that time does not permit the issuance of long -term debt, or (2) the need for financing is so small that the total cost of issuance of long -term debt including carrying costs of debt proceeds not needed immediately is significantly higher. Draws will be made on the line of credit to pay for projects designated for line of credit financing by the City Council. Borrowings under the line of credit shall be repaid from current revenues. The Director of Finance will authorize all draws on the line of credit, as authorized in the agreement approved by the City Council. Under current state law, a line of credit cannot extend past the end of the then current fiscal year. E. Capital Leasing Capital leasing is an option for the acquisition of a piece or package of equipment. Leasing shall not be considered when funds are on hand for the acquisition unless the interest expense associated with the lease is less than the interest that can be earned by investing the funds on hand or when other factors such as budget constraints or vendor responsiveness override the economic consideration. Page 11 of 27 Whenever a lease is arranged with a private sector entity, a tax - exempt rate shall be sought. Whenever a lease is arranged with a government or other tax - exempt entity, the City shall obtain an explicitly defined taxable rate so that the lease will not be counted in the City's total annual borrowings subject to arbitrage rebate. The lease agreement shall permit the City to refinance the lease at no more than reasonable cost should the City decide to do so. A lease which may be called at will is preferable to one which may merely be accelerated. The City shall seek at least three (3) competitive proposals for any lease financing, except those related to technology equipment. Due to the proprietary nature of most technology equipment, lease financing is typically only offered through the technology's vendor. The net present value of competitive bids shall be compared, taking into account whether payments are in advance or in arrears, and how frequently payments are made. The purchase price of equipment shall be competitively bid, as required by state law, as well as the financing costs. The Director of Finance will ensure any leasing agreement is compared to other financing options to ensure the lease is cost beneficial. Alternate financing options will include revenue bonds, contractual obligations, certificates of obligation, tax notes, and lines of credit. The Director of Finance will be the person responsible for evaluating this financing source, and will make a recommendation to the City Council for approval. F. Interfund Loans As allowed by the City, the Director of Finance will review opportunities whereby interfund loans may be utilized to meet short -term financing needs. Interfund loans will only be utilized if economically beneficial to the lending fund and only if the rate of return is comparable or higher than the rate of return the lending fund would otherwise receive by keeping funds in the City's investment pool. Any interfund loan must be approved by the City Council. XI. LONGTERM DEBT A. General Proceeds from the sale of long -term obligations will not be used for operating purposes, and the final maturity of the obligations will not exceed the estimated useful life of the asset(s) financed. Voter approved general obligation bonds will strive to have a final maturity of twenty (20) years or less. Revenue bonds and certificates of obligation will strive to have a final maturity of thirty (30) years or less. If deemed appropriate, staff may present to the City Council extraordinary circumstances in which longer final maturities may be necessary but never in excess of the useful life of an individual asset. A level debt service structure will be used unless operational matters and marketing considerations dictate otherwise. Page 12 of 27 The cost of issuance of private activity bonds is usually higher than for governmental purpose bonds. Consequently, private activity bonds will be issued only when they will economically benefit the City. The cost of taxable debt is generally higher than for tax- exempt debt. However, the issuance of taxable debt may be required or may be more appropriate in some circumstances and may allow valuable flexibility in subsequent contracts with users or managers of the improvements constructed with the bond proceeds. Therefore, the City will usually issue tax - exempt obligations but may occasionally issue taxable obligations. • on Long -term general obligation debt, including certificates of obligation, or revenue bonds shall be issued to finance significant and desirable capital improvements. Proceeds of general obligation debt will be used only for the purposes approved by voters in bond elections or set forth in the notices of intent for certificates of obligation or to refund previously issued general obligation bonds, certificates of obligation or revenue bonds. All bonds shall be sold in accordance with applicable law. C. Certificates of Obligation Certificates of obligation may be issued to: • Finance permanent improvements and land acquisitions; • Finance costs associated with capital project overruns; • Acquire equipment/vehicles; • Leverage grant funding; • Renovate, acquire, construct facilities and facility improvements; • Construct street improvements; • Provide funding for master plans /studies; • Address necessary life safety needs; and • Finance revenue supported projects /assets if determined to be more economical than revenue bonds. To the extent required by state law, a resolution authorizing publication of notice of intent to issue certificates of obligation shall be presented for the consideration of the City Council. The notice of intent shall be published in a newspaper of general circulation in the City once a week for two consecutive weeks with the first publication to be at least thirty -one (3 1) days prior to the date set for passage of the ordinance authorizing the sale of the certificates. Certificates of obligation may be backed by a tax pledge under certain circumstances as permitted by law. They may also be backed by a combination tax and revenue pledge as permitted under state law. Some revenues are restricted as to the uses for which they may be pledged. Electric, Water, and Wastewater Page 13 of 27 revenues may be pledged without limit for Electric, Water, and Wastewater purposes but may only be pledged to a limit of $1,000 for any one series of bonds issued for non - utility system purposes. The final maturity of certificates of obligation will be in accordance with Section XI (A). D. Public Property Finance Contractual Obligations Public property finance contractual obligations may be issued to finance the acquisition of personal property. E. Revenue Bonds In addition to the policies set forth above, when cost - beneficial and when permitted under applicable state law, the City may consider the use of surety bonds, letters of credit, or similar instruments to satisfy debt service reserve fund requirements on outstanding and /or proposed revenue bonds. F. Combination Tax and Revenue Bonds In addition to the policies set forth above, when cost - beneficial and when permitted under applicable state law, the City may consider the use of tax bonds or combination tax and revenue bonds for refunding obligations of the Electric, Water and Wastewater combined utility system, and Solid Waste or any other self - supporting revenue - producing City enterprise. Combination tax and revenue bonds will comply with applicable state law and are assigned the full faith and credit of the City, thereby enhancing the credit rating otherwise obtained from debt that is strictly supported by non -tax revenues (i.e., revenue bonds). Page 14 of 27 # #_ issue capital appreciation bonds that are secured by ad valorem taxes (other than XII. CREDIT ENHANCEMENTS Credit enhancements are mechanisms which guarantee principal and interest payments. They include bond insurance, lines of credit, surety bonds and letters of credit. A credit enhancement, while costly, is intended to bring a lower interest rate on debt and a higher rating from the rating agencies, thus lowering overall borrowing costs. The City's financial advisor will advise the City whether or not a credit enhancement is cost effective under the circumstances and what type of credit enhancement, if any, should be purchased. In a negotiated sale, bids will be taken during the period prior to the pricing of the debt. In a competitive sale, bond insurance may be provided by the purchaser if the purchaser finds it cost effective. Other credit enhancements may arise in the future, which may be beneficial. The City's financial advisor will present these options for consideration. XIII. REFUNDING AND RESTRUCTURING OPTIONS Page 15 of 27 In the case of advance refundings, the City shall consider refunding debt whenever an analysis indicates the potential for present value savings of at least 3% of the par amount being refunded. In the case of current refundings, the City shall consider refunding debt whenever an analysis indicates the potential for present value savings above the costs of refunding the outstanding debt. Refunding for savings should not extend the final maturity of the original obligations, unless specifically approved by the City Council. Refunding of contractual obligations not currently recorded as an outstanding debt obligation of the City (i.e., TMPA debt) may be restructured to extend the final maturity if specifically approved by the City Council. XIV. REIMBURSEMENT ORDINANCES The Director of Finance will review and approve all reimbursement ordinances from City departments, including enterprise fund departments, before forwarding to the City Council for consideration. Initially, funding for the capital expenditures will be provided with existing bond proceeds or unreserved fund balance. Once the debt is sold, these expenditures will be reimbursed from the debt proceeds. Reimbursement ordinances must be adopted within sixty (60) days of the date the original expenditures were paid. Debt obligations must be issued and the reimbursement allocation made not later than eighteen (18) months after the later of (1) the date the original expenditures were paid, or (2) the date the project is placed in service or abandoned, but in no event more than three (3) years after the original expenditures were paid. XV. USE OF ANTICIPATED BOND PROCEEDS The use of anticipated bond proceeds will be limited to preliminary (soft) costs, which may include engineering fees, architect fees, feasibility studies, etc unless a reimbursement ordinance has been adopted pursuant to Section XIV. The Director of Finance may provide additional parameters regarding qualifying uses and will review and approve all requests for the use of anticipated bond proceeds. Departments may not use anticipated bond proceeds for preliminary costs earlier than 60 days from the date the City Council adopts an ordinance authorizing the sale of said bonds unless a reimbursement ordinance has been adopted pursuant to Section XIV. In no event will the use of anticipated bond proceeds exceed the unreserved fund equity of the combined Utility System for Electric, Water or Wastewater requests or the operating fund of any other department making a request. XVL METHOD OF SALE A. Competitive Sale When feasible and economical, obligations shall be issued by competitive rather than negotiated sale. Favorable conditions for a competitive method of sale include the following: Page 16 of 27 • The market is familiar with the issuer, and the issuer is a stable and regular borrower in the public market; • An active secondary market with a broad investor base for the issuer's debt; • The issue is neither too large to be easily absorbed by the market nor too small to attract investors without a concerted sales effort; • The issue is not viewed by the market as carrying overly complex features or requiring explanation as to the debt's soundness; and • Interest rates are relatively stable, market demand is strong, and the market is able to absorb a reasonable amount of buying or selling at reasonable price changes. 1. Bidding Parameters The notice of sale will be carefully constructed so as to ensure the best possible bid for the City, in light of existing market conditions and other prevailing factors. Parameters to be examined may include: • Limits between lowest and highest coupons; • Coupon requirements relative to the yield curve; • Method of underwriter compensation, discount or premium coupons; • Use of true interest cost (TIC); • Use of bond insurance; • Serial debt versus term debt with mandatory sinking fund redemptions; and • Call provisions B. Negotiated Sale Bonds issued for the purpose of refunding and /or restructuring outstanding debt may appropriately be sold on a negotiated basis when maximum flexibility is required in order for the City to respond to day -to -day nuances in the marketplace and other complications peculiar to the issuance of refunding debt. Whenever the option exists to sell an issue on a negotiated basis, an analysis of the options shall be performed to aid in the decision - making process. The City will present the reasons and will actively participate in the selection of the underwriter or direct purchaser. In negotiated sales, the City attempts to involve qualified and experienced firms which consistently submit financing plans to the City and actively participate in the City's competitive sales. The criteria used to select an underwriter in a negotiated sale may include the following: • Overall experience; • Participation in the City's past competitive sales; • Marketing philosophy; • Capability; Page 17 of 27 • Previous experience as managing or co- managing underwriter; • Financial statement and financing plans that are relevant and appropriate; • Public finance team and resources; and • Breakdown of underwriter's discount, which includes management fee, underwriting fee, average takedown and other administrative expenses. C. Private Placement When cost - beneficial, the City may privately place its debt. Since underwriting and rating agency expenses may be avoided, it may result in a lower cost of borrowing. Private placement is sometimes an option for small issues. The opportunity may be identified by the financial advisor. XVII. INVESTMENT OF BOND PROCEEDS A. Strategy The City should actively monitor its investment practices to ensure maximum returns on its invested bond funds while complying with federal arbitrage guidelines. Specific investment strategies for the investment of bond proceeds are provided in the City's Policy No. 403.06 ( "Investment Policy "). B. Arbitrage Compliance With respect to the investment and expenditure of the proceeds of tax - exempt obligations, the Director of Finance will: • Instruct the appropriate person or persons that the construction, renovation or acquisition of the facilities financed with tax - exempt obligations must proceed with due diligence and that binding contracts for the expenditure of at least 5% of the proceeds of the tax - exempt obligations must be entered into within six months of the date of delivery of such obligations ( "Issue Date "); • Monitor that at least 85% of the proceeds of tax - exempt obligations to be used for the construction, renovation or acquisition of any facilities are expended within three years of the Issue Date; • Monitor investment of proceeds of the tax - exempt obligations and restrict the yield of the investments to the yield on the tax - exempt obligations after three years of the Issue Date; • Monitor all amounts deposited into a sinking fund or funds, (e.g., the Interest and Sinking Fund established under each ordinance authorizing the issuance of the tax - exempt obligations), to assure that the maximum amount invested at a yield higher than the yield on the obligations does not exceed an amount equal to the debt service on the obligations in the succeeding 12 month period plus a carryover amount equal to one - twelfth of the principal and interest payable on the obligations for the immediately preceding 12 -month period; Page 18 of 27 • Assure that the maximum amount of any debt service reserve fund for tax - exempt obligations invested at a yield higher than the yield on the related tax - exempt obligations will not exceed the lesser of (1) 10% of the principal amount of the related tax - exempt obligations, (2) 125% of the average annual debt service on the related tax - exempt obligations measured as of the Issue Date for such obligations, or (3) 100% of the maximum annual debt service on the related tax - exempt obligations as of the Issue Date for such obligations; • Ensure that no more than 50% of the proceeds of tax - exempt obligations are invested in an investment with a guaranteed yield for four years or more; • Monitor the actions of the escrow agent (to the extent an escrow is funded with proceeds of tax - exempt obligations) to ensure compliance with the applicable provisions of the escrow agreement, including with respect to reinvestment of cash balances; • Maintain any official action of the City (such as a reimbursement ordinance) stating its intent to reimburse with the proceeds of tax - exempt obligations any amount expended prior to the Issue Date for the acquisition, renovation or construction of the facilities financed with the obligations; • Ensure that the applicable information return (e.g., Internal Revenue Service ( "IRS ") Form 8038 -G, 8038 -GC, or any successor forms) is timely filed with the IRS; and • Assure that, unless excepted from rebate and yield restriction under section 148(f) of the United States Internal Revenue Code of 1986, as amended (the "Code "), excess investment earnings are computed and paid to the U.S. government at such time and in such manner as directed by the IRS (i) at least every five years after the Issue Date and (ii) within 30 days after the date the tax - exempt obligations are retired. The City will follow a policy of full compliance with all arbitrage rebate requirements of the Code and IRS regulations, and will perform (internally or by contract consultants) arbitrage rebate calculations for each issue subject to rebate on an annual basis. All necessary rebates will be filed and paid when due. C. Arbitrage Liability Management The Director of Finance will maintain a system for tracking arbitrage rebate liability and ensuring that required calculations are performed on a timely basis. These calculations will be performed annually and as needed. Due to the complexity of the arbitrage calculations and regulations, and to the severity of the penalties for noncompliance, the advice of bond counsel and qualified experts will be pursued on an ongoing basis. If deemed necessary, funds should be set aside in anticipation of potential rebate liabilities. Page 19 of 27 XVIIL RESTRICTIONS ON PRIVATE BUSINESS USE With respect to the use of the facilities financed or refinanced with the proceeds of tax - exempt obligations the Director of Finance will: • Develop procedures or a tracking system to identify all property financed with tax - exempt obligations; • Monitor the date on which the facilities are substantially complete and available to be used for the purpose intended; • Monitor whether, at any time the tax - exempt obligations are outstanding, any person, other than the City, the employees of the City, the agents of the City or members of the general public has any contractual right (such as a lease, purchase, management or other service agreement) with respect to any portion of the facilities; • Monitor whether, at any time the tax - exempt obligations are outstanding, any person, other than the City, the employees of the City, the agents of the City or members of the general public has a right to use the output of the facilities (e.g., water, gas, electricity); • Determine whether, at any time the tax - exempt obligations are outstanding, any person, other than the City, has a naming right for the facilities or any other contractual right granting an intangible benefit; • Determine whether, at any time the tax - exempt obligations are outstanding, the facilities are sold or otherwise disposed o£ Prior to any sale of property owned by the City (real or personal), the Director of Finance must confirm whether such property was financed with tax- exempt obligations, and if so, determine whether the proposed disposition of the property could impact the tax - exempt status of the issue of tax - exempt obligations that financed the acquisition of such property; • Before entering into any private business use arrangement that involves the use of the facilities financed with tax - exempt obligations, the Director of Finance must obtain a description of the proposed private business use arrangement and determine whether such arrangement, if put into effect, will be consistent with the restrictions on private business use of the facilities. In connection with the evaluation of any proposed private business use arrangement, the Director of Finance should consult with bond counsel to discuss whether such arrangement, if put into effect, will be consistent with the restrictions on private business use of the facility, and, if not, whether any remedial action permitted under federal guidelines may be taken as a means of enabling such private business use without adversely affecting the tax - exempt status of the tax - exempt obligations which financed such facilities; and • Take such action as is necessary to remediate any failure to maintain compliance with the covenants contained in the ordinances authorizing tax - exempt obligations related to the public use of the facilities financed by such obligations. Page 20 of 27 The City shall establish an appropriate record keeping system and designate the appropriate City personnel for purposes of compliance with this section, and as stated in Section XIX. XIX. RECORD RETENTION All proceeds of debt obligations will be separately accounted for in the City's financial accounting system to facilitate arbitrage tracking and reporting. The Director of Finance shall include in the CAFR the City's arbitrage rebate liability in accordance with accounting standards established by GASB. With respect to each issue of tax - exempt obligations issued by the City, the Director of Finance will maintain or cause to be maintained all records relating to the investment and expenditure of the proceeds of such issue and the use of the facilities financed or refinanced thereby for a period ending six years after the complete extinguishment of such issue of tax - exempt obligations. If any portion of an issue of tax- exempt obligations is refunded with the proceeds of another series of tax- exempt obligations, such records shall be maintained until the six years after the refunding obligations are completely extinguished. Such records may be maintained in paper or electronic format. XX. TRAINING The Director of Finance shall receive appropriate training regarding the City's accounting system, contract intake system, facilities management and other systems necessary to track the investment and expenditure of the proceeds and the use of the facilities financed with the proceeds of debt obligations. The foregoing notwithstanding, the Director of Finance is authorized and instructed to retain such experienced advisors, agents and consultants as may be necessary to carry out the policies and procedures described in Sections XVII, XVIII and XIX. Page 21 of 267 GLOSSARY Amortization — The planned reduction of a debt obligation according to a stated maturity or redemption schedule. Arbitrage — The gain which may be obtained by borrowing funds at a lower (often tax - exempt) rate and investing the proceeds at higher (often taxable) rates. The ability to earn arbitrage by issuing tax - exempt securities has been severely curtailed by the Tax Reform Act of 1986, as amended. Average Life — The average length of time debt is expected to be outstanding. Generally, a level debt service structure will limit the average life of a bond issue (i.e., a 20 year final maturity will have an approximate average life of 12 years, and a 30 year final maturity will have an approximate average life of 18 years). Basis Point — One one - hundredth of one percent (0.0001). BBI — Bond Buyer Index. Comparison of current rates for various maturities. Bid Form — The document used by an underwriter to submit his bid at a competitive sale. Bond — A security that represents an obligation to pay a specified amount of money on a specific date in the future, typically with periodic interest payments. Bond Counsel — An attorney (or firm of attorneys) retained by the issuer to give a legal opinion concerning the validity of the securities. The bond counsel's opinion usually addresses the subject of tax exemption. Bond counsel may prepare, or review and advise the issuer regarding authorizing resolutions or ordinances, trust indentures, official statements, validation proceedings and litigation. Bond Insurance — Bond insurance is a type of credit enhancement whereby a monoline insurance company indemnifies an investor against a default by the issuer to pay principal and interest in -full and on -time. Once assigned, the municipal bond insurance policy generally is irrevocable. The insurance company receives an up -front fee, or premium, when the policy is issued. Book -Entry -Only — Bonds that are issued in fully- registered form but without certificates of ownership. The ownership interest of each actual purchaser is recorded on computer. Bond Years — $1,000 of debt outstanding for one year used to compute average life and net interest cost. CAFR — Comprehensive Annual Financial Report. CIP — Capital Improvement Program. Call Option — The right to redeem a bond prior to its stated maturity, either on a given date or continuously. The call option is also referred to as the optional redemption provision. Page 22 of 267 Capital Lease — The acquisition of a capital asset over time rather than merely paying a rental fee for temporary use. A lease - purchase agreement, in which provision is made for transfer of ownership of the property for a nominal price at the scheduled termination of the lease, is referred to as a capital lease. Certificates of Obligation — A type of debt authorized to be issued pursuant to the Certificates of Obligation Act of 1971 (Subchapter C of Chapter 271, Texas Government Code). Closing — When bonds are exchanged for money (a/k/a delivery or settlement). Commercial Paper (Tax- Exempt) — By convention, short -term, unsecured, tax - exempt promissory notes issued in either registered or bearer form with a stated maturity of 270 days or less. Competitive Sale — A sale of securities in which the securities are awarded to the bidder who offers to purchase the issue at the best price or lowest cost. Coupon Rate — The interest rate on specific maturities of a bond issue. While the term "coupon" derives from the days when virtually all municipal bonds were in bearer form with coupons attached, the term is still frequently used to refer to the interest rate on different maturities of bonds in registered form. Cover Bid — The runner -up in a competitive bond sale. Credit Enhancements — Credit enhancements are mechanisms which guarantee principal and interest payments. They include bond insurance and a line or letter of credit. A credit enhancement, while costly, will usually bring a lower interest rate on debt and a higher rating from the rating agencies, thus lowering overall costs. Cost effectiveness of credit enhancement will be evaluated for each debt issue. CUSIP Number — The term CUSIP is an acronym for the Committee on Uniform Securities Identification Procedures. An identification number is assigned to each maturity of an issue, and is usually printed on the face of each individual certificate of the issue. The CUSIP numbers are intended to help facilitate the identification and clearance of municipal securities. As the municipal market has evolved, and the new derivative products are devised, the importance of the CUSIP system for identification purposes has increased. Dated Date — A defined date at which interest begins to accrue from. Page 23 of 267 Debt Burden — The ratio of outstanding tax - supported debt to the market value of property within a jurisdiction. The overall debt burden includes a jurisdiction's proportionate share of overlapping debt as well as the municipality's direct net debt. Debt Limitation — The maximum amount of debt that is legally permitted by a jurisdiction's charter, constitution, or statutory requirements. ## Iflils security which is an instrument, including a bond, certificate, note, or other type of obligation authorized to be issued by an issuer under a statute, a municipal home-rule charter, or the constitution of the state. Debt Service — The amount necessary to pay principal and interest requirements on outstanding bonds for a given year or series of years. Debt Service Reserve Fund — The fund into which moneys are placed which may be used to pay debt service if pledged revenues are insufficient to satisfy the debt service requirements. The debt service reserve fund may be entirely funded with bond proceeds, or it may only be partly funded at the time of the issuance and allowed to reach its full funding requirement over time, due to the accumulation of pledged revenues. If the debt service reserve fund is used in whole or part to pay debt service, the issuer usually is required to replenish the funds from the first available funds or revenues. A typical reserve requirement might be the maximum aggregate annual debt service requirement for any year remaining until the bonds reach maturity. The size of the reserve fund, and the manner in which it is invested, may be subject to arbitrage regulations. Default — The failure to pay principal or interest in full or on time. An actual default should be distinguished from technical default. The latter refers to a failure by an issuer to abide by certain covenants but does not necessarily result in a failure to pay principle or interest when due. Defeasance — Providing for payment of principal of premium, if any, and interest on debt through the first call date or scheduled principal maturity in accordance with the terms and requirements of the instrument pursuant to which the debt was issued. A legal defeasance usually involves establishing an irrevocable escrow funded with only cash and U.S. government obligations. Depository Trust Company (DTQ — A limited purpose trust company organized under the New York Banking Law. DTC facilitates the settlement of transactions in municipal securities. Downgrade — A reduction in credit rating. Enterprise Activity — A revenue - generating project or business. The project often provides funds necessary to pay debt service on securities issued to finance the facility. The debts of such projects are self - liquidating when the projects earn sufficient monies to cover all debt service and other requirements imposed under the bond contract. Common examples include water and sewer treatment facilities and utility facilities. Page 24 of 267 Electronic Municipal Market Access (EMMA) — Effective July 1, 2009, the SEC implemented amendments to SEC Rule 15c2 -12 which approved the establishment by the MSRB of EMMA, the sole successor to the nationally recognized municipal securities information repositories with respect to filings made in connection with disclosure undertakings. Access to filings are made free of charge to the general public by the MSRB. Final Official Statement (FOS) — A document published by the issuer which generally discloses material information on a new issue of municipal securities including the purposes of the issue, how the securities will be repaid, and the financial, economic and social characteristics of the issuing government. Investors may use this information to evaluate the credit quality of the securities. Flow of Funds — The order in which pledged revenues must be disbursed, as set forth in the trust indenture or bond resolution. In most instances, the pledged revenues are deposited into a general collection account or revenue fund as they are received and subsequently transferred into the other accounts established by the bond resolution or trust indenture. The other accounts provide for payment of the costs of debt service, debt service reserve deposits, operation and maintenance costs, renewal and replacement, and other requirements. GASB — Government Accounting Standards Board. GFOA — Government Finance Officers Association. General Obligation Debt — Debt that is secured by a pledge of the ad valorem taxing power of the issuer. Also known as a full faith and credit obligation. Good Faith Deposit — A sum of money given by the Underwriter to assure his bid. Institutional Buyer — Banks, financial institutions, insurance companies, and bond funds. Issuance Costs — The costs incurred by the bond issuer during the planning and sale of securities. These costs include but are not limited to financial advisory and bond counsel fees, printing and advertising costs, rating agencies fees, and other expenses incurred in the marketing of an issue. Junior Lien Bonds — Bonds which have a subordinate claim against pledged revenues. Letter of Credit — Bank credit facility whereby a bank will honor the payment of an issuer's debt, in the event that an issuer is unable to do so, thereby providing an additional source of security for bondholders for a predetermined period of time. A letter of credit often is referred to as an L/C or an LOC. Letter of Credit can be issued on a "stand -by" or "direct pay" basis. Level Debt Service — When annual payments are substantially the same each year. Page 25 of 267 Line of Credit — Bank credit facility wherein the bank agrees to lend up to a maximum amount of funds at some date in the future in return for a commitment fee. Long -Term Debt — Will not exceed the estimated useful life of the asset(s) financed. Voter approved general obligation bonds will strive to have a final maturity of twenty (20) years or less. Revenue bonds and certificates of obligation will strive to have a final maturity of thirty (30) years or less. Manager — The member (or members) of an underwriting syndicate charged with the primary responsibility for conducting the affairs of the syndicate. The managers take the largest underwriting commitment. Lead Manager or Senior Manager The underwriter serving as head of the syndicate. The lead manager generally handles negotiations in a negotiated underwriting of a new issue of municipal securities or directs the process by which a bid is determined for a competitive underwriting. The lead manager also is charged with allocating securities among the members of the syndicate in accordance with the terms of the syndicate agreement or agreement among underwriters. Joint Manager or Co- Manager Any member of the management group. Municipal Advisory Council of Texas (MAC) — The designated State of Texas Information Depository as approved by the SEC with respect to filings made in connection with undertakings. Municipal Securities Rulemaking Board (MSRB) — A self - regulating organization established on September 5, 1975 upon the appointment of a 15- member Board by the Securities and Exchange Agreement. The MSRB, comprised of representatives from investment banking firms, dealer bank representatives, and public representatives, is entrusted with the responsibility of writing rules of conduct for the municipal securities market. New Board members are selected by the MSRB pursuant to the method set forth in Board rules. Negotiated Sale — A sale of securities in which the terms of sale are determined through negotiation between the issuer and the purchaser, typically an underwriter, without competitive bidding. Net Interest Cost — The average interest cost of a bond issue calculated on the basis of simple interest. Paying Agent — An agent of the issuer with responsibility for timely payment of principal and interest to bond holders. Preliminary Official Statement (POS) — The POS is a preliminary version of the official statement which is used by an issuer or underwriters to describe the proposed issue of municipal securities prior to the determination of the interest rate(s) and offering Page 26 of 267 prices(s). The preliminary official statement, also called a "red herring ", often is examined by potential purchasers prior to making an investment decision. Present Value — The value of a future amount or stream of revenues or expenditures in current dollars. Private Business Use — Private business use occurs whenever tax - exempt obligation proceeds are used to benefit any entity other than a state or local government, including non - profit corporations and the federal government. In simple terms, an issue of tax - exempt obligations may lose their tax - exempt status if (i) more than 10% of the proceeds of the obligations are to be used for any private business use and the payment of the principal of, or the interest, on more than 10% of the proceeds of the obligations is secured by or payable from property used for a private business use or (ii) the amount of the proceeds of the obligations used to make loans to borrowers other than state and local governments exceeds the lesser of 5% of the proceeds or $5 million. Refunding — An advance refunding is a refunding that occurs more than 90 days before the call date of the refunded bonds, and a current refunding is a refunding that occurs 90 days or less before the call date. A refunding is a process of selling a new issue of securities to obtain funds needed to retire existing securities. Debt refunding is done to extend maturity and /or to reduce debt service cost. Retail Buyer — Individual investors. Revenue Bond — A bond which is payable from a specific source of revenue and to which the full faith and credit of an issuer with taxing power is not pledged. Revenue bonds are payable from identified sources of revenue, and do not permit the bondholders to compel a jurisdiction to pay debt service from any other source. Pledged revenues often are derived from the operation of an enterprise activity. Generally, no voter approval is required prior to issuance of such obligations. SEC— Securities and Exchange Commission. SID — State Information Depository. Secondary Market — The market in which bonds are sold after their initial sale in the new issue market. Senior Lien Bonds — Bonds having a prior or first claim on pledged revenues. Serial Bonds — A bond issue in which the principal is repaid in periodic installments over the issue's life. Short -Term Debt — May be issued to finance projects or portions of projects for which the City ultimately intends to issue long -term debt (i.e., it will be used, when appropriate, to provide interim financing which will eventually be refunded with proceeds of long -term obligations). Short -term obligations may be backed with a tax and /or revenue pledge or a pledge of other available resources. Page 27 of 267 Split ratings — Different rating levels from different rating agencies. Surety Bond — A bond guaranteeing performance of a contract or obligation. Term Bonds — Term bonds usually refer to a particularly large maturity of a bond issue that is created by aggregating a series of maturities. A provision is often made for the mandatory redemption of specified amounts of principal during several years prior to the stated maturity, which effectively simulates serial bonds. True Interest Cost (TIC) — An expression of the average interest cost in present value terms. The true interest cost is a more accurate measurement of the bond issue's effective interest cost and should be used to ascertain the best bid in a competitive sale. Variable Rate Bond — A bond on which the interest rate is reset periodically, usually no less often than semi - annually. The interest rate is reset either by means of an auction or through an index. Upgrade — An increase in credit rating. Exhibit 2 City o f Denton Debt Summary Report As of September 30, 2015 Contact: City of Denton Finance Department 215 E. McKinney St. Denton, Texas 76201 Phone: 940 - 349 -7277 Fax: 940 - 349 -7206 Website: www.cityofdenton.com Published: November 20, 2015 Disclaimer. Data provided in this report is as of the date of publication and constitutes existing long -term debt obligations only. This report does not include forward looking statements nor does it include debt that may be incurred in the future. Interested parties should refer to the City's audited financial statements and other disclosure documents when investing. TABLE OF CONTENTS Introduction........................................................................ ............................... 3 Schedule — Total Annual Debt Service by Type of Debt ...................... ..............................4 Bar & Pie Charts — Total Annual Debt Service by Type of Debt ............. ..............................5 Schedule — Tax Supported Debt Service ...................................... ............................... 6 Bar & Pie Charts — Tax Supported Debt Service .............................. ..............................7 Schedule — Revenue Supported Debt Service .................................. ..............................8 Bar & Pie Charts — Revenue Supported Debt Service ....................... ............................... 9 Schedule — General Government Debt Service .................................. .............................10 Bar & Pie Charts — General Government Debt Service ...................... ............................... l l Schedule — Electric Debt Service ................................................. .............................12 Bar & Pie Charts — Electric Debt Service ........................................ .............................13 Schedule — Water Debt Service ................................................. ............................... 14 Bar & Pie Charts — Water Debt Service .......................................... .............................15 Schedule — Wastewater Debt Service .......................................... ............................... 16 Bar & Pie Charts — Wastewater Debt Service ................................... .............................17 Schedule — Solid Waste Debt Service ............................................ .............................18 Bar & Pie Charts — Solid Waste Debt Service ................................... .............................19 Schedule — Airport Debt Service ................................................... .............................20 Bar & Pie Charts — Airport Debt Service ......................................... .............................21 Page 2 INTRODUCTION The City of Denton utilizes long -term debt to finance non - operating expenses, which may include equipment, facilities, and the acquisition of land. Unlike the Federal Government, the City only issues debt for the purchase or construction of capital assets and infrastructure improvements and cannot issue debt to fund operating expenses or deficit spending. All debt issued by the City must be approved by the Texas Attorney General's Office prior to the final sale of the debt. Additional information on the City's outstanding debt including statistical comparisons and ratios can be found in the City's Comprehensive Annual Financial Report, which is located on the City's website under the Finance Department. (www.cityofdenton.com) The City issues two types of long -term debt: General Obligation Debt and Revenue Bond Debt. The City also differentiates between tax - supported and revenue - supported debt to provide the public with a clear understanding of what debt will be paid by property taxes versus rate revenues. The following table shows the latest bond ratings for each type of debt for which ratings are given: GENERAL OBLIGATION DEBT: The largest category of debt is General Obligation Debt. It consists of two categories of bonds: General Obligation Bonds (GOs) and Certificates of Obligation (COs). GOs are generally voter approved and backed by the full faith and credit of the City (property tax pledge) and must be approved at an election. Voter approval may be granted during one of two general election dates. Under the City's debt policy, GOs strive to have a final maturity of twenty (20) years or less. COs do not require voter approval and may have a dual pledge of a specific City revenue and the full faith and credit of the City. Some examples of pledged City revenues are electric, water, wastewater, and landfill revenues. Under the City's debt policy, COs will strive to have a final maturity of thirty (30) years or less. Historically, COs have mostly been issued with twenty (20) year final maturities for general government purposes. In 2010, the City began issuing COs not only for general government purposes which are repaid by property taxes, but also for utility operations of the City. The CO's issued for utility purposes are repaid from the specific utility fund for which the debt was issued. CO's have a lower interest rate than revenue bonds, due to the pledge of full faith and credit. A portion of the interest savings to the City's utilities through issuing CO's (instead of revenue bonds) is being paid back to the general government and placed in the Street Improvement Fund. REVENUE BOND DEBT. The second largest category of debt is Revenue Bond Debt. This debt is pledged only against the operating revenues of the City's Electric, Water and Wastewater Funds (collectively known as the "Utility System ") and not the full faith and credit of the City. Under the City's debt policy, revenue bonds will strive to have a final maturity of thirty (30) years or less. Historically, most revenue bonds have been issued with a twenty (20) year final maturity. The City's total outstanding principal and interest as of September 30, 2015 is shown in Table 1 on the following page: Page 3 Mood 's Standard & Poor's Fitch General Obligation Debt Aa2 AA+ AA+ Revenue Bond Debt Al AA- Not Rated GENERAL OBLIGATION DEBT: The largest category of debt is General Obligation Debt. It consists of two categories of bonds: General Obligation Bonds (GOs) and Certificates of Obligation (COs). GOs are generally voter approved and backed by the full faith and credit of the City (property tax pledge) and must be approved at an election. Voter approval may be granted during one of two general election dates. Under the City's debt policy, GOs strive to have a final maturity of twenty (20) years or less. COs do not require voter approval and may have a dual pledge of a specific City revenue and the full faith and credit of the City. Some examples of pledged City revenues are electric, water, wastewater, and landfill revenues. Under the City's debt policy, COs will strive to have a final maturity of thirty (30) years or less. Historically, COs have mostly been issued with twenty (20) year final maturities for general government purposes. In 2010, the City began issuing COs not only for general government purposes which are repaid by property taxes, but also for utility operations of the City. The CO's issued for utility purposes are repaid from the specific utility fund for which the debt was issued. CO's have a lower interest rate than revenue bonds, due to the pledge of full faith and credit. A portion of the interest savings to the City's utilities through issuing CO's (instead of revenue bonds) is being paid back to the general government and placed in the Street Improvement Fund. REVENUE BOND DEBT. The second largest category of debt is Revenue Bond Debt. This debt is pledged only against the operating revenues of the City's Electric, Water and Wastewater Funds (collectively known as the "Utility System ") and not the full faith and credit of the City. Under the City's debt policy, revenue bonds will strive to have a final maturity of thirty (30) years or less. Historically, most revenue bonds have been issued with a twenty (20) year final maturity. The City's total outstanding principal and interest as of September 30, 2015 is shown in Table 1 on the following page: Page 3 TABLE 1 - TOTAL OUTSTANDING DEBT (in millions) Total $ 252.07 $ 582.04 $ 80.92 $ 915.03 Principal Interest GOs $ 203.61 $ 48.46 COs $ 400.97 $ 181.07 Revenue Bonds $ 63.34 $ 17.58 Total $ 667.92 $ 247.11 Total $ 252.07 $ 582.04 $ 80.92 $ 915.03 Page 4 Revenue Bonds 12,761,456 6,920,150 6,329,025 6,345,844 6,347,838 6,365,522 3,158,378 3,169,172 5,094,169 5,098,966 5,110,738 5,112,594 3,829,538 2,637,455 2,639,930 80,920,775 Total $ 76,587,460 73,127,330 70,367,736 69,816,680 68,005,182 61,281,193 56,393,399 49,475,633 46,529,754 42,606,536 34,264,704 33,270,720 30,460,037 27,969,235 28,093,483 20,988,252 18,935,406 16,135,453 12,048,624 9,855,200 7,147,600 7,174,600 7,202,200 7,225,100 7,238,200 7,241,500 7,239,900 7,238,100 7,235,700 3,870,900 $ 915,025,817 City of Denton Total Annual Debt Service (Principal & Interest) - All Debt As of September 30, 2015 FY End General Obligation Bonds (GOs) Certificates of Obligation (COs) 9 -30 Tax Supported Revenue Supported Tax Supported Revenue Supported 2016 $ 11,621,216 $ 12,285,084 $ 6,962,916 $ _ 32,956,788 $ 2017 11,495,765 16,903,931 6,175,720 31,631,764 2018 11,060,103 17,245,186 5,260,745 30,472,677 2019 10,493,057 18,859,407 4,290,470 29,827,902 2020 9,717,291 18,884,105 3,867,034 29,188,914 2021 9,383,856 15,112,622 3,057,063 27,362,130 2022 8,495,238 14,480,425 2,919,403 27,339,955 2023 7,128,799 9,152,573 2,734,078 27,291,011 2024 6,588,270 5,309,803 2,572,018 26,965,494 2025 5,743,406 2,449,978 2,407,840 26,906,346 2026 5,105,236 504,050 2,235,729 21,308,951 2027 4,565,346 - 2,235,318 21,357,462 2028 3,395,043 1,934,700 21,300,756 2029 2,824,568 1,172,897 21,334,315 2030 2,832,226 1,175,669 21,445,658 2031 2,522,072 1,123,106 17,343,074 2032 2,343,681 1,091,281 15,500,444 2033 2,134,463 1,064,472 12,936,518 2034 1,856,313 604,824 9,587,487 2035 1,575,900 219,300 8,060,000 2036 - - 7,147,600 2037 7,174,600 2038 7,202,200 2039 7,225,100 2040 7,238,200 2041 7,241,500 2042 7,239,900 2043 7,238,100 2044 7,235,700 2045 - - - 3,870,900 _ $ 120,881,849 $ 131,187,164 $ 53,104,583 $ 528,931,446 $ Page 4 Revenue Bonds 12,761,456 6,920,150 6,329,025 6,345,844 6,347,838 6,365,522 3,158,378 3,169,172 5,094,169 5,098,966 5,110,738 5,112,594 3,829,538 2,637,455 2,639,930 80,920,775 Total $ 76,587,460 73,127,330 70,367,736 69,816,680 68,005,182 61,281,193 56,393,399 49,475,633 46,529,754 42,606,536 34,264,704 33,270,720 30,460,037 27,969,235 28,093,483 20,988,252 18,935,406 16,135,453 12,048,624 9,855,200 7,147,600 7,174,600 7,202,200 7,225,100 7,238,200 7,241,500 7,239,900 7,238,100 7,235,700 3,870,900 $ 915,025,817 Total Annual Debt Service ($) Total Annual Debt Service ( %) Page 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IIIIIIIII GO - Tax Supported IIIIIIIII GO - Revenue Supported 11111 CO - Tax Supported IIIIIIIII CO - Revenue Supported IIIIIIII Revenue Bonds FY End 9 -30 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 City of Denton Total Annual Debt Service (Principal & Interest) - Tax Supported Debt As of September 30, 2015 General Obligation Bonds (GOs) $ 11,621,216 11,495,765 11,060,103 10,493,057 9,717,291 9,383,856 8,495,238 7,128,799 6,588,270 5,743,406 5,105,236 4,565,346 3,395,043 2,824,568 2,832,226 2,522,072 2,343,681 2,134,463 1,856,313 1,575,900 $ 120,881,849 Certificates of Obligation (COs) $ 6,962,916 6,175,720 5,260,745 4,290,470 3,867,034 3,057,063 2,919,403 2,734,078 2,572,018 2,407,840 2,235,729 2,235,318 1,934,700 1,172,897 1,175,669 1,123,106 1,091,281 1,064,472 604,824 219,300 $ 53,104,583 Page 6 Total $ 18,584,132 17,671,485 16,320,848 14,783,527 13,584,325 12,440,919 11,414,641 9,862,877 9,160,288 8,151,246 7,340,965 6,800,664 5,329,743 3,997,465 4,007,895 3,645,178 3,434,962 3,198,935 2,461,137 1,795,200 $ 173,986,432 Tax Supported Debt ($) $20 ..r" $12 ..,' 0 $10 "''" NCO GO $8 $6 ..r' ........ ........ ......... $4 r ". .... ........ ........ .... ........ ..... ........ .... ....... ............. ............. ............. ....................... $2 O N N N N N N N N N N N M M M M O O O O O O O O O O O O O O O O O N N N N N N N N N N N N N N N N N M O N M O N Page 7 City of Denton Total Annual Debt Service (Principal & Interest) - Revenue Supported Debt As of September 30, 2015 FY End General Obligation Bonds Certificates of Obligation Revenue 9 -30 GOs COs Bonds Total 2016 $ 12,285,084 $ 32,956,788 $ 12,761,456 $ 58,003,328 2017 16,903,931 31,631,764 6,920,150 55,455,845 2018 17,245,186 30,472,677 6,329,025 54,046,888 2019 18,859,407 29,827,902 6,345,844 55,033,153 2020 18, 884,105 29,188,914 6,347,838 54,420, 857 2021 15,112,622 27,362,130 6,365,522 48,840,274 2022 14,480,425 27,339,955 3,158,378 44,978,758 2023 9,152,573 27,291,011 3,169,172 39,612,756 2024 5,309,803 26,965,494 5,094,169 37,369,466 2025 2,449,978 26,906,346 5,098,966 34,455,290 2026 504,050 21,308,951 5,110,738 26,923,739 2027 - 21,357,462 5,112,594 26,470,056 2028 - 21,300,756 3,829,538 25,130,294 2029 - 21,334,315 2,637,455 23,971,770 2030 - 21,445,658 2,639,930 24,085,588 2031 - 17,343,074 - 17,343,074 2032 - 15,500,444 - 15,500,444 2033 - 12,936,518 - 12,936,518 2034 - 9,587,487 - 9,587,487 2035 - 8,060,000 - 8,060,000 2036 - 7,147,600 - 7,147,600 2037 - 7,174,600 - 7,174,600 2038 - 7,202,200 - 7,202,200 2039 - 7,225,100 - 7,225,100 2040 - 7,238,200 - 7,238,200 2041 - 7,241,500 - 7,241,500 2042 - 7,239,900 - 7,239,900 2043 - 7,238,100 - 7,238,100 2044 - 7,235,700 - 7,235,700 2045 - 3,870,900 - 3,870,900 $ 131,187,164 $ 528,931,446 $ 80,920,775 $ 741,039,385 Page 8 Revenue Supported ($) Revenue Supported ( %) Page 9 City of Denton Total Annual Debt Service (Principal & Interest) - General Government As of September 30, 2015 FY End 9 -30 General Fleet Technology Water Park Streets Warehouse Total 2016 $ 18,058,627 $ 241,053 $ 11,806 $ 97,436 $ 126,875 $ 48,334 $ 18,584,131 2017 17,150,335 228,006 16,281 103,977 124,850 48,036 17,671,485 2018 15,813,466 219,492 10,731 104,641 125,000 47,519 16,320,849 2019 14,318,824 211,027 10,250 64,837 129,250 49,339 14,783,527 2020 13,319,501 21,059 - 66,887 128,125 48,752 13,584,324 2021 12,313,229 15,717 64,038 - 47,936 12,440,920 2022 11,282,711 16,185 66,381 49,363 11,414,640 2023 9,798,834 15,813 - 48,230 9,862,877 2024 9,160,288 - - 9,160,288 2025 8,151,246 8,151,246 2026 7,340,965 7,340,965 2027 6,800,663 6,800,663 2028 5,329,743 5,329,743 2029 3,997,465 3,997,465 2030 4,007,895 4,007,895 2031 3,645,178 3,645,178 2032 3,434,963 3,434,963 2033 3,198,935 3,198,935 2034 2,461,138 2,461,138 2035 1,795,200 - - - - 1,795,200 $ 171,379,206 $ 968,352 $ 49,068 $ 568,197 $ 634,100 $ 387,509 $ 173,986,432 Page 10 General Government ($) General Government ( %) 0.2% 0.4% � 0.6% 1111 Streets ................... 111111 Warehouse III Water Park 111111 Technology Fleet IIIIIIIII General Page 11 FY End 9 -30 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 City of Denton Total Annual Debt Service (Principal & Interest) - Electric As of September 30, 2015 General Obligation Bonds Certificates of Obligation Revenue GOs COs Bonds 3,329,671 4,673,713 5,128,725 7,064,600 7,097,587 6,335,175 6,093,175 4,491, 800 3,087,025 330,750 331,500 $ 47,963,721 $ 20,994,980 20,925,770 20,833,495 20,756,545 20,701,632 20,661,095 20,672,050 20,719,181 20,764,357 20, 812, 882 15,346,895 15,380,875 15,412,119 15,482,256 15,557,030 13,004,225 11,427,437 9,843,615 7,114,969 7,126,700 7,147, 600 7,174, 600 7,202,200 7,225,100 7,238,200 7,241,500 7,239,900 7,238,100 7,235,700 3,870,900 $ 402,351,908 Page 12 4,775,761 3,115,575 2,687,575 2,698,094 2,696,263 2,705,067 1,380,897 1,394,825 1,395,672 1,401,413 1,402,126 1,404,506 866,124 $ 27,923,898 Total $ 29,100,412 28,715,058 28,649,795 30,519,239 30,495,482 29,701,337 28,146,122 26,605, 806 25,247,054 22,545,045 17,080,521 16,785,381 16,278,243 15,482,256 15,557,030 13,004,225 11,427,437 9,843,615 7,114,969 7,126,700 7,147, 600 7,174, 600 7,202,200 7,225,100 7,238,200 7,241,500 7,239,900 7,238,100 7,235,700 3,870,900 $ 478,239,527 Electric ($) Electric ( %) Page 13 FY End 9 -30 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 City of Denton Total Annual Debt Service (Principal & Interest) - Water As of September 30, 2015 General Obligation Bonds Certificates of Obligation Revenue GOs COs Bonds $ 5,290,713 7,553,013 7,524,287 7,549,931 7,553,550 5,737,675 5,503,925 3,225,050 1,867,275 1,877,750 $ 53,683,169 $ 2,252,695 2,238,981 2,214,581 2,196,481 2,180,081 2,174, 831 2,179,481 2,183,956 2,190,181 2,186, 531 2,202,356 2,211,990 2,219,586 2,240,749 2,261,430 1,273,581 1,276,400 833,937 833,637 209,100 $ 37,560,565 Page 14 $ 5,899,846 3,119,075 3,026,150 3,034,250 3,035,775 3,043,353 1,777,481 1,774,347 3,698,497 3,697,553 3,708,613 3,708,088 2,963,413 2,637,456 2,639,931 $ 47,763,828 Total $ 13,443,254 12,911,069 12,765,018 12,780,662 12,769,406 10,955,859 9,460,887 7,183,353 7,755,953 7,761,834 5,910,969 5,920,078 5,182,999 4,878,205 4,901,361 1,273,581 1,276,400 833,937 833,637 209,100 $ 139,007,562 Water ($) $14 $12 $10 y $8 a ,r 0 Revenue Bonds m CO $6 GO $4 r $2 N N N N N N N N N N M M M M M M O O O O O O O O N N N N N N N N O O O O O O O O O N N N N N N N N N O N O O N N Water ( %) Page 15 FY End 9 -30 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 City of Denton Total Annual Debt Service (Principal & Interest) - Wastewater As of September 30, 2015 General Obligation Bonds Certificates of Obligation Revenue GOs COs Bonds $ 2,899,388 3,887,112 3,809,943 3,469,444 3,476,488 2,296,800 2,250,875 1,071,125 $ 23,161,175 $ 2,652,173 2,523,962 2,452,487 2,441,262 2,421,112 2,104,587 2,103,987 2,096,737 2,096,687 2,092,487 2,097,437 2,101,012 2,103,842 2,116,461 2,124,458 1,792,262 1,788,893 1,285,659 925,850 474,300 $ 39,795,655 Page 16 $ 2,085,849 685,500 615,300 613,500 615,800 617,100 $ 5,233,049 Total $ 7,637,410 7,096,574 6,877,730 6,524,206 6,513,400 5,018,487 4,354,862 3,167,862 2,096,687 2,092,487 2,097,437 2,101,012 2,103,842 2,116,461 2,124,458 1,792,262 1,788,893 1,285,659 925,850 474,300 $ 68,189,879 Wastewater ( %) Page 17 FY End 9 -30 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 City of Denton Total Annual Debt Service (Principal & Interest) - Solid Waste As of September 30, 2015 General Obligation Bonds Certificates of Obligation Revenue GOs COs Bonds Total $ 588,829 582,312 578,622 572,833 569,463 561,336 490,136 259,701 254,243 194,379 131,950 4,783,804 $ 6,757,632 5,684,864 4,714,752 4,177,601 3,636,527 2,168,729 2,133,574 2,042,524 1,663,231 1,571,208 1,416,200 1,414,697 1,318,343 1,249,466 1,254,356 1,022,294 755,281 719,456 590,781 249,900 $ 44,541,416 Page 18 $ 7,346,461 6,267,176 5,293,374 4,750,434 4,205,990 2,730,065 2,623,710 2,302,225 1,917,474 1,765,587 1,548,150 1,414,697 1,318,343 1,249,466 1,254,356 1,022,294 755,281 719,456 590,781 249,900 49,325,220 Solid Waste ( %) Page 19 City of Denton Total Annual Debt Service (Principal & Interest) - Airport As of September 30, 2015 FY End General Obligation Bonds Certificates of Obligation Revenue 9 -30 GOs COs Bonds Total 2016 $ 176,481 $ 299,308 $ - $ 475,789 2017 207,781 258,187 - 465,968 2018 203,609 257,362 - 460,971 2019 202,599 256,012 - 458,611 2020 187,017 249,562 - 436,579 2021 181,636 252,887 - 434,523 2022 142,314 250,862 - 393,176 2023 104,896 248,612 - 353,508 2024 101,260 251,037 - 352,297 2025 47,100 243,237 - 290,337 2026 40,602 246,069 - 286,671 2027 - 248,887 - 248,887 2028 - 246,875 - 246,875 2029 - 245,381 - 245,381 2030 - 248,381 - 248,381 2031 - 250,712 - 250,712 2032 - 252,431 - 252,431 2033 - 253,850 - 253,850 2034 - 122,250 - 122,250 2035 - - - - 1,595,295 $ 4,681,902 - 6,277,197 Page 20 Airport ($) Airport ( %) Page 21 SA1Cg,l1\0Ur LIOCLILI'lents\reso I Lit ions\1 5\exh 3 - debt policy reso I Liti oil. doc Exhibit 3 Rf,,SOLUTION NO. A RESOLUTION REVISING ADMINISTRATIVI.., POLICY NO. 403.07 "DEBT SERVICE MANAGEMENT" AND PROVIDING FOR AN 1"'I"FECTIVE DATE. WHEREAS, on the 5"1l day of March, 1996 the City C ouncil passed Resolution No. 96-013 adopting Administrative policy No. 403.07 "Debt Service Management"; and W1 II the policy most recently amended on the 1 8t1 day of November 2014, when the City Council passed Resolution No. 2014-041 adopting the current version of the Debt Service Management Policy; and WHEREAS, the City Manager recommends adoption of the revised policy and the City Council desires to adopt such policy as the official policy regarding Debt Service Management; NOW, THEREFORE',, THE COUNCIL OF THE' CITY OFDEN'-fON HEREBY RESOLVES: SECTION 1. The following policy entitled "Policy No. 403.07 "Debt Service Management", attached hereto and made a part hereof, is hereby adopted as an official policy of the City of Denton,Texas and shall replace the existing Debt Service Management Policy. SECTION 2. The attached policy shall be filed in the official records with the City Secretary. SECTION 3. This resolution shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of 2015. CHRIS WATTS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRI"J'ARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: � CITY ��r �7 DENTON Page lo[27 P01.1x-YYA0M1N1ql[RA'r1VFpRWCEUvT7RF/A0m|N[STRATTVE0UREUHVE SECTION: FINANCE REFERENCE NUMBER: SUBJECT: DERTMANAGEMENT INITIAL EFECTIVEDATE: TITLE: DEBTSERVICE MANAGEMENT LAST REVISION DATE: 1 12/1/15 POLICY STATEMENT This policy shall provide general guidelines b» which the City o[ Denton (the ^1Citv`)will issue debt. In ao much ns this policy may bo in conflict or inconsistent with state |avv state |ov/ will prevail. Furthermore, state |ux' will prevail on matters not specifically addressed in this policy. bis the o6iecti*z ofdbis policy that (|) the City obtain Financing only when necessary, (2} the process for identifying the timing and amount of' debt or other financing proceed as cfDoicody as possible, and (3) the City occk the most favorable interest rate and competitive costs in accordance with this policy vvhi|c maintaining financial flexibility. This debt management policy applies to the financing activities of the City of Denton, Texas. It also addresses the issues ofprocess, use and limitations. Proceeds from debt issuances will be delivered as closely as possible to the time that contracts are expected 0n be awarded so that the proceeds are spent efficiently. In addition, the City Council may, through adoption of a reirribursement ordinance, authorize the expenditure of" funds prior to the bond sale for certain capital expenses. The reimbursement ordinance io required by Federal Law to docunucn(thc City's intent to rcioobumo cxpconcm from the future um|c of debt obligations. 1[hc City Council shall review and approve tile debt management policy at least annually and be docunucn(cd by ordinance or resolution, which obu|| include ally chuogearnudc. ADMINISTRATIVE PROCEDURES 8. 0E13T MANAGEMENTCOMMIT1[EE A. Members The Debt Management Committee (the ^^Coumittee") will consist of the City Manager, two (2) Assistant City Mmmgco. and the Director of' Finance. The City's fiuouciu| advisor and bond counsel ohuU act as consultants to the Committee. B. Scope The Cornonittom shall meet at least annually to o:vicvv the debt program or as nm:counry. Topics For discussion should include: the Capital |rnprovcnlcn1 Program (C|P)^ acquisition of fixed assets, status of outstanding debt, unspent Page 2 of 27 bond proceeds, unissued voter authorized debt, timing of additional financing needs and financing options, and the effect of proposed Financing activity on the related rates supporting the debt (i.e., property tax rate, utility rates, User fees, etc.). IL RESPONSIBILITY AND STANDARD OF CARE The Finance Department will coordinate all activities required for the issuance of all debt. A. Delegation The Director of Finance shall have primary responsibility for developing financing recommendations. '-File Director of Finance shall: • Meet at least annually during budget development with Department Directors to consider the need for financing, review debt capacity and assess progress oil the Capital Improvement Program; Periodically review changes in state and federal legislation; Periodically review the provisions of ordinances authorizing issuance of debt obligations; • Periodically review the City's Charter to ensure compliance with state law; and Periodically review services provided by the financial advisor, bond counsel, paying agent, and other service providers to evaluate the extent and effectiveness of the services being provided. B. Conflicts of Interest All participants in the debt management process shall act responsibly as custodians of public assets. Officers and employees involved in the debt management process shall refrain from personal business activity that could conflict with proper execution of the financing program, or which could impair their ability to make impartial Financing decisions. C. Reporting The Director of Finance shall include in the Comprehensive Annual Financial Report ("CAFR") a report summarizing all debt outstanding by type (tax- Supported and self- supported general obligation debt, and revenue debt), remaining balance of bond proceeds, update of arbitrage liability, and update of pertinent legislative changes. Additionally, the Director of Finance shall annually publish on the City's website a Debt Report summarizing the City's total outstanding principal and interest for all long-term debt as of the end of the last Fiscal year. Page 3 of 27 D. Investor Relations The City uhm|{ endeavor to maintain u positive relationship with the invco8ncn< oonnnnuoity. The Director ofF'iounoc and the City's financial advisor sba|\` as necessary, pccpuco reports and other fbonx of communications regarding the City's indebtedness, as well as its [u1uvc Financing p|uoo. This includes information presented in the press and other media. The infbnnution includes, but is not limited to, the unuuu| program of services, C/\FQ, financial plans, capital improvement plans, and comprehensive development plans. All fbnna of media dccrnoJ appropriate ond immediately available k` the City will be utilized 10 diencnoina{c information to all investors. Examples include dlc Texas Bond Reporter and the Texas Municipal Reports published by the Municipal Advisory Council of' Texas (the "MAC"), The Bond Buyer, and dbe Bcoirooio Municipal Market &cocxm myx1cro (^^EMM/\'`) maintained by the Municipal Securities Ru|crnnking Board (the ^"MSKW"). Bond counsc} Will advise on the use ofdec1ronionucdioio connection with the City's debt program. E. Financial Advisor The City shall retain an independent financial advisor for advice on the structuring of new debt, financial analysis of various options, including refunding opportunities, the rating review process, the marketing and marketability of' City debt obligations, issuance and post-issuance services, the preparation o[offering doounnco{o(each, an "Official StaLcoocot") and other services, as necessary. The City will aock the advice of' tile Duonciu\ advisor on an ongoing basis. The financial advisor will perform other services as defined by the ugrccnncnt approved by the City Council. The financial advisor will not bid on nor underwrite any City debt issues in accordance with M8KBrules. Bond Counsel The City shall retain bond counsel for legal and procedural advice on all debt issues. Bond counsel shall advise the City in all matters pertaining to its bond ordinance(s) and/or resolution(s). No action mbuU be taken with respect to any obligation uud| ap/hkon iou1zurncu1 (e.g., Certificate for Ordinance or other \cgu| ina1zunncnU has been prepared by the bond attorneys certifying the legality of tile proposal. The bond attorneys shall prepare all ordinances and other legal inatrunoco1a required for the execution and su\c of any bonds issued vvbicb shall then bc reviewed by the City Attorney and the Director oil' Finance. Tbc City will also aock the advice of bond counsel on all other types of' debt and on any other questions involving federal tax or arbitrage law. Special counsel may be retained to protect the City's interest in conup|cs negotiations. G. Communications with Underwriters The Dodd-Frank VVuU Street Ncfbno and Consumer Protection /\ot of 2010 mandated the Securities and Exchange Commission to establish the Municipal Page 4 of 27 Advisor Rules (the "MA Rules") which were finalized in September of 2013 and became effective July 1, 2014. Under the MA Rules, any person that provides certain advice to the City with respect to the issuance of' bonds or municipal Financial projects (including investment strategies involving the investment of bond proceeds) is, absent an exemption under the MA Rules, deemed to be a "municipal advisor." Any pet-son that is a municipal advisor under the MA Rules is subject to a fiduciary duty to the City and would be precluded from acting as all underwriter for bonds issued by the City. 'File City receives deal ideas, analysis, suggestions and related services for bond issues from underwriter banks that may be considered "advice" for purposes of the MA Rules. So that the City may continue to receive this type of advice from underwriters/banks, the Director of Finance may provide whatever communications to an underwriter/bank the Director of Finances determines to be necessary to establish an exemption under the MA Rules so that those Underwriters/banks are not considered a "municipal advisor" for purposes of the MA Rules, Oil June 29, 2015, the Director of Finance Filed an Independent Registered Municipal Advisor (IRMA) Certificate with the Municipal Advisory Council of Texas (MAC) to be nlacle available to underwriters/banks desiring to communicate with the City, The IRMA Certificate is also available on the City's website. 111. OFFICIAL STATEMENT The preparation of the Official Statement is the responsibility of the financial advisor in concert with the Director of Finance. Information for the Official Statement is gathered from departments /divisions throughout the City. IV. DISCLOSURE A. The City will take all appropriate steps to comply with federal securities laws, including, but not limited to, Securities and Exchange Commission ("SEC") Rule 15c2-12 (tile "Rule"). 'I"he City will make annual and event disclosure filings to the MSR13 via EMMA as required by the Rule and its continuing disclosure undertakings. 13. With each bond offering, in the preparation of a CAFR, Official Statement or any other offering document, and with the City's annual filings required by its Continuing disclosure undertakings pursuant to the Rule, the City will follow a policy of full and complete disclosure of operating, financial and legal conditions of the City, in conformance with the Government Finance Officers Association best practice, "Understanding Your Continuing Disclosure Responsibilities (2010)", and as advised by the City's bond Counsel or financial advisor. C. Notice of` Disclosure Events The Rule and the City's continuing disclosure undertakings list certain events that Must be reported in a timely fashion to the MSRB via EMMA and, if required by the Rule and the City's continuing disclosure undertakings, to the MAC in its I-- -- ............. . . ..... . Page 5 of 27 capacity as the State Information Depository ("SID") for the state. On May 26, 2010, the SEC made amendments to the Rule, which only apply to primary offerings that occur on or after December 1, 2010. While not required, the City will make every effort to apply the new requirements to previously issued bonds since the amendments make the Rule more stringent. The amended Rule requires that events be reported to the MSRB within 10 business days after the occurrence of the event. 1. The events that must be reported, if material, are: a. Nonpayment related defaults; b. Modifications of rights of'security holders; c. Bond calls; d. Release, substitution, or sale of property Securing repayment of the Securities; e. Mergers, consolidations, acquisitions, the sale of all or Substantially all of the assets of the City or other obligated entity or their termination; and f". Appointment of a successor or additional trustee or paying agent or the change of the name of a trustee or paying agent. 2. The events that must be reported, regardless of materiality, are: a. Principal and interest payment delinquencies; b. Unscheduled draws on debt service reserves reflecting financial difficulties; c. Unscheduled draws on credit enhancements reflecting Financial difficulties; d. Substitution of credit or liquidity providers, or their failure to perform; e. Adverse tax opinions, the issuance by the IRS of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701 -TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; f. Tender offers; g. Defeasances; h. Rating changes; and i. Bankruptcy, insolvency, receivership or similar procceding, The Rule also requires the City to report to the MSRB the failure of the City to provide the required annual financial information or operating data on or before the dates specified under a continuing disclosure undertaking V. RATING AGENCY COMMUNICATIONS & CREDIT' OBJECTIVES The City will seek to maintain and improve its Current bond ratings so its borrowing costs are reduced to a minimum and its access to credit is preserved. Page 6 of 27 In co juncioovviththcfiom)uie} advisor, the City shall maintain u |ioo of communication with at least two of the rating ugcocico (MooJn'u, Standard 6t Poo,^a, or Fitch), iufboning thcru of major finuocia| cveoLm in the City us they Occur. The C/\PK, /\nuuu| Program of Services, and Capital Improvement Program shall be distributed to the rating ogcocicu after they have been accepted and adopted by the City Council on an annual When necessary, u conference call or personal meeting with rcpn:mco1utivem n[tbc rating ugnnuioo will be scheduled when orn 'oroupi\n| icnprovcn)cn1program is initiated, or to discuss economic and/or financial developments which might impact credit ratings. The following documents may be required by the rating agencies: • Most recent annual audit reports, including o description oF accounting practices. Accounting changes in the past three years and the impact on Financial results should bcexplained; • Current budget; • Current Capital Improvement Program; • Official Statements for new financings; • Description o[pr 'ectabcingDnuoocd; • Sources and uses aCatcrouu1 for bond issuance. If additional funds are required to cnrup|c1e specific pro.jects being financed, the source of the funds and any conditional requirements may bcdiscussed; • Bnginceringuod feasibility report (if upp|iouh|c); • Zoning or land-Use noap (if upp|ioub\e); • Cosh Unvv eiuterncn1, in the ooxc of interim borrowing. Sta1cnncot of long— and short-term debt with uooua| and monthly maturity do1cm as appropriate. /\|oo, a report of any lease obligations, their nature and 1coo; • Indication o[ appropriate authority for debt issuance; • Investment policy (ifappliomb|c);and • Statement concerning remaining borrowing capacity plus tax ruLu and levy capacity or other revenue capacity. Ful|disclosure of the City's operations will be made to the bond rating agencies. 'The City staff, with the assistance ofthe financial advisors and bond counsel, will prepare the necessary materials for and presentation to the rating agencies. V1. LIMITATIONS OFINDEBTEDNESS AND AFFORDABILITY STATEMENT City stall" in con.junction with the financial advisor and bond counsel, will present to the City Council, and any City committee, as appropriate, a cornprehensive analysis o[debt capacity prior 10 issuing bonds. This una|Yaiu should include ro)cvoni information such • Legal debt limits, tax oc expenditure ceilings; • Coverage ruquiron\cu1m or additional bonds tests in accordance with bond Page 7 of 27 • Measures of the tax and revenue base, such as projections of relevant economic variables (e.g., assessed property values, employment base, unemployment rates, income levels, and retail sales); • Population trends; • Utilization trends for Services underlying revenues; • Factors affecting tax collections, including types of' property, goods, or services taxed, assessment practices and collection rates, evaluation of trends relating to the City's financial performance, such as revenues and expenditures, net revenues available after meeting operating requirements; • Reliability of'revenues expected to pay debt service; • Unreserved fund balance levels; • Debt service obligations, such as existing debt service requirements; • Debt service as a percentage of expenditures or tax or system revenues; • Measures of debt burden on the C0111171711,111ity, such as debt per capita, debt as a percentage of full or equalized assessed property value, and overlapping or underlying debt; and • Tax- exempt and taxable market factors affecting interest costs, such as interest rates, market receptivity, and credit rating. Annual debt service on general obligation debt (tax- supported'), which excludes self- supported debt, shall be limited to no more than 30% of budgeted expenditures in the City's General Fund. The City has revenue bonds and other indebtedness of the Electric, Water, and Wastewater Funds, which are collectively known as the City's "Utility System." The City will maintain coverage ratios as dictated by the City's outstanding bond covenants, including any other indebtedness of the Utility System. In addition, the City will follow a policy that the Utility System will maintain a debt service coverage ratio of at least 1.25 on all Outstanding revenue bonds and other indebtedness of the Utility System. For this purpose, the debt coverage ratio is defined as the net revenue of the Utility System (gross revenue less operating expenses) for a fiscal year (as set out in the audited financial statements for that fiscal year) divided by the maximum annual debt set-vice for all then outstanding revenue bonds and other indebtedness of the Utility System. The City will strive to further maintain this debt service coverage ratio for each separate utility. T'he Electric, Water, and Wastewater Funds' total long-term debt outstanding shall not exceed the amount of combined fund equity. VII. CAPITAL IMPROVEMENT PROGRAM A. The City will seek all possible federal and state reimbursernent for mandated pro.jects and/or prograrns. The City Will pursue a balanced relationship between issuing debt and pay-as-you-go financing as dictated by prevailing econornic factors and as directed by the City Council. B. Current operations will not be financed with long-term debt. C. Debt incurred io finance capital improvements will bc repaid within the useful life of the asset. D. High priority will be uumiguud to the rupbncnoco1 of capital inupnovurucota and fixed assets when they have deteriorated to the point there they are hazardous, incur high ruain1cuuocc costs, negatively affect property values, or no longer serve their intended purposes. E. An updated Cunbu| bopun'cmont Program will be presented to the City Council for approval on an annual basis. This plan will be used as u basis for the long- range VIII. TYITS OF DEB,r The City's bond uouusc| and financial advisor will present the different types of debt best muitcd and legally permissible under state law for each debt issue and uoxint in analyzing the use of capital ]caoc purchases or ihc use of lines o[crodit. These types may include, but are not limited to: • Short-term vs. long-term debt, • General obligation debt vs. revenue debt, • Fixed rate debt, • Lease-backed dc6L • Bpcoin| obligation debt, such os assessment district debt, • Certificates o[obligation, • Combination tax and revenue debt, • Tax Increment Reinvestment Zone (T|KZ)debt, • Public Improvement District (Pl0) debt, • Conduit issues, • Tax Notes, and • Taxable debt. Tbc issuance of ioug-V:no variable ru1c debt and interest rate swaps are expressly prohibited by this policy. The Director of Finance will be nzupmumib|u [oc evaluating this type ofdcbtand will present avariable rate debt policy or interest ru1c swap policy 1nthe City Council for approval as necessary. IX. BOND STRUCTURE Factors that may be considered when structuring debt include the following: • Final maturity o[ the debt; • Setting the final maturity of the dc[x equal 1u or less than 1hc useful life of the usaot(u) being financed; • Use of zero ooupmn bonds, capital appreciation bonds, deep discount bonds or prerniurn bonds; Page 9 of 27 • Principal arid interest payment mhuo1urc (e.g., love} debt service payments, level principal puyrnoo1a, bullet and term maturities, interest only, or other pmyrneu1 structures); • Redemption provisions (c.g.. mandatory arid optional ou\\ features); • Use o[ credit cnbnnscrnuui(c.g.. bond insurance); • Use o[ senior lien and junior lien obligations; • Capitalized interest; and • Other factors as docnocd appropriate in consultation with the City's financial advisor arid bond counsel. A. (}onoru| Short-term obligations rnoy be issued to Finance projects or portions o[projects for which the City ultimately intends to issue long-term debt (i.e., it will be oucd^ when appropriate, to provide interim financing which will eventually [e refunded with the proceeds of long-term obligations). Shod-k:nn obligations may be bucked with a tax and/or revenue p|uJgo or u pledge of other available resources. lo1cdcn financing may bc appropriate when long-term interest rates are [brcoaotcd to decline in the future. In addition, uooucfomou of short-term obligations may be obtained more quickly than long-term obligations and, thus, may be used until long-term financing iusecured. B. [\/nuneroio\ Paper Due to the Financing costs umanciaiud with the ouuckc1ing and placcnoco1 o[ commercial paper, programs of less than $25 noi||ioo may not be oom1 effective. Should the opportunity to pudloiputc in ocoounuorcia| paper issuance pool present itself ucif the establishment o[opoogron\ becomes cost effective, the advantages arid disadvantages mba|| be evaluated by the Director of' Finance. The use of commercial paper p,ogrunn requires approval by the City Council, C'. Anticipation Notes Anticipation notes dm not require giving o notice of intent. Anticipation notes may be accorcd and repaid by a pledge of revenue, taxes, or the proceeds ofu future debt issue and have u rousinnurn nnu1ud\y of seven (7) years. Anticipation notes may bcauthorized byun ordinance adopted by the City Council. Anticipation notes may be used to finance projects or acquisitions that could also be financed using certificates of obligation arid have the following restrictions: Page lOo/27 l) Anticipation un\cs may not be used 1n repay interftmd borrowing or a borrowing that occurred up to/or more than 24-cnootbm prior tothe date of issuance, and 2) The City may not issue anticipation notes that are payable from general obligation bond pn000cdm un|com the proposition authorizing the iseuuouc o[ the general obligation bonds has already been approved by the voters. D. Line ofCredit To the extent authorized by state law and with the approval Of the City Council, the City may cokab|iab n tax-exempt \ioc of credit with m Gnaooiu| institution selected through o competitive process. Draws shall bc made on the line o[oredit when (I) the oocd for financing is so urgent that time does not permit the issuance of long-term debt, or (2) the need for financing is so snou|| that the total cost o[ issuance of long-term debt including carrying costs of debt proceeds not occdcd inurncdiato|Y is significantly higher. Draws will be nnodo on the line of credit to pay for proJects designated for |ioc of credit financing by the City Council. Borrowings under the line of' credit xbm|\ be repaid from current revenues. The Director of Finance will authorize all druvva on the |iou of credit, as authorized in the agreement approved by the City Council. Under Current aio(c law, o line of credit cannot extend past the end o[dhc then current fiscal year. E. Capital Leasing Capital leasing is an option lor the acquisition of a piece or package ofequipment. Leasing shall not be considered when funds are on hand for the acquisition unless the interest c«pcnac associated with the |uoec is |caa than the io1occsi that can be cucnod by investing the funds on hood or when other factors ouch as budget constraints or vendor responsiveness override the economic consideration. Whenever |euac is arranged with u private sector entity, o1ox-cxconp1 rate shall be sought. Whenever u |cuuu is arranged with a government or other tax-exempt entity, the City shall obtain an explicitly defined taxable ro1c mo that the |eumc will not bc counted in the City's total annual borrowings subject to arbitrage rebate. The lease agreement shall permit the City tooOmmur the lease atnnmore than reasonable Cost Should the City decide to do so. /\ |cuoc which maybecalled at will is preferable to one which may merely be accelerated. Tbc City shall seek at least three (3) competitive proposals For any |ssc financing, except dbomc related to technology equipment. Due to the proprietary nature of most Lcubum|Vgy equiproenL lcoao financing is typically only offlercd through the technology's vendor. The net present value of competitive bids shall bc compared, taking into account whether payments are in advance or in arrears. and how frcgucu1ly payments are made. The purchase price oF equipment shall be competitively bid, as required by state \u"/, as well as the financing costs. Page 11 of 27 The Director of Finance will ensure any leasing agreement is compared to other financing options to ensure the lease is cost beneficial. Alternate Financing options will include revenue bonds, contractual obligations, certificates of obligation, tax notes, and lines of credit. The Director of Finance will be the person responsible for evaluating this financing source, and will make a recommendation to the City Council for approval. F. Interfund Loans As allowed by the City, the Director of Finance will review opportunities whereby interfund loans may be utilized to meet short-term financing needs. Interfund loans will only be utilized if " economically beneficial to the lending fund and only if the rate of return is comparable or higher than the rate of return the lending fund would otherwise receive by keeping funds in the City's investment pool. Any interfund loan must be approved by the City Council. XL LONG -TERM DEBT A. General Proceeds from the sale of long-term obligations will not be used f(.)r operating purposes, and the final maturity of the obligations will not exceed the estimated useful life of the asset(s) Financed. Voter approved general obligation bonds will strive to have a Final maturity of twenty (20) years or less. Revenue bonds and certificates of obligation will strive to have a final maturity ofthirty (30) years or less. If deemed appropriate, staff may present to the City Council extraordinary circumstances in which longer final maturities may be necessary but never in excess of the useful life of an individual asset. A level debt set-vice structure will be used unless operational matters and marketing considerations dictate otherwise. The cost of issuance of private activity bonds is usually higher than for governmental purpose bonds. Consequently, private activity bonds will be issued only when they will econornically benefit the City. The cost of taxable debt is generally higher than for tax-exempt debt. I lowever, the issuance of taxable debt may be required or may be more appropriate in some circumstances and may allow valuable flexibility in subsequent contracts with users or managers of the improvements constructed with the bond proceeds. Therefore, the City will Usually issue tax-exempt obligations but may occasionally issue taxable obligations. B. Bonds Long-term general obligation debt, including certificates ofobligation, or revenue bonds shall be issued to finance significant and desirable capital improvements. Page 12 of 27 Proceeds of general obligation debt will be used only for the purposes approved by voters in bond elections or set forth in the notices of intent for certificates of obligation or to refund previously issued gcncnu| obligation bonds, oediOca1ca of obligation or revenue bonds. All houJa shall be sold in accordance with applicable law. C. Certificates o[Obligation Certificates o[obligation may be issued to: • Finance permanent i and land acquisitions; • Finance costs associated with capital project ovcnnns; • /\oquincoguiproondvcbioloa; • Leverage grant funding; • Renovate, acquire, construct facilities and facility improvements; • Construct street. innp,Vvcnocnh; � Provide funding for master p|ous/utudicx; � Address necessary life safety needs; and e Finance revenue supported pro.j ects/a s sets if duLoonincd to be more economical than revenue bonds. T'othe extent required by state law, aresolution authorizing publication of'mnice of' intent b) issue oortifiou1coof obligation shall bc presented for the consideration of the City Council. The uoiioc of intent shall be published in o newspaper of' general circulation in the City once u vvcck for two consecutive v/neky with the first publ ication to be at least thirty-one (3 1 ) days prior to the date set lot- passage ofthe ordinance authorizing the sale o[tbccertificates. Certificates of obligation may be backed by o tax pledge under oodmiu oirounookonoomam permitted hy |uv/. They may also bcbacked hyuuornbinu1iou tax and revenue pledge aspermitted under state law. Sococ revenues are rcm1dc\cd as 10 the uses for which they may be pledged. Electric, VVuiur, and VVusicvva1cr revenues may be pledged without limit for Electric, YVyicr, and VVus1cvvutor purposes but may only bcpledged tou limit o[$l,0OO for any one series o[bonds issued for non-uti|dy system purposes. The final maturity of certificates o[ obligation will be in accordance with Section XlAO. Effective January l, 2016 and as prescribed in Section 271.047, Lxxcm) Government Code, the City Council may not authorize certificates ofobligation to pay ucontractual ob|iAu|lmn to be incurred ifabond proposition to authorize the issuance of bonds for the same purpose was submitted 10 the voters during the preceding three youcm and failed to be approved. The City (�ouuci) may authorize a certificate that it is otherwise prohibited from authorizing: l. In o case of public calamity if it is necessary to act promptly to relieve the necessity of residents mto preserve the property of the City; Page 13 of'27 2. /\ case in which it is necessary to preserve or protect the public health of1bc residents of the City; 3. /\ case of unfbrcmcco dnnnogc 10 public machinery, cquipcncn1 or other property; 4. To oonoy|y with u oiaic or federal |uv/, rule, or regulation if the City has been officially notified nfnonunnnpiiance with the law, rule, or regulation. 0. Public property Finance Contractual Obligations Public property finance contractual obligations may be issued to Douocc the acquisition of personal property. E. Revenue Bonds In addition to the policies set forth above, when cost-beneficial and when permitted under applicable state law, the City may consider the use of surety bonds, letters *[credit, or similar instruments 10 ou1is[» debt service reserve fund requirements oo outstanding and/or proposed revenue bonds. F. Combination 'Fax arid Revenue Bonds |n addition to the policies set fodh above, when cost-beneficial arid when psooiUzd under applicable state |uvv, the City may consider the use of tax bonds or combination tax and revenue bonds for refunding obligations of the Electric, YVm1cr arid YVuo1cwa1cr combined utility mysturn, arid Solid YVuotc or any other self-supporting ccvcnuc-pruduciog City enterprise. Combination tax and revenue bonds will comply with upp|icuh|c mto10 |uv/ arid are assigned the full faith arid credit of the City, thereby enhancing the credit rating otherwise obtuiucd From debt that is strictly supported by non-tax revenues (i.e., revenue hondo). G. Capital Appreciation Bonds (CABS) As prescribed by Section 1201.0245` Government Code, o ouuniulpa|iiy may not issue capital appreciation bonds that are secured by ad valorem taxes (other than as refunding bonds or for the purpose uf financing transportation pr 'ccia}uu|css: |. The bonds have uscheduled maturity date that ia not later than 20 years arter the date of' ioauunoc' , 2. The City Council has received a written estimate of the cost of the issuance as prescribed in the statute; 3. The City Council has dc1conincd in writing whether any personal or financial ro/u1ioomhipexim1ehctvvccutbonuunubmcaoftboCi1yCounoi|ondanyFiouucia\ advisor, bond uouoao|, bond underwriter orother professional associated with the bond issuance; and 4. The City Council posts prominently oil the City's vvchuitc and enters in the minutes the required information as prescribed in the statute. Page |4o[27 CA138 may not beused to purchase items more regularly considered maintenance items, including rop|accnncn1 HVAC units, upgraded plumbing or similar items, or transportation-related items, including buses, unless the i1cnl has all expected useful life that exceeds the CABS maturity date. The total amount o[CABS may not exceed 25 percent ofthe City's total outsiunding bonded indebtedness at tile time of the issuance, including the amount of principal arid interest to be paid nn tile ou1mtamding bonds until maturity. The City may not extend the maturity date of an issued capital appreciation bond, including through the iaauuucu of refunding bonds that extend the maturity date, except in tile event the extension of' the maturity date will decrease the total amount o[pr '*ctodprincipa|ond interest to maturity. XIL CREDIT ENHANCEMENTS Credit cnhm/cconco1m are rncohaniornx which guarantee principal and io1crcsi payrnouts. They include bond insurance, lines nfcredit, surety bonds and letters o[ocodii. /\ on:dd cnhunucnnoni, vvbi}c costly, is intended 10 bring u lower io|croo\ oUo on doFo and 4 higher rating fronn the rating agencies, thus lowering overall borrowing costs. The City's Onuuoia| advisor will advise the City vvbothcr or riot a credit enhancement is cost effective under the oincunlstunoca and v/hu1 type of credit onhu000nucnL ifuoy,ohou|d be purchased. |nu negotiated sale, bids will be taken during the period prior to thm pricing of' the debL In uoornpcdtivc sale, bond insurance may be provided by the purchaser if the purchaser finds it cna1 Other credit enhancements may arise in the future, which may bubeneficial. The City's financial advisor will present these options for consideration. X111. REFUNDING AND RESTRUCT0RING OPTIONS In the case of' advance refundings, the City shall consider refunding debt whene cran onu\yoia indicates the potential for present value savings of' at |caai 3% ofthe pururnnun1 being refunded. In the coxc of current rc[uodiugs,the City shall consider refunding debt whenever all analysis indicates the potential for present value savings above the costs of refunding the outstanding debt. Refunding for savings Should not extend the final noak/rdy of the original obligations, unless specifically approved by the City (�ouoci|. Refunding of contractual obligations not currently nocon]cd as an outstanding debt obligation oF1hc City (i.e., TMP/\ debt) may be restructured to extend the final maturity if specifically approved by the City Council. XIV. REIMBURSEMENT ORDINANCES Tbc Director (f Finance will review and approve all reimbursement ordinances from City dcnorUncn1m, loo|udlug enterprise fund Jcnm1mcuts, bc6occ forwarding to the CitY Council for consideration. Initially, funding for the capital expenditures will be provided Page 15 of` 27 with existing bond proceeds or unreserved Fund balance. Once the debt is sold, these expenditures will be reimburse(] from the debt proceeds. Reimbursement ordinances must be adopted within sixty (60) days of the date the original expenditures were paid. Debt obligations must be issued and the reimbursement allocation made not later than eighteen (18) months after the later of (1) the date the original expenditures were paid, or (2) the date the project is placed in service or abandoned, but in no event more than three (3) years after the original expenditures were paid. XV. USE OF ANTICIPATED BOND PROCEEDS The use of anticipated bond proceeds will be limited to preliminary (soft) costs, which may include engineering fees, architect fees, feasibility studies, etc unless a reimbursement ordinance has been adopted pursuant to Section XIV. 'File Director of Finance may provide additional parameters regarding qualifying uses and will review and approve all requests for the use of anticipated bond proceeds. Departments may not use anticipated bond proceeds for preliminary costs earlier than 60 days from the date the City Council adopts an ordinance authorizing the sale of said bonds unless a reimbursement ordinance has been adopted pursuant to Section XIV. In no event will the use of' anticipated bond proceeds exceed the unreserved ftnid equity of the combined Utility System for Electric, Water or Wastewater requests or the operating fund of any other department making a request. XVL METHOD OF SALE A. Competitive Sale When feasible and economical, obligations shall be issued by competitive rather than negotiated sale. Favorable conditions for a competitive method of sale include the following: • The market is I'arniliar with the issuer, and the issuer is a stable and regular borrower ill the public market; • An active secondary market with a broad investor base for the iSSLIer"s debt; • The issue is neither too large to be easily absorbed by the market nor too small to attract investors Without a concerted sales effort; • The issue is not viewed by the market as carrying overly complex features or requiring explanation as to the debt's soundness; and • Interest rates are relatively stable, market demand is strong, and the market is able to absorb a reasonable amount of buying or selling at reasonable price changes. . .... ...... Page 16 of*27 1. Bidding Parameters The notice of sale will be carefully constructed so as to ensure the best possible bid for the City, in light of existing market conditions and other prevailing factors. Parameters to be examined may include: • Limits between lowest and highest Coupons; • Coupon requirements relative to the yield Curve; • Method of underwriter compensation, discount or premium coupons; • Use of true interest cost (TIC); • Use of bond insurance; • Serial debt versus term debt with mandatory sinking fund redemptions; and • Call provisions B. Negotiated Sale Bonds issued for the purpose of refunding and/or restructuring outstanding debt may appropriately be sold on a negotiated basis when maximum flexibility is required in order for the City to respond to day-to-day nuances in the marketplace and other complications peculiar to the issuance of refunding debt. Whenever the option exists to sell an issue on a negotiated basis, an analysis of' the options shall be performed to aid in the decision-making process. The City will present the reasons and will actively participate in the selection of the underwriter or direct purchaser. In negotiated sales, the City attempts to involve qualified and experienced firms which Consistently Submit financing plans to the City and actively participate in the City's competitive sales. The criteria used to select an underwriter in a negotiated sale may include the following: • Overall experience; • Participation in the City's past competitive sales; • Marketing philosophy; • Capability; • PreviOLIs experience as managing or co-managing underwriter; • Financial statement and financing plans that are relevant and appropriate; • Public finance team and resources-, and • Breakdown of underwriter's discount, which includes management fee, underwriting fee, average takedown and other administrative expenses. . . . . . ............. __.' ...... Page 17 of' 27 C. Private Placement When cost-beneficial, the City may privately place its debt. Since underwriting and rating agency expenses may be avoided, it may result in a lower cost of borrowing. Private placement is sometimes all option for small issues. "I'lle opportunity may be identified by the financial advisor. XV1.L INVESTMENT OF BOND PROCEEDS A. Strategy The City Should actively monitor its investment practices to ensure maxiinurn returns on its invested bond funds while complying with federal arbitrage guidelines. Specific investment strategies For the investment of bond proceeds are provided in the City's policy No. 403.06 ("Investment Policy"). B. Arbitrage Compliance With respect to the investment and expenditure of the proceeds of tax-exempt obligations, the Director of 1"inance will: • Instruct tile appropriate person or persons that the construction, renovation or acquisition of the facilities financed with tax-exempt obligations must proceed with due diligence and that binding contracts for the expenditure of at least 5% of the proceeds of the tax-exempt obligations must be entered into within six months of the date of delivery of such obligations ("Issue Date"); • Monitor that at least 85% of the proceeds of tax-exempt obligations to be used for the construction, renovation or acquisition of any facilities are expended within three years of the Issue Date; • Monitor investment of proceeds of the tax-exempt obligations and restrict the yield of tile investments to the yield on the tax-exempt obligations after three years of'the Issue Date; • Monitor all amounts deposited into a sinking fund or funds, (e.g.. tile Interest and Sinking I"Und established under each ordinance authorizing the issuance of the tax-exempt obligations), to assure that the maxil-nUrn amount invested at a yield higher than the yield on the obligations does not exceed an amount equal to the debt service on tile obligations in the succeeding 12 month period Plus a carryover amount equal to one- twelfth of the principal and interest payable on the obligations for the immediately preceding 12 -month period; • Assure that the maximum amount of any debt service reserve fund for tax- exempt obligations invested at a yield higher than the yield on the related tax-exempt obligations will not exceed the lesser of (1) 10% of the principal amount of the related tax-exempt obligations, (2) 125% of the average annual debt service on the related tax-exempt obligations measured as of the Issue Date for such obligations, or (3) 100% of the Page 18oyZ7 maximum annual debt service on the related tax-exempt obligations as of the Issue Date for such obligations; • Cnauro that no more than 5011/oo[the proceeds of' tax-exempt obligations are invested in an investment with u guaranteed yield for four youzm or nnoru' ' • Monitor the oodona n[Lbc escrow agent hu the extent an escrow is funded with proceeds of1au-cxenupt obligations) 1m ensure compliance with tbo ypp|ioub|c provisions of the escrow agreement, including with rcupco| 10 reinvestment mfcash balances; • Maintain any uffiuiu| action o[ the City (Such as u reimbursement ordinance) stating its iutcoi to reimburse with the pnncocdm nftox-cxcnupt obligations any amount expended prior to the Issue Date for (hc acquisition, renovation or construction of the Coui|itioa Gounocd with tbo obligations; • £nounr that the applicable information return (e.g., lniuonul Revenue Service (^^|KS`) Porno 8038-(}, 8038-G[,, or any successor [bcma) is 1inoc|y filed with the IRS; and • Assure that, uu|cma cxocp1cd hrorn rchuk: and yield restriction under occdou 148(H of the United S1u1co {otcruu| f<cvnnuc Code of 1906, as amended (tile "Code"), excess investment earnings are computed and paid to the U.S. government ui Such bouc and io Such manner am directed by the |N0 /i> at least every O*o years after the |umuc Date and (ii) within 30 days after the date the tax-exempt obligations are retired. The City will [b||ovv o policy of full 0000pilanoc with all arbitrage rcha10 requirements of the Code and IRS regulations, and will our[hnn (internally o,b« contract consultants) arbitrage rebate calculations for each issue nubJect to rebate onuo annual basis. All necessary rebates will be filed and paid when due. C. Arbitrage Liability Management The Director of Bouuoc will rnuiniun a aymbzo for tracking arbitrage n:buto liability and ensuring that required oo]cu|a\inna are pccfoonoj on u 1innck basis. These ox|ou|a1iono will be performed annually and as needed. Due to the complexity ofthe arbitrage calculations and regulations, and to the severity of the pcnu|Ucsfbrnmnconnp|iance,dbcudviceofbondcouunc\uodquu\i6edexper\mvvi|| hc pursued on an ongoing basis. |fdoerncdnuocmaary, funds should bc set aside io anticipation ofpotential rcboLc liabilities. Page 19 of 27 XVKULREsT0ICTIONS ON PRIVATE BUSINESS USE With respect 10 the use of the facilities 5nunccd or rufiuuoccd with the pnouccdm of" tax- exempt • |)cvc|np procedures or u bucking oyaKxn to kkxhf« all property financed with tax-exempt obligations; • K4undnr the do1c on which the facilities are substantially uoolp|eiC and available kzhc used for the purpose intended; • Monitor whether, at any time the iox-cxcnupi obligations are ou1standing, ally person, other than the City, the crnp\oyocm of the City, the agents of(bc City or nucrnhcru of the general public has any contractual right (ouch as a |umso, purchase, management oc other service agrcorooud with respect to any portion o[ the 6suUidea' • Monitor vvbcihcc at any time the tax-exempt obligations are outatunding, ally person, other than the City, Ubc cnup|uyccy of the City, the ugcuio of tile City or rocnobccu of the general public has a right to use the Output ofthe [uci|hicu (e.g., water, gas, electricity); • Do1onninu vvhotbcc, at any time the tax-exempt obligations are outa1unding, any person, othu, than the City, has a nanoing right for the facilities or ally other contractual right granting all intangible benefit; • Determine whether, at any tioue the 1us-cxurnpt obligations are outstanding, the facilities are sold or otherwise disposed o[ Prior to onI ea|c of property ov/ucd by the City (real orperyoou|),the Director of Finance Must conf irnn whether such property was financed with tax-exempt obligations, and if so, determine vvbe1bcr the proposed disposition uf the property could impact the tax-exempt oiotusofibc issue oftax-exempt obligations that financed the acquisition Of Such property; • 0c[hcc entering into any private buai000u use arrangement that involves the use of' the [uci)i1icu Financed with tax-exempt obligations, the Director of[inancc must obtain o description of the proposed private business use arrungcnunut and do\cnninc whether such onuugcnncot, ifpu1 into effect, will be consistent with the restrictions nn private business use of the facilities. In connection with the uvu|uu1ioo of any proposed private bunlncmn use arrangement, tbu Director of Finance Should consult with bond counsel to discuss p/be1hcr such arrangement, if put into effect, will be 000siutcu1 with the restrictions on private business use of the facility, and, if not, p/bcthcc any remedial action permitted under f'ederu| guidelines may be taken as a means oferiabling such private business use without adversely uOeotiog the tax-exempt status of' the tax-exempt obligations which financed such facilities; and • 'Fake ouch action as is occuooury 1n renncdia10 any failure 10 maintain compliance with the covenants contained in the ordinances authorizing tax-exempt obligations related to the public use ofthc facilities Iounced hy Such obligations. The City shall establish an appropriate record keeping system and designate the appropriate City personnel for purposes nf compliance with this section, and as stated in 8cu1ioo }<(}{. Page 20 of 27 XIX. RECORD RETENTION All proceeds of debt obligations will be separately accounted for in the City's financial accounting systern to facilitate arbitrage tracking and reporting. The Director of Finance shall include in the CAF the City's arbitrage rebate liability in accordance with accounting standards established by GASB. With respect to each issue of' tax-exempt obligations issued by the City, the Director of Finance will maintain or cause to be maintained all records relating to the investment and expenditure of" the proceeds of such issue and the use of the facilities financed or refinanced thereby for a period ending six years after the complete extinguishment of such issue of tax-exempt obligations. If any portion of an issue of tax-exempt obligations is refunded with the proceeds of another series of tax-exempt obligations, Such records shall be maintained until the six years after the refunding obligations are completely extinguished. Such records may be maintained in paper or electronic format. XX. TRAINING The Director of` Finance shall receive appropriate training regarding the City's accounting system, contract intake system, facilities management and other systems necessary to track the investment and expenditure of the proceeds and the use of the facilities Financed with the proceeds of* debt obligations. The foregoing notwithstanding, the Director of Finance is authorized and instructed to retain such experienced advisors, agents and consultants as may be necessary to carry out the policies and procedures described in Sections XVII, XVIII and XIX. Page 21 of 27 GLOSSARY /1/nur/izwtiuo — The planned reduction of debt obligation uouon1iug 10 o stated maturity or redemption schedule. Arbitrage — The gain vvbio6 may be obtained by borrowing funds at a lower (often tax-exempt) ru1c and investing the prnucoda at higher (often taxable) ryica. The ability to cuco arbitrage by issuing tax-exempt securities has been severely cudai|cd by the Tax pLuboon Act of' |986,aoucocodcd. Average L�� — 'file average length of time debt is expected to be outstanding. Generally, alevel debt service mbuuioro will limit the average life of bond issue (i.e., o 20 year Dna| maturity will have an approximate average |ifle of' |2 years, and a 30 year final maturity will have nu approximate average life of|8ycarm). Basis 1"V/m/— One one-hundredth of one percent (D.O00|). BBI—Dood Buyer Index. Comparison of current rates for various noo1uridce. Bid Form —The document used by all underwriter 10 submit his bid uia competitive sale. Bond — A security that represents an obligation to pay a specified arnount of money on a specific du10 in the future, typically with periodic interest payments. Bond Counsel — /\o attorney (or firm of attorneys) retained by the issuer 1n give a legal opinion concerning the validity o[the securities. Tbc bond Counsel's opinion usually addresses the auhicu1oftax exemption. Bond couusc| may prepare, or review and advise the issuer regarding authorizing resolutions or ondionucos, trust indentures, official stutcrocn(a, validation proceedings and litigation. Bond Insurance — 0nod insurance is o type of credit enhancement v/hco:by a nnonn|iou insurance company iodcnoniGca an investor against u default by the issuer to pay principal and luico:a1 in-full and on-time. 0noc assigned, the nounicipa| bond insurance policy generally is irrevocable. The insurance company occcivcm all Up-front I'cc, or premium, when the policy ioissued. Book-En/g'-Ox/o — Bonds that are issued in fo||Y-rcgisLepcd fbnn but Without oectlOcuica of o"/ocrmhip. Tbc ownership io1crcm1ofcuuh actual purchaser is recorded on computer. Bond Yeu/m — $1,000 of debt ou1a1undiog for one year used to uvouputc average |l/e and net interest cost. CATW— Comprehensive Annual Financial Report. C111 —Capital |nnpzovmnocnt Program. Ca// Option — The right to rcducnu a bond prior to its a(u1cd rna1uriiy, oiibcr on u given date or continuously. Tllucu|| option is also referred to uo the optional redemption provision. Page 22 of'27 Capital Appreciation Bond .-- & bond without current interest omu[mus that is typically sold at a substantial discount from por lovosk/ry are provided with a cck/rn based upon the accretion and compounding of interest on the hnnJ through maturity. As dcGocd by Scodun 1201.0245, Government Code, rnemoa u bond that accrues and compounds io1oroo1 f}orn its dn1c of delivery, the iutcrca1 on which by its terms is payable only upon maturity or prior redemption. Capital Lease — The acquisition of capital amaCi over time rather than cnorc|y paying a rcotn| fee fb, 1uonpocory use. /\ |000e-purohumc ugrccnucnL in which provision is nnude for transfer oil' ownership oftbc property for u nominal price at the scheduled 1crooinoiioo of the |cuao, im referred \noyacapital |cooc. Cert/ficates qf0bligation — A type ofdebt authorized to be issued pursuant to the (.,erti f icates of' Obligation Act *f|97| (Subchapter Cof Chapter 27|, Texas Government Codo>. Closing — When bonds are exchanged for money (a/k/a delivery or settlement). Comvxvcrc/u/ Paper (Tax-Exempt) — By convention, short-term, unsecured, tax-exempt promissory notes issued in either registered or bearer form with ustuLed maturity of27O days orless. K]/eqrufit/vc Sm6c — /\ sale o[uccuri\ica in which the securities are mvvurJcd to the bidder who offers to purchase the issue ut the best price o[ lowest cost. KI/upoo Rotu — Thc io1urcm1 ro1c on specific noa1udLico of bond issue. VVbilc the Lonn '^oouPoo" derives frorn the days when virtually all municipal bonds were in bearer form with cnup000 attached, the term is yii|\ frequently used to refer (othe interest rate oo different maturities nfbonds in registered form. Cover Bid —Thc runner-up inu competitive bond sale. Credit Enhancements — C,edi1 cohanocrnco(a are nuccbmoimnos which guarantee principal and interest payments. They include bond insurance and u line or letter of' credit. /\ credit enhancement, while costly, will Usually bring u lower interest ro|c oil debt and ahigbcr rating from the rating agencies, thus lowering overall costs. Cost effectiveness ofcrudit enhancement will bc evaluated for each debt issue. CUSIP Numher — The term CU8lPisun acronym for the Committee oo Uniform Securities |dco1iOuu1ion Procedures. An identification number is assigned to each maturity of' an issue, and is usually printed on the face n[each individual certificate o[the issue. The CDSlP ourohcrs are intended 10 bc|p CyoUi\u1c the identification and dcoruoue of nnuoicipu| securities. As the municipal o`orkc\ has evolved, and the new derivative products arc devised, the ioupmduoocofdlc CDS|Psys1ern for identification purposes has increased. Dated Date -- A defined date at which interest begins to accrue fi-orn P,ne 23 of 27 Debt Burden — The ratio of outstanding tax-supported debt to the market value of property within a jurisdiction. The overall debt burden includes a jurisdiction's proportionate share of overlapping debt as well as the municipality's direct net debt. Debt Limitation -- The maximum amount oil' debt that is legally permitted by a jurisdiction's charter, Constitution, or statutory requirements. Debt Obligation — As defined by Section 1201.002, Government Code, means an issued public security which is all instrument, including a bond, certificate, note, or other type of obligation authorized to be issued by all issuer under a statute, a municipal horne-rule charter, or the constitution of the state. Debt Service — The amount necessary to pay principal and interest requirements oil outstanding bonds for a given year or series of years. Debt Service Reserve Fund — "I'lle fund into which moneys are placed which may be used to pay debt service if pledged revenues are insufficient to satisfy the debt service requirements. The debt service reserve fund may be entirely funded with bond proceeds, or it may only be partly funded at the time of the issuance and allowed to reach its full funding requirement over time, due to the accumulation of pledged revenues. If the debt service reserve fund is used in whole or part to pay debt service, the issuer Usually is required to replenish the funds from the first available funds or revenues. A typical reserve requirement might be the maxinlUm aggregate annual debt service requirement for any year remaining until the bonds reach maturity. The size of the reserve fund, and the manner in which it is invested, may be subject to arbitrage regulations. Default — The failure to pay principal or interest in full or on time. An actual default should be distinguished from technical default. The latter refers to a failure by an issuer to abide by certain covenants but does not necessarily result in a failure to pay principle or interest when due. De .1easance — Providing for payment of principal of premium, if' any, and interest oil debt through the first call date or scheduled principal maturity in accordance with the terms and requirements of the instrument Pursuant to which the debt was issued. A legal defeasance usually involves establishing an irrevocable escrow funded with only cash and U.S. government obligations. Depositot:v Trust Companj, (DTC) — A limited purpose trust company organized under the New York f3anking Law. UFC facilitates the settlement of transactions in municipal securities. Downgrade — A reduction in credit rating. Enterprise Activity — A revenue - generating project or business. The project often provides funds necessary to pay debt service on securities issued to finance the facility. The debts of Such projects are self-liquidating when the projects earn sufficient monies to cover all debt service and other requirements imposed Linder the bond contract. Common examples include water and sewer treatment facilities and utility facilities. Page 24 of 27 Electronic Municipal Market Access — Effective July l,209, tile SBCimplemented amendments to SEC Ku|c 15c2-12 which approved the establishment by tbc K4SRf3 of BMK4&, the ao|c successor to the no1ioou||y recognized rnuoioipu| ueuuddcu iofbrcoa1ion repositories with respect to filings nnudc in connection with diaC|omurc undertakings. Access to filings are made frec ofcharge to the general public by tile MSRB. Floo/ O/ficio/S/ofe*/eo/ (FOS) —/\ document published by the issuer which generally discloses nuo1criu| iofbnmudoo on uncvv issue ofmunicipal securities including the purposes of(hc issue, bov/ the yccurl1iou will be repaid, and the Guuociy|, economic and social choruc1criaiicoo[thu issuing government. Investors may use this information to uvu|uu1c the credit quality o[ the securities. FYun/ nfFuadw—Thc order in which pledged revenues nuuu( be disbursed, as mci [bdb in the trust indun1uroorbond resolution. In most instances, the pledged revenues are deposited into a general collection account or revenue fund as they are received and subsequently transferred into the other accounts established by the bond resolution or trust indenture. The other accounts provide for payment ofthe cnu1a of debt service, debt service reserve deposits, operation and maintenance costs, rcocvvu| and [ep|uoeoocn1, and other ruqulrcnuco1s. G�43B— Government Accounting Standards Board. GFOA — Government Finance Officers Association. Gex/cro/ Obligation Debt — []cbL that is secured by u p|uJgu ofdhc m] vu|urorn taxing power of the issuer. Also known uua full faith and credit obligation. Good Faith Deposit —/\aunuofcuuncy given by the Underwriter io assure his bid. Institutional B4ycr—Banks, financial institutions, insurance companies, and bond funds. Is«yuaco Costs — Thc costs incurred by the bond issuer during the planning and au|c of securities. These costs include but are not limited to financial advisory and bond Counsel fees, printing and advertising costs, rating agencies fees, and other expenses incurred in the marketing nfyn issue. Junior Lien Bonds — Bonds which have a subordinate clairn against pledged revenues. Letter of Credit — Bank credit facility whereby a bank will honor the payment of ail issuer's debt, in the event that an issuer is uuob|c to do so, thereby providing an uddiiinou| uourcc of acuud1y for bondholders for a predetermined period of' time. A letter of' credit often is referred iooaao L/C ornnLDC. Letter ofCrcdi{ can bc issued oou^^stund-by" or"direct puy^` basis. Level Debt Service -- When annual payments are substantially the same each year. Page 25 of 27 Line of Credit — Batik credit facility wherein the batik agrees tm lend up1ma maximum amount of funds at sorne date in the future in return for ucommitment fee. Long-Term Debt — Will not cxoccd the es(ionuisd useful life of the asset(s) Ouuucod. Voter approved general obligation bonds will strive 1n have a final maturity of twenty (28) ycmcm or |cuo. Revenue bonds and ucdiDcaicm of obligation will strive to have u final maturity o[ thirty (30) years o,less. Manager — The rncu�bcr (or nocmhocs) of all underwriting syndicate charged with the primary responsibility for conducting tile affairs of the syndicate. The managers take the |nrguo( underwriting commitment. Lead Manaaer or Senior Manage The underwriter serving as bcud of tile m>mJkx}&:. The lead ozuougec generally huod|cn negotiations in a negotiated underwriting o[y new issue Of Municipal securities or directs the process by which a bid is determined for uconopc1iiivc underwriting. The lead manager also is charged with allocating Securities among the nucnobcrn of Uhe syndicate in uoomrdoocc with the tcnna of ihc syndicate agreement oc agreement among underwriters. Any member of the management group. Municipal Advismy CommrJ o/Teras (MAC) — Tlie designated State of Texas Information Depository as approved by the SCC with respect to filings u)mdu in connection with undertakings. Municipal Securities Rulemaking Board —/\ self-regulating organization established on September 5, 1975 upon the appointment nfa 15-rucm/bcr0ourd by the Securities and Exchange /\gccsmmuL. The MSRl . comprised of representatives frono investment banking Gnom, dcm|or bunk copo:ycntu1ivmo` and public representatives, is entrusted with the responsibility ofvvri(inA rules of conduct for the municipal securities rnockcL New Board nocoobera are oc|eotcd by the MSR0 pursuant 10 the method set Codb in Board rules. Negotiated Sale — Amaleofsecuritiesiowhich the terms of sale are determined through negotiation between the issuer and Ulc purchaser, typically an underwriter, vvbbou1 competitive bidding. Net Interest Cost — The u*crogo interest ouai of bond issue calculated on the basis of simple Agent — An agent of tile issuer with responsibility for timely payment of principal and interest to bond holders. Page 36of27 Preliminary Qf Statement (POS) — The PQS is o preliminary version of the official statement which is used by an issuer or underwriters to describe the proposed issue of municipal securities prior to the dcLconioo1iou of the interest rate(s) and offering priooe(s). The preliminary official s|u1concni, also uu||ud a ^^ncd herring", often is examined by potential purchasers prior to making an investment decision, Present Value— The value of future unnnuot or oineanl of revenues or cxncnJhurca in ounccd Private Business Use — Private business use occurs v�hcocvcr tax-exempt obligation proceeds are used to benefit any entity other than a state or local government, including non-profit corporations and the federal government. in simple tconu, an issue of tax-exempt obligations may lose their tax-exempt status if(i) more than 10% ofthe proceeds of the obligations are to be used for any private business use and the payment of the principal of or the iotc,csL un more than l0Y6of the proceeds of the obligations is secured by or payable /ionn property used for oprivate business use or (ii) the amount ofthe prncccJo of the obligations used to make loans to borrowers other than state and local governments exceeds the lesser of5Y6of the proceeds or $5 million. Re/audinp— An advance reftxnding is u refunding that occurs more than 90 J»vx before the call date of the refunded bonds, and a current refunding ioa refunding that occurs g0 days mr lcgo before the call do1c /\ refunding is a process of selling a new issue of acourbioo to obtain funds oucdcd to retire existing securities. Debt refunding is done to extend maturity and/or to reduce debt service cost. Retail Buyer —Individual investors. Revenue Bond — &bmdwhichimpayabbfromuxpecificmorcenfrevomcmd to which the Gu|| faith and credit of an issuer with taxing power is not pledged. Revenue bonds are payable from identified sources ofrevenue, and do not permit the bondholders to compel m jurisdiction to pay dcLx service from any other source. Pledged revenues often are derived from the operation of an co&crpcinc activity. Generally, no voter approval is required prior to iaouuuoo of" such obligations. SEC— ScouriiieaandBxchuogcCoronoimsiou. SID — State Information Depository. Secondary Market — The cuurko1 in which bonds are sold uhtr their initial mu|* in the new issue nnurkcL Senior Lien Bonds -- Bonds having a prior or First clairn on pledged revenues. Serial Bonds — /\ bond issue in which the principal is repaid in periodic installments over the issue's life. Page 27 of 27 Short -Term Debt — May be issued to finance projJects or portions of pro.jects [br which the City Ultimately intends to issue long-term debt (i.e., it will be used, when appropriate, 10 provide interim financing which will eventually be refunded with pn`cnoda of long-term obligations). Short-term obligations may bc backed with o tax and/or revenue pledge ora pledge of other available resources. Split ratings —DiOercnt rating levels from different rating agencies. Surety Bond — A bond guaranteeing performance of a contract or obligation. Term Bonds — Tonn bonds usually refer 10 u particularly large maturity of bond issue that is created by aggregating o xcdcs of maturities. /\ provision is often nnudo for the mandatory redemption ofspecified amounts ofprincipal during several years prior tothe stated maturity, which effectively ainuu|atcaserial bonds. Tiac Interest Cox/ /TIQ — An expression of the average interest cost in present value icrnon. The true interest 000\ is u more accurate rocaaurornoni of the bond issue's effective interest cost and should be used to ascertain the best bid in uoornpcthivu sale. Vmr/u6/e Rate Bond — /\ bond on v/hiub the interest ca1c is reset ycriodiooUy, usually on |cus nftou than semi-annually. Thc interest rm10 is reset either by nocaos o[ un auction or through ail index. Upgrade — An increase in credit rating. City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com DENT' IN File #: ID 15 -1227, Version: 1 DEPARTMENT: ACM: Date: Finance Bryan Langley December 1, 2015 Legislation Text Agenda Information Sheet SUBJECT Consider adoption of an ordinance authorizing the City Manager to execute an agreement between the City of Denton and Music Theater of Denton (PY2016) for the payment and use of hotel tax revenue; and providing an effective date. ($5,250 - Hotel Occupancy Tax Committee recommends approval 3 -0) BACKGROUND This organization is recommended to receive funding from the Hotel Occupancy Tax funds. This contract is for a thirteen month term beginning January 1, 2016 through midnight January 31, 2017. Allocations are dependent upon requests for funding, as well as availability of revenues. PRIOR ACTION/REVIEW (Council, Boards, Commissions) The Hotel Occupancy Tax Committee reviewed all budget applications and recommended allocations to the City Council as part of the FY 2015 -2016 budget development process. FISCAL INFORMATION The Hotel Occupancy Tax allocation for this organization is $5,250 for FY 2015 -2016 and has been included in the Annual Program of Services. EXHIBITS 1. Ordinance Respectfully submitted: Chuck Springer, 349 -8260 Director of Finance City of Denton Page 1 of 1 Printed on 11/25/2015 \ \codad \departments \legal \our documents \ordinances \15 \hot funds py16 \music theatre ord.doc Exhibit 1 ORDINANCE NO. AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND MUSIC THEATRE OF DENTON FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE; AND PROVIDING AN EFFECTIVE DATE. THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Manager, or his designee, is hereby authorized to execute an agreement between the City of Denton and Music Theatre of Denton for the payment and use of hotel tax revenue, under the terms and conditions contained in the agreement, a copy of which is attached hereto and made a part hereof. SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2015. CHRIS WATTS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY IM APPROVED AS TO LEGAL FORM: AGREEMENT BETWEEN THE CITY OF DENTON AND MUSIC THEATRE OF DENTON (PY2016) PROVIDING FOR THE PAYMENT AND USE OF HOTEL TAX REVENUE THIS AGREEMENT made between the City of Denton, Texas, a municipal corporation (the "CITY "), and the Music Theatre of Denton, a legal entity incorporated under the laws of the State of Texas (the "THEATRE "): WHEREAS, TEX. TAX CODE §351.002 authorizes CITY to levy by ordinance a municipal hotel occupancy tax ( "hotel tax ") not exceeding seven percent (7 %) of the consideration paid by a hotel occupant; and WHEREAS, by ordinance, CITY has provided for the assessment and collection of a municipal hotel occupancy tax in the City of Denton of seven percent (7 %); and WHEREAS, TEX. TAX CODE §351.101(a) authorizes CITY to use revenue from its municipal hotel occupancy tax to promote tourism and the convention and hotel industry by advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; and WHEREAS, THEATRE is well equipped to perform those activities; and WHEREAS, TEX. TAX CODE §351.101(c) authorizes CITY to delegate by contract with THEATRE, as an independent entity, the management and supervision of programs and activities of the type described hereinabove funded with revenue from the municipal hotel occupancy tax; NOW, THEREFORE, in consideration of the performance of the mutual covenants and promises contained herein, CITY and THEATRE agree and contract as follows: I. HOTEL TAX REVENUE PAYMENT 1.1 Consideration. For and in consideration of the activities to be performed by THEATRE under this Agreement, CITY agrees to pay to THEATRE a portion of the hotel tax revenue collected by CITY at the rates and in the manner specified herein (such payments by CITY to THEATRE sometimes herein referred to as the "agreed payments" or "hotel tax funds "). 1.2 Amount of Payments. (a) As used in this Agreement, the following terms shall have the following specific meanings: (i) The term "hotel tax revenue" shall mean the gross monies collected and received by CITY as municipal hotel occupancy tax at the rate of seven percent (7 %) of the price paid for a room in a hotel, pursuant to Texas Tax Code §351.002 and City Ordinance. Hotel tax revenue will include penalty and interest related to the late payments of the tax revenue by the taxpayer. Music Theatre of Denton HOT Funding PY2016 - Page 1 (ii) The term "Collection period" will mean the collection period for CITY's fiscal year. It will include hotel tax revenue due to CITY for the relevant fiscal year and collected through the 22nd day of the month following the close of the relevant fiscal year. (iii) The term "base payment amount" shall mean a net amount of money equal to the total hotel tax revenue collected by CITY during any relevant period of time (Le., fiscal year or fiscal quarter), less: (1) attorney and auditing costs incurred during such relevant period of time for costs of collection or auditing of hotel taxpayers (attorney and auditing costs include fees paid to attorneys or agents not in the regular employ of CITY for which attorneys or agents effect compliance or collection of the hotel tax from taxpayers); and (2) court costs and other expenses incurred in litigation against, or auditing of, such taxpayers. (iv) The term "contract quarter" shall refer to any quarter of the calendar year in which this Agreement is in force. Contract quarters will end on March 31St, June 30th, September 30th, and December 31St of each contract year. (b) In return for satisfactory performance of the activities set forth in this Agreement and all attachments hereto, CITY shall pay to THEATRE an amount of money in each contract year equal to the lesser amount of Twenty -Four Hundredths percent (0.24 %) of the annual base payment amount, or the fixed contract amount of Five Thousand Two Hundred Fifty Dollars ($5,250). This amount will be paid in one lump sum after the 25th of January 2016. If CITY's Chief Financial Officer determines that hotel tax receipts to the CITY are not meeting the anticipated budget projection, CITY may reduce THEATRE's current budget at any time during the contract period. Payment is subject to refund of any unused or improperly expended funds from the prior contract period, and CITY's timely receipt of the required quarterly reports. 1.3 Dates of Payments. (a) The term "payments" shall mean payments by CITY to THEATRE of those amounts specified in ¶1.2, above, as determined by the hotel tax revenue collected. (b) Each quarterly payment shall be paid upon receipt of the required reports and after the 25th day following the last day of the contract quarter. If any quarterly financial report is not received within thirty (30) days of the end of the applicable contract quarter, the recipient may be held in breach of this Agreement. CITY may withhold the quarterly payment(s) until the appropriate reports are received and approved, which approval shall not be unreasonably withheld. 1.4 Other limitations regarding consideration. (a) The funding of this project in no way commits CITY to future funding of this program beyond the current contract period. Any future funding is solely the responsibility of THEATRE. (b) It is expressly understood that this contract in no way obligates the General Fund or any other monies or credits of CITY. Music Theatre of Denton HOT Funding PY2016 - Page 2 (c) CITY may withhold further allocations if CITY determines that THEATRE's expenditures deviate materially from their approved budget. II. USE OF HOTEL TAX REVENUE 2.1 Use of Funds. For and in consideration of the payment by CITY to THEATRE of the agreed payments of hotel tax funds specified above, THEATRE agrees to use such hotel tax funds only for advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; as authorized by TEX. TAX CODE §351.101(a). Funds for any calendar year which are unused by midnight December 31' of that year shall be refunded to CITY within sixty (60) days. Advertising materials purchased with the hotel occupancy tax funds must be targeted to reach audiences outside the Denton city limits. These materials include, but are not limited to, signs, posters, postcards, newsletters and print advertising. 2.2 Administrative Costs. The hotel tax funds received from the CITY by the THEATRE may be spent for day -to -day operations, office supplies, salaries, travel expenses, and other administrative costs allowed by TEX. TAX CODE §351.101(e), but only if specified in THEATRE's budget (Exhibit "A ") and each are directly attributable to work on programs which promote tourism and the hotel and convention industry, and if each promotes at least one of the six statutory purposes enumerated within TEX. TAX CODE §351.101(a). 2.3 Specific Restrictions on Use of Funds. (a) That portion of total administrative costs of the THEATRE for which hotel tax funds may be used shall not exceed that portion of the THEATRE's administrative costs actually incurred in conducting the activities specified in ¶2.1 above. (b) Hotel tax funds may not be spent for travel for a person to attend an event or conduct an activity the primary purpose of which is not directly related to the promotion of local tourism and the convention and hotel industry or the performance of the person's job in an efficient and professional manner. III. RECORDKEEPING AND REPORTING REQUIREMENTS 3.1 Budget. (a) THEATRE shall prepare and submit to the City Manager of CITY an annual budget (see Exhibit "A ") as approved by the City Council for each calendar year, for all operations of THEATRE in which the hotel tax funds shall be used by THEATRE. In other words, CITY should be able to audit specifically the purpose of each individual expenditure of hotel tax funds from the separate account relating to hotel tax. CITY shall not pay to THEATRE any hotel tax revenues as set forth in Section I of this contract during any program year of this Agreement unless a budget for such respective program year has been approved in writing by the Denton City Council, authorizing the expenditure of funds. Music Theatre of Denton HOT Funding PY2016 - Page 3 (b) THEATRE acknowledges that approval of the budget (Exhibit "A ") by the Denton City Council creates a fiduciary duty in THEATRE with respect to the hotel tax funds paid by CITY to THEATRE under this Agreement. THEATRE shall expend hotel tax funds only in the manner and for the purposes specified in this Agreement, TEX. TAX CODE §351.101(a) and in the budget as approved by CITY. (c) Upon the application or consent of THEATRE, the City Manager or his designate may authorize minor amendments to the approved budget as necessary to carry out the intent of this Agreement, in a manner consistent with efficient use of public funds, and in accordance with State law. Such minor amendments may not increase the overall funding set forth in ¶1.2(b), extend the term, or otherwise alter the performance obligations of THEATRE, without approval of the City Council by ordinance. 3.2 Separate Accounts. THEATRE shall maintain any hotel tax funds paid to THEATRE by CITY in a separate account or with segregated fund accounting, such that any reasonable person can ascertain the revenue source of any given expenditure. 3.3 Financial Records. THEATRE shall maintain complete and accurate financial records of each expenditure of the hotel tax funds made by THEATRE. These funds are required to be classified as restricted funds for audited financial purposes, and may not be used for contracted services, including, but not limited to, auditing fees or attorney fees. Upon reasonable advance written request of the Denton City Council, the City Manager or designate, or any other person, THEATRE shall make such financial records available for inspection and review by the party making the request. THEATRE understands and accepts that all such financial records, and any other records relating to this Agreement shall be subject to the Texas Public Information Act, TEX. Gov'T CODE, ch. 552, as hereafter amended. 3.4 Quarterly Reports. After initial receipt of hotel tax funds, and within thirty (30) days after the end of every quarter thereafter, until all funds have been expended and reported to CITY, THEATRE shall furnish to CITY: (1) a completed financial report, (2) a list of the expenditures or copies of the invoices or receipts made with regard to hotel tax funds pursuant to TEX. TAX CODE §351.101(c), and (3) a copy of all financial records (e.g., copies of front and back cleared checks or bank statements, and other relevant documentation). Both the financial and expenditure reports will be in a form either determined or approved by the City Manager or designate. THEATRE shall respond promptly to any request from the City Manager of CITY, or designate, for additional information relating to the activities performed under this Agreement. 3.5 Notice of Meetings. THEATRE shall give the City Manager of CITY, or his designate, reasonable advance written notice of the time and place of all meetings of THEATRE's Board of Directors, as well as any other meeting of any constituency of THEATRE, at which this Agreement or any matter subject to this Agreement shall be considered. IV. TERM AND TERMINATION 4.1 Term. The term of this Agreement shall commence on January 1, 2016, and terminate at midnight on January 31, 2017. However, the program period shall commence on January 1, 2016 and terminate at midnight on December 31, 2016. Only those expenditures authorized by Chapter Music Theatre of Denton HOT Funding PY2016 - Page 4 351 of the Texas Tax Code and the program guidelines, which are actually incurred during the program period, for events and activities taking place within the program period, are eligible for funding under this agreement, and any ineligible expenditures or unspent funds shall be forfeited to CITY upon termination of the Agreement. 4.2 Termination Without Cause. (a) This Agreement may be terminated by either party, with or without cause, by giving the other party sixty (60) days advance written notice. (b) In the event this contract is terminated by either party pursuant to ¶4.2(a), CITY agrees to reimburse THEATRE for any contractual obligations of THEATRE undertaken by THEATRE in satisfactory performance of those activities specified in ¶ ¶2.1 and 2.2 above, and that were approved by the Council through the budget, as noted in ¶3.1. This reimbursement is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in ¶ ¶2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. Notwithstanding any provision hereof to the contrary, the obligation of CITY to reimburse THEATRE, or to assume the performance of any contractual obligations of THEATRE, for or under any contract entered into by THEATRE as contemplated herein, shall not exceed 66 2/3% of the current quarterly payment. (c) Further, upon termination pursuant to ¶4.2(a), THEATRE will provide CITY: 1) within ten (10) business days from the termination notification, a short-term budget of probable expenditures for the remaining sixty (60) day period between termination notification and contract termination. This budget will be presented to Council for approval within ten (10) business days after receipt by CITY. If formal approval is not given within ten (10) business days, and the budget does not contain any expenditures that would be prohibited by the Texas Tax Code, and is within the current contractual period approved budget; the budget will be considered approved; 2) within thirty (30) days, a full accounting of all expenditures not previously audited by CITY; 3) within five (5) business days of a request from CITY, a listing of expenditures that have occurred since the last required reporting period; 4) a final accounting of all expenditures and tax funds on the day of termination. THEATRE will be obligated to return any unused funds, or funds determined to be used improperly. Any use of remaining funds by THEATRE after notification of termination is conditioned upon such contractual obligations having been incurred and entered into in the good faith performance of those services contemplated in ¶ ¶2.1 and 2.2 above, and further conditioned upon such contractual obligations having a term not exceeding the full term of this Agreement. 4.3 Automatic Termination. This Agreement shall automatically terminate upon the occurrence of any of the following events: (a) The termination of the legal existence of THEATRE; (b) The insolvency of THEATRE, the filing of a petition in bankruptcy, either voluntarily or involuntarily, or an assignment by THEATRE for the benefit of creditors; Music Theatre of Denton HOT Funding PY2016 - Page 5 (c) The continuation of a breach of any of the terms or conditions of this Agreement by either CITY or THEATRE for more than thirty (30) days after written notice of such breach is given to the breaching party by the other party; or (d) The failure of THEATRE to submit a financial quarterly report which complies with the reporting procedures required herein and generally accepted accounting principles prior to the beginning of the next contract term, or quarterly as required by ¶1.3 hereof. 4.4 Right to Immediate Termination Upon Litigation. Notwithstanding any other provision of this Agreement, to mitigate damages and to preserve evidence and issues for judicial determination, either party shall have the right to terminate this Agreement upon immediate notice to the other party in the event that any person has instituted litigation concerning the activities of the non - terminating party, and the terminating party reasonably believes that such activities are required or prohibited under this Agreement. 4.5 In the event that this Agreement is terminated pursuant to ¶ ¶4.3 or 4.4, THEATRE agrees to refund any and all unused funds, or funds determined by CITY to have been used improperly, within thirty (30) days after termination of this Agreement. V. GENERAL PROVISIONS 5.1 Subcontract for Performance of Services. Nothing in this Agreement shall prohibit, nor be construed to prohibit, the agreement by THEATRE with another private entity, person, or organi- zation for the performance of those services described in ¶2.1 above. In the event that THEATRE enters into any arrangement, contractual or otherwise, with such other entity, person or organization, THEATRE shall cause such other entity, person, or organization to adhere to, conform to, and be subject to all provisions, terms, and conditions of this Agreement and to TEX. TAX CODE ch. 351, including reporting requirements, separate funds maintenance, and limitations and prohibitions pertaining to expenditure of the agreed payments and hotel tax funds. 5.2 Independent Contractor. THEATRE shall operate as an independent contractor as to all services to be performed under this Agreement and not as an officer, agent, servant, or employee of CITY. THEATRE shall have exclusive control of its operations and performance of services hereunder, and such persons, entities, or organizations performing the same, and THEATRE shall be solely responsible for the acts and omissions of its directors, officers, employees, agents, and subcontractors. THEATRE shall not be considered a partner or joint venturer with CITY, nor shall THEATRE be considered, nor in any manner hold itself out as, an agent or official representative of CITY. 5.3 Indemnification. THEATRE AGREES TO INDEMNIFY, HOLD HARMLESS, AND DEFEND CITY, ITS OFFICERS, AGENTS, AND EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR INJURIES, DAMAGE, LOSS, OR LIABILITY OF WHATEVER KIND OR CHARACTER, ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE BY THEATRE OF THOSE SERVICES CONTEMPLATED BY THIS AGREEMENT, INCLUDING ALL SUCH CLAIMS OR CAUSES OF ACTION BASED UPON COMMON, CONSTITUTIONAL OR STATUTORY LAW, OR BASED, IN Music Theatre of Denton HOT Funding PY2016 - Page 6 WHOLE OR IN PART, UPON ALLEGATIONS OF NEGLIGENT OR INTENTIONAL ACTS OF THEATRE, ITS OFFICERS, EMPLOYEES, AGENTS, SUBCONTRACTORS, LICENSEES AND INVITEES. 5.4 Assignment. THEATRE shall not assign this Agreement without first obtaining the written consent of CITY. 5.5 Notice. Any notice required to be given under this Agreement or any statute, ordinance, or regulation, shall be effective when given in writing and deposited in the United States mail, certified mail, return receipt requested, or by hand - delivery, addressed to the respective parties as follows: CITY City Manager City of Denton 215 E. McKinney Denton, TX 76201 THEATRE Music Theatre of Denton David Pierce 214 West Hickory Denton, Texas 76201 5.6 Inurement. This Agreement and each provision hereof, and each and every right, duty, obligation, and liability set forth herein shall be binding upon and inure to the benefit and obligation of CITY and THEATRE and their respective successors and assigns. 5.7 Application of Laws. All terms, conditions, and provisions of this Agreement are subject to all applicable federal laws, state laws, the Charter of CITY of Denton, all ordinances passed pursuant thereto, and all judicial determinations relative thereto. 5.8 Exclusive Agreement. This Agreement contains the entire understanding and constitutes the entire agreement between the parties hereto concerning the subject matter contained herein. There are no representations, agreements, arrangements, or understandings, oral or written, express or implied, between or among the parties hereto, relating to the subject matter of this Agreement, which are not fully expressed herein. The terms and conditions of this Agreement shall prevail, notwithstanding any variance in this Agreement from the terms and conditions of any other document relating to this transaction or these transactions. 5.9 Duplicate Originals. This Agreement is executed in duplicate originals. 5.10 Headings. The headings and subheadings of the various sections and paragraphs of this Agreement are inserted merely for the purpose of convenience and do not express or imply any limitation, definition, or extension of the specific terms of the section and paragraph so designated. 5.11 Severabitity. If any section, subsection, paragraph, sentence, clause, phrase or word in this Agreement, or application thereof to any person or circumstance is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Agreement, and the parties hereby declare they would have enacted such remaining portions despite any such invalidity. Music Theatre of Denton HOT Funding PY2016 - Page 7 5.12 Insurance. THEATRE shall provide insurance as follows: 1. $500,000 Commercial General Liability, or $1,000,000 Event Insurance, covering all events taking place on City-owned property, 2. Statutory Workers' Compensation and Employers' Liability ($100,000 /$500,000 /$100,000), and 3. $250,000 Liquor/Dram Shop Liability for any event occurring on City-owned property where alcohol will be provided or served. CITY must be named as an additional insured on all policies (except Workers' Compensation), and proof of coverage shall be submitted prior to any payment by the CITY. EXECUTED this day of , 2015. THE CITY OF DENTON, TEXAS Bv: GEORGE C. CAMPBELL, CITY MANAGER ATTEST: APPROVED By: JENNIFER WALTERS, ANITA BURGESS CITY SECRETARY CITY ATTO ATTEST: Secretary THE OF DENTON. By:. C irman/Director APPROVED AS TO LEGAL FORM: IM Music Theatre of Denton HOT Funding PY2016 - Page 8 Exhibit A Music Theatre of Denton 2016 Season Budget ADVERTISING Theatre Programs $2,500 Radio 1,800 Social Media 250 Printed Matter & Postage 700 Total $5,250 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON File #: ID 15 -1228, Version: 1 Legislation Text AGENDA INFORMATION SHEET DEPARTMENT: Materials Management ACM: Bryan Langley AGENDA DATE: December 1, 2015 SUBJECT Consider adoption of an ordinance of the City of Denton authorizing the City Manager or his designee to execute a contract through the Buy Board Cooperative Purchasing Network for the acquisition of an asphalt recycling machine for the City of Denton Street Department; and providing an effective date (File 5995 - awarded to Cooper Equipment Company in the amount of $185,815). FILE INFORMATION This item is a fleet addition that was approved in the Fiscal Year 2015 -2016 budget. One (1) Bagela model BA10000 asphalt recycling machine will be purchased through the Buy Board Cooperative Purchasing Network Contract# 424 -13. This machine takes recycled asphalt millings and recycles them into a usable material that can be repaved into the roadway. Comparison pricing could not be obtained for this item due to its specialized ten (10) ton capacity. The Bagela BA 10000 is the only commercially available asphalt recycler with a maximum rated output capacity of ten (10) tons per hour using an indirect flame, continuous flow method (Exhibit 2). This method will allow the Street Department crews to utilize the entirety of the ten (10) ton capacity for optimum efficiency in road repairs (Exhibit 3). RECOMMENDATION Award the purchase of one (1) Bagela model BA10000 asphalt recycling machine to Cooper Equipment Company in the amount of $185,815. PRINCIPAL PLACE OF BUSINESS Cooper Equipment Company San Antonio, TX ESTIMATED SCHEDULE OF PROJECT The delivery of the asphalt recycling machine will occur within 180 days of purchase order issuance. City of Denton Page 1 of 2 Printed on 11/25/2015 File #: ID 15 -1228, Version: 1 FISCAL INFORMATION The asphalt recycling machine (Fleet ID #ST 1666) will be funded from Street Improvement Fund account 810249444.1355.30100. Requisition 4126910 has been entered in the Purchasing software system. EXHIBITS Exhibit l: Quote Exhibit 2: Sole Source Letter Exhibit 3: Fleet Memo Exhibit 4: Ordinance Respectfully submitted: Chuck Springer, 349 -8260 Director of Finance For information concerning this acquisition, contact: Terry Kader at 349 -8729. City of Denton Page 2 of 2 Printed on 11/25/2015 Quote 1 EXHIBIT 1 4i9woEQUIPMENT COMPANY 17474 Judson Rd. San Antonio, Tx. 78247 Phone: (210) 657 -5151 Fax: (210) 657 -5871 September 3, 2015 ' gaard� r (Quote valid untill 1013112015) oo�«eo n ,am Keith Gabbard, Street Superintendent Contract no: (424 -13) City of Denton Street Department 901 -A Texas St. Email: keith .gabbardC- �cityofdenton.com Denton, TX 76209 Phone: 940 - 349 -7160 Buyboard Quotation- Bagela BA10000 Asphalt Recycler One (1) New 2015 BA 10000 Heavy duty, fully self- contained, portable Asphalt Recycler with 31hp Kubota diesel engine, 1.48M BTU /hr indirect heating diesel burner, hydraulic control levers, electronic temperature control, emergency stop button, adjustable pintle eye trailer tounge, maximum rated output capacity of ten (10) tons per hour.... 1 year standard warranty List Price FOB Germany... $ 175,900.00 Buyboard discount... $ (8,795.00) Buyboard subtotal... $ 167,105.00 Freight (from Germany) /PDI /Start -up assistance... $ 14,750.00 Additional 1 year warranty through Bagela /Pavement Recyclers (2 years total) ... $ 3,960.00 Buyboard Price FOB Denton... $ 185,815.00 Add $5,840.00 to total for third year warranty provided by Cooper Equipment Signed: Matt Cooper, District Manager Any warranties on the product sold hereby are those made by the manufacturer. The Seller, Cooper Equipment Company, hereby expressly disclaims all warranties, either express or implied, including any implied warranty of merchantability or fitness for a particular purpose, and Cooper Equipment Company neither assumes nor authorizes any other person to assume for it any liability in connection with the sale of said products. EXHIBIT 2 po a ent "J4,P/ r e c y c 1. eilr,,� September 24, 2015 To Whom It May Concern: As the exclusive US Distributor of the Bagela Asphalt Recycler, Bagela USA/Pavement Recyclers has authorized Cooper Equipment Company of San Antonio, Texas to exclusively represent our complete line of Bagela Asphalt Recyclers for the State of Texas. Also, the Bagela BA1 0000 asphalt recycler is the only commercially available unit available in the United States that can recycle at a rate of ten tons per hour using an indirect flame, continuous flow method. Please feel free to contact me with any questions. Thank you. Sincerely, Greg Harla Director of Marketing/Partner Bagela USA/Pavement Recyclers 70 Platt Road, Shelton, CT 06484 203.944.0525 PavementRecyclers.com EXHIBIT 3 MEMORANDUM DATE: November 16, 2015 TO: Elton Brock FROM: Terry Kader Fleet Services Superintendent CC: Antonio Puente SUBJECT: SOLE SOURCE ' l ? I : "1 I SE — BAGELA ASPHALT RECYCLER The quoted Bagela BA 10000 Asphalt Recycler is the only commercially available asphalt recycler with the capacity to recycle at a rate of 10 tons per hour using an indirect flame, continuous flow method. The Streets Department is currently organized and equipped to utilize this production capacity for optimum efficiency in road repair. Fleet Services is respectfully requesting authorization to purchase the Bagela BA 10000 Asphalt recycler as a sole source from Cooper Equipment Company, located in San Antonio Texas. Regards, Terry Kader Fleet Services Superintendent EXHIBIT 4 ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO EXECUTE A CONTRACT THROUGH THE BUY BOARD COOPERATIVE PURCHASING NETWORK FOR THE ACQUISITION OF AN ASPHALT RECYCLING MACHINE FOR THE CITY OF DENTON STREET DEPARTMENT; AND PROVIDING AN EFFECTIVE DATE (FILE 5995- AWARDED TO COOPER EQUIPMENT COMPANY IN THE AMOUNT OF $185,815). WHEREAS, pursuant to Ordinance 2005 -034, the Buy Board Cooperative Purchasing Network has solicited, received, and tabulated competitive bids for the purchase of necessary materials, equipment, supplies, or services in accordance with the procedures of state law on behalf of the City of Denton; and WHEREAS, the City Manager or a designated employee has reviewed and recommended that the herein described materials, equipment, supplies, or services can be purchased by the City through the Buy Board Cooperative Purchasing Network programs at less cost than the City would expend if bidding these items individually; and WHEREAS, the City Council has provided in the City Budget for the appropriation of funds to be used for the purchase of the materials, equipment, supplies, or services approved and accepted herein; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The items shown in the "File Number" referenced herein and on file in office of the Purchasing Agent, are hereby accepted and approved as being the lowest responsible bids for such items: FILE NUMBER VENDOR AMOUNT 5995 Cooper Equipment Company $185,815 SECTION 2. By the acceptance and approval of the items set forth in the referenced file number, the City accepts the offer of the persons submitting the bids to the Buy Board Cooperative Purchasing Network for such items and agrees to purchase the materials, equipment, supplies, or services in accordance with the terms, conditions, specifications, standards, quantities and for the specified sums contained in the bid documents and related documents filed with the Buy Board Cooperative Purchasing Network and the purchase orders issued by the City. SECTION 3. Should the City and persons submitting approved and accepted items set forth in the referenced file number wish to enter into a formal written agreement as a result of the City's ratification of bids awarded by the Buy Board Cooperative Purchasing Network, the City Manager or his designated representative is hereby authorized to execute the written contract which shall be attached hereto; provided that the written contract is in accordance with the terms, EXHIBIT 4 conditions, specifications and standards contained in the Proposal submitted to the Buy Board Cooperative Purchasing Network, and related documents herein approved and accepted. 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 the File 5995 to the City Manager of the City of Denton, Texas, or his designee. SECTION 5. By the acceptance and approval of the items set forth in the referenced file number, the City Council hereby authorizes the expenditure of funds therefor in the amount and in accordance with the approval purchase orders or pursuant to a written contract made pursuant thereto as authorized herein SECTION 6. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this day of 12015. CHRIS WATTS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY • APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY A BY: City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com DENT' IN Legislation Text File #: ID 15 -1212, Version: 1 Agenda Information Sheet DEPARTMENT: Finance ACM: Bryan Langley Date: December 1, 2015 SUBJECT Consider approval of resolution casting votes for membership to the Board of Directors of the Denton Central Appraisal District; and declaring an effective date. BACKGROUND The Denton Central Appraisal District (DCAD) notified the City on August 28, 2015 that the term for members on the current DCAD Board of Directors expires December 31, 2015, and accordingly they began the process to elect a Board of Directors for the next two -year term. On October 13, 2015, the City Council approved a resolution nominating Charles Stafford and David Terre for the DCAD Board of Directors. Seventeen nominations from all taxing jurisdictions were received by DCAD, and a memorandum has now been sent to the City requesting the casting of its votes. The number of votes a taxing unit has is determined by their proportional share of the total levy in the district from the prior tax year. There are a total of 5,000 votes throughout the district. One thousand votes are the maximum number needed to elect a local representative /nominee to the Board of Directors. In 2013, the City of Denton had 196 votes and allocated all 196 votes to Charles Stafford to serve on the DCAD Board of Directors. This year, the City has 192 votes and Denton Independent School District has 654 votes. The following is a summarization of DCAD's nomination process. Prior to October 1st - DCAD notifies taxing entities of the number of votes they are entitled to cast for appointing board members. Prior to October 15th - Nominations are submitted to DCAD by each jurisdiction. Prior to October 30th - DCAD compiles a comprehensive list of the nominees and forwards to each taxing unit in the form of a ballot. Prior to December 15 - The taxing jurisdictions choose by written resolution the candidate (s) of their choice. The jurisdiction then submits the name (s) and the votes cast to DCAD. City of Denton Page 1 of 2 Printed on 11/25/2015 File #: ID 15 -1212, Version: 1 Prior to December 31st - DCAD tabulates the votes and forwards the results back to the jurisdictions. The five candidates that receive the most votes become the Board of Directors as of January 1st. The seventeen candidates nominated by the taxing jurisdictions and a breakdown of the 5,000 votes is attached as Exhibit 1. Nominee John Mahalik has stated that he does not want to be reappointed and nominee Michelle French has stated that she wished to remain an ex- officio member of the board. RECOMMENDATION Staff has included a resolution that allows the City Council to determine the allocation of the City's 192 votes for the DCAD Board of Directors. PRIOR ACTION/REVIEW (Council, Boards, Commissions) On October 13, 2015, the City Council approved a resolution nominating Charles Stafford and David Terre for the DCAD Board of Directors. EXHIBITS 1. DCAD Memorandum 2. 2015 Board of Directors 3. Resolution Respectfully submitted: Chuck Springer, 349 -8260 Director of Finance City of Denton Page 2 of 2 Printed on 11/25/2015 TO: FROM: DATE: SUBJECT DENTON CENTRALAPPRAISALDISTRICT 3911 MORSE STREET, P O Box 2816 DENTON, TEXAS 76202 -2816 MEMO All Taxing Jurisdictions Rudy Durham, Chief Appraiser October 23, 2015 Candidates to Board of Directors of Denton Central Appraisal District Candidates to the Denton Central Appraisal District Board of Directors are listed below. The list is in alphabetical order by last name. Each voting unit must cast its vote by written resolution and submit it to the Chief Appraiser by December 15th. The unit may cast all its votes for one candidate or may distribute the votes among any number of candidates. When a voting unit casts its votes, it must cast the votes for a person that was nominated and is named on the ballot. There is no provision for write -in candidates. The Tax Code does not permit the Chief Appraiser to count votes cast for someone not listed on the official ballot. The five nominees receiving the most votes will become the Board of Directors. The candidates nominated by the taxing jurisdictions are: (Please note Asterisk below) Candidate Nominating Jurisdiction 1. Scott Brown Lewisville ISD 2. Rod Collver City of Lake Dallas 3. Tina Curfman City of Lake Dallas 4. Danny Everett City of Lake Dallas 5. Kevin Falconer City of Carrollton 6. Michelle French* City of Lewisville 7. Robert Gallagher Denton County 8. Matthew Haines Town of Shady Shores 9. Mike Hassett Lewisville ISD 10. Brenda Latham Lewisville ISD, Town of Trophy Club, City of Lewisville 11. David Loerwald Carrollton- Farmers Branch ISD 12. John Mahalik" Town of Trophy Club, Frisco ISD 13. Phillip Marquez City of Lake Dallas 14. Connie Smith Lewisville ISD, Town of Trophy Club, City of Lewisville 15. Charles Stafford Denton ISD, City of Denton, Town of Trophy Club, City of Lewisville 16. David Terre City of Denton, Lewisville ISD, City of The Colony, Town of Trophy Club, City of Lewisville 17. Heath W innett City of Lake Dallas "John Mahalik has indicated that he does not want to be reappointed to the Board of Directors and Michelle French has indicated that she prefers to remain an ex- officio member. Since some of you may not be familiar with the process of selecting the Board, please do not hesitate to contact Kathy Williams at (940) 349 -3974 for clarification and /or information. PHONE: (940) 349 -3800 METRO: (972) 434 -2602 FAX: (940) 349 -3801 DENTON CENTRAL APPRAISAL DISTRICT - 2015 DISTRIBUTION OF VOTES %OF TOTAL NUMBER 2014 LEVY LEVIES t OF VOTES - -- - - JURISDICTIONS SCHOOL DISTRICTS: SO1 ARGYLE ISD - 18,801,309 571 1.3458% 67 - - - - 9,920,938.33 1 0.7101% 36 _ 502 AUBREY ISD S03 CARROLLTON -FB ISD 40,023,899.891 2.8649 % 142 SO4 CELINA ISD 325,442.36 0.0233% 1 - 183,021,464.421 - 13.1005%, i - 1 - 654 2,643 48 - 0.00020% --- - 92,760,421.77 6.6397/0 332 - DENTON ISD - ERA IS_D _SOS S15 S07 1 FRISCO ISD - - - - - - - - 22,689,193.06 0.8406% 42 1.6241 %i 81 I ' S08 LAKE DALLAS ISD S09 ±LEWISVILLE ISD 401,041,125.00 28.7062 %' 1434 S10 'LITTLE ELM ISD 36,337,787.05 2.6010% 130 S11 'NORTHWEST ISD 1 82,343,878.92 5.8941 %, 294 S12 PILOT POINT - 10,453,6025 15 - _ -- -- 38 - -- �POONDE S13 - - RI ISD SANGER - 1,453,625.32 0. 040% -- 5 S14 ISD 10,917,871.81 0.7815% 39 - - � 3 830,7 06.78 0.0595% '. S 16 SL[DELL ISD - SCHOOL DISTRICTS TOTALS 0 $929,148,865.87 66.508 /01 3322 $174,365,271.44 12.48% 623 - GO1 DENTON COUNTY 1815,45_4.19 0.1299/C26 - - - - CS - TOWN OF ARGYLE 0.0363%, 3 C31 TOWN OF BARTONVILLE.. - _ 0.0363 /0 507,555.69' CO2 CITY OF CARROLLTON -- 31,836,174.01 2.2788 /o - 113 - -- C49 CITY OF CELIN A.. ... 4,26.3.52 0.0003 /o i .2 - u 17,817,583.31 1.2754% 1 64 CO3 CITY OF THE COLONY... C21 TOWN OF COPPELL - 80020.731 0.0577% 3 TOWN OF COPPER CANYON 560,758.23 0.0401% 2 _C27 C04 CITY OF CORINTH. .. 9,159,001.96 0.6556% 33 C47 CITY OF CORRAL CITY 11,017.31 1 0.0008% 1 CITY OF DALLAS...... 8,691,816.17 0.6222% 31 - C055 CITY OF DENTON..... 54,412,506.17 3.8948% 192 C42 CITY OF DISH......... 77,697.61 0.0056% 1 C30 TOWN OF DOUBLE OAK... 829,829.97 0.0594% 3 C07 TOWN OF FLOWER MOUND. 34,261,080.62 2.4524% 123 C36 CITY OF FORT WORTH ... 9,742,096.94 0.6973% 35 C32 CITY OF FRISCO........ 31,660,659.49 2.2662% 113 C39 CITY OF GRAPEVINE....... 280.09 0.0000 0/0', 1 C22 TOWN OF HACKBERRY.... 103,685.94 0.0074 % 1 C38 CITY OF HASLET........ 9,951.38 0.0007% 1 - C19 'TOWN OF HICKORY CREEK 1 414,544 -68 1 0.1013% 5 CH VILLAGE... ICITY 0.7349% l0 37 C09 OF USTIN.....D 568,203.211 0.1130% 6 _ C18 _CITY OF KRUGERVILLE.. C10 CITY OF KRUM...... 414,492.77_ 0.0297 %I - - 1,619,817.82: 01]59/0 I 6- -- - ° DALLAS.. CITY OF LAKE DALLAS.. 2,485,244 951 0 1779/0 -9 - C25 - CITY OF LAKE VILLAGE..... o - 0.0167 /o 232,757 88� 1 C12 CITYOFLEWISVILLE... 33,883,151.22 2.4253% 120 C13 TOWN OF LITTLE ELM... 13,601,601.884 0.9736% - - 49 - - C33 - - - _ 0.0538% 3 - C24 OF OAK POINT... -C14 0.1165% 5 _CITY 4CIOT OFFOAKP POINT.- i 1,368,992.79 4,460,055.39'_ 0.3192 /0, 5 16 C29 CITY OF PLANO....... C15 TOWN OF PONDER 567,978.69 0.0407 °_ /0 2 - - - - 0 0259% 1 _ C17 ICITY OF ROANOKE 5 253,028 87{ 0 3760% - 19 - - - C16 CITY OF SANGER....... - -- 2 965,119.051 0.2122o/._,_ i 11_ - _ S OF - 0.0518% 3 - - C37 CITY OF SOUTHLAKE .. 575,949.97 0.0412/0 _ -- C28 CITY TROPHY CLUB.. _ -- - ° 6 2] 6,540.78 0.4450 /o l 22 C44 TY OF WESTLAKE 1,367.08' 0.0001 %' 1 CITY TOTAL $293,540,890.41 1 21.01% 1055 TOTAL ALLURISDICTIONS $1,397,055,027.72 100.00 %' 51 00 2014-2015 DENTON CENTRAL APPRAISAL DISTRICT BOARD OF DIRECTORS CHARLES STAFFORD Chairman 1903 Williamsburg Row Denton, Texas 76209' JOHN MAHALIK Vice-Chairman 2648 Newcastle Dr. Carrollton, TX 75007 CONNIE SMITH Secretary 2700 Pecan Leaf Ln. Flower Mound, TX 75022 DAVID TERRE Member 3941 Teal Cove The Colony, TX 75056 BRENDA LATHAM Member 1553 Parkside Trail Lewisville, TX 75077 Ex Officio Member MICHELLE FRENCH P.O. Box 90223 Denton, Texas 76202 sAlegal \our documents\resolutions \15 \dcad casting votes.doc RESOLUTION NO. A RESOLUTION CASTING VOTES FOR MEMBERSHIP TO THE BOARD OF DIRECTORS OF THE DENTON CENTRAL APPRAISAL DISTRICT; AND DECLARING AN EFFECTIVE DATE. THE CITY COUNCIL OF THE CITY OF DENTON HEREBY RESOLVES: SECTION 1. The City Council of the City of Denton, Texas, hereby casts 192 votes for for membership to the Board of Directors of the Denton Central Appraisal District for the County of Denton, Texas. SECTION 2. This Resolution shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2015. CHRIS WATTS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY I APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON File #: ID 15 -1222, Version: 1 Legislation Text Agenda Information Sheet DEPARTMENT: Development Services /Economic Development CM/ ACM: Jon Fortune Date: December 1, 2015 SUBJECT Consider adoption of an ordinance approving an Economic Development Agreement under Chapter 380 of the Local Government Code to promote economic development and to stimulate business activity in the city of Denton between the City of Denton and BUC-EE's LTD, regarding the development of an approximate 38 -acre parcel of land generally located on the west side I -35 E, north of Wind River Lane, in south Denton; authorizing the expenditure of funds therefor; and providing an effective date. BACKGROUND A commercial development anchored by a Buc -ee's Travel Center is proposed for a site in south Denton. The proposal would include an approximately 53,000 square foot retail store, fuel sales, a car wash, and peripheral development along I -35E for future development. The main retail store and the associated fuel sales would be open 24 hours a day, 7 days a week, but the facility would not cater to semi - trucks. The subject property was rezoned in 2008 from Regional Center Residential 1 (RCR -1) District to Regional Center Commercial Downtown (RCC -D) District with overlay conditions to provide additional buffering between the commercially zoned property and the adjacent residential neighborhoods. The current zoning designation permits all of the proposed uses. The purpose of Regional Center Commercial Downtown (RCC -D) District is to "create high density centers of activity including shopping, services, recreation, employment and institutional facilities supported by and serving an entire region." The RCC -D district is one of the most intense zoning districts in the Regional Mixed Use future land category and the City of Denton as a whole. It is intended to promote mixed use development with an urban character and businesses with a highly regional customer base to attract visitors to the city. Moderate to high density residential uses with a maximum density of 100 units per acre are permitted including townhomes and apartments associated with a mixed -use development. All commercial and institutional uses are permitted with the exception of the sale of products grown on site, motels, equestrian facilities, outdoor recreation, sexually oriented businesses, elementary schools, and cemeteries. Most industrial uses are either limited or not permitted. The proposed Buc -ee's Travel Center meets the intent of the RCC -D District, and its associated uses of Retail Sales and Service, Quick Vehicle Servicing, and Drive - through Facility are permitted in RCC -D. City of Denton Page 1 of 3 Printed on 11/25/2015 File #: ID 15 -1222, Version: 1 The City Council is contemplating an incentive for the project in order to reimburse the developer for public infrastructure improvements and other neighborhood /public amenities. A Neighborhood Meeting was held on November 11, 2015 where approximately 100 citizens attended to learn about the project, ask questions, and express their concerns. The City Council will discuss incentive options for the proposed commercial development. All options are performance -based incentives that rebate a portion of local sales tax produced by the development. The proposed development has resulted in TxDOT advancing several mobility improvements to the intersections of Loop 288 /Lillian Miller and I35E, Mayhill Road and I35E, and Brinker Road and I35K. These improvements will enhance mobility and address traffic congestion, and will be complete in the spring of 2018 (see Exhibits 1 and 8 for more details). In order to facilitate these improvements, TxDOT requires a local funding match of $2 million. The developer is willing to fund all or a part of the $2 million, to be reimbursed as a part of an incentive agreement. Additionally, the developer will incur approximately $5.2 million in public infrastructure costs, including water, wastewater, storm sewer, right -of -way dedication, and constructing a new city street. See Exhibit 7 for an Opinion of Probable Costs. The exhibit includes the cost of retaining the existing pond; however, that cost is not included in the $5.2 million total (it has been intentionally subtracted). About the potential incentive, the following details should be noted: • The incentive is a rebate of a portion of local sales tax generated by the proposed development only (i.e. new tax revenue that the City would otherwise not receive) • The City would collect 100% of the property tax revenue on the development • The incentive is intended to reimburse the developer for public infrastructure, and • The incentive is the City's only opportunity to require the developer to take measures to protect the adjacent neighborhood and minimize the impact of the development on the neighborhood The Grant Agreement will require the developer to take the following measures to protect the neighborhood and minimize impact: • Maintain an average setback from all residential properties of at least 400 feet • Maintain a minimum setback from all residential properties of at least 200 feet • Have a Photometric Engineer design a lighting system that minimizes light impact to the neighborhood (maximum of 0.2 foot candles of light at all residential property lines) • Retain and amenitize the pond area with access, walking trails, and seating • Provide an opportunity for the homeowners whose property lines directly border the development to give input regarding the landscape buffer and the masonry & wrought iron walls to be constructed The Economic Development Partnership Board has recommended an incentive of 50% sales tax rebate for 25 years, on the Buc -ee's parcel as well as the outparcels. At the time of this writing, the incentive options were still being finalized. Current discussions include the following proposed terms: The developer and the City would split the cost of the TxDOT local match of $2 million • The developer would receive a 50% sales tax rebate on all parcels for three years to be repaid for the $1 million contribution City of Denton Page 2 of 3 Printed on 11/25/2015 File #: ID 15 -1222, Version: 1 • The City would provide a one -time payment to the developer at the end of Year 3 if developer was not fully compensated for the $1 million contribution at that time • An incentive term of 20 years would then commence, with the developer receiving a 50% sales tax rebate on the Buc -ee's tract, and a 25 -50% rebate on the outparcels (depending on the type of development) • The 20 year term would partially, but not fully, compensate the developer for the infrastructure cost of $5.2 million (including interest costs for financing the infrastructure) • The 20 year term would obligate the developer take measures (defined above) to protect the neighborhood and minimize impact of the development PRIOR ACTION/REVIEW (Council, Boards, Commissions) • November 17, 2015 - City Council Work Session on Buc -ee's Project • November 17, 2015 - City Council Closed Session discussion on incentives • November 10, 2015 - City Council Closed Session discussion on incentives • October 30, 2015 - City Council Closed Session discussion on incentives • October 20, 2015 - City Council Closed Session discussion on incentives • October 13, 2015 - City Council Closed Session discussion on incentives • September 22, 2015 - Economic Development Partnership Board recommended approval of an incentive for the project EXHIBITS 1 - Preliminary Staff Report 2 - Aerial Map 3 - Zoning Map 4 - Future Land Use Map 5 - Preliminary Concept Site Plan 6 - Preliminary Elevations 7 - Public Infrastructure Costs 8 - Buc -ee's Presentation 9 - Draft Grant Agreement (under separate cover) 10 - Draft Ordinance (under separate cover) Respectfully submitted: Aimee Bissett Director of Development Services City of Denton Page 3 of 3 Printed on 11/25/2015 Exhibit 1 - Preliminary Staff Report Planning Report Item 44 BACKGROUND: A commercial development anchored by a Buc -ee's Travel Center is proposed for a site in south Denton. The proposal would include an approximately 53,000 square foot retail store, fuel sales, a car wash, and peripheral development along I -35E for future development. The main retail store and the associated fuel sales would be open 24 hours a day, 7 days a week, but the facility would not cater to semi - trucks. The subject property was rezoned in 2008 from Regional Center Residential 1 (RCR -1) District to Regional Center Commercial Downtown (RCC -D) District with overlay conditions to provide additional buffering between the commercially zoned property and the adjacent residential neighborhoods. The current zoning designation permits all of the proposed uses. SITE DATA: The approximately 38 acre site is generally located on the southwest side of I -35E, 1,200 feet north of Wind River Lane. It is undeveloped and has approximately 2,100 feet of frontage along I -35 E. The triangular- shaped property includes mature trees along the perimeter, a 3 -acre pond, and an Environmentally Sensitive Area (ESA) running north from the pond to I -35E. USE OF PROPERTY UNDER CURRENT ZONING: The purpose of Regional Center Commercial Downtown (RCC -D) District is to "create high density centers of activity including shopping, services, recreation, employment and institutional facilities supported by and serving an entire region." The RCC -D district is one of the most intense zoning districts in the Regional Mixed Use future land category and the City of Denton as a whole. It is intended to promote mixed use development with an urban character and businesses with a highly regional customer base to attract visitors to the city. Moderate to high density residential uses with a maximum density of 100 units per acre are permitted including townhomes and apartments associated with a mixed -use development. All commercial and institutional uses are permitted with the exception of the sale of products grown on site, motels, equestrian facilities, outdoor recreation, sexually oriented businesses, elementary schools, and cemeteries. Most industrial uses are either limited or not permitted. The proposed Buc -ee's Travel Center meets the intent of the RCC -D District, and its associated uses of Retail Sales and Service, Quick Vehicle Servicing, and Drive - through Facility are permitted in RCC -D. SURROUNDING ZONING AND LAND USES: North: Property to the northwest is zoned as Regional Center Residential 2 (RCR -2) District and Regional Center Commercial Neighborhood (RCC -N) District and is developed with retail and restaurant uses. Exhibit 1 - Preliminary Staff Report East: Adjacent property to the east is zoned at Regional Center Residential 1 (RCR -1) District and is developed with retail sales and service uses. Property across I -35E is zoned as Regional Center Commercial Neighborhood (RCC -N) District and is developed with restaurants and hotels. South: Property to the south is zoned as Neighborhood Residential 3 (NR -3) District and Regional Center Commercial Downtown (RCC -D) District and is developed with single - family dwellings and commercial uses. A multi - family dwelling development is also planned for the property to the south. West: Property to the west is zoned as Neighborhood Residential 3 (NR -3) and is developed with single - family dwellings. COMPATIBILITY OF THE DEVELOPMENT WITH SURROUNDING ZONING AND LAND USES: The proposed uses are permitted under the existing zoning. The Denton Development Code (DDC) provides for specific screening mechanisms to ensure sufficient buffering between the residential uses and the proposed use. No access to the adjacent neighborhoods will be provided from the proposed development. Access to the site will be finalized during platting and with the Building Permit; however, the current conceptual site plan shows access from the north near the Goodwill Store and the south from Unicorn Lake Boulevard. Two additional access points will be obtained from the I -35E improvements, one of which will extend Brinker Road under the highway directly to the site. COMPREHENSIVE PLAN: Per the Denton Plan 2030, the Future Land Use Designation is Regional Mixed Use. Regional Mixed Use applies to areas that serve as regional destinations within Denton. Development may include moderate and high density residential, commercial, office, entertainment and other uses except industrial, at the highest levels of scale and density within the city. This designation is located predominantly along I -35 interchanges and primary arterials to encourage the greatest regional accessibility. Future development in Regional Mixed Use areas will complement and embrace existing, viable uses, and raise the standard of design to increase their regional draw, accommodate greater connectivity and mobility options, and create a sense of place. CONSIDERATIONS: 1. The uses associated with the proposed Buc -ee's Travel Center are permitted in the RCC -D District. 2. A conceptual site plan was presented at a neighborhood meeting on November 11, 2015 (attached), but has not been reviewed for compliance with the Denton Development Code (DDC). Development of the site must comply with all standards outlined in the DDC, including platting, lot dimensions and coverage, site design, lighting, landscaping and tree canopy, ESA impacts, tree preservation, and parking. Any deviations from the development standards requested by the developer must be approved in accordance with the procedures outlined in the DDC. An official submittal has not been made to the City to date. Planning Report Project Number Page 2 of 4 Exhibit 1 - Preliminary Staff Report 3. Additionally, in 2008, an overlay was placed on the subject property. The conditions of the overlay require the following: a. 50 -foot buffer of landscaping is required, including the water features (existing pond), abutting the residential developments to the west ( Southridge Estates) and to the south (Wind River Estates) with the right to install a walking trail and other complementary hardscape around the existing pond (including the area within the 50 -foot buffer) in connection with a pedestrian easement; b. No building within 100 feet of the residential developments to the west and to the south of the subject Property shall exceed a maximum building height of 40 feet; c. The owner of the subject Property will not remove the existing pond along the western boundary of the subject Property abutting Southridge Estates; d. The owner of the subject Property (or its designee) will erect , at its expense, an 8 -foot wrought iron fence with finials for the benefit of the homes to the west of the subject property which are directly across from and adjacent to the aforementioned pond. 4. Due to the development of the site for a Buc -ee's Travel Center, access along I -35 E in south Denton will be improved. Specifically, TxDOT has approved an additional $28 million in improvements in order to help with traffic and congestion in the area. Three areas along I -35 E are slated for improvements in association with the construction of the Buc -ee's Travel Center: a. Loop 288 /Lillian Miller and I -35E - Plans for the intersection at Loop 288 /Lillian Miller and I -35 E will include four lanes in each direction (two through lanes and two left -turn lanes), U -turns on each side of the intersection, and pedestrian improvements. b. Brinker Road and I -35E - Brinker Road will be extended under I -35E and include two lanes in each direction, one turn lane, and U- turns. c. South Mayhill Road and I -35E - Mayhill Road and I -35E will be modified to include a U -turn on the western side of Mayhill Road. These improvements are scheduled to be completed in Spring of 2018. 5. The location of a new detention pond associated with the proposed development will help to mitigate nuisances between the commercial development and the adjacent residential neighborhoods. 6. Access from the subject property to the adjacent neighborhoods would be prohibited. 7. As a commercial development located along the I -35 E corridor, the proposed Buc -ee's Travel Center meets the intent of the Denton Plan 2030's Regional Mixed Use designation, drawing on a customer base beyond Denton's limits. Additionally, proposed improvements to I -35E in association with the development will improve the mobility along I -35E, a goal of the Denton Plan 2030. Planning Report Project Number Page 3 of 4 Exhibit 1 - Preliminary Staff Report 8. The developer held two neighborhood meetings on November 11. 2015. Approximately 100 citizens attended the meeting and voiced concerns about the project. Major topics of discussion included the hours of operation, buffer requirements, traffic, visual impacts, lighting, tax incentives, and crime. ATTACHMENTS: • Aerial Map • Zoning Map • Future Land Use Map • Conceptual Site Plan • Elevations Prepared By: 1 Julie Wyatt, Associate Planner Date: 11/12/15 Reviewed By: Aimee Bissett Reviewed By: Munal Mauladad Deputy Director of Development Services Date: 11/12/15 Planning Report Project Number Page 4 of 4 Location Map CITY ITY OF DENTON Legend Current Zoning CM -G ZONING DC -G oo °p °m oip DC -N Amy, °pb��° CM -E DR -1 DR -2 IC -E NR -1 NR -6 M RCC -D M RD -5 EC -C IC -G NR -2 N R M U I= RCC -N RD -5X EC -I MF -1 NR -3 W® NRMU -12 RCR -1 w - co y ETJ MPC NR -4 PD RCR -2 s DENTON na x t of u aw w ow.rswx�+w+Ra WwW aro' roHetaootvm� \W�aw+weab�— cwz�wv�Y�+wra — aooi \oewoi \a Exhibit 7 Project: Buc -ee's - Denton Denton County - Denton, Texas Developer: Buc -ee's, Ltd. Date: November 12, 2015 Description: Rough Cost - No Design Project No.: 100530 -09 Item Description Quantity /Unit Unit Price Total Wastewater 8" Gravity Line 10" Gravity Line 4' -Dia. Wastewater Manhole Wet Connection (Existing Line) Testing and Trench Safety 235 LF $80.00 $18,800.00 1,980 LF $90.00 $178,200.00 7 EA $12,000.00 $84,000.00 1 EA $4,000.00 $4,000.00 1 LS $7,500.00 $7,500.00 SUBTOTAL Opinion of Probable Costs Wastewater 1 $292,500.00 Water 12" C -900 Waterline w/ appurtenances Fire Hydrant Service Connections Wet Connection Testing and Trench Safety Storm Sewer 2,535 LF $65.00 $164,775.00 11 EA $4,000.00 $44,000.00 10 EA $2,500.00 $25,000.00 3 EA $4,000.00 $12,000.00 1 LS $5,000.00 $5,000.00 SUBTOTAL Opinion of Probable Costs Water 1 $250,775.00 8'x6' RCB (Includes TxDOT Joint Use Section) 1,365 LF $450.00 $614,250.00 18" RCP 324 LF $70.00 $22,680.00 24" RCP 575 LF $75.00 $43,125.00 36" RCP 640 LF $125.00 $80,000.00 48" RCP 138 LF $180.00 $24,840.00 10' Curb Inlet 16 EA $3,000.00 $48,000.00 4 -Sided Area Inlet 2 EA $4,500.00 $9,000.00 Junction Box 1 EA $6,200.00 $6,200.00 Exhibit 7 ESA Double 48" Headwall 2 EA $14,000.00 $28,000.00 Remove Existing Headwall 1 EA $7,500.00 $7,500.00 Storm Sewer Riser 2 EA $2,500.00 $5,000.00 Testing and Trench Safety 1 LS $10,000.00 $10,000.00 SUBTOTAL Opinion of Probable Costs Storm Sewer 1 $898,595.00 Paving Reinforced Concrete Pavement 14,926 SY $50.00 $746,311.11 Pavement Headers 1,130 LF $30.00 $33,900.00 5' Sidewalk 3,034 LF $25.00 $75,850.00 ADA Ramps 24 EA $1,100.00 $26,400.00 4" Striping & Crosswalks 7,485 LF $2.00 $14,970.00 12" Stop Bars and & STOP 8 EA $1,000.00 $8,000.00 Traffic Control 3 MO $2,100.00 $6,300.00 SUBTOTAL Opinion of Probable Costs Storm Sewer 1 $911,731.11 Miscellaneous Items Street Lights 18 EA $11,000.00 $198,000.00 Street Signs 30 EA $500.00 $15,000.00 Median Landscaping 647 SY $25.00 $16,175.00 City Street ROW Dedication 1 LS $868,112.00 $868,112.00 Park /Pond Plaza Amenity 1 LS $1,394,766.00 $1,394,766.00 Erosion & Sedimentation Controls (SWPPP) 1 LS $50,000.00 $50,000.00 Bonding, Insurance and Mobilization (5 %) 1 LS $127,699.00 $127,699.00 SUBTOTAL Opinion of Probable Costs Miscellaneous Items 1 $2,669,752.00 SUBTOTAL Public Improvements 1 $5,023,353.11 20% CONTINGENCY: $ 11004,670.62 10% ENGINEERING AND PERMITTING: $ 502,335.00 3% CONSTRUCTION MANAGEMENT & INSPECTIONS: $ 150,701.00 TOTAL $ 6,681,059.73 Note: The above Engineer's Opinion of Probable Construction Cost is based on conceptual layout utilizing reasonable professional judgment and experience and does not constitute a warranty, expressed or implied, that the actual cost will not vary. •a ��� at �¢ w w �pwgtuyiqu h w�w� h+'mo� \Nu�aw�YR-owwAwm�S�w�a - amp \aam�a •a ��� at �¢ w w �pwgtuyiqu h w�w� h+'mo� \Nu�aw�YR-owwAwm�S�w�a - amp \aam�a •a ��� at �¢ w w �pwgtuyiqu h w�w� h+'mo� \Nu�aw�YR-owwAwm�S�w�a - amp \aam�a •a ��� at �¢ w w �pwgtuyiqu h w�w� h+'mo� \Nu�aw�YR-owwAwm�S�w�a - amp \aam�a ail s,33 -one 'NOA]a "00 NOLN3a '39f kVMHSIH 31VSe31.N1 NO-LN30 — _g S,33 -3ne V1 z EY �� ��,. . �u �a �� �� �,� .� �. �� 1 m � i d 1 ��Iii 1 � � • � • • • • • (1) 4-J a-- 4- O 4-1 L %U N • i� L Q O' QJ D .-�. Q O 400-1.. 400-1.. .� >1 { .> V x CL C IV cif CU �' QJ ' +j W ' N X Q1 u�i�C'2. „ Q1 .�.,, © CU Q r3 p o c:' O N R5 p ru t31 ru W ' 4-J 0 -- Q V4-J -- N 4-J (1) C: ,., o z� ._ ru I- � ? .0 i ru �' � � ® r • 1 • M 1 <i 1 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON File #: ID 15 -1269, Version: 1 Legislation Text Agenda Information Sheet DEPARTMENT: City Manager's Office CM/ ACM: Bryan Langley Date: December 1, 2015 SUBJECT Consider nominations /appointments to the City's Boards and Commissions: Community Development Advisory Committee and Traffic Safety Commission. BACKGROUND Below are the outstanding Boards and Commissions nominations and the Council Member responsible for the nomination. Community Development Advisory Committee - Codie Causey has resigned. She was serving in an All position. This is a nomination for the entire Council. Traffic Safety Commission - Cameron Cox has moved outside of the city limits and has resigned. This is a nomination for Council Member Johnson. Nominations could be made and voted on at this meeting should the Council desire. Approval would be contingent on completion of the confirmation process. If you require any further information, please let me know. Respectfully submitted: Jennifer Walters City Secretary City of Denton Page 1 of 1 Printed on 11/25/2015 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON File #: S15- 0009a, Version: 1 Legislation Text AGENDA INFORMATION SHEET DEPARTMENT: Department of Development Services ACM: Jon Fortune DATE: December 1, 2015 SUBJECT Hold a public hearing and consider an ordinance regarding a Specific Use Permit to allow a multi - family development on an approximately 16.061 acre property generally located on the south side of East McKinney Street (FM 426), approximately 1,500 feet east of Woodrow Lane. The Planning and Zoning Commission recommends approval of this request (6 -0), subject to conditions. Due to written opposition from property owners of at least 20% of the area immediately adjoining and within 200 feet of the subject property, a supermajority vote of all members of the City Council is necessary to approve the request. BACKGROUND The applicant is requesting approval of a Specific Use Permit (SUP) to allow a multi - family development on an approximately 16 -acre property within a Neighborhood Residential Mixed Use (NRMU) District. The NRMU District requires an SUP for multifamily unless it is part of a mixed -use development, Master Planned Community (MPC), or part of a Small Area Plan. The proposed development will include 322 multi - family units with supplementary amenities, including a business center, fitness center, swimming pool, two community centers, and an after school program. According to the applicant, the project is proposed in cooperation with the Denton Housing Authority and all units will be subsidized by Low - Income Housing Tax Credits. No market rate apartments will be offered. In 2008, the subject property and the 10 -acre property to the west were rezoned from a Neighborhood Residential Mixed Use 12 (NRMU -12) District to the current NRMU District. This rezoning was in association with an SUP for a 369 -unit multi - family development also approved in 2008. Because the development was not constructed within 24 months of its approval, this SUP has expired per Subchapter 35.6.6.A of the Denton Development Code (DDC). To comply with public hearing notice requirements, seven notices were sent to property owners within 200 feet of the subject property, 21 courtesy notices were sent to the physical addresses within 500 feet of the subject property, a notice was published in the Denton Record Chronicle, and signs were placed on the property. The applicant also hosted a neighborhood meeting on Monday, October 26, 2015 at the American Legion Senior Center at 629 Lakey Street. Section 211.006(d) of the Texas Local Government Code requires that if a proposed change to zoning regulations for a property is protested by the owners of at least 20% of the area of land within 200 feet of the proposed change, the affirmative vote of at least three- fourths of all members of the governing body is City of Denton Page 1 of 3 Printed on 11/25/2015 File #: S15- 0009a, Version: 1 necessary to approve the change. In computing the percentage of land area under this provision, the area of streets and alleys shall be included. Staff received written opposition from an owner of approximately 40.55% of the 200 feet area surrounding the subject property. Therefore, a supermajority vote of all members of the City Council is required to approve the SUP request. A map of the public notification boundary and responses received has been attached for reference. OPTIONS 1. Approve as submitted. 2. Approve subject to conditions. 3. Deny. 4. Postpone consideration. 5. Table item. RECOMMENDATION The Planning and Zoning Commission recommends approval of this request (6 -0), subject to the following conditions: 1. Development of the site shall substantially comply with the site plan and landscape plan attached. 2. The maximum number of units of the development shall be 322 units. 3. The western access shall be emergency access only until McKinney Street is widened and a median is installed. 4. Buildings facades facing McKinney Street shall have a minimum of 60% masonry building materials. Gables, windows, doors, and related trim may be excluded from the percentage calculation. The Development Review Committee recommends approval of this request, subject to the above conditions. PRIOR ACTION/REVIEW (Council, Boards, Commissions) On November 4, 2015, the Planning and Zoning Commission recommended approval of the rezoning request (6 -0), subject to conditions. EXHIBITS 1. Staff Analysis 2. Aerial 3. Zoning Map 4. Future Land Use Map 5. Applicant Narrative 6. Site Plan 7. Landscape Plan 8. Type A Elevations 9. Type B Elevations 10. Type C Elevations 11. Type D Elevations 12. Type E 1 Elevations 13. Type E2 Elevations City of Denton Page 2 of 3 Printed on 11/25/2015 File #: S15- 0009a, Version: 1 14. Type F Elevations 15. Site Photos 16. Public Notification Map and Responses 17. November 4, 2015, Planning and Zoning Commission Meeting Minutes 18. Draft Ordinance Respectfully submitted: Aimee Bissett Director of Development Services Prepared by: Mike Bell Senior Planner City of Denton Page 3 of 3 Printed on 11/25/2015 City Hall City of Denton 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com D EN'FON Legislation Text File #: S15 -0009, Version: 1 Planning Report 515- 0009/McKinney Denton Apartments City Council District 1 Planning & Zoning Commission November 4, 2015 REQUEST: Hold a public hearing and consider a recommendation to City Council regarding a Specific Use Permit to allow a multi - family development on an approximately 16.061 acre property generally located on the south side of East McKinney Street (FM 426), approximately 1,500 feet east of Woodrow Lane. (515 -0009, McKinney Denton Apartments, Mike Bell) OWNER: Codella, LLC. APPLICANT: Hayes, Berry, White & Vanzant, LLP. BACKGROUND: The applicant is requesting approval of a Specific Use Permit (SUP) to allow a multifamily development on an approximately 16 -acre property within a Neighborhood Residential Mixed Use (NRMU) District. The NRMU District requires an SUP for multifamily unless it is part of a mixed -use development, Master Planned Community (MPC), or part of a Small Area Plan. The proposed development will include 322 multifamily units with supplementary amenities, including a business center, fitness center, swimming pool, two community centers, and an after school program. According to the applicant, the project is proposed in cooperation with the Denton Housing Authority and all units will be subsidized by Low - Income Housing Tax Credits. No market rate apartments will be offered. In 2008, the subject property and the 10 -acre property to the west were rezoned from a Neighborhood Residential Mixed Use 12 (NRMU -12) District to the current NRMU District. This rezoning was in association with an SUP for a 369 -unit multifamily development also approved in 2008. Because the development was not constructed within 24 months of its approval, this SUP has expired per Subchapter 35.6.6.A of the Denton Development Code (DDC). SITE DATA: The subject property includes 16.061 acres of undeveloped property. Although the site is heavily forested, it is not located within an Environmentally Sensitive Area (ESA). A Tree Preservation Plan was submitted as part of the SUP request to verify that the proposed site plan complies with the Tree Code. USE OF PROPERTY UNDER CURRENT ZONING: The purpose of the NRMU District is to encourage a mix of high - density, residential units and an active node of City of Denton Page 1 of 8 Printed on 10/30/2015 File #: S15 -0009, Version: 1 retail and commercial services to support adjacent neighborhoods, as described in Denton Plan 2030. These activity centers would primarily allow for a mix of neighborhood- oriented retail, office, and service uses with allowances for townhome, civic uses, and multi -story apartments up to 30 units per acre. The NRMU district may also serve as a transition between neighborhoods and non - residential zoning districts. Multifamily is permitted within the NRMU District with an SUP or if part of a mixed -use development, MPC, or Small Area Plan. A list of additional permitted uses within the NRMU zoning district is attached for reference. SURROUNDING ZONING AND LAND USES: North: The property to the northwest is zoned a Neighborhood Residential 4 (NR -4) District and is developed with the Summerwind single- family neighborhood. Directly to the north is zoned an NRMU District and is developed with a law office. To the northeast is zoned an NRMU -12 District and is developed with the Fountains of Denton Apartments. East: The property immediately to the east is zoned a combination of NRMU and NRMU -12 Districts and is developed with a Denton Municipal Electric (DME) electric substation. Farther to the east is a property also zoned NRMU and NRMU -12 Districts that is anticipated to develop with the recently approved Majestic at McKinney Apartments. South: The property to the south is zoned an NR -4 District and is undeveloped. West: The property immediately to the west is zoned an NRMU District and is undeveloped. Farther to the west is Mack Park zoned Neighborhood Residential 2 (NR -2) District. COMPATABILITY OF REQUEST WITH SURROUNDING ZONING /LAND USES: The proposed development is primarily surrounded to the west and south by undeveloped property zoned for single- family residential. A 10 -foot landscape buffer with five evergreen and deciduous trees and 30 shrubs per 100 linear feet is required along the southern property line to mitigate potential nuisances. Additionally, all proposed buildings within the development that are adjacent to single- family zoning will comply with the residential proximity slope for multi - family development required by Subchapter 35.13 of the DDC. This provision limits the height of multifamily buildings near the property lines of single- family zoning to prevent the residents from overlooking the backyards of homes. To the east is a property recently developed with a DME electric substation. A 15 -foot landscape buffer with six evergreen and deciduous trees and 25 shrubs per 100 linear feet is required along the site's eastern perimeter to mitigate any potential nuisances. The driveway and parking spaces on the east side of the development also provide additional setback for the residents in those buildings closest to the substation. To the north is the Fountains of Denton Apartments that includes three -story buildings. A two -story law office is also located to the north. The site design requirements in Subchapter 13 of the DDC, including buffers, proximity slopes, light and glare standards, will be provided to mitigate potential impacts to surrounding properties. Development of the site as proposed is not anticipated to have an adverse impact on surrounding land uses. COMPREHENSIVE PLAN: Per the Future Land Use Map in Denton Plan 2030, the subject property is designated as "Moderate Residential." This designation is primarily intended to promote single- family housing on small lots, typical of Denton's more compact, established single- family neighborhoods. The density of Moderate Residential should range between four to twelve units per acre. Low -rise multifamily dwellings and townhomes may also be located in these areas so long as they maintain a scale, style, and building orientation complementary of the prevailing character of the area. This designation typically applies to areas within the central areas of Denton between established single- family neighborhoods and mixed -use or commercial areas that can accommodate City of Denton Page 2 of 8 Printed on 10/30/2015 File #: S15 -0009, Version: 1 greater density. The Housing and Neighborhoods Element of Denton Plan 2030 provides additional guidance on apartments and affordable housing in Denton. It notes that although housing and rental units are generally more affordable than elsewhere in the region, incomes are also lower. According to the Plan, nearly 58% of Denton's renter households were "cost burdened," or paying more than 30% of their income towards housing. This forces households to make trade -offs regarding the costs of health care, childcare, and food. Per the City's 2010 -2014 Consolidate Plan, Denton also has a higher percentage of subsidized, affordable housing than neighboring communities. This includes an inventory of approximately 3,400 subsidized rental units within three developments (Heritage Oaks Apartments, Pecan Place Apartments, and Renaissance Courts Townhomes), as well as approximately 1,800 in scattered site units. Even with this higher percentage, there are approximately 1,500 people on waiting lists for these subsidies, which will span at least five years as of 2014. Addressing these issues requires a comprehensive strategy of increasing employment, homeownership, and affordable housing opportunities for the citizens of Denton. With regards to affordable housing, Denton Plan 2030 outlines the following policies and actions: 7.2 - Expand the availability of affordable housing choices for community members most in need of housing, including those with low incomes and special needs. 7.2.1 - Support efforts of DHA, Denton Affordable Housing Corporation, and Habitat for Humanity to expand the availability of affordable housing for low - moderate income residents through policies for mixed income housing and neighborhoods. While there is an obvious need to provide additional affordable housing options for a growing city like Denton, Denton Plan 2030 also cautions that the quality of construction, design, and maintenance of these properties is critical. High quality design for all multifamily, including those for low - income families, students, and seniors, will be essential to preventing the existing condition of some of the city's older multifamily housing stock. CONSIDERATIONS: 1. The applicant is proposing to develop a 322 -unit multifamily development. Multifamily that is not part of mixed -use development requires approval of an SUP in the NRMU zoning district. The approval criteria for SUP's is outlined in Subchapter 35.6.4 of the DDC: a. That the use would be in conformance with all standards within the zoning district in which the use is proposed to be located, and in conformance with Denton Plan 2030, and federal, state, or local law. b. An SUP shall be issued only if all the following conditions have been met: i. That the specific use will be compatible with and not injurious to the use and enjoyment of other property nor significantly diminish or impair property values within the immediate vicinity; ii. That the establishment of the specific use will not impede the normal and orderly development and improvement of surrounding vacant property; iii. That adequate utilities, access roads, drainage, and other necessary supporting facilities have been or will be provided; iv. The design, location and arrangement of all driveways and parking spaces provides for the safe and convenient movement of vehicular and pedestrian traffic without adversely affecting the general public or adjacent developments; v. That adequate nuisance prevention measures have been or will be taken to prevent or control offensive odor, fumes, dust, noise and vibration; vi. That directional lighting will be provided so as not to disturb or adversely affect neighborhood properties; and City of Denton Page 3 of 8 Printed on 10/30/2015 File M S15 -0009, Version: 1 vii. That there is sufficient landscaping and screening to ensure harmony and compatibility with adjacent property. C. That adequate capacity of infrastructure can and will be provided to and through the subject property. d. That the specific use is compatible with and will not have an adverse impact on the surrounding area. When evaluating the effect of the proposed use on the surrounding area, the following factors shall be considered in relation to the target use of the zone: i. Similarity is scale, bulk, and coverage ii. Generation of traffic and effects on surrounding streets. Increases in pedestrian, bicycle, and mass transit use are considered beneficial regardless of capacity of facilities. iii. Architectural compatibility with the impact area. iv. Air quality, including the generation of dust, odors, or other environmental pollutants. V. Generation of noise, light, and glare. vi. The development of adjacent properties as envisioned in Denton Plan 2030. vii. Other factors found to be relevant to satisfy the requirements of the DDC. The proposed site plan, landscape plan, and elevations are compliant with the requirements of the DDC and no noise and lighting impacts onto adjacent properties are anticipated. A preliminary review of public infrastructure and services has also determined that the proposed use will be adequately served under future conditions. 2. The proposed development will include eleven apartment buildings ranging from two to four stories in height. A breakdown of the height, unit count, and parking requirements for all apartment buildings within the site is provided below: Type A: Number of Buildings: 3 Height: 3 stories Number of Units: 30 each Type B: Number of Buildings: 2 Height: 3 stories Number of Units: 30 each Type C: Number of Buildings: 1 Height: 3 stories Number of Units: 12 Type D: Number of Buildings: 2 Height: 2 stories Number of Units: 10 each Type El: Number of Buildings 1 Height: 2 stories Number of Units 12 City of Denton Page 4 of 8 Printed on 10/30/2015 File #: S15 -0009, Version: 1 Type E2: Number of Buildings 1 Height: 2 stories Number of Units 12 Type F: Number of Buildings 1 Height: 4 stories Number of Units 116 Total: Number of Buildings: 11 Height Range: 2 -4 stories Total Number of Units: 322 One Bedroom Units: 36 Two Bedroom Units: 146 Three Bedroom Units: 124 Four Bedroom Units: 16 Parking Spaces Required: 626 Two additional buildings will be also be constructed within the site, including the leasing office near the entrance to the site and a laundry /mail/community area within the interior of the site. These buildings are labeled as Buildings 13 and 12, respectively, on the attached site plan. Although elevations for these buildings were not provided with the application, the applicant has stated they will be architecturally compatible with the apartment buildings. 3. Although not located within an Environmentally Sensitive Area (ESA), the site is heavily forested. This made compliance with the tree preservation and mitigation requirements in Subchapter 13 of the DDC particularly challenging. The applicant has worked with staff through several iterations of the site plan to design the site not only to comply with Tree Code requirements, but to preserve as many of the prime trees as possible. These tree areas are generally clustered into the common areas of the development as well as along McKinney Street. 4. It should be taken into consideration that McKinney Street is currently a two -lane, undivided roadway with a capacity of approximately 9,000 trips per day. According to recent traffic counts conducted by the City, the street is already over capacity with approximately 14,000 trips per day on this road. Ultimately, however, the Texas Department of Transportation (TxDOT) has plans to widen McKinney Street into a four -lane, divided roadway. When the widening is complete, the capacity will increase to approximately 24,000 trips per day; which is sufficient to handle the additional 2,100 trips generated per day by the proposed use. No date has been set for the start of the widening project. However, in an effort to address traffic impacts in the interim, the applicant will be required to provide two principal mitigation measures: • The applicant will be required to construct temporary turn lanes into the primary access to the development. This access is located on the east side of the property directly across from the entrance City of Denton Page 5 of 8 Printed on 10/30/2015 File #: S15 -0009, Version: 1 for the Fountains of Denton apartments to the north. It also aligns with the future median opening on McKinney Street. These turn lanes will allow residents to enter the site without impeding the flow of pass - through traffic. • The secondary access on the west side of the property will be a gated, emergency access only until a median is installed with the widening of McKinney. This is intended to improve traffic safety by forcing traffic to use the turn lanes to the east rather than crossing the double yellow stripe currently in the center of McKinney Street. When the widening is complete, the median is installed, and the ability to cross McKinney is removed, this access may be converted to a right -in, right -out entrance /exit for the residents. 5. To improve bicycle and pedestrian safety and amenities along McKinney Street, which has long suffered from a lack of sidewalks, staff recommended the applicant consider enhancing bicycle and pedestrian amenities within the development. In response, the applicant is proposing a sidewalk along McKinney Street six feet in width and designed around the existing trees. This is wider than the standard five -foot sidewalk typically required along arterial streets. The sidewalk will taper down to five feet near the property lines to provide a seamless transition to the sidewalks of adjacent properties. To enhance bicycle amenities, the applicant is also proposing to add 35 bike racks within the site for use by the residents. 6. The property is in an area designated as "Moderate Residential" on the Future Land Use Map of Denton Plan 2030. Multifamily is allowed within Moderate Residential, so long as it is complementary in scale, style, and orientation of surrounding uses. The density within this designation is encouraged between four and twelve units per acre. The development's proposed density of 19 units per acre is higher than those encouraged by Moderate Residential but is well below the maximum of 30 units per acre permissible in the NRMU zoning district. Denton Plan 2030 also encourages higher densities within the city's core to promote a compact growth pattern so long as it does not negatively impact existing, viable neighborhoods. No negative impacts are anticipated on nearby neighborhoods. 7. Denton Plan 2030 cites the shortage of affordable housing options in Denton and recommends additional options through support of the Denton Housing Authority. According the applicant, the proposed development will be 100% subsidized units. If approved, this development would decrease the current shortage of low - income housing in the city; a stated goal of Denton Plan 2030. 8. Denton Plan 2030 stresses the importance of high quality design, materials, and maintenance of multifamily projects. All buildings within the development will be constructed in compliance with the multifamily design standards of the DDC. The exterior buildings materials will be a minimum of 40% adhered masonry with the remainder being a combination of siding and stucco. Staff recommends that the minimum percentage of masonry be increased to 60% on sides of buildings facing McKinney Street to enhance the visual qualities of the development. STAFF RECOMMENDATION: Staff recommends approval of the request as it is compatible with the surrounding property and is consistent with the goals and objectives of the Denton Plan 2030, subject to the following conditions: City of Denton Page 6 of 8 Printed on 10/30/2015 File #: S15 -0009, Version: 1 1. Development of the site shall substantially comply with the site plan and landscape plan attached. 2. The maximum number of units of the development shall be 322 units. 3. The western access shall be emergency access only until McKinney Street is widened and a median is installed. 4. Buildings facades facing McKinney Street shall have a minimum of 60% masonry building materials. Gables, windows, doors, and related trim may be excluded from the percentage calculation. OPTIONS: 1. Recommend approval as submitted. 2. Recommend approval subject to conditions. 3. Recommend denial. 4. Table the item. PUBLIC NOTIFICATION: To comply with the public hearing notice requirements, seven notices were sent to property owners within 200 feet of the subject property, 21 courtesy notices were sent to physical addresses within 500 feet of the subject property, a notice was published in the Denton Record Chronicle, and signs were placed on the property. The applicant hosted a neighborhood meeting on October 26, 2015. PROJECT TIMELINE: Application Received: 1st Submittal Sent to DRC Members: Comments Released to Applicant: DRC Meeting with Staff: 2nd Submittal Sent to DRC Members: Comments Released to Applicant: Business Days under DRC Review: Business Day out to Applicant: Total Business Days: EXHIBITS: • Aerial Map • Zoning Map Future Land Use Map • Applicant Narrative Site Plan Landscape Plan • Type A Elevations • Type B Elevations • Type C Elevations • Type D Elevations • Type E 1 Elevations • Type E2 Elevations • Type F Elevations Site Photos • Notification Map July 7, 2015 August 18, 2015 September 4, 2015 September 10, 2015 September 18, 2015 October 2, 2015 23 40 63 City of Denton Page 7 of 8 Printed on 10/30/2015 File #: S15 -0009, Version: 1 Respectfully submitted: Munal Mauladad Deputy Director, Development Services Prepared by: Mike Bell Senior Planner City of Denton Page 8 of 8 Printed on 10/30/2015 oll dnoaJ &IN 941 E �$ nn sox91•u04uea S-LO311HOIJV oaw sluaiu).MdV u0jdw8H +I *ewOM u04uaQ Aauu.A-ayV n a u o rc h z O H Q J w w A F N� � o R K CO) O z O F >Q W ud w O�N i- LL 9 J � V I- u a rc3 Qp z O H Q W W ,`? 2 9 �m r 1` u O Q �i W U Q o N O D■ - oil dn.,E) /�t � =a,_ ; 26. . ,., s Ga � a So GaQ aT J u0jdw8H +IoeW0AR ,� [ : M j lu §: w\ $, M §} \ 2 (( §) N , § § §; f\ � O � d , \ q j \( 2) r z M 0 LU N olidn.,E) m ic &IN 941 soxqj,uo4uqG sjuaul dv p-m uojdw8H+I*8WOAR U04UQCI A6uu.A < 0 % \ � � � (� z LU oil #o /N t , \' _ s Ga a� u0jdw8H +1oeW0� So GaQ �a�J !Q = }� � d (° wr $( M O (\ j d (( §j N � � r.,: , § q j §� §\ � O ))` ew § \ ! ) ! ] i ) ! ) § \ \ q j j 2� )