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2016-07-21 Agenda with backup
Cit of Denton City Hall Y 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com Meeting Agenda City Council Thursday, July 21, 2016 12:00 PM Work Session Room After determining that a quorum is present, the City Council of the City of Denton, Texas will convene in a Work Session on Thursday, July 21, 2016 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. Work Session Reports A. ID 16-873 Receive a report, hold a discussion, and give staff direction regarding the Economic Development Investment Fund and the Downtown Reinvestment Grant Fund. Attachments: Exhibit 1 Ordinance 2012-001 • �� `- � •� � ""•ate ""� ExhibitDowntown a 0 2007-2015 Exhibit 4 Draft ED Investment Exhibit Presentation B. ID 16-877 Receive a report, hold a discussion, and provide staff direction regarding the objectives of a compensation plan and the results of the compensation market study conducted by the UM Global HR. Attachments: Exhibit 1 - City of Denton Compensation Overview 7-16 Exhibit 2 - Compensation Introduction for CC Exhibit 3 - Compensation Discussion and Market Study Results by UMGHR 2. 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. NOTE: 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. CERTIFICATE City ofDenton Page 1 Printed on 7/14/2016 City Council Meeting Agenda July 21, 2016 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 , 2016 at o'clock (a.m.) (p.m.) CITY SECRETARY NOTE: THE CITY OF DENTON CITY COUNCIL WORK SESSION ROOM IS ACCESSIBLE IN ACCORDANCE WITH THE AMERICANS WITH DISABILITIES ACT. THE CITY WILL PROVIDE SIGN LANGUAGE INTERPRETERS FOR THE HEARING IMPAIRED IF REQUESTED AT LEAST 48 HOURS IN ADVANCE OF THE SCHEDULED MEETING. PLEASE CALL THE CITY SECRETARY'S OFFICE AT 349-8309 OR USE TELECOMMUNICATIONS DEVICES FOR THE DEAF (TDD) BY CALLING 1 -800 -RELAY -TX SO THAT A SIGN LANGUAGE INTERPRETER CAN BE SCHEDULED THROUGH THE CITY SECRETARY'S OFFICE. City ofDenton Page 2 Printed on 7/14/2016 City Hall City of Denton 215 E. McKinney St. - Denton, Texas 76201 www.cityofdenton.com , DENTON File #: ID 16-873, Version: 1 Legislation Text Agenda Information Sheet DEPARTMENT: Department of Development Services/Economic Development Division CM/ ACM: Jon Fortune Date: July 21, 2016 SUBJECT Receive a report, hold a discussion, and give staff direction regarding the Economic Development Investment Fund and the Downtown Reinvestment Grant Fund. EXECUTIVE SUMMARY The purpose of this Work Session is to discuss two separate economic development -related funds: 1) the existing Downtown Reinvestment Grant Program, and 2) the new Economic Development Investment Fund. These two items are being discussed together in order to look holistically at the range of economic development tools available to the City and to compare the purpose and policies of each fund. BACKGROUND Downtown Reinvestment Grant Program - Created in 2007 Purpose: To provide small ($5,000-$25,000) cash reimbursement grants for capital improvements to buildings in the downtown area. The grant program is designed to assist downtown building and business owners with projects, and it is tied to preserving the history of Denton by restoring the buildings. It also gives the Downtown Task Force, Economic Development Partnership Board, and City Council control over the design of rehabilitations and new construction, as there are no design standards in place for downtown. The program is strictly for capital improvements, not operating costs. It is set up as a single -payment reimbursement to property owners per buildingibusiness, and in some situations, tenants. Reimbursement grants are available for the following types of projects: • Facade Rehabilitation is defined as the removal of slipcovers or non-historic/added facades, repointing brick or replacing mortar joints, replacing or restoring cornices, removing paint from brick, replacing windows, restoring transom windows, roof and foundation work. • New Awnings & Signs is defined as replacing, adding or repairing awnings & signs. Signs may include signboards, projecting signs and pedestrian signage (includes window sign, hanging sign and awning/canopy sign). • Impact Fee Reimbursement is the reimbursement for City of Denton water, wastewater, and roadway impact fees • Utility Upgrades includes upgrades to water, wastewater and electrical service, including interior upgrades as well as exterior service upgrades City of Denton Page 1 of 4 Printed on 7/14/2016 povveied by I_egivt9i IN File #: ID 16-873, Version: 1 In FY 2013-14, the grant fund was increased from $50,000 to $100,000 per year and is currently funded through mixed beverage tax revenues to the City. Grants of $10,000 or less are subject to review by the Downtown Task Force and approval by the City Manager; grants of more than $10,000 are reviewed by the Downtown Task Force and the Economic Development Partnership Board and approved by City Council. Since October 1, 2007, 41 grants have been awarded for a total of $401,195. Of those, seven expired without the recipient receiving the grant due to issues with the projects (spreadsheet attached). The Return on Investment (ROI) over the life of the grant has been $1 (City) to $30 (private investment). Staff Recommendation Staff recommends continuing the grant program given its success in preserving Denton's history via restoration of Downtown buildings and the increase in property values that can be attributed to those restorations. However, based on Council direction, the scope of the grant program should be expanded to add targeted redevelopment areas in addition to Downtown, such as major development corridors and entryways into the city. Staff proposes renaming the program to "Small Business Improvement Grant Program." Economic Development Investment Fund - Created in 2015 Purpose: To provide a cash grant program in order to increase the City's ability to compete for large or targeted economic development projects. In April 2014, the City of Denton's Tax Abatement Policy was broadened to apply Chapter 380 of the Texas Local Government Code in order to implement a wider range of incentive programs. Such programs could include cash incentives to gain a competitive position when in direct competition for a project. While the expanded 2014 Tax Abatement and Incentive Policy gave the City the ability to offer cash incentives, no mechanism was put in place at that time to create a cash fund for incentive purposes. In August 2015, the Economic Development Partnership Board recommended to the City Council the creation of an economic development incentive fund with the following criteria for eligibility for a cash grant under the program: • A company must meet at least two of the following three criteria: 1) higher -wage or knowledge-based jobs 2) substantial capital investment 3) address a recruitment or supplier target Higher -wage jobs are defined as having an average annual wage of $55,000 or greater for all positions or at least 25% of the positions having an annual wage of $65,000 or greater. Knowledge-based jobs are defined as occupations which: • Require specialized and theoretical knowledge, usually acquired through a college education or through work experience or other training which provides comparable knowledge; • Require some research, analysis, report writing and presentations; • Require special licensing, certification, or registration to perform the job task. Substantial capital investment under the Economic Development Investment Fund is a minimum of $15 City of Denton Page 2 of 4 Printed on 7/14/2016 povveied by I_egist9i I;, File M ID 16-873, Version: 1 million. Recruitment or supplier targets include aviation; advanced manufacturing; renewable energy; research and development; information technology; supply chain logistics and distribution and large consumers of municipal utilities. In conjunction with the FY 2015-16 Proposed Budget, the City Council directed staff to create the Economic Development Investment Fund. This fund, created under Governmental Accounting Standards Board Statement Number 54, will allow unspent funds to be rolled over from one year to the next and utilized in future years. The City Council recommended committing $150,000 in mixed beverage taxes previously accounted for in the General Fund. This investment falls under HBU 2833301, and the revenue will provide a dedicated mechanism to account for investment in economic development projects. Staff Recommendation Staff recommends adoption of an ordinance establishing the fund as outlined above and enabling its use. PRIOR ACTION/REVIEW (Council, Boards, Commissions) January 5, 2016 - During a work session, Council reviewed both funds and directed staff to further define criteria for the Economic Development Investment Fund and target areas for the Downtown Reinvestment Grant Program. STRATEGIC PLAN RELATIONSHIP The City of Denton's Strategic Plan is an action -oriented road map that will help the City achieve its vision. The foundation for the plan is the five long-term Key Focus Areas (KFA): Organizational Excellence; Public Infrastructure; Economic Development; Safe, Livable, and Family -Friendly Community; and Sustainability and Environmental Stewardship. While individual items may support multiple KFAs, this specific City Council agenda item contributes most directly to the following KFA and goal: Related Key Focus Area: Economic Development Related Goal: 3.4 Encourage development, redevelopment, recruitment, and retention EXHIBIT Exhibit 1 - Current Downtown Reinvestment Grant Program Fund Ordinance & Policy Exhibit 2 - Draft Revisions to Downtown Reinvestment Grant Program Policy Exhibit 3 - Downtown Reinvestment Grant Program Return on Investment Exhibit 4 - Draft Economic Development Investment Fund Ordinance Exhibit 5 - Presentation Respectfully submitted: Aimee Bissett Director of Development Services City of Denton Page 3 of 4 Printed on 7/14/2016 povveied by I_egist9i I;, File M ID 16-873, Version: 1 Prepared by: Erica Sullivan, Economic Development Analyst Economic Development Division, Department of Development Services City of Denton Page 4 of 4 Printed on 7/14/2016 povveied by I_egist9i I;, UodadWepartmentsVegaRour documents\ordinances112\ecodevo downtown grant program.doc ORDINANCE NO. 2012-001_ AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS, AMENDING THE DOWNTOWN INCENTIVE REIMBURSEMENT GRANT PROGRAM; AND PROVIDING AN EFFECTVE DATE. WHEREAS, on February 14, 2007, the Downtown Task Force unanimously recommended creating an incentive program to promote desired development/redevelopment in the downtown area of the City of Denton; and WHEREAS, on April 3, 2007, the City Council of the City of Denton adopted the Downtown Incentive Reimbursement Grant Program; and WHEREAS on October 13, 2011, the Downtown Task Force recommended changes to the original Downtown Incentive Reimbursement Grant Program; and WHEREAS on November 1, 2011, the Economic Development Partnership Board recommended the changes to the City Council of the City of Denton, including changing the name of the program to "Downtown Reinvestment Grant Program;" and WHEREAS, on December 6, 2011, the City Council reviewed changes to the Downtown Reinvestment Grant Program; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Council of the City of Denton hereby approves the changes to the Downtown Reinvestment Grant Program, which is attached to and made a part of this ordinance for all purposes. SECTION 2. The City Council will fund the program in an amount to be considered annually. SECTION 3. This Ordinance shall become effective immediately upon its passage and approval. Lh PASSED AND APPROVED this the day of jvolza" '2012, sAlegahour documents\ordinances112\ecodevo downtown grant program.doc ATTEST: JENNIFER WALTERS, CITY SECRETARY BY; APPOVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY / c BY: / o' DENTON POLICY FOR DOWNTOWN REINVESTMENT GRANT PROGRAM I. GENERAL PURPOSE AND OBJECTIVES The City of Denton Economic Development department promotes Denton and its unique character through the redevelopment and revitalization of Downtown, historic preservation, community involvement, and by providing educational and technical assistance to business and property owners. With Downtown as a key focus area of the Economic Development Program, the City of Denton City Council adopted the following Downtown Reinvestment Grant Program. Each fiscal year (October 1 through September 30), the City Council considers allocation of funds in the City's budget for the grant program. Applications are considered as they are received, and may be funded, if approved, until funds are depleted. H. GRANT GUIDELINES 1. Commercial fagade rehabilitation grant funds are available for exterior work on building facades that immediately overlook public streets located in the Downtown area as defined in the Downtown Implementation Plan (DTII'), see attached map, page 5. 2. Roof and foundation work on commercial buildings in the DTIP area may also be eligible for grant funds, providing costs do not exceed 50% of the grant request. 3. No grant applications will be accepted for work that has already been started or complete, or for work that is covered by insurance. 4. Grants are awarded on a reimbursement basis once completed work has been verified by City staff as compliant with the plans proposed in the approved application. Any deviation from the approved grant project may result in the total or partial withdrawal of the grant. Grants are awarded as a single payment to the applicant. 5. All submitted work will be reviewed based on the Secretary of the Interior's Standards for Rehabilitation (see page 7) and the City of Denton's Municipal Codes and Ordinances. 6. Grant applications and awards can be made in any of the reimbursable activities listed below and may be combined for any single property or project. However, the maximum award amount available annually per project is $25,000. 7. An applicant is defined as an eligible property within the DTIP area. A single owner of multiple properties may apply for grant funds for each property owned, but may not receive more than $25,000 per property. 8. If an applicant is awarded a reinvestment grant for fagade, awning or sign work and the facade, sign or awning is altered for any reason within one (1) year from construction, the applicant may be required to reimburse the City of Denton immediately for the full amount of the grant. 9. Projects will be reviewed and ranked with the following considerations in mind: • Project results in an increase in property valuation and/or generates sales tax revenue • Project rehabilitation reflects historic accuracy • Project improves the capacity of water, wastewater and electric utility services • Water/Wastewater impact fees are assessed • Project results in a significant increase in downtown population (residents and/or day or night users) • Location (i.e., proximity to the square, transit station or catalyst project) • Other appropriate impacts may be considered on a case-by-case basis M. PROGRAM DETAILS Reinvestment grants are available for the following types of projects: Facade Rehabilitation and Building Renovation Definition: Removing slipcovers or non-historic/added facades, repointing brick or replacing mortar joints, replacing or restoring cornices, removing paint from brick, replacing windows, restoring transom windows, painting, roof and foundation work. Grant Limits: Fagade rehabilitation and building grants are limited to a 50% match of the eligible projects costs, with a cap of $25,000 per grant for fagade, roof and foundation work. Roof and foundation repair may constitute no more than half of the request and shall only be considered for funding if included as a portion of a larger project. Paint -only grants are limited to a 50% match with a cap of $5,000 per grant. Awnings & Signs Definition: Replacing, adding or repairing awnings & signs. Signs may include signboards, projecting signs and pedestrian signage (includes window sign, hanging sign and awning/canopy sign). Grant Limits: Awning grants are limited to a 50% match with a cap of $5,000 per grant. Sign grants are limited to a 50% match with a cap of $500 per grant. Impact Fee Reimbursement Defmition: Reimbursement for City of Denton water and wastewater impact fees Grant Limits: Impact Fee grants are limited to a 50% match with a cap of $25,000 per grant. Utility Upgrades Definition: Upgrades to water, wastewater and electrical service, includes interior upgrades as well as exterior service upgrades Grant Limits: Utility Upgrade grants are limited to a 50% match with a cap of $25,000 per grant. Downtown Reinvestment Grant Program Policy 2 IV. GRANT APPLICATION PROCESS 1. Contact Economic Development Program Administrator to discuss project and determine eligibility. If requested, the Program Administrator will set up an appointment with the Texas Main Street Center's Architectural Assistance Program, which provides free assistance in selecting paint, color schemes and building and sign materials for building facade and signs. 2. Complete grant application form and sign the agreement form. Return the completed application form with all original itemized work estimates, color samples, drawings and example sign material of the proposed work to the Economic Development office at 215 E. McKinney no later than 5 pm the first Monday of each month. Applications should include: a. Drawings of all proposed grant work to be done. Drawings may be prepared by the Texas Main Street Architect, the project architect, or contractor. b. Color samples of all final paint selections and/or final building or sign material selections must be included with the application. c. Itemized work estimates on all project work from contractors or project architects must be included with the application. (Self -contracted work will be reimbursed for eligible expenses, excluding labor.) d. Photos of the building's exterior, interior, roof or foundation (areas where work is to be performed). 3. The approval process will include without limitation the following: a. All projects must meet current building standards and codes, as well as building permit requirements. b. Applicants are required to attend and present their grant reinvestment project to the Downtown Task Force (DTTF). Grants of $10,000 and less will be subject to a recommendation by the DTTF and approval by the City Manager. The DTTF meets monthly, as needed. c. Grants of more than $10,000 must be reviewed and approved by the Economic Development Partnership Board (EDPB) prior to consideration by the Denton City Council. The EDPB meets monthly and will review submitted applications and consider the DTTF's recommendation. d. If recommended by the EDPB, grants of more than $10,000 will be placed on the City Council agenda and the Denton City Council will review the recommendations from the DTTF and EDPB. The DTTF and EDPB recommendations are advisory only, and no recommendation shall be binding on the Denton City Council. The Denton City Council has the final discretion with regard to funding and reserves the right to modify or reject any project or elements of any project. e. Applications must be complete and contain all required information. Additional information requested by the DTTF, EDPB or the Denton City Council must be provided prior to consideration of the grant. f. All construction bids submitted by an applicant must be current and must be dated no earlier than ninety (90) days prior to the application request. Bids shall be submitted on the contractor's or project architect's letterhead and shall contain the contractor' name, address, telephone number and shall itemize the bid in a manner that allows the DTTF, EDPB and Denton City Council to determine the bid components and authenticity of the bid. Downtown Reinvestment Grant Program Policy 3 g. An applicant whose application that has been denied by the Denton City Council shall not be eligible to re -submit a grant application for six (6) months from the date the prior application was declined by the Denton City Council. h. Applicants receiving approval shall commence construction described within the application within ninety (90) days from the date the grant is awarded. All applicants must complete the construction described in the application within one (1) year from the date the grant is approved. If the applicant is unable to commence construction within ninety (90) days from the date the grant is approved or complete construction within one (1) year from the date the grant is approved, the applicant may submit a written request for an extension for the commencement date or completion date provided the extension request is made prior to the ninety (90) day or one (1) year time limit. The DTTF or Denton City Council shall not be obligated to allow extensions, but may do so for good cause determined solely by the entity which authorized the grant. The extensions, if granted, shall be for the term and for the conditions determined exclusively by the entity which authorized the grant. An extension denial cannot be appealed and shall be final. i. As a condition of this grant application, the applicant consents and shall allow the Economic Development staff to request City inspections to determine that the grant, if awarded, will not be used for construction on any building that is not in compliance with the City Municipal Codes and Ordinances that are applicable to the construction contemplated in the application. j. No applicant has a proprietary right to receive grant funds. Each request will be considered on a case-by-case basis. k. The applicant shall be required to furnish photographs of the building's exterior, roof and foundation after the construction is completed, as a condition of final grant reimbursement. 1. The applicant is required to obtain all applicable City permits and City approvals required for the construction if a grant is awarded. in. An applicant should attend DTTF, EDPB and Denton City Council meetings in which consideration of the application occurs. 4. Reimbursement: When the grant project has been satisfactorily completed and reviewed, the applicant shall present the Economic Development office with copies of all paid invoices, including copies of cancelled checks and/or credit card receipts, for a single payment reimbursement of the approved funding. In addition, the applicant must complete a City of Denton Vendor Form and a Form 1099 to receive payment from the City. Vendor forms and 1099's will be provided by the Economic Development office. Downtown Reinvestment Grant Program Policy 4 DOWNTOWN IMPLEMENTATION PLAN AREA MAP Downtown Reinvestment Grant Program Policy 5 Legend Lo Withers DTIP Boundry M 0 - Historic Courthouse Square Parkway W Mc Kinne Mc Kinne Oak Hick ry Sycamore N N E v �g wE W J S use only as a reference. Date depicted A Registered Surveyor for the Mlles 0.225 0.3 This map is not is a graphic representation prepared by the City of Denton and is intended for guaranteed for accuracy and may be subject to revision at any time without notification. 0 0.0376.075 D.15 State of Texas was not consulted. For Survey level accuracy, supervision and certification of the produced data by a Registered Professional Land Surveyor for the State of Texas would need to be performed. Downtown Reinvestment Grant Program Policy 5 EXHIBIT A D NTON CITY OF DENTON DOWNTOWN REINVESTMENT GRANT PROGRAM APPLICATION City of Denton Department of Economic Development 215 E. McKinney Street Denton, TX 76201 940-349-7732 www.ciiyofdenton.com Julie.l�gcityo fdenton. com Downtown Reinvestment Grant Program Policy 6 Downtown Reinvestment Grant Program Application Please return completed with necessary attachments and signature to Economic Development office, 215 E. McKinney no later than 5 pm by the first Monday of each month. If you have any application questions, please contact the Economic Development Program Administrator at 940- 349-7732. Applicant Name Date Business Name Mailing Address Contact Phone Email Address Building Owner (if different from applicant) Historical/Current Building Name Project Site/Address Type of Work: (check all that apply) Paint Only Fagade & Building Renovation Signage Awnings Utility Upgrades Impact Fees Details of Planned Improvements relating to Grant Request (attach additional information if necessary) Downtown Reinvestment Grant Program Policy 7 How will this project benefit Downtown? Project Expenditures Estimated Costs Grant Requested FagadeBuilding Rehab Awnings Signs Impact Fees Utility Upgrades Totals TOTAL COST OF PROPOSED PROJECT $ TOTAL GRANT REQUEST (May not exceed 50% of TOTAL COST up to $25,000) Attach with all required color samples of paint, awning/canopy, sign design, etc., as well as photographs of building's exterior facade, roof and foundation. Applicant's Signature Date Downtown Reinvestment Grant Program Policy 8 DOWNTOWN REINVESTMENT GRANT AGREEMENT FORM Please complete and return with Downtown Reinvestment Grant Application to Economic Development office, 215 E. McKinney no later than 5 pm by the first Monday of each month. If you have any questions, please contact the Economic Development Program Administrator at 940- 349-7732. I have met with the Economic Development Program Administrator, and I have read and fully understand the Downtown Reinvestment Grant procedures established by the Denton City Council. I intend to use this grant program for the aforementioned renovation projects to advance the efforts of revitalization and historic preservation of Denton's historic downtown. I have not received, nor will I receive insurance monies for this revitalization project. I understand that if I am awarded a Downtown Reinvestment Grant by the City of Denton, any deviation from the approved project may result in the partial or total withdrawal of the grant. (If I am awarded a reinvestment grant for facade, awning or sign work and the fagade, sign or awning is altered for any reason within one (1) year from construction, I may be required to reimburse the City of Denton immediately for the full amount of the grant.) Business/Organization Name Applicant's Signature Printed Name Date Building Owner's Signature (if different from applicant) Printed Name Date - -------se-c--tio--n---is---to ---b-e--co--m--plete------d--b--y------c-o-m--i-c ---De--v--e-1-o-p--m--- ent----- staff f-------------------------------------------------- This E Date considered by DTTF Recommendation Staff Signature Date considered by City Manager Recommendation City Manager Signature Date considered by EDPB Recommendation Staff Signature Downtown Reinvestment Grant Program Policy 9 REVIEW PROCESS Total project scores can range from 0 to 30 points. Recommendations will be based on: 0 - 14 points = No funding 15-19 points = Grant recommendation up to $5,000 20-24 points = Grant recommendation up to $10,000 25-30 points = Grant recommendation up to $25,000 Grants more than $10,000 will be subject to a recommendation by the Denton Economic Development Partnership Board and approval by the Denton City Council. Grant applications will be scored based on: • Economic Impact — 0-5 Points o Total investment dollars as provided in the grant application o Investment in structure construction or renovation (excluding purchase price) o Investment in furniture, fixtures and equipment; estimated taxable sales • Historic Accuracy — 0-5 Points o New construction/complements existing buildings o Restores building to historic accuracy o Renovation of building with historic marker (Local, state or national historic marker) Upgrades to Utilities/Impact Fees -- 0-5 Points o Requires upgrades in electrical service o Increases existing water/wastewater capacity o No existing utilities to structure o Extends water/wastewater lines (improves additional properties) o Impact fees may be ranked depending upon percentage of fees to eligible expenses • Increases Population -- 0-5 Points o Increases consumer traffic (day or night) o Increases quality or high end residential units • Location -- 0-5 Points o Near square or transit area o Potential to spur adjacent or nearby development o Catalyst project area • Other -- 0-5 Points o Partners with other businesses (i.e., shared parking) o Project is a "target" business (i.e., grocery, pharmacy, "Denton Store") o Promotes development of Denton Arts and Entertainment District Downtown Reinvestment Grant Program Policy 10 Grant Scoring System 0 1 2 3 4 5 Economic impact Historic accuracy Utility Upgrades/Impact fees Increases population Location Other Totals Downtown Reinvestment Grant Program Policy 11 POLICY FOR SMALL BUSINESS IMPROVEMENT GRANT PROGRAM L GENERAL PURPOSE AND OBJECTIVES The City of Denton Economic Development department promotes Denton and its unique character through the redevelopment and revitalization of Denton, historic preservation, community involvement, and by providing educational and technical assistance to business and property owners. The City of Denton City Council adopted the following Small Business Improvement Grant Program. Each fiscal year (October 1 through September 30), the City Council considers allocation of funds in the City's budget for the grant program. Applications are considered as they are received, and may be funded, if approved, until funds are depleted. IL GRANT GUIDELINES 1. Facade rehabilitation grant funds are available for exterior work on building facades that immediately overlook public streets. 2. Roof and foundation work on commercial buildings may also be eligible for grant funds, providing costs do not exceed 50% of the grant request. 3. No grant applications will be accepted for work that has already been started or complete, or for work that is covered by insurance. 4. Grants are awarded on a reimbursement basis once completed work has been verified by City staff as compliant with the plans proposed in the approved application. Any deviation from the approved grant project may result in the total or partial withdrawal of the grant. Grants are awarded as a single payment to the applicant. 5. All submitted work will be reviewed based on the City of Denton's Municipal Codes and Ordinances. Historic buildings will also be reviewed based on the Secretary of the Interior's Standards for Rehabilitation (see page 7) and. 6. Grant applications and awards can be made in any of the reimbursable activities listed in the Program Details (pages 2-3) and may be combined for any single property or project. However, the maximum award amount available annually per property is $25,000. 7. An applicant is defined as an eligible commercial property within targeted redevelopment areas consistent with the Denton 2030 Plan, or on major corridors which include, but are not limited to: the Downtown Implementation Plan Area, industrial corridor near the Euline Brock Downtown Transit Center, Fry Street Area, and entryways into the City (University Drive, Dallas Drive, Elm, Locust, Carroll, etc.). A single owner of multiple properties may apply for grant funds for each property owned, but may not receive more than $25,000 per property. If an applicant is awarded a reinvestment grant for building improvement, and the improvement is altered for any reason within one (1) year from construction, the applicant may be required to reimburse the City of Denton immediately for the full amount of the grant. 9. Projects will be reviewed and ranked with the following considerations in mind: • Project results in an increase in property valuation and/or generates sales tax revenue • Project rehabilitation reflects historic accuracy or compatible design to the area • Project improves the capacity of water, wastewater and electric utility services • Water/Wastewater impact fees are assessed • Project results in a significant increase in population (residents and/or day or night users) • Location (i.e., targeted redevelopment areas) • Other appropriate impacts may be considered on a case-by-case basis III. PROGRAM DETAILS Reinvestment grants are available for the following types of projects: Facade Rehabilitation and Building Renovation Definition: Removing slipcovers or non-historic/added facades, repointing brick or replacing mortar joints, replacing or restoring cornices, removing paint from brick, replacing windows, restoring transom windows, painting, roof and foundation work. Grant Limits: Facade rehabilitation and building grants are limited to a 50% match of the eligible projects costs, with a cap of $25,000 per grant for facade, roof and foundation work. Roof and foundation repair may constitute no more than half of the request and shall only be considered for funding if included as a portion of a larger project. Paint -only grants are limited to a 50% match with a cap of $5,000 per grant. Awnings & Signs Definition: Replacing, adding or repairing awnings & signs. Signs may include signboards, projecting signs and pedestrian signage (includes window sign, hanging sign and awning/canopy sign). Grant Limits: Awning grants are limited to a 50% match with a cap of $5,000 per grant. Sign grants are limited to a 50% match with a cap of $500 per grant. Impact Fee Reimbursement Definition: Reimbursement for City of Denton water, wastewater, and roadway impact fees Grant Limits: Impact Fee grants are limited to a 50% match with a cap of $25,000 per grant. Utility Upgrades Small Business Improvement Grant Program Policy 2 Definition: Upgrades to water, wastewater and electrical service, includes interior upgrades as well as exterior service upgrades Grant Limits: Utility Upgrade grants are limited to a 50% match with a cap of $25,000 per grant. IV. GRANT APPLICATION PROCESS 1. Contact Economic Development Program Administrator to discuss project and determine eligibility. If requested, the Program Administrator will set up an appointment with the Texas Main Street Center's Architectural Assistance Program, which provides free assistance in selecting paint, color schemes and building and sign materials for building facade and signs for historic buildings within the DTIP area only. 2. Complete grant application form and sign the agreement form. Return the completed application form with all original itemized work estimates, color samples, drawings and example sign material of the proposed work to the Economic Development office at 215 E. McKinney no later than 5 pm the first Monday of each month. Applications should include: a. Drawings of all proposed grant work to be done. b. Color samples of all final paint selections and/or final building or sign material selections must be included with the application. c. Itemized work estimates on all project work from contractors or project architects must be included with the application. (Self -contracted work will be reimbursed for eligible expenses, excluding labor.) d. Photos of the building's exterior, interior, roof or foundation (areas where work is to be performed) The approval process will include without limitation the following: a. All projects must meet current building standards and codes, as well as building permit requirements. b. Applicants are required to attend and present their grant reinvestment project to the Small Business Improvement Task Force. Grants of $10,000 and less will be subject to a recommendation by the Small Business Improvement Task Force and approval by the City Manager. The Small Business Improvement Task Force meets monthly, as needed. c. Grants of more than $10,000 must be reviewed and approved by the Economic Development Partnership Board (EDPB) prior to consideration by the Denton City Council. The EDPB meets monthly and will review submitted applications and consider the Small Business Improvement Task Force's recommendation. d. If recommended by the EDPB, grants of more than $10,000 will be placed on the City Council agenda and the Denton City Council will review the recommendations from the Small Business Improvement Task Force and EDPB. The Small Business Improvement Task Force and EDPB recommendations are advisory only, and no recommendation shall be binding on the Denton City Council. The Denton City Council has the final discretion with regard to funding and reserves the right to modify or reject any project or elements of any project. e. Applications must be complete and contain all required information. Additional information requested by the Small Business Improvement Task Force, EDPB or the Denton City Council must be provided prior to consideration of the grant. Small Business Improvement Grant Program Policy 3 f. All construction bids submitted by an applicant must be current and must be dated no earlier than ninety (90) days prior to the application request. Bids shall be submitted on the contractor's or project architect's letterhead and shall contain the contractor' name, address, telephone number and shall itemize the bid in a manner that allows the Small Business Improvement Task Force, EDPB and Denton City Council to determine the bid components and authenticity of the bid. g. An applicant whose application that has been denied by the Denton City Council shall not be eligible to re -submit a grant application for six (6) months from the date the prior application was declined by the Denton City Council. h. Applicants receiving approval shall commence construction described within the application within ninety (90) days from the date the grant is awarded. All applicants must complete the construction described in the application within one (1) year from the date the grant is approved. If the applicant is unable to commence construction within ninety (90) days from the date the grant is approved or complete construction within one (1) year from the date the grant is approved, the applicant may submit a written request for an extension for the commencement date or completion date provided the extension request is made prior to the ninety (90) day or one (1) year time limit. The Small Business Improvement Task Force or Denton City Council shall not be obligated to allow extensions, but may do so for good cause determined solely by the entity which authorized the grant. The extensions, if granted, shall be for the term and for the conditions determined exclusively by the entity which authorized the grant. An extension denial cannot be appealed and shall be final. i. As a condition of this grant application, the applicant consents and shall allow the Economic Development staff to request City inspections to determine that the grant, if awarded, will not be used for construction on any building that is not in compliance with the City Municipal Codes and Ordinances that are applicable to the construction contemplated in the application. j. No applicant has a proprietary right to receive grant funds. Each request will be considered on a case-by-case basis. k. The applicant shall be required to furnish photographs of the building's exterior, roof and foundation after the construction is completed, as a condition of final grant reimbursement. 1. The applicant is required to obtain all applicable City permits and City approvals required for the construction if a grant is awarded. in. An applicant should attend Small Business Improvement Task Force, EDPB and Denton City Council meetings in which consideration of the application occurs. 5. Reimbursement: When the grant project has been satisfactorily completed and reviewed, the applicant shall present the Economic Development office with copies of all paid invoices, including copies of cancelled checks and/or credit card receipts, for a single payment reimbursement of the approved funding. In addition, the applicant must complete a City of Denton Vendor Form and a Form W-9 to receive payment from the City. Vendor forms and 1099's will be provided by the Economic Development office. Small Business Improvement Grant Program Policy 4 DOWNTOWN IMPLEMENTATION PLAN AREA MAP +4 i�;'i I�k�lAli t r(Ilyl �tl i{(Il��IrIV Legend lrtil �`'1 �lsa Withers �il'1 l�s��llrli ® DTIP Boundry ¢ I tl t O Itlll�itbt'�ikt� Historic Courthouse �i'1{flub` Square 141�.� ... <ls S S�II �Itt tt�}Ili r' i Ili � I lrlljwl� t��}3 �i�;tl f3 1 (1 li Parkway w �" �'k� 111�1fy� McKinne "a, Mc Kinne Oak Hick ry {� 4r i'ME( II If nylpa rnt f 3d 7 } 1(', S camore I Rfflfi z �tl �ylsi E V N Q7�' wE lT3 w J ,fll,ll 1 1ji fn's 1j11 I" 1„ MIIes This map is a graphic representation prepared by the City of Denton and is intended for use only as a reference. Data depicted 0 0.0376.075 0.15 0.225 0.3 is not guaranteed for accuracy and may be subject to revision at any time without notification. A Registered Surveyor for the State of Texas was not consulted. For Survey level accuracy, supervision and certification of the produced data by a Registered Professional Land Surveyor for the State of Texas would need to be performed. Small Business Improvement Grant Program Policy 5 EXHIBIT A CITY OF DENTON SMALL BUSINESS IMPROVEMENT GRANT PROGRAM APPLICATION City of Denton Department of Economic Development 215 E. McKinney Street Denton, TX 76201 940-349-7732 www.cityofdenton.com Julie. GloverL cityofdenton. com Small Business Improvement Grant Program Policy 6 Small Business Improvement Grant Program Application Please return completed with necessary attachments and signature to Economic Development office, 215 E. McKinney no later than 5 p.m. by the first working day of each month. If you have any application questions, please contact the Economic Development Program Administrator at 940-349-7732. Applicant Name Date Business Name Mailing Address Contact Phone Email Address Building Owner (if different from applicant) Historical/Current Building Name Project Site/Address Type of Work: (check all that apply) Paint Only Facade & Building Renovation Signage Awnings Utility Upgrades Impact Fees Details of Planned Improvements relating to Grant Request (attach additional information if necessary). Small Business Improvement Grant Program Policy 7 How will this nroiect benefit Denton? Project Expenditures Estimated Costs Grant Requested Facade/Building Rehab Awnings Signs Impact Fees Utility Upgrades Totals TOTAL COST OF PROPOSED PROJECT $ TOTAL GRANT REQUEST (May not exceed 50% of TOTAL COST up to $25,000) Attach with all required color samples of paint, awning/canopy, sign design, etc., as well as photographs of building's exterior facade, roof and foundation. Applicant's Signature Date Small Business Improvement Grant Program Policy 8 SMALL BUSINESS IMPROVEMENT GRANT AGREEMENT FORM Please complete and return with Small Business Improvement Grant Application to Economic Development office, 215 E. McKinney no later than 5 pm by the first day of each month. If you have any questions, please contact the Economic Development Program Administrator at 940-349- 7732. I have met with the Economic Development Program Administrator, and I have read and fully understand the Small Business Improvement Grant procedures established by the Denton City Council. I intend to use this grant program for the aforementioned renovation project to advance the efforts of building Denton's business community. I have not received, nor will I receive insurance monies for this project. I understand that if I am awarded a Small Business Improvement Grant by the City of Denton, any deviation from the approved project may result in the partial or total withdrawal of the grant. (If I am awarded a reinvestment grant for facade, awning or sign work and the facade, sign or awning is altered for any reason within one (1) year from construction, I may be required to reimburse the City of Denton immediately for the full amount of the grant.) Business/Organization Name Applicant's Signature Printed Name Date Building Owner's Signature (f different from applicant) Printed Name Date ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- This section is to be completed by Economic Development staff Date considered by DTTF Recommendation Staff Signature Date considered by City Manager Recommendation City Manager Signature Date considered by EDPB Recommendation Staff Signature Small Business Improvement Grant Program Policy 9 REVIEW PROCESS Total project scores can range from 0 to 30 points. Recommendations will be based on: 0 - 14 points = No funding 15-19 points = Grant recommendation up to $5,000 20-24 points = Grant recommendation up to $10,000 25-30 points = Grant recommendation up to $25,000 Grants more than $10,000 will be subject to a recommendation by the Denton Economic Development Partnership Board and approval by the Denton City Council. Physical Improvement Grant applications will be scored based on: • Economic Impact — 0-5 Points o Total investment dollars as provided in the grant application o Investment in structure construction or renovation (excluding purchase price) o Investment in furniture, fixtures and equipment; estimated taxable sales • Historic Accuracy — 0-5 Points o New construction/complements existing buildings o Restores building to historic accuracy o Renovation of building with historic marker (Local, state or national historic marker) Upgrades to Utilities/Impact Fees -- 0-5 Points o Requires upgrades in electrical service o Increases existing water/wastewater capacity o No existing utilities to structure o Extends water/wastewater lines (improves additional properties) o Impact fees may be ranked depending upon percentage of fees to eligible expenses • Increases Population -- 0-5 Points o Increases consumer traffic (day or night) o Increases quality or high end residential units • Location -- 0-5 Points o Near square or transit area o Potential to spur adjacent or nearby development o Catalyst project area • Other -- 0-5 Points o Partners with other businesses (i.e., shared parking) o Project is a "target" business (i.e., grocery, pharmacy, "Denton Store") o Promotes development of Denton Arts and Entertainment District Small Business Improvement Grant Program Policy 10 Physical improvement scoring Grant Scoring System 0 1 2 3 4 5 Economic impact Historic accuracy*/Design Utility Upgrades/Impact fees Increases population Location Other Totals *if applicable Small Business Improvement Grant Program Policy 11 N fb N m lD co a fT co a O N coO n N� O O 7! ci O 7! ci N N n O Ln ci ci ci a/ O_ / C CL Y C: 0 CL u fu fu D f0 f0 '6 tw fu a/ fu fu a) y O 110O_ ut lea fu a a/ C f0 O_ u f O fu L pa u V C Y V _ Ya/ f0 2200 2200 3 a •� � Q y .Y i 7 o O NV CL tw tw fu EL v D m v � CL o v I v � Q D Q D u �e 3 3 O .E V N O CO N OV 0 O_ w w O A2 A2 to fu C fu w O fu E> bb • blo b.0 "fu O v o u O m a) M v 0o i ON C O_ N i— O_ Y i o O rl O_ i ut C fu ho Y 'fp t/? ° 'O � f0 o a) L? 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I„ o O O Yi o : , 'i C Y Y r Z, O O OzCO �w O o v 0 m v O O 00 d m E%,`' d m n0 00 o o o m 0=� o N0 d N N Ln N N c -I .--I J Iz i N N m � f0 o O N i N Q Q 0 H - +� O C O. CL N Nate-+ Y N S 7 O Q v w N m 3 °r-I�° ++ C Q:, i ; u Eo N (n C Y �, v m LL y .�,p, 2 d c c o n v c E ,c O fo Y fM v 'F f0 fu KT 0 2 fn 0 a fn H (7 0 ;tom,. U mLn rq O N c -I O N s:Alegal\our documents\ordinances\16\ed investment fiord ord 051916.docx ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS, ESTABLISHING AN ECONOMIC DEVELOPMENT INVESTMENT FUND; DEFINING AND COMMITTING CERTAIN REVENUES OF THE CITY; PROVIDING A SEVERABILITY CLAUSE; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City Council of the City of Denton elects to establish a Special Revenue Fund to be called the Economic Development Investment Fund; and WHEREAS, the Governmental Accounting Standards Board ("GASB") has adopted Statement 54, which states that Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes other than debt service or capital projects; and WHEREAS, the City Council of the City of Denton elects to commit $150,000 annually of the mixed beverage taxes previously accounted for in the General Fund for Economic Development activities beginning with fiscal year ending September 30, 2016; and WHEREAS, the City Council of the City of Denton approved a budget of $150,000 for FY 2015-16 for Economic Development activities; and WHEREAS, the City Council of the City of Denton elects to establish the Economic Development Investment Fund in conjunction with its financial statements beginning with fiscal year ending September 30, 2016; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The City Council hereby creates the Economic Development Investment Fund, an official fund of the City of Denton, Texas. SECTION 2. In order to be eligible to receive a grant under this program, a company must meet at least two of the following criteria: 1) providing higher -wage or knowledge-based jobs; 2) making a substantial capital investment; and 3) addressing a recruitment or supplier target. Higher -wage jobs are defined as having an average annual wage of $55,000 or greater for all positions or at least 25% of the positions have an annual wage of $65,000 or greater. sAlegal\our documents\ordinances\16\ed investment fund ord 051916.docx Knowledge-based jobs are defined as occupations which: • Require specialized and theoretical knowledge, usually acquired through a college education or through work experience or other training which provides comparable knowledge; • Require some research, analysis, report writing and presentations; and • Require special licensing, certification, or registration to perform the job task. Substantial capital investment under the Economic Development Investment Fund is a minimum of $15 million. Recruitment or supplier targets include aviation; advanced manufacturing; renewable energy; research and development; information technology; supply chain logistics and distribution, and large consumers of municipal utilities. SECTION 3. If any section, subsection, paragraph, sentence, clause, phrase or word in this ordinance, or application thereof to any person or circumstances is held invalid by any court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this ordinance, and the City Council of the City of Denton, Texas hereby declares it would have enacted such remaining portions despite any such validity. SECTION 4. This Ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2016. ATTEST: JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: / Page 2 CHRIS WATTS, MAYOR `7 EN 6 c I f- �z w -- City Hall City of Denton 215 E. McKinney St. - Denton, Texas 76201 www.cityofdenton.com , DENTON File #: ID 16-877, Version: 1 DEPARTMENT: CM/ ACM: Date: Human Resources Bryan Langley July 21, 2016 Legislation Text Agenda Information Sheet SUBJECT Receive a report, hold a discussion, and provide staff direction regarding the objectives of a compensation plan and the results of the compensation market study conducted by the UM Global HR. BACKGROUND Council approved a contract with UM Global HR (UMGHR) on February 2, 2016, to conduct a comprehensive compensation and classification study. The study encompassed all regular, non -civil service positions (excluded temporary, seasonal, Police civil service, and Fire civil service positions). Police and Fire civil service positions are classified on a step plan, and their pay plan is updated yearly through a method outlined in the meet and confer agreements. UMGHR is nearing completion of this project. As such, staff wanted to provide Council an update over two meeting dates: July 21 and August 1. During the July 21 meeting, Council will be provided information on the following: • A summary of the issues we face with our current compensation program; • An overview of general compensation program principles and objectives; and • A summary of the salary survey results based on market study conducted by UMGHR. On August 1, UMGHR representatives will return to share with Council their recommendations for our salary structure, the cost impact associated with the recommended salary structure, and market trends they are seeing for reward and recognition programs. FISCAL INFORMATION The fiscal impact of this study will be presented with the AIS for the August 1, 2016, City Council meeting. STRATEGIC PLAN RELATIONSHIP The City of Denton's Strategic Plan is an action -oriented road map that will help the City achieve its vision. The foundation for the plan is the five long-term Key Focus Areas (KFA): Organizational Excellence; Public City of Denton Page 1 of 2 Printed on 7/14/2016 povveied by I_egivt9i IN File #: ID 16-877, Version: 1 Infrastructure; Economic Development; Safe, Livable, and Family -Friendly Community; and Sustainability and Environmental Stewardship. While individual items may support multiple KFAs, this specific City Council agenda item contributes most directly to the following KFA and goal: Related Key Focus Area: Organizational Excellence Related Goal: 1.2 Develop a high-performance work force EXHIBITS Exhibit I - "Compensation Program Overview" paper Exhibit 2 - Power Point presentation - Compensation Introduction Exhibit 3 - Power Point presentation - Compensation Discussion and Market Study Results by UMGHR Respectfully submitted: Carla Romine-Haggmark Director of Human Resources City of Denton Page 2 of 2 Printed on 7/14/2016 povveied by I_egist9i I;, City of Denton Compensation Program Overview During the budget process for fiscal year 2015/2016, the City Manager recommended that the Council authorize funding for a comprehensive compensation and classification study. This study would encompass all positions except temporary, seasonal, Police civil service, and Fire civil service. Police and Fire civil service positions are classified on a step plan, and their pay plan is updated yearly through a method outlined in the meet and confer agreements. Council approved a contract with UM Global HR (UMGHR) on February 2, 2016, to conduct the study. UMGHR's recommendations will be presented at the August 1, 2016, City Council meeting. However, prior to that meeting, staff thought it would be helpful to Council if UMGHR could provide an overview of some compensation principles and objectives, and the methodology they use to meet those objectives. This will be presented at the July 21, 2016, City Council meeting. In preparation for this meeting, staff has prepared a report designed to highlight the current compensation plan(s) for regular, non -civil service employees and some of the challenges associated with our plan(s), which led to a need for this study. In summary, the City's current compensation and classification program has been in place for almost ten (10) years. Over the years, we have developed some challenges with our compensation plan including, but not limited to, internal equity and pay compression issues. Internal equity focuses on comparable work and comparable worth inside the organization, or in other words, determining if "pay equity" exists between like positions. Pay compression (also referred to as salary compression) is the result of the market -rate for a given job outpacing the increases historically given by the organization to high tenure employees. Further explanation of the challenges associated with our compensation plan are outlined beginning on page 14 of this report. In addition to our structure challenges, we face the challenges of more and more employees being eligible to retire. This is not a challenge unique to our organization. Economists generally expect the labor force participation rate to continue its gradual down -tick as more and more boomers retire. In addition to the loss of this group, experts are predicting that there will be a substantial shortage in skilled workers with at least some postsecondary education and training. This reality will result in organizations having to be more creative and competitive with their total compensation program in order to attract qualified candidates. City of Denton Compensation Overview 7-16 1 7/13/2016 In August of 2006, the City Council authorized the City Manager to contract with T. R. Edgar and Associates (Edgar) to design a "pay for performance" compensation plan for Denton Municipal Electric (DME) and conduct a wage and salary survey for the rest of the organization. After seeing the positive aspects of the DME pay plan as it was being designed, staff requested the Council to authorize the City Manager to contract with T. R. Edgar and Associates to design a "pay for performance" compensation plan for the rest of the organization. The contract was approved by the Council on February 7, 2007. When it was all said and done, Edgar designed four (4) compensation plans: Electric, Water/Wastewater, Solid Waste, and General. The Electric plan was implemented in 2006, and all other plans were implemented in 2007. The compensation philosophy adopted with the plans is as follows: It is the City's philosophy that compensation guidelines should evolve from an objective evaluation of the relative value of an individual's position as it compares with all other positions within the City. Generally, specific rewards should be determined on the basis of performance, not on length of service or years since degree. In this regard, the City believes in, and strives to achieve, "merit"pay. The compensation objectives of all the plans include: • To formally define the levels of responsibility and scope of each different position within the City; • To objectively evaluate each different position to determine its relative importance among all other positions; • To develop a compensation structure which ensures that wages/salaries are equitable internally and competitive when compared with the appropriate external labor market; • To provide managers with guidelines that will aid in the consistent and equitable administration of wages/salaries for employees at all levels; and • To attract, retain, and fairly reward employees for their contributions to the goals of the City. The goal was to have each plan be reflective of the different labor markets, and we would incrementally make those changes over the next few years following implementation. A benefit to having the different plans is that one plan could be adjusted, as dictated by the labor market, without affecting the others. Unfortunately, shortly after we implemented the new compensation plans, the economy took a downturn, and we could not fund increases as originally designed. The labor market did not change much, and therefore, our pay plans were not adjusted. Because the markets did not fluctuate as much as we originally thought they would with Solid Waste and Water/Wastewater, we combined those compensation plans with the General compensation plan and retitled the plan to the "General Career Ladder' in FY 12/13. The Electric market was dynamic enough that it continued to warrant a separate City of Denton Compensation Overview 7-16 1 7/13/2016 'E:NTON compensation plan; however, positions that were similar in nature to others in the organization such as Administrative Assistants were moved to the General Career Ladder. In FY 13/14, we developed a "Craft" pay plan and moved all of the positions associated with our Department of Labor approved apprenticeship programs (such as Lineman, Substation Techs, etc.) and the Foreman positions over those areas. At the request of the department and consistent with their labor market, this pay plan was designed to have a single rate that reflects the Electric market once an incumbent reaches the Journeyman level for their positon. Any "Senior" level or foreman positions also has a single rate. Employees on the Electric Craft pay plan do not receive merit increases; instead, increases are awarded annually if the pay plan is adjusted based on market. The Electric Department created a new division in FY 13/14 for its Energy Market Operations. This is a highly competitive field with limited labor available, so we developed separate pay ranges in order to be able to attract and retain employees for these positions. Also, to remain competitive and to be able to adequately attract and retain employees, we developed and implemented a separate Technology Services pay plan in FY 14/15. Compensation is a tool used by management for a variety of purposes to further the performance of the organization. Compensation may be used to: • Recruit and retain qualified employees; • Increase or maintain morale/satisfaction; • Reward and encourage peak performance; • Achieve internal and external equity; and • Reduce turnover and encourage loyalty to the organization. Recruitment and retention of qualified employees is a common goal shared by many employers. To some extent, the availability and cost of qualified applicants for open positions is determined by market factors beyond the control of the employer. While an employer may set compensation levels for new hires and advertise those salary ranges, it does so in the context of other employers seeking to hire from the same applicant pool. Morale and job satisfaction are affected by compensation. Often there is a balance that must be reached between the monetary value the employer is willing to pay and the sentiments of worth felt be the employee. Compensation may also be used as a reward for exceptional job performance. City of Denton Compensation Overview 7-16 2 7/13/2016 'E:NTON Compensation will be perceived by employees as fair if based on systematic components. Various compensation systems have been developed to determine the value of positions. These systems utilize many similar components including job descriptions, salary ranges/structures, and written procedures. There are many steps to developing a thorough compensation program, which have been compartmentalized in this paper into four (4) main areas: L Developing a classification program to ensure internal equity among positions; IL Conducting a market analysis to ensure external equity among competing employers; III. Developing a sound salary structure utilizing the information obtained through the classification program and market analysis; and IV. Developing a reward program to recognize employees for their performance and contributions to the organization. I. Classification Program (Internal Equity) The first step to developing a competitive pay program is to establish a classification program. A classification program shows the relationships between jobs in the organization, which is done through job analysis, job evaluations, and job descriptions. The program should be established on facts and principles that can be explained and accepted by the employees and management. An understanding of the program is important in convincing an employee to accept his/her position on the wage scale. Establishing a classification program takes the subjective approach out of paying an employee. The job is evaluated, not the employee who is performing the job. The job ultimately will have a wage assigned to it, and anyone assigned to work on the job will receive the predetermined amount of pay. The objective of the classification program is to arrange the jobs in a hierarchy of importance or skill (from the least important/skilled to the most important/skilled) through job evaluation and then to slot the jobs into pay grades. In general, the process includes: 1. Analyzing each job and preparing a written job description. The major part of the description shows the function and scope of the job and the essential and non-essential tasks, duties, and requirements for the job. 2. Systematically assessing and comparing each job with the other jobs in the department and/or organization. 3. Producing a rank order of jobs, from the one that is the least important/skilled in the group to the one that is the most important/skilled. 4. Assigning jobs with similar demands or importance into pay grades. 5. Determining how much money each pay grade is to receive. 6. Keeping the system up to date by (a) re-evaluating a job if the job content changes, to ascertain if it should be promoted or demoted to a different pay grade, (b) "slotting" or inserting new jobs into the program, and (c) periodically updating the monetary value of the pay grades. City of Denton Compensation Overview 7-16 3 7/13/2016 'E:NTON A. Classification Approaches There are several approaches to developing a classification system, including non - quantitative approaches such as ranking and classification, and quantitative approaches such as factor comparison and point -factor analysis. Briefly, non -quantitative approaches place jobs in a grading hierarchy by assessing the importance of each job as a whole or unit in relation to all the other jobs being compared. The jobs are not broken down by factors for evaluation purposes. In a ranking system, the rater compares each job against the other jobs, determining whether it is more demanding, as demanding, or less demanding. As a result, a grading of the jobs is obtained. In a classification system, the total job is evaluated and is placed into job grades that have been predetermined and arranged in a hierarchy of importance. Quantitative approaches break down jobs into factors or job characteristics to determine importance. The factor comparison approach compares job against job, looking at a group or set of factors which is given a pre -determined weight (ranking of importance in relation to 100 percent). Such factors may include skill, responsibility, mental requirements, physical requirements, and working conditions. All jobs are ranked in importance in each of these factors and receive a money value for their position in rank. The point -factor approach uses a point rating system to compare each job against a pre -determined job factor or characteristic and assigns a point value for that characteristic. Typically, as few as five (5) and as many as twenty (20) factors may be chosen, and each job is compared against these factors and points are assigned accordingly. The job that receives the most points is considered the most demanding and/or important and receives the most wages. With the Edgar plan, we are using a non -quantitative, classification approach. Differences among all positions are based on qualifications and skills and the relative strengths of specific job factors: 1) Freedom of Action, 2) Impact, and 3) Scope of Job. Qualifications and skills provide the basic framework for assignments requiring various levels of responsibility. The position's scope of responsibility, however, is determined by assessing unique demands within the City. The scope of the job, along with the position's individual autonomy and accountability, represent the job elements most critical to the operational and financial success. These "compensable" factors are the most important items in determining an employee's slotting to the appropriate level of responsibility on the career ladder. An example is included in Figure 1. City of Denton Compensation Overview 7-16 4 7/13/2016 'E:NTON Figure 1 Business Operations Specialist V 150 Business Operations Specialist IV 140 LADDER 1 tsusiness • High School diploma plus additional training or education in area of specialization equivalent to an Associate's degree. • Over 6 years directly related experience performing responsibilities in area of specialization. • Advanced skills in operating office/laboratory equipment and machinery. • Advanced proficiency in personal computer operations and in the use of word processing, spreadsheet, and/or graphics applications. • Ability to communicate with all levels of employees and vendors, clients, contractors, city government officials, and the general public. • Demonstrated ability to perform basic research and analysis in area of specialization and to prepare a written synopsis of findings. • If position requires public contact, such contact will require advanced communication skills. • High School diploma plus additional training or education in area of specialization equivalent to an Associate's degree preferred. • 4-6 years directly related experience performing responsibilities in area of specialization. • Advanced skills using standard office equipment and machinery. • Advanced proficiency in personal computer operations and in the use of word processing, spreadsheet, and/or graphic applications. • Ability to communicate effectively with all levels of employees, including vendors, clients, contractors, city government officials, and the general public. • If position requires public contact, such contact will often require advanced communications skills. • Appropriate driver's and other licenses consistent with job requirements. ns • Performs a variety of administrative/paraprofessional responsibilities, frequently confidential or complex in nature, in a narrow area of specialization in order to facilitate attainment of the organization's mission. • Employees at this level are largely self-sufficient, having attained a mastery of their responsibilities through a combination of education, training, experience, and knowledge of the City's policies, procedures, and regulations. • Employees may have advanced manual skills and dexterity. • Employees at this level may allocate work and provide guidance and training to others in their field of specialization. • Employees at this level may be asked to serve as "spokesperson" for others among their peers. • Performs a variety of administrative/paraprofessional responsibilities, frequently confidential or complex in nature, in direct support of management, in order to enhance their operating efficiency and/or to achieve organizational objectives. • Employees at this level are expected to perform within broad guidelines, relying on their proficiency and past experience to accomplish most activities with limited direction. • Employees at this level will also have advanced manual skills and dexterity and/or rely on past experience to research problems/issues in order to recommend appropriate action. • Employees at this level have a good working knowledge of policies, procedures, and the City's practices applicable to area of specialization. The Edgar plan also distinguishes between "technical" and "business" specialties. The plan has positions classified into "ladders" with typically five (5) levels within each ladder. The "technical" side, at the upper level, requires both a background in one of the applied sciences and the application of that knowledge in the performance of the employee's job. The "business" side, on the other hand, is intended to include employees whose background is in business management or the liberal arts and who apply this knowledge in performing general business or administrative functions. City of Denton Compensation Overview 7-16 5 7/13/2016 DENTON There are seven (7) ladders: Business Operations Ladder (Ladder 1) Employees assigned to this ladder perform jobs that typically include clerical and administrative responsibilities. They are "non-exempt" which means we must pay overtime at time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek. Technical Operations Ladder (Ladder 2) Laborers, skilled trade workers, and technicians are the types of positions to be found in this ladder. They are also "non-exempt" which means we must pay overtime at time and one- half the regular rate of pay for all hours worked over 40 hours in a workweek. Technical Professional Ladder (Ladder 3) The basis for determining the appropriateness of an employee's assignment to this career ladder focuses on two criteria: 1) technical knowledge and 2) time devoted to performance of technical work. Employees assigned to this ladder should have knowledge of computer science, research, statistics, or other similar applied science disciplines gained through formal study, training, or experience. Employees assigned to this ladder will spend in excess of 50% of their time using their technical knowledge to complete their assigned responsibilities. Employees on this ladder are "exempt" from the overtime requirements. Technical Specialty plus Management Ladder (Ladder 3A) Employees assigned to this ladder have a dual assignment combining their technical responsibilities with those of a managerial or leadership nature. They will perform the work as well as typically oversee 3 or more employees. Their responsibilities, however, also will include technical leadership or the management of people, projects, or activity(s) to an extent that justifies managerial recognition. To qualify, employees should be expected to have this dual set of responsibilities on a continuing basis - 6 months or more. Employees on this ladder are "exempt" from the overtime requirements. Business Professional Ladder (Ladder 4) The basis for determining the appropriateness of assigning an employee to this ladder focuses on two criteria: 1) business (as opposed to technical) knowledge and 2) percentage of time spent applying this knowledge to their work. Employees assigned to this ladder should have backgrounds of a general business nature gained through a combination of academic pursuits, training, and experience. Employees assigned to this ladder will spend in excess of 50% of their time using the business knowledge they have gained to carry out their assigned responsibilities. Employees on this ladder are "exempt" from the overtime requirements. City of Denton Compensation Overview 7-16 6 7/13/2016 'E:NTON Business Specialty plus Management Ladder (Ladder 4A) Employees assigned to this ladder will function primarily in their business -oriented discipline. They will perform the work as well as typically oversee 3 or more employees. Their responsibilities, however, will also include work direction and the management of people, projects, or an activity to the extent that justifies managerial recognition. To qualify, employees should be expected to have this dual set of responsibilities on a continuing basis — 6 months or more. Employees on this ladder are "exempt" from the overtime requirements. Management Ladder (Ladder 5) Employees assigned to this ladder should spend in excess of 50% of their time performing in a traditional management role. That is, time should be spent in planning, organizing, staffing, directing, and controlling assigned financial and human resources. While assignment to this ladder does not preclude an employee from having a "specialty," it assumes that the use of this specialized knowledge is secondary to the managerial responsibilities. Employees on this ladder are "exempt" from the overtime requirements. There are typically 5 levels on each ladder. Although we have guidelines for classifying positions at the various levels on each ladder, a general overview of how the levels work is as follows: Level 1 — entry level; minimal training; entering the workforce Level 2 — apprentice — learning the job Level 3 —journey — knows the job; can function somewhat independently Level 4 — master — autonomous, can function independently Level 5 — expert — high level individual contributor Figure 2 is a pictorial representation of the Career Ladder. City of Denton Compensation Overview 7-16 7 7/13/2016 'E:NTON Figure 2 CITY OF DENTON GENERAL FUND LADDERS OF CAREER PROGRESSION a hsli Anjs^im. r %n _ ker SP 3A �ypk6lz Nh�ilrn4a� �+1y#y `s S � any TR �ctq@ 3,wm'maaiw -. ,M i9 Y rt �. s• Auy. a-• � W� � "A7 AKTw�. lrn'o, :tS;li�dl'AStii { o��� _931 `*fMCAtu°I��.`x P,y ldi 4Es�i(�+xiiarg, m P -mPyiJ4 6u°eae:n �pamt�rss ; & Sp—Wilt1:11 zr f, 5. —t 'K ,. T.etma_9 oprmo 5psc-i h—t ii MID _ Tsr.L�At^mS 4psra� vs ,^ap-L izl e ,^e.: i B. Classification Maintenance pesl�La::1 n$? N WENEAT WT 14 THE CAREER' LAD OCR ❑LY,aGNf„ Approval of positions or changes in classification of positions within the City is the responsibility of the Human Resources Department and the concerned Department Director. It is the responsibility of the Department Director to report any errors, problems, or changes that need to be made to a job description in his/her department to the Human Resources Department for review. The Human Resources staff conducts a study of the position, determines the appropriate classification, and submits the classification decision to the Department Director. Decisions may be appealed through the Assistant City Manager over the affected department. II. Market Analysis (External Equity) The second step to developing a competitive pay program is to conduct a market comparison or market analysis of "benchmark jobs" using "benchmark organizations." Benchmark j obs are jobs that share some commonality across organizations, such as an Administrative Assistant or an Accountant. Benchmark organizations share some commonality as well. Factors used to identify benchmark organizations include similar positions, competition for jobs, location/proximity, services provided, and size. City of Denton Compensation Overview 7-16 8 7/13/2016 'E:NTON The following cities are typically contacted when we are conducting a salary survey: Arlington Grand Prairie Carrollton Irving Dallas Lewisville Farmers Branch McKinney Fort Worth Mesquite Frisco Plano Garland Richardson For some of our Utility positions, we typically survey other public organizations in the industry outside of municipalities (e.g., North Texas Municipal Water District, Trinity River Authority, Upper Trinity Regional Water District, Waste Management of Texas). For Electric Utility positions, we also survey several cities in Texas with an Electric Utility. Additionally, we attempt to survey other non -municipal and private organizations within Denton such as Denton County, DISD, UNT, TWU, Peterbilt, ACME Brick, Tetrapak, Sally Beauty, Morrison Milling, Denton Regional, and Presbyterian Hospital. Historically, it has been difficult to obtain information from the private organizations. A market analysis is used to establish the City's position in the competitive labor market. In conducting a market analysis, we compare the midpoint or "market" of our pay plan to the actual average salaries of the incumbents in the surveyed cities/organizations. Salary Structure Design A salary structure is a hierarchal group of jobs and salary ranges within an organization. Salary structures are often expressed as pay grades or job grades that reflect the value of a job in the external market and/or the internal value to an organization Salary structures are an important component of effective compensation programs and help ensure that pay levels for groups of jobs are competitive externally and equitable internally. An effective salary structure allows management to reward performance and the development of skills while controlling overall base salary costs by providing a cap on the range paid for particular jobs. A. Pay Grades Pay grades are used to group jobs that have approximately the same relative internal worth. In other words, all jobs within a particular grade are paid the same rate or within the same pay range. The number of pay grades varies depending the size and degree to which an organization's structure is flat or hierarchical. For the General Career Ladder, the non-exempt pay plan has 12 pay grades. The exempt pay plan has 26 pay grades. (Note: Our pay plans are divided between exempt and non- exempt positions. Non-exempt positions are those positions that we are required by federal law to pay overtime at time and one-half the regular rate of pay for all hours worked over City of Denton Compensation Overview 7-16 9 7/13/2016 'E:NTON 40 hours in a workweek.) The Technology pay plan and Electric Energy Market pay plan have fewer pay grades because there are fewer positions on those pay plans. B. Pay Range Pay ranges (or wage/salary ranges) set the upper and lower bounds of possible compensation for individuals whose jobs fall in a pay grade. There is typically a midpoint between the minimum and maximum pay. The midpoint represents the market value of the job and is determined by looking at the actual average salaries of the City's competitors for labor. In other words, we compare ourselves to those cities and organizations from which we draw or to which we lose our employees. Each pay range has three (3) distinct points: The minimum salary represents the dollar value assigned to an individual first learning the duties and the workings of the organization. The midpoint salary represents the dollar value assigned to an individual who is fully competent, performing all duties and responsibilities in a competent manner. The maximum salary represents the dollar value assigned to an individual who has fully mastered the duties and responsibilities, has progressed well beyond the "normal" expectations of the job, and has enhanced the overall effectiveness of the basic contribution of the position to the organization. Example: ---------- Minimum $24,000 ------------ Midpoint $30,000 Maximum $36,000 Our current pay plan is further divided into thirds. Figure 3 is a sample from the current General Career Ladder pay plan for exempt positions. Figure 3 Business Professional - Ladder 4 Ladder Code 410 - Business Professional I; (Pay Grade - G 11) SalaryIVtrrrtraaa 1Vlirrrt 3 IVFaxrluna Types Annual $33,500.00 S-37,800.0 $40,000.00 S42.20000 $46,500.00 Monthly $2,791.67 $3, 150M $3,333.33 $ 3,1,'; 1667 $3,875.00 Flay Perio $1,288.46 $1.45 ,85 $1,538.46 , 1..6 2,3 .0 8 $1,788.46 Hourly $16.11 1 x.1'7 $19.23 0 '0.` 9 $22.36 O4'i fl2 Recreation Specialist C�4 iO3 Assistant Planner City of Denton Compensation Overview 7-16 10 7/13/2016 'E:NTON G Range Spread A range spread is the width of a salary range from minimum to maximum, typically expressed as a percentage. The spread between the minimum and maximum will depend on variables such as tenure needed to reach full proficiency in the job, the career trajectory (or expected time in job), and the compensation policy and practices. Generally, range spreads are narrower for lower -level jobs and wider for higher level jobs. The range spread varies by each pay grade (or pay level within the pay plan) in the Edgar plan, ranging from 35% at the lowest level to 50% at the top level. The range spread for the Technology pay plan is 50% for all levels. The ranges for the Electric Energy market pay plan range from 36% at the lower level to 73% at the upper level. These broader ranges allow for more competitive salaries, which is needed to be competitive in the current labor market. D. Midpoint Differential The midpoint differential, also known as midpoint progression, is the increase between the midpoints of different salary ranges in the salary structure. For smaller midpoint progression, the advantages are the ranges and midpoints more closely represent the market prices of the jobs (market pay). The disadvantages are it is much harder to administer and there is little distinction between grades, hence harder to ensure internal equity. There may also be problems of salary compression. Salary compression occurs when less experienced people earn as much as or more than longer-term employees (and this can be especially problematic between supervisors and their subordinates). For larger midpoint progression, the advantage is that it is easier to group jobs and segregate which jobs belong in each grade. The disadvantages will be that ranges or midpoints could possibly stray from market pay and there may not be enough levels to accommodate all job family levels. Many compensation experts recommend that midpoint differentials increase as the job hierarchy ascends. The recommended guidelines between salary grades is typically as follows: • 5% to 12% clerical/production • 10% to 15% paraprofessional, professional, management • 15% to 25% total midpoint differential between supervisor/subordinates • 20% to 35% executive levels Our differentials vary depending on ladder and range from 4% to 30%. Range (or grade) overlap is the degree of overlaps between two (2) adjacent ranges. It is determined by two (2) variables —job grade's pay range and the percentage differentials between midpoints. The greater the mid -point progression, the smaller the overlap will be. Figure 4 illustrates the anatomy of a salary structure. City of Denton Compensation Overview 7-16 11 7/13/2016 'E:NTON Figure 4 Anatomy of a Salary Structure (Prepared by UNIGHR) Base Pay Line Policy Is the Compensation Philosophy as well as the beginning values in creating structural differences between grades. Progression Within The Range Upper Bound Progression within the A Max immediately promote to a higher grade. range Is the difference between the maximum and minimum, divided by one_ Rangespread represent and support pay plan sustainability. Max VOM Thenarrower the range spread, the faster employees reach the maximum of the pay range. Grade Overlap Max the longer an employee stays in the grade. ®® Grade--------- This is veryuseful forjobs with varying levels such as Admin Asst. 1, 11, 111 Upper Bound and Lower Bound Overlap The spread from P50 to min should be equivalent to the spread from Max to P50 Range P50 I Grade 3 Spread ---- ---- I Min 'Grade 2 i Min Grade I Min V Lower Bound Base Pay Line Policy Is the Compensation Philosophy as well as the beginning values in creating structural differences between grades. Progression Within The Range Are differences between percentiles. This represents the policy on pay for performance. Salaries progress into the range based on performance and license or certificate achievements, without the need to immediately promote to a higher grade. Range Spread Is the difference between the maximum and minimum, divided by one_ Rangespread represent and support pay plan sustainability. The wider the range spread, the longer the pay plan can be sustained_ Thenarrower the range spread, the faster employees reach the maximum of the pay range. Grade Overlap Is the difference between the maximum of the lower grade and the minimum of the upper grade. The higher the overlap the longer an employee stays in the grade. This allows for career progression within the grade, without the need to promote in grade. This is veryuseful forjobs with varying levels such as Admin Asst. 1, 11, 111 Upper Bound and Lower Bound These are boundaries. It shows the structural integrity of a pay plan that should always be balanced. The spread from P50 to min should be equivalent to the spread from Max to P50 City of Denton Compensation Overview 7-16 12 -e" 7/13/2016 DENTON E. Salary Structure Maintenance The Human Resources department, with the help of a compensation consultant, periodically conducts a market analysis to determine the City's competitiveness within the market. Based on the results, the Human Resources department and/or consultant will make a recommendation to the City Manager and/or Executive team for structure and/or pay adjustments. Any recommendations for structure adjustments or employee pay increases are included in the budget and presented to the City Council for approval. The City Manager and City Council have the discretion to determine if the adjustments are going to be applied to employees' hourly rates or to the ranges only. In the past, if adjustments were applied to the ranges only, those employees whose hourly rates fell below the new minimum after the ranges were adjusted received an increase. The increase was equivalent to the minimum rate of pay for the job. IV. Performance Management System (Individual Equity) The final step to developing a competitive pay program is to adequately recognize and reward competent employees for their contributions. As with the previous compensation program, we have a "pay for performance" component, which we call "merit pay." Merit pay is a compensation strategy that is used to motivate employees with pay increases for positive performance outcomes. Merit pay systems can be advantageous in helping the organization attract and retain top talent. High achievers usually prefer to work for organizations where they feel their accomplishments will be acknowledged and rewarded. For established employees, merit compensation helps retain employees who might otherwise leave for better - paying opportunities. With our current compensation program, employees receive an increase based on their performance and based on where their pay falls within the pay range. Performance ratings fall into the following categories: Improvement Essential Strong (-) Strong Strong (+) Leading Performance The merit matrix for FY 15/16 is as follows: Level of Performance Com ensation Range Midpoint and Below Above Midpoint Leading Performance 5% 4% Strong Performance 1-3% 0-2% Improvement Essential 0% 0% City of Denton Compensation Overview 7-16 13 7/13/2016 'E:NTON The current compensation program was implemented almost ten (10) years ago. Since that time, we have had some challenges that has affected our ability to administer the program as effectively as possible. 1. Since implementing the pay plan in 2007, we have added approximately 279 new FTEs. Many of these new FTEs were newly classified positions. As we have grown as a City and have added new classifications, the design of the salary structure has limited our options on where to classify the positions. This has affected our internal equity in some areas. 2. We have internal equity and pay compression issue with some supervisors and subordinates, especially with the field employees and their supervisors. We are limited in our options to fix the compression issue without inflating the salary structure. 3. We are a full service City with a variety of industries represented within our pay structures. Some of these industries—especially Electric, Engineering, and Technology—have different markets which are highly competitive with a limited labor supply. As such, we need a salary structure(s) that can be better adaptable to the dynamic markets. 4. We have been limited with traditional compensation practices. Our Electric Operations, especially the Energy Market group, is competing with organizations that have other recognition and reward systems that increase their total compensation. To be truly competitive for the long-term, we need to explore ways to better compete with these organizations. 5. The construction industry (and gas/oil industry from time to time) creates recruitment and retention challenges for us with some of our field positions such as Equipment Operators. 6. The ranges are very narrow for many of our positions. This can make it difficult to offer competitive salaries in some of the more difficult to fill positions without an employee topping out quickly. In other words, they have less opportunity for future earning potential within their pay range. 7. Our compensation plan is difficult to explain to supervisors and employees. 1. Our workforce is aging and more and more employees are becoming eligible to retire, although age is only one of the factors in retirement eligibility. The City's retirement system for all employees (except Fire civil service) allows for retirement at the age of 60 with 5 years of service or any age with 20 years of service. As of December 31, 2015, approximately 24% of our employees, excluding those participating in Fire Pension, were eligible to retire. Assuming a static workforce (no turnover), this number increases to 45% by the end of 2020. The City's pay philosophy and reward programs (as well as benefits) can influence whether these employees work beyond retirement eligibility. The chart below shows a breakdown of employees eligible to retire under TMRS by ladder. Again, this information assumes a static workforce. City of Denton Compensation Overview 7-16 14 7/13/2016 'E:NTON Number of Employees Eligible to Retire Under TMRS by Ladder Based on Data as of December 31, 2015 Ladder Currently Eligible (as of 12/31/15) Total Employees Eligible' within 5 Years or Less Number Percent of Total # of Ees on Ladder Number Percent of TotaI # of EesEon Ladder 1 Business Operations 38 18.01% 87 41.23% 2 Technical Operations 76 16.74% 160 35.249/o 3 Technical Professional 14 19.72% 30 42.25% 4 Business Professional 21 24.14% 41 47.13%' 3A Tech Specialty w/Mgt 39 41.05% 53 55:79% 4A Bus Specialty w/Mgt 24 38.71% 41 66.13% 5 Management 21 63.64% 31 93.949/o' Police 47 29.56% 83 52.209/o' Fire* 2 50.00% 3 75.009/o'; Total Eligible to Retire 282 23.98% 529 *Only captures el igi bi I ity under TMRS; not Fire Pension 2. Turnover varies from year to year but since FY 2013/14, we have been trending close to 10%. The chart below reflects the turnover, excluding temporary and seasonal positions, from fiscal year 2008/09 through fiscal year 2015/2016 (projected). 12.00°/1 10.00% 8.00 °/l 6.00 °/l 4.00% 2.00 °/l 0.00 Turnover Excluding Temporary and seasonal Employees 9.6-19.6 9.699-6 10.109-6 _..._ 9.45/9-6 _ 7.389/6 *The projected turnover for FY 15/16 includes Police and Fire civil service employees. If they are excluded, the projected turnover for non -civil service employees is 11.39%. City of Denton Compensation Overview 7-16 15 7/13/2016 Turnover costs the City money. Many sources say that the cost to hire a supervisory, technical, or management personnel can cost from fifty percent (50%) to several hundred percent of their salaries. We have historically used a simple formula at the City when conducting an analysis of the cost of turnover: 1/3 of the employee's salary for recruitment costs; 1/10 of the employee's salary for training; and 1/2 of the employee's salary for learning curve. When looking at the turnover information in our HRIS system (JD Edwards) from October 1, 2015 through May 31, 2016, 93 employees (excluding temporary and seasonal) have left the organization. Of these 93, 25 were due to retirement. Therefore, we will only consider 68 employees initially in the cost of turnover analysis. Some turnover is inevitable and cannot be avoided. For example, employees may resign for a variety of personal reasons including medical, school, or relocation. However, some turnover, such as those leaving for better pay in a comparable position, can be avoided. When considering the leave reasons logged in JD Edwards, of the 68 employees who left the City due to non -retirement reasons, 21 were reported as "Resigned — better pay for equivalent position." The turnover cost for those 21 employees, considering their salary when they resigned and using the formula above, equates to $805,142. An additional 13 only reported "resigned" while all others were specific with a reason for school, military, moving, dissatisfied, or personal reasons. Since the others were so specific and because we know employees are not always forth -coming as to why they are leaving the organization, it is reasonable to include these 13 employees in the cost of turnover analysis. With this assumption, the number of employees included in the cost of turnover analysis is 34. This equates to $1,254,089. This cost of turnover analysis only includes eight (8) months' worth of resignation information. As you can imagine, the cost will be even higher when considering a full year. Again, as noted above, the City's pay philosophy, reward program, and benefits can influence the retention of some employees. City of Denton Compensation Overview 7-16 16 7/13/2016 'E:NTON References Waters. Rollie O. (2005). Compensation 101 Session presented to Denton City Council on December 5, 2005. Dallas, TX Linkedln. (2016). "Calculating Pay Scale or Salary Ranges." Mohammad Amjad. Retrieved from tts e//wwwlinkedin.co121/pulse/calculating--scale_ salary -ran yes-lnoha�nlnad-a�j ad SHRM. (2009). "Salary Range Structure Practices by Culpepper and Associates." Retrieved from htt se//www.shl-�n.or�/hrdisci lines/cola ensatiol�/articles/ ayes/salarvran�e.as x Kenexa. PowerPoint presentation. "Best Practices for Designing Salary Structures." Andrew Miller and Mark Szypko. Retrieved from www.hr.col/en/a/Media/resource/ ggolo 7e.deliver? HCAhr. (2016). Power Point presentation. "Compensation Structures — Design, Implementation, Maintenance." Scott Kelly. Retrieved from tte//1tshln.or/i1aes/downloads/compensation structures.df UMGHR. (2016). Draft presentation for July 21, 2016, City Council meeting. Denton, TX AZ Central. "The Advantages of a Merit Compensation." Neil Kokemuller. Retrieved from htt e//vourbusiness.azcentral.co121/advantages-merit-com ensation-11642.html Hr-guide.com. "Compensation. Outline and Definitions." Retrieved from http Hwww.hr- guide.coln/data/G400.ht1n City of Denton Compensation Overview 7-16 17 7/13/2016 'E:NTON 4 4 .: � c c6 0- 0— cu - 0— ccu r. c c� 0- 0— (3) - 0— (3) c6 2 g r. 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