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March 3, 2009 Agenda
AGENDA CITY OF DENTON CITY COUNCIL March 3, 2009 After determining that a quorum is present, the City Council of the City of Denton, Texas will convene in a Work Session on Tuesday, March 3, 2009 at 2:30 p.m. in the Council Work Session Room at City Hall, 215 E. McKinney Street, Denton, Texas at which the following items will be consi ere 1. Requests for clarification of agenda items listed on the agenda for March 3, 2009. 2. Receive a report, hold a discussion, and give staff direction regarding the city's Comprehensive Annual Financial Report (CAFR) and External Audit Report. 3. Receive a report, hold a discussion, and give staff direction regarding the evaluation and implementation of a fixed asset/job cost accounting system. 4. Receive a report, hold a discussion and give staff direction regarding renewing the Red Light Camera contract. 5. Receive a briefing, hold a discussion and give staff direction on proposed amendments to Subchapters 12, 13, and 23 of the Denton Development Code (DDC). These are staff initiated Code amendments to clarify standards and regulations regarding outside storage and outside display requirements; revise the requirement for window and door areas for single-family residential dwellings, multiple unit residential dwellings and multi-family development; provide definitions for windows and doors; and revise the definitions of front lot line, front yard, rear yard and side yard. The purpose of this work session is for the City Council to review the proposed amendments and provide staff with direction. The Planning and Zoning Commission recommends approval (6-0). (DCA08-0009) 6. Receive a briefing, hold a discussion and give staff direction on the proposed amendments to Subchapters 13 and 23 of the Denton Development Code (DDC). These are staff initiated Code amendments to clarify the buffer, screening and fencing requirements in Subchapter 13, and to provide definitions for master planned development, buffer, fence, perimeter fence, screening, and refuse containers. The purpose of this work session is for the City Council to review the proposed amendments and provide staff with direction. The Planning and Zoning Commission recommends approval (5-0). (DCA08-0012) Following the completion of the Work Session, the City Council will convene in a Closed Meeting to consider specific items when these items are listed below under the Closed Meeting section of this agenda. When items for consideration are not listed under the Closed Meeting section of the agenda, the City Council will not conduct a Closed Meeting and will convene at the time listed below for its regular or special called meeting. The City Council reserves the right to adjourn into a Closed Meeting on any item on its Open Meeting agenda consistent with Chapter 551 of the TEXAS GOVERNMENT CODE, as amended, as set forth below. 1. Closed Meeting: City of Denton City Council Agenda March 3, 2009 Page 2 A. Consultation with Attorneys -Under Texas Government Code, Section 551.071. 1. Receive information about and a consultation from the City's attorneys regarding the status of two of the pending TMPA-related cases which includes: Texas Municipal Power Agency v. Cites, an, et al, Cause No. 28,169, in the 506th Judicial District Court in and for Grimes Count , y Texas; Ex Parte Texas Municipal Power Agency, Cause No. D-1-GN-08- 003426, in the 250th Judicial District Court in and for Travis County, Texas; a public discussion and deliberation of these legal issues in an open meeting would clearly conflict with the duty of the City's attorneys to the City of Denton and the Denton City Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas. B. Consultation with Attorney -Under Texas Government Code Section 551.071. 1. Consultation on status of potential litigation concerning street failures in the Wind River subdivision. C. Deliberations regarding Certain Public Power Utilities: Competitive Matters - Under Texas Government Code Section 551.086. 1. Receive a presentation from staff regarding negotiations between Denton Municipal Electric (DME) and a leading wind developer. The project is known as "Project Alpha"; discuss, deliberate and provide staff with direction. D. Deliberations regarding Real Property -Under Texas Government Code Section 551.072, Consultation with Attorney -Under Texas Government Code Section 551.071. 1. Deliberate the value of real property interests for the lease of City property, in the H. Sisco Survey, Abstract Number 1184 and being a tract of land approximately 1,437.48 square feet in size, located west of the southwest corner of the intersection of Industrial Street and East Hickory Street, Denton, Texas (the "Property"). Receive legal advice from the City Attorney or her staff concerning legal issues regarding the lease of such real property interests. E. Consultation with Attorney -Under Texas Government Code Section 551.071. 1. Receive a briefing and status report from the City's attorneys regarding the litigation entitled The City of Denton, Texas v. The Universit~f North Texas, Cause No. 2008-20043 -15 8, now endin before the 15 8th p g Judicial District Court in and for Denton County, Texas; discuss, deliberate and provide the attorneys with direction. A public discussion of these legal matters would conflict with the duty of the City's attorneys to the City Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas. City of Denton City Council Agenda March 3, 2009 Page 3 F. Deliberations regarding Personnel Matters -Under Texas Government Code Section 551.074. 1. Deliberate and discuss the evaluation, duties, discipline, procedures, and contracts of the Municipal Court Judge, City Attorney, City Auditor, and City Manager. G. Deliberations regarding Real Property -Under Texas Government Code Section 551.072; Consultation with Attorney -Under Texas Government Code Section 551.071. 1. Discuss, deliberate and receive information from staff and provide staff with direction pertaining to the grant of an easement for the construction, maintenance and operation of a rail line within the Denton Rail Corridor to the Denton County Transportation Authority (DCTA), the limits of said corridor being all that certain lot, tract or parcel of land described in that certain Quitclaim Deed from Missouri Pacific Railroad Company to the City of Denton, Texas dated August 9, 1993, and filed on August 24, 1993, as Clerk No 93-R0058485 in the Real Property Records of Denton County, Texas; and also being that same property described in that certain Correction Quitclaim Deed, dated June 1, 2001 and filed for record in the Real Property Records of Denton County, Texas as Volume 4857, Page 020211 where such deliberation in an open meeting would have a detrimental effect on the position of the City Council in negotiations with DCTA. Consultation with the City's attorneys regarding legal issues associated with the granting of said easement above described where a public discussion of these legal matters would clearly conflict with the duty of the City's attorneys to the City of Denton and the Denton City Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas. Regular Meeting of the City of Denton City Council on Tuesday, March 3, 2009 at 6:30 p.m. in the Council Chambers at City Hall, 215 E. McKinney Street, Denton, Texas at which the following items will be considered: 1. PLEDGE OF ALLEGIANCE A. U.S. Flag B. Texas Flag "Honor the Texas Flag - I pledge allegiance to thee, Texas, one state under God, one and indivisible." 2. PROCLAMATIONS/PRESENTATIONS A. ProclamationslAwards 1. Presentation of the Certificate of Achievement for Excellence in Financial Reporting by the Government Finance Officers Association. 2. Proclamation for Convoy of Hope Day City of Denton City Council Agenda March 3, 2009 Page 4 3. Proclamation for Social Work Month 4. Proclamation for National Surveyors Week 3. CONSENT AGENDA Each of these items is recommended by the Staff and approval thereof will be strictly on the basis of the Staff recommendations. Approval of the Consent Agenda authorizes the City Manager or his designee to implement each item in accordance with the Staff recommendations. The City Council has received background information and has had an opportunity to raise questions regarding these items prior to consideration. Citizens may speak on items listed on the Consent Agenda. A Request to Speak Card should be completed and returned to the City Secretary before Council considers the Consent Agenda. Citizen comments on Consent Agenda items are limited to three minutes. Listed below are bids, purchase orders, contracts, and other items to be approved under the Consent Agenda (Agenda Items A - Q). This listing is provided on the Consent Agenda to allow Council Members to discuss or withdraw an item prior to approval of the Consent Agenda. If no items are pulled, Consent Agenda Items A - Q below will be approved with one motion. If items are pulled for separate discussion, they may be considered as the first items following approval of the Consent Agenda. A. Consider adoption of an ordinance of the City Council of the City of Denton, Texas, authorizing the City Manager or his designee to execute a second one-year extension to the depository services contract with Wachovia Bank, N.A.; and providing an effective date. The Investment Committee recommends approval (5-0). B. Consider approval of a resolution reviewing and adopting revisions to the Investment Policy regarding funds for the City of Denton; and providing an effective date. The Investment Committee recommends approval (5-0). C. Consider approval of a resolution adopting the City of Denton Parks, Recreation and Trails System Master Plan; and providing an effective date. The Parks, Recreation and Beautification Board recommends approval (6-0). D. Consider approval of a resolution to loan the water color painting, Spring Dusk, to the Pearl Fincher Museum of Fine Arts, in Spring, Texas. The Parks, Recreation and Beautification Board recommends approval (7-0). E. Consider adoption of an ordinance authorizing the City Manager to execute change order number one to a contract for the rebuilding of a D7 Caterpillar Landfill dozer between the City of Denton and Holt Cat; providing for the expenditure of funds therefor; and providing an effective date (File 4221-Repair of D7 Caterpillar Landfill dozer in the amount of $92,705.82 and Change Order Number One for the rebuilding of the transmission of a dozer in the amount of $32,859 for a total award of $125,565). The Public Utilities Board recommends approval (7-0). City of Denton City Council Agenda March 3, 2009 Page 5 F. Consider adoption of an ordinance of the City of Denton, Texas authorizing the City Manager to execute a professional services agreement for electric design and engineering services pertaining to the Jim Christal Substation and other engineering and related consulting services for CIP projects for Denton Municipal Electric with Ampirical Solutions, L.L.C. (in an amount not-to-exceed $188,032); authorizing the expenditure of funds therefor; and providing an effective date. The Public Utilities Board recommends approval (7-0). G. Consider adoption of an ordinance accepting competitive bids and awarding a public works contract for the construction of concrete pavement for the Evers Park Athletic Complex and North Lakes Park fields 5 and 6; providing for the expenditure of funds therefor; and providing an effective date (Bid 3516-awarded to the lowest responsible bidder meeting specification, Floyd Smith Concrete, Inc. in the amount of $229,974.86). H. Consider adoption of an ordinance accepting competitive bids and awarding a public works contract for the construction of five overhead distribution line projects for Denton Municipal Electric; providing for the expenditure of funds therefor; and providing an effective date (Bid 4243-awarded to the lowest responsible bidder meeting specification, Finway, Inc. in the amount of $364,146). The Public Utilities Board recommends approval (7-0). I. Consider adoption of an ordinance of the City of Denton, Texas authorizing the City Manager to execute a professional services agreement between the City of Denton and MarketSphere Consulting, LLC for a fixed asset/job cost system needs assessment and gap analysis; authorizing the expenditure of funds; and providing an effective date (RFSP 4225-Fixed Asset/Job Cost System Needs Assessment JD Edwards Fixed Asset/Job Cost System Gap Analysis awarded to MarketSphere Consulting, LLC in an amount not to exceed $194,930). J. Consider adoption of an ordinance of the City of Denton, Texas providing for, authorizing, and approving the expenditure of funds for the purchase of protective relay, control, monitoring, metering, software, and integration products manufactured by Schweitzer Engineering Laboratories, Inc., which is available from only one source, KD Johnson, Inc. in accordance with the pertinent provisions of Chapter 252 of the Texas local government code exempting such purchases from the requirements of competitive bidding; and providing an effective date (File 4265-Purchase of Protective Relay, Control, Monitoring, Metering and Integration Hardware for Denton Municipal Electric in the estimated amount of $662,575). The Public Utilities Board recommends approval (7-0). K. Consider adoption of an ordinance accepting competitive bids and awarding a contract for the purchase of tree trimming and vegetation management services for Denton Municipal Electric; providing for the expenditure of funds therefor; and providing an effective date (Bid 4233-Tree Trimming Services awarded to ABC Professional Tree Services, Inc. in the amount of $450,000). The Public Utilities Board recommends approval (7-0). City of Denton City Council Agenda March 3, 2009 Page 6 L. Consider adoption of an ordinance accepting competitive bids and awarding a contract for the purchase of transmission control and relay panels for Denton Municipal Electric; providing for the expenditure of funds therefor; and providing an effective date (Bid 4245-Relay Panels for RD Wells Interchange and Hickory Creek Substation awarded to Electrical Power Products in the amount of $188,893). The Public Utilities Board recommends approval (7-0). M. Consider adoption of an ordinance of the city of Denton authorizing an agreement between the City of Denton, Texas and Denton Parks Foundation to assist with preparation for the 2009 Cinco de Mayo celebration; providing for the expenditure of funds; and providing for an effective date. ($1,450) N. Consider adoption of an ordinance of the City of Denton, Texas approving an interlocal cooperation agreement between the City of Denton and the Denton County Transportation Authority (DCTA) granting an easement to the DCTA on the Denton Branch Rail Trail for the purpose of building a public commuter rail line. The Mobility Committee recommends approval (3-0). 0. Consider adoption of an ordinance authorizing the City Manager to enter into an interlocal cooperative agreement between the City of Denton and the North Central Texas Council of Governments for a Local Air Quality Program traffic signal project; and providing for an effective date. The Mobility Committee recommends approval (3-0). P. Consider adoption of an ordinance of the City Council of the City of Denton, Texas authorizing the City Manager to execute a First Amendment to Agreement for Professional Legal Services with the law firm of Walker Sewell, LLP for professional legal services relating to litigation styled: Texas Municipal Power Agent, v~~yan, Texas, Cause No. 28,169 pending in the 506th Judicial District Court in and for Grimes County, Texas; City of Bryan, Texas v. City of Denton, et al, Cause No. 08-002233-CV-361 brou ht in the 361St Judicial District g Court in and for Brazos County, Texas; Ex Parte Texas Municipal Power Agency, Cause No. D-1-GN-08-003426, now pending before the 250th Judicial District Court in and for Travis County, Texas; together with ancillary litigation involving the City of Bryan, Texas as plaintiff and the three northern cities of TMPA (Denton, Garland and Greenville) as defendants, which suit has been severed and is in the process of being transferred from Travis County to Hunt County, Texas; authorizing the expenditure of funds therefor in the amount of an additional $105,000 (for the total not-to-exceed amount of $195,000); and providing an effective date. The Public Utilities Board recommends approval (7-0). Q. Consider adoption of an ordinance of the City of Denton, Texas, authorizing and directing the City Manager to execute a right of entry and possession in favor of the Denton County Transportation Authority (DCTA) authorizing DCTA to enter upon and take possession of certain real property of the City of Denton for the purpose of performing pre-construction surveying, installing erosion control, conducting clearing and grubbing and performing utility pot holing; an providing an effective date. The Mobility Committee recommends approval (3-0). City of Denton City Council Agenda March 3, 2009 Page 7 R. Consider adoption of an ordinance amending Section 18-92 "Prohibited for Certain Purposes" of Chapter 18 "Motor Vehicles and Traffic" of the Code of Ordinances of the City of Denton; adding a new Section 18-92.1 "Parking Nuisances" to Chapter 18; amending Chapter 21 "Offenses" of the Code of Ordinances to add a new Section 21-8 "Dumping;" providing a severability clause; providing a penalty clause; and declaring an effective date. 4. ITEMS FOR INDIVIDUAL CONSIDERATION A. Consider adoption of an ordinance considering all matters incident and related to the issuance, sale and delivery of "City of Denton General Obligation Refunding Bonds, Series 2009"; establishing parameters for the redemption of certain outstanding obligations of the city; authorizing the issuance of the bonds; approving and authorizing instruments and procedures relating to said bonds; and enacting other provisions relating to the subject. B. Consider adoption of an ordinance of the City of Denton, Texas creating a new Chapter 17 "Property Maintenance" in the Code of Ordinances of the City of Denton; repealing Chapter 20 "Nuisances" of the Code of Ordinances; repealing Sections 21-5 1, 21-55, and 21-56 of Chapter 21 "Offenses" of the Code of Ordinances; repealing a portion of Section 35-76 of Chapter 35 "Zoning" of the Code of Ordinances; providing a severability clause; and providing for an effective date. C. Consider nominations/appointments to the City's Boards and Commissions: 1. Denton Housing Authority 2. Historic Landmark Commission 3. Human Services Advisory Committee 4. Charter Review Committee D. Citizen Reports 1. Review of procedures for addressing the City Council. 2. Receive citizen reports from the following: A. Elma Walker regarding 65 and over tax exemption for property taxes. B. Kathleen Wazny regarding property taxes for seniors in the City. C. Nell Yeldell regarding telephone services in Denton and harassing and threatening calls and eavesdropping. D. Bob Clifton regarding conflicts of interest. E. Dan Hurt regarding 65 and over exemption on city tax. F. Al Jacobson regarding tax exemptions for senior citizens over 65. G. Willie Hudspeth regarding concerns of Southeast Denton. H. Jordan Hudspeth regarding concerns of Southeast Denton. I. Lanisha Hudspeth regarding concerns of Southeast Denton. J. Hagar Hudspeth regarding concerns of Southeast Denton. City of Denton City Council Agenda March 3, 2009 Page 8 E. 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. F. Possible Continuation of Closed Meeting under Sections 551.071-551.086 of the Texas Open Meetings Act. G. Official Action on Closed Meeting Item(s) under Sections 551.071-551.086 of the Texas Open Meetings Act. CERTIFICATE I certify that the above notice of meeting was posted on the bulletin board at the City Hall of the City of Denton, Texas, on the day of , 2009 at o'clock (a.m.) (p.m.) CITY SECRETARY NOTE: THE CITY OF DENTON CITY COUNCIL CHAMBERS IS ACCESSIBLE IN ACCORDANCE WITH THE AMERICANS WITH DISABILITIES ACT. THE CITY WILL PROVIDE SIGN LANGUAGE INTERPRETERS FOR THE HEARING IMPAIRED IF REQUESTED AT LEAST 48 HOURS IN ADVANCE OF THE SCHEDULED MEETING. PLEASE CALL THE CITY SECRETARY'S OFFICE AT 349-8309 OR USE TELECONMINICATIONS DEVICES FOR THE DEAF (TDD) BY CALLING 1-800-RELAY-TX SO THAT A SIGN LANGUAGE INTERPRETER CAN BE SCHEDULED THROUGH THE CITY SECRETARY'S OFFICE. AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 DEPARTMENT: Finance ACM: Jon Fortune SUBJECT Receive a report, hold a discussion, and give staff direction regarding the FY 2007-08 Comprehensive Annual Financial Report and annual audit. BACKGROUND Each year, the City hires an independent accounting firm to conduct an audit of the City's basic financial statements. The purpose of the audit is to express an opinion as to whether the City's financial statements present fairly, in all material respects, the financial position of the City. The annual audit report is comprised of four major components: 1) the Comprehensive Annual Financial Report (CAFR), 2) Management Letter, 3) Single Audits, and 4) Auditor's Communication to the Audit Committee. The CAFR represents the entire financial position of the City, specifically for the fiscal year ending September 30, 2008. The document includes the independent auditor's opinion of management's representations within the annual report. The auditors have provided the City a clean opinion, which means that in the opinion of Weaver and Tidwell, LLP., the City's financial statements present fairly, in all material respects, the financial position of the City. The Weaver and Tidwell audit specifically included the following items: • Audit of the City's CAFR in accordance with generally accepted auditing standards. • Performance of a Single Audit, which is an audit of the City's expenditures of State and Federal grant awards. • Preparation of a letter to management detailing any weaknesses or ideas for improvement identified during the audit. • A review, analysis, and evaluation of the City's financial accounting systems and internal controls. The auditor's examination of internal controls was conducted at a level sufficient to gain an understanding of the internal control structure to determine the nature, timing, and extent of audit procedures. The auditors did not perform an audit of internal controls, but performed limited tests of internal controls for the purpose stated above. Additionally, the auditors examined, on a test basis, evidence supporting amounts and disclosures in the combined financial statements. Agenda Information Sheet March 3, 2009 Page 2 Attached you will find a copy of the City's 2008 CAFR. Included in the CAFR is the Independent Auditor's Report. Also, I have attached the Letter to Management from Weaver and Tidwell, the Single Audit reports, and the Auditor's Communication to the Audit Committee. Representatives from Weaver and Tidwell will be present to provide their opinion and to answer your questions. I have received some questions from Audit and Finance Committee members related to the CAFR document. Attached is a summary of the questions that I have received and the answers that we have been able to compile. PRIOR ACTION/REVIEW (Council, Boards, Commissions) The Audit/Finance Committee fully discussed this item during its February 16, 2009, meeting. EXHIBITS a) Comprehensive Annual Financial Report (CAFR) b) PowerPoint Presentation c) Single Audit Reports d) Management Letter e) Auditor's Communication to the Audit Committee f) CAFR Questions from Committee Members and Answers from Staff Respectfully Submitted: Bryan Langley Director of Finance CITY OF DENTON, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the fiscal year ended September 30, 2008 CITY MANAGER George C. Campbell ASSISTANT CITY MANAGER Jon Fortune Prepared by: Bryan Langley Lori Allen Director of Finance Accounting Technician Harvey Jarvis David Wilson Controller Electric Accounting Manager Cody Wood Michelle McCallum Assistant Controller Budget Manager Diane Chang, CPA Antonio Puente Senior Grants Accountant Revenue and Treasury Analyst Kurt Breyfogle Katie Griffin Senior Utilities Accountant Financial Analyst Ed Lane, CPA Caroline Finley Accountant III Treasury and Debt Manager Mary Billings Accountant III City of Denton, Texas Comprehensive Annual Financial Report For Year Ended September 30, 2008 TABLE OF CONTENTS Page INTR OD UCTOR Y SECTION (UNAUDITED) Transmittal Letter i Organlzatlona C art vl Certificate of Achievement ................................................................................................................................vii List of Principal Officials viii FINANCIAL SECTION: Independent Auditors' Report l Management's Discussion and Analysis .............................................................................................................3 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets ll Statement of Activities ..........................................................................................................................12 Fund Financial Statements: Governmental Fund Financial Statements: Balance Sheet .................................................................................................................................14 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets ......15 Statement of Revenues, Expenditures and Changes in Fund Balances ..........................................16 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ..............................................................17 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget to Actual General Fund ...............................................................................................................................19 Proprietary Fund Financial Statements: Statement of Net Assets .................................................................................................................20 Statement of Revenues, Expenses and Changes in Fund Net Assets .............................................24 Statement of Cash Flows ................................................................................................................26 Fiduciary Fund Financial Statements: Statement of Assets and Liabilities ................................................................................................28 Notes to Basic Financial Statements ...........................................................................................................29 Required Supplementary Information: Schedule of TMRS Funding Progress and Contributions -Last Three Fiscal Years .................................61 Schedule of Denton's Firemen's Relief and Retirement Plan Funding Progress and Contributions -Last Three Valuation Years .................................................................................61 Schedule of Other Post Employment Benefits Funding Progress and Contributions Last Three Valuation Years ..................................................................................................................62 Combining and Individual Fund Financial Statements and Schedules: Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget to Actual: Debt Service Fund ................................................................................................................................63 Combining Balance Sheet -Nonmajor Governmental Funds .....................................................................66 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds ............................................................................................................68 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget to Actual: Recreation .......................................................................................................................................70 Police Confiscation ........................................................................................................................71 Tourist and Convention 72 Combining Statement of Net Assets -Internal Service Funds ...................................................................74 City of Denton, Texas Comprehensive Annual Financial Report For Year Ended September 30, 2008 TABLE OF CONTENTS (continued) Page FINANCIAL SECTION (continued): Combining and Individual Fund Financial Statements and Schedules (continued): Combining Statement of Revenues, Expenses and Changes in Fund Net Assets - Internal Service Funds 76 Combining Statement of Cash Flows -Internal Service Funds ..................................................................78 Combining Statement of Assets and Liabilities -Agency Funds ......................................................................80 Combining Statement of Changes in Assets and Liabilities -Agency Funds 81 Capital Assets Used in the Operation of Governmental Funds: Comparative Schedules by Source ..............................................................................................................83 Schedule by Function and Activity .............................................................................................................84 Schedule of Changes by Function and Activity ..........................................................................................85 STATISTICAL SECTION (UNAUDITED): Table 1 Net Assets by Component 89 2 Changes in Net Assets ........................................................................................................................ .......90 3 Fund Balances of Governmental Funds ....................................................................................................92 4 Changes in Fund Balances of Governmental Funds ..................................................................................94 5 Assessed Value and Estimated Actual Value of Taxable Property ...........................................................96 6 Property Tax Rates (Per $100 of Assess Value) -Direct and Overlapping Governments .......................97 7 Principal Property Taxpayers ....................................................................................................................99 8 Property Tax Levies and Collections ......................................................................................................100 9 Ratio of Outstanding Debt by Type .........................................................................................................102 10 Ratio of General Bonded Debt Outstanding ............................................................................................104 11 Direct and Overlapping Governmental Activities Debt ..........................................................................105 12 Pledged Revenue Coverage .....................................................................................................................106 13 Demographic and Economic Statistics ....................................................................................................108 14 Principal Employers ................................................................................................................................109 15 Full-Time Equivalent City Government Employees by Function/Program ............................................110 16 Operating Indicators by Function/Program .............................................................................................112 17 Capital Asset Statistics by Function/Program .........................................................................................114 OTHER SUPPLEMENTAL INFORMATION: Schedule of Expenditures Budget and Actual -General Fund ................................................................117 I I f i • I 1 ry r / q, ' e 7 • c I J~a_ ~ I ® ~ a aJ a s / ~4r® _ r. ® rv ✓'ro-vfir arv as s ~ February 6, 2009 T0: The Honorable Mayor, Members of the City Council and Citizens of the City of Denton It is with great pleasure that we present to you a copy of the Comprehensive Annual Financial Report (CAFR) of the City of Denton (the City) for the fiscal year ended September 30, 2008. The responsibility for both the accuracy of the presented information and the completeness and fairness of the presentation of the data, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to fairly present the results of our operations in each of the various funds reported by the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. The CAFR is presented in three sections: Introductory, Financial, and Statistical. The Introductory Section includes this transmittal letter, the City's organizational chart, and a list of principal officials. The Financial Section includes the Management's Discussion and Analysis (MD&A), Basic Financial Statements, Required Supplementary Information, Combining and Individual Fund Financial Statements and Other Supplemental Information, as well as, the independent auditors' report. The Statistical Section includes selected financial and demographic information, generally presented on amulti-year basis. Management's discussion and analysis (MD&A) immediately follows the independent auditors' report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. Profile of the Government The City of Denton was incorporated September 26, 1866. The City operates as a home rule city, under a council-manager form of government and provides a full range of services as authorized by its charter, such as public safety (police and fire protection); public works (construction and maintenance of highways, streets and infrastructure); parks and recreation; electric, water and wastewater utilities; solid waste; and general administrative services. This report includes all funds of the City. Local Economy The City of Denton is located in the northern portion of the Dallas/Fort Worth Consolidated Statistical Area (CSMA). The City is a part of the Dallas/Fort Worth Metroplex, and is situated at the apex of a triangle based by Dallas (38 miles to the southeast) and Fort Worth (36 miles to the southwest) providing excellent access to and from all parts of the area. Due to its proximity to Dallas and Fort Worth, Denton enjoys a low average unemployment rate of 4.2 percent compared to the state average of 5.7 percent (as of December 2008). With the expansion of both its hospitals and other medical facilities, Denton is well on its way to becoming a regional medical destination serving north Texas and southern Oklahoma. Denton is also home to two universities that have a combined enrollment of more than 44,900 students. Fiscal year 2007-08 brought exciting news in economic development. Listed below are just a few of the highlights. ~ Aldi Foods began construction of their 500,000 square foot distribution center. The company will also improve Westcourt Road as part of their project. Aldi operates grocery stores in the east and midwest. The Denton distribution center will support the opening of Aldi stores in Texas and Oklahoma. The project is estimated at $52 million. ~ The Rayzor Ranch Market Place began construction of Highway 3 80 in order to complete the road improvements prior to the opening of the retail center. WalMart and Sam's received their building i permits and will begin construction in 2009. Site work is underway. Lowe's indicated they would likely begin construction in 2010. Allegiance Hillview Development will also construct a 30,000 square foot retail center. Several pad sites have been purchased by local banks and restaurants. ~ The Rayzor Ranch Towne Center development has experienced additional medical related activity. Cook's Children's Hospital closed on a tract at the southern portion of the property where they will begin construction in 2009 for a treatment facility. Select Medical opened their 52-bed brain trauma and spinal injury hospital. The estimated project value of both the Market Place and Towne Center phases is estimated at $1 billion. ~ Citizens have witnessed an increase in activity at the Unicorn Lake mixed-use development. The development is nearing completion of a Hilton Homewood Suites hotel, 20,000 square feet of retail space, and multiple medical offices. These new structures join the already completed Brick House Gym, Pour House restaurant, Cinemark Theater and several upscale residential units. ~ In addition to the Hilton Homewood Suites, several new hotels were completed or were under construction in 2007-08: o Hilton Garden Inn o Comfort Inn o Candlewood Suites o Sleep Inn o Holiday Inn Express ~ The City opened its new 4,000 square foot terminal at the Denton Municipal Airport. In addition, Jet Works Aircraft completed an expansion of 43,000 square feet. ~ Fastenal Company completed construction of their 208,000 square foot distribution center on Airport Road. The company received its certificate of occupancy in November 2008. The facility will also be used as their regional headquarters and training center. The company estimates their investment in Denton at $16 million. ~ Josten's completed a 13,000 square foot expansion to their existing 57,000 square foot plant in 2008. The company consolidated operations of an out-of state facility with the Denton plant. Josten's makes jewelry for educational and sports recognitions -including Super Bowl and other sports championship rings. The expansion is estimated at $4 million. ~ Tetra Point Fuels announced their decision to build an ethanol fuel plant at the City's Landfill. The project will locate Tetra Point Fuels adjacent to the new Pratt Industries materials recycling facility that is currently under construction at the Landfill. The Pratt facility will be approximately 40,000 square feet and the Tetra Point Fuels phase one is estimated at 10,000 square feet. Major Initiatives According to recent projections from the North Central Texas Council of Governments, the city is expected to continue growing over the next several years. According to their estimates, the City is projected to reach a population of approximately 132,579 by the end of 2015. Growth continues to increase demand for City of Denton services. Sales tax, the second largest revenue source for the City's General Fund, continues to increase as well. For fiscal year 2007-08, sales tax revenue increased 3.81% over the prior year's receipts. For fiscal year 2008-09, sales tax revenue is projected to increase by less than 1% over fiscal year 2007-08 receipts. The City's tax base has grown considerably over the last few years. The Denton Central Appraisal District's fiscal year 2007-08 certified appraisal roll shows an increase of 11.91 % over the fiscal year 2006-07 certified value and ii an increase of 27.1% over the final fiscal year 2005-06 value. A tax increase of 4.0 cents (per $100 of valuation) was approved for fiscal year 2007-08. 3.0 cents (per $100 of valuation) of this tax increase will be used to pay debt service associated with the 2005 general obligation bond program and an additional 1.0 cent (per $100 of valuation) will be used to fund additional drainage improvements. Public safety continues to be a major initiative for the City. The Police Department added two additional officers and three civilian positions in FY 2007-08. The Fire Department also received new equipment, supplies, and training funding to improve the City's hazardous materials response capability. In addition, the City also recently completed a Public Safety Training Facility Master Plan and is planning to begin construction in late FY 2009 or FY 2010. The City also continues to emphasize community service programs. The FY 2007-08 budget included funding for the addition of a new code enforcement officer to enhance neighborhood vitality. In addition, the City created a substandard structures program to address neighborhood decline and promote neighborhood stability. Finally, as mentioned previously, the tax rate was increased by 4.0 cents (per $100 of valuation). One cent (per $100 of valuation) of this tax increase was used to issue $7 million in Certificates of Obligation to construct various neighborhood and community drainage projects. The drainage fee was left unchanged for the fiscal year. Financial Information The City's management team is responsible for establishing and maintaining internal controls designed to ensure that the assets of the City are protected from loss, theft, or misuse and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. Internal controls are designed to provide reasonable but not absolute assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of the controls should not exceed the benefits likely to be derived and (2) the valuation of cost and benefits requires estimates and judgments by management. Single Audit As a recipient of federal and state grant awards, the City is also responsible for ensuring that adequate internal controls are in place to ensure compliance with applicable state and federal laws and regulations. These controls are subject to periodic evaluation by management. As a part of the City's single audit, tests are conducted to determine that the City has complied with applicable laws and regulations related to federal awards. Budgetary Controls The City maintains budgetary controls to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. Activities of the General Fund, Special Revenue Funds (Recreation Fund, Police Confiscation Fund, and Tourist and Convention Fund), Debt Service Fund, Enterprise Funds, and Internal Service Funds are included in the annual operating budget. A capital improvement plan is approved each year. The level of budgetary control (i.e., the level at which expenditures cannot legally exceed the appropriated amount) is established by function activity within an individual fund. The City maintains an encumbrance accounting system as one technique of accomplishing budgetary controls. As demonstrated by the statements and schedules included in the financial section of this report, the City continues to meet its responsibility for sound financial management. Enterprise Operations The City's enterprise fund operations consist of a utility system and solid waste operations. The City's utility system provides electric, water and wastewater services. Electric operations did not increase base rates in FY 2007- 08. Retail water rates were increased by 3% in an attempt to improve water conservation for residential customers with high volume usage. Wastewater operations did not increase retail or wholesale customers' rates. Solid Waste increased the single-family residential recycling rate by $0.50 per month. Internal Service Operations The internal service operations consist of the Materials Management, Fleet Services, Risk Retention, and Technology Services funds. The Materials Management Fund accounts for the financing of goods provided by the Warehouse to other City departments. The Fleet Services Fund accounts for the financing of goods and services iii provided by the municipal garage to other departments within the City. The Risk Retention Fund accounts for the accumulation of resources for the payment of workers' compensation, general liability claims, and insurance policies. The Technology Services Fund provides computer-programming services and systems analysis. Reprographics, which is part of the Technology Services Fund, provides imaging, print shop, and office services to City departments. Fiduciary Operations -Agency Funds The Agency Funds consist of Payroll, Employee Insurance and Other Agency Funds. The Payroll Fund is responsible for the collection and payment of the City's payroll and associated liabilities. Employee Insurance Fund accounts for City and employee contributions to pay for employee health and life insurance premiums. Other Agency Funds account for various accumulations of resources for non-City entities. Debt Administration The City has developed a plan for issuing annual General Obligation Bonds that are approved by voters in a capital improvements plan. Certificates of Obligation are used in accordance to the City Debt Issuance Policy to finance facilities, vehicles, and equipment. Cash Management The City follows an active program of cash management, keeping all temporarily idle funds in interest-bearing accounts. These accounts are in the form of money market (government-based) funds, U.S. Treasury issues, and federal government agency instrumentalities. On September 30, 2008, the annualized yield on investments was 3.07 percent, compared to 4.47 percent and 4.07 percent for the same period in 2007 and 2006, respectively. Funds available for investment at September 30, 2008 were $333.9 million, which is an increase from $312.4 million in 2007 and an increase from $294.2 million in 2006. The City's investment policy is to safeguard assets with a minimal amount of risk, while maintaining the necessary level of liquidity and maximizing the yield on investments. Accordingly, all of the City's deposits are either insured by the Federal Deposit Insurance Corporation or are collateralized by governmental securities. A third-party financial institution in the City of Denton's name holds all collateral for deposits. An outside trustee appointed by the City holds the investments of the Deferred Compensation Plan, in which the City participates, separately from those of other City funds. State statutes authorize the City to invest in obligations of the U.S. Treasury and U.S. agencies; obligations of the State of Texas and related agencies; fully collateralized repurchase agreements; local government investment pools; SEC- registered no-load, money market mutual funds; fully collateralized or insured certificates of deposit; and municipal securities of any state rated "AA" or above by a nationally recognized rating service. Risk Management The City has maintained a very aggressive program to increase safety awareness and training. Incentive programs, transitional duty, medical-case management, and cost containment should continue to contain workers' compensation expenditure growth in the future. Legal expenditures for general liability issues have spiked in previous years due to specific cases that have now been settled. Independent Audit The City Charter requires an independent audit of the accounts of the City by an independent auditor. The accounting firm of Weaver and Tidwell, LLP was selected by the City Council to perform the annual audit. In addition to meeting the requirements set forth in the City Charter, the audit was also designed to meet the requirements of the Single Audit Act Amendments of 1996 and related OMB Circular A-133. Awards The Government Finance Officers' Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Comprehensive Annual Financial Report for the fiscal year ended September 30, 2007, for the twenty-third consecutive year. In order to be awarded the Certificate of Achievement in Financial Reporting, the City published an easily readable and efficiently organized Comprehensive Annual Financial Report. This report satisfies both generally accepted accounting principles and applicable legal requirements. The Certificate of Achievement is held for a period of one year only. We believe our current iv Comprehensive Annual Financial Report continues to meet the Certificate of Achievement requirements, and we are submitting it to GFOA to determine its eligibility for another certificate. The City also received the GFOA award for Distinguished Budget Presentation for its fiscal year 2007-08 Annual Budget. In order to qualify for the Distinguished Budget Presentation Award, the City's budget document was judged according to its compliance with specific guidelines established by GFOA. These guidelines help ensure that Denton's budget is distinguished as an operations guide, financial plan, policy document, and communications device. The City has submitted its fiscal year 2008-09 Annual Budget to GFOA to determine its eligibility for another certificate. We believe it continues to meet the Distinguished Budget Presentation Award criteria. In 2008, the City's Purchasing Department earned the Excellence in Procurement Award from the National Purchasing Institute, Inc. (NPI) for 2008 for the eleventh year in a row. This award is achieved by those organizations that demonstrate excellence in procurement by achieving a high score on standardized criteria designed to measure innovation, professionalism, productivity, and leadership. NPI represents purchasing officials employed by national, state, and local governments; educational institutions; and tax-supported and public entities throughout the country. Acknowledgements We would like to thank the City Council for their strong leadership and support that helped make the presentation of this report possible. We would also like to thank the Finance staff, department directors, division heads and especially the Accounting Division staff for their diligent efforts in the preparation of the annual financial report. Jon Fortune Bryan Langley Assistant City Manager Director of Finance v CITY OF DENTON, TEXAS ORGANIZATIONAL CHART SEPTEMBER 30, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Citizens City Council Boards, Commissions, & Committees City Attorney Municipal Judge Internal Audit City Manager Economic Development/ Human Resources Downtown Development Administrative Services City Manager's Office City Secretary Reprographics Public Communications Office Assistant City Manager Assistant City Manager Assistant City Manager Finance Electric Operations Fire Solid Waste Operations Library Accounting/Budget Water Operations Parks & Recreation Municipal Court Wastewater Operations Police Treasury/Debt Streets Materials Management Animal Services Traffic/Street Lighting Risk Management Planning Transportation/Airport Customer Service Building Inspections Facilities/Fleet Code Enforcement Tech Services Community Development ® ® ~ f rese to to For its o re e live nn a Fi acial e o or t e Fiscal ear e ee er, Certificate afAcieve et far Excellence i Financial sporting is presented y e Laver et Finance fficers Association of the United States and Canada to Bove et units and public employes retire ent sste whose co rehesive ua financial reports ~CAFs~ achieve the highest standards in gover ent account` g and financial reporting, ~c~ ~ UHiTtU STATESI` w ` Ah"fl q CAS' ~ o ~1 CORPU~iA1~ON ~ res~ e t • ~~1C~4~ XeC 1Ve trecor CITY OF DENTON, TEXAS List of Principal Officials September 30, 2008 ELECTED OFFICIALS Title Name Mayor Mark Burroughs Mayor Pro-Tem Pete Kamp Councilmember Charlye Heggins Councilmember Rudy Moreno Councilmember Joe Mulroy Councilmember Jack Thomson Councilmember Chris Watts CITY OFFICIALS Title Name City Manager George C. Campbell Assistant City Manager Howard Martin Assistant City Manager Jon Fortune Assistant City Manager Fred Greene Director of Finance Bryan Langley City Attorney Anita Burgess Municipal Judge Robin Ramsay City Secretary Jennifer Walters INDEPENDENT AUDITOR'S REPORT V~~AV~R TID~VI~LL To The Honorable Mayor and Members of City Council L~ ~ City of Denton, Texas CERTIFIED PUBLIC AGCQUN'FANTS AND CoHSUL'TAHTS Vlle have audited the accompanying financial statements of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the City of Denton, Texas the "City} as of and for the year ended September 30, 2008, which collectively comprise the City's basic financial statemen#s as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is tv express opinions on these financial statements based on our audit. We conducted our audit in accordance with audi#ing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, an a test basis, evidence supporting the amounts and disclosures in the fnancial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statemen# presentation. Vile believe that our audit provides a reasonable basis for our opinions. !n our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, business~type activities, each major fund, and the aggregate remaining fund information of the City of Denton, Texas, as of September 30, 2008, and the respective changes in financial position, and, where applicable, cash flaws, thereof and the budgetary comparison for the General Fund far the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated February ~ 2, 2009, on our consideration of the City of Denton's internal control aver financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. The purpose of that report is to describe the scope of our testing, and not to provide an opinion on the internal contro! over financial reporting or on compliance. That report is an integral part of '1~~~~~~ f ore.►~t 1'l~a~~~ an audit performed in accordance with Government Auditing Standards and should ~~z~l ~~lerit 1)rr~~e be considered in assessing the results of our audit. ,~arrff~ ]40() D~~I1~~, 1i~~,-r~.s 7~?~ 1-22'(1 9'2.49(1.1 ~7~] 972.102.8321 WWW.WEAVERANDTIDWELL.COM AN INDEPENDENT MEMBER OF OFFICES fN BAKER TlLLY INTERNATIONAL DALLAS PORT WORTH HOllSTON City of Denton Page 2 The accompanying Management's Discussion and Analysis ion pages 3 through 10~, the schedules of TMRS funding progress and contributions and Denton firemen's relief and retirement plan funding progress and contributions ion page ~1 and the schedule of other post employment benefts ~vn page ~2} are not a required part of the basic financial statements but are supplementary information required by the ~averr~mental Accounting Standards Board. UVe have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. fur audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The introductory section, combining and individual fund financial statements and schedules, capital assets used in the operation of governmental funds schedules, the statistical section, and the other supplementary information as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules, capital assets used in the operation of governmental funds schedules, and the other supplementary information have been subjected to the auditing procedures applied in the audi# of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whale. The introductory section and the statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and accordingly, we express no opinion on them. J~~ ~ ` Ql + ~i VIfEAVER AND T!D'WELL, L.L.P. February 12, 2g~9 Dallas, Texas CITY OF DENTON, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2008 The City of Denton's Management's Discussion and Analysis is designed to (a) assist the reader in focusing on significant financial issues, (b) provide an overview of the City's financial activity, (c) identify changes in the City's fnancial position (its ability to address the next and subsequent years' challenges), (d) identify any material deviations from the financial plan (the approved budget), and (e) identify individual fund issues or concerns. Since the Management's Discussion and Analysis (MD&A) is designed to focus on the current year's activities, resulting changes and currently known facts, please read it in conjunction with the Transmittal Letter (beginning on page i) and the City's fnancial statements (beginning on page ll FINANCIAL HIGHLIGHTS • The assets of the City exceeded its liabilities at the close of the fiscal year ended September 30, 2008 by $545,064,468 (net assets). Of this amount, $145,156,400 (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors. • The City's total net assets increased by $30,714,987. This increase can be attributed to the net revenue of the governmental activities, business-type activities and the contribution of capital assets by developers. • As of September 30, 2008, the City's governmental funds reported combined fund balances of $94,760,121, an increase of $13,446,449 in comparison with the prior fiscal year, due to increased revenue from taxes and the proceeds from the issuance of long-term debt. Approximately 36.7% of the $94,760,121, or $34,788,424, is available for spending at the government's discretion (unreserved fund balance). • At the end of the fiscal year, the unreserved and undesignated fund balance for the General Fund was $25,253,797, or 30.51% of budgeted general fund expenditures. • The City's total noncurrent liabilities increased by $13,966,361 during the fiscal year. The primary reason for the increase was the issuance of $15.3 million of revenue bonds, $7.3 million of general obligation bonds, and $17.7 million of certificates of obligation bonds along with the normal pay down of general obligation bonds and certificates of obligation bonds of $10.8 million, and the normal pay down of revenue bonds of $14.8 million. OVERVIEW OF THE FINANCIAL STATEMENTS The Management's Discussion and Analysis is intended to serve as an introduction to the City of Denton's basic fnancial statements. The City's basic financial statements comprise three components: (1) government- wide financial statements, (2) fund financial statements and (3) notes to the financial statements. This report also contains other supplementary information in addition to the basic fnancial statements themselves. Government-wide Financial Statements. The government-wide financial statements are designed to provide readers with a broad overview of the City's finances in a manner similar to private-sector business. The statement of net assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City's net assets changed during the most recent fiscal year. All of the current year's revenues and expenses are taken into account regardless of when cash is received or paid. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but not used vacation leave). Both the statement of net assets and the statement of activities are prepared using the accrual basis of accounting as opposed to the modified accrual basis. In its Statement of Net Assets and the Statement of Activities, the City is divided between two kinds of activities: 3 CITY OF DENTON, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (continued) SEPTEMBER 30, 2008 • Governmental activities. Most of the City's basic services are reported here, including police, fire, libraries, development, public services and operations, public works, building inspection, technology services and general administration. Property taxes, sales taxes and franchise fees finance most of these activities. • Business-type activities. The City charges a fee to customers to cover the cost of services it provides. The City's utility systems (electric, water and wastewater) and solid waste activities are reported here. The government-wide financial statements can be found on pages 11-13 of the report. Fund Financial Statements. A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. Fund financial statements provide detailed information about the most significant funds, not the City as a whole. Some funds are required to be established by state law or bond covenants. However, the City Council establishes many other funds to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes, grants and other monies. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. • Governmental funds. The majority of the City's basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method identified as the modified accrual basis of accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City's general government operations and the basic services it provides. Governmental fund information helps the reader determine whether there are more or fewer financial resources that can be spent in the near future to finance the City's programs. By comparing information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements, readers may better understand the long-term impact of the government's near-term financing decisions. The relationship or differences between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds are detailed in a reconciliation following the fund financial statements. The City of Denton maintains ten governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures and changes in fund balances for the general fund, debt service fund and capital projects fund, all of which are considered to be major funds. Data from the other seven governmental funds are combined into a single, aggregated presentation. Individual fund data for six of these non-major governmental funds along with an aggregate of all other is provided in the form of combining statements elsewhere in this report. • Proprietary funds. The City charges customers for certain services it provides, whether to outside customers or to other units within the City. These services are generally reported in proprietary funds. Proprietary funds are reported in the same manner that all activities are reported in the Statement of Net Assets and the Statement of Activities. In fact, the City's enterprise funds (a component of proprietary funds) are similar to the business-type activities that are reported in the government-wide statements but provide more detail and additional information, such as cash flows. The internal service funds (the other component of proprietary funds) are utilized to report activities that provide supplies and services for the City's other programs and activities, such as the City's municipal warehouse, the City's self insurance fund and equipment maintenance function. Because these services benefit both governmental and business-type functions, they have been included in both the governmental and business-type activities in the government-wide financial statements. The City of Denton maintains four enterprise funds. The City uses enterprise funds to account for its electric, water and wastewater systems and solid waste operations. The funds provide the same type of information as the government-wide financial statements, only in more detail and include some of the internal service fund-type activity. The City considers all enterprise funds to be major funds. 4 CITY OF DENTON, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (continued) SEPTEMBER 30, 2008 • Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the City's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. Agency funds are a component of fiduciary funds. Agency funds differ from other fiduciary funds in that they do not typically involve a formal trust agreement. Agency funds are used to account for situations where the City's role is purely custodial, such as receipt, temporary investment and remittance of fiduciary resources to individuals, private organizations, or other governments. The City maintains three fiduciary funds. The City uses agency funds to account for the collection and payment of the City's payroll and associated liabilities, employee-purchased insurance and other similar relationships. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 29 - 60 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS As of September 30, 2008, the City's combined net assets were $545,064,468, of which $141,105,566 can be attributed to governmental activities and $403,958,902 attributed to business-type activities. This analysis focuses on the net assets (Table 1) and changes in net assets (Table 2) of the City's governmental and business- type activities. The largest portion of the City's net assets (67.0%) reflects its investment in capital assets (e.g., land, building, machinery and equipment), less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Table 1 Net Assets (in thousands) Governmental Business-type Activities Activities Total 2008 2007 2008 2007 2008 2007 Current and other assets $ 113,773 $ 94,658 $ 263,793 $ 269,434 $ 377,566 $ 364,092 Capital assets 189,855 179,923 470,283 449,529 660,138 629,452 Total assets 303,628 274,581 734,076 718,963 1,037,704 993,544 Long-term liabilities outstanding 137,360 124,126 289,436 288,703 426,796 412,829 Other liabilities 25,163 18,973 40,681 49,391 65,844 68,364 Total liabilities 162,523 143,099 330,117 338,094 492,640 481,193 Net assets: Invested in capital assets, net of related debt 102,040 99,858 263,326 242,016 365,366 341,874 Restricted 1,454 886 33,088 31,015 34,542 31,901 Unrestricted 37,611 30,738 107,545 107,838 145,156 138,576 Total net assets $ 141,105 $ 131,482 $ 403,959 $ 380,869 $ 545,064 $ 512,351 5 CITY OF DENTON, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (continued) SEPTEMBER 30, 2008 Governmental activities increased the City's net assets by $9,623,016 and business-type activities increased the City's net assets by $21,091,971. The key elements of these increases are contained in Table 2. Table 2 Changes in Net Assets (in thousands) Governmental Business-type Activities Activities Total 2008 2007 2008 2007 2008 2007 Revenue: Program Revenue: Charges for services $13,917 $13, 877 $209,156 $195,405 $223,073 $209,282 Operating grants and contributions 3,306 2,991 - - 3,306 2,991 Capital grants and contributions 7,308 5,399 5,742 8,441 13,050 13,840 General Revenue: Property tax 41,500 34,756 - - 41,500 34,756 Sales tax 21,441 20,654 - - 21,441 20,654 Franchise tax 16,197 15,198 - - 16,197 15,198 Hotel occupancy tax 1,370 1,269 - - 1,370 1,269 Beverage tax 320 295 - - 320 295 Bingo tax 24 24 - - 24 24 Investment Income 3,287 3,633 7,818 12,109 11,105 15,742 Miscellaneous 4,214 3,199 195 548 4,409 3,747 Total revenue 112,884 101,295 222,911 216,503 335,795 317,798 Expenses: General government 26,409 22,146 - - 26,409 22,146 Public safety 43,427 42,162 - - 43,427 42,162 Public works 15,448 14,009 - - 15,448 14,009 Parks and recreation 12,927 11,564 - - 12,927 11,564 Interest on long-term debt 5,373 4,658 - - 5,373 4,658 Electric - - 138,791 123,927 138,791 123,927 Water - - 26,226 25,840 26,226 25,840 Wastewater - - 19,413 18,785 19,413 18,785 Solid waste - - 17,066 15,451 17,066 15,451 Total expenses 103,584 94,539 201,496 184,003 305,080 278,542 Increase in net assets before transfers 9,300 6,756 21,415 32,500 30,715 39,256 Transfers 323 (13,476) (323) 13,476 - - Increase in net assets 9,623 (6,720) 21,092 45,976 30,715 39,256 Net assets at beginning of year - 131,482 138,202 380,869 334,893 512,351 473,095 Prior period adjustment - - 1,998 - 1,998 - Net assets at beginning of year-as restated 131,482 138,202 382,867 334,893 514,349 473,095 Net assets at end of year $141,105 $131,482 $403,959 $380,869 $545,064 $512,351 Governmental activities. The most significant governmental activities expense was in providing public safety, which incurred expenses of $43,426,526. These expenses were funded by revenues collected from a variety of sources, with the largest being from property taxes, which are $41,499,791 for the fiscal year ended September 30, 2008. The most significant portion of public safety is the cost of personnel, which totaled $34,020,444. Other significant governmental activities expense for the City includes general government, which incurred $26,408,949 in expenses, of which $13,785,490 represented personnel charges. 6 CITY OF DENTON, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (continued) SEPTEMBER 30, 2008 Increased expenses for governmental activities includes general government personnel costs of $1.4 million, professional services of $0.4 million, maintenance costs of $0.8 million, and CDBG costs of $.7 million; increased personnel costs of $1.6 million in public safety; public works reflect increased personnel costs of $0.3 million, maintenance cost of $0.3 million, and depreciation costs of $.4 million; parks and recreation reflect increased personnel costs of $0.4 million, power costs of $0.2 million and the reclassification of code enforcement into parks and recreation of $0.6 million. The $6.7 million increased revenues in governmental activities are mainly due to a $0.03 per $100 valuation increase to the property tax rate in fiscal year 2008 over fiscal year 2007. Franchise fees increased $1.0 million due to increased energy costs during fiscal year 2008. Business-type activities. Business-type activities increased the City's net assets by $21,091,971, accounting for 68.7% of the growth in the entity-wide net assets. A key element of this increase is capital contributions, emerging as a maj or revenue source for the Water and Wastewater funds during the current fiscal year, producing $5,742,139 in revenue. Contributions of assets arise from new property development within the City. Charges for services increased $10.7 million due to Energy Cost Adjustment (ECA) rate increases as a result of higher energy costs. Water experienced increased sales volumes of 13.7%, or $2.8 million, as a result of rain fall returning to normal amounts. Interest income decreased $4.3 million during FY 2008 for all Business-type funds. Electric expense increased between fiscal years 2007 and 2008 reflects increased costs of whole sale power costs of $10.7 million. Waste Water expense increased reflects additional personnel and vehicle costs. Solid Waste expense increase reflects additional costs associated with vehicles and additional outside consulting services. FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of resources available to spend. Such information is useful in assessing the City's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City's governmental funds reported a combined ending fund balance of $94.8 million, an increase of $13.5 million in comparison with the prior year. Approximately $34.8 million constitutes unreserved, undesignated fund balance, which is available for spending at the government's discretion. The remainder of the fund balance is reserved to indicate that it is not available for new spending because it has already been committed 1) to purchase or construct capital assets ($57.9 million), or 2) to pay debt service ($2.0 million). The general fund is the chief operating fund of the City. At September 3 0, 200 8, the unreserved and undesignated fund balance of the general fund was $25.3 million, or 30.51% of budgeted general fund expenditures. The unreserved and undesignated fund balance of the general fund increased by $7.1 million during the current fiscal year due to a decrease in designations of $4.4 million and an increase in fund balance of $2.8 million. The change in fund balance is primarily due to positive budget variances. Expenditures were $1.9 million less than anticipated from the budget. Revenues were higher than anticipated due to tax revenues by $0.9 million, franchise fees by $0.4 million, fines and forfeitures by $0.4 million, fees for services by $0.4 million, and total other revenues by $0.8 million. In the prior year, the general fund had $4.4 million unreserved designated for vehicle replacement. At September 30, 2008, the $4.4 million designation was removed. The entire balance of the capital projects fund is reserved for capital construction and acquisition. At the end of the fiscal year, the capital projects fund has a fund balance of $57.9 million, an increase of $8.9 million. In 2008, the City received $22.2 million of proceeds from the issuance of debt while expending $22.7 million on construction and acquisition. In addition to 2008 debt proceeds, the capital projects fund received $1.9 million CITY OF DENTON, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (continued) SEPTEMBER 30, 2008 in interest income, $1.7 million of revenue related to gas wells, transfers in from the general fund of $0.8 million, and other government contributions of $4.6 million. The debt service fund has a total fund balance of $2.0 million all of which is reserved for the payment of debt service. The overall increase in the debt service fund balance was $ l , l million. Proprietary funds. The City's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net assets in Electric, Water, and Wastewater at September 30, 2008 are $71.7 million, $18.7 million, and $12.0 million respectively. Solid Waste has unrestricted net assets of $2.2 million. The results reflect a decrease of unrestricted net assets in the Electric fund of $0.4 million, a decrease in the Water fund of $0.3 million, an increase in the Wastewater fund of $2.0 million, and a decrease $1.9 million in Solid Waste. Other factors concerning the finances of these funds have already been addressed in the discussion of the City of Denton's business-type activities. GENERAL FUND BUDGETARY HIGHLIGHTS During fiscal year 2007-2008, a formal amendment to adjust the City's of Denton Annual Program of Services was approved by council to provide for the increased costs of purchasing fuel. The amendment added $0.9 million to the Fleet Service Fund and $1.0 million to the Solid Waste Fund budgets. For fiscal year 2007-08, General Fund actual expenditures (including transfers) on a budgetary basis were $80.7 million compared to the budget of $82.8 million. The $0.9 million variance was primarily due to reduced costs for the general government and reduced costs of $0.6 costs in public works. Actual revenue (including transfers, sale of capital asset, and proceeds from capital leases) on a budgetary basis was $83.6 million compared to the original budget of $80.8 million. Of the $2.8 million revenue variance, approximately $0.9 million was due to increased tax collection, $0.4 million for increased franchise fees due to higher energy costs and a $0.4 million increase for various fees for services. Increased interest income accounts for $0.3 million and fines and forfeitures of $0.4 million make up most of the revenue variance. Over the years, the Denton City Council has followed a policy of maintaining a general fund balance in order to plan for unforeseen emergencies and place the City in a more favorable position. In 1997-1998, the policy level was increased from 10% to 12.5% of general fund expenditures. In 1999-2000 the percentage was increased to 13%. Council raised the policy in 2004-2005 to 13.5%, and in 2005-2006 to 14.0%. The 2006-07 adopted budget increased the policy level to 14.5%. While our reserve level goal is 15% of budgeted expenditures, in 2008 the Audit/Finance Committee recommended maintaining a fund balance level of 12% to 15% rather than an absolute reserve percentage. In this way, the City will be able to maintain budget flexibility in responding to fluctuations in economic cycles that may arise in the future. The City of Denton's unreserved and undesignated fund balance at September 30, 2008 is $25.3 million, or 30.51% of budgeted expenditures. Below is a listing of the ending unreserved balances for the past two years, as well as fiscal year 2007-08 projected and actual. For those years where the actual ending balance has exceeded the policy level, the following year's budget has included utilization of that amount for one-time expenditures. By using the fund balance for one-time expenditures only, the financial impact on future budgets is eliminated. Actual Actual Adopted Projected Actual 9/30/06 9/30/07 9/30/08 9/30/08 9/30/08 Unreserved balances $13,264,027 $18,199,161 $12,415,015 $22,996,323 $25,253,797 of total budgeted expenditures 18.84% 23.68% 15.00% 28.06% 30.51% Policy level 14.00% 14.50% 15.00% 12-15.00% 12-15.00% The largest revenue source of the General Fund's budget was the ad valorem tax. Denton's ad valorem tax rate is comprised of two components. The first is the operations and maintenance component that is used to calculate revenue for the City's General Fund operations. The second component is the debt portion that is used to calculate revenue to pay the City's general debt service obligations. The Denton Central Appraisal 8 CITY OF DENTON, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (continued) SEPTEMBER 30, 2008 District's certified appraisal roll shows an increase of 11.91 % over the prior year certified value and 11.31 over the final 2006 value (including supplements). This increase consisted of $246.5 million of new value added for 2007 and a $401.7 million increase in value for property on the tax rolls in 2006. The 2007-08 ad valorem tax rate was increased by $0.04 to $.66652 per $100 of valuation, of which $0.03 was used to provide full funding for the adopted 2005 five year bond program and $0.01 to provide for new neighborhood and community drainage improvements. CAPITAL ASSET AND DEBT ADMINISTRATION Capital assets. At the end of fiscal year 2008, the City had $660,138,014 invested in a broad range of capital assets, including police and fire equipment, buildings, park facilities, roads, bridges and water and sewer lines (see Table 3 on the following page). This amount represents a net increase (including additions and deductions) of $30,685,301, or 4.9% over the prior fiscal year. Table 3 Capital Assets at Year-end (Net of Accumulated Depreciation, in Thousands Governmental Business-type Activities Activities Totals 2008 2007 2008 2007 2008 2007 Land $ 7,929 $ 7,840 $ 10,403 $ 10,015 $ 18,332 $ 17,855 Landfill improvements - - 166 253 166 253 Buildings and improvements 42,612 41,766 5,359 4,802 47,971 43,568 Plant, machinery and equipment 20,940 20,881 112,822 116,625 133,762 137,506 Water rights - - 56,403 57,099 56,403 57,099 Infrastructure 94,805 95,568 231,744 226,441 326,549 322,009 Construction in progress 23,569 13,869 53,386 34,294 76,955 48,163 Total capital assets $189,855 $179,924 $470,283 $449,529 $660,13 8 $629,453 This year's major additions included: Description Amount Three Fire Engines $ 1,835,552 The Maple Leaf -development infrastructure 1,780,467 Tuscan Hills - development infrastructure 1,579,308 Highway 77 Utility relocation 1,446,866 Airport Terminal Building 1,153,596 Central Village Estates - development infrastructure 1,131,786 Highway 380 Utility relocation 1,075,549 Tertiary Filter at the Pecan Creek Plant 1,010,915 West Oak reconstruction 957,055 The Meadows at Hickory Creek - development infrastructure 870,860 West Glenn Phase I - development infrastructure 758,879 Library Books 667,823 Total $ 14,268,656 Additional information on the City's capital assets can be found in note IV. D. on pages 39 - 41 of this report. 9 CITY OF DENTON, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (continued) SEPTEMBER 30, 2008 Debt. At year-end, the City had $439.1 million in bonds and notes outstanding as compared to $423.9 million at the end of the prior fiscal year, an increase of 3.4%, as shown in Table 4. Table 4 Outstanding Debt at Year-end (in thousands) Governmental Business-type Activities Activities Totals 2008 2007 2008 2007 2008 2007 General obligation bonds $ 80,815 $70,650 $ 4,865 $ 3,100 $ 85,680 $ 73,750 Certificates of obligation 55,098 51,355 12,952 13,890 68,050 65,245 Revenue bonds - - 282,200 281,750 282,200 281,750 Notes - - 3,141 3,141 3,141 3,141 Total $135,913 $122,005 $303,158 $301,881 $439,071 $423,886 These amounts do not include net unamortized premiumsl(discounts) of $7,910,357 or net deferred gainl(loss) on refunding of ($9,679,453). During the current fiscal year, the City issued debt in November 2007 and September 2008. The new debt resulted primarily from the issuance of $35,570,000 in general obligation bonds, $17,750,000 in certificates of obligation, and $15,290,000 inutility revenue bonds. Moody's Investor's Service, Inc. has given the City's General Obligation Bonds and the Certificates of Obligation a rating of "Aa3." Standard and Poor's Corporation has given both the City's General Obligation Bonds and Certificates of Obligation an "AA" rating. The City's Utility Revenue Bonds carry "Al"and "A+" ratings by Moody's and Standard and Poor's respectively. The City is permitted by Article XI, Section 5 of the State of Texas Constitution to levy taxes up to $2.50 per $100 of assessed valuation for general governmental services including the payment of principal and interest on general obligation long-term debt. The current ratio oftax-supported debt to certified assessed value of all taxable property is 2.52%. Other long-term liabilities. The City maintains a self insurance program for general liability, auto liability, public officials' liability, errors and omission liability, police professional liability, and workers' compensation. Private insurance companies cover claims for property loss over $50,000 per occurrence and for workers' compensation and liability over $500,000 per occurrence. The City has a reserve for claims and judgments of $3.5 million outstanding at year-end compared with $3.3 million at the end of the prior fiscal year. Other obligations include accrued vacation pay and sick leave. More detailed information about the City's long-term liabilities is presented in Note IV. G., on pages 44 - 49 of this report. ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES While growth for the Denton community is expected to slow, demands for city services is expected to remain strong. As a result, the 2008-09 Budget includes the resources to provide City services to meet those demands. The 2008-09 budget maintains the same ad valorem tax rate of $0.666521$100 valuation. Sales tax revenue is projected to increase 2.0%. The general fund balance reserve policy has been adjusted to a range from 12 % to 15.0% of budgeted expenditures. The 2008-09 budget includes no base rate increases for electric customers. The water budget includes a 3% rate revenue increase for retail customers. No base rates changes are proposed for wastewater retail or wholesale customers. Solid Waste adopted budget includes varying rate increases to solid waste customers and a rate increase of $0.30 per month to the single-family residential recycling rate. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the City's finances for all those with an interest in the City's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Denton Finance Department, 215 E. McKinney, Denton, Texas 76201. 10 CITY OF DENTON, TEXAS Exhibit I STATEMENT OF NET ASSETS SEPTEMBER 30, 2008 Primary Government Governmental Business-type Activities Activities Total ASSETS: Current assets: Cash, cash equivalents and investments, at fair value $ 53,390,694 $ 98,157,432 $ 151,548,126 Receivables, net of allowances: Taxes 4,494,712 - 4,494,712 Accounts - 12,903,000 12,903,000 Unbilled utility service - 10,164,172 10,164,172 Interest 815,699 954,477 1,770,176 Other 3,543,359 800,502 4,343,861 Internal balances (8,993,122) 8,993,122 - Duefrom other governments 1,094,394 - 1,094,394 Inventory 7,487,714 - 7,487,714 Prepaid items - 39,294 39,294 Deferred debt issuance costs 138,715 264,848 403,563 Total current assets 61,972,165 132,276,847 194,249,012 Noncurrent assets: Restricted assets: Cash, cash equivalents and investments, at fair value 50,773,825 128,494,174 179,267,999 Accrued interest - 1,140,266 1,140,266 Deferred debt issuance costs 1,026,641 1,882,056 2,908,697 Capital assets not being depreciated: Land 7,929,335 10,402,655 18,331,990 Construction in progress 23,568,973 53,385,694 76,954,667 Capital assets, net of accumulated depreciation: Buildings 42,611,695 5,358,854 47,970,549 Plant, machinery and equipment 20,940,594 112,822,701 133,763,295 Infrastructure 94,804,751 231,744,258 326,549,009 Landfill improvements - 165,747 165,747 Water rights - 56,402,757 56,402,757 Total noncurrent assets 241,655,814 601,799,162 843,454,976 Total assets 303,627,979 734,076,009 1,037,703,988 LIABILITIES: Current liabilities: Accounts payable 4,732,812 8,764,889 13,497,701 Retaina~e payable 105,101 - 105,101 Deposits - 3,905,203 3,905,203 Accrued interest 760,193 - 760,193 Due to other governments 147 - 147 Noncurrent liabilities due within one year 16,095,586 20,137,095 36,232,681 Other liabilities 580,780 - 580,780 Unearned revenue 742,321 974,538 1,716,859 Payable from restricted assets: Accounts payable 1,835,851 2,403,316 4,239,167 Retainage payable 310,164 118,841 429,005 Accrued interest - 4,377,348 4,377,348 Total current liabilities 25,162,955 40,681,230 65,844,185 Noncurrent liabilities: Noncurrent liabilities due in more than one year 137,359,458 289,435,877 426,795,335 Total noncurrent liabilities 137,359,458 289,435,877 426,795,335 Total liabilities 162,522,413 330,117,107 492,639,520 NET ASSETS: Invested in capital assets, net of related debt 102,040,021 263,325,859 365,365,880 Restricted: Restricted for debt service 1,454,579 29,512,524 30,967,103 Restricted for capital acquisition - 3,575,085 3,575,085 Unrestricted 37,610,966 107,545,434 145,156,400 Total net assets $ 141,105,566 $ 403,958,902 $ 545,064,468 The notes to the basic financial statements are an integral part of this statement. II CITY OF DENTON, TEXAS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2008 Program Revenues Operating Capital Charges for Grants and Grants and FunctionslPrograms Expenses Services Contributions Contributions Primary government: Governmental activities: General government $ 26,408,949 $ 3,310,592 $ 2,265,784 $ - Publicsafety 43,426,526 6,461,037 935,289 - Publicworks 15,448,473 853,091 15,000 7,308,398 Parks and recreation 12,927,020 3,292,528 90,252 - Interest expense 5,372,868 - - - Total governmental activities 103,583,836 13,917,248 3,306,325 7,308,398 Business-type activities: Electric system 138,791,009 138,467,222 - - Water system 26,226,068 30,843,797 - 1,938,969 Wastewater system 19,413,247 23,184,369 - 3,803,170 Solid waste 17,065,295 16,660,375 - - Total business-type activities 201,495,619 209,155,763 - 5,742,139 Total primary government $ 305,079,455 $ 223,073,011 $ 3,306,325 $ 13,050,537 General revenues: Taxes: Property tax Sales tax Franchise fees Hotel occupancy tax Beverage tax Bingo tax Investment income Miscellaneous Transfers Total general revenues and transfers Change in net assets Net assets at beginning ofyear - as previously stated Prior period adjustment (Note LE.) Net assets at beginning ofyear - as restated Net assets at end ofyear The notes to the basic financial statements are an integral part of this statement. 12 Exhibit II Net (Expense) Revenue and Changes in Net Assets Primary Government Governmental Business-type Activities Activities Total $ (20,832,573) $ - $ (20,832,573) (36,030,200) - (36,030,200) (7,271,984) - (7,271,984) (9,544,240) - (9,544,240) (5,372,868) - (5,372,868) (79,051,865) - (79,051,865) - (323,787) (323,787) - 6,556,698 6,556,698 - 7,574,292 7,574,292 - (404,920) (404,920) - 13,402,283 13,402,283 (79,051,865) 13,402,283 (65,649,582) 41,499,791 - 41,499,791 21,440,839 - 21,440,839 16,197,042 - 16,197,042 1,369,667 - 1,369,667 319,541 - 319,541 23,653 - 23,653 3,287,282 7,817,671 11,104,953 4,214,028 195,055 4,409,083 323,038 (323,038) - 88,674,881 7,689,688 96,364,569 9,623,016 21,091,971 30,714,987 131,482,550 380,868,627 512,351,177 - 1,998,304 1,998,304 131,482,550 382,866,931 514,349,481 $ 141,105,566 $ 403,958,902 $ 545,064,468 13 CITY OF DENTON, TEXAS Exhibit III BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2008 Other Total General Capital Governmental Governmental Fund Debt Service Proiects Funds Funds ASSETS: Cash, cash equivalents and investments, at fair value $ 22,585,327 $ 1,913,985 $ 60,202,559 $ 9,144,446 $ 93,846,317 Receivables, net of allowances for uncollectibles: Taxes 4,211,189 283,523 - - 4,494,712 Accrued interest 211,552 17,264 457,895 63,605 750,316 Other 2,304,214 - 684,185 298,125 3,286,524 Interfund receivables 158,762 - - 80,953 239,715 Due from other governments 367,725 - - 726,669 1,094,394 Total assets ~ 29.838.769 ~ 2.214.772 ~ 61.344.639 ~ 10.313.798 ~ 103.711.978 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable 2,430,718 - 2,263,677 486,340 5,180,735 Retaina~e payable - - 415,265 - 415,265 Interfund parables - - - 80,953 80,953 Due to other governments 147 - - - 147 Other liabilities 580,780 - - - 580,780 Deferred revenues 1,449,631 259,817 778,166 206,363 2,693,977 Total liabilities 4,461,276 259,817 3,457,108 773,656 8,951,857 FUND BALANCES: Reserved for: Debt service - 1,954,955 - - 1,954,955 Encumbrances 123,696 - - 5,515 129,211 Capital projects - - 57,887,531 - 57,887,531 Unreserved, undesignated reported in: General fund 25,253,797 - - - 25,253,797 Special revenue funds - - - 9,534,627 9,534,627 Total fund balances 25,377,493 1,954,955 57,887,531 9,540,142 94,760,121 Total liabilities and fund balances ~ 29.838.769 ~ 2.214.772 ~ 61.344.639 ~ 10.313.798 ~ 103.711.978 The notes to the basic financial statements are an integral part of this statement. 14 CITY OF DENTON, TEXAS Exhibit IV RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS AS OF SEPTEMBER 30, 2008 Total fund balances -governmental funds (Exhibit III) ~ 94,760,121 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in governmental funds. 189,855,348 Certain receivables will be collected next year but are not available soon enough to pay for the current period's expenditures and therefore are reported as deferred revenues in the funds. 1,951,656 An internal charge to business-type activities is not recorded at the fund level. (2,979,670) Several internal service funds are used by the City's management. The assets and liabilities of the internal service funds are included with governmental activities. Total assets of internal service funds ~ 25,621,816 Less: Deferred debt issuance costs (31,938) Less: Capital assets reported above (7,461,744) Less: Total liabilities of internal service funds (18,301,965) Liabilities reported below 5,512,451 5,338,620 Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Long-term liabilities at year-end consist of: General obligation bonds payable ~ (80,814,594) Certificates of obligation payable (55,097,550) Bond (premiums)Idiscounts (1,645,160) Deferred loss on refunding 1,146,982 Deferred charges for issuance costs 1,165,356 Accrued interest on the bonds (760,193) Capital leases payable (1,819,298) Other post employment benefits liability (809,584) Compensated absences (9,186,468) (147,820,509) Total net assets of governmental activities (Exhibit I) ~ 141,105,566 The notes to the basic financial statements are an integral part of this exhibit. 15 CITY OF DENTON, TEXAS Exhibit V STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2008 Other Total General Capital Governmental Governmental Fund Debt Service Projects Funds Funds REVENUES: Taxes $ 49,772,244 $ 13,447,801 $ - $ 1,369,667 ~ 64,589,712 Licenses and permits 1,080,580 - - - 1,080,580 Franchise fees 16,197,042 - - - 16,197,042 Fines and forfeitures 4,969,102 - - 293,087 5,262,189 Fees for services 5,657,673 - - 2,293,992 7,951,665 Investment revenue 1,084,097 91,517 1,906,096 205,572 3,287,282 Intergovernmental 779,158 - 4,033,512 3,281,637 8,094,307 Miscellaneous 369,052 - 2,889,229 520,392 3,778,673 Total revenues 79,908,948 13,539,318 8,828,837 7,964,347 110,241,450 EXPENDITURES: Current: General government 18,925,270 - 608,286 4,576,773 24,110,329 Public safety 39,619,707 - 100,918 1,134,487 40,855,112 Public works 6,553,570 - 12,171 30,450 6,596,191 Parks and recreation 10,230,800 - 2,260 1,324,108 11,557,168 Capital outlay 854,273 - 22,016,867 404,563 23,275,703 Debt service: Principal retirement 202,003 8,277,133 - - 8,479,136 Bond issuance costs - 297,973 232,164 - 530,137 Interest and other charges - 5,261,346 - - 5,261,346 Total expenditures 76,385,623 13,836,452 22,972,666 7,470,381 120,665,122 Excess (deficiency) of revenues over (under) expenditures 3,523,325 (297,134) (14,143,829) 493,966 (10,423,672) OTHER FINANCING SOURCES (USES): Refunding bonds issued - 24,595,000 - - 24,595,000 Payment to refunded bond escrow agent - (25,117,336) - - (25,117,336) Issuance of long-term debt - - 22,230,000 - 22,230,000 Premium on debt issuance - 821,048 116,707 - 937,755 Capital lease proceeds 69,897 - - - 69,897 Sale of capital assets 193,375 - 388,712 - 582,087 Transfers in - 1,067,236 853,081 486,361 2,406,678 Transfers out (968,914) - (528,750) (336,296) (1,833,960) Total other financing sources (uses) (705,642) 1,365,948 23,059,750 150,065 23,870,121 Net change in fund balances 2,817,683 1,068,814 8,915,921 644,031 13,446,449 Fund balances at beginning of year 22,559,810 886,141 48,971,610 8,896,111 81,313,672 Fund balances at end of year $ 25,377,493 $ 1,954,955 $ 57,887,531 $ 9,540,142 $ 94,760,121 The notes to the basic financial statements are an integral part of this statement. 16 CITY OF DENTON, TEXAS Exhibit VI RECONCILIATION OF STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2008 Net change in fund balances -total governmental funds (Exhibit V) $ 13,446,449 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay ($23,275,703) exceeded depreciation and retirement of assets 014,318,669=$15,863,502 - X1,544,833 internal service portion) in the current period. 8,957,034 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Such amounts are recorded in the funds when considered available. 11,631 The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins and donations) is to increase net assets. 2,100,869 Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net assets. Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. This is the amount by which proceeds exceeded payments. (14,266,453) Fund-level financials report costs related to bonds as expenditures; however, these are deferred and amortized on the government-wide financials. 403,374 Certain expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. (1,397,327) Internal service funds are used by management to charge the costs of certain activities, such as insurance and telecommunications, to individual funds. A portion of the net revenue (expense) of certain internal service funds is reported with governmental activities. The amount reported with business-type activities is X408,404. 367,439 Change in net assets of governmental activities (Exhibit II) $ 9,623,016 The notes to the basic financial statements are an integral part of this statement. 17 I I f i 18 CITY OF DENTON, TEXAS Exhibit VII STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET TO ACTUAL GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 2008 Variance with Adjustments - Actual on a Final Budget - Budgeted Amounts Actual Budgetary Budgetary Positive Original Final Amounts Basis Basis (Negative) REVENUES: Taxes $ 48,899,433 ~ 48,899,433 ~ 49,772,244 $ - $ 49,772,244 $ 872,811 Licenses and permits 1,339,722 1,339,722 1,080,580 - 1,080,580 (259,142) Franchise fees 15,791,889 15,791,889 16,197,042 - 16,197,042 405,153 Fines and forfeitures 4,538,400 4,538,400 4,969,102 - 4,969,102 430,702 Fees for services 5,217,542 5,217,542 5,657,673 - 5,657,673 440,131 Investment revenue 750,000 750,000 1,084,097 - 1,084,097 334,097 Intergovernmental 753,567 753,567 779,158 - 779,158 25,591 Miscellaneous 82,000 82,000 369,052 - 369,052 287,052 Total revenues 77,372,553 77,372,553 79,908,948 - 79,908,948 2,536,395 EXPENDITURES: Current: General government 24,019,130 23,299,880 18,925,270 3,376,437 22,301,707 998,173 Public safety 39,310,479 39,686,729 39,619,707 - 39,619,707 67,022 Public works 7,458,821 7,098,821 6,553,570 - 6,553,570 545,251 Parks and recreation 10,400,683 10,483,985 10,230,800 - 10,230,800 253,185 Capital outlay 713,582 852,672 854,273 - 854,273 (1,601) Debt service: Principal retirement 236,994 236,994 202,003 - 202,003 34,991 Total expenditures 82,139,689 81,659,081 76,385,623 3,376,437 79,762,060 1,897,021 Excess (deficiency) of revenues over expenditures (4,767,136) (4,286,528) 3,523,325 (3,376,437) 146,888 4,433,416 OTHER FINANCING SOURCES (USES): Capital leases - - 69,897 - 69,897 69,897 Sale of capital assets - - 193,375 - 193,375 193,375 Transfer in 3,376,278 3,376,278 - 3,376,437 3,376,437 159 Transfers out (627,075) (1,107,683) (968,914) - (968,914) 138,769 Total other financing sources (uses) 2,749,203 2,268,595 (705,642) 3,376,437 2,670,795 402,200 Excess (deficiency) of revenues and other sources over (under) expenditures and other uses (2,017,933) (2,017,933) 2,817,683 - 2,817,683 4,835,616 Fund balances at beginning of year 22,559,810 22,559,810 22,559,810 - 22,559,810 - Fundbalance at end of year $ 20,541,877 ~ 20,541,877 ~ 25,377,493 $ - $ 25,377,493 $ 4,835,616 Adjustments -Budgetary Basis are expenditures allocated to and reimbursed by other funds. These expenditures are recorded in the other funds' financials. The notes to the basic financial statements are an integral part of this statement. 19 CITY OF DENTON, TEXAS STATEMENT OF NET ASSETS PROPRIETARY FUNDS AS OF SEPTEMBER 30, 2008 Business-type Activities -Enterprise Funds Electric Water Wastewater Solid System System System Waste ASSETS: Current assets: Cash, cash equivalents and investments, at fair value $ 63,979,198 $ 18,433,410 $ 9,223,688 $ 6,521,136 Receivables, net of allowances: Accounts 9,517,593 1,449,370 1,077,819 858,218 Unbilled utility service 7,402,464 1,153,441 904,205 704,062 Accrued interest 527,895 216,419 123,809 86,354 Other 795,505 - - 4,997 Interfund receivables 455,109 64,854 50,782 8,945 Merchandise inventory - - - - Prepaid items 1,700 - - 37,594 Deferred debt issuance costs 83,601 107,336 50,506 23,405 Total current assets 82,763,065 21,424,830 11,430,809 8,244,711 Noncurrent assets: Restricted assets: Cash, cash equivalents and investments, at fair value 37,295,100 61,878,186 24,937,653 4,383,235 Accrued interest 363,110 542,183 234,973 - Interfund receivables 5,132,873 274,101 25,113 1,675 Total restricted assets 42,791,083 62,694,470 25,197,739 4,384,910 Deferred debt issuance costs 588,520 906,421 268,100 119,015 Capital assets, net of accumulated depreciation 110,667,910 186,812,546 146,969,603 25,832,607 Total noncurrent assets 154,047,513 250,413,437 172,435,442 30,336,532 Total assets 236,810,578 271,838,267 183,866,251 38,581,243 LIABILITIES: Current liabilities: Accounts payable 7,588,415 502,419 295,637 378,418 Claims payable - - - - Compensated absences payable 515,760 474,350 292,074 282,572 Leases payable - - 109,780 987,236 Deposits 3,576,831 246,483 4,595 77,294 Accrued interest - - - - Interfund payables - - - - Unearned revenue 974,538 - - - Payable from restricted assets: Accounts payable 1,000,240 506,945 97,004 799,127 Retainage payable - 13,456 30,926 74,459 Accrued interest 1,299,326 2,096,871 885,948 95,203 Revenue and certificate and general obligation bonds 5,406,919 5,863,853 4,033,561 2,170,990 Total current liabilities paid from restricted assets 7,706,485 8,481,125 5,047,439 3,139,779 Total current liabilities 20,362,029 9,704,377 5,749,525 4,865,299 20 Exhibit VIII Governmental Activities - Total Internal Enterprise Service Funds Funds $ 98,157,432 $ 9,700,333 12,903,000 - 10,164,172 - 954,477 65,383 800,502 256,835 579,690 - - 7,487,714 39,294 - 264,848 6,263 123,863,415 17,516,528 128,494,174 617,869 1,140,266 - 5,433,762 - 135,068,202 617,869 1,882,056 25,675 470,282,666 7,461,744 607,232,924 8,105,288 731,096,339 25,621,816 8,764,889 1,363,620 - 2,247,525 1,564,756 232,320 1,097,016 442,284 3,905,203 - - 22,413 - 6,172,214 974,538 - 2,403,316 24,308 118,841 - 4,377,348 - 17,475,323 459,863 24,374,828 484,171 40,681,230 10,964,547 (continued) 21 CITY OF DENTON, TEXAS STATEMENT OF NET ASSETS PROPRIETARY FUNDS AS OF SEPTEMBER 30, 2008 Business-type Activities -Enterprise Funds Electric Water Wastewater Solid System System System Waste Noncurrent liabilities: Leases payable ~ - ~ - $ 81,288 $ 1,393,515 General obligation bonds payable - - - 4,452,739 Certificates of obligation - - - 11,277,873 Revenue bonds payable, net of premiumldiscount 88,219,809 131,540,856 52,409,937 - Deferred amount on refunding (2,101,635) (4,323,044) (1,035,031) (166,245) Notes payable - 3,141,222 - - Compensated absences payable 66,255 31,557 31,578 90,116 Claims payable - - - - Landfill closurelpostclosure costs - - - 4,325,087 Total noncurrent liabilities 86,184,429 130,390,591 51,487,772 21,373,085 Total liabilities 106,546,458 140,094,968 57,237,297 26,238,384 NET ASSETS: Invested in capital assets, net of related debt 47,726,481 98,344,161 107,155,483 10,099,734 Restricted for debt service 10,869,523 12,602,474 6,040,527 - Restrictedfor capital acquisition - 2,118,320 1,456,765 - Unrestricted 71,668,116 18,678,344 11,976,179 2,243,125 Total net assets ~ 130,264,120 ~ 131,743,299 $126,628,954 $12,342,859 Adjustment to reflect inclusion of internal service fund activities related to enterprise funds. Net assets of business-type activities (Exhibit I) The notes to the basic financial statements are an integral part of this statement. 22 Exhibit VIII Governmental Activities - Total Internal Enterprise Service Funds Funds $ 1,474,803 $ 442,290 4,452,739 1,501,355 11,277,873 2,402,975 272,170,602 - (7,625,955) (23,349) 3,141,222 - 219,506 32,300 - 2,981,847 4,325,087 - 289,435,877 7,337,418 330,117,107 18,301,965 263,325,859 2,854,195 29,512,524 - 3,575,085 - 104,565,764 4,465,656 $ 400,979,232 $ 7,319,851 2,979,670 $ 403,958,902 (concluded) 23 CITY OF DENTON, TEXAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2008 Business-type Activities -Enterprise Funds Electric Water Wastewater Solid System System System Waste OPERATING REVENUES: Utility services $ 134,936,624 $ 23,414,168 $ 20,310,137 $ 16,339,345 Charges for goods and services - - - - Otherfees 3,530,598 2,631,360 1,051,563 321,030 Miscellaneous - - - - Totaloperating revenues 138,467,222 26,045,528 21,361,700 16,660,375 OPERATING EXPENSES: Operating expenses before depreciation 130,836,059 15,452,895 11,956,931 13,567,039 Depreciation 4,986,097 4,980,010 5,143,035 2,804,672 Total operating expenses 135,822,156 20,432,905 17,099,966 16,371,711 Operating income 2,645,066 5,612,623 4,261,734 288,664 NON-OPERATING REVENUES (EXPENSES): Investment revenue 3,923,996 2,482,143 1,052,466 359,066 Interest expense and fiscal charges (3,115,022) (5,900,229) (2,364,875) (797,159) Impact fee revenue - 4,798,269 1,822,669 - Gain (loss) on disposal of capital assets (69,273) 16,244 55,539 34,165 Other non-operating revenues (expenses) (654) 74,675 16,600 67,759 Total non-operating revenues (expenses) 739,047 1,471,102 582,399 (336,169) Income before contributions and transfers 3,384,113 7,083,725 4,844,133 (47,505) CONTRIBUTIONS AND TRANSFERS: Capital contributions - 1,938,969 3,803,170 - Transfers in - 74,200 286,545 22,215 Transfers out (93,579) (143,613) (402,625) (66,181) Total contributions and transfers (93,579) 1,869,556 3,687,090 (43,966) Change in net assets 3,290,534 8,953,281 8,531,223 (91,471) Net assets at beginning of year - as previously stated 125,609,408 122,563,914 117,689,709 12,434,330 Prior period adjustment (Note LE) 1,364,178 226,104 408,022 - Netassets at beginning of year - as restated 126,973,586 122,790,018 118,097,731 12,434,330 Total net assets at end of year $ 130,264,120 $ 131,743,299 $ 126,628,954 $ 12,342,859 Change in fund net assets of proprietary funds Adjustment to reflect inclusion of internal service fund activities related to enterprise funds. Change in net assets of business-type activities (Exhibit II) The notes to the basic financial statements are an integral part of this statement. 24 Exhibit IX Governmental Activities - Total Internal Enterprise Service Funds Funds ~ 195,000,274 ~ - - 36,619,480 7,534,551 - - 264,223 202,534,825 36,883,703 171,812,924 34,372,389 17,913,814 1,544,833 189,726,738 35,917,222 12,808,087 966,481 7,817,671 271,429 (12,177,285) (173,660) 6,620,938 - 36,675 (38,727) 158,380 - 2,456,379 59,042 15,264,466 1,025,523 5,742,139 - 382,960 8,750 (705,998) (258,430) 5,419,101 (249,680) 20,683,567 775,843 378,297,361 6,544,008 1,998,304 - 380,295,665 6,544,008 $ 400,979,232 $ 7,319,851 20,683,567 408,404 ~ 21,091,971 25 CITY OF DENTON, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2008 Business-type Activities -Enterprise Funds Electric Water Wastewater System System System CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers $ 132,853,545 ~ 26,294,312 ~ 21,640,795 Cash paid to employees for services (6,721,649) (8,899,156) (4,981,261) Cash paid to suppliers (132,907,715) (6,338,930) (7,645,713) Net cash provided (used) by operating activities (6,775,819) 11,056,226 9,013,821 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers out (93,579) (143,613) (402,625) Transfers in - 74,200 286,545 Net cash used by noncapital financing activities: (93,579) (69,413) (116,080) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Principal payments on capital debt (5,275,264) (5,474,185) (3,952,708) Interest and fiscal charges (3,185,787) (5,890,565) (2,374,252) Principal payments under capital lease obligation - - 191,068 Proceeds from issuance of capital debt 11,196,976 4,233,084 - Proceeds from impact fees - 4,798,20 1,822,669 Proceeds from sale of capital assets 109,784 24,034 58,990 Acquisition and construction of capital assets (14,085,301) (4,391,046) (5,534,328) Net cash used by capital financing activities (11,239,592) (6,700,409) (9,788,561) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale and maturities of investment securities 312,430,348 44,899,337 23,150,317 Purchase of investment securities (300,359,367) (47,886,637) (23,868,614) Interest received on investments 4,308,942 2,375,282 1,074,972 Net cash provided (used) by investing activities 16,379,923 (612,018) 356,675 Net increase (decrease) in cash and cash equivalents (1,729,067) 3,674,386 (534,145) Cash and cash equivalents at beginning of year 10,706,589 6,107,887 8,165,653 Cash and cash equivalents at end of year 8,977,522 9,782,273 7,631,508 Investments, at fair value (Note IV.A.) 92,296,776 70,529,323 26,529,833 Cash, cash equivalents and investments, at fair value $ 101,274,298 ~ 80,311,596 ~ 34,161,341 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income $ 2,645,066 ~ 5,612,623 ~ 4,261,734 Adjustments: Depreciation expense 4,986,097 4,980,010 5,143,035 Decrease (Increase) in receivables (4,833,08) 286,354 60,053 Decrease (Increase) in interfund receivables (779,979) (37,570) 219,042 Increase in inventories - - - Decrease (Increase) in prepaid items 12,675 - 3,935 Increase (Decrease) in accounts payable (8,80,314) 238,993 (400,046) Increase (Decrease) in compensated absences payable 63,334 (24,184) 52,095 Increase in closure/postclosure liability - - - Increase (Decrease) in interfund payables - - (326,027) Total adjustments (9,420,885) 5,443,603 4,752,087 Net cash provided (used) by operating activities $ (6,775,819) ~ 11,056,226 ~ 9,013,821 NONCASH CAPITAL, INVESTING AND FINANCING ACTIVITIES: Noncash activity during the year consisted of contributed capital assets of X1,938,90 for Water and $3,803,170 for Wastewater; the change in the fair value of investments of $141,243 for Electric, x(0,734) for Water, $(8,217) for Wastewater, and x(68,290) for Solid Waste; and the change in fair value of investments of X27,107 for the Internal Service funds; the refunding of capital debt of $2,295,548 for Solid Waste and X1,472,532 for the Internal Service funds. The notes to the basic financial statements are an integral part of this statement. 26 Exhibit X Governmental Activities Total Internal Solid Enterprise Service Waste Funds Funds ~ 17,121,865 ~ 197,910,517 ~ 36,893,445 (5,890,467) (26,492,533) (4,157,041) (6,798,182) (153,690,540) (28,603,069) 4,433,216 17,727,444 4,133,335 (66,181) (705,998) (258,430) 22,215 382,960 8,750 (43,966) (323,038) (249,680) (2,034,128) (16,736,285) (474,409) (822,413) (12,273,017) (187,268) (1,184,986) (993,918) (442,279) 2,820,000 18,250,060 - - 6,620,938 - 48,446 241,254 135 (6,961,531) (30,972,206) (457,803) (8,134,612) (35,863,174) (1,561,624) 18,937,871 399,417,873 8,600,296 (12,950,000) (385,064,618) (8,400,000) 467,307 8,226,503 208,724 6,455,178 22,579,758 409,020 2,709,816 4,120,990 2,731,051 2,197,097 27,177,226 2,604,883 4,906,913 31,298,216 5,335,934 5,997,458 195,353,390 4,982,268 $ 10,904,371 ~ 226,651,606 ~ 10,318,202 ~ 288,664 ~ 12,808,087 ~ 966,481 2,804,672 17,913,814 1,544,833 422,258 (4,065,033) 5,515 3,086 (595,421) 4,227 - - (963,786) (37,594) (20,984) 140 544,450 (8,485,917) 2,174,463 57,055 148,300 7,752 350,625 350,625 - - (326,027) 393,710 4,144,552 4,919,357 3,166,854 $ 4,433,216 ~ 17,727,444 ~ 4,133,335 27 CITY OF DENTON, TEXAS Exhibit XI STATEMENT OF ASSETS AND LIABILITIES AGENCY FUNDS AS OF SEPTEMBER 30, 2008 Total Agency Funds ASSETS: Cash, cash equivalents and investments, at fair value $ 3,607,240 Other receivables 75,178 Total assets $ 3,682,418 LIABILITIES: Accounts payable $ 3,682,418 Total liabilities $ 3,682,418 The notes to the basic financial statements are an integral part of this statement. 28 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2008 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Denton is a municipal corporation governed by an elected mayor and six-member council. The City receives funding from state and federal government sources and must comply with the requirements of these funding source entities. However, the City is not included in any other governmental "reporting entity," as defined in pronouncements by the Governmental Accounting Standards Board (GASH) Statement No. 14, "The Financial Reporting Entity," since council members are elected by the public and have decision-making authority, the authority to levy taxes, the power to designate management, the ability to significantly influence operations, and primary accountability for fiscal matters. The GASH issued Statement No. 45, "Accounting and Financial Reporting by Employers for Post employment Benefts Other Than Pensions" ("GASH 45"), which was effective for the City in the fiscal year ended September 30, 2008. GASH 45 requires that state and local governments establish standards for the measurement, recognition, and display of other post employment benefits expense/expenditures, related liabilities, and note disclosures in the financial statements. The financial statements of the City have been prepared to conform to accounting principles generally accepted (GAAP) in the United States of America as applicable to state and local governments. GASH is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the more significant policies. A. Reporting entity An elected mayor and asix-member council govern the City. As required by accounting principles generally accepted in the United States of America, these financial statements present the City (the primary government) and its component units, which are entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the City's operations, and so data from these units are combined with data of the primary government. A discretely presented component unit, on the other hand, is reported in a separate column in the government-wide financial statements to emphasize it is legally separate from the City. The City had no discretely presented or blended component units at September 30, 2008. B. Government-wide and fund financial statements The basic financial statements include both government-wide (based on the City as a whole) and fund financial statements. The reporting focus is either the City as a whole (government-wide financial statements) or major individual funds (within the fund financial statements). The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all non-fiduciary activities of the primary government. For the most part, the effect of inter-fund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The government-wide statement of activities demonstrates the degree to which the direct expenses of a functional category (public safety, public works, etc.) or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or applicants who purchase, use or directly benefit from goods, services or privileges provided by a given function or segment; (2) grants and contributions that are restricted to meeting operational requirements of a particular function or segment; and (3) grants and contributions that are restricted to meeting the capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. The net cost (by function or business-type activity) is normally covered by general revenue (property taxes, sales taxes, franchise fees, interest income, etc.). Separate fund financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major governmental funds 29 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 and major enterprise funds are reported as separate columns in the fund financial statements. GASB Statement No. 34 sets forth minimum criteria (percentage of assets, liabilities, revenues or expenditures/expenses of either fund category and for the governmental and enterprise funds combined) for the determination of major funds. Non-major funds are combined in a column in the fund financial statements. Internal service funds, which traditionally provide services primarily to other funds of the government, are presented in summary form as part of the proprietary fund financial statements. The financial statements of internal service funds are allocated (based on the percentage of goods or services provided) between the governmental and business-type activities when presented at the government-wide level. The City's fiduciary funds are presented in the fund financial statements. Since by definition these assets are being held for the benefit of a third party (other local governments, individuals, etc.) and cannot be used to address activities or obligations of the government, these funds are not incorporated into the government-wide statements. The government-wide focus is more on the sustainability of the City as an entity and the change in aggregate financial position resulting from the activities of the fiscal period. The focus of the fund financial statements is on the major individual funds of the governmental and business-type categories, as well as the fiduciary funds (by category). Each presentation provides valuable information that can be analyzed and compared to enhance the usefulness of the information. C. Measurement focus, basis of accounting and financial statement presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund statements. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund-level financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property tax, franchise fees, sales tax and other taxes associated with the current fiscal period are all susceptible to accrual and so have been recognized as revenues of the current fiscal period. All of the other revenue items are considered to be measurable and available only when cash is received. The City reports the following major governmental funds: The general fund is the City's primary operating fund. All general tax revenues and other receipts that are not allocated by law or contractual agreement to some other fund are accounted for in this fund. From the fund are paid general operating costs, fixed charges and capital improvement costs that are not paid through other funds. The debt service fund accounts for the payment of principal and interest on general long-term liabilities, paid primarily by taxes levied by the City, and for payment of principal and interest on capital leases in the governmental funds. The capital projects fund accounts for financial resources used for the acquisition or construction of major capital facilities being financed from bond proceeds, capital contributions, or transfers from other funds, other than those recorded in the enterprise funds and internal service funds. Other governmental funds is a summarization of all of the non-major governmental funds. 30 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 The City reports the following major proprietary funds: The City utility system is made up of three separate funds as follows: The electric fund accounts for electrical utility services to the residents and commercial establishments of the City. Activities necessary to provide such services are accounted for in the fund, including, but not limited to, administration, operations, maintenance, finance and related debt service. The water fund accounts for water utility services to the residents and commercial establishments of the City. Activities necessary to provide such services are accounted for in the fund, including, but not limited to, administration, operations, maintenance, finance and related debt service. The wastewater fund accounts for sewer and storm water services to the residents and commercial establishments of the City. Activities necessary to provide such services are accounted for in the fund, including, but not limited to, administration, operations, maintenance, finance and related debt service. The City provides additional services through the following fund: The solid waste fund accounts for the provision of solid waste services to the residents of the City. Activities necessary to provide such services are accounted for in the fund, including, but not limited to, administration, operations, maintenance, finance and related debt service. The City additionally reports the following funds: Internal service funds are used to account for the financing of materials and services provided by one department of the City to other departments of the City on acost-reimbursement basis. Agency funds are used to account for the payment of payroll, employee insurance, and other similar liabilities. The City holds the assets in an agency capacity for individuals, private organizations or other governments. The City follows private-sector standards of accounting and financial reporting (as issued by the Financial Accounting Standards Board) issued prior to December 1, 1989 in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the GASB. Governments also have the option of following subsequent private-sector guidance for business-type activities and enterprise funds, subject to this same limitation. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's electric, water, wastewater and solid waste funds are charges to customers for services. Operating expenses for the enterprise funds and internal service funds include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. For deferred charges, the City recognizes, as an asset or a liability, the difference between the electric fund's energy cost adjustment (ECA) revenue collected and related costs, in compliance with Financial Accounting Standards Board Statement No. 71. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. 31 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 D. Assets, liabilities and net assets or equity 1. Cash, cash equivalents and investments The City's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Investments are carried at fair value or cost, if maturities are one year or less. Fair value is determined as the price at which two willing parties would complete an exchange. Interest earned on investments is recorded in the funds in which the investments are recorded. 2. Receivables Outstanding balances between funds are reported as "interfund receivableslpayables." Any residual balances between governmental activities and business-type activities are reported in the government-wide statements as "internal balances." Trade and property tax receivables are shown net of an allowance for uncollectibles. The City accrues amounts for utility services provided in September, but not billed at September 30, 2008. 3. Inventories Inventories of supplies are maintained at the City warehouse for use by all City funds and are accounted for by the consumption method. Cost is determined using a moving average method. No inventories exist in the governmental fund types. 4. Restricted Assets Certain proceeds of the City's governmental and proprietary fund revenue bonds, general obligation bonds, and certificates of obligation, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. Assets collected from impact fees are limited by state statute in use and also shown as restricted on the balance sheet of the Water and Wastewater funds. 5. Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, bridges, sidewalks and similar items) are reported in applicable governmental or business-type activities columns in the government-wide financial statements and in the proprietary fund financial statements. The City defines capital assets as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair value at the time received. Major outlays for capital assets and improvements are capitalized as projects are constructed. Net interest incurred during the construction phase of capital assets of business-type activities and enterprise funds is included as part of the capitalized value of the assets constructed. For 2008, net interest capitalization of $2,103,074 was recorded for electric fund projects, $524,271 was recorded for water fund projects and $433,947 was recorded for wastewater fund projects. Included in these amounts is $1,998,304 in a prior period adjustment to capitalized interest as disclosed in footnote LE. 32 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 Capital assets are depreciated using the straight-line method over the following useful lives: Assets Years Buildings 40 Infrastructure 20 - 40 General improvements 10 Machinery and equipment 10 - 20 Furniture and office equipment 10 Computer equipment/software 3 -10 Plant and equipment 5 Underground pipe 40 Water storage rights 50 -100 Water recreation rights 50 Communication equipment 5 Vehicles 3 -10 Renewals and betterments of property and equipment are capitalized, whereas normal repair and maintenance are charged to expense as incurred. 6. Compensated Absences The City allows employees to accumulate unused vacation up to 320 hours (480 for Civil Service Fire employees.) Upon termination, any accumulated vacation time will be paid to an employee. Generally, sick leave is not paid upon termination except for fire fighters and police officers. Firefighters and police officers accumulate unused sick leave up to a maximum of 1080 hours and 720 hours, respectively. All other employees are paid only upon illness while employed by the City. Accumulated vacation and sick leave is accrued when incurred in the government-wide, proprietary and fiduciary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. The General Fund and Other Governmental Funds has been used in prior years to liquidate governmental funds' related liability. 7. Arbitra e Arbitrage involves the investment of the proceeds from the sale oftax-exempt securities in a taxable money market instrument that yields a higher rate, resulting in interest revenue in excess of interest costs. Federal tax code requires that these excess earnings be rebated to the federal government. The Capital Projects Fund has been used in prior years to liquidate governmental funds' related liability. 8. Lon -term obli atg ions In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term obligations are reported as liabilities. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount. Gains and losses on refunding are amortized over the life of the refunded debt or the life of the new issue, whichever is shorter. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 33 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 9. Fund e ui In the fund financial statements, governmental funds report reservations of fund balance for accounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balances represent management plans that are subject to change. E. Prior period adjustments An adjustment has been recorded to beginning net assets to change the calculation of capitalizable interest. The adjustment was necessary to change the City's calculations from capitalizing interest on the expenditures of capital construction for the fiscal year to a calculation using the accumulated expenditures during the capitalization period in accordance with FASB Statement No. 34. The entry increases previously reported net assets for the Electric Fund, the Water Fund, and the Wastewater Fund in the amounts of $1,364,178, $226,104, and $408,022, respectively. II. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS Explanation of certain differences between the governmental fund statement of revenues, expenditures and changes in fund balances and the government-wide statement of activities Another element of that reconciliation states, "Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net assets. Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. This is the amount by which proceeds exceeded payments." The details of this $(14,266,453) difference are as follows. Debt issued or incurred: Issuance of general obligation debt $(31,895,000) Issuance of certificates of obligation (14,930,000) Issuance of capital lease debt (69,897) Principal repayments: Principal retirement 8,479,136 Refunded principal 24,149,308 Net adjustment to decrease net changes in fund balances -total governmental funds to arrive at changes in net assets of governmental activities 14 266 453 Another element of that reconciliation states, "The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins and donations) is to increase net assets." The details of this $2,100,869 difference are as follows: Loss on disposal of capital assets $ (529,864) Donations of capital assets increase net assets in the statement of 2,630,733 activities but do not appear in the governmental funds because they are not financial resources Net adjustment to increase net changes in fund balances -total 2100 869 governmental funds 34 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 Another element of that reconciliation states, "Certain expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds." The details of the $(1,397,327) difference are as follows: Compensated absences $ (636,592) Other post employment benefits (809,584) Arbitrage liability 3,335 Accrued interest 45,514 Net adjustments to decrease net changes in fund balances -total governmental funds to arrive at changes in net assets of governmental activities 1397 327 III. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Budgetary information The City Council follows these procedures, as prescribed by City Charter, in establishing the budgets reflected in the financial statements: 1. Within the time period required by law, the City Manager submits to the City Council a proposed budget for the fiscal year beginning on the following October 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted prior to the adoption of the budget in order to obtain taxpayer comments. 3. The annual budget adopted by the City Council covers the general fund, special revenue funds (Recreation Fund, Police Confiscation Fund, and Tourist and Convention Fund only), the debt service fund, the enterprise funds, and internal service funds. The budget is legally enacted by the City Council through passage of an ordinance prior to the beginning of the fiscal year. The basic financial statements reflect the legal level of control, (i.e. the level at which expenditures cannot legally exceed the appropriated amount) which is established at fund level as approved by City Council. 4. The City Charter provides that the City Manager may transfer any part of the unencumbered appropriation balance or the entire balance thereof between programs or general classifications of expenditures within an office, department, agency, or organizational unit. City Council approval is not required at this level. The Charter also provides that at any time during the year, at the request of the City Manager, City Council may by resolution transfer any part of the unencumbered appropriation balances or the entire balance thereof from one office, department, agency, or organizational unit to another, as well as make any increases in fund appropriations. Budgets are adopted on a basis for the governmental funds and the budgeted special revenue funds that is generally consistent with generally accepted accounting principles. Budgets for enterprise funds are prepared on the full accrual basis, except certain noncash transactions such as depreciation expense and amortization on debt issuance costs where it is not budgeted, and debt service payments where it is budgeted. At the beginning of the subsequent year, management reviews all open encumbrances from the prior year and, as provided in the budget ordinance, appropriations for the encumbrances may be carried forward. In the current fiscal year, $123,696 of appropriations were carried forward for the General Fund and $5,515 in Other Governmental Funds. Also, during the budgetary process, amounts are included in all fund budgets to recognize administrative transfers between funds for goods or services. These amounts are not included in the reporting of actual activity for the funds. For funds reporting required budget-to-actual comparisons, these administrative transfers are included as adjustments -budgetary basis. 35 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 IV. DETAILED NOTES ON ALL FUNDS A. Deposits and investments In order to facilitate effective cash management practices, the operating cash of all funds is pooled into common accounts for the purpose of increasing income through combined investment activities. At year-end, the City had $60,334,121 in cash and cash equivalents, including $55,450,000 invested in TexPool, a local government investment pool, and $5,000,000 in money market funds the City considers cash equivalent. Of the $60,334,121, $3,607,240 is included in the agency funds. In addition, the City had $14,443 in petty cash at year-end. Statutes authorize the City to invest in obligations of the U.S. Treasury; U.S. agencies, fully collateralized repurchase agreements, public fund investment pools, SEC-registered, no-load, money market mutual funds, investment-grade, rated municipal securities of any state and fully collateralized certificates of deposit. The investments reported at September 30, 2008, were similar to those held during the fiscal year. The City reports all investments in the financial statements at fair value. At September 30, 2008, the City's investments carried a fair value of $274,074,801. As of September 30, 2008, City investments were as follows: Weighted Average Investment Type Fair Value Maturity (Years) U.S. Treasury Securities-Coupon $ 5,128,125 0.87 U.S. Treasury Securities-Zero Coupon 22,399,695 0.38 U.S. Agency Securities-Coupon 161,662,744 0.80 U.S. Agency Securities-Callable 52,108,437 2.74 U.S. Agency Securities-Discount 4,998,500 0.05 Commercial Paper 12,777,300 0.39 Certificates ofDeposit-Insured 15,000,000 0.96 Total fair value of investments $274,074,801 Portfolio weighted average maturity 1.11 Interest rate risk. In accordance with its investment policy, the City manages its exposure to declines in fair values due to interest rate fluctuations by limiting the weighted average maturity of its investment portfolio to less than eighteen months. With review and approval of the City's investment committee, the weighted average maturity of its investment portfolio maybe extended beyond eighteen months. Credit risk. The City's investment policy limits investments to obligations of the United States of America and its agencies, investment quality obligations of the States with a rating not less than AA, fully insured or collateralized Certificates of Deposit, and commercial paper that has a maturity of 270 days or less and a rating of A-1 or P- l .The City's investments in the bonds of U. S. agencies were rated AAA by Standard & Poor's and Fitch Ratings and Aaa by Moody's Investors Service. Custodial credit risk. This is the risk that in the event of a bank or counterparty failure, the City's deposits may not be returned. The policy states that all bank deposits and bank investments of City funds shall be secured by 36 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 pledged collateral with a market value equal to no less than 102 percent of the principal plus accrued interest less an amount insured by FDIC, if a deposit. As of September 30, 2008, the bank balance for deposits was $934,431 which was insured by FDIC for $100,000 and covered by collateral with a fair value of $8,004,209 held by an independent third party custodian pledged for the City, but not in the City's name. Cash, cash equivalents and investments, at fair value are reported together on the financial statements. Investments, at fair value, by fund were as follows: Other General Debt Capital Governmental Fund Service Projects Funds Electric Unrestricted investments $ 20,878,553 $ 1,508,532 $ 47,864,635 $ 3,570,484 $ 62,231,098 Change in fair value (34,582) 218 (34,354) (14,343) (9,183) Restricted investments - - - - 30,108,542 Change in fair value - - - - (33,681) Total $ 20,843,971 $ 1,508,750 $ 47,830,281 $ 3,556,141 $ 92,296,776 Internal Total Service City Water Wastewater Solid Waste Funds Investments Unrestricted investments $ 19,233,337 $ 8,561,378 $ 5,987,032 $ 4,977,801 $ 174,812,850 Change in fair value (12,087) (23,253) 10,426 4,467 (112,691) Restricted investments 51,389,379 17,966,312 - - 99,464,233 Change in fair value (81,306) 25,396 - - (89,591) Total $ 70,529,323 $ 26,529,833 $ 5,997,458 $ 4,982,268 $ 274,074,801 B. Property tax revenue Property taxes attach as an enforceable lien on property as of January 1. Taxes are levied on October 1 and are due and payable at that time; therefore, the legally enforceable claim arises on October 1. A receivable is recorded at that time. All unpaid taxes levied October 1 become delinquent February 1 of the following year. Property taxes at the fund level are recorded as receivables and revenue at the time the tax levy is billed. Current-year revenues recognized are those ad valorem taxes collected within the current period or soon enough thereafter to pay current liabilities, which is sixty days after year-end. All other outstanding receivables are adjusted from revenue and recognized as deferred for future collections. Current tax collections for the year ended September 30, 2008, were 98.9% of the tax levy. An allowance is provided for delinquent taxes not expected to be collected in the future. At September 30, 2008, the City had a tax rate of $0.66652 per $100 valuation. Based upon the maximum ad valorem tax of $2.50 per $100 valuation imposed by Texas Constitutional law, the City had a tax rate margin of $1.83348. Additional revenues up to $111,649,760 could be raised per year based on the current year's assessed value of $6,089,499,775 before the limit is reached. 37 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 C. Receivables Receivables at September 30, 2008, for the City's individual major funds and other funds (non-major funds, internal service funds and fiduciary funds), including the applicable allowances for uncollectible accounts, are shown below. Capital General Debt Service Projects Electric Water Receivables: Taxes $4,500,917 $ 387,327 $ - $ - $ - Accounts - - - 21,911,882 2,962,709 Accrued interest 211,552 17,264 457,895 891,005 758,602 Unbilled utility service - - - 7,402,464 1,153,441 Other 9,456,218 - 684,185 795,505 - Grossreceivables 14,168,687 404,591 1,142,080 31,000,856 4,874,752 Less: Allowance for uncollectibles 7,441,732 103,804 - 12,394,289 1,513,339 Net total receivables $6,726,955 $ 300,787 $ 1,142,080 $ 18,606,567 $ 3,361,413 Other Internal Waste- Solid Governmental Service water Waste Funds Funds Total Receivables: Taxes $ - $ - $ - $ - $ 4,888,244 Accounts 2,820,186 2,195,092 - - 29,889,869 Accrued interest 358,782 86,354 63,605 65,383 2,910,442 Unbilled utility service 904,205 704,062 - - 10,164,172 Other - 4,997 298,125 256,835 11,495,865 Gross receivables 4,083,173 2,990,505 361,730 322,218 59,348,592 Less: Allowance for uncollectibles 1,742,367 1,336,874 - - 24,532,405 Net total receivables $2,340,806 $ 1,653,631 $ 361,730 $ 322,218 $ 34,816,187 38 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 D. Capital assets Capital assets balances and transactions for the year ended September 30, 2008 are summarized below and on the following page. Balance at Governmental activities: Balance at September 30, October 1, 2007 Increases Decreases 2008 Capital assets not being depreciated: Land $ 7,839,654 $ 89,681 $ - $ 7,929,335 Construction in progress 13,868,587 22,316,612 12 616 226 23,568,973 Total capital assets not being depreciated 21,708,241 22,406,293 12 616 226 31,498,308 Capital assets being depreciated: Buildings 54,809,387 2,259,731 (106,098) 56,963,020 Infrastructure 174,899,377 7,929,594 (129,100) 182,699,871 Machinery and equipment and other improvements 50,821,809 6,188,739 3 981799 53,028,749 Total capital assets being depreciated 280,530,573 16,378,064 4 216 997 292,691,640 Less accumulated depreciation for: Buildings 13,043,047 1,383,520 (75,242) 14,351,325 Infrastructure 79,331,474 8,692,745 (129,099) 87,895,120 Machinery and equipment and other improvements 29,940,955 5,933,616 3 786 416 32,088,155 Total accumulated depreciation 122,315,476 16,009,881 3 990 757 134,334,600 Total capital assets, being depreciated, net 158,215,097 368,183 226 240 158,357,040 Governmental activities capital assets, net 179 923 338 22 774 476 12 842 466 189 855 348 Increases in accumulated depreciation for machinery and equipment and other improvements include $146,379 from the transfer of assets from business-type activities. (Continued) 39 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 Balance at Balance at Business-type activities: October 1, 2007 Increases Decreases Se tember 30, 2008 P Capital assets not being depreciated: Land $ 10,015,175 $ 387,480 $ - $ 10,402,655 Construction in progress 34,294,162 31,570,361 12 478 829 53,385,694 Total capital assets not being depreciated 44,309,337 31,957,841 12 478 829 63,788,349 Capital assets being depreciated: Buildings 7,366,446 771,552 (18,252) 8,119,746 Landfill improvements 9,900,666 - - 9,900,666 Water rights 69,883,098 - - 69,883,098 Infrastructure 289,727,267 12,975,253 (499,867) 302,202,653 Plant, machinery, equipment and other improvements 211,598,517 5,493,413 1513 468 215,578,462 Total capital assets being depreciated 588,475,994 19,240,218 2 031587 605,684,625 Less accumulated depreciation for: Buildings 2,564,751 214,391 (18,250) 2,760,892 Landfill improvements 9,647,467 87,452 - 9,734,919 Water rights 12,784,010 696,331 - 13,480,341 Infrastructure 63,285,776 7,672,487 (499,868) 70,458,395 Plant, machinery, equipment and other improvements 94,973,952 9,243,153 1461344 102,755,761 Total accumulated depreciation 183,255,956 17,913,814 1979 462 199,190,308 Total capital assets, being depreciated, net 405,220,038 1,326,404 52125 406,494,317 Business-type activities capital assets, net 449 529 375 33 284 245 12 530 954 470 282 666 Depreciation expense was charged to activities of funds/functions/programs as follows: Governmental activities: General government $ 1,842,594 Public safety 2,384,564 Public works 8,727,356 Parks & recreation 1,364,155 Capital assets held by internal service funds are charged to the various functions based upon usage 1,544,833 Total depreciation expense -governmental activities $ 15,863,502 Business-type activities: Electric $ 4,986,097 Water 4,980,010 Wastewater 5,143,035 Solid waste 2,804,672 Total depreciation expense -business-type activities $ 17,913,814 40 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 Construction commitments: The City has several major construction projects planned or in progress as of September 30, 2008. These projects are evidenced by contractual commitments with contractors and include: Remaining Project Spent-to-Date Commitment South Branch Library Expansion $ 250,812 $1,851,247 R D Wells Interchange -Electric System Infrastructure 2,964,119 1,426,726 R D Wells Substation D -Electric System Infrastructure 1,835,514 1,729,024 Denton West R DWells -Electric System Infrastructure 1,049,105 1,506,015 Denia Water Main at Roselawn 730,294 l,l 19,488 Bonnie Brae Distr. Sub -Electric System Infrastructure 449,551 1,246,384 High School Elevated Water Tower Painting 174,696 958,489 E. Interfund receivables, payables and transfers A summary of Interfund receivables and payables (in thousands) at September 30, 2008, is as follows: Interfund Receivables: Governmental Major Funds Business-Type Major Funds Non-Major Governmental Solid Interfund Payables: General Fund Funds Electric Water Wastewater Waste Total Non-Major Governmental Funds $ - $81 $ - $ - $ - $ - $ 81 Internal Service Funds 159 - 5,587 339 76 11 6,172 Total $159 $81 $5,587 $339 $76 $ll $6,253 The more significant Interfund receivables and payables include the following: Interfund receivables Interfund pa. a~ Amount Electric fund Internal service funds-materials management $5,587,982 Water fund Internal service funds-materials management 338,955 General fund Internal service funds-materials management 158,762 Wastewater fund Internal service funds-materials management 75,895 The outstanding balances between the Electric, Water, General and Wastewater Funds and the Materials Management Fund are a result of the cash position in the Materials Management Fund due to inventory purchases. 41 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 Transfers between funds (in thousands) during the year were as follows: Transfers Out: Governmental Major Funds Business-Type Major Funds Capital Non-Major Internal General Projects Governmental Solid Service Transfers In: Fund Fund Funds Electric Water Wastewater Waste Funds Total Governmental Major Funds: Debt Service Fund $ - $529 $ - $ - $ - $280 $ - $258 $1,067 Capital Projects Fund 782 - 33 19 19 - - - 853 Non-Major Governmental Funds 177 - - 75 110 58 66 - 486 Water 10 - - - - 64 - - 74 Wastewater - - 272 - 15 - - - 287 Solid Waste - - 22 - - - - - 22 Internal Service Funds - - 9 - - - - - 9 Total $969 $529 $336 $94 $144 $402 $66 $258 $2,798 The more significant transfers include the following: Transfers from fund Transfers to fund Amount Capital Projects Debt Service $528,750 General Fund Capital Projects 431,090 General Fund Capital Projects 350,000 Wastewater Debt Service 280,056 Internal service funds-Technology Services Debt Service 258,430 Transfers from the Capital Projects Fund, Wastewater Fund, and Technology Services Fund to the Debt Service Fund were for related debt service payments. Transfers from the General Fund to the Capital Projects Fund were to fund street reconstruction projects and projects funded from property and sales taxes earned through gas well activities. 42 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 F. Leases Leases payable represent the remaining principal amounts payable under lease purchase agreements for the acquisition of equipment through the General, Solid Waste, Tech Services, and Wastewater funds. These leases are recorded as capital leases. Remaining requirements, including interest, under these leases are as follows: Year Pa menu 2009 $1,846,603 2010 1,693,906 2011 397,332 2012 376,714 2013 5 8,497 2014-2017 233,987 Total minimum lease payments 4,607,039 Less: amount representing interest 215,922 Present value of minimum future lease payments 4 391 117 The following schedule provides an analysis of the City's investments in equipment under capital lease arrangements as of September 30, 2008: Equipment $8,452,490 Less: Accumulated Depreciation 3 719 682 Total 4 732 808 43 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 G. Long-term debt Long-term liabilities transactions for the year ended September 30, 2008, are summarized as follows below and on the following page: Balance at Balance at October 1, September 30, Due Within 2007 Increases Decreases 2008 One Year Governmental Activities: General obligation bonds $ 70,650,317 $33,325,000 $23,160,723 $ 80,814,594 $ 4,558,569 Certificates of obligation 51,355,100 14,930,000 11,187,550 55,097,550 5,156,400 Obligations under capital leases 2,393,684 69,897 644,283 1,819,298 665,390 Arbitrage payable 3,335 - 3,335 - - Compensatedabsences payable 8,542,124 3,911,998 3,267,654 9,186,468 3,484,651 Claims payable 3,316,796 10,215,044 8,302,468 5,229,372 2,247,525 Other post employment benefits - 879,280 69,696 809,584 - Unamortized premiuml(discounts) 849,575 986,612 191,027 1,645,160 184,893 Unamortized deferred gainl(loss) (288,197) (1,066,202) (207,417) (1,146,982) (201,842) Total governmental long-term liabilities $136,822,734 $63,251,629 $46,619,319 $153,455,044 $16,095,586 Balance at Balance at October 1, September 30, Due Within 2007 Increases Decreases 2008 One Year Business-type Activities: Revenue bonds $281,750,000 $15,290,000 $14,840,000 $282,200,000 $15,495,000 General obligation bonds 3,099,683 2,245,000 479,277 4,865,406 476,431 Certificates of obligation 13,889,900 2,820,000 3,757,450 12,952,450 1,708,600 Obligations under capital leases 3,891,764 - 1,319,946 2,571,819 1,097,016 Arbitrage payable 47,254 - 47,254 - - Compensatedabsences payable 1,635,962 1,575,624 1,427,324 1,784,262 1,564,756 Note payable 3,141,222 - - 3,141,222 - Landfill closure/post-closure costs 3,974,462 350,625 - 4,325,087 - Unamortized premiuml(discounts) 6,836,909 139,368 711,080 6,265,197 701,809 Unamortized deferred gainl(loss) (9,339,685) (148,328) (955,542) (8,532,471) (906,517) Total business-type activities 308,927,471 22,272,289 21,626,788 309,572,972 20,137,095 Total long-term liabilities $445,750,205 $85,523,918 $68,246,107 $463,028,016 $36,232,681 44 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 General bonded debt -General bonded debt at September 30, 2008, is comprised of the following: Gross Amount Original Outstanding at Interest Rate Final Amount September 30, Bonded Debt Issue Date Maturity of Issue 2008 General obligation 5.25 to 5.25 1998 2018 $ 9,660,000 $ 1,450,000 General obligation 4.1 to 5.0 1999 2019 8,215,000 1,640,000 General obligation refunding 3.2 to 5.0 1999A 2016 5,538,780 3,420,315 General obligation 5.25 to 6.125 2000 2020 3,750,000 565,000 General obligation 4.5 to 5.5 2001 2021 14,245,000 3,555,000 General obligation 5.0 to 5.25 2002 2022 12,075,000 3,365,000 General obligation refunding 3.0 to 4.75 2003 2023 7,222,999 3,674,279 General obligation refunding 2.5 to 5.0 2004 2020 7,370,000 6,690,000 General obligation 3.0 to 5.0 2005 2025 5,000,000 4,560,000 General obligation 4.25 to 4.875 2006 2026 3,695,000 3,475,000 General obligation 4.0 to 4.5 2007 2026 15,925,000 15,475,000 General obligation refunding 4.0 to 5.25 2007 2022 26,025,000 25,645,000 General obligation 4.0 to 4.75 2008 2028 7,300,000 7,300,000 Total general obligation bonds 126,021,779 80,814,594 Certificates of obligation 4.0 to 5.0 1998 2018 5,625,000 195,000 Certificates of obligation 4.1 to 5.0 1999 2019 5,926,273 1,180,000 Certificates of obligation 5.25 to 6.125 2000 2020 3,125,000 465,000 Certificates of obligation 4.25 to 5.25 2001 2021 8,275,000 1,950,000 Certificates of obligation 4.7 to 5.25 2002 2022 8,045,000 2,565,000 Certificates of obligation 3.0 to 4.75 2003 2023 5,650,000 3,945,000 Certificates of obligation 2.0 to 5.0 2004 2024 12,805,000 11,150,000 Certificates of obligation 3.0 to 4.375 2005 2025 5,575,000 4,315,000 Certificates of obligation 4.0 to 4.75 2006 2026 7,214,950 6,237,550 Certificates of obligation 4.7 to 5.0 2007 2027 8,855,000 8,165,000 Certificates of obligation 4.0 to 5.0 2007A 2028 7,065,000 7,065,000 Certificates of obligation 3.0 to 4.625 2008 2028 7,865,000 7,865,000 Total certificates of obligation 86,971,273 55,097,550 Total general bonded debt $212,993,052 $13 5,912,144 [These amounts do not include net unamortizedpremiums/(discounts) of $1,645,160 nor net deferred gainl(loss) on refunding of ($1,146,982).] Proceeds of general bonded debt are restricted to the uses for which they were approved in the bond elections. The City Charter expressly prohibits the use of bond proceeds to fund operating expenses. The general obligations are collateralized by the full faith and credit of the City and, primarily, payable from property taxes. In prior years, the City defeased general obligation bonds and certificates of obligation by placing the proceeds of new debt in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and liabilities for the defeased debt are not included in the City's financial 45 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 statements. On September 3 0, 2008, $16,745,000 of general obligation bonds and $10,105,000 of certificates of obligation considered defeased are still outstanding. In September 2008, the City issued $10,685,000 ($2,820,000 of which is included as part of business type activities) in certificates of obligation and $7,300,000 of general obligation bonds. The debt was issued to pay the cost of various Capital Project improvements ($15,165,000) and proprietary fund capital improvements ($2,820,000). The bonds and obligations are payable over the next 20 years. In November 2007, the City issued $7,065,000 in certificates of obligation. The debt was issued to pay the cost of various drainage capital improvements and is payable over the next 20 years. Also in October 2007, the City issued $28,270,000 ($2,245,000 of which is included as part of business-type activities) of general obligation refunding bonds. The reacquisition price exceeded the net carrying amount of the old debt by $1,214,530, of which $148,328 is reported in business-type activities. This amount is being amortized over the remaining life of the refunded debt, which is shorter than the life of the new debt issued. This advance refunding was undertaken to reduce total debt service payments over the next 20 years by $1,604,157 and resulted in a net present value savings of $1,162,766. Revenue bonds -Revenue bond debt at September 30, 2008, is comprised of the following issues: Principal Net Net Original Outstanding at Unamortized Outstanding at Interest Rate Issue Final Amount September 30, Premiuml September 30, Revenue Bonds Date Maturity of Issue 2008 (Discount) 2008 Utility system 4.3 to 6.3 1998 2018 $ 7,175,000 $ 1,080,000 $ - $ 1,080,000 Utility system refunding 4.65 to 6.65 1998 2030 36,795,000 2,700,000 (16,750) 2,683,250 Utility system refunding 4.0 to 5.0 1998 2015 7,640,000 4,370,000 - 4,370,000 Utility system 4.974 to 6.0 2000 2020 54,880,000 13,340,000 11,577 13,351,577 Utility system 4.0 to 5.4 2001 2021 59,545,000 20,405,000 144,675 20,549,675 Utility system 4.25 to 5.0 2002 2022 56,710,000 45,000,000 226,126 45,226,126 Utility system 5.0 to 6.5 2002 2022 13,985,000 2,920,000 (6,032) 2,913,968 Utility system 3.625 to refunding 5.625 2003 2022 50,180,000 33,955,000 967,150 34,922,150 Utility system refunding 2.0 to 5.25 2004 2024 24,850,000 23,790,000 962,695 24,752,695 Utility system refunding 3.0 to 5.0 2005 2023 53,845,000 53,585,000 3,662,485 57,247,485 Utility system refunding 4.5 to 5.0 2006 2026 8,515,000 7,940,000 - 7,940,000 Utility system 4.0 to 4.25 2007 2026 16,740,000 16,135,000 3,846 16,138,846 Utility system refunding 4.0 to 4.25 2007 2029 41,795,000 41,690,000 116,700 41,806,700 Utility System 3.50 to 5.00 2008 2027 15,290,000 15,290,000 79,392 15,369,392 Total revenue Bonds $493,250,000 $282,200,000 $6,151,864 $288,351,864 [These amounts do not include net unamortizedgain/(loss) on refunding of ($8,336,639).] 46 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 The revenue bonds are collateralized by the revenue of the Denton utility system funds (System) and the various special funds established by the bond ordinance. The ordinance provides that the revenue of the System is to be used first to pay operating and maintenance expenses of the System and second to establish and maintain the revenue bond funds. Any remaining revenues may then be used for any lawful purpose. The ordinance also contains provisions, which among other items restrict the issuance of additional revenue bonds unless the special funds noted above contain the required amounts and certain financial ratios are met. Management believes the City is in compliance with all significant requirements. Assets in these accounts consist of cash and U.S. government securities. Below is a summary of the various net asset balances in the funds required by the bond ordinance to be restricted for debt service. Interest and sinking fund $11,337,975 Reserve fund 18,174,549 Total restricted net assets restricted for debt service $29,512,524 In prior years, the City defeased revenue bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and liabilities for the defeased bonds are not included in the City's financial statements. On September 30, 2008, $94,965,000 of revenue bonds considered defeased are still outstanding. In September 2008, the City issued $15,290,000 in revenue bond debt. The debt was issued to pay for the cost of various utility system improvements and upgrades. The bonds are payable over the next 20 years. Other enterprise obligations -General obligation bonds and certificates of obligation issued for solid waste fund at September 30, 2008, is comprised of the following: Gross Amount Interest Original Outstanding at Rate Issue Final Amount September 30, Other Obligations Date Maturity of Issue 2008 General obligation refunding 3.2 to 5.0 1999 2016 $ 1,481,220 $ 914,685 General obligation refunding 3.0 to 4.75 2003 2023 857,001 395,721 General obligation refunding 2.5 to 5.0 2004 2015 2,040,000 1,340,000 General obligation refunding 4.0 to 5.25 2007 2022 2,245,000 2,215,000 Total general obligation bonds 6,623,221 4,865,406 Certificates of obligation 4.25 to 5.25 2001 2021 3,845,000 350,000 Certificates of obligation 4.7 to 5.25 2002 2022 4,545,000 845,000 Certificates of obligation 3.0 to 4.75 2003 2023 1,755,000 405,000 Certificates of obligation 2.0 to 5.0 2004 2024 1,195,000 800,000 Certificates of obligation 3.0 to 4.375 2005 2025 1,570,000 1,060,000 Certificates of obligation 4.0 to 4.75 2006 2026 5,450,050 4,337,450 Certificates of obligation 4.7 to 5.0 2007 2027 2,590,000 2,335,000 Certificates of obligation 3_~ t~ 4_h2.5 2~~R 2~2R 2,820,000 2,820,000 Total certificates of obligation 23,770,050 12,952,450 Total other enterprise obligations $30,393,271 $17,817,856 [These amounts do not include net unamortized premiumsl(discounts) of $113,333 nor net deferred gainl(loss) on refunding of ($195,832).] 47 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 Note payable In 1980, the City and the City of Dallas contracted with the Corps of Engineers for the construction and development of Ray Roberts Reservoir in Denton County. In contracts with the Corp of Engineers, the City will pay for twenty-six (26%) percent of the estimated water storage rights of the reservoir. Water obtained from the reservoir will be pro rata on the basis of each city's proportional share of total construction cost. The closing of the dam was completed in 1987 with water being available from the reservoir in 1989. Schedule of long-term debt maturities Aggregate maturities of the long-term debt (principal and interest) for the years subsequent to September 30, 2008, are shown below and on the following page: Governmental Activities: Certificates of General Obli a.~ tion Obli anon Capital Leases Total Fiscal Year Principal Interest Principal Interest Principal Interest Principal Interest 2009 $ 4,558,569 $ 3,570,495 $ 5,156,400 $ 2,306,545 $ 665,390 $ 34,810 $10,380,359 $ 5,911,850 2010 4,520,885 3,371,415 5,243,200 2,090,664 627,444 18,295 10,391,529 5,480,374 2011 4,772,630 3,162,554 5,062,950 1,871,575 140,422 19,651 9,976,002 5,053,780 2012 5,114,305 2,940,113 4,285,000 1,671,416 124,671 14,784 9,523,976 4,626,313 2013 5,316,805 2,708,141 3,425,000 1,509,356 48,382 10,115 8,790,187 4,227,612 2014-2018 28,481,400 9,852,190 12,945,000 5,739,277 212,989 20,998 41,639,389 15,612,465 2019-2023 19,485,000 4,042,384 11,835,000 3,046,598 - - 31,320,000 7,088,982 2024-2028 8,565,000 860,938 7,145,000 634,017 - - 15,710,000 1,494,955 Total $80,814,594 $30,508,230 $55,097,550 $18,869,448 $1,819,298 $118,653 $137,731,442 $49,496,331 Business-Type Activities: Certificates of General Obli a.~ tion Obli anon Revenue Fiscal Year Principal Interest Principal Interest Principal Interest 2009 $ 476,431 $197,549 $ 1,708,600 $ 521,078 $15,495,000 $ 12,935,449 2010 479,115 180,855 1,701,800 450,195 15,935,000 12,267,798 2011 342,370 165,071 1,602,050 379,363 14,845,000 11,486,258 2012 355,695 150,593 1,455,000 313,244 15,495,000 10,748,188 2013 353,195 135,317 1,230,000 256,748 16,195,000 9,997,321 2014-2018 1,773,600 423,013 2,160,000 888,863 89,615,000 37,657,836 2019-2023 1,085,000 95,088 1,760,000 513,857 82,270,000 15,746,693 2024-2028 - - 1,335,000 114,869 27,290,000 3,755,272 2029-2033 - - - - 5,060,000 217,387 Total $4,865,406 $1,347,486 $12,952,450 $3,438,217 $282,200,000 $114,812,202 48 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 Notes Payable Capital Leases Total Fiscal Year Principal Interest Principal Interest Principal Interest 2009 $ - $ - $1,097,016 $49,387 $18,777,047 $13,703,463 2010 3,141,222 - 1,025,185 22,982 22,282,322 12,921,830 2011 - - 220,758 16,501 17,010,178 12,047,193 2012 - - 228,860 8,399 17,534,555 11,220,424 2013 - - - - 17,778,195 10,389,386 2014-2018 - - - - 93,548,600 38,969,712 2019-2023 - - - - 85,115,000 16,355,638 2024-2028 - - - - 28,625,000 3,870,141 2029-2033 - - - - 5,060,000 217,387 Total $3,141,222 $ - $2,571,819 $97,269 $305,730,897 $119,695,174 [These amounts do not include net unamortized premiuml(discount) of $7,910,357 nor net unamortized gainl(loss) on refunding of ($9,679,453).] Bonds authorized and unissued General obligation bonds authorized but unissued as of September 30, 2008 amounted to $10,334,000. When issued, the proceeds will be allocated to the applicable capital projects. H. Landfill closure and post-closure cost State and federal laws and regulations require the City to place a final cover on its Mayhill Road landfill site upon closure and to perform certain maintenance and monitoring functions at the site for thirty years after closure. Although closure and post-closure care costs will be paid only upon anticipated closure, the City reports a portion of these costs as an operating expense in each period based on landfill capacity used as of each balance sheet date. Based on a model created by a 2005 engineering study, total landfill closure and post- closure cost increased from $14,947,207 to $15,320,888 and increased this year's reported landfill closure and post-closure expense by $350,624. The $4,325,087 reported as landfill closure and post-closure care liability represents the cumulative amount incurred to date based on the use of 28.2% of the estimated capacity of the entire landfill at September 30, 2008. Based on this estimate, the remaining potential estimated liability for closure and post-closure care of the entire landfill is $10,995,801. The City will recognize the remaining estimated cost of closure and post-closure care as the remaining capacity is filled. These amounts are based on what it would cost to perform closure and post- closure care in 2008. Actual cost may fluctuate due to inflation, changes in technology, or changes in regulations. The landfill has a remaining life of 30 years, and the City expects to close the landfill in fiscal year 203 8. The solid waste fund has provided for a designation of cash and investments of $4,329,306 at September 30, 2008, and anticipates increasing the reserve in future periods as the closure and post-closure activities are carried out. V. OTHER INFORMATION A. Pension plans Texas Municipal Retirement Plan Plan description The City provides pension benefits for all of its full-time employees (except fire fighters) through anon- traditional,joint contributory, hybrid-defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS), one of 827 administered by TMRS, an agent multiple-employer public employee retirement system. Benefits Benefits depend upon the sum of the employee's contributions to the plan, with interest, and the City-financed monetary credits, with interest. At the date the plan began, the City granted monetary credits for service 49 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 rendered before the plan began of a theoretical amount equal to two times what would have been contributed by the employee, with interest, prior to establishment of the plan. Monetary credits for service since the plan began are a percent (200%) of the employee's accumulated contributions. In addition, the City can grant, as often as annually, another type of monetary credit referred to as an updated service credit which is a theoretical amount which, when added to the employee's accumulated contributions and the monetary credits for service since the plan began, would be the total monetary credits and employee contributions accumulated with interest if the current employee contribution rate and City matching percent had always been in existence and if the employee's salary had always been the average of their salary in the last three years that are one year before the effective date. At retirement, the benefit is calculated as if the sum of the employee's accumulated contributions with interest and the employer-financed monetary credits with interest were used to purchase an annuity. Members can retire at ages 60 and above with five or more years of service or with 20 years of service regardless of age. A member is vested after five years. The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS and within the actuarial constraints also in the statutes. Contributions The contribution rate for the employees is 7%, and the City matching ratio is currently 2 to 1, both as adopted by the governing body of the City. Under the state law governing TMRS, the actuary annually determines the city contribution rate. This rate consists of the normal cost contribution rate and the prior service contribution rate, both of which are calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the currently accruing monetary credits due to the City matching percent, which are the obligation of the City as of an employee's retirement date, not at the time the employee's contributions are made. The normal cost contribution rate is the actuarially determined percent of payroll necessary to satisfy the obligation of the City to each employee at the time a retirement becomes effective. The prior service contribution rate amortizes the unfunded actuarial liability over the remainder of the plan's 25-year amortization period. The unit credit actuarial cost method is used for determining the City contribution rate. Both the employees and the City make contributions monthly. Three-Year Trend Information for TMRS Funding Year ending 12/31/07 12/31/06 12/31/05 Annual required contribution (ARC) $9,875,534 $9,146,513 $9,185,505 Actual contributions $9,875,534 $9,146,513 $9,185,505 Percent contributed 100% 100% 100% Actuarial Assumptions 12/31/07 Actuarial cost method Proj ected unit credit Amortization method Level percent of payroll Remaining amortization period 30 years -closed period Asset valuation method Amortized cost Investment rate of return 7% Projected salary increases Varies by age and service Includes inflation at 3.0% Cost-of living adjustments 2.1%(3.0% CPI) 50 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 At its December 8, 2007 meeting, the TMRS Board of Trustees adopted actuarial assumptions to be used in the actuarial valuation for the year ended December 3 1, 2007. A summary of actuarial assumptions and definitions can be found in the December 3 1, 2007 TMRS Comprehensive Annual Financial Report. Since its inception, TMRS has used the Unit Credit actuarial funding method. This method accounts for liability accrued as of the valuation date, but does not proj ect the potential future liability of provisions adopted by a city. Two-thirds of the cities participating in TMRS have adopted the Updated Service Credit and Annuity Increases provisions on an annually repeating basis. For the December 31, 2007 valuation, the TMRS Board determined that the Projected Unit Credit (PUC) funding method should be used, which facilitates advance funding for future updated service credits and annuity increases that are adopted on an annually repeating basis. In addition, the Board also adopted a change in the amortization period from a 25-year "open" to a 25-year "closed" period. TMRS Board of Trustee rules provide that, whenever a change in actuarial assumptions or methods results in a contribution rate increase in an amount greater than 0.5%, the amortization period will be increased to 30 years, unless a city requests that the period remain at 25 years. For cities with repeating features, these changes would likely result initially in higher required contributions and lower funded ratios; however, the funded ratio should show steady improvement over time. To assist in this transition to higher rates, the Board also approved an eight-year phase-in period, which will allow cities the opportunity to increase their contributions gradually (approx. 12.5% each year) to their full rate (or their required contribution rate). The City of Denton will be phasing in the higher contribution over the eight-year period. If the changes in actuarial funding method and assumptions had not been adopted for the 2007 valuation, the city's unfunded actuarial accrued liability would have been $43,139,277 and the funded ratio would have been 72.5%. In addition, TMRS is currently working on its legislative package for 2009. There is a possibility that the investment rate of return (IRR) assumption of 7% would need to be lowered if desired legislation for the 2009 session is unsuccessful. Maintaining a 7% IRR assumption is contingent in part on the continued diversification of the TMRS portfolio, from an almost exclusive bond portfolio to a portfolio that includes equities as well. If state legislation needed to facilitate the continued diversification is not enacted, TMRS may have to revisit the continued diversification of the portfolio and consider reducing the assumed IRR. A reduction in the IRR would result in increased actuarial accrued liabilities, thus causing further increases in city contribution rates, following the December 3 1, 2009 actuarial valuation. The City adopted the Updated Service Credit provision in 1992, on a repeating basis. Additionally, the City adopted annuity increases for its retirees, on a repeating basis in 1992 equal to 70% of the change in consumer price index. The City of Denton is one of 827 municipalities having the benefit plan administered by TMRS. Each of the 827 municipalities has an annual, individual actuarial valuation performed. All assumptions for the December 3 1, 2007, valuations are contained in the 2007 TMRS Comprehensive Annual Financial Report, a copy of which maybe obtained by writing to P.O. Box 149153, Austin, Texas 78714-9153. Supplemental death benefit fund The City of Denton contributes to acost-sharing multiple-employer defined benefit group term life insurance plan known as the Supplemental Death Benefits Fund (SDBF). This is a separate trust administered by the TMRS Board of Trustees and is a voluntary program in which participating municipalities may elect, by ordinance, to provide group term life insurance coverage for their active members and/or retirees. Employers may terminate coverage under and discontinue participation in the SDBF by adopting an ordinance before November 1 of any year to be effective the following January 1. Contributions are made monthly based on the covered payroll of employee members of the City. The contractually required contribution rate is determined annually, and the rate is based on the mortality and service experience of all employees covered by the SDBF and the demographics specific to the workforce of the City. There is a one-year delay between the actuarial valuation that serves as the basis for the employer contribution rate and the calendar year when the rate goes into effect. The contributions to the SDBF are 51 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 pooled for investment purposes with those of the Pension Trust Fund described above. The TMRS Act requires the Pension Trust Fund to allocate investment income to the SDBF on an annual basis. The funding policy of the plan is to assure adequate resources are available to meet all death benefit payments for the upcoming year; the intent is not to prefund retiree term life insurance during employees' entire careers. As such, contributions are utilized to fund active member deaths on apay-as-you-go basis; any excess contributions and investment income over payments then become net assets available for postemployment benefits other than pension benefits (OPEB). The City's contributions to SDBF for the calendar year ended December 3 1, 2005, 2006, and 2007, were $161,690, $164,802, and $179,413, respectively. Payments from this fund are similar to group term life insurance benefits, and are paid to the designated beneficiaries upon the receipt of an approved application for payment. The death benefit for active employees provides alump-sum payment approximately equal to the employee's annual salary. The death benefit for retirees is considered an OPEB and is a fixed amount of $7,500. The obligations of this plan are payable only from the SDBF and are not an obligation of, or claim against, the Pension Trust Fund. Denton Firemen's Relief and Retirement Plan Plan description The Board of Trustees of the Denton Firemen's Relief and Retirement Fund is the administrator of a single- employerdefined benefit pension plan. The Denton Firemen's Relief and Retirement Fund covers firefighters in the Denton Fire Department. The table below summarizes the membership of the fund as of December 31, 2007, the most recent biennial actuarial valuation. 12/31/07 1. Retirees and beneficiaries currently receiving benefits and terminated employees entitled to 60 benefits but not yet receiving them 2. Current employees a. Vested 72 b. Nonvested 93 3. Total 225 The Denton Firemen's Relief and Retirement Fund provides service retirement, death, disability and withdrawal benefits. These benefits vest after 10 years of credited service. Firefighters may retire at age 50 with 20 years of service. As of the December 3 1, 2007 actuarial valuation date, the Plan effective April 1, 2007, and amended June 14, 2007, provided a monthly normal service retirement benefit, payable in a Joint and Two-Thirds to Spouse form of annuity, equal to 2.56% of Highest 36-Month Average Salary for each year of service. There is no provision for automatic postretirement benefit increases. The fund has the authority to provide, and has periodically in the past provided for, ad hoc postretirement benefit increases. The benefit provisions of this plan are authorized by the Texas Local Fire Fighter's Retirement Act (TLFFRA). TLFFRA provides the authority and procedure to amend benefit provisions. Contributions Required and Contributions Made The contribution provisions of this plan are authorized by TLFFRA. The TLFFRA provides the authority and procedure to change the amount of contributions determined as a percentage of pay by each firefighter and a percentage of payroll by the city. 52 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 While the contribution requirements are not actuarially determined, state law requires that an eligible actuary must approve each plan of benefits adopted by the fund. The actuary certifies that the contribution commitment by the firefighters and the city provides an adequate financing arrangement. Using the entry age actuarial cost method, the plans' normal cost contribution rate is determined as a percentage of payroll. The excess of the total contribution rate over the normal cost contribution rate is used to amortize the plan's unfunded actuarial accrued liability, and the number of years needed to amortize the plan's unfunded actuarial accrued liability is determined using an open, level percentage of payroll method. The costs of administering the plan are financed from the fund. The funding policy of the Denton Firemen's Relief and Retirement Fund requires contributions equal to 12% of pay by the firefighters. The City of Denton contributed 12% of payroll during October 2007 through September 2008 and will contribute 14% of payroll starting in October 2008. The December 31, 2007 actuarial valuation assumes that the city contribution rate will average 13% beginning October 2008. Three-Year Trend Information for Denton Firemen's Relief and Retirement Funding Year ending 12/31/07 12/31/06 12/31/05 Annual required contribution (ARC) $2,550,377 $2,071,542 $1,970,632 Actual contributions $2,550,377 $2,071,542 $1,970,632 Percent contributed 100% 100% 100% Actuarial Assumptions 12/31/07 Actuarial cost method Entry age Amortization method Level percent of payroll, open Amortization period for ARC 21 years Asset valuation method 5-year adjusted market value Investment rate of return 7.75% Projected salary increases 4.25% plus promotion and lon~evit_y Includes inflation at 3.75% Cost-of living adjustments None Payroll increases 4.25% ARC as percent of payroll Budgeted rates Financial statements are available and can be obtained by contacting the Denton Fire Department at the City of Denton at 332 E. Hickory, Denton, Texas 76201. B. Post-employment benefits other than pensions (OPEB) The cost of post-employment healthcare benefits, from an accrual accounting perspective, similar to the cost of pension benefits, should be associated with the periods in which the cost occurs, rather than in the future year when it will be paid. In implementing the requirements of GASB Statement No. 45 during the fiscal year ended September 30, 2008, the City recognizes the cost of post-employment healthcare in the year the employee services are received, reports the accumulated liability from prior years, and provides information useful in 53 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 assessing potential demands on the City's future cash flows. Recognition of the liability accumulated from prior years will be amortized over 3 0 years, the first period commencing with the fiscal year ending September 3 0, 2008. Plan Description The City provides post-employment medical care (OPEB) for retired employees through asingle-employer defined benefit medical plan. The plan provides medical benefits for eligible retirees, their spouses and dependents though the City's group health insurance plans, which covers both active and retired members. The benefits, benefit levels, and contribution rates are approved annually by the City management and the Denton City Council as part of the budget process. Since an irrevocable trust has not been established, the plan is not accounted for as a trust fund. The plan does not issue a separate financial report. Benefits Provided The City provides post-employment medical, dental, and vision care benefits to its retirees. To be eligible for benefits, an employee must qualify for retirement under the Texas Municipal Retirement System or the Denton Firemen's Relief and Retirement Plan. Retirees must make aone-time irrevocable decision to chose benefits at the time of retirement, after that their eligibility for this benefit ceases. All medical care benefits are provided through the City's self insured health plan. The benefit levels are the same as those afforded to active employees. As of September 30, 2008, membership consisted of: Retirees and beneficiaries receiving benefits 126 Terminated employees eligible for benefits, but not yet enrolled - Active employees 1,133 Total 1,259 Funding Policy The plan premium rates are determined annually by City management and approved by the City Council as part of the annual budget. The retiree's contribution is the full amount of the actuarially determined blended premium rate less a subsidy dependent upon years of service at retirement. By providing retirees with access to the City's healthcare plans based on the same rates it charges to active employees, the City is in effect providing a subsidy to retirees. This implied subsidy exists because, on average, retiree health care costs are higher than active employee healthcare costs. By the City not contributing anything toward this plan in advance, the City employs apay-as-you-go method through paying the higher rate for active employees each year. The subsidies paid by the City for the fiscal year ended September 30, 2008 totaled $69,696 and are calculated as follows: Years of service Subsidy 5 years $20/month 5 - 9 years $40/month 10 -14 years $60/month 15 -19 years $80/month 20+ years $ l 00/month Although the City has not setup an irrevocable trust to administer the OPEB plan, the City has set aside in a special revenue fund a cumulative amount of $2,339,396 as of September 30, 2008 with current year additions of $359,776 from contributions and interest earnings. Annual OPEB costs and Net OPEB Obligation The City's annual other post-employment benefit (OPEB) cost is calculated based on the annual required contribution of the City (ARC), an amount actuarially determined in accordance with the parameters of GASB 54 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities over a period not to exceed thirty years. The City's annual OPEB cost for the current year and the related information are as follows at September 30, 2008: Annual required contribution $ 879,280 Interest on prior year Net OPEB obligation - Adj ustment to annual required contribution - Annual OPEB cost 879,280 Contributions made 69,696 Increase in net OPEB obligation 809,584 Net OPEB obligation -beginning of year - Net OPEB obligation - end of year $ 809,584 Percentage of OPEB costs contributed 7.93% Funded Status and Funding Progress The funded status of the plan as of the actuarial measurement date of July 1, 2007 was as follows: Actuarial accrued liability $ 7,926,202 Actuarial value of plan assets - Unfunded actuarial accrued liability $ 7,926,202 Funded ratio 0.0% Covered payroll $ 61,668,312 Unfunded actuarial accrued liability as a percentage of covered payroll 12.9% Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events in the future. Amounts determined regarding the status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. Actuarial Methods and Assumptions Projections of benefits are based on the substantive plan (the plan understood by the employer and plan members) and include the type of benefits in force at the valuation date and the pattern of sharing benefits between the City and the plan members at that point. Actuarial calculations reflect along-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Significant method and assumptions used for this fiscal year valuation were as follows: 55 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 Actuarial Assumptions 7/1/07 Actuarial cost method Unit credit Amortization method Level dollar, closed Amortization period for ARC 3 0 years Asset valuation method N/A Investment rate of return 4.0% Includes inflation at 3.5% Healthcare inflation rate Pre 65 - 7.75% initial, 4.50% ultimate Post 65 - 9.75% initial, 5.50% ultimate 10-year grade-in period Medical Reimbursements The federal government may provide the city subsidies per the Medicare Part D Prescription Drug Subsidy Program for providing healthcare for Medicare eligible employees. Any current and future year subsidies are not recognized as a reduction to the actuarial accrued liability. C. Deferred compensation plan The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. For the calendar 2008 year, the plan, available to all permanent City employees, permitted them to defer, until future years, up to 25% of annual gross earnings not to exceed $15,500. Employees who are age 50 or older may contribute an amount not to exceed $20,500. Employees who are within three years of retirement eligibility may elect to participate in a catch-up provision allowed by Section 457, which has an annual maximum contribution amount of $31,000. The withdrawal of deferred compensation funds is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property or rights are, until paid or made available to the employee or other beneficiary, solely the property and rights of the employees. Accordingly, the assets and associated liability of the plan are not included in the City's financial statements. It is the opinion of the City's legal counsel that the City has no liability for losses under the plan. D. Self insurance plan The City has established a self insurance plan for liability and workers' compensation benefits in the Risk Retention Fund. Accrued claims payable include provisions for claims reported and claims incurred but not reported. The provision for reported claims is determined by estimating the amount which will ultimately be paid each claimant. The provision for claims incurred but not yet reported is estimated based on actuarial studies. It is the policy of the City of Denton not to purchase commercial insurance for workers' compensation claims or general liability. Commercial liability insurance coverage is purchased for public officials, airport operations, emergency medical services, take-home vehicles, and employee theft and dishonesty. Additionally, excess insurance is purchased for general liability and workers' compensation exposure. The City reports liabilities when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported. Because actual claims liabilities depend on such complex factors as inflation, changes in legal doctrines, and damage awards, the process used in computing claims liability does not necessarily result in an exact amount. 56 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 In January 2008, the City started a self insured group employee health insurance plan. Claims are paid from the Health Insurance Fund, which has an annually negotiated stop loss provision. The City's costs associated with the self insurance plans are reported as interfund transactions. Accordingly, they are treated as operating revenues of the Internal Service Risk Retention Fund and Health Insurance Fund and operating expenditures (expenses) of the other funds and employee payroll deductions. Claims liabilities are re-evaluated periodically to take into consideration settlement of claims, new claims and other factors. As of September 30, 2008, the estimated value of these liabilities was $5,229,372. Changes in balances of claims liabilities during fiscal years 2008 and 2007 were as follows: Claims Liability Claims and Claims Liability Beginning of Change in Claims End of Fiscal Year Estimates Payments Fiscal Year Workers' Compensation 2008 $2,638,696 $ 990,726 $ 694,208 $2,935,214 2007 2,418,698 958,944 738,947 2,638,696 General Liability 2008 $ 678,100 $ 252,876 $ 374,343 $ 556,633 2007 576,515 302,868 138,332 678,100 Health Insurance 2008 $ - $8,971,442 $7,233,917 $1,737,525 On September 30, 2008, the City of Denton held additional amounts in unrestricted net assets of $1,363,619 in the Risk Retention Fund and $844,864 in the Health Insurance Fund for payment of claims. There were no significant reductions in insurance coverage from coverage in the prior year, and the amount of settlements did not exceed insurance coverage in the current year or in any of the past three fiscal years. E. Commitments and contingencies Agreement with TMPA In 1976, the City, along with the cities of Bryan, Greenville, and Garland, Texas (the Cities) entered into a Power Sales Contract with the Texas Municipal Power Agency (TMPA). TMPA was created through concurrent ordinances of the Cities and is governed by a Board of Directors consisting of eight members, two appointed by the governing body of each city. Under the terms of the agreement, TMPA agreed to construct or acquire electric generating plants to supply energy and power to the Cities for a period of not less than 35 years. The Cities in turn agreed to purchase all future power and energy requirements in excess of the amounts generated by their systems from TMPA at prices intended to cover operating costs and retirement of debt. In the event that revenues are insufficient to cover all costs and retire the outstanding debt, each of the Cities has guaranteed a portion of the unpaid debt based, generally, upon its pro rata share of the energy delivered to consumers in the prior operating year. As of September 30, 2008, total TMPA long-term debt outstanding was approximately $967,399,000, and the City's percentage was approximately 21.3%. In the opinion of management, the possibility of a material payment in the near future under this guarantee is remote in that TMPA is generating operating profits and assets exceed liabilities. TMPA operates a 462-megawatt, coal-fired generating plant. In 1996, TMPA switched to an external source of coal to reduce costs. Should TMPA be dissolved, each city would be entitled to an undivided interest in the property. 57 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 Selected financial statement information of TMPA is as follows: September 30 (Unaudited) 2008 2007 (OOOs) (OOOs) Operating revenues $ 261,222 $ 248,977 Operating expenses 124,964 112,916 Operating income 136,258 136,061 Other non-operating sources 6,440 9,361 Current assets 59,630 48,166 Total assets 1,198,095 1,203,288 Long-term debt 967,399 1,026,502 Total liabilities 1,162,286 1,165,858 Total equity 35,809 37,430 Agreement with the City of Dallas During 1985, the City entered into an agreement with the City of Dallas that provides for the purchase of a minimum of 500,000 gallons/day of untreated water from the City of Dallas from Lake Lewisville. This contract will be effective for 3 0 years. The cost of water purchased under this agreement during fiscal year 2008 was $70,111. F. Litigation Various claims and lawsuits are pending against the City. In accordance with GAAP, those judgments considered "probable" are accrued, while those claims and judgments considered "reasonably possible" are disclosed but not accrued. In the opinion of City management and legal counsel, the maximum amount of all significant claims considered reasonably possible, excluding condemnation proceedings, is approximately $500,000 as of September 30, 2008. Potential losses after insurance coverage on all probable claims and lawsuits will not have a material effect on the City's financial position as of September 30, 2008. The following information is related to litigation and potential litigation concerning cost of energy delivered by TMPA to Denton under the TMPA Agreement: Texas Municipal Power Agenc~t~ryan, Texas During June 2008, the City became aware of a successful appeal and remand to the trial court for further proceedings in the lawsuit (Cause No. 28,169), now pending in the 506th Judicial District Court in Grimes County, Texas. This case was originally brought by TMPA as Plaintiff against the City of Bryan as Defendant. An eleven year period passed from the date of the suit's filing in 1997 until the Supreme Court's conclusion of the appeal and remand to the trial court in June 2008. On September 12, 2008 Bryan filed a first amended answer in the remanded case, a first amended counterclaim against TMPA, and new third-party actions against the Cities of Denton, Garland and Greenville (hereafter the "Northern Cities"). Denton and the other Northern Cities were properly served and subsequently entered an appearance. Bryan has since dismissed its claims against Greenville in an apparent effort to preserve venue in Grimes County over Denton and Garland. Bryan was sanctioned by the Court for what the Court concluded were Bryan's improper pleading practices in relation to the claims against Greenville. As a preliminary matter, Denton has filed a plea to the jurisdiction seeking to strike Bryan's derivative claims as lacking any genuine legal basis and asserting Denton's immunity to all such claims as a sovereign entity. Bryan's "third-party" suit against Denton alleges tortious interference with contract and several derivative claims that Bryan seeks to file in the name of TMPA. No amount of actual damages is specified by Bryan in the third-party complaint. Denton has also filed special exceptions alternatively asking the 58 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 Court to order greater specificity in Bryan's pleading on several issues. The City will vigorously defend this "third-party" claim and believes Bryan's claims are groundless and invalid under Texas law. The City currently has a motion to transfer venue, a plea to the jurisdiction and special exceptions complaining about certain pleading defects set for hearing in March 2009 with the Court. The City has determined that an adverse outcome against the City is unlikely. The September 2008 City of Bryan Lawsuit On September 12, 2008, Bryan filed a suit in Brazos County District Court in Texas (Cause No. 08-002233-CV- 361) naming TMPA as a defendant, along with each of the Northern Cities, including the City of Denton. Under the suit, Bryan requested a temporary restraining order preventing TMPA from issuing bonds authorized by the TMPA Board of Directors on September 11, 2008, which would refund and restructure approximately $443 million of outstanding TMPA debt, extending the maturity of the debt from 2018 to 203 0. Bryan claims that the proposed TMPA refunding bonds may not be issued without Bryan's consent and that TMPA has breached its contract with Bryan by authorizing the refunding bonds. Bryan also claims that TMPA's financial needs do not require extending the maturity of the existing debt, and that the proposed debt restructuring is detrimental to the interests of TMPA as the restructuring will result in an additional $400 million in debt service, while materially increasing other financial risks of TMPA. Bryan also alleged that the City of Denton and the other Northern Cities each tortiously interfered with Bryan's contract with TMPA by causing the TMPA Board to authorize the refunding and restructuring of the $443 million of TMPA debt, and alleged a tortious interference count and several other derivative claims against the Northern Cities pursuant to the same legal theories Bryan has asserted in the Grimes County action. Bryan seeks a judgment that either Bryan has consent rights to the issuance of the proposed TMPA refunding bonds pursuant to its contract with TMPA, or, if the TMPA refunding bonds are issued, that Bryan may elect to withdraw from TMPA refunding bonds. Bryan also claimed the TMPA has breached its contract with Bryan. No amount of Bryan's alleged damages has yet been specified. At the September 11, 2008 meeting of the TMPA Board of Directors, the Board authorized the issuance of the TMPA refunding bonds and authorized TMPA to take all legal action necessary to secure the issuance of the TMPA refunding bonds. On October 10, 2008, the TMPA Board met again and passed Resolution No. 2008- 10- 1, authorizing the issuance of the refunding bonds together with all legal action that is necessary to secure the issuance of the TMPA bonds. On September 19, 2008, TMPA filed an ex parte expedited declaratory judgment action seeking to validate the bonds for certification by the Texas Attorney General and as a predicate to the bonds' issuance. As required by state law, this in rem bond validation proceeding was filed in Travis County District Court (Cause No. D-1-GN- 08-003426). On September 22, 2008 the District Court in the Travis County case enjoined the above-referenced Brazos County suit that Bryan had previously initiated and consolidated the claims affecting the bonds' validity into the Travis County proceeding. On December 10, 2008 the Court ordered that the bond validation claims and the other claims against TMPA be severed into two separate cases - TMPA I and TMPA II. The in rem bond validation action is being tried before the Honorable John Dietz (TMPA II). The Travis County District Court granted the motions to transfer venue of Bryan's third party claims against Denton and the other Northern Cities to Hunt County pursuant to mandatory venue rules. After transferring Bryan's claims against the Northern Cities to Hunt County, the Court also ordered that each Northern City intervene in the bond validation suit to ensure they are bound by the result. Denton is currently an Intervenor in the TMPA's in rem bond validation proceeding known as TMPA II. Bryan has also intervened to assert its various objections to the issuance of the subject bonds. In light of the consolidation and transfer of Bryan's claims into the bond validation proceeding, Bryan voluntarily dismissed the balance of its claims in the Brazos County litigation. The City will support the validation and issuance of all TMPA Bonds made the subject of the in rem bond validation proceeding now pending in TMPA II in the 250th Judicial District Court in Travis County, Texas. 59 CITY OF DENTON, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (continued) SEPTEMBER 30, 2008 Denton is not a party to TMPA I as this action is only between TMPA and Bryan. The City will also vigorously defend the various "third-party" claims originally filed by Bryan in Travis County and now transferred to Hunt County in response to the Northern Cities successful venue transfer motions. These "third-party" claims are based upon the same legal theories Bryan has asserted against Denton and the other Northern Cities in the Grimes County action. Accordingly, Denton will pursue dismissal of these claims by means of a similar plea to the jurisdiction and special exceptions and will set these matters for hearing at the first available date once a Hunt County court has been assigned the case. The City has made a determination that an adverse outcome against the City in the Hunt County case is unlikely. In TMPA II, Judge Dietz has recently stated his preliminary inclination to validate most, if not all, of the TMPA bonds and, based upon these recent statements, the City believes that an adverse outcome against the TMPA and the Northern Cities as Intervenors supporting the TMPA's efforts is unlikely. However, if the TMPA's request for an expedited declaratory judgment and an ultimate validation of the subject bonds in TMPA II is unsuccessful, the City of Denton will mitigate impacts and adjust rate structures as necessary. 60 CITY OF DENTON, TEXAS REQUIRED SUPPLEMENTARY INFORMATION Exhibit XII SCHEDULE OF TMRS FUNDING PROGRESS AND CONTRIBUTIONS LAST THREE FISCAL YEARS (Unaudited) Actuarial Unfunded Accrued Actuarial Actuarial Actuarial Liability (AAL) Accrued Fiscal Valuation Value of Unit Credit Liability Funded Year Date Assets Method (UAAL) Percent 2006 12/31J2005 $ 98,051,747 $ 133,853,457 $ (35,801,710) 73.3% 2007 12/31/2006 105,951,245 145,309,633 (39,358,388) 72.9 2008 12/31/2007 113,952,231 181,480,297 (67,528,066) 62.8 UAAL as Percent of Annual Fiscal Covered Covered Required Actual Percent Year Payroll Payroll Contributions Contributions Contributed 2006 $ 46,394,303 77.2% $ 9,185,505 $ 9,185,505 100.0% 2007 47,271,473 83.3 9,146,513 9,146,513 100.0 2008 50,347,495 134.1 9,875,534 9,875,534 100.0 SCHEDULE OF DENTON FIREMEN'S RELIEF AND RETIREMENT PLAN FUNDING PROGRESS AND CONTRIBUTIONS LAST THREE VALUATION YEARS (Unaudited) Actuarial Unfunded Accrued Actuarial Actuarial Actuarial Liability (AAL) Accrued Fiscal Valuation Value of Unit Credit Liability Funded Year Date Assets Method (UAAL) Percent 2004 12/31/2003 $ 30,538,352 $ 37,557,733 $ (7,019,381) 81.3% 2006 12/31/2005 34,677,009 45,341,724 (10,664,715) 76.5 2008 12/31/2007 41,020,648 52,675,541 (11,654,893) 77.9 UAAL as Percent of Annual Fiscal Covered Covered Required Actual Percent Year Payroll Payroll Contributions Contributions Contributed 2004 $ 8,459,472 83.0% $ 1,846,396 $ 1,846,396 100.0% 2006 10,445,026 102.1 1,970,632 1,970,632 100.0 2008 11,320,817 103.0 2,550,377 2,550,377 100.0 61 CITY OF DENTON, TEXAS REQUIRED SUPPLEMENTARY INFORMATION Exhibit XIII SCHEDULE OF OTHER POST EMPLOYMENT BENEFITS FUNDING PROGRESS AND CONTRIBUTIONS LAST THREE VALUATION YEARS (Unaudited) Actuarial Unfunded Accrued Actuarial Actuarial Actuarial Liability (AAL) Accrued Fiscal Valuation Value of Unit Credit Liability Funded Year Date Assets Method (UAAL) Percent 2006 NIA N/A NIA N/A N/A 2007 NIA N/A NIA N/A N/A 2008 7/31/2007 - $ 7,926,202 $ (7,926,202) 0.0% UAAL as Percent of Annual Fiscal Covered Covered Required Actual Percent Year Payroll Payroll Contributions Contributions Contributed 2006 NIA N/A NIA N/A N/A 2007 NIA N/A NIA N/A N/A 2008 $ 61,668,312 12.9% $ 879,280 $ 69,696 7.9% 62 CITY OF DENTON, TEXAS Exhibit XIV SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET TO ACTUAL DEBT SERVICE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2008 Variance with Adjustments - Actual on a Final Budget - BudgetedAmounts Actual Budgetary Budgetary Positive Original Final Amounts Basis Basis (Negative) REVENUES: Taxes ~ 13,328,088 S 13,328,088 ~ 13,447,801 S - ~ 13,447,801 S 119,713 Investment revenue - - 91,517 - 91,517 91,517 Total revenues 13,328,088 13,328,088 13,539,318 - 13,539,318 211,230 EXPENDITURES: Debt service: Principal, interest and fiscal charges 17,331,763 17,331,763 13,538,479 2,936,439 16,474,918 856,845 Bond issuance costs - - 297,973 - 297,973 (297,973) Total expenditures 17,331,763 17,331,763 13,836,452 2,936,439 16,772,891 558,872 Deficiency of revenues under expenditures (4,003,675) (4,003,675) (297,134) (2,936,439) (3,233,573) 770,102 OTHER FINANCING SOURCES: Refunding bonds issued - - 24,595,000 - 24,595,000 24,595,000 Payment to refunded bond escrow agent - - (25,117,336) - (25,117,336) (25,117,336) Premium on debt issuance - - 821,048 - 821,048 821,048 Transfers in 4,003,675 4,003,675 1,067,236 2,936,439 4,003,675 - Totalother financing sources 4,003,675 4,003,675 1,365,948 2,936,439 4,302,387 298,712 Net change in fund balance - - 1,068,814 - 1,068,814 1,068,814 Fund balance at beginning of year 886,141 886,141 886,141 - 886,141 - Fundbalance at end of year ~ 886,141 S 886,141 ~ 1,954,955 S - ~ 1,954,955 S 1,068,814 63 I I f i 64 NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Special revenue funds are used to account for specific revenues that are legally restricted to expenditures for particular purposes. Community Development Block Grant (CDBG) - to account for the operations of projects utilizing Community Development Block Grant Funds. Such revenues are restricted to expenditures for specified projects by the Department of Housing and Urban Development. Recreation - to account for the revenues and expenditures for the recreation programs that are self supporting. All expenditures will be reimbursed 100%. Various business operations, such as concessions, fall into this account. Criminal Justice - to account for revenue received from the State of Texas Criminal Justice Division and other grants administered by the police department. Police Confiscation - to account for revenues received from confiscated goods. Expenditures are restricted to enhancing law enforcement. Tourist and Convention - to account for taxes received from hotel and motel occupancy for the purpose of promoting tourism. Citizens' Park Trusts - to account for several small trust funds that are for park development, previously reported as expendable trust funds. All Other - to account for miscellaneous special revenue sources that are required to finance specific activities. 65 CITY OF DENTON, TEXAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2008 Special Revenue Funds Community Development Criminal Police Block Grant Recreation Justice Confiscation ASSETS Cash, cash equivalents and investments, at fair value $ - $ 657,636 $ - ~ 175,782 Receivables (net of allowances): Accrued interest - 11,441 - - Other - - - - Interfund receivables - - - - Duefrom other governments 217,478 - 14,952 - Total assets $ 217,478 $ 669,077 $ 14,952 ~ 175,782 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable $ 93,601 $ 133,140 $ 14,952 ~ 5,798 Interfund payables 80,953 - - - Deferred revenues 30,136 - - - Total liabilities 204,690 133,140 14,952 5,798 FUND BALANCES: Reserved for encumbrances - - - - Unreserved balance 12,788 535,937 - 169,984 Total fund balance 12,788 535,937 - 169,984 Total liabilities and fund balances $ 217,478 $ 669,077 $ 14,952 ~ 175,782 66 Exhibit XV Special Revenue Funds (continued) Total Tourist Citizens' Nonmajor and Park All Governmental Convention Trusts Other Funds ~ 23,983 $ 4,812,790 $ 3,474,255 $ 9,144,446 - 48,511 3,653 63,605 240,393 - 57,732 298,125 - - 80,953 80,953 - - 494,239 726,669 $ 264,376 $ 4,861,301 $ 4,110,832 $ 10,313,798 $ 2,990 $ - $ 235,859 $ 486,340 - - - 80,953 - - 176,227 206,363 2,990 - 412,086 773,656 - - 5,515 5,515 261,386 4,861,301 3,693,231 9,534,627 261,386 4,861,301 3,698,746 9,540,142 $ 264,376 $ 4,861,301 $ 4,110,832 $ 10,313,798 67 CITY OF DENTON, TEXAS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2008 Special Revenue Funds Community Development Criminal Police Block Grant Recreation Justice Confiscation REVENUES: Fees for services $ - $ 1,197,710 $ - $ - Fines and forfeitures - - - 79,383 Investment revenue - 25,348 - - Tax revenue - - - - Intergovernmental 2,149,762 - 189,621 - Miscellaneous 212,388 72 - 9,048 Total revenues 2,362,150 1,223,130 189,621 88,431 EXPENDITURES: General government 2,098,716 - - - Publicsafety - - 13,102 125,223 Public works - - - - Parks and recreation - 1,121,957 - - Capital outlay 666 112,287 108,578 - Total expenditures 2,099,382 1,234,244 121,680 125,223 Excess (deficiency) of revenues over (under) expenditures 262,768 (11,114) 67,941 (36,792) OTHER FINANCING SOURCES (USES): Transfers in - - 9,329 - Transfers out (263,826) - - - Total other financing sources (uses) (263,826) - 9,329 - Net change in fund balances (1,058) (11,114) 77,270 (36,792) Fund balance (deficit) at beginning of year 13,846 547,051 (77,270) 206,776 Fund balance at end of year $ 12,788 $ 535,937 $ - $ 169,984 68 Exhibit XVI Special Revenue Funds (continued) Total Tourist Citizens' Nonmajor and Park All Governmental Convention Trusts Other Funds $ - $ 394,636 $ 701,646 $ 2,293,992 - - 213,704 293,087 - 129,022 51,202 205,572 1,369,667 - - 1,369,667 - - 942,254 3,281,637 - - 298,884 520,392 1,369,667 523,658 2,207,690 7,964,347 1,401,514 - 1,076,543 4,576,773 - - 996,162 1,134,487 - - 30,450 30,450 - 104,860 97,291 1,324,108 - 48,477 134,555 404,563 1,401,514 153,337 2,335,001 7,470,381 (31,847) 370,321 (127,311) 493,966 - - 477,032 486,361 - - (72,470) (336,296) - - 404,562 150,065 (31,847) 370,321 277,251 644,031 293,233 4,490,980 3,421,495 8,896,111 $ 261,386 $ 4,861,301 $ 3,698,746 $ 9,540,142 69 CITY OF DENTON, TEXAS Exhibit XVH SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET TO ACTUAL SPECIAL REVENUE FUNDS: RECREATION FUND FOR YEAR ENDED SEPTEMBER 30, 2008 Variance with Adjustments - Actual on a Final Budget - Budgeted Amounts Actual Budgetary Budgetary Positive Original Final Amounts Basis Basis (Negative) REVENUES: Fees for services ~ 1,264,824 S 1,264,824 ~ 1,197,710 ~ - ~ 1,197,710 ~ (67,114) Investment revenue 12,000 12,000 25,348 - 25,348 13,348 Miscellaneous - - 72 - 72 72 Total revenues 1,276,824 1,276,824 1,223,130 - 1,223,130 (53,694) EXPENDITURES: Parks and recreation 1,147,024 1,147,024 1,121,957 (129,800) 992,157 154,867 Capital outlay - - 112,287 - 112,287 (112,287) Total expenditures 1,147,024 1,147,024 1,234,244 (129,800) 1,104,444 42,580 Deficiency of revenues under expenditures 129,800 129,800 (11,114) 129,800 118,686 (11,114) OTHER FINANCING SOURCES (USES): Transfers in - - - - - - Transfers out (129,800) (129,800) - (129,800) (129,800) - Totalother financing sources (129,800) (129,800) - (129,800) (129,800) - Net change in fund balance - - (11,114) - (11,114) (11,114) Fund deficit at beginning of year 547,051 547,051 547,051 - 547,051 - Fund deficit at end of year ~ 547,051 S 547,051 ~ 535,937 ~ - ~ 535,937 ~ (11,114) 70 CITY OF DENTON, TEXAS Exhibit XVHI SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET TO ACTUAL SPECIAL REVENUE FUNDS: POLICE CONFISCATION FUND FOR YEAR ENDED SEPTEMBER 30, 2008 Variance with Adjustments - Actual on a Final Budget - Budgeted Amounts Actual Budgetary Budgetary Positive Original Final Amounts Basis Basis (Negative) REVENUES: Fines and forfeitures ~ 115,221 S 115,221 ~ 79,383 ~ - ~ 79,383 ~ (35,838) Miscellaneous - - 9,048 - 9,048 9,048 Total revenues 115,221 115,221 88,431 - 88,431 (26,790) EXPENDITURES: Public safety 198,220 198,220 125,223 - 125,223 72,997 Total expenditures 198,220 198,220 125,223 - 125,223 72,997 Net change in fund balance (82,999) (82,999) (36,792) - (36,792) 46,207 Fund balance at beginning of year 206,776 206,776 206,776 - 206,776 - Fund balance at end of year ~ 123,777 S 123,777 ~ 169,984 ~ - ~ 169,984 ~ 46,207 71 CITY OF DENTON, TEXAS Exhibit XIX SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET TO ACTUAL SPECIAL REVENUE FUNDS: TOURIST AND CONVENTION FUND FOR YEAR ENDED SEPTEMBER 30, 2008 Variance with Adjustments - Actual on a Final Budget - Budgeted Amounts Actual Budgetary Budgetary Positive Original Final Amounts Basis Basis (Negative) REVENUES: Taxes S 1,243,904 ~ 1,243,904 ~ 1,369,667 ~ - ~ 1,369,667 S 125,763 Total revenues 1,243,904 1,243,904 1,369,667 - 1,369,667 125,763 EXPENDITURES: General government 1,411,354 1,411,354 1,401,514 - 1,401,514 9,840 Total expenditures 1,411,354 1,411,354 1,401,514 - 1,401,514 9,840 Net change in fund balance (167,450) (167,450) (31,847) - (31,847) 135,603 Fund balance at beginning of year 293,233 293,233 293,233 - 293,233 - Fund balance at end of year S 125,783 ~ 125,783 ~ 261,386 ~ - ~ 261,386 S 135,603 72 INTERNAL SERVICE FUNDS Internal Service Funds account for the financing of goods or services provided by one department for another. The City has five Internal Service Funds as follows: Materials Management Fund - to account for the financing of goods and services provided by Materials Management to other City departments. Such costs provided by Materials Management are billed to the other departments at standard labor charges and cost of parts plus 13 percent. Actual costs include depreciation on machinery and equipment used to provide the service. Fleet Services Fund - to account for the financing of goods and services provided by the Municipal Garage and Machine Shop to other City departments. Municipal Garage and Machine Shop billings include labor charges and cost of parts plus 25 percent. Actual costs include depreciation on the building, improvements, machinery, and equipment used to provide the service. Health Insurance Fund - to account for the accumulation of resources for the self insurance activities of the City for employee medical insurance as well as other employee insurance benefits including long-term disability, short-term disability, dental insurance, and vision insurance. Risk Retention Fund - to account for the accumulation of resources for the payment of employee insurance claims and insurance policies. Technology Services Fund - to account for the accumulation of resources to provide computer programming services, systems analysis, imaging, print shop, and office services to City departments. 73 CITY OF DENTON, TEXAS COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS SEPTEMBER 30, 2008 Materials Fleet Health Risk Management Services Insurance Retention Fund Fund Fund Fund ASSETS: Current assets: Cash, cash equivalents and investments, at fair value $ 6,660 $ 923,029 $ 2,582,389 $ 4,910,387 Receivables, net of allowances: Accrued interest - - - 57,602 Other 3,698 253,137 - - Merchandiseinventory 7,334,560 153,154 - - Deferred debt issuance costs 434 2,171 - - Total current assets 7,345,352 1,331,491 2,582,389 4,967,989 Noncurrent assets: Restricted assets: Cash, cash equivalents and investments, at fair value - 39,531 - - Deferred debt issuance costs 3,399 15,321 - - Capitalassets, net of accumulated depreciation 746,455 3,119,518 - 4,605 Total noncurrent assets 749,854 3,174,370 - 4,605 Total assets 8,095,206 4,505,861 2,582,389 4,972,594 LIABILITIES: Current liabilities: Accounts payable 532,189 447,643 - 95,880 Claims payable - - 1,737,525 510,000 Compensated absences payable 50,805 54,239 - 14,803 Accrued interest 2,897 11,637 - - Interfund payables 6,172,214 - - - Leases payable - - - - Payable from restricted assets: Accounts payable - - - - Certificate and general obligation bonds 24,438 69,668 - - Total current liabilities 6,782,543 583,187 1,737,525 620,683 Noncurrent liabilities: Leases payable - - - - General obligation bonds payable - 1,383,097 - - Certificates of obligation 488,966 712,046 - - Deferred amount on refunding - (23,349) - - Claims payable - - - 2,981,847 Compensated absences payable 1,446 10,592 - 1,840 Total noncurrent liabilities: 490,412 2,082,386 - 2,983,687 Total liabilities 7,272,955 2,665,573 1,737,525 3,604,370 NET ASSETS: Invested in capital assets, net of related debt 233,051 1,017,587 - 4,605 Unrestricted 589,200 822,701 844,864 1,363,619 Total net assets $ 822,251 $ 1,840,288 $ 844,864 $ 1,368,224 74 Exhibit XX Total Technology Internal Services Service Fund Funds $ 1,277,868 $ 9,700,333 7,781 65,383 - 256,835 - 7,487,714 3,658 6,263 1,289,307 17,516,528 578,338 617,869 6,955 25,675 3,591,166 7,461,744 4,176,459 8,105,288 5,465,766 25,621,816 287,908 1,363,620 - 2,247,525 112,473 232,320 7,879 22,413 - 6,172,214 442,284 442,284 24,308 24,308 365,757 459,863 1,240,609 10,964,547 442,290 442,290 118,258 1,501,355 1,201,963 2,402,975 - (23,349) - 2,981,847 18,422 32,300 1,780,933 7,337,418 3,021,542 18,301,965 1,598,952 2,854,195 845,272 4,465,656 $ 2,444,224 $ 7,319,851 75 CITY OF DENTON, TEXAS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2008 Materials Fleet Health Risk Management Services Insurance Retention Fund Fund Fund Fund OPERATING REVENUES: Charges for goods and services ~ 5,330,794 $ 7,440,840 $ 14,714,039 ~ 2,152,222 Miscellaneous 60,843 4,312 133,248 65,820 Total operating revenues 5,391,637 7,445,152 14,847,287 2,218,042 OPERATING EXPENSES: Operating expenses before depreciation 5,129,887 7,101,910 14,004,202 2,790,679 Depreciation 16,703 113,600 - 2,313 Total operating expenses 5,146,590 7,215,510 14,004,202 2,792,992 Operating income 245,047 229,642 843,085 (574,950) NONOPERATING REVENUES (EXPENSES): Investment revenue 491 27,754 1,779 203,010 Interest expense and fiscal charges (23,460) (82,980) - - Gain (loss) on disposal of capital assets - 135 - - Total non-operating revenues (expenses) (22,969) (55,091) 1,779 203,010 Income before contributions and transfers 222,078 174,551 844,864 (371,940) Transfers in - - - - Transfers out - - - - Change in net assets 222,078 174,551 844,864 (371,940) Total net assets at beginning of year 600,173 1,665,737 - 1,740,164 Total net assets at end of year ~ 822,251 $ 1,840,288 $ 844,864 ~ 1,368,224 76 Exhibit XXI Total Technology Internal Services Service Fund Funds $ 6,981,585 $ 36,619,480 - 264,223 6,981,585 36,883,703 5,345,711 34,372,389 1,412,217 1,544,833 6,757,928 35,917,222 223,657 966,481 38,395 271,429 (67,220) (173,660) (38,862) (38,727) (67,687) 59,042 155,970 1,025,523 8,750 8,750 (258,430) (258,430) (93,710) 775,843 2,537,934 6,544,008 $ 2,444,224 $ 7,319,851 77 CITY OF DENTON, TEXAS COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2008 Materials Fleet Management Services Fund Fund CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers $ 5,390,164 ~ 7,397,075 Cash paid to employees for services (852,793) (1,265,889) Cash paid to suppliers 4,496,081 (5,909,639) Net cash provided (used) by operations 41,290 221,547 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers out - - Transfers in - - Netcash provided (used) by noncapital financing activities - - CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES: Principal payments on capital debt (24,431) (73,547) Interest and fiscal charges (23,101) (98,236) Principal payments under capital lease obligation - - Proceeds from the sale of fixed assets - 135 Acquisition and construction of capital assets (10,471 (49,321) Net cash used by capital financing activities (58,003 (220,969) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale and maturities of investment securities - 2,800,000 Purchase of investment securities - (2,800,000) Interest received on investments 491 27,754 Net cash provided (used) by investing activities 491 27,754 Net increase in cash and cash equivalents (16,222) 28,332 Cash and cash equivalents at beginning of year 22,882 934,228 Cash and cash equivalents at end of year 6,660 962,560 Investments, at fair value - - Cash, cash equivalents and investments, at fair value $ 6,660 ~ 962,560 RECONCILIATION OF OPERATING FUND INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income $ 245,047 ~ 229,642 Adjustments: Depreciation expense 16,703 113,600 Decrease (Increase) in receivables (1,473) (49,893) Decrease (Increase) in interfund receivables - 1,816 Decrease (Increase) in inventories (874,193) (89,593) Decrease (Increase) in prepaid items 140 - Increase (Decrease) in accounts payable 258,779 9,463 Increase (Decrease) in compensated absences 2,577 6,512 Increase (Decrease) in interfund payables 393,710 - Total adjustments (203,757) (8,095) Net cash provided (used) by operating activities $ 41,290 ~ 221,547 NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES: Noncash activity during the year consisted of the change in the fair value of investments of $6,120 and $20,987 for the Technology Services and Risk Retention Funds; the refunding of general obligation and certificates of obligation debt of $1,348,963 for Fleet Services and $123,569 for Technology Services. 78 Exhibit XXII Total Health Risk Technology Internal Insurance Retention Services Service Fund Fund Fund Funds $ 14,847,287 $ 2,274,892 $ 6,984,027 $ 36,893,445 - (764) (2,037,595) (4,157,041) (12,266,677) (2,577,591) (3,353,081) (28,603,069) 2,580,610 (303,463) 1,593,351 4,133,335 - - (258,430) (258,430) - - 8,750 8,750 - - (249,680) (249,680) - - (376,431) (474,409) - - (65,931) (187,268) - - (442,279) (442,279) - - - 135 - - (398,011) (457,803) - - (1,282,652) (1,561,624) - 4,658,765 1,141,531 8,600,296 - (4,750,000) (850,000) (8,400,000) 1,779 145,866 32,834 208,724 1,779 54,631 324,365 409,020 2,582,389 (248,832) 385,384 2,731,051 - 676,795 970,978 2,604,883 2,582,389 427,963 1,356,362 5,335,934 - 4,482,424 499,844 4,982,268 $ 2,582,389 $ 4,910,387 $ 1,856,206 $ 10,318,202 $ 843,085 $ 574,950 $ 223,657 $ 966,481 - 2,313 1,412,217 1,544,833 - 56,850 31 5,515 - - 2,411 4,227 - - - (963,786) - - - 140 1,737,525 213,088 (44,392) 2,174,463 - (764) (573) 7,752 - - - 393,710 1,737,525 271,487 1,369,694 3,166,854 $ 2,580,610 $ (303,463) $ 1,593,351 $ 4,133,335 79 CITY OF DENTON, TEXAS Exhibit XXIII COMBINING STATEMENT OF NET ASSETS AGENCY FUNDS AS OF SEPTEMBER 30, 2008 Agency Funds Other Total Payroll Developers' Agency Agency Fund Escrow Fund Funds Funds ASSETS: Cash, cash equivalents and investments, at fair value $ 933,341 $ 2,528,583 ~ 145,316 ~ 3,607,240 Other assets - - 75,178 75,178 Total assets $ 933,341 $ 2,528,583 ~ 220,494 ~ 3,682,418 LIABILITIES: Accounts payable $ 933,341 $ 2,528,583 ~ 220,494 ~ 3,682,418 Total liabilities $ 933,341 $ 2,528,583 ~ 220,494 ~ 3,682,418 80 CITY OF DENTON, TEXAS Exhibit XXIV COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2008 Balance Balance October 1, 2007 Additions Deductions September 30, 2008 PAYROLL FUND ASSETS Cash and deposits $ 1,395,573 $ 78,031,772 $ 78,494,004 $ 933,341 Total assets $ 1,395,573 $ 78,031,772 $ 78,494,004 $ 933,341 LIABILITIES Accounts payable $ 1,395,573 $ 78,031,772 $ 78,494,004 $ 933,341 Total liabilities $ 1,395,573 $ 78,031,772 $ 78,494,004 $ 933,341 EMPLOYEE INSURANCE FUND ASSETS Other assets $ 115,516 $ - $ 115,516 $ - Total assets $ 115,516 $ - $ 115,516 $ - LIABILITIES Interfund payables $ 115,516 $ - $ 115,516 $ - Totalliabilities $ 115,516 $ - $ 115,516 $ - DEVELOPERS' ESCROW FUND ASSETS Cash and deposits $ - $ 2,528,583 $ - $ 2,528,583 Total assets $ - $ 2,528,583 $ - $ 2,528,583 LIABILITIES Accounts payable $ - $ 2,528,583 $ - $ 2,528,583 Total liabilities $ - $ 2,528,583 $ - $ 2,528,583 OTHER AGENCY FUNDS ASSETS Cash, cash equivalents and investments, at fair value $ 135,310 $ 1,449,320 $ 1,439,314 $ 145,316 Interfund receivables 49 - 49 - Other assets 79,971 240,974 245,767 75,178 Total assets $ 215,330 $ 1,690,294 $ 1,685,130 $ 220,494 LIABILITIES Accounts payable $ 215,330 $ 1,690,294 $ 1,685,130 $ 220,494 Interfund payables - - - - Totalliabilities $ 215,330 $ 1,690,294 $ 1,685,130 $ 220,494 TOTAL AGENCY FUNDS ASSETS Cash, cash equivalents and investments, at fair value $ 1,530,883 $ 82,009,675 $ 79,933,318 $ 3,607,240 Interfund receivables 49 - 49 - Other assets 195,487 240,974 361,283 75,178 Total assets $ 1,726,419 $ 82,250,649 $ 80,294,650 $ 3,682,418 LIABILITIES Accounts payable $ 1,610,903 $ 82,250,649 $ 80,179,134 $ 3,682,418 Interfund payables 115,516 - 115,516 - Totalliabilities $ 1,726,419 $ 82,250,649 $ 80,294,650 $ 3,682,418 81 I I f i 82 CITY OF DENTON, TEXAS Exhibit XXV CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS COMPARATIVE SCHEDULES BY SOURCE* SEPTEMBER 30, 2007 AND 2008 2008 2007 Governmental funds capital assets: Land $ 7,130,693 $ 7,041,012 Construction in progress 23,505,242 13,598,086 Buildings 53,914,596 51,760,962 Plant, machinery and equipment 42,386,127 40,784,876 Infrastructure 182,270,851 174,470,357 Total governmental funds capital assets $ 309,207,509 ~ 287,655,293 Investments in governmental funds capital assets by source: General fund $ 174,417,317 ~ 174,790,623 Special revenue funds 4,346,708 4,118,378 Capital projects funds 130,443,484 108,746,292 Total governmental funds capital assets $ 309,207,509 ~ 287,655,293 *This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets. 83 CITY OF DENTON, TEXAS Exhibit XXVI CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE BY FUNCTION AND ACTIVITY* SEPTEMBER 30, 2008 Plant, Machinery Construction and in Function and Activity Land Buildings Equipment Infrastructure Progress Total General government: Finance $ - ~ - $ 23,100 $ - ~ 29,205 $ 52,305 Legal - - 263,158 - - 263,158 Municipal court/judgelclerl~ - - 7,705 - 108,174 115,879 Human resources - - 27,703 - - 27,703 City managerleconomicdevelopment - 808,462 114,534 - 34,450 957,446 Facilities management 355,470 13,519,538 4,510,701 570,021 82,233 19,037,963 Library - 9,386,386 7,196,780 14,715 250,812 16,848,693 Building inspections - - 233,205 - - 233,205 Planning/community development - 494,500 48,848 24,057 - 567,405 Engineering - - 359,827 769,237 - 1,129,064 Public transportation - - - - - - Airport 881,252 2,985,523 400,065 4,867,085 14,717 9,148,642 Total general government 1,236,722 27,194,409 13,185,626 6,245,115 519,591 48,381,463 Public works: Traffic operations - 14,600 1,095,047 15,171,476 2,290,350 18,571,473 Streets 792,665 5,000 3,840,179 149,811,647 17,711,316 172,160,807 Total public works 792,665 19,600 4,935,226 164,983,123 20,001,666 190,732,280 Parks and recreation 3,076,602 14,420,727 5,175,583 11,042,613 961,861 34,677,386 Public safety: Fire administration - - 125,488 - - 125,488 Fire operations 2,024,704 11,881,065 10,106,506 - 1,657,118 25,669,393 Fire prevention - - 270,293 - - 270,293 Emergency medical services - - 72,187 - - 72,187 Police - 11,993 8,172,214 - 263,881 8,448,088 Animal services - 386,802 343,004 - 101,125 830,931 Total public safety 2,024,704 12,279,860 19,089,692 - 2,022,124 35,416,380 Total governmental funds capital assets $ 7,130,693 ~ 53,914,596 $ 42,386,127 $ 182,270,851 ~ 23,505,242 $ 309,207,509 *This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets. 84 CITY OF DENTON, TEXAS Exhibit XXVII CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITY* FOR THE YEAR ENDED SEPTEMBER 30, 2008 Governmental Governmental Funds Capital Funds Capital Assets Assets Function and Activity October 1, 2007 Additions Deductions September 30, 2008 General government: Finance $ 30,282 ~ - ~ (7,182) $ 23,100 Legal 239,965 23,193 - 263,158 Municipal court/judgelclerks 7,705 - - 7,705 Human resources 27,703 - - 27,703 City managerleconomic development 935,489 3,577 (16,070) 922,996 Facilities management 17,846,512 1,165,391 (56,173) 18,955,730 Library 16,894,526 835,695 (1,132,340) 16,597,881 Building inspections 226,560 45,400 (38,755) 233,205 Planninglcommunitydevelopmmt 610,965 666 (44,226) 567,405 Engineering 1,163,564 - (34,500) 1,129,064 Public transportation - - - - Airport 7,851,775 1,396,904 (114,754) 9,133,925 Total general government 45,835,046 3,470,826 (1,444,000) 47,861,872 Public works: Traffic operations 16,362,083 25,040 (106,000) 16,281,123 Streets 146,503,933 8,168,473 (222,915) 154,449,491 Total public works 162,866,016 8,193,513 (328,915) 170,730,614 Parks and recreation 33,065,514 993,151 (343,140) 33,715,525 Public safety: Fire administration 221,527 - (96,039) 125,488 Fire operations 22,204,172 2,495,723 (687,620) 24,012,275 Fire prevention 238,230 58,990 (26,927) 270,293 Emergency medical services 72,187 - - 72,187 Police 8,824,709 692,107 (1,332,609) 8,184,207 Animal services 729,806 - - 729,806 Total public safety 32,290,631 3,246,820 (2,143,195) 33,394,256 Construction in progress 13,598,086 22,065,344 (12,158,188) 23,505,242 Total governmental funds capital assets $ 287,655,293 ~ 37,969,654 ~ (16,417,438) $ 309,207,509 *This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets. 85 I I f i 86 STATISTICAL SECTION This part of the City of Denton's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the city's overall financial health. Contents Financial Trends These schedules contain trend information to help the reader understand how the city's financial performance and well-being have changed over time. (Tables 1- 4) Revenue Capacity These schedules contain information to help the reader assess the city's most significant local revenue source, the property tax. These tables do not include the Electric fund information due to confidentiality of information necessary for competitive rates. (Tables 5 - 8) Debt Capacity These schedules present information to help the reader assess the affordability of the city's current level of outstanding debt and the city's ability to issue additional debt in the future. (Tables 9 -12) Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the city's financial activities take place. (Tables 13 -14) Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the city's financial report relates to the services the city provides and the activities it performs. (Tables 15 -17) Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The city implemented GASB Statement 34 in 2002; schedules presenting government-wide information include information beginning in that year. 87 I I f i 88 CITY OF DENTON, TEXAS Table 1 NET ASSETS BY COMPONENT LAST SEVEN FISCAL YEARS (accrual basis of accounting) 2002 2003 2004 2005 2006 2007 2008 Governmental activities Invested in capital assets, net of related debt $ 88,162,242 ~ 100,876,627 $ 107,754,576 $ 107,112,321 $ 107,410,289 $ 99,858,383 $ 102,040,021 Restricted 1,000,906 428,426 296,731 451,046 439,658 886,141 1,454,579 Unrestricted 14,091,681 13,185,865 14,615,294 18,519,185 30,352,691 30,738,026 37,610,966 Total governmental activities net assets 103,254,829 114,490,918 122,666,601 126,082,552 138,202,638 131,482,550 141,105,566 Business-type activities Invested in capital assets, net of related debt 131,316,531 163,784,452 172,589,102 193,657,258 213,074,701 242,015,614 263,325,859 Restricted 28,456,447 30,558,417 35,812,117 30,863,580 30,974,925 31,015,188 33,087,609 Unrestricted 94,356,569 78,074,629 78,543,929 76,726,025 90,843,185 107,837,825 107,545,434 Total business-type activities net assets 254,129,547 272,417,498 286,945,148 301,246,863 334,892,811 380,868,627 403,958,902 Primary government Invested in capital assets, net of related debt 219,478,773 264,661,079 280,343,678 300,769,579 320,484,990 341,873,997 365,365,880 Restricted 29,457,353 30,986,843 36,108,848 31,314,626 31,414,583 31,901,329 34,542,188 Unrestricted 108,448,250 91,260,494 93,159,223 95,245,210 121,195,876 138,575,851 145,156,400 Total primary government net assets $ 357,384,376 ~ 386,908,416 $ 409,611,749 $ 427,329,415 $ 473,095,449 $ 512,351,177 $ 545,064,468 Source: Comprehensive Annual Financial Reports 89 CITY OF DENTON, TEXAS Table 2 CHANGES IN NET ASSETS LAST SEVEN FISCAL YEARS (accrual basis of accounting) 2002 2003 2004 2005 2006 2007 2008 EXPENSES Governmental activities: General government $16,240,418 ~ 22,933,107 $ 26,411,608 ~ 26,675,799 $ 22,165,661 ~ 22,145,804 $ 26,408,949 Public safety 27,322,153 28,837,158 30,508,765 33,642,445 36,626,635 42,161,674 43,426,526 Public works 13,691,514 10,274,822 11,053,131 11,986,881 12,485,281 14,008,867 15,448,473 Parks and recreation 7,362,939 8,419,508 9,418,580 9,912,996 10,497,241 11,564,247 12,927,020 Interest expense 4,252,970 4,186,051 4,494,851 4,175,466 4,333,428 4,658,128 5,372,868 Total governmental activities expenses 68,869,994 74,650,646 81,886,935 86,393,587 86,108,246 94,538,720 103,583,836 Business-type activities: Electric system 99,831,597 113,674,296 119,650,157 132,829,976 145,368,132 123,926,967 138,791,009 Water system 18,095,107 20,424,805 21,278,791 22,380,589 26,708,095 25,839,614 26,226,068 Wastewater system 15,555,687 16,560,308 18,528,348 18,808,374 19,027,926 18,785,353 19,413,247 Solid waste 11,658,565 12,366,910 11,301,940 13,168,880 13,454,556 15,451,025 17,065,295 Building inspections 1,731,031 - - - - - - Total business-type activities expenses 146,871,987 163,026,319 170,759,236 187,187,819 204,558,709 184,002,959 201,495,619 Total primary government expenses 215,741,981 237,676,965 252,646,171 273,581,406 290,666,955 278,541,679 305,079,455 PROGRAM REVENUES Governmental activities: Charges for services: General government 1,428,098 3,654,387 3,417,657 3,333,866 3,904,941 3,694,869 3,310,592 Public safety 4,082,859 4,371,407 3,382,791 4,965,056 6,023,100 6,160,611 6,461,037 Public works 1,085,200 1,803,025 1,280,423 1,086,387 802,711 800,378 853,091 Parks and recreation 1,597,496 347,110 2,143,756 2,613,567 3,234,347 3,220,837 3,292,528 Operating grants and contributions 2,480,309 3,221,264 3,264,777 2,995,978 3,712,817 2,991,224 3,306,325 Capital grants and contributions 6,379,228 14,023,056 14,046,071 7,426,194 5,536,786 5,399,220 7,308,398 Total governmental activities program revenues 17,053,190 27,420,249 27,535,475 22,421,048 23,214,702 22,267,139 24,531,971 Business-type activities: Charges for services: Electric system 91,315,761 105,509,934 111,742,276 129,343,037 149,419,800 128,973,477 138,467,222 Water system 22,352,636 24,552,658 24,331,555 24,890,289 33,436,651 27,830,767 30,843,797 Wastewater system 15,398,218 17,144,312 19,210,529 20,423,424 23,670,458 22,634,454 23,184,369 Solid waste 10,383,296 11,728,024 13,172,556 13,600,512 14,624,132 15,967,051 16,660,375 Building inspections 1,415,998 - - - - - - Capitalgrants and contributions 8,504,900 19,022,045 8,415,470 9,808,842 10,022,654 8,440,634 5,742,139 Total business-type activities program revenues 149,370,809 177,956,973 176,872,386 198,066,104 231,173,695 203,846,383 214,897,902 Total primary government program revenues 166,423,999 205,377,222 204,407,861 220,487,152 254,388,397 226,113,522 239,429,873 NET (EXPENSE)IREVENUE Governmental activities (51,816,804) (47,230,397) (54,351,460) (63,972,539) (62,893,544) (72,271,581) (79,051,865) Business-type activities 2,498,822 14,930,654 6,113,150 10,878,285 26,614,986 19,843,424 13,402,283 Total primary government program net expense $ (49,317,982) ~ (32,299,743) $ (48,238,310) ~ (53,094,254) $ (36,278,558) ~ (52,428,157) $ (65,649,582) (continued) (continued) 90 CITY OF DENTON, TEXAS Table 2 CHANGES IN NET ASSETS LAST SEVEN FISCAL YEARS (accrual basis of accounting) 2002 2003 2004 2005 2006 2007 2008 GENERAL REVENUES AND OTHER CHANGES IN NET ASSETS Governmental activities: Taxes: Property tax $19,075,268 $ 20,964,738 $ 23,149,916 ~ 26,678,783 $ 30,000,847 ~ 34,756,356 $ 41,499,791 Sales tax 15,875,935 16,047,297 17,871,380 18,998,057 20,343,413 20,653,932 21,440,839 Franchise tax 11,930,612 12,571,989 13,215,882 14,250,484 16,499,994 15,197,943 16,197,042 Hotel occupancy tax 938,225 855,879 911,505 988,573 1,132,500 1,268,627 1,369,667 Beverage tax 174,264 192,243 208,855 215,872 257,950 294,623 319,541 Bingo tax 20,673 28,146 21,127 25,466 24,260 23,708 23,653 Investment income 3,990,679 1,451,106 1,332,568 1,148,517 1,967,473 3,632,744 3,287,282 Miscellaneous 3,246,851 5,354,783 4,213,163 4,218,245 3,892,087 3,199,131 4,214,028 Transfers 1,073,857 1,000,305 1,410,947 864,493 895,106 (13,475,571) 323,038 Total governmental activities 56,326,364 58,466,486 62,335,343 67,388,490 75,013,630 65,551,493 88,674,881 Business-type activities: Investment income 11,819,512 4,143,039 2,698,551 3,252,342 7,298,870 12,108,632 7,817,671 Miscellaneous 379,357 214,563 914,087 1,035,581 627,198 548,189 195,055 Transfers (1,073,857) (1,000,305) (1,410,947) (864,493) (895,106) 13,475,571 (323,038) Total business-type activities 11,125,012 3,357,297 2,201,691 3,423,430 7,030,962 26,132,392 7,689,688 Total primary government 67,451,376 61,823,783 64,537,034 70,811,920 82,044,592 91,683,885 96,364,569 CHANGE IN NET ASSETS Governmental activities 4,509,560 11,236,089 7,983,883 3,415,951 12,120,086 (6,720,088) 9,623,016 Business-type activities 13,623,834 18,287,951 8,314,841 14,301,715 33,645,948 45,975,816 21,091,971 Total primary government $ 18,133,394 ~ 29,524,040 $ 16,298,724 ~ 17,717,666 $ 45,766,034 ~ 39,255,728 $ 30,714,987 Source: Comprehensive Annual Financial Reports 91 CITY OF DENTON, TEXAS FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) 1999 2000 2001 2002 General fund Reserved for encumbrances $ 828,963 ~ 932,374 $ 199,135 $ 431,528 Unreserved, designated - - - - Unreserved, undesignated 7,625,431 8,536,438 9,571,700 8,033,092 Total general fund 8,454,394 9,468,812 9,770,835 8,464,620 All other governmental funds Reserved for: Debt service 1,131,067 822,913 1,594,620 934,406 Capital projects 17,416,609 20,007,072 27,293,278 37,584,615 Encumbrances 2,244,559 3,349,161 3,457,022 2,899 Unreserved, undesignated reported in: Special revenue funds 187,519 296,306 509,513 2,390,065 Total all other governmental funds $ 20,979,754 ~ 24,475,452 $ 32,854,433 $ 40,911,985 Source: Comprehensive Annual Financial Reports 92 Table 3 2003 2004 2005 2006 2007 2008 $ 137,051 ~ 112,292 ~ 210,818 ~ 242,088 $ - ~ 123,696 - - - 1,550,000 4,360,649 - 8,442,942 9,504,988 9,718,368 13,264,027 18,199,161 25,253,797 8,579,993 9,617,280 9,929,186 15,056,115 22,559,810 25,377,493 428,426 296,731 451,046 439,658 886,141 1,954,955 24,389,226 26,548,130 27,671,252 32,840,640 48,971,610 57,887,531 14,295 - - - - 5,515 1,678,620 3,607,200 3,614,489 5,534,701 8,896,111 9,534,627 $ 26,510,567 $ 30,452,061 $ 31,736,787 $ 38,814,999 $ 58,753,862 $ 69,382,628 93 CITY OF DENTON, TEXAS CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) 1999 2000 2001 2002 REVENUES: Taxes: Property tax $ 12,542,960 ~ 13,957,144 $ 16,579,367 $ 18,894,068 Sales tax 13,883,181 15,131,637 17,489,408 15,875,933 Hotel occupancy tax 758,272 838,152 910,907 938,225 Beverage tax 149,771 166,523 165,379 174,264 Bingo tax 25,349 21,509 26,856 20,675 Licenses and permits 373,979 441,831 233,219 91,049 Franchise fees 9,283,328 9,958,500 10,709,710 11,930,612 Fines and forfeitures 2,855,899 2,680,352 3,222,517 3,522,895 Fees for services 2,512,669 3,359,523 4,118,361 6,818,363 Investment revenue 1,701,496 2,695,225 1,835,650 2,963,755 Intergovernmental 4,997,170 5,763,321 6,397,702 3,573,399 Miscellaneous 1,811,201 2,646,375 1,039,093 656,186 Total revenues 50,895,275 57,660,092 62,728,169 65,459,424 EXPENDITURES: General government 11,619,718 14,565,496 16,750,445 14,748,842 Public safety 19,060,713 22,679,278 23,957,206 26,155,876 Public works 5,098,539 4,888,271 6,954,265 7,949,472 Parks and recreation 4,413,869 5,341,227 6,336,352 6,962,373 Capital outlay 16,605,028 5,724,897 15,842,919 15,005,659 Debt service: Principal retirement 4,132,192 3,601,439 3,853,087 5,019,164 Advance refunding escrow - - - - Bond issuance costs - - - - Interestand other charges 2,205,565 3,327,544 3,285,426 4,215,673 Total expenditures 63,135,624 60,128,152 76,979,700 80,057,059 Excess (deficiency) of revenues over (under) expenditures (12,240,349) (2,468,060) (14,251,531) (14,597,635) OTHER FINANCING SOURCES (USES): Refunding bonds issued 5,538,780 - - - Payment to refunded bond escrow agent (5,538,780) - - - Issuance of long-term debt 9,526,351 6,625,000 20,992,749 20,120,000 Premium on debt issuance - - - - Proceeds of capital lease 2,159,279 - - - Sale of capital assets - - - - Transfers in 2,416,072 2,349,442 3,193,675 1,454,541 Transfers (out) (3,596,807) (1,996,266) (1,253,889) (1,906,600) Total other financing sources (uses) 10,504,895 6,978,176 22,932,535 19,667,941 NET CHANGE IN FUND BALANCES $ (1,735,454) ~ 4,510,116 $ 8,681,004 $ 5,070,306 Debt service as a percentage of noncapital expenditures 13.6% 12.7% 11.7% 14.2% Source: Comprehensive Annual Financial Reports 94 Table 4 2003 2004 2005 2006 2007 2008 $ 20,964,737 $ 22,986,590 $ 26,640,930 $ 30,019,657 $ 34,662,336 $ 41,436,012 16,047,297 17,684,899 18,998,058 20,343,413 20,653,932 21,440,839 855,879 911,505 988,573 1,132,500 1,268,627 1,369,667 192,243 208,855 215,872 257,950 294,623 319,541 28,147 21,127 25,465 24,260 23,708 23,653 1,151,169 1,700,044 1,235,337 1,383,169 1,097,323 1,080,580 12,571,989 13,215,882 14,250,484 16,499,994 15,197,943 16,197,042 3,422,952 3,338,979 3,959,476 4,639,922 5,065,049 5,262,189 8,556,002 10,022,001 8,255,342 6,779,904 7,624,265 7,951,665 1,451,106 1,332,568 1,148,517 1,967,473 3,632,744 3,287,282 5,757,543 6,655,240 5,443,517 5,254,058 3,852,513 8,094,307 1,304,367 5,012,607 1,931,762 3,424,786 3,006,751 3,778,673 72,303,431 83,090,297 83,093,333 91,727,086 96,379,814 110,241,450 21,025,986 24,894,438 22,272,681 20,539,006 20,158,739 24,110,329 28,406,261 29,689,083 33,057,120 35,813,329 37,755,272 40,855,112 4,627,292 4,752,409 5,247,546 5,206,224 5,624,287 6,596,191 8,094,780 8,404,074 9,176,686 9,548,416 10,234,361 11,557,168 22,845,204 13,463,619 11,760,356 9,056,102 17,237,922 23,275,703 5,027,222 5,502,897 5,642,487 5,914,819 6,808,439 8,479,136 - - 216,148 - - - - - 293,668 70,745 314,286 530,137 4,487,778 4,544,502 4,018,765 4,210,628 4,389,307 5,261,346 94,514,523 91,251,022 91,685,457 90,359,269 102,522,613 120,665,122 (22,211,092) (8,160,725) (8,592,124) 1,367,817 (6,142,799) (10,423,672) 4,130,000 - 7,316,688 - 24,780,000 24,595,000 (4,130,000) - (7,491,938) - - (25,117,336) 6,913,483 11,805,000 9,070,000 9,550,000 - 22,230,000 - - 404,361 49,644 528,630 937,755 - - - - 1,108,131 69,897 - - - - - 582,087 2,192,680 3,496,765 3,341,047 4,095,018 12,323,132 2,406,678 (1,181,116) (2,162,259) (2,451,402) (2,857,338) (5,154,536) (1,833,960) 7,925,047 13,139,506 10,188,756 10,837,324 33,585,357 23,870,121 $ (14,286,045) ~ 4,978,781 ~ 1,596,632 $ 12,205,141 $ 27,442,558 ~ 13,446,449 13.3% 12.9% 12.7% 12.5% 13.5% 14.7% 95 CITY OF DENTON, TEXAS Table 5 ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS Estimated Market Value Less: Total Taxable Total Direct Fiscal Real Personal Tax-Exempt Assessed Tax Year Property Property Property Value Rate 1999 $ 2,322,359,777 $ 419,578,093 $ 393,738,972 $ 2,348,198,898 0.50815 2000 2,551,781,177 529,990,564 431,651,247 2,650,120,494 0.50815 2001 2,959,019,481 665,990,501 565,373,249 3,059,636,733 0.52815 2002 3,343,400,379 618,020,979 594,129,333 3,367,292,025 0.54815 2003 3,761,322,990 654,159,101 712,069,576 3,703,412,515 0.54815 2004 4,129,344,174 659,848,833 746,990,136 4,042,202,871 0.54815 2005 4,468,428,305 695,572,385 789,056,859 4,374,943,831 0.59815 2006 4,876,565,660 733,405,037 820,593,886 4,789,376,811 0.60815 2007 5,475,770,871 952,273,984 986,815,946 5,441,228,909 0.62652 2008 6,159,567,238 969,219,527 1,039,286,990 6,089,499,775 0.66652 Source: Denton Central Appraisal District 96 CITY OF DENTON, TEXAS Table 6 PROPERTY TAX RATES (PER X100 OF ASSESSED VALUE) DIRECT AND OVERLAPPINGI GOVERNMENTS LAST TEN FISCAL YEARS Overlapping Rates Denton City of Denton Independent Total Direct Fiscal Operating Debt Service Total Denton School & Overlapping Year Rate Rate Direct Rate County District Rates 1999 0.31187 0.19628 0.50815 0.24875 1.85000 2.60690 2000 0.31948 0.18867 0.50815 0.23504 1.70000 2.44319 2001 0.31948 0.20867 0.52815 0.23193 1.84400 2.60408 2002 0.31948 0.22867 0.54815 0.25193 1.85400 2.65408 2003 0.33816 0.20999 0.54815 0.24897 1.86400 2.66112 2004 0.34928 0.19887 0.54815 0.24717 1.86400 2.65932 2005 0.39928 0.19887 0.59815 0.25480 1.86400 2.71695 2006 0.42928 0.17887 0.60815 0.24648 1.86400 2.71863 2007 0.44765 0.17887 0.62652 0.23192 1.76400 2.62244 2008 0.44765 0.21887 0.66652 0.23577 1.49000 2.39229 Source: City of Denton Tax Office, Denton County Tax Office, and Denton Independent School District lOverlapping rates are those of local and county governments that apply to property owners with the City of Denton. 97 I I f i 98 CITY OF DENTON, TEXAS Table 7 PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO 2008 1999 Percentage of Percentage of Taxable Total Taxable Taxable Total Taxable Assessed Assesed Assessed Assesed Name of Taxpayer Value Valuer Name of Taxpayer Value Value2 TTHR Limited Partnership (Presbyterian Hospital) $ 100,780,067 1.65% Peterbilt Motors $ 44,318,837 1.89% Columbia Medical Center of Denton (Denton Regional General Telephone Hospital) 80,454,725 1.32% (Verizon Southwest) 42,726,124 1.82% Inland Western Crossing 56,310,992 0.92% Tetra Pak 25,759,393 1.10% Denton Regional United Copper 40,387,520 0.66% Medical Center 22,619,858 0.96% Allegiance Hillview LLP 36,391,205 0.60% Wal Mart 19,836,170 0.84% PACCAR Inc (Peterbilt) 35,052,300 0.58% Texas Instruments 18,592,907 0.79% Anderson Merchandisers 34,492,145 0.57% Golden Triangle Mall 16,617,230 0.71% Verizon Southwest 34,386,920 0.56% Andrew Corporation 15,681,827 0.67% FMP Denton 25,495,405 0.42% Albertson's 12,762,134 0.54% Robson Denton Dev LP 24,562,198 0.40% Westdale Property 12,442,108 0.53% Total $ 468,313,477 7.68% Total $ 231,356,588 9.85% Source: Denton Central Appraisal District iTotal taxable assessed value for tax year 2007 (fiscal year 2008) is X6,089,499,772. Total taxable assessed value for tax year 1998 (fiscal year 1999) is X2,348,198,898. 99 CITY OF DENTON, TEXAS PROPERTY TAX LEVIES AND COLLECTIONS LAST FOUR FISCAL YEARS Taxes Levied Adjustments Adjusted Collected Within the Within the to Levy in Taxes Levied Fiscal Year of the Levy Collections Fiscal Fiscal Year Subsequent for the Percentage in Subsequent Year of the Levy Years Fiscal Year Amount of Levy Years 2005 $ 26,457,399 $ 158,806 $ 26,616,205 $ 26,016,239 97.75% $ 499,560 2006 29,545,033 111,199 29,656,232 29,162,978 98.34% 385,247 2007 34,273,862 217,243 34,491,105 33,872,404 98.21% 513,380 2008 40,816,256 - 40,816,256 40,354,528 98.87% - Source: City of Denton Tax Office and Denton Central Appraisal District Only four years of data included due to inability to obtain correct data from previous tax software. 100 Table 8 Total Collections to Date Percentage Amount of Levy $ 26,515,799 99.62% 29,548,225 99.64% 34,385,784 99.69% 40,354,528 98.87% 101 CITY OF DENTON, TEXAS RATIO OF OUTSTANDING DEBT BY TYPE LAST EIGHT FISCAL YEARS Governmental Activities Business-Type Activities General Certificates General Certificates Fiscal Obligation of Other Revenue Obligation of Other Year Bonds Obligation Obligations Bonds Bonds Obligation Obligations 2001 $ 49,950,882 $ 21,924,825 ~ 1,022 $ 211,035,241 $ 1,759,622 $ 8,504,895 ~ 3,148,744 2002 58,663,791 27,628,284 635,442 274,875,129 1,508,017 12,188,878 3,141,222 2003 59,721,870 30,148,929 696,508 304,366,352 2,191,168 11,765,612 3,328,798 2004 55,893,370 40,540,162 1,244,678 293,105,000 2,046,630 11,325,838 3,141,222 2005 58,870,849 41,791,588 2,210,846 281,120,000 3,904,151 9,233,412 3,141,222 2006 58,742,900 46,700,000 3,559,742 277,305,000 3,582,100 11,975,000 3,141,222 2007 70,650,317 51,355,100 2,393,684 281,750,000 3,099,683 13,889,900 7,032,986 2008 80,814,594 55,097,550 1,819,298 282,200,000 4,865,406 12,952,450 5,713,041 Source: Comprehensive Annual Financial Reports Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. 1See Table 13 for personal income and population data. 102 Table 9 Total Percentage Primary of Personal Per Government Income Capita $ 296,325,231 0.01879% 3,471.19 378,640,763 0.02248% 4,190.59 412,219,237 0.02006% 4,399.49 407,296,900 0.01889% 4,143.91 400,272,068 0.01764% 3,877.85 405,005,964 0.01680% 3,736.87 430,171,670 0.01661% 3,780.07 443,462,339 0.01729% 3,839.30 103 CITY OF DENTON, TEXAS Table 10 RATIO OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS General Bonded Debt Outstanding Percentage of General Certificates Less: Amounts Actual Taxable Fiscal Obligation of Available in Debt Value of Per Year Bonds Obligation Service Fund Total Property) Capital 1999 $ 39,056,730 $ 19,945,000 $ 1,131,067 $ 57,870,663 2.46% 768.53 2000 40,105,923 20,881,000 822,913 60,164,010 2.27% 725.08 2001 51,569,223 30,571,000 1,594,620 80,545,603 2.63% 943.52 2002 60,185,495 39,806,000 934,406 99,057,089 2.94% 1,096.31 2003 61,913,038 41,978,000 428,426 103,462,612 2.79% 1,104.23 2004 57,940,000 51,866,000 296,731 109,509,269 2.71% 1,114.17 2005 62,775,000 51,025,000 451,046 113,348,954 2.59% 1,098.13 2006 62,325,000 58,675,000 439,658 120,560,342 2.52% 1,112.38 2007 73,750,000 65,245,000 886,141 138,108,859 2.54% 1,213.61 2008 80,814,594 55,097,550 1,954,955 133,957,189 2.20% 1,159.74 Source: Comprehensive Annual Financial Reports Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. 1See Table 5 for property value data. 2See Table 13 for population data. 104 CITY OF DENTON, TEXAS Table 11 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF SEPTEMBER 30, 2008 Estimated Estimated Share of Debt Percentage Overlapping Governmental Unit Outstanding Applicable) Debt Debt repaid with property taxes: Denton Independent School District $ 654,154,238 66.47% ~ 434,816,322 Denton County 295,214,740 12.90% 38,082,701 Aubrey Independent School District 45,495,358 0.01 % 4,550 Krum Independent School District 48,835,303 1.78% 869,268 Argyle Independent School District 57,578,407 7.30% 4,203,224 Sanger Independent School District 30,927,685 0.11 % 34,020 Ponder Independent School District 33,400,000 2.36% 788,240 Pilot Point Independent School District 19,674,011 0.12% 23,609 Subtotal, overlapping debt 478,821,934 City of Denton, direct debt 100.00% 135,912,144 Total direct and overlappping debt $ 614,734,078 Source: Compiled from data from the "Texas Municipal Report" prepared by the Municipal Advisory Council. Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the city. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City of Denton. This process recognizes that, when considering the City of Denton's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should betaken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. 1The percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining the portion of the overlapping government's taxable assessed value that is within the City of Denton's boundaries and dividing it by the overlapping government's total taxable assessed value. 105 CITY OF DENTON, TEXAS PLEDGED REVENUE COVERAGE LAST SEVEN FISCAL YEARS Utility System Revenue Bonds Less: Fair Market Less: Value Operating Adjustment Expenses Fiscal Operating Investment to Investment Impact Fee Before Year Revenue Revenue Revenue2 Revenue Depreciation 2002 ~ 124,769,615 $ 8,406,425 ~ 2,515,297 ~ 4,294,000 $ 113,557,718 2003 140,450,819 4,320,188 (2,599,123) 5,150,000 125,351,837 2004 148,512,689 2,618,296 (1,523,523) 6,771,671 134,885,329 2005 170,450,120 3,114,254 (2,027,258) 4,206,630 150,549,007 2006 200,970,560 7,061,556 721,058 5,556,349 166,537,867 2007 173,879,713 11,390,142 2,710,742 5,558,985 142,890,603 2008 185,874,450 7,458,605 69,292 6,620,938 158,245,885 Source: Comprehensive Annual Financial Reports The Utility System includes the Electric, Water, and Wastewater funds. 2For the coverage calculation, the fair market adjustment to the value of investments is excluded. 3For the coverage calculation, franchise fees and return on investment payments to the General Fund are excluded from operating expenses. 4Revenue bond covenants require a times coverage of 1.25 or greater. 106 Table 12 Add: Franchise Fees and Return Debt Service on Investment Net Paid to Available Times General Fund3 Revenue Principal Interest Coverage4 $ 8,487,570 ~ 29,884,595 ~ 7,345,000 $ 12,130,021 1.53 9,207,505 36,375,798 9,965,000 14,324,178 1.50 9,596,617 34,137,467 11,255,000 15,979,950 1.25 10,922,442 40,171,697 12,545,000 14,429,925 1.49 12,839,184 59,168,724 12,330,000 13,798,811 2.26 11,283,647 56,511,142 13,325,000 12,265,461 2.21 12,262,151 53,900,967 14,840,000 13,088,928 1.93 107 CITY OF DENTON, TEXAS Table 13 DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Fiscal Estimated Personal Per Capita Median Grade School University Unemployment Year Population) Income Income2 Agee Enrollment3 Enrollment4 Rates 1999 75,300 904,578,900 12,013 30.7 13,283 33,407 2.7% 2000 82,976 996,790,688 12,013 26.8 13,667 33,317 3.1 2001 85,367 1,577,069,958 18,474 26.8 14,408 34,026 4.7% 2002 90,355 1,684,488,265 18,643 26.8 13,600 36,985 7.4% 2003 93,697 2,054,962,604 21,932 26.9 15,128 38,612 7.4% 2004 98,288 2,155,652,416 21,932 27.1 16,932 39,618 5.8% 2005 103,220 2,269,291,700 21,985 27.1 18,395 41,204 3.3% 2006 108,381 2,410,068,297 22,237 27.1 19,701 42,408 3.5% 2007 113,800 2,590,088,000 22,760 27.1 20,880 43,133 3.4% 2008 115,506 2,564,348,706 22,201 27.9 22,221 43,770 4.4% Sources: 1City of Denton Planning and Development Department estimate 2United States Census and Denton Chamber of Commerce DDenton Independent School District UUnvversity of North Texas' and Texas Woman's University's Denton campus enrollment TTexas Workforce Commission estimate 108 CITY OF DENTON, TEXAS Table 14 PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO 2008 1999 Percentage Percentage of Total City of Total City Name of Employer Employees Employment Name of Employer Employees Employment University of North Texas 7,351 12.14% University of North Texas 5,500 10.26% Denton Independent School 3,113 5.14% Boeing Electrics 2,200 4.10% District Texas Woman's University 1,586 2.62% Denton Independent 1,648 3.07% School District Denton County 1,523 2.51% Denton State School 1,497 2.79% (in Denton) Peterbilt Motors 1,500 2.48% Peterbilt Motors 1,400 2.61% Denton State School 1,500 2.48% Texas Woman's 1,300 2.42% University City of Denton 1,300 2.15% Denton County 1,132 2.11% Denton Regional Medical 800 1.32% City of Denton 1,000 1.86% Center Presbyterian Hospital of 750 1.24% Denton Regional Medical 850 1.59% Denton Center Jostens 600 0.99% Victor Equipment 700 1.31% Total 20,023 33.07% Total 17,227 32.12% Source: Denton Chamber of Commerce 109 CITY OF DENTON, TEXAS FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTIONIPROGRAM LAST TEN FISCAL YEARS Full-time Equivalent Employees for Fiscal Year Function /Program 1999 2000 2001 2002 2003 General government 169.41 179.03 200.53 203.75 202.75 Public safety Police 170.39 173.29 176.62 178.14 180.14 Fire 130.25 145.25 151.25 151.25 152.25 Animal services 8.00 8.00 8.00 8.00 8.00 Public works 52.00 52.00 61.00 83.00 84.00 Parks and recreation 96.91 108.15 115.15 117.17 136.37 Electric system 128.75 128.75 136.75 107.50 108.50 Water system 103.71 106.71 110.21 112.71 113.71 Wastewater system 72.40 72.90 81.00 76.00 79.12 Solid waste 66.75 69.25 88.50 88.50 88.50 Materials management 10.00 10.00 13.00 13.00 15.00 Fleet services 15.50 16.50 18.50 18.50 20.00 Technology services 26.25 30.75 29.75 34.75 33.75 Risk Retention - - - - - Total 1,050.32 1,100.58 1,190.26 1,192.27 1,222.09 Source: City of Denton Budget Office 110 Table 15 2004 2005 2006 2007 2008 202.75 211.75 192.50 192.38 197.38 183.73 198.23 206.23 212.23 217.23 152.25 160.25 162.25 162.25 162.25 8.00 8.00 8.00 8.00 8.00 84.00 77.00 37.00 38.00 39.00 152.34 149.62 141.85 142.07 144.15 109.50 110.50 110.50 112.00 120.50 120.00 130.00 161.75 164.50 165.00 80.12 83.22 83.12 82.87 83.37 88.50 82.50 85.00 87.00 88.00 15.00 14.00 12.50 12.50 12.50 19.00 16.00 17.00 18.00 19.00 33.75 29.75 26.00 24.50 25.00 - - - 5.00 5.00 1,248.94 1,270.82 1,243.70 1,261.30 1,286.38 III CITY OF DENTON, TEXAS OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Fiscal Year Function l Program 1999 2000 2001 2002 Public Safety Police Calls for service 50,194 57,466 57,704 68,869 Traffic citations issued 38,882 29,838 38,628 39,138 Fire Fire calls for service 2,200 2,200 2,200 2,800 EMS calls for service 6,603 6,445 7,200 7,200 Inspections (Businesses) 4,300 3,540 2,794 2,802 Animal Services Animals sheltered 4,974 4,304 5,234 5,098 Animals adopted, transferred, or returned 2,266 2,171 2,269 3,015 Public Works Street repaving (square yards) 50,000 43,978 50,000 107,956 Pot holes repaired 3,000 4,000 5,000 8,304 Cutouts base failures (square feet) 200,000 108,458 150,000 165,335 Crack seal maintenance (linear feet) NA NA NA NA Parks and Recreation Attendance Leisure Services 957,743 980,000 869,960 893,710 Water Park NA NA NA NA Total Acres Maintained 1,378 1,846 1,916 2,084 Water System Number of customers 18,824 19,662 21,419 23,098 Annual finished water production (in thousand gallons) 4,769,096 5,386,680 4,966,603 5,070,200 Wastewater System Number of customers 18,258 18,340 19,825 21,455 Annual wastewater discharge (in thousand gallons) 4,208,290 4,756,640 5,190,410 4,687,960 Solid Waste Number of customers (residential and commercial) 19,842 21,550 23,265 23,783 MSW Landfilled (tons) 111,920 111,850 110,172 107,901 Recycling collections (tons) 16,768 16,732 14,060 11,965 Source: Various city departments Note: Fire calls for 1997-2002 were rounded to the nearest hundred by department. ~ linear feet 2 lane miles of repaving and reconstruction 3 curbside residential recycling program introduced 112 Table 16 2003 2004 2005 2006 2007 2008 68,727 69,312 73,154 73,346 74,397 80,117 38,181 34,804 36,757 39,483 31,131 31,610 2,894 2,917 3,013 3,495 3,539 3,703 8,808 7,012 6,527 6,840 6,544 6,862 3,114 3,000 3,727 3,882 3,144 3,591 4,769 5,166 4,320 4,443 5,427 4,967 1,487 1,777 2,091 2,167 2,297 2,119 211,113 32.41 ~ 19.44 ~ 16.41 ~ 23.38 ~ 41.28 ~ 5,162 4,004 5,479 3,971 8,153 6,841 94,876 79,010 124,442 171,543 44,566 75,877 NA NA 40,338 79,314 42,624 40,288 1,026,309 981,883 952,866 985,778 1,048,500 1,010,351 102,637 107,198 141,495 162,039 163,000 169,000 2,107 2,190 2,208 2,262 2,293 2,633 24,089 25,303 26,715 27,884 28,898 29,679 5,636,768 5,369,957 5,901,750 7,097,403 5,671,124 6,582,151 22,561 23,550 24,894 26,079 27,185 28,019 4,689,450 4,967,440 5,039,240 4,428,700 5,174,100 5,263,780 24,254 25,154 26,062 27,805 28,954 30,680 107,061 122,113 122,477 114,060 128,644 136,024 15,322 3 16,353 16,195 17,762 21,179 24,248 113 CITY OF DENTON, TEXAS CAPITAL ASSET STATISTICS BYFUNCTION/PROGRAM LAST TEN FISCAL YEARS Fiscal Year Function l Program 1999 2000 2001 2002 2003 Public safety Police Police stations 1 1 1 1 1 Police patrol units 97 103 104 138 141 Fire Fire stations 6 6 6 6 6 Emergency vehicles 19 16 20 20 21 Animal services Animals shelters 1 1 1 1 1 Public works Lane miles added per year NA 74.02 36.30 32.15 34.95 Streetlights NA NA 5,426 5,713 6,086 Parks and recreation Parks 26 26 27 28 33 Park acreage 743 743 813 981 1,177 Recreation centers 10 10 10 10 11 Water system Water mains (miles) 380 422 433 458 478 Raw water (in thousand gallons) 5,159,230 5,647,014 5,185,568 5,472,708 6,168,039 Wastewater system Wastewater mains (miles) 360 393 396 414 426 Maximum daily capacity (in thousand gallons) 15 15 15 15 15 Solid waste Landfills 1 1 1 1 1 Source: Various city departments 114 Table 17 2004 2005 2006 2007 2008 1 1 1 1 1 143 148 149 149 147 6 6 6 7 7 22 21 22 24 24 1 1 1 1 1 14.79 24.56 25.34 22.66 10.10 6,931 7,104 7,118 7,008 7,011 34 34 37 30 37 1,240 1,205 1,272 1,210 1,444 12 13 13 13 13 497 511 520 530 533 6,046,070 6,234,076 7,322,361 5,801,994 6,694,734 442 452 459 470 481 21 21 21 21 21 1 1 1 1 1 115 I I f i 116 CITY OF DENTON, TEXAS Exhibit XXVIII GENERAL FUND SCHEDULE OF EXPENDITURES -BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2008 Variance with Actual on a Final Budget - BudgetedAmounts Budgetary Positive Original Final Basis (Negative) EXPENDITURES: Personal Service $ 1,324,933 $ 1,314,933 $ 1,300,717 $ 14,216 Materials and Supplies 44,501 45,461 18,859 26,602 Maintenance and Repairs 3,152 3,152 1,300 1,852 Insurance 40,060 40,060 40,060 - Miscellaneous 40,620 51,470 44,074 7,396 Operations, Services 117,043 141,278 87,594 53,684 Transfers -Interfund 135,007 135,807 115,034 20,773 City Manager's Office 1,705,316 1,732,161 1,607,638 124,523 Personal Service 70,780 70,780 61,123 9,657 Materials and Supplies 5,564 5,564 194 5,370 Maintenance and Repairs 400 400 115 285 Insurance 835 835 835 - Miscellaneous 150 150 731 (581) Operations, Services 16,118 16,118 8,627 7,491 Transfers -Interfund 12,967 12,967 12,967 - Cable Television 106,814 106,814 84,592 22,222 Personal Service 269,123 269,123 240,669 28,454 Materials and Supplies 6,916 6,916 5,495 1,421 Maintenance and Repairs 400 400 - 400 Insurance 761 761 761 - Operations, Services 18,320 25,920 20,137 5,783 Transfers -Interfund 9,041 9,041 9,041 - InternalAudit 304,561 312,161 276,103 36,058 Personal Service 251,947 251,947 250,741 1,206 Materials and Supplies 20,255 19,855 19,888 (33) Maintenance and Repairs 776 776 8,026 (7,250) Insurance 2,993 2,993 2,993 - Miscellaneous - - 482 (482) Operations, Services 111,548 106,553 81,294 25,259 Transfers -Interfund 25,999 25,999 25,999 - Public Communications 413,518 408,123 389,423 18,700 Personal Service 897,567 897,567 887,674 9,893 Materials and Supplies 45,456 43,665 27,158 16,507 Maintenance and Repairs 1,500 1,500 210 1,290 Insurance 9,676 9,676 9,676 - Miscellaneous 23,523 33,814 33,793 21 Operations, Services 82,979 82,979 62,092 20,887 Transfers -Interfund 98,360 98,360 98,360 - Human Resources $ 1,159,061 $ 1,167,561 $ 1,118,963 $ 48,598 ~COntlnued~ 117 CITY OF DENTON, TEXAS Exhibit XXVIII GENERAL FUND SCHEDULE OF EXPENDITURES -BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2008 Variance with Actual on a Final Budget - BudgetedAmounts Budgetary Positive Original Final Basis (Negative) EXPENDITURES: Personal Service $ 837,689 $ 864,189 $ 818,967 $ 45,222 Materials and Supplies 13,042 11,642 4,973 6,669 Maintenance and Repairs 300 300 - 300 Insurance 6,268 6,268 6,268 - Miscellaneous 500 500 417 83 Operations, Services 292,322 267,222 240,889 26,333 Transfers -Interfund 39,315 39,315 39,315 - Fixed Assets 21,620 21,620 23,193 (1,573) Legal Administration 1,211,056 1,211,056 1,134,022 77,034 Personal Service 300,086 300,086 270,868 29,218 Materials and Supplies 1,630 1,630 2,608 (978) Insurance 2,750 2,750 2,750 - Operations, Services 11,488 11,488 6,745 4,743 Transfers -Interfund 26,923 26,923 26,923 - MunicipalJudge 342,877 342,877 309,894 32,983 Personal Service 1,444,440 1,321,552 1,250,444 71,108 Materials and Supplies 44,261 50,687 42,288 8,399 Maintenance and Repairs 572 572 - 572 Insurance 11,298 11,298 11,298 - Miscellaneous 21,000 35,071 32,024 3,047 Operations, Services 279,885 443,776 340,186 103,590 Transfers -Interfund 174,493 174,493 174,493 - Fixed Assets 4,568 4,568 - 4,568 Planning 1,980,517 2,042,017 1,850,733 191,284 Personal Service 1,284,042 1,249,042 1,238,145 10,897 Materials and Supplies 53,010 39,309 38,953 356 Maintenance and Repairs 15,100 2,300 2,252 48 Insurance 12,343 12,344 12,343 1 Operations, Services 98,886 98,886 99,331 (445) Transfers -Interfund 109,788 109,788 109,788 - Building Inspections 1,573,169 1,511,669 1,500,812 10,857 Personal Service 881,906 881,906 866,843 15,063 Materials and Supplies 53,532 53,532 40,514 13,018 Insurance 10,684 10,684 10,684 - Operations, Services 97,827 97,827 90,494 7,333 Transfers -Interfund 77,261 77,261 77,261 - Municipal Court $ 1,121,210 $ 1,121,210 $ 1,085,796 $ 35,414 ~COntlnued~ 118 CITY OF DENTON, TEXAS Exhibit XXVIII GENERAL FUND SCHEDULE OF EXPENDITURES -BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2008 Variance with Actual on a Final Budget - BudgetedAmounts Budgetary Positive Original Final Basis (Negative) EXPENDITURES: Personal Service $ 1,863,117 $ 1,844,017 $ 1,792,425 $ 51,592 Materials and Supplies 95,813 95,808 71,991 23,817 Maintenance and Repairs - 5,100 4,670 430 Insurance 18,069 18,069 18,069 - Miscellaneous 1,225 1,230 1,320 (90) Operations, Services 115,677 129,677 130,532 (855) Transfers -Interfund 185,984 185,984 185,984 - Finance 2,279,885 2,279,885 2,204,991 74,894 Personal Service 456,147 456,147 446,396 9,751 Materials and Supplies 59,142 59,142 33,353 25,789 Insurance 3,015 3,015 3,015 - Miscellaneous 10,100 10,100 4,013 6,087 Operations, Services 79,133 82,443 79,133 3,310 Transfers -Interfund 27,698 27,698 27,698 - EconomicDevelopment 635,235 638,545 593,608 44,937 Personal Service 6,844,904 6,605,791 6,398,908 206,883 Materials and Supplies 647,192 730,606 703,944 26,662 Maintenance and Repairs 568,888 754,416 721,114 33,302 Insurance 154,037 154,037 154,037 - Miscellaneous 130 130 17 113 Operations, Services 1,915,817 1,969,290 1,964,307 4,983 Transfers -Interfund 353,833 353,833 356,073 (2,240) Fixed Assets - - 5,000 (5,000) Parks & Recreation 10,484,801 10,568,103 10,303,400 264,703 Personal Service 1,052,223 1,052,223 1,053,091 (868) Materials and Supplies 94,380 54,380 41,297 13,083 Maintenance and Repairs 470,170 469,465 467,948 1,517 Insurance 18,878 18,878 18,878 - Miscellaneous 503 503 106 397 Operations, Services 1,053,732 1,093,732 1,134,759 (41,027) Transfers -Interfund 91,643 92,348 92,348 - Facilities Management 2,781,529 2,781,529 2,808,427 (26,898) Personal Service 3,034,350 2,891,658 2,920,458 (28,800) Materials and Supplies 142,288 172,871 165,805 7,066 Maintenance and Repairs 87,757 87,188 140,829 (53,641) Insurance 56,024 56,024 56,024 - Operations, Services 358,761 321,373 321,404 (31) Transfers -Interfund 688,107 692,107 692,107 - Fixed Assets 687,394 826,484 826,080 404 Library $ 5,054,681 $ 5,047,705 $ 5,122,707 $ (75,002) (continued) 119 CITY OF DENTON, TEXAS Exhibit XXVIII GENERAL FUND SCHEDULE OF EXPENDITURES -BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2008 Variance with Actual on a Final Budget - BudgetedAmounts Budgetary Positive Original Final Basis (Negative) EXPENDITURES: Personal Service $ 140,966 $ 136,966 $ 130,727 $ 6,239 Materials and Supplies 1,500 1,000 518 482 Maintenance and Repairs - - 89 (89) Miscellaneous 200 700 440 260 Operations, Services 169,390 169,390 151,755 17,635 Transfers -Interfund - 4,000 4,000 - Transportation Operations 312,056 312,056 287,529 24,527 Personal Service 916,362 873,362 867,770 5,592 Materials and Supplies 20,812 19,429 15,700 3,729 Maintenance and Repairs 351,624 438,103 309,011 129,092 Insurance 33,000 31,500 31,500 - Miscellaneous 500 2,000 1,136 864 Operations, Services 139,918 97,822 100,372 (2,550) Transfers -Interfund 83,578 83,578 83,578 - Traffic Operations 1,545,794 1,545,794 1,409,067 136,727 Personal Service 1,725,010 1,689,338 1,627,729 61,609 Materials and Supplies 65,425 45,225 43,464 1,761 Maintenance and Repairs 2,307,386 2,052,558 2,031,308 21,250 Insurance 28,964 28,964 28,964 - Miscellaneous 4,550 4,550 2,994 1,556 Operations, Services 425,835 376,535 377,595 (1,060) Transfers -Interfund 38,908 398,908 398,908 - Streets 4,596,078 4,596,078 4,510,962 85,116 Materials and Supplies 68,700 68,700 51,525 17,175 Operations, Services 995,358 995,358 699,960 295,398 Street Lighting 1,064,058 1,064,058 751,485 312,573 Personal Service 252,013 252,013 223,118 28,895 Materials and Supplies 34,331 17,428 6,850 10,578 Maintenance and Repairs 30,792 28,192 18,986 9,206 Insurance 18,011 18,011 18,011 - Miscellaneous 1,000 1,250 1,257 (7) Operations, Services 131,859 134,209 141,234 (7,025) Transfers -Interfund 43,901 43,901 43,901 - Airport 511,907 495,004 453,357 41,647 Personal Service 18,376,589 18,376,939 18,209,199 167,740 Materials and Supplies 352,173 352,173 296,427 55,746 Maintenance and Repairs 189,467 188,467 181,239 7,228 Insurance 199,132 199,132 199,132 - Miscellaneous 13,000 13,250 12,149 1,101 Operations, Services 1,207,920 1,265,471 1,265,414 57 Transfers -Interfund 1,209,145 1,209,945 1,218,269 (8,324) Fixed Assets 56,551 - - - Police $ 21,603,977 $ 21,605,377 $ 21,381,829 ~ 223,548 (continued) 120 CITY OF DENTON, TEXAS Exhibit XXVIII GENERAL FUND SCHEDULE OF EXPENDITURES -BUDGET AND ACTUAL FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2008 Variance with Actual on a Final Budget - BudgetedAmounts Budgetary Positive Original Final Basis (Negative) EXPENDITURES: Personal Service $ 15,350,922 $ 15,792,677 $ 15,811,245 ~ (18,568) Materials and Supplies 362,218 362,218 407,002 (44,784) Maintenance and Repairs 158,832 158,832 151,688 7,144 Insurance 188,025 188,025 188,025 - Miscellaneous 41,950 27,950 21,014 6,936 Operations, Services 1,119,731 1,157,680 1,263,795 (106,115) Transfers -Interfund 564,950 564,950 564,950 - Fixed Assets 37,160 - - - Fire 17,823,788 18,252,332 18,407,719 (155,387) Personal Service 110,290 110,290 107,509 2,781 Miscellaneous 106,434 107,034 101,663 5,371 Transfers -Interfund 23,279 23,279 23,279 - AgencyContributions 240,003 240,603 232,451 8,152 Personal Service 611,021 169,866 56,307 113,559 Materials and Supplies - - 4 (4) Miscellaneous 195,000 195,000 206,111 (11,111) Operations, Services 2,088,365 1,939,644 1,658,771 280,873 Transfers -Interfund 1,020,487 1,079,536 984,273 95,263 MiscellaneouslFinance 3,914,873 3,384,046 2,905,466 478,580 Personal Service 58,296,427 57,672,412 56,831,073 841,339 Materials and Supplies 2,232,141 2,257,241 2,038,810 218,431 Maintenance and Repairs 4,187,116 4,191,721 4,038,785 152,936 Insurance 814,823 813,324 813,323 1 Miscellaneous 460,385 484,702 463,741 20,961 Operations, Services 10,927,912 11,024,671 10,326,420 698,251 Transfers -Interfund 5,040,667 5,470,021 5,364,549 105,472 Fixed Assets 807,293 852,672 854,273 (1,601) TOTAL GENERAL FUND $ 82,766,764 $ 82,766,764 $ 80,730,974 $ 2,035,790 121 I I f i 122 . 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We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over financial reporting. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or a combination of control deficiencies, that adversely affect the City's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the City's financial statements that is more than inconsequential will not be prevented or detected by the City's internal control. We considered the deficiency described in the accompanying schedule of findings and questioned costs to be a significant deficiency in internal control over financial reporting item 08-01. A material weakness is a significant deficiency, or combination of significant deficiencies that results in more than a remote likelihood that a misstatement of the financial statements will not be prevented or detected by the City's internal control. Our consideration of the internal control over financial reporting was for the limited purpose and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. WWW.WEAVERANDTIDWELL.COM OFFICES IN AN INDEPENDENT MEMBER OF BAKER TILLY DALLAS FORT WORTH HOUSTON INTERNATIONAL 1 CITY OF DENTON, TEXAS February 12, 2008 Page 2 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to management of the City, in a separate letter dated February 12, 2009. The City's response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. We did not audit the City's response and, accordingly we express no opinion on it. This report is intended solely for the information and use of the audit committee, management, City Council, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. ~ WEAVER AND TIDWELL, L.L.P. Dallas, Texas February 12, 2009 2 REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 INDEPENDENT AUDITOR'S REPORT The Honorable Mayor and City Council City of Denton, Texas Compliance We have audited the compliance of the City of Denton, Texas (the "City"), with the types of compliance requirements described in the U. S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended September 30, 2008. The City's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the City's management. Our responsibility is to express an opinion on the City's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non- profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City's compliance with those requirements. In our opinion, the City, complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended September 30, 2008. Internal Control Over Compliance The management of the City is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the City's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. WWW.WEAVERANDTIDWELL.COM AN INDEPENDENT MEMBER OF OFFICES IN BAKER TILLY DALLAS FORT WORTH HOUSTON INTERNATIONAL 3 CITY OF DENTON, TEXAS February 12, 2008 Page 2 A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or a combination of control deficiencies, that adversely affect the entity's ability to administer a federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the entity's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the entity's internal control. Our consideration of the internal control over compliance would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. Schedule of Expenditures of Federal Awards We have audited the basic financial statements of the City of Denton as of and for the year ended September 30, 2008, and have issued our report dated February 12, 2009. Our audit was performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB A-133 and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects in relation to the basic financial statements taken as a whole. This report is intended solely for the information and use of the City Council, management, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. ~ . , , WEAVER AND TIDWELL, L.L.P Dallas, Texas February 12, 2009 4 CITY OF DENTON, TEXAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED SEPTEMBER 30, 2008 I. Summary of the Auditor's Results: Financial Statements a. An unqualified opinion was issued on the financial statements. b. Internal control over financial reporting: • Material weakness(es) identified? Yes X No • Significant deficiency(ies) identified that are not considered a material weakness? X Yes No c. Noncompliance material to financial statements noted Yes X No Major Programs d. Internal control over major programs: • Material weakness(es) identified? Yes X No • Significant deficiency(ies) identified that are not considered a material weakness? Yes X None reported e. An unqualified opinion was issued on compliance for major programs. f. Any audit findings disclosed that were required to be reported under Section 510(a) or OMB Circular A-133. Yes X No g. Identification of major programs: 14.239 Home Investment Partnership 14.251 Neighborhood Initiative h. The dollar threshold used to distinguish between type A and type B programs. $300,000 i. Auditee qualified as a low-risk auditee. X Yes No 5 CITY OF DENTON, TEXAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED SEPTEMBER 30, 2008 II. Findings Relating to the Financial Statements Which Are Required To Be Reported in Accordance with Generally Accepted Government Auditing Standards. Finding 08-01 Criteria or Specific Requirement: Although the City has many controls in place over its Municipal Court system, we noted that non-cash transactions (i.e. attending defensive driving classes in lieu of payment of a fine for a moving violation} can presently be entered into the system without being formally reviewed and approved to ensure that they are adequately supported by required documentation. Condition: (}Compliance Finding (X) Significant Deficiency ()Material Weakness Effect: As a result of the condition described above, unauthorized abatement of charges, as well as other irregularities, can occur and go undetected. Cause: Not all items that are entered into the Municipal Court system as non-cash transactions are properly reviewed and approved to prevent the unauthorized dismissal of charges. Recommendation: We recommend that the City improve controls over Municipal Court receipts by implementing policies and procedures designed to prevent unauthorized non-cash transactions from being entered into the Municipal Court system. III. Findings and Questioned Costs for Federal Awards Including Audit Findings as Described in I.f Above None 6 CITY OF DENTON, TEXAS SCHEDULE OF PRIOR AUDIT FINDINGS FOR THE YEAR ENDED SEPTEMBER 30, 2008 IV. Summary of Prior year Findings. None. 7 CITY OF DENTON, TEXAS SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2008 Federal Grantor/ Federal Passed Pass-Through Grantor/ Grant CFDA Through to Program Title I.D. Number Number Expenditures Subrecipients FEDERAL AWARDS U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Community Development Block Grant B-03-MC-48-0036 14.218 $ 4,632 $ - Community Development Block Grant B-04-MC-48-0036 14.218 45,153 - Community Development Block Grant B-05-MC-48-0036 14.218 17,000 - Community Development Block Grant B-06-MC-48-0036 14.218 243,610 - Community Development Block Grant B-07-MC-48-0036 14.218 516,040 127,650 Community Development Block Grant B-08-MC-48-0036 14.218 58,121 - Home Investment Partnership M-01-MC-48-0223 14.239 46,513 - Home Investment Partnership M-03-MC-48-0223 14.239 152,603 - Home Investment Partnership M-04-MC-48-0223 14.239 24,964 - Home Investment Partnership M-05-MC-48-0223 14.239 44,011 - Home Investment Partnership M-06-MC-48-0223 14.239 283,156 65,000 Home Investment Partnership M-07-MC-48-0223 14.239 73,942 - Home Investment Partnership M-08-MC-48-0223 14.239 14,214 - Supportive Housing Program TX01 B310001 14.235 23,650 - Neighborhood Initiative B-04-NI-TX-0038 14.251 217,154 - Economic Development Initiative 2004 B-04-SP-TX-0788 14.251 184,476 - Economic Development Initiative 2005 B-05-SP-TX-0300 14.251 188,480 - Total Direct Funding U.S. Department of Housing and Urban Development 2,137,719 192,650 Passed Through Texas Department of Housing and Community Affairs Emergency Shelter Grants 420000016 14.231 134,090 128,574 Total U.S. Department of Housing and Urban Development 2,271,809 321,224 FEDERAL ENVIRONMENTAL PROTECTION AGENCY Hickory Creek Basin CWA Section 319 Grant CP-99614641-0 66.460 77,795 - Total Federal Environmental Protective Agency 77,795 - U. S. DEPARTMENT OF HOMELAND SECURITY Passed through State Department of Public Safety Governor's Division of Emergency Management Emergency Management Performance Grant 08TX-EMPG-0122 97.042 80,993 - Fire Prevention Grant EMW-2006-FG-11425 97.044 166,627 - 2006 LETPP State Homeland Security Program 2006-GE-T6-0068 97.074 69,918 - 2006 UASI State Homeland Security Program 2006-GE-T6-0068 97.008 12,000 - Total U.S. Department of Homeland Security 329,538 - U. S. DEPARTMENT OF JUSTICE Bryne Justice Assistance Grant 2007-DJ-BX-1106 16.580 20,711 - COPS 2006 Technology Grant 2006-CK-WK-0140 16.710 98,958 - Total U. S. Department of Justice 119,669 - U. S. DEPARTMENT of AGRICULTURE Passed through Texas Department of Health and Human Services Summer Food Services Grant 061-1002 10.559 97,291 - Passed through Texas Forest Service Urban Forestry Partnership Grant 05-03-08 10.664 15,000 - Total U.S. Department of Agriculture 112,291 - U. S. DEPARTMENT OF TRANSPORTATION Passed Through State Department of Transportation STEP Comprehensive 588EGF6028 20.600 80,030 - Total U.S. Department of Transportation 80,030 - TOTAL EXPENDITURES OF FEDERAL AWARDS 2,991,132 321,224 8 CITY OF DENTON, TEXAS SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2008 Federal Grantor/ Federal Passed Pass-Through Grantorl Grant CFDA Through to Program Title I.D. Number Number Expenditures Subrecipients STATE AWARDS TEXAS STATE LIBRARY AND ARCHIVES COMMISSION Loan Star Library Grant 442-08136 N/A 37,939 - Gate Public Access Computer Hardware Upgrade Grant 434-07078 N/A 8,750 Total library 46,689 - TEXAS DEPARTMENT OF TRANSPORTATION Airport Maintenance Grant M818DNTON N/A 39,595 - Total Texas Department of Transportation 39,595 - NORTH CENTRAL TEXAS COUNCIL OF GOVERNMENT(NCTCOG) Construction and Demolition Recycling Grant 08-04-G12 N/A 22,215 Total NCTCOG 22,215 - TOTAL EXPENDITURES OF STATE AWARDS 108,499 - TOTAL FEDERAL AND STATE FINANCIAL ASSISTANCE EXPENDED $ 3,099,631 $ 321,224 9 CITY OF DENTON, TEXAS NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2008 1. GENERAL The accompanying schedule of expenditures of federal and state awards presents the activity of all applicable federal and state awards of the City of Denton, Texas (the "City"). The City's reporting entity is defined in Note 1 to the City's basic financial statements. Federal and state awards received directly from federal and state agencies as well as federal and state awards passed through other government agencies are included in the respective schedule. 2. BASIS OF ACCOUNTING The accompanying schedule of expenditures of federal awards is presented using modified accrual basis of accounting, which is described in Note 1 to the City's basic financial statements. 3. RELATIONSHIP TO FEDERAL FINANCIAL REPORTS Grant expenditures reports as of September 30, 2008, which have been submitted to grantor agencies will, in some cases, differ slightly from amounts disclosed herein. The reports prepared for grantor agencies are typically prepared at a later date and often reflect refined estimates of year-end accruals. The reports will agree at termination of the grant as the discrepancies noted are timing differences. 4. SCHEDULE OF FINDINGS AND QUESTIONED COSTS The schedule of findings and questioned costs, including the summary of auditor's results for federal awards, is included beginning on page 5. 10 CITY OF DENTON, TEXAS CORRECTIVE ACTION PLAN FOR THE YEAR ENDED SEPTEMBER 30, 2008 Finding 08-01 Management Response: Management agrees with the recommendation presented. Currently, non-cash computer system entries are compared to information submitted by the court clerks. While this process provides an appropriate review, it may fail to detect an issue if the court clerk does not provide the correct information to the court supervisor. To address this issue, staff has implemented a procedure to ensure that all non-cash items entered into the City's computer system are reviewed and approved on a daily basis by a supervisor. If the court supervisor notes any discrepancies between the non-cash items entered and the cases filed, the exceptions will be thoroughly investigated. 11 CITY OF DENTON, TEXAS MANAGEMENT LETTER YEAR ENDED SEPTEMBER 30, 2008 February 12, 2009 To the City Manager and Director of Finance CITY OF DENTON Denton, Texas Management of the City of Denton, Texas (the "City") is responsible for establishing and maintaining the City's internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The City's internal control structure consists of policies and procedures established by management to provide reasonable, but not absolute, assurance that the financial data are recorded, processed, summarized, and reported consistent with the assertions embodied in the financial statements. In establishing those policies and procedures, management assesses their expected benefits and related costs. Because of the inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any assessment of the internal control structure to future periods is subject to the risk that policies or procedures may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. In planning and performing our audit of the City's basic financial statements for the year ended September 30, 2008, we considered its internal control structure in order to plan our auditing procedures for the purpose of expressing our opinion on the basic financial statements and not to provide assurance on the internal control structure. Our report on compliance and on internal control over financial reporting is documented in a separate letter dated February 12, 2009. However, certain matters came to our attention that we wish to report to you. These matters, which were considered by us during our audit of the financial statements and do not modify the opinion expressed in our report dated February 12, 2009, are presented in the following paragraphs. Access Controls During our audit, we noted 275 active generic IDs on the City's computer network, 74 of which are deemed to be inappropriate. These IDs are ones that either could not be identified or are no longer in use. In addition, five generic IDs have access to the Unix environment. As a result of the existence of these IDs, there is an increased risk that unauthorized or undetected accounts may be used to access the system resulting in loss of critical data or the illicit manipulation of financial information. WWW.WEAVERANDTIDWELL.COM AN INDEPENDENT MEMBER OF BAKER TILLY OFFICES IN INTERNATIONAL DALLAS FORT WORTH HOUSTON City of Denton, Texas February 12, 2009 Page Two We recommend that the City remove all generic IDs that are deemed inappropriate as soon as possible. We also recommend that the City implement policies and procedures requiring a regular review of generic IDs for appropriateness. Implementation of these recommendations will help reduce the risk that unauthorized or undetected accounts may be used to access the system resulting in loss of critical data or the illicit manipulation of financial information. Management Response: Management agrees with the recommendation presented. Staff has removed all inappropriate generic IDs from the City's computer system. Management will also ensure that the remaining generic IDs are reviewed on a periodic basis to determine whether they are appropriate. This report is intended solely for the information and use of the City and its management. This restriction is not intended to limit the distribution of this letter and the accompanying memorandum, which, upon issuance to the City, are a matter of public record. If we may be of assistance in further discussion of the above comments and recommendations, please call upon us. We appreciate the opportunity to be of service to you and the courtesies and cooperation extended to us during our audit. ~ WEAVER AND TIDWELL, L.L.P. CITY OF DENTON AUDITOR'S COMMUNICATION TO THE AUDIT COMMITTEE SEPTEMBER 30, 2008 WEAVER February 16, 2009 AND TIDWELL To the Audit Committee CERTIFIED PUBLIC Clty of Denton ACC°UNTANTS 215 E. McKinney Street AND CONSULTANTS Denton, Texas 76201 We have completed our audit of the financial statements of the City of Denton as of and for the year ended September 30, 2008. Professional standards require that we provide you with the following information related to our audit. Our Responsibilities under U.S. Generally Accepted Auditing Standards and OMB Circular A-133 As stated in our engagement letter dated July 24, 2008, our responsibility, as described by professional standards, is to express opinions about whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, inconformity with U. S .generally accepted accounting principles. Our audit of the financial statements does not relieve you or management of your responsibilities. In planning and performing our audit, we considered the City's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinions on the financial statements and not to provide assurance on the internal control over financial reporting. We also considered internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133. As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit. Also, in accordance with OMB Circular A-133, we examined, on a test basis, evidence about the City's compliance with the types of compliance requirements described in the "U.S. Office of Management and Budget (OMB) Circular A-133 Compliance www.wEAVERANDrIDWELL.coM Supplement" applicable to each of its major federal programs for the purpose of AN INDEPENDENT MEMBER OF BAKER TILLY INTERNATIONAL OFFICES IN DALLAS FORT WORTH HOUSTON City of Denton February 16, 2009 Page 3 expressing an opinion on the City's compliance with those requirements. While our audit provides a reasonable basis for our opinion, it does not provide a legal determination on the City's compliance with those requirements. Other Information in Documents Containing Audited Financial Statements Our responsibility for other information, including required supplementary information and the statistical section of the City's comprehensive annual financial report does not extend beyond the financial information identified in the report. We applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information. Nothing came to our attention that caused us to believe that such information is materially inconsistent with the manner of its presentation appearing in the financial statements. Planned Scope and Timing of the Audit We performed the audit according to the planned scope and timing previously communicated. Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the fiscal year ending September 30, 2008. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. There was one significant transaction recorded by the City involving a prior period adjustment. The adjustment involved restating beginning net assets in the Electric, Water and Wastewater funds in order to correct the calculation of capitalizable interest for the prior year. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about City of Denton February 16, 2009 Page 2 past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were: Management's estimates relating to the allowance for uncollectible receivables for property taxes and utility services. We evaluated the key factors and assumptions used to develop the allowances in determining that they are reasonable in relation to the basic financial statements taken as a whole. Management's estimates of useful lives in calculating depreciation on capital assets. We evaluated the key factors and assumptions used to develop the estimate in determining that it is reasonable. Management's estimates relating to the recognition of claims liability for the City's self-insurance plans were made based on actuarial calculations. We evaluated the key factors and assumptions used to develop the claims liability in determining that it is reasonable in relation to the internal service fund-type financial statements taken as a whole. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or City of Denton February 16, 2009 Page 4 not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated February 12, 2009. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves the application of an accounting principle to the City's financial statements or a determination of the type of auditor's opinion that maybe expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues As this was a first year engagement with the City, there were no discussions with management prior to our selection as the City's auditors. This information is intended solely for the use of the Audit Committee, the City Council and management of City of Denton and is not intended to be and should not be used by anyone other than these specified parties. Very truly yours, ~ ~ ~ ~ WEAVER AND TIDWELL, L.L.P. i I i Finance Department * 215 E. McKinney * Denton, TX 76201 (940) 349-8224 ~ DFW Metro (972) 434-2259 ~ Fax (940) 349-7206 MEMORANDUM DATE: February 27, 2009 T0: Honorable Mayor and Members of the City Council FROM: Bryan Langley, Director of Finance SUBJECT: Comprehensive Annual Financial Report Questions and Answers The Comprehensive Annual Financial Report (CAFR) was discussed with the AuditlFinance Committee on February 16th. Below is a summary of the questions that I have received and the answers that we have compiled. uestion 1: On page 10, the report identifies amounts for unamortized premiums/(discounts) of $7,910,357 or net deferred gain/(loss) on refunding of ($9,679,453). What do these amounts represent? Answer: When the City issues new debt, it has a face value with a stated interest rate. As interest rates are continually changing due to economic factors, the City rarely issues debt at an interest rate equal to the stated interest rate on the bonds. The difference in the issued interest rate and the stated interest rate results in the City either paying a premium or getting a discount on the face value of the bonds issued. This difference is deferred and amortized over the life of the debt. In the meantime, the unamortized premiums and discounts are reported as a reduction of (or addition to) the amount of reported debt on the financial statements. When the City issues new debt to replace existing debt, it is known as a refunding. There often is a difference between the carrying amount of redeemed/defeased debt and its reacquisition price. GAAP dictates this amount be deferred and amortized over the remaining life of the debt. The end purpose is to match the amortization of the deferred gain/loss with the savings in interest expense over the life of the debt. In the meantime, the unamortized difference is reported as a reduction of (or addition to) the amount of reported debt, much like a bond premium or discount. The long-term debt of the City is more fully described in the CAFR beginning on page 44. _r_ _ www. cityofdenton. com w Comprehensive Annual Financial Report Questions and Answers February 27, 2009 Page 2 uestion 2: What type of assets are reported under the Governmental Infrastructure category on page 11 ? Answer: Streets, bridges, drainage improvements, parking lots, sidewalks, and some park improvements such as trails, maj or landscaping, athletic fields, and park lighting. uestion 3: Is the 7% employee contribution rate to the Texas Municipal Retirement System (TMRS) required by state statute? Answer: TMRS member cities designate, by ordinance, the rate of member contributions for their employees. The employee deposit rate is mandated by state statute, and it can be set at 5%, 6%, or 7% of employee earnings. The City Council adopted the 7% rate on September 7,1999, and it became effective on January 1, 2000. uestion 4: What TMRS benefit options are approved by the City Council, and which options are required by the TMRS plan? Answer: The basic TMRS plan includes an employee deposit rate, a city matching ratio, an employee vesting requirement, and a determination of retirement eligibility. The TMRS options specifically approved by the City Council are as follows: • Cost of Living Adjustments (COLA) can be granted at 70%, 50% or 30% of the annual Consumer Price Index (CPI). The City of Denton has adopted a COLA equivalent to 70% of the CPI. • Updated Service Credits (USC) can be granted at 100%, 75%, or 50%. If the city has adopted the COLA for retirees, there must be some amount of USC granted to employees. The City of Denton has adopted a plan with 100% USC. • TMRS members vest after either 5 or 10 years of service. The City of Denton has adopted a 5 year vesting plan for employees. Comprehensive Annual Financial Report Questions and Answers February 27, 2009 Page 3 • Retirement eligibility can be established at any age with 25 or 20 years of service. The City of Denton has adopted a plan that will allow employees to retire at any age provided they have at least 20 years of service. • Upon an employee's retirement, the employing city matches accumulated employee contributions plus interest earned with a matching ratio of 1:1 (100%), 1.5 : l (15 0%), or 2:1(200%). The City of Denton has adopted a matching ratio of 2:1(200%) • The City of Denton has approved supplemental death benefits for active employees and retirees. • The City of Denton has also adopted various provisions related to Military Service Credit, Restricted Service Credit, and Buyback of Service Credit. Amore complete description of the plan is contained within the attached "TMRS Facts for City Officials." uestion 5: What is the planned use for the $2.3 million that has been set aside for the City's Other Post Employment Benefit (OPEB) liability? Answer: In anticipation of having to report the OPEB liability, staff has worked over the past few years to build a reserve to fund the requirements of Governmental Accounting Standards Board (GASB) Statement Number 45. The reserve has been funded by contributions from all of the major funds in the City. The purpose of the reserve is to provide financial flexibility for the organization in meeting the Annual Required Contribution (ARC) associated with the liability. In this way, staff hopes to use the reserve to offset any potentially large increase in funding the ARC that is required. The intent of this reserve is to eventually use these funds to pay for retiree expenses. In order to do so, an individual internal service fund will need to be established to record all retiree contributions and expenses. Before this is done, however, staff would like to more accurately determine our retiree costs. The OPEB liability presented in the CAFR has been determined using national retiree cost trend information. The City of Denton may have higher or lower costs for our retirees than the national figures. Now that we have a full year of data in the self funded health insurance plan, staff would like to evaluate our actual retiree costs and reassess our strategy in the future. Once these costs are known with more certainty, staff will schedule a work session to more fully explore this issue. We are planning to provide more information on this topic to the Audit/Finance Committee and the City Council in the near future. Comprehensive Annual Financial Report Questions and Answers February 27, 2009 Page 4 uestion 6: How are the claim liabilities calculated on page 57? How do these liabilities compare to what was anticipated in the budget and our fund balance level targets? Answer: General Liability and Workers' Compensation Exhibit 2 provides the calculation worksheet we have used to arrive at the ending balance of claim liabilities for September 30, 2008. To calculate the ending balance, we add an actuarial estimate of claims incurred for FY 2007-08 (at the 75% confidence level) to the ending liability at September 30, 2007, and then subtract out any payments made on claims during the year. The actuarial estimates are more fully described in the report presented in Exhibit 3. Health Insurance We do not have an actuarial study on health insurance claims. To estimate the Health Insurance liability, we accrued all claims that we incurred prior to October 1, 2008, and paid before December 15, 2008. In addition, a percentage of the unpaid or pending claims as of September 30th were also added to the figure to estimate the liability. In 2006, Administrative Procedures were established for the Risk Retention Fund (RRF). These procedures set forth a recommended minimum undesignated fund balance equal to 50% of the designated liability and workers' compensation claim reserves. As of September 30, 2008, the designated claim reserves were $3,491,847 and the undesignated fund balance in the RRF was $1,368,224. While this amount is currently less than the recommended minimum balance, it is possible that we have more funds set aside in designated claim reserves than necessary. Once the final actuary report is received for FY 07/08 will re-evaluate these reserve levels. However, $4,860,071 was available at the end of FY 07/08 for liability or workers' compensation claims. In 2008, guidelines were established to set the minimum fund balance in the Health Insurance Fund (HIF) at $1,400,000. As of September 30, 2008, the total HIF balance was $2,582,389. Of this amount, $844,864 was undesignated fund balance and the remaining $1,737,525 was designated as a claims payable (health claims incurred as of September 30, 2008, but not yet paid as of that date). uestion 7: Please provide the actuarial basis for the claim liabilities that are presented on page 57. Comprehensive Annual Financial Report Questions and Answers February 27, 2009 Page 5 Answer: Exhibit 3 presents the actuarial basis of the calculations. uestion 8: Over what time period are library books depreciated? Answer: The City depreciates library books over a 10 year period. Please let me know if you would like any additional information. Best regards, Bryan Langley Director of Finance Attachments Exhibit 1- TMRS Facts for City Officials Exhibit 2 -Workers Compensation and General Liability Claim Calculations Exhibit 3 -Actuarial Tables for Workers Compensation Liability Calculations EXHIBIT 1 r a r- ~ r r r - ■ f ~ ■ ~ ~ ~ ~ ~ i i ~ + f~ ~ i F f F' ~ _ i~ ■ ~ r ~ I. ~ ~ ~ i~ ~ ~ I ~ ~ i' ~ r~ -i . a r ~1 - i ■ i ~ ~ ~ ~ ■ - ti's ~ # ' i ~ - r + r r ~ ~ ~ ~ ~ r ~ ~ ~ ~ ~ ' ~ ~ i ~ ~ ~ ' i ~ ~ ~ ~ - F I+ i ~ ~ ~ ~ - ~ ~ ~ ~ I ~ ~ + I r ' ~ ~ r ' - r ~ ~ ~ i ■ ~ + f~ ~ i ~ i - i ~ i 1 ~ ■ ~ ~ J - j ~ i+ ~ - r i r 4 r ti . ~1• i ' r ~ ~ ■ i ~ ■ r { ~ ~ - 1 ~ ~ F ■ ~ h ~ 1 ~ ~ r ~ ~ of + r ~ i - r ~ ~ * r _ ~ ~ ~ ~ f ■ ~ ~ ~ ~ ~ ~ ~ L r - r- ~ ~ ' i i~ t n r ~ ~ ~ ~ ~ ~ J ~ r ~ ~ ~ F ~ • ~i iz~. ~~r,~ ~ Purpose of this Guide This guide for city officials -city managers, finance officers, and elected and appointed officials - is intended to provide the information you need to understand how the Texas Municipal Retirement System (TMRS) works. What Is TMRS? TMRS is a retirement system created by the Texas State Legislature in 1947 and administered in accordance with the Texas Municipal Retirement System Act, Subtitle G, Title 8, Government Code, for municipal employees in the State of Texas. TMRS is a public trust fund that bears a fiduciary obligation to the public employees and retirees who are its beneficiaries. The Administrative Rules governing the System are adopted by the TMRS Board of Trustees and contained in the Texas Administrative Code, Title 34 (changes to the TMRS Act are shown in Exhibit A, TMRS Provisions Timeline). Cities voluntarily elect to participate in the System. TMRS requires full participation by all employees of the city if it is a member. Pension and other benefits are administered by TMRS on behalf of more than 820 participating municipalities throughout the State of Texas. We provide a menu of plan options for our member cities so they can tailor their particular plan to match their city's needs. The city's plan description, as stated in the 2006 Governmental Accounting Standards Board (GASB) disclosure letter, reads as follows (individual GASB Letters are available on the TMRS Website; the text of a sample letter is reprinted in Exhibit B): The City provides pension benefits for all of its full-time employees through a non-traditional, joint contributory, hybrid defined benefit plan in the statewide Texas Municipal Retirement System (TMRS), one of 821 currently administered by TMRS, an agent multiple-employer public employee retirement system. All employees must participate in TMRS except for any excluded departments (such as firefighters or police who have their own pensions), decided upon in advance by the city. The plan is "non-traditional," which means it is not a standard salary and service-formula pension plan. It is "joint contributory," which means that both the member and the employer city contribute to the plan; and it is a "hybrid defined benefit" plan, which means it has some elements of both defined benefit (DB) and defined contribution (DC) plans. Cities join TMRS voluntarily, and the plan decisions and modifications remain in the city's hands. Cities can change their plan provisions by ordinance. Who Governs TMRS? The TMRS Act provides that the governance of TMRS is entrusted in asix-member Board of Trustees, appointed by the Governor with the advice and consent of the Senate. Three Trustees are "Executive Trustees," who are the chief executive officer; chief finance officer; or other officer, executive, or department head of a participating municipality. Three Trustees are "Employee Trustees," who are employees of a participating municipality. A current list of Board members may be found on the TMRS Website. What is the TMRS Advisory Committee? The nine-member Advisory Committee on Retirement Matters is appointed by the TMRS Board of Trustees and serves at the pleasure of the Board. The Advisory Committee provides valuable assistance to the Board in considering benefit changes and improvements to the System, and acts as a voice for member, retiree, and city issues. 3 Where Can I Find the TMRS Statutes? The complete law that governs TMRS is referenced as Government Code, Title 8, Subtitle G, Texas Municipal Retirement System, Chapters 851 General Provisions, 852 Membership, 853 Creditable Service, 854 Benefits, and 855 Administration. All amendments to the TMRS Act in the form of laws passed by the Texas Legislature (including the passage of HB 1244 by the 80th Legislature in 2007) are incorporated into this law. To download PDF copies of the statutes governing TMRS, go to the Texas Legislature archive at http://tlo2.tlc. state.tx.us/statutes/gv.toc.htm. The separate Chapters of the Administrative Rules promulgated by the Board of Trustees are posted online in the Texas Administrative Code, Title 34, Part 6, available at http://info.sos.state. tx.us/pls/pub/readtac$ext.ViewTAC?tac view-3&ti=34&pt=6. How Does the Plan Work? TMRS is one of the nation's oldest "hybrid" pension plans. Being a hybrid means we share some traits of defined benefit (DB) and defined contribution (DC) plans (see the Glossary, page 12. for definitions). TMRS has most of the traits of a DC or "cash balance" plan (where a member's basic benefit is calculated based on account balances rather than on a benefit multiplier applied to salary and service), but investments are not self directed like most DC plans. TMRS' DB plan characteristics include the Updated Service Credit (USC) and Cost of Living Adjustment (COLA) options. TMRS does not receive state money; it is funded by TMRS members and municipalities, plus earnings from investment income. As shown in Figure 1 below, the overall System assets are the total of earnings from TMRS investments and contributions (both the employer and employee contributions). FIGURE 1. TMRS SYSTEM FUNDING MECHANICS NOT TO SCALE) ~ I / ' ~ / I I Member Benefits 4 Another way that TMRS is different is in our investment policy. TMRS has historically invested mainly in long-term bonds. Our investment objective has been to preserve principal and earn interest at the statutory rate. In September 2007, the TMRS Board decided to diversify the System's investments. See an overview of our investment policy in Exhibit C. Primary contact between cities and TMRS is handled in the key areas of administration, plan design, and record keeping/payroll. City Correspondents -Your city shares a joint relationship with TMRS. Each city designates at least one representative, or City Correspondent, to be responsible for the city's administration of TMRS. To help with that responsibility, we offer a City Correspondents certification training course several times each year, covering member benefits administration, and we include training courses in the TMRS Annual Training Seminar. Because each city has at least one designated representative, certain responsibilities are handled by the Correspondent. Correspondents handle the day-to-day administrative work and serve as the primary contacts with TMRS. A key part of their role at the city level is to educate members about the way TMRS works. City Decision-Makers - In contrast, the city's decision-makers include the city manager, the mayor, city council or commission members, the finance officer, and other municipal employees. These officials make decisions involving TMRS benefits, decide which plan provisions to grant to the employees and retirees, and consider changes that affect plan costs. Payroll Reporting -Each city must send its monthly payroll report and transfer funds to TMRS. This function is usually performed by Finance or Accounting personnel. For more information, see the "How Does My City Report Payroll?" section, page 6. TMRS benefits are funded by deposits made by employees, monthly contributions made by employers, and by investment earnings. From the city's point of view, the deposit it makes each month pays for current service, a portion of prior service, and Supplemental Death Benefits (if adopted). In other words, your contribution rate is set to pay for your city's Normal Cost and to amortize a part of the Unfunded Accrued Actuarial Liability (UAAL). (See the Glossary and the City Cost section, page 7, for more information about Normal Cost and UAAL). As certified by our independent actuary, TMRS is funded in accordance with GASB principles and state law. Each city's plan objective (for the options that city chooses) is to accumulate sufficient assets to pay benefits when they become due and to finance its long-term benefits through a contribution rate that is annually determined by the actuary. To accumulate funds for benefits, each member city has its own accumulation account (the Municipality Accumulation Fund, or MAF). Paying for costs over the lives of retired members uses funds from the city's MAF. These resources are also used for optional features such as USC and COLAs. To adequately fund the benefits promised (to keep enough in your MAF account), TMRS provides your city with actuarially determined plan cost information and funded ratios annually. Member deposits are accounted for as a separate fund (the Employees Saving Fund, or ESF, for member contributions). The accumulation accounts are part of TMRS' Fiduciary Fund. The Fiduciary Fund is reported in two parts: the Pension Trust Fund and the Supplemental Death Benefits (SBD) Fund. If your city elects to provide SDBs for active members and/or retirees, that money is held in a separate trust. Pension Trust Fund Accounts -The TMRS Act has established the accounts listed below and shown in Figure 2, page 6. These accounts comprise the net assets held intrust for benefits (for a full description of these funds, see the TMRS Comprehensive Annual Financial Report, Financial Section). Employees Saving Fund (ESF) -all contributions made by member employees, plus earned interest. Municipality Accumulation Fund (MAF) -all normal and prior service contributions made by cities, plus earned interest. 5 Current Service Annuity Reserve Fund (CSARF) -used for current service retirement benefits. At the time of retirement, a member's accumulated funds are transferred from ESF to CSARF. In addition, the respective "matching" funds from the city are transferred from MAF to CSARF. All funds rolled into the CSARF are "combined/commingled" and become an obligation of the System. Endowment Fund -investment income (Interest Reserve Account). Expense Fund - fund to cover administrative and maintenance costs of TMRS. Supplemental Disability Benefits Fund - a closed fund that has not received contributions since 1987 due to a change in the TMRS Act. Each year, we issue the CAFR, which provides the changes in the Municipality Accumulation Fund and Employees Saving Fund balances for each city. FIGURE 2. ACCUMULATION ACCOUNTS Pension Trust Fund ~ Employees Saving Fund (ESF) Municipality Accumulation Fund (MAF) Current Service Annuity Reserve Fund (CSARF) Endowment Fund Expense Fund Total Pension Trust Fund = $13,508,839,846 * The Supplemental Death Benefits fund ($22,973,617 at year-end 2006) is maintained as a separate fund from the Pension Trust Fund and is therefore not included. A small fund called the Supplemental Disability Benefits Fund is also not included because cities' participation in the program ceased in 1987. As of December 31, 2006. How Does My City Report Payroll? This function is usually handled by the payroll officer or TMRS City Correspondent. For monthly processing, each city sends a monthly payroll report, which must be postmarked by the 15th of the month after the month being reported. After the city has submitted the report, the information must be added to the member's account before any action (refund or retirement annuity) may be taken on that account. Items in this monthly report are: Individual Employee deposits (TMRS-2) Summary of Monthly Payroll (TMRS-3) City's Remittance (calculated on the Summary of Monthly Payroll) Cities are requested to report their payroll information electronically, which allows TMRS to process monthly information faster, increases efficiency, and reduces errors. We encourage cities also to transmit their funds electronically whenever possible. Electronic transfer is the safest and quickest option. How Are Retirements Ca Icu laced? Employees contribute to their accounts according to their city's deposit rate of 5%, 6%, or 7%. For every month an employee makes a deposit to his or her TMRS account, the city agrees to match the member's deposits and interest at 100%,150%, or 200% of the member's deposit, depending on the city's matching ratio option (1 to 1, 1~/z to 1, or 2 to 1, respectively). The city's match is held in the city's MAF account until the member retires, when 6 the city match becomes part of the member's benefit. The only way the member may receive the city matching funds is to retire from TMRS and receive a monthly payment. City matching funds are not reduced if a member selects a Partial Lump Sum Distribution. Interest onAccounts - Interest on member and city accounts is credited once each year, on December 31. It is calculated on the amount in the account as of January 1 of that calendar year. The annual interest rate is based on investment income and is determined annually by the TMRS Board of Trustees. Earnings on TMRS investments above the 5% statutory rate have traditionally been shared between active employees and the city, in the form of interest credits at a rate higher than 5%, and retirees, in the form of an extra payment (also called a "distributive benefit"). The extra payment and additional interest credit are not guaranteed or required bylaw but are extra benefits granted by the TMRS Board at its discretion. In recent years, extra payments and additional interest credits have been reduced, and no extra payment or additional i nterest creel it was g ra nted i n 2007. When members retire with TMRS, a lifetime benefit is calculated based on the following factors: Total member deposits and interest City matching funds and other credits granted (such as USC) Member's remaining life expectancy at retirement Beneficiary's life expectancy (if member selects a plan that pays a lifetime benefit to a survivor) Future interest rate assumption (asset by the Board of Trustees) Monthly payment option chosen Whether they choose to take a Partial Lump-Sum Distribution How Do I Know My City's Cost? Every city has its own contribution rate established every year -this is the annual cost required to fund the benefits your employees are projected to earn over time. The process starts with an annual actuarial valuation - each city's assets and liabilities are examined and analyzed, and a full census of the employees is made, taking into account their ages and service histories. TMRS notifies each city of its plan cost for the next calendar year by sending a customized Rate Letter (see Exhibit D). Beginning in 2008, Rate Letters will include historical data and other new features. The Rate Letter TMRS sends out in the spring provides the rate that will be in effect for the following calendar year (for example, the 2008 letters were sent in May 2007). This allows each city time to include the rate in the following year's budget. Contact TMRS if you need additional copies of your Rate Letter. How Rates Are Determined -Your city's rate is the annual cost of providing benefits for your employees. The rate is based on the benefits you have chosen for your city. The rate is expressed as a percentage of payroll. Contribution rate calculations are based on each city's demographics, service history, and actuarial assumptions that are adopted by the Board after an actuarial experience study. The independent actuary looks at your city's history and determines the actuarial gains and losses that have occurred in the most recent plan year. An actuarial gain is an experience that is financially more favorable to the plan (e.g., greater payroll growth than expected). An actuarial loss is an experience that is financially less favorable to the plan (e.g., fewer terminations than expected). Current Service and Prior Service Costs -The retirement portion of a member city's contribution rate consists of the Normal Cost contribution rate, which finances the monthly service credits as they accrue, and the Prior Service contribution rate, which amortizes the unfunded (or overfunded) actuarial liability (asset) over the remainder of each plan's amortization period. The current service portion of the rate is actuarially determined so that when a member becomes eligible to retire, there are sufficient funds in the 7 account to match the individual employee's deposits and interest. This portion of the rate is discounted by the actuary to take into account expected withdrawals and payroll growth. The prior service portion of the rate amortizes a city's unfunded actuarial accrued liability (UAAL) over a defined period of time, called an amortization period. For most cities, beginning in 2008, benefits will be funded over a 30-year closed period. An unfunded actuarial liability is simply the difference between the benefits promised under the plan and the assets held in the plan. The liability for prior service is created by four situations: 1. When the city grants Prior Service Credit to employees when the city begins participation in TMRS or under other special circumstances 2. When the city grants an Updated Service Credit 3. When the city grants an Annuity Increase (COLA) to its retirees 4. When actual experience does not match the experience the actuary expects each year (actuarial gain or loss) Why Annual Contribution Rates Fluctuate - As in financing any long-term debt, such as a mortgage, the city's actuarially determined rates are calculated to fund the city's liability over time. The annual actuarial valuation determines your liability for future retirements. An Unfunded Actuarial Accrued Liability (UAAL) is the difference between the actuarial accrued liability and the assets held as of the study date. The UAAL is not necessarily an indication that a plan is unfunded; the key is to make sure the UAAL is funded systematically in an actuarially acceptable manner over a reasonable period of time. A loss results in a larger UAAL than expected, while a gain results in a smaller UAAL. Significant sources of annual rate changes for TMRS cities are: Withdrawals - If fewer members than expected terminate in a year and apply for a refund, then a city's rate can be expected to i ncrease. Updated Service Credit (USC) and Annuity Increases (COLAs). Payroll growth - If payroll does not increase or even decreases, then the city's rate can be expected to increase. See Exhibit D for a complete Municipal Contribution Rate Reconciliation Explanation. This exhibit, or a version of it, is included each year with the City Rate Letter. What Is the Maximum Contribution Rate Limit? The Maximum Contribution Rate Limit is commonly referred to as the Statutory Maximum, or "Stat Max." The TMRS Act sets a limit as to the maximum amount the System can require a City to contribute in a given year, based on the level of benefits the city has chosen to provide. The Stat Max does not limit the cost of a plan; it merely limits how much a city can be charged for a certain benefit level, which may not be sufficient to fund the cost in a given year. For example, a city with a 6%,1-to-1 ratio has a Stat Max of 8.50%. (This limit does not include the cost of Supplemental Death Benefits, if adopted.) The TMRS Act also allows any city to enact an ordinance that removes the Stat Max. Cities that joined TMRS after 1996 are not subject to the Stat Max law, and many TMRS cities have enacted ordinances to remove the maximum limit. Ifyour city reaches this limit, we will let you know in the annual Rate Letter, which spells outsome possible solutions: Remove the Statutory Maximum Contribution Rate Limit (by ordinance) Increase, in certain cases, the Statutory Maximum Contribution Rate Limit (by ordinance) Pay the Actuarially Determined Calculated Rate (by ordinance; this is cone-year-at-a-time fix) Pay the Maximum Contribution Rate Limit S If a city's rate exceeds the limit, and the city does not act to remove or increase the Stat Max, annually repeating benefits ~USC and Annuity Increases will be automatically "turned off" until the rate drops back below the limit. Why Do Cities Reach Stat Max? There is no single answer to this question. The contribution rate itself varies from year to year, based on how closely actual plan experience matches what the actuary assumes will happen (i.e., payroll growth, rate of withdrawal, rate of retirement, average age, average length of service, etc.). Except for very small cities, contribution rates do not usually exceed the Stat Max overnight. In most cities where the contribution rate has exceeded the Stat Max, the contribution rate has increased gradually over a period of time. This may be due to, for example, a declining payroll base, benefit adoptions that have caused significant rate increases, or privatization of a department or work unit. Each year, several TMRS cities exceed the maximum contribution rate limit. This trend is likely to continue in fu- ture years, especially now that the Board of Trustees has changed the actuarial funding method. It may become necessary to remove the maximum contribution rate limits for all cities. Remember - the Stat Max is not intended to limit the actual cost of a certain level of benefits. Rather, it is intended to be the maximum amount TMRS can charge a city for a particular level of benefits. The limit should not rest with an arbitrary number in the statute, but with what a city is willing to pay (or can afford) for its plan of benefits. If the cost of the plan is more than a city is willing to pay, then the city should consider limiting itself to only adopting a level of benefits it can afford to maintain. The table in Figure 3 below shows the differences in the Stat Max rates under the different deposit rate options and matching ratios chosen by the city. FIGURE 3. STATUTORY MAXIMUM CONTRIBUTION RATES . • - 1to1 1~/Zto1 2to1 3%* 5.50% 7.50% 9.50% 5% 7.50% 9.50% 11.50% 6% 8.50% 10.50% ° 12.50% ° 11.00% 13.50% 7% 9.50% 11.50% ° 13.50% ° 12.50 15.50 For the four plans showing split limits, the left number is the base limit, and the right number is what the limit can be increased to. *This deposit rate is no longer an option for new cities. Why Do Rates Increase? City plan costs can be expected to increase any time a city adopts benefit improvements, but other factors may also cause your annual cost to rise. In general, city contribution rates are discounted by the actuary to account for expected withdrawal and payroll growth. The actuary knows (based on historical evidence) that not every employee enrolled in TMRS by a city will ultimately retire under TMRS. However, over time, other factors can cause costs to rise (or fall). For example, some TMRS cities are currently experiencing stagnation in workforce numbers (and thus their pool of employee contributions). The ratio of active employees to retired employees may be dropping (fewer active employees are supporting more retirees). Cities with annually repeating COLAs and USC are also seeing their costs rise. 9 What Role Does the TMRS Actuary Play? The TMRS consulting actuary calculates the long-term cost of the pension benefits offered by TMRS cities and determines the annual contribution rate needed to fund those benefits. Using an actuarial funding method and actuarial assumptions, including retirement rates, salary growth, and investment income, the actuary prepares an annual actuarial valuation of each city to determine the city's actuarial liability and measure it in relation to the city's assets, both present and future. Besides the annual valuation, the consulting actuary determines costs for mergers and major plan changes within cities, assists the TMRS Board with policy decisions, and helps determine the cost of proposed legislation. Every four years, the actuary performs an actuarial experience study and measures cities' actual experience -such as rates of retirement, withdrawal, and mortality -then compares it to the most recent set of actuarial assumptions. The actuary recommends any adjustments needed to the actuarial assumptions and the Board considers the actuary's recommendations, and approves assumptions for the next valuation. TMRS has used the Unit Credit actuarial cost method for many years. In 2007, the TMRS Board adopted the Projected Unit Credit method to provide advance funding of annually repeating COLAs and USC. TMRS performsan annual actuarial valuation for each participating municipality, the results of which are in the Actuarial Section of our Comprehensive Annual Financial Report (CAFR). Historical information relating to progress in meeting the actuarial funding objective is presented in the Schedule of Funding Progress, included as a part of the Required Supplementary Information in the Financial Section of the CAFR. As of December 31, 2006, TMRS, as a whole, was 82.1% funded. As a public entity, TMRS follows the accounting guidelines and disclosure requirements established by the Governmental Accounting Standards Board (GASB). GASB standards require the disclosure of pension asset and liability information annually in asix-year-trend Schedule of Funding Progress. This disclosure includes the calculation of the plan's Funded Ratio, which is the primary measure of funding progress (actuarial value of assets expressed as a percentage of the Actuarial Accrued Liability, or AAL). An increase in the Funded Ratio indicates improvement in the System or a city's ability to pay all projected benefits as they become due. The System or city is fully funded if the Funded Ratio is greater than or equal to 100%. The Schedule of Funding Progress is presented to provide a consistent basis for measuring the System's annual progress toward funding its actuarial liability in accordance with its actuarial funding method. A funding progress disclosure, referred to as the GASB disclosure letter, is sent to each city annually with the Rate Letter and reflects information for the previous calendar year (see Exhibit B). For example, the GASB letters for the year ended 2006 were posted online and sent in May 2007. We prepare these GASB Letters for your city to use as a template for its financial reporting. In producing these letters, we create custom summaries from your city plan options and city data. These letters are addressed to the City Correspondent. The primary accounting rules that apply to TMRS and individual cities are: GASB Statement No. 25 -Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans (November 1994) GASB Statement No. 27 -Accounting for Pensions by State and Local Governmental Employers (November 1994) GASB Statement No. 43 -Financial Reporting for Postemployment Benefit Plans Other than Pension Plans (April 2004) 10 GASB Statement No. 45 -Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions (June 2004) GASB Statement No. 50 -Pension Disclosures - An Amendment of GASB Statements 25 and 27 (May 2007) System-wide, the TMRS Pension Trust Fund and the Supplemental Death Benefits Fund are maintained on the accrual basis of accounting. This means that revenue is recorded when earned and expenses are recorded when incurred, regardless of when payment is made. Employer and employee contributions are recognized when due. Participant benefits are recorded when payable by law. Refunds are recorded and paid upon receipt of an approved application for refund. For more details, refer to the Financial section of the CAFR. How Does a City Change its Plan Options? If you wish to modify your existing plan elements, contact TMRS directly and ask to speak to the Deputy Executive Director or a member of the "Travel Team" TMRS staff can run the numbers to analyze the effects of these options on your Contribution Rate. We can also send you model ordinances that can be used by your City Council to adopt plan changes (see Exhibit E for a list of provisions that may be adopted by the Council). By running an actuarial study for proposed plan changes, we can determine the effect the proposed changes will have on your city rate. What Plan Modifications Are Allowed? TMRS offers a menu of choices, and full information about options that may be changed by ordinance is available by calling TMRS. To review potential plan changes and the effects of such changes, see the Plan Changes Table in Exhibit F (inside back cover). TMRS Changes for 2008 In late 2007, the TMRS Board of Trustees approved several changes for the System, effective in 2008. These changes include: Amending the System's Investment Policy to diversify the investment portfolio (See Exhibit C). Changing the System's actuarial cost method from Unit Credit to Projected Credit to provide advance funding of annually repeating USC and Annuity Increases. Changing the amortization period for actuarial liabilities from a 25-year open period to a 30-year closed period for most cities. Cities that see a contribution rate change greater than 0.5% may request a longer period. Adopting an eight-year implementation schedule for phasing in contributions necessary to amortize each city's actuarial liability under the new method. TMRS will assist cities in 2008 with the information needed to manage these changes. We will continue to send e-bulletins and other correspondence with late-breaking news as needed. See the TMRS Website for the latest information. 11 Actuarial Accrued Liability ~AAL~ -The present monetary value, actuarially determined, of the estimated cost of benefits payable to active and retired members, accrued in periods prior to the valuation date. Actuarial Cost Method, or Actuarial Funding Method -Technique for establishing the amount of current service cost for a pension plan and the related accrued liability. The appropriate method is chosen to calculate the liabilities accruing under a pension plan and the funds that are needed to pay for them overtime. Actuarial Experience Study - An analysis performed every few years by the actuary, in which the actuarial assumptions used are reviewed, both individually and in the aggregate, to ensure they are reasonable given current economic and demographic experience. Actuarial Gain ~Loss~ -The difference between actual experience and that expected based on actuarial assumptions, during the period between the two actuarial valuation dates. A gain indicates better than expected experience, while a loss indicates experience less than anticipated. Actuary - A professional trained in the mathematics of finance, probability, and statistics and credentialed by organizations representing their profession. In the pension arena, actuaries assign values to the probable amounts to be paid in the future and help establish a method for responsibly budgeting for those payments. Amortization Period -The designated length of time that it takes for a liability to be reduced by means of periodic payments sufficient to liquidatethe liabilityatmaturity; the time over which pension liabilities will be "paid off." In retirement systems, amortization periods may either be closed (so that all liabilities will be paid at a certain date, if assumptions are met) or open (where the amortization period is reset each year). Annual Required Contributions ~ARC~ -The rate calculated by the actuary as required to fund the city retirement plan for a given year. Annuity Increase/Cost of Living Adjustment ~COLA~ - An option chosen by cities to provide an increase in annuities for retirees similar to acost-of living-adjustment. The city chooses the adjustment amount up to 70% of the annual Consumer Price Index (CPI) increase. Annuity increases may be adopted on either an annually repeating or ad hoc basis. Closed Amortization -This method (also called a "fixed" amortization) uses astraight-line reduction of liability. The required contribution is calculated by the actuary so that at the end of the period the liability will be fully funded. Contribution Rate -The annual percentage of your city's payroll that funds its TMRS plan. TMRS notifies you of your contribution rate each year (in the Rate Letter), and this sets the percent of payroll for the upcoming year. The contribution rate is the sum of the Normal Cost, the Prior Service Cost, and the Supplemental Death Benefit cost, if that provision has been adopted byyour city. Current Service Annuity Reserve Fund ~CSARF~ -The account to which an employee's deposits and interest plus the city matching funds are transferred when a person retires, and from which the current service portion of the person's retirement benefit is paid. Defined Benefit Plan DDB Plank - A retirement plan in which the benefit paid to the employee is based on a formula set in law (determined by statute, regulation, or plan document), and NOT determined by the account balance. A DB plan literally "defines" the future benefit to be paid. Examples of DB plans are the Teachers Retirement System of Texas and Social Security. DB plans are usually qualified pension trusts under Section 401(x) of the Internal Revenue Code. Defined Contribution Plan ADC Plank - A retirement plan in which the benefit is based on the amount of money in the account at retirement. A DC plan "defines" the contributions and maintains an individual account for each plan participant. Examples of DC plans include private-industry plans such as 401(k), 403(b), and governmental 457 deferred compensation plans. Deposit Rate -The percentage of the member's salary that constitutes the member deposits deducted from gross salary. Also called employee contribution rate. Employee -Municipal employees must join TMRS if they are employed with a city that participates in TMRS and in a position that regularly requires at least 1,000 hours of work per year. The city must classify each position as to whether or not it is "membership eligible." Membership starts the first dayofemployment. Employees Saving Fund ~ESF~ - An account containing all contributions made by member employees, plus earned interest. Funded Ratio -The ratio of actuarial assets to liabilities; an overall reflection of a pension plan's health at a point in time. In TMRS, both the System as a whole and individual cities have funded ratios. For example, TMRS' funded ratio as of year-end 2006 was 82.1%. Your city's funded ratio is shown in the Rate Letter under the heading "Funded Ratio" and in the CAFR. In a public retirement system, a funded ratio of 100% is unusual, but some plan sponsors aim for 100%funding. Most experts agree that a more meaningful indicator is the change in the ratio from year to year. Funding Policy -The program for the amounts and timing of contributions to be made by plan members and employers to provide the benefits specified by the plan. Governmental Accounting Standards Board ~GASB~ -The governing body whose mission is to establish and improve standards of state and local governmental accounting and financial reporting that will result in useful information for users of financial reports and guide and educate the public, including issuers, auditors, and users of those financial reports. Most public entities follow the disclosure requirements of the GASB. Matching Ratio -The ratio at which the city will match member deposits and interest at retirement. Options are 1 to 1,1/2 to 1, and 2 to 1(100%,150%, and 200%, respectively). City matching funds are held in the city's MAF account until needed for retirement funding. Maximum Contribution Rate Limit ~"Stat Max"~ -The maximum percent of payroll, as set by the TMRS Act, that a city can be required to pay for a given plan level (deposit rate and matching ratio). This is not the calculated rate; it is simply the most a city can be required to pay. For example, a city with a 6%,1-to-1 ratio has a Stat Max of 8.50%. This limit does not include the cost of Supplemental Death Benefits, if adopted; it only applies to the retirement portion of your contribution rate. TMRS cities have the authority allowed to enact ordinances that override the Stat Max, and many cities have chosen that option. Member - (see Employee) Municipality Accumulation Fund ~MAF~ - An account containing all normal and prior service contributions made by cities, plus earned interest. Net Pension Obligation -This is the amount that a city has underpaid or overpaid, as compared to its required contribution rate, in a given year. This will normally be zero for a city. Normal Cost Contribution Rate -Actuarial present value of benefits allocated to a valuation year by the actuarial cost method, expressed as a percentage of the covered payroll. Normal cost information is included in the City Rate Letter. Open Amortization -The method whereby an amortization period is renewed every year as part of the valuation process (also called a "rolling" amortization). Other Post-Employment Benefits ~OPEBs~ -Post-employment benefits other than pension benefits. Specifically, for TMRS, the $7,500 Supplemental Death Benefits payable to the beneficiaries of retirees of municipalities that have elected to offer the Supplemental Death Benefit. Prior Service Contribution Rate -The level percentage of payroll required to amortize the unfunded or overfunded actuarial liability over a period of 25 years. Prior Service information is included in the City Rate Letter. Projected Unit CreditActuarial Cost Method - A method under which the benefits of each individual included in the valuation are allocated by a consistent formula to valuation years based on years of service. Benefits are allocated equally to each year of service over the individual's career from date of hire to retirement. Under this method, actuarial gains (or losses) reduce (or increase) the Unfunded Actuarial Accrued Liability (see also, Unit Credit Actuarial Cost Method). Retirement Contribution Rate -The sum of the normal cost contribution rate and the prior service contribution rate. Service Credit Purchase - A method that allows members to "buy" or increase the service credit used in determining eligibility for their retirement benefits. Supplemental Death Benefit ~SDB~ - A benefit payable, if adopted by the city, to the beneficiaries of deceased contributing members. This benefit is approximately equal to the member's annual salary. If adopted, a benefit is also payable to the beneficiary or estate of a deceased retiree in the amount of $7,500. Unfunded Actuarial Accrued Liability ~UAAL~ -The difference between the actuarial accrued liability and the assets held as of the study date. The UAAL is not necessarily an indication that a plan is not properly funded; the key is to make sure the UAAL is funded systematically in an actuarially acceptable manner over a reasonable period of time. Unit Credit Actuarial Cost Method - A method under which the benefits of each individual included in the valuation are allocated by a consistentformula to valuation years. Current service benefits are a function of a member's deposits, and are allocated to the year in which deposits are made. Underthis method actuarial gains (or losses), as they occur, reduce (or increase) the Unfunded Actuarial Accrued Liability (see also, Projected Unit Credit Actuarial Cost Method). Updated Service Credit ~USC~ - A provision adopted by city ordinance that may increase the value of employee retirement benefits by accounting for increases in salary in the employee's later career and factoring in city plan improvements. If a city adopts USC, it chooses the percentage of USC it will provide (50%, 75%, or 100%) and whether itwill adopt USC on an annually repeating or ad hoc basis. Vesting -When an employee member has met the length-of-service requirement for their participating city (after either 5 or 10 years of service) to be guaranteed a retirement benefit upon the attainment of a certain age, provided they do not terminate their membership in the plan. Becoming vested increases an employee's potential to retire and therefore increases the plan's liability. Exhibit A •TMRS Provisions Timeline 1947> Enactment of the TMRS Act, creating the Texas Municipal Employees Retirement System. 1948 > TMRS deposit rate established at 5%. First cities begin participation with a 1-to-1 city match. 1955 > Maximum earnings limit for contributions to TMRS raised. 3% deposit rate added. 1960 > Distributive Benefit (extra check) paid for the first time to retirees, equaling'/z a regular annuity check. 1963 > TMRS allowed to invest in corporate securities. 2.5% interest rate limit removed. 1966 > Multiple matching of future employee deposits by cities made available.1'/z to 1 and 2 to 1 matches added. 1968 > Maximum TMRS deposit rate increased to 7%. 1969 > Prior Service Credit options added. 20-year vesting and an earlier retirement provision added. 1975 > Updated Service Credit, retirement Annuity Increases, and buyback of previously forfeited credit provisions added. Could only be adopted once every four years. 1977> Proportionate Retirement Program created. Supplemental Death Benefit fund established; $5,000 to survivors of retirees. 1979 > 10-year vesting provision, retirement eligibility at 60 with at least 10 years of service, maximum entry age raised to 59, added as optional provisions for cities. Maximum entry age raised from 49 to 54 for all cities. Spouse or estate allowed to elect certain payment options upon the death of a member eligible to retire. 1981 > Military Service Credit provision added. Elected officials allowed to participate as members of TMRS if they meet the 1,000-hour rule. 1983 > Updated Service Credit for transfer employees provision added. January 1,1984 > Employer "pickup" adopted. This date also marks the start of taxation on withdrawals. Any return of deposits made after this date (refund or benefit) became subject to taxation. 1987> Maximum age for participation removed. 25-year, any-age retirement added. Surviving spouse benefit, and Oc- cupational Disability Retirement Benefit added. 6% deposit rate added. 1991 > Restricted Prior Service Credit and annually repeating Updated Service Credit and Annuity Increases added. Probationary Prior Service Credit added for employees working for a TMRS city on a probationary basis before 1989.3% deposit rate dropped. 1995 > 20-year, any-age retirement eligibility provision added. 1997> Partial Lump Sum Distribution added. "Pop-up"provision added (if retiree's beneficiary dies before retiree, and retiree chose a retirement option that provided survivor benefits, the option "pops up" to retiree-only). 2001 > Five-year vesting added. 2003 > Military service credit changed to time credit only, with some exceptions. 2004 > Supplemental Death Benefit for survivors of retirees increased to $7,500. 2007> Cities allowed to voluntarily make payments above their contribution rate and above the statutory maximum contribution limit. Board allowed to modify amortization periods, establish rules regarding distributions to public safely officers under the federal Pension Protection Act, and clarify the calculation of Updated Service Credit. Exhibit B • Sample GASB Disclosure Letter Due to pending actuarial changes, this disclosure letter will contain additional information in the future. Data in this template is effective December 31, 2006. Full text of each TMRS City GASB Letter is available at htfp://www.rMRS.com/cifies.shfm Anycity, Texas Template for Financial Statement disclosure regarding participation in the TMRS Pension Plan Plan Description The City provides pension benefits for all of its full-time employees (any exceptions such as firefighters would be inserted here by the City through anon-traditional, joint contributory, hybrid defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS), one of821 currently administered byTMRS, an agent multiple-employer public employee retirement system. Benefits depend upon the sum of the employee's contributions to the plan, with interest, and the City-financed monetary credits, with interest. At the date the plan began, the City granted monetary credits for service rendered before the plan began of a theoretical amount at least equal to two times what would have been contributed by the employee, with interest, prior to establishment of the plan. Monetary credits for service since the plan began are a percent (100%,150%, or 200%) of the employee's accumulated contributions. In addition, the City can grant, as often as annually, another type of monetary credit referred to as an updated service credit which is a theoretical amount which, when added to the employee's accumulated contributions and the monetary credits for service since the plan began, would be the total monetary credits and employee contributions accumulated with interest if the current employee contribution rate and city matching percent had always been inexistence and if the employee's salary had always been the average of his salary in the last three years that are one year before the effective date. At retirement, the benefit is calculated as if the sum of the employee's accumulated contributions with interest and the employer-financed monetary credits with interest were used to purchase an annuity. The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS. Plan provisions for the City were as follows (as of 4/4/07): * To ensure the most accurate future rates are determined for the City, TMRS provided plan provisions as of 4/4/07 to the actuary in calculating the 12/31/06 valuation. Deposit Rate: 7.00% Matching Ratio City to Employee: 2 to 1 A member is vested after 5 Years Members can retire at certain ages, based on the years of service with the City. The Service Retirement Eligibilities for the city (expressed as years of service/age) are: 5 yrs/age 60; 20 yrs/any age Contributions Under the state law governing TMRS, the actuary annually determines the City contribution rate. This rate consists of the normal cost contribution rate and the prior service cost contribution rate, both of which are calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the currently accruing monetary credits due to the City matching percent, which are the obligation of the City as of an employee's retirement date, not at the time the employee's contributions are made. The normal cost contribution rate is the actuarially determined percent of payroll necessary to satisfy the obligation of the City to each employee at the time his/her retirement becomes effective. The prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the remainder of the plan's 25-year amortization period. The unit credit actuarial cost method is used for determining the City contribution rate. Both the employees and the City make contributions monthly. Since the City needs to know its contribution rate in advance for budgetary purposes, there is a one-year delay between the actuarial valuation that serves as the basis forthe rate and the calendar year when the rate goes into effect (i.e. December 31, 2006 valuation is effective for rates beginning January 2008). Exh i bit B • Sample GASB Disclosure Letter (cont.] Actuarial Valuation Date 12/31/2006 Actuarial Value of Assets (A) $ 8,774,256 Actuarial Accrued Liability (B) $ 11,403,717 Unfunded / (Over-funded) Actuarial Accrued Liability (UAAL) (C)=(B)-(A) $ 2,629,461 Funded Ratio (D)=(A)/(B) 76.94% Annual Covered Payroll (E) $ 4,142,703 UAAL as a Percentage of Covered Payroll (C)/(E) 63.47% Fiscal Year Ending 12/31/2006 Annual Pension Cost $ 532,143 Percent of APC Contributed 100% Net Pension Obligation (F) $ 0.00 General System-wide Actuarial Assumptions Actuarial Cost Method Unit Credit Amortization Method Level Percent of Payroll Remaining Amortization Period 25 Years -Open Period Asset Valuation Method Amortized Cost (to accurately reflect the requirements of GASB statement, No.25, paragraphs 36e and 138) Investment Rate of Return 7% Projected Salary Increases None Includes Inflation At 3.5% Cost-of Living Adjustments None Note to Cities: 1. For (E) above: The Annual Covered Payroll number is calculated by Payroll growth assumption = 4% the actuary as follows: Remaining amortization period = 25 years A person's avg monthly contribution X 12 Withdrawal rates (low, mid or high) for Male/Female =Low/Mid Employee deposit rate 5. The City also has the option to state the following in its annual These are then summed for all members of your city. report: "ANYCITY is one of 821 municipalities having their benefit plan administered by TMRS. Each of the 821 municipalities has an annual, 2. For (F) above: Because the actuary determines contribution rates individual actuarial valuation performed. All assumptions for the on an annual calendar basis and your municipality pays the calcu- 12-31-06 valuations are contained in the 2006 TMRS Comprehensive lated rate each month (TMRS-3), your municipality will always have Annual Financial Report, a copy of which may be obtained by writing a Net Pension Obligation (NPO) of zero. to P.O. Box 149153, Austin, Texas 78714-9153." 3. City-specific actuarial assumptions , For cities with fewer than 3 employees, more conservative methods Notes for Auditors: and assumptions are used. These effectively establish a lower limit 1. TMRS Actuary -The Segal Co. for the normal cost rate and shorten the amortization period for 2. The 2006 TMRS Comprehensive Annual Financial Report (CAFR) the unfunded actuarial liability from 25 years to the average years contains an entire Actuarial Section: remaining until normal retirement. In addition to the general a) Actuary's Certification Letter system-wide assumptions stated above, the following actuarial b) Summary of Actuarial Assumptions assumptions were used for your municipality: c) Definitions of Actuarial Terms Exhibit C • Investment Overview TMRS investments are held intrust for the exclusive benefit of members and invested under the provisions of the TMRS Act. The investment guidelines for TMRS are found in the Texas Government Code, Sections 855.301 through 855.303. A copy of the current TMRS investment policy may be found on the TMRS Website. Principles and Objectives TMRS investments are managed to assure the matching of long-term assets to future benefits in an equitable manner. Investments are made with the degree of judgment and care, under the circumstances that persons of prudence, discretion, and intelligence exercise in the management of their own affairs, considering the probable income and safety of their capital. Current investment objectives include the preservation of principal, the earning of income at least sufficient to pay annual interest on member accounts and pay administrative costs, to maintain an "interest reserve" to ensure interestcredits during low-performing market periods and to maintain sufficient liquidityto pay benefits. Investments in Transition As of September 30, 2007, the TMRS retirement fund was valued at $13,831,005,991, invested entirely infixed-income securities. The average years-to-maturity is 21.5 years, and the yield-to-maturity is 5.50%. For most of the nearly 60-year history of TMRS, the Board of Trustees has chosen to invest primarily infixed-income instruments, focusing on government and high-quality corporate bonds, and has pursued an income return investment strategy. During the inflationary era of the 1980s, this strategy enabled the granting of annual interest credit rates as high as 11% to member and city accounts. Now, in a continued period of low interest rates, with 30-year Treasury bonds yielding below 5%, after a period of analysis and on the advice of investment advisors, TMRS has decided to diversify the investment portfolio. TMRS has traditionally used two economic investment Asset Allocation as of September 30, 2007 advisors, Hillswick Asset Management, LLC and A. Gary Shilling & Co. to provide the System with additional insight into the broader economic markets while managing the investment portfolio utilizing the TMRS investment staff. ,Cash Equivalents - 2°i° As of October 1, 2007, TMRS hired its first general investment consultant, R.V. Kuhns & Associates, to advise the Board on investment policy and strategy, and this firm is working with the Board on the diversification of the portfolio. On Fixed Income - 98°~° November 16, 2007, the Board approved hiring Hillswick Asset Management, LLC to assist investment staff with the fixed-income portion of the portfolio to ensure that the transition is optimal. Also, on November 16, 2007, the Board approved an initial Target Asset Mix as of December 31, 2008 allocation of 12% of the portfolio to equities by the end of 2008. TMRS will make a gradual transition from its current investment policy, focused on minimizing risk and investment cost while improving the potential for future gains. Half of ~ Domestic Equities - s°~° the 12% equities investment will be dedicated to a portfolio of U.S. companies, and the other half to foreign companies. Each of these equity portfolios will be invested passively ~ International Equities - 6°i° to track the performance of a specific index. This is a lower Fixed Income - 88°~° cost approach. TMRS will be using the broader Russell 3000 Index for domestic equities, which represents about 98% of the stocks in the U.S., and the MSCI-EAFE for international equities, which is a broad representation of the foreign developed markets. The transition to equities will emphasize a new focus on a total return investment strategy. Exhibit D Municipal Contribution Rate Reconciliation Explanation Normal Cost Contribution Rate Reconcilation 1. Change due to termination of status as a contributing member This item reflects changes due to termination of status as a contributing The annual contribution Rate Letter sent to cities member that may result from death, will Chan e in 2008. termination of employment, disability, 9 or retirement. When a member stops contributing to TMRS, the city's cost The example below shows last year's Rate Letter, of matching deposits ends, and the Exhibit 1. The Municipal Contribution Rate Reconciliation employee's salary is removed from the Explanation reprinted here is another exhibit that total payroll used to fund all benefits. accompanies the Rate Letter and explains the changes Unless another employee fills the listed on Exhibit 1. vacated position, this will normally cause an increase in the contribution rate. ~ T ■ 2. Change in service and salary ■ ' characteristics of contributing members ■ ■ Chan es in Service: An increase in the ■ g number of contributing members from one ~ ~ ■ year to the next increases the overall payroll ~ . r used to fund retirement benefits. Although ■ . . ■ ~ the liability for the city's matching funds will ~ ■ ■ r - - increasedue tothe new employees, the ~ ~ ■ overall effect of increasing the number of contributing members usually is a decrease ■ in a city's contribution rate. . ■ f~ Changes in Salary: When a member's Y; . compensation changes from one actuarial valuation to another, the city's ti~ ~ ' matching requirements likewise change. If the actual compensation experience is less than expected, the contribution a_ 5 rate generally increases; conversely, if - _ the actual compensation experience is greater than expected, the contribution rate will generally decrease. ■ 3. Change due to increased age of ■ ■ ■ contributing members ' As the age of contributing members ~ ' ~ increases, the probability of the member remaining employed until retirement also increases. Increasing age of members will therefore increase the likelihood that a member will reach retirement eligibility and retire, resulting in an increase in the city's contribution rate. Exhibit D continued ► Exhibit D Municipal Contribution Rate Reconciliation Explanation (cont. 4. Change due to other factors For cities with fewer than three contributing members, conservative funding formulas are used to calculate the normal cost contribution rate. These conservative funding formulas ensure that the city's matching portion is fully funded at the time of the employee's retirement eligibility. Also included in this category are adjustments due to changes in actuarial procedures, system improvements, and the effects of rounding in the actuarial valuation process. Prior Service Contribution Rate Reconciliation 1. Change due to annually repeating Updated Service Credit and Annuity Increases For a city that has adopted annually repeating Updated Service Credit, this increase is the effect of the additional actuarial liability derived from the new credits to be granted effectiveJanuary1 oftheyear in which the rate is effective. Likewise, if the city has adopted annually repeating Annuity Increases, the effect of the additional actuarial liability derived from the Annuity Increases to be granted is included here also. 2. Change due to payroll experience The prior service contribution rate is closely linked to the city's payroll. An increase in payroll above the actuarial assumption reduces the contribution rate. An increase in payroll of less than the actuarial assumption, or a decrease in the payroll, will cause an increase in the contribution rate. The actuarial assumptions are based on the historical trends in the city itself, and allow the actuary to project future contributions to the retirement system. 3. Change due to actuarial gains, losses, or inconsistent contribution Actuarial gain or loss: The assumptions used in the actuarial valuation process enable the actuaryto project the value of the Unfunded Actuarial Liability (UAL) from the previous actuarial valuation to the current actuarial valuation. The difference between the projected UAL and the actual UAL is called an actuarial gain (a negative difference is an actuarial loss). This gain (or loss) takes into account the differences between events (investment return, deaths, retirements, disabilities, and withdrawal of member contributions) assumed on the basis of the actuarial assumptions and the corresponding real-life events that occurred between the preceding actuarial valuation and the current one. An actuarial gain reduces the prior service contribution rate, and a loss increases it. Inconsistent contributions: This refers to timing of the valuation and when contribution rates actually take effect. A city's 2007 contribution rate is based on the valuation for the year ended December 31, 2005. There is, therefore, a one-year period from the time the actuarial experience is recognized and the time the contribution rate is changed to reflect the actuarial experience. During this one-year lag time, 2006 in this case, the city may be contributing too little or too much as a result of the actuarial experience for the year ended December 31, 2005. Therefore, the contribution rate must be adjusted to account for this one-year lag time. If actuarial experience is better than assumed, the contribution rate can be reduced. Likewise, if actuarial experience is worse than assumed, the contribution rate will be increased. Also included in this category are adjustments due to changes in actuarial procedures, system improvements, and the effects of rounding in the actuarial valuation process. 4. Change due to effect of conservative funding This item is the effect of conservative funding formulas used to calculate the prior service contribution rate for cities with fewer than three contributing members. These conservative funding formulas provide for funding the prior service benefits over the remaining expected working life of the contributing members. Exhibit E • Menu of Optional Plan Benefits Contact TMRS for sample resolutions to adopt or change plan features. See inside back cover (Exhibit F) for details about adoption or change. Basic Plan Options Additional Features Employee contribution rate (5%, 6%, or 7%)* Updated Service Credit (USC) City matching ratio (1 to 1,1/2 to 1, 2 to 1) Annuity Increases (COLAs) Vesting (5-year)** Military Service Credit Retirement Eligibility (20-year, any age) ~ Probationary Prior Service Credit Restricted Prior Service Credit * 3% contribution rate is no longer an option for new cities. Buyback of forfeited TMRS credit 1o-year vesting is no longer an option. Supplemental Death Benefits 25-year eligibility is no longer an option. Exhibit F • Plan Changes Table Bylaw, each city that decides to join TMRS must adopt the basic plan features designed for all cities (left column of Exhibit E). The options that individual cities may choose to add, modify, or drop are shown in this table. Changes may be made at any time, but are effective on the dates shown. Join TMRS City Council, by ordinance Increase employee contribution rate (up to 7%~ City Council, by ordinance; no employee consent required Reduce employee contribution rate To reduce rate takes a 2/3 vote of employees, then Council must approve Change city matching ratio City Council, by ordinance; no employee consent required Reduce vesting requirement (from 10 years to 5J City Council, by ordinance; NOTE: Vesting may not be increased. no employee consent required Change retirement age/service requirement to 20-year, any age City Council, by ordinance (after public hearing); no employee consent required Adopt USC or change USC to annually repeating City Council, by ordinance; USC can be adopted on its own or with COLAs Rescind repeating USC City Council, by ordinance Adopt USC -transfers City Council, by ordinance Adopt Annuity Increases (COLAs If this option is chosen, it must be adopted in tandem or change to repeating Annuity Increase with USC or repeating USC Rescind annually repeating annuity increases (COLAs) Must be dropped if annually repeating USC is dropped Adopt or rescind Supplemental Death Benefits City Council, by ordinance Military Service Credit City Council, by ordinance Restricted Prior Service Credit City Council, by ordinance (also probationary prior service Buyback of refunded TMRS service City Council, by ordinance. Employee must have previously refunded service, be on the payroll at time of adoption, and have 24 consecutive months of deposits with the city Stop enrolling new employees * City Council, by ordinance * Once a city has joined TMRS, it must continue to provide TMRS benefits for all eligible employees. Bylaw, if a city stops active participation in TMRS, it must maintain the retirement accounts of the employees who have already joined the System. It must continue to fund existing pensions, and it must match at its established rate when its current employees retire. Exhibit F • Plan Changes Table (cont. First day of month selected Installs quality, competitive retirement plan for members. First day of month selected The higher the rate, the larger the benefit earned by the member; increases employee deposit pool. First day of month after the 90th day Reduces benefit for employees, by reducing future accumulation after ordinance adopted of reserves. January 1 of the calendar year after adoption Bylaw, cities must match at least 1 to 1. First day of month after adoption Reducing vesting to 5 years allows members to vest earlier, or be guaranteed a retirement benefit assuming a refund is not taken. First day of month after adoption Allows for earlier retirement; city can't go back to 25-year retirement once change is made. January1 of theyear after adoption Recalculation based on employee's most recent average salary can mean a better benefit for retirees but increases costs for employer city. January1 oftheyearafteradoption Benefits no longer adjusted for salaryor plan changes. January 1 of the year after adoption Potentially increases costs for employer city because it allows USC eligibility to be transferred from another city. January 1 of the year after adoption Helps protect retiree benefits from inflation, but increases costs for employer city. January 1 of the year after adoption Future increases will only occur when city makes an ad hoc adoption. Benefits are not adjusted annually. First day of the month after adoption. Benefit can Reduces cost to city and eliminates a benefit. only be discontinued effective January 1, if ordinance Adding will increase costs. adopted before preceding November 1 First day of the month after adoption Applying this credit to members' accounts does not increase the retirement benefit but may affect retirement eligibility for some members. First day of month after adoption Allows full-time employees who have previous public service, including active military, to receive time credit. Applying this credit to members' accounts does not increase the amount of their benefit but can add actuarial cost. Date of adoption No up-front costfor adoption of buyback. TMRS will estimate costs that accrue if some or all employees purchase their refunded service. First day of month after adoption. This change only City still must fund retirements of employees enrolled prior applies to employees starting after that date to adoption. I~ ~ ~ I~ ~ ~ ~ - - i ~ _ ~ ~ - ~ i r ~ ~ a ~ ~ ~ r _ r ~ ~ f ~ ~ ~ r _ ~ _ ~ r_ - ' ~ - . ~ , T ~ ~ ' ~ r ~ ~ ~ti ~ i 7 1~ ~ L ~ i f - ~ r+ r ~ i ~ ' ~ i 1 ■ • ~ i • ' ~ _ ~ ~ - ~ ' 'f ~ ~ ~ ~ 1 i . ~ - i _ ~ ~ . ' ~ , ~ I ~ ~ r ~ ~ r ~ ~ ~ _ - • - ~ • - • r ~ ~ R M ~ .I a- ~ 1 ~ ® ' EXHIBIT 2 RISK RETENTION FUND RESERVES Based on 75% Confidence Level Footnote Current Change in Reserves Reserves Worker's Compensation Reserve Beginning Reserve 2,638,696 2007-2008 year (From Actuary Report) 990,726 C Required Gross Reserves 3,629,422 Less: 07-08 Claim Payments (694,208) ~ E Ending Net Reserves 2,935,214 ° A 2,638,695 296,519 General Liability Reserve Beginning Reserve 678,100 2007-2008 year (From Actuary Report) 252,876 D Required Gross Reserves 930,976 Less: 07-08 Claim Payments (374,343) , F Ending Net Reserves 556,633 aAB 678,100 (121,467) Total Reserves as of 9130108 3,491,847 Fund Balance as of 9130/08 1,368,224 Fund Balance Plus Reserves as of 9130108 4,860,071 WalkforWard for CAFR Footnote Claims Liability Claims and Claims Liability Beginning of Change in Claim End of Fiscal Year Estimates Payments Fiscal Year Worker's Comp 2,638,696 990,726 C 694,208 E 2,935,214 A General Liability 678,100 252,876 D 374,343 F 556,633 B EXHIBIT 3 R]EP ®RT T CITY OF DENTON SELF-INSURANCE FUND REGARDING WORKERS' COMPENSATION REQITIItED FUNDING LEVELS AS OF 9130/07 Prepared By Rv$Eici nUGnE~ ASS^vCiATEa, ii ETC. 508 TWILIGHT TRAIL, SUITE 200 RICHARDS4N, TEXAS 75080 (972} 980-0088 February 23, 2009 ROBERTHUGHESASSOCIATESILAC. REPORT TO CITY OF DENTON SELF-INSURANCE FUND REGARDING WORKERS COMPENSATION REQUIRED FUNDING LEVELS AS OF 9/30107 Purpose and Scope At the request of the managers for the City of Denton Self Insurance Fund {City), Robert Hughes Associates, Inc. (RHA}performed an actuarial analysis of the fund's workers' compensation loss experience as of September 3 0, 2007. The intent of the review is to provide the City with a perspective on the financial status of the self insurance fund. Specifically, we estimated the total reserves required for outstanding losses and allocated loss adjustment expenses for the City as of September 30, 2007 using loss data evaluated as of this date. In addition, we provided projected ultimate loss and allocated loss adjustment expense (ALAS} for the prospective funding periods 10/1107-08 and 1011108-09. Distribution and Use This report is prepared for use by the management and board of the City to assist in evaluating the financial status of the self insurance fund and appropriate funding levels for the funding periods 1011107-08 and 10/1108-09. We understand that copies of this report may also be provided to accountants and auditors for the City, current and potential excess insurance carriers, and state regulatory authorities. We request that if this report is distributed, it be furnished in its entirety. All recipients should be made aware that RHA personnel are available to answer any questions regarding the report or the underlying actuarial analysis. Further distribution or alternative use of this report other than that described above is not authorized without the prior consent of Robert Hughes Associates, Inc. Summary and Conclusions Exhibit Summ, Sheet 1(page 7} summarizes our recommendation of ALAS reserves for the City as of 913 0107. As shown on Exhibit Summ, Sheet 1(page 7}, our analysis produced total retained outstanding losses and all loss adjustment expenses (LAE}for the City of $1,953,721 as of 9130107. Carried case reserves for the fund totaled $1,132,003 as of 9130107, leaving an indicated incurred-but- not-reported (IBNR} reserve of $821,718. Discounting lass reserves provides an allowance for investment income. We assumed an investment rate of return of 4.0%. Formula discounted total outstanding losses and LAE as of 9/30/07 are estimated to be approximately $1,804,588, yielding a loss and LAE IBNR provision of $672,585. Our projected ultimate loss and ALAS for the 1 ROBERTHUGHESASSOCIATESINO. prospective periods are shown on Exhibit Summ, Sheet 2 (page 8). The total ultimate loss and loss adjustment expense (L&LAE) for the periods 10/1107 through 9130/09 are: Fund Year Ultimate L&LAE Discounted Ultimate L&LAE 10f I/07-08 $ 955,208 $ 846,829 10/1108-09 $1,014,911 $ 865,151 Total $1,970,118 $1,711,980 when funding for losses in a self insurance fund, it is generally advisable to include an additional amount to cover the possibility of an unexpected frequency or severity of loss. Using a Monte Carlo statistical technique, we have simulated the fund's loss potential with assumed statistical loss frequency and severity distributions for 1,000 trials. The results of these simulations provided us with a risk loading for the City at the 75%, 85% and 90% confidence levels. The loss and ALAE reserve level for the City is $2,111,234 at the 75% level for fund years 10/1/87 through 9/30/07. In other words, loss reserves of $2,111,234 would be adequate to fund the losses and ALAE in 750 out of 1,000 simulations of the 1011/87-07 experience period. The total loss and ALAE for fund years 10/1107 through 9/30109 is $2,002,889 at the 75% level. The choice of an appropriate confidence level for funding purposes is up to the prerogative of fund management. The level selected is generally based on the risk aversion of management and the availability of surplus funds. It is our experience that a confidence level of at least 75% is reasonable and supportable. Background Effective Qctober 1,1987, the City of Denton began self insuring its workers' compensation coverage. Coverage is provided on an occurrence basis with the City retaining the first $500,000 per claim. After the City has met this obligation, the insurance pays up to $5 million for all claims arising from that occurrence. The City has a workforce of about 1,120 employees and has an effective safety and risk management program in place. The City provides law enforcement, fire safety, paramedicslrescue, refuse collection, sanitary landfill, electric distribution and transmission, water, wastewater, storm sewer, animal control, parks/recreation, library, airport services, street maintenance and traffic control. Reliances and Limitations There are a number of factors that are pertinent to the proper interpretation of our results. In the course of our analysis we relied without audit or verification on data and information provided by the City. We also relied without audit or verification upon data from insurance industry sources as required. We did, however, review all information for reasonableness based on our knowledge of the property and casualty insurance industry. The estimation of ultimate lass and loss adjustment expense underlying our conclusions is subject to potential errors of estimation due to the fact that the ultimate liability for claims is subj ect to the outcome of events yet to occur. For example, for open suits, the decision of an administrative judge or a jury may be required to ultimately determine the amount of loss. Furthermore, not all claims that have occurred have been reported at this time. UVhile we have estimated the expected ultimate loss and loss adjustment expense amounts in accordance with what we consider to be reasonable judgments and actuarial techniques, it should be recognized that actual future lass emergence will likely deviate, perhaps substantially, from the RHA estimates. Due to the nature and degree of uncertainties involved in projecting future 2 ROBERTHUGHESASSOCIATESINO. losses, no assurance can be offered that any specific funding level will be adequate or not excessive. In our estimation of recommended funding for the City, we have anticipated future investment income. The projected investment income is based on the probable length of time between the occurrence of an incident and the ultimate settlement and payment of the resulting loss or expense. It should be noted that an additional source of variation is introduced in estimating liabilities and computing funding levels on a discounted basis. That is, besides fihe risk of underestimating or overestim.atingtbe overall amount of the loss and expense liabilities, there is the additional risk that the timing of the future payment of those liabilities may differ from our expected payment pattern. Also, capital gains or losses, or significant changes in economic conditions may affect the yield on assets supporting the liabilities. We have assumed a 4.0% rate of return on investments which is slightly below current CD rates due to the uncertainty of projected payment patterns. Unless otherwise noted, any reference to loss(es) within this report includes a provision for allocated loss adjustment expenses. The exhibits attached in support of our results should be considered an integral part of this report. Methodology and Description of Exhibits The exhibits documenting our analysis are arranged in approximate order of calculation, from back to front. Details regarding the calculations are generally contained in the footnotes to each exhibit. Historical Loss Development Triangles Exhibit WC6 (pages 19 through 24) contains the historical loss and claim count development data. Triangular data was available for both paid and reported losses and ALAS, as well as for closed and reported claim counts. In general, the development triangle exhibits show the loss and ALAE amounts (or claim counts) for each funding year at the end of the fund year and at the . • . . rr.. > > ~ ~ ~ t ~ n n In n fnn mt end of each successive twelve-month period. 1 ne Latest aiagona~ ~s evaluatea as or ylju~u ~ ne Report-to-report development factors are computed based upon the observed change in losses at successive evaluations. The observed City report-to-report development factors are compared to factors derived from general insurance industry experience, where applicable. Representative report-to-report development factors assumed applicable to the City data are selected from the comparison of past observed loss development and industry data. The selected incremental factors are multiplied together to produce cumulative loss development factors to ultimate as of 9130/07. Exhibit U~C6, Sheets I and 2 (pages 19 and 20} display the analysis of the loss and ALAE development. We reviewed historical development of both paid and reported amounts as shown on Sheets 1 and 2, respectively. We have selected representative report-to-report development factors separately for paid and reported loss a~naunts. Exhibit WC~, Sheet 3 (page 21) shows case reserve amounts by fund year evaluated as of each development point and the ratios of paid losses to reported losses as of each evaluation date. The analyses of closed and reported claim count development are contained in Sheets 4 and S (pages 22 & 23} of Exhibit WC6. Again, we have selected report-to-report development factors 3 ROBER~'HUGHESASSOCIATES INC. appropriate for the City's reported claim counts. Sheet 6 (page 24) of Exhibit 6 shows the number of open claims in the triangular format. Loss development patterns are applied to the most recent evaluation of fund year losses to project the ultimate incurred losses arising from each fund year. The City's historic loss development was compared to insurance industry patterns, and factors were selected to reflect our best estimate of future development, Loss Development Projection of Ultimates Exhibit wC5 details the development projections of ultimate loss amounts and counts for all periods through 9130/07. Sheet 1(page 17) contains the projections of ultimate losses and ALAS. Selected cumulative development factors from Exhibit WC6, Sheets 1 and 2 (pages 19 & 20) are applied to the paid and reported loss amounts as of 9/30107. Individual claims that would exceed the per occurrence retention with application of the loss development factors were limited to the actual retention ($500,000.) Based on the paid loss development analysis, the estimated ultimate losses and ALAS for all years through 9/30/07 total $10,551,932. The reported loss data produced estimated ultimate losses of $11,059,379. Sheet 2 (page 18) of Exhibit WS shows the development projections of ultimate claim counts. Closed and reported claim counts as of 9130/07 are multiplied by the cumulative development factors from Exhibit wC6 Sheets 4 and 5 (pages 22 & 23) to produce estimated ultimate counts far all years of 3,154 and 3,117, respectively. Estimation of Expected Loss Costs Exhibit WC4 (page 16) documents our estimation of expected loss costs for the City. Based on payroll for the fund, and the average of the paid and reported loss development projections on Exhibit wCS, Sheet 1(page 17), we have computed the indicated loss costs per $100 of payroll. Loss costs, or pure premiums, remove the effect of changing exposure volumes. Based on indicated loss costs in Column 4 we have selected an initial loss cost of 1.450 for all years. Bornhuetter-Ferguson Projection of Ultimates Exhibit yVC3 projects ultimate losses using the Bornhuetter-Ferguson (BF) method applied separately to paid and reported data on Sheet 1 and Sheet 2 (pages 14 & 15), respectively. The BF procedure is a carnpromise between the responsiveness of a straight development method and the stability of a loss ratio approach to reserving. This method is often used in cases where loss fluctuations are great from year to year. To estimate the ultimate losses using the BF method, we first extend the expected loss costs from Exhibit wC4 (page 16} by the payroll and the expected percentage of losses unpaid (or unreported} at 9130107. The result is an estimate of unpaid (or unreported} losses as of the evaluation date. The proj ections of ultimate losses and ALAS are then calculated by adding actual paid (or actual reported) losses as of 9/30107 to the generated estimates of unpaid (or unreported} losses. used on paid data, the BF projection of ultimate losses and ALAS for all years is $10,648,587. The reported loss data produced estimated ultimates of $11,065,93 8. Selection of Ultimates 4 R~BERTHUGHESAS50CIATES IBC. In Exhibit wC2, Sheets 1 through 3 (pages 11 through 13), we bring together the results of the various projection techniques described above and document our selection of expected ultimate losses and claim counts by fund year. Exhibit wC2, Sheet 3 (page 13) shows the results of our ultimate claim count projections and documents our selection of ultimate claim counts. We have selected results of the reported development method as our estimate of ultimate claim counts for all years. Also in Sheet 3 (page 13), we relate our ultimate counts to the payroll exposure to calculate the .claim frequency. we often look at claim count results to judge the reasonableness of our loss projections. ~we have selected an ultimate claim count of 3,136 or 0.357 claims per $100,000 of payroll. Our prof ections of ultimate losses and ALAS are displayed in Exhibit wC2, Sheet 2 (page 12). The four projection methods are compared and an appropriate selection is made. The selections for the periods 10/1/87-96 are based on the average of the reported and paid development methods. The selection for the 10/1/96-97 period is based on the reported development method. The 1011197-98,1011/02-04 and 1011/06-07 periods are based on the reported BF method. The selections for the 10/1198-02 and 1011104-05 periods are based on the average of the BF methods. The 1011/05-06 period is based on the paid BF method. The total selected ultimate loss and ALAE for years combined is $11,137,850. Sheet 1(page 11} of Exhibit wC2 summarizes our ultimate selections as well as the indicated average claim amounts. We estimate the ultimate losses and ALAE for the City to be $11,137,850 on 3,136 ultimate claims for an indicated average claim amount of $3,552. Loss and ALAE Funding Levels Exhibit WC 1, Sheet 2 (page 10) documents the calculation of factors that are applied to outstanding loss estimates in order to recognize investment income on loss reserves. An expected return on investment of 4.0% is assumed. The payment pattern assumed is based on paid loss development factors selected in Exhibit wCS, Sheet 1(page 17). The discount factors displayed in this exhibit are calculated to recognize the remaining expected payout pattern as of the evaluation date. Because the payment patterns are not uniformly decreasing, the formulas will occasionally produce discount factors that are not steadily increasing. On Exhibit VVC 1, Sheet 1(page 9}, we calculate loss costs that will be applied to exposure in the prospective years in order to calculate the total loss and ALAE for the future years. The selected ultimate loss and ALAE in column (2} are divided by the payroll in column (3) to estimate the loss costs for each year. These loss costs are adjusted to the cost levels that we expect will prevail in the 1011/07-08 period. We selected a loss cost of 1.429 based on the average of Column (6) excluding the highest and the lowest loss costs. 0n Exhibit Summ, Sheet 2 (page 8}, we calculate the ultimate loss and ALAE for fund years 1011107-08 and 1 OI1108-09. we adjust the selected loss costs calculated in Exhibit WC 1, Sheet 1 (page 9} to the cost levels far each of the future periods. This adjusted loss costs is then combined with the estimated payroll for the year to project the ultimate loss and ALAE for that year. The total estimated loss and ALAE for the funding periods 10!1107-09 is $1,970,118 on an undiscounted basis and $x,711,980 on a discounted basis. On Sheet 1(page 7) of Exhibit Summ, we remove losses and ALAE paid by the fund through 9130107 to develop a loss reserve indication as of this date. when we subtract out payments made through the evaluation, the loss and LAE reserve estimate is $1,953,721 on an undiscounted basis and $1,804,588 on a discounted basis. S ROBERTHUGHESASSOCIATES!NC. As previously mentioned, simulation techniques provided us with risk margin factors that produce reserve or funding estimates at various confidence levels as of 9/30107. The addition of risk margins to the funding level provides protection from adverse development that would normally be absorbed by surplus in an insurance company scenario. The total discounted funding as of 9130107 at a 75% confidence level is $2,111,234 for all fiscal years through 9/30/07. The total funding at the ?S% level for the prospective periods 1011107 through 9/30109 is $2,002,889. Comparison to .Previous Projections The Appendix (page 25) provides a comparison of the projected ultimate losses in this analysis with those projected in our analysis as of 9/30/05. Our projected ultimate losses for all fund years 10/1/879/30/05 using data evaluated as of 9/30/07 are $462,541 lower than the projections made as of 9130/05. Respectfully submitted, ROBERT HUGHES ASSOCIATES, INC. ~ ~ Jeanne H. Camp, FCAS, MAAA Chief ary Koff Boaitey, ACAS Senior Actuarial Con ultant 6 ROBERTHUGHESASSOCIATES1NC. City of Denton Exhibit summ Workers Compensation Self Insurance Fund Sheet 1 Estimation of Lass and ALAS Funding Total Loss and ALAE Reserves as of 9/30/07 Retained Retained Indicated Indicated Discounted Including Including Including Selected Paid Case Loss IBNR Loss Total Loss Total Loss Contingency Contingency Contingency Ultimate Losses &ALAE &ALAE &ALAE &ALAE Margin @ Margin @ Margin cr Fund Losses &ALAE Reserves Reserves Reserves Discount Reserves 75th 85th 90th Year &ALAE 9130107 9/30/07 9/30107 9130/07 Factors 9!30107 Percentile Percentile Percentile (1) (2) (3) (4) (5} (6) (7) (8) (9) (10) (11) 1011/87-88 521,638 521,638 0 0 0 1.000 0 0 0 0 1011/88-89 373,071 373,071 0 0 0 1.000 0 0 0 0 1011/89-90 .532,797 532,797 0 0 0 1.000 0 0 0 0 1011190-91 460,440 460,440 0 0 0 1.000 0 0 0 0 1011/91-92 296,498 296,498 0 0 0 1.000 0 0 0 0 1011192-93 159,220 159,220 0 0 0 1.000 0 0 0 0 10/1/93-94 445,551 445,551 0 0 0 1.000 0 0 0 0 1011194-95 423,271 423,271 0 0 0 1.000 0 0 0 0 10!1195-96 223,360 223,360 0 0 0 1.000 0 0 0 0 10/1/96-97 572,503 550,785 21,718 0 21,718 0.981 21,305 .24,925 27,669 31,027. 1011/97-98 359,128 359,128 0 0 0 0.974 0 0 0 0 10/1/98-99 185,604 179,219 0 6,385 6,385 0.964 6,155 7,201 7,993 8,964 10/1199-00 661,760 641,134 9,963 10,663 20,626 0.953 19,657 22,997 25,528 28,627 ]011!00-Ol 860,196 831,441 0 28,755 28,755 0.941 27,058 31,656 35,140 39,405 1011/O1-02 610,878 542,214 26,000 42,664 68,664 0.929 63,789 74,628 82,842 92,898 10/1!02-03 905,815 619,567 236,227 50,021 286,248 0.917 262,489 307,093 340,891 382,269 1011/03-04 1,251,500 1,042,082 143,059 72,359 215,418 0.913 196,677 230,097 255,422 286,426 1011104-05 381,623 228,431 17,024 136,168 153,192 0.914 140,017 163,809 181,838 203,910 10/1/05-06 801,680 535,355 99,351 166,974 266,325 0.908 241,823 282,91 S 314,052 352,173 10/1!06-07 1,105,317 278,685 578,661 247,971 826,632 0.932 770,421 901,335 !,000,536 1,121,983 Total 11,137,850 9,243,887 1,132,003 761,960 1,893,963 1,749,391 2,046,657 2,271,911 2,547,682 ULAEReserves: 59,758 55,197 64,576 71,683 80,384 Total L~LAE 1,953,721 1,$04,588 2,111,234 2,343,595 2,628,066 Notes• (2) Exhibit WC1, Sheet 1, Column (2). (5) Column (2) -Column (3) -Column (4). (3) Exhibit WCS, Sheet 1, Column (2}. (6} Column (4) + Column (5). (4) Exhibit WCS, Sheet 1, Column (5) - (7) Exhibit WC 1, Sheet 2, Column (7}. Exhibit WCS, Sheet 1, Column (2). (8) Column (6) x Column (7). (9) thru' (11) Column (8} adjusted to reflect confidence levels. C:1Documents and SettingsljeannelLocal SettingslTemporary Internet Files/Content.0udooklTRQH5SLG1WCExhibit07 Projection & Outstanding2124/2009 7 ROBERTHUGHESASSOCIATES!NC. City of Denton Exh~bitSumm Workers Compensation Self Insurance Fund Sheet? Projection of UItimate Loss & ALAS for Prospective Years Including Including Including Trended Indicated Factor Indicated Discounted Contingency Contingency Contingency Loss Costs Estimated Ultimate to Adjust Ultimate Ultimate Margin @ Margin @ Margin cr Fund per $100 Payroll Losses far Losses Discount Losses 78th 88th 90th Year Payroll _in 100's & ALAS ULAE &LAE Factor &LAE Percentile Percentile Percentile (1) (2) (3) (4) (S) (6) (7) (8} (9) (10} (11) 10/1107-08 1.429 639,618 914,075 4.50% 955,208 0.887 846,829 990,726 1,099,765 1,233,258 1011108-09 1.446 b71,537 971,206 4.50% 1,014,911 0.852 865,151 1,012,163 1,123,561 1,259,941 Total 1,311,155 1,885,281 1,970,118 1,711,98D .x,04.2,889 2,223,326 2,493,!99 Notes: ~(2) Selected from Exhibit WC 1, Sheet 1, Adjusted for Trend. (3) Estimated Payroll based on Exhibit WC4, Column (2). ;(4) Column (2) x Column (3). (5) Selected based an Industry Experience. ''(6) Column (4} x [1 + Column (S)]. f71 Discount factors - Exhibit WC 1, Sheet 2, adjusted to the respective prospective period. (8) Column (6) x Column (7). (9) through (11) Column (8) adjusted to reflect confidence levels. C:1Documents and SettingsljeannelLocal SettingslTemporary lntemet FileslContent0udooklTRQH5SLG1WCExhibit07 Projection & Outstanding2l2412009 S ROBERTHUGHESASSOCIATESlNC. City of llenton Exhibit wCl Workers' Compensation Self Insurance sh~~t r Projection ol'Trended Loss Costs Per Payroll Selected Indicated Indicated Trended Ultimate Loss Costs Trend Loss Costs Fund Losses Payroll per $100 Factors per $100 Year & ALAS in $100's Payroll 1.20% Payroll (1) (2) (3) (4) (5) (6) 1011187-88 521,638 246,911 2.113 1.269 2.682 10/1188-89 373,071 274,877 1.357 1.254 1.702 1011/89-90 532,797 297,187 1.793 1.240 2.222 10/1190-91 460,440 311,763 1.477 1.225 1.809 1011191-92 296,498 324,779 0.913 1.210 1.105 10/1!92-93 159,220 329,977 0.483 1.196 0.577 10/1/93-94 445,551 342,209 1.302 1.182 1.539 10/1!94-95 423,271 344,649 1.228 1.168 1.434 10/1195-96 223,360 380,573 0.587 1.154 0.677 1011196-97 572,503 418,512 1.368 1.140 1.560 1011197-98 359,128 439,408 0.817 1.127 0.921 1011198-99 185,604 468,382 0.396 1.113 0.441 10!1!99-00 661,760 563,306 1.175 1.100 1.292 10/1/00-01 860,196 550,998 1.561 1.087 1.697 1011101-02 610,878 671,544 0.910 1.074 0.977 10/1!02-03 905,815 529,525 1.711 1.061 1.816 1011/03-04 1,257,500 540,209 2.328 1.049 2.442 10/1/04-05 381,623 558,077 0.684 1.036 0.709 1011/OS-06 801,680 582,809 1.376 1.024 1.409 1011106-07 1,105,317 609,216 1.814 1.012 1.836 Total 11,137,850 8,784,911 1.268 1,469 Trend All Years: 0.06% Avera es Trend 1 Q/1/00-07~ 1.30% All Years 1.442 10/1/97 07 1.354. 10/1 /O 1-07 1.531 ExcludingHi ~ Lo 1.429 Selected 1.429 Notes: {2} Exhibit WC2, Sheet 2, Column (6). (3} Exhibit WC4, Column (2). (4) Column (2) /Column (3}. (5) Trend factor to adjust for changes in cost levels. (6) Column (4) x Column (5). anal2oo~ g ~WCE~t►ibitQ7]WC ROBERTHUGHESASSOCIATESIHC. t;ity of llenton Exhibit WCl Workers' Compensation Self Insurance Sheet ? Calculation of Discount Factors Assuming a 4.0% Investment Rate of Return D1$COllnt Present Present Factors at Payment Pattern Value Value of Beginning Year Cumulative Incremental Factors Payments of Year (1) (2} (3) (4) (5) (6) 1 30.44 % 30.44 % 0.981 0.298 0.922 2 6$.48 % 38.05 % 0.943 0.359 0.932 3 77.39 % 8.90 % 0.907 0.081 0.908 4 85.39 % 8.00 % 0.872 0.070 (1.914 S 90.04 % 4.65 % 0.$38 0.039 0.913 6 92.74 % 2.70 % 0.806 0.022 0.917 7 95.06 % 2,32 % 0,775 0.018 0.929 8 96.96 % 1,90 % 0.745 O.Ol4 0,941 9 98.42 % 1.45 % 0.717 0.010 0.953 10 99.40 % 0.98 % 0.689 0.007 (1.964 11 99.90 % 0.50 % 0.662 0.003 0.974 12 100.00 % 0.10 % O.b37 0.001 0.981 Total 100.00 % 92,17 Notes: (2} 1; Cumulative Factors from Exhibit WCS, Sheet 1. (3} Column (2), current year -Column (2), prior year. f41 Present value factors assume sins?le ~avment at rnid-year. (5} Column (3} x Column (4). (6} Discount factor for beginning of year based on Column (5). 2/34/2009 1 ~ ~wc>r~,~b~~o~~wc ROBERTHUGHESASS~CIATES ANC. t,'ity of llenton E~~;~;c wc? Workers' Compensation Self insurance Fund Sheet 1 Indicated Ultimate Loss and ALAE Ratios Summary of Ultimate Amounts, Counts, and Averages Selected Selected Indicated Ultimate Ultimate Ultimate Fund Losses & Claim Average Year ALAE Counts Claim (1) (2} (3) (4) 10/1/87-88 521,b38 239 2,183 1011188-89 373,071 213 1,752 1011/89-90 532,797 190 2,804 10/1190-91 460,440 205 2,246 1011191-92 296,498 133 2,229 1011/92-93 159,220 158 1,008 10/1/93-94 445,551 172 2,590 1011/94-95 423,271 160 2,645 1011195-96 223,360 147 1,519 10/1/96-97 572,503 147 3,895 10/1!97-98 359,128 124 2,896 1011198-99 185,604 100 1,856 1011199-00 661,760 129 5,130 10/I/QO-41 860,196 185 4,662 1011101-02 610,878 163 3,748 1011102-03 905,815 160 5,b79 10/1103-04 1,257,500 130 9,673 1011/04-05 38/,623 127 3,008 1011145-06 801,680 135 5,938 1011.106-07 1,105,317 120 9,211 Total 11,137,850 3,136 3,552 Notes: (2) Exhibit WC2, Sheet 2, Column (6). (3} Exhibit "~VC2, Sheet 3, Column (4). fAl f~nl4irr~r~ (1n~iimn fZZ ~~rJ t~ututiui ' ~.v~.uixux ~J j. 2/24/2009 11 ~wc~,n~bcca~wc ROBERTHUGHESASSOCIATES IBC, t;ity o~ llenton ~xh~~;r Wc2 Workers' Compensation Self Xnsurance Fund Sheet 2 Selection of Ultimate Losses and ALAS Summary of Ultimate Loss & ALAE Projections Projected Ultimate Losses &ALAE Selected Paid Reported Ultimate Fund Paid Reported Bornhuetter- Bornhuetter- Losses Year Development Development Ferguson Ferguson &ALAE (1} (2) (3} (4) (5) (6) 1011/87-88 521,638 521,638 521,638 521,638 521,638 1011188-89 373,071 373,071 373,071 373,071 373,071 1011189-90 532,797 532,797 532,797 .532,797 532,797 1011190-91 460,440 460,440 460,440 460,440 460,440 1011/91-92 296,498 296,498 296,498 296,498 296,498 1011192-93 159,220 159,220 159,220 159,220 159,220 1011193-94 445,551 445,551 445,551 445,551 445,551 1011194-95 423,271 423,271 423,271 423,271 423,271 1011195-96 223,360 223,360 223,360 223,360 223,360 1011196-97 551,33b 572,503 551,391 572,503 572,503 1011/97-9$ 361,285 359,128 362,931 359,128 359,128 1011198-99 182,098 179,757 189,957 l 81,250 185,b04 1011199-00 661,205 b5b,316 665,928 657,592 bb1,760 1011100-O1 874,b20 850,677 870,884 849,507 860,196 1011101-02 584,632 592,987 612,863 608,893 610,878 1011/02-03 68$,077 915,432 696,016 945,815 905,815 1011103-04 1,220,355 1,254,874 1,156,509 1,257,500 1,257,500 ]011104-OS 295,17b 282,607 411,410 351,835 381,b23 1011105-Ob 781,712 767,313 801,680 780,752 801,b80 1011/06-07 915,590 1,191,939 893,172 1,105,317 1,105,317 Total 10,551,932 11, 059,379 10,G4B,587 11, 065,938 11,137,850 Notes: ____r (2) Exhibit WCS, Sheet 1, Column (4). (3) Exhibit WCS,Slheet1, Column (7). /A~ rvla.~.i+ 1A~I Z CI'1WP'I' i ('nli~mn (71 ~`tJ L'1u11U11 YY VJ, V1tN~+t t, vviuaaiaa `r J. (5} Exhibit WC3, Sheet 2, Column (7}. (6} The selections for periods 1011/87-96 are based on the average of Reported and Paid methods; 1011196-97 based on the reported development method;l0/1197-98,1011102-04 and 10/1106-07 based on the reported BF method; 1011198-02 & 1011104-OS are based on the average of the BF methods; 1011105-06 based on the paid BF method. 2/2412009 12 (WCE~hibic0l)VJC ROBERTHUGHESASSOCIATESILAC. City of llenton Exhibit WC2 Workers' Compensation Self Insurance Fund S17eet 3 Selection of Ultimate Claim Counts Indicated Ultimate Claim Frequencies Per $100,000 Payroll Indicated Protected Ultimate Claim Counts Selected Claim Closed Reported Ultimate Frequency Fund Count Count Claim Payroll Per $100,000 Year Development Development Counts in $100's Payroll (1} (2} (3} (4} (5) (6) 1011/87-88 239 239 239 246,911 0,968 10!1188-89 213 213 213 274,877 0.775 10/1/89-90 190 190 190 297,187 0.639 10!1190-91 205 205. 205 311,763 0.658 1011/91-92 133 133 133 324,779 0.410 1011192-93 158 158 158 329,977 0.479 1011193-94 172 172 172 342,209 0.503 10/1194-95 160 160 160 344,649 0.464 1011195-9b 147 147 147 380,573 0.386 10!1/96-97 I46 147 147 418,512 0.351 1011197-98 124 124 124 439,408 0.282 10/1/98-99 100 100 100 468,382 0.214 10/1199-OQ 129 129 129 563,306 0.229 1011100-O1 186 183 185 550,998 0.335 10/1101-02 164 162 163 671,544 0.243 1011102-03 160 159 160 529,525 0.301 1011103-04 130 130 130 540,209 0.241 10/1!04-05 132 122 127 558,077 0.228 10/1105-06 144 126 135 582,809 0.232 10/1106-07 122 118 120 609,216 0.197 Total 3,154 3,117 3,136 8,784,911 0.357 Notes: ('21 ~vl,;l,;t EAI('S ChAat'~ ~'nlnmrti !dl 1 JJAl11 U11. t► V✓, 1J11VVT. Lr, VVltT1111f `-T~• (3} Exhibit WCS, Sheet 2, Column (7}. (4) Based on the Reported Count Development projections far 1011187-00; 10/1101-07 are based on the average of the two methods. (5) Exhibit WC4, Column (2). (6) Column (4) Column (5) x 1,000. v~an_uo~ 13 ~WCE.~chibit0~)WC ROBERTHUGHESASSOCIATESINO. t;ity of llenton Exhibit WC3 Workers' Compensation Self Insurance Fund Sheet 1 Projection of Ultimate Lasses and ALAE Paid Bornhuetter-Ferguson Projection Expected Expected Loss Costs Percentage Fund per $100 Payroll Unpaid Year Payroll in $100's 9130/07 (1) (2} (3} (4) 1011187-88 1.450 246,911 0,00 % 10/1/88-89 1.450 274,877 0.00 10/1/89-90 1.450 297,187 0.00 1011/90-91 1.450 311,763 0.00 10/1/91-92 .1.450 324,779 0.00 1011/92-93 1.450 329,977 0.00 10/1193-94 1.450 342,209 0.00 1011/94-95 1.450. 344,649 0.00 1011195-9b 1.450 380,573 0.00 1011196-97 1.450 418,512 0.10 10/1197-98 1.450 439,408 0.60 1011/98-99 1.450 468,382 1.58 10/1/99-00 1.450 563,306 3.04 % 10/1/00-01 1.450 550,998 4.94 % 10/1/01-02 1.450 671,544 7.26 1011102-03 1.450 529,525 9.96 1011103-04 1.450 540,209 14.61 1011/04-OS 1.450 558,077 22.61 10!1105-06 1.450 582,809 31.52 1011/06-07 1.450 609,216 69.56 % Expected Unpaid Paid Projected Losses Losses Ultimate Fund & ALAS & ALAE Losses Year r 9130107 a 9130107 & ALAS c1) c5) (6) (7) 1011187-88 0 521,638 521,638 1011188-89 0 373,071 373,071 1 t~11/89-90 0 532,797 532,797 10/1/90-91 0 460,440 460,440 1011191-92 0 296,498 296,498 10/1192-93 0 159,220 159,220 10/1193-94 0 445,551 445,551 10/1194-95 0 423,271 423,271 1011195-96 0 223,360 223,360 10/1196-97 606 550,785 551,39] 1011197-98 3,803 359,128 362,931 10/1198-99 10,738 179,219 189,957 1 011199-00 24,794 641,134 665,928 1011100-01 39,443 831,441 870,884 10/1/01-02 70,649 542,214 612,863 10/1102-03 76,449 619,567 696,016 1011/03-04 114,427 1,042,082 1,156,509 1011/04-05 182,979 228,431 411,410 10/1105-06 266,325 535,355 801,680 1011106-07 614,487 278,685 893,172 Total 1, 404, 704 9, 243, 887 10, 648, 587 Notes: (2) Exhibit WC4, Column (5). (5) Column (2) x Column (3) X Column (4}, (3) Exhibit WC4, Column (2}. (6) Exhibit WCS, Sheet 1, Column (2). (4} 1- [1-~ Exhibit WC 5, Sheet 1, Column (3)]. (7) Column (S) + Column (6}, tiz~~2ao~ 14 ~wcE.~~b~~u~~wc ROBERTHUGHESASSOCIATES INC. c;xty of .~enton Exlub;tWC3 Workers' Compensation Self Insurance Fund Slteet 2 Projection of Ultimate Losses and ALAE Reported Bornhuetter-Ferguson Projection Expected Expected Loss Costs Percentage Fund per $100 Payroll Unreported Year Payroll in 5100's rr 9,130/07 (1) (2} (3} (4) 1011187-88 1.450 246,911 0.00 1011188-89 1.450 274,877 0.00 1011189-90 1.450 29?,187 0.00 10/1190-91 1.450 311,763 0.00 1011/91-92 1.450 324,779 0.00 % 1011/92-93 1.450 329,977 0.00 % 1011193-94 1.450 342,209 0.00 % 1011194-95 1.450 344,b49 0.00 10/1195-96 1.450 380,573 0.00 % 1011196-97 1.450 418,512 0.00 1011/97-98 1.450 439,408 0.00 °Jo 1011198-99 1.450 468,382 0.30 1011/99-00 1.450 563,306 0.80 1011/00-O1 1.450 550,998 2.26 10/1101-02 1.450 671,544 4.18 I0/1/02-03 1.450 529,525 6.51 10/1103-04 1.450 540,209 9.24 1011104-05 1.450 558,077 13.15 10/1105-Ob 1.450 582,809 17.28 1011106-07 1.450 609,216 28.07 Expected Unreported Reported Projected Losses Losses Ultimate Fund &ALAE ~ &ALAE Losses Year c 9130107 c 9130107 &ALAE (1) (5) (6) (7) 1011187-88 0 521,638 521,638 1011188-89 0 373,071 373,071 nit fon nn f! SZ~ ?0? 4~~ '7~~ 1VI 1107-7U V JJL, ! ! I JJL, ! J f 1011190-91 0 460,440 460,440 1011191-92 0 296,498 296,498 1011192-93 0 159,220 159,220 1011193-94 0 445,551 445,551 1011194-95 0 423,271 423,271 1011195-9b ~ 0 223,360 223,360 1011196-97 0 572,503 572,503 1011197-98 0 359,128 359,128 10/1198-99 2,031 179,219 181,250 1011/99-00 b,495 651,097 b57,592 1011!00-Ol 18,06b 831,441 849,507 1011/O1-02 40,679 568,214 608,893 1011102-03 50,021 855,794 905,81 S 1011103-04 72,359 1,185,141 1,257,500 10/1/04.05 106,380 245,455 351,835 1011105-06 146,046 634,706 780,752 1011106-07 247,971 857,346 1,105,317 Total 690, 048 10, 375, 890 11, 065, 938 Notes: (2) Exhibit WC4, Column (S). (5) Column (2} x Column (3) X Column (4). (3) Exhibit WC4, Column (2). (6) Exhibit WCS, Sheet 1, Column (S), (4) 1- [I : Exhibit WC S, Sheet 1, Column (6)~. limited to retention. (7) Column (5) + Column (6). 2124lZDD9 15 [WCEshibi107jWC ROBERTH GHESASSOCIATES INC. City of llenton Exhibit WC4 Workers' Compensation Self Insurance Fund Estimation of Expected Loss Costs Based on Development Projection Results Average Projected Indicated Ultimate Loss Costs Selected Fund Payroll Losses per $100 Initial Year in ~ 100's & ALAE Payroll Loss Costs , . (1) (2) (3) (4) (5) 10111$7-88 246,911 521,638 2.113 1.450 1011188-89 274,877 373,071 1.357 1.450 10/1189-90 297,187 532,797 1.793 1.450 10!1190-91 311,763 460,440 1.417 1.450 1011191-92 324,779 296,498 0.913 1.450 1011192-93 329,977 159,220 0.483 1.450 1011193-94 342,209 445,551 1.302 1.450 1011/94-95 344,b49 423,271 1.228 1.450 1011195-96 380,573 223,364 0.587 1.450 101119b-97 418,512 561,920 1.343 1.450 1011197-98 439,408 360,207 0.820 1, 450 1011/98-99 468,382 180,928 0.386 1.450 1011199-00 563,30b 658,761 1.169 1.450 1011/00-01 550,998 862,649 1.566 1.450 1011101-02 671,544 588,810 0.877 1.450 1011/02-03 529,525 801,755 1.514 1.450 1011103-04 540,209 1,237,615 2.291 1.450 1011104-05 558,077 288,892 0.518 1.450 1011/05-06 582,809 774,513 1.329 1.450 1011/06-07 609,216 1,053,765 1.730 1.450 Weighted Average: 1.230 Linear Average: 1.240 Average of last 5 years: 1.476 Average of last 4 years: 1.467 Average excluding high & low: 1.229 Selection: 1.450 Notes: (2} From City of Denton (3} Average of Columns (4) and (7) from Exhibit WCS, Sheet 1. (4} Column (3} _ Column (2}. (5) Selected based on averages and actuarial judgement. 2nanoo~ ~ ~ (WCExhibitD7]WC ROBERTHUGHESASS~CIATES INC. City of Denton Exhibit WC5 Workers' Compensation Self Insurance Fund Slteet J Projection of Ultimate Lasses and ALAE Paid Loss Development Projection Paid Paid Projected Losses Development Ultimate Fund &ALAE Factors to Lasses yew r 9/30107 Ultimate &ALAE (1) (2) (3} (4) 1011187-88 521,638 1.000 521,638 1011/88-89 373,071 1.000 373,071 10/1189-90 532,797 1,000 532,797 1011190-91 460,440 1.000 460,440 1011191-92 296,498 1,000 29b,498 1011/92-93 159,220 1.000 159,220 10/1/93-94 445,55 I 1.000 445,551 1011194-95 423,271 1.000 423,271 10/1/95-96 223,360 1.000 223,360 1011/96-97 550,785 1.001 551,336 10/1/97-98 359,128 1.006 361,285 1011198-99 179,219 1.016 182,098 10/1199-00 641,134 1.031 661,205 1011100-01 831,441 1.052 874,620 10/1101-02 542,214 1.078 584,632 1011102-03 619,567 1.111 688,077 10/1103-04 1,042,082 1.171 1,220,355 1011104-05 228,431 1.292 295,176 1011/05-06 535,355 1,460 781,712 1011106-07 278,685 3.285 915,590 Total 9,243,887 10,551,932 Reported Loss Development Projection Reparted Reported Projected Losses Development Ultimate Fund &ALAE Factors to Losses Year ~ 913a/o7 Ultimate &ALAE (1) (5} (6) (7) 10/!187-88 521,638 1.000 521,638 rnn nn n~~ ~ nnn ~7'~ !l'll 1011189-90 532,797 1.000 532,797 1011/90-91 460,440 1.000 460,440 1011/91-92 296,498 1.000 296,498 1011192-93 159,220 1.000 159,220 1011193-94 445,551 1.000 445,551 1011/94-95 423,271 1.000 423,271 10/1/95-96 223,360 ~ 1.000 223,360 1011196-97 572,503 1.000 572,503 14/1197-98 359,128 1.000 359,128 1011198-99 179,219 1.003 179,757 10/1/99-00 651,097 1.008 656,316 10/1100-01 831,441 1.023 850,677 l0/1/01-02 568,214 1.044 592,987 1011102-03 ~ 855,794 1.070 915,432 10/1/03-04 1,829,935 1.102 1,254,874 1011/04-05 245,455 1.1 S 1 282,607 1011/05-06 634,706 1.209 767,313 I0/1106-07 857,346. 1.390 1,191,939 Total 11, Q20, 684 11, 059, 379 Notes: (2~ & {3) Exhibit WC6, Sheet 1. (5) & (6) Exhibit WC6, Sheet 2. (4} Column (2} x Column (3}. (7) Column (5) X Column (6); One claim for $1,144,794 is capped at $500,000. 2/24/2DQ9 1 ~ [WCExhibitU~JWC ROBERTHUGHESASS~CIATES INC. t;ity of llenton Exhibit WCS yYorkers' Compensation Self Insurance Fund Sheet 2 Projection of Ultimate Claim Counts Closed Claim Count Projection Closed Closed Projected Claim Development Ultimate Fund Counts Factors to Claim Year rr, 91~ 30107 Ultimate Counts (l) (2} (3) (4) 10/1187-88 239 1.000 239 1011/88-89 213 1.000 213 1011/89-90 190 1.000 190 10/1190-91 205 1.000 205 1011191-92 133 1.000 133 1011192-93 158 1.000 158 1011193-94 172 1.000 172 10/1194-95 160 1.000 160 1011/95-96 147 1.000 147 1011196-97 146 1.000 146 10/1!97-98 124 1.001 124 10/1/98-99 100 1.004 100 10/1199-00 128 1.009 129 1011100-01 1$3 1.014 186 1011101-02 161 1.021 164 10/1102-03 155 1,029 160 1011103-04 123 1.060 130 IOI1104-05 119 1.113 132 1011105-06 114 1.264 144 1011/06-07 43 2,843 122 Total 3,(113 3,154 Reported Claim Count Projection Reported Reported Projected Claim Development Ultimate Fund Counts Factors to Claim Year 9130/07 Ultimate Counts (1 } (5) (6) (7} 1011187-88 239 1.000 239 1011188-89 213 1.000 213 1011189-90 190 1.000 190 1011190-91 205 1.000 205 1011191-92 133 1.000 133 10/1192-93 158 1.000 158 1011193-94 172 1.000 172 1011194-95 160 1.000 160 1011195-96 147 1.000 147 1011196-97 147 1.000 147 1011/97-98 124 1.000 124 1011/98-99 100 1.000 100 1011199-00 129 1.000 129 1011/00-O1 183 1.001 183 1011101-02 162 1.002 162 1011102-03 159 1.003 159 1 011103-04 129 1.004 130 10/1104-05 121 1.009 122 1011105-06 124 1.017 126 1011106-07 1 O1 1.170 11$ Total 3, 096 3,117 Notes. (2} & (3} Exhibit WC6, Sheet 4. (5) & (6) Exhibit WC6, Sheet S. (4) Column (2) ~ Column (3). (7} Column (5) X Column (6). J24/2009 18 ~wcE.~►a►m~~wc ROBERTHUGHESASSQCIATESWC. City of Denton Exhibit WC6 Sheet 1 Loss Develaprnent History Total Paid Indemnity, Medical and Expenses Months of Development from Inception Fund Year I2 24 36 48 60 72 84 96 108 120 132 144 10!1!87-88~ . 520,978 520,978 52I,236 52],57$ 521,578 521,588 1011188-89 329,31? 330,764 331,048 332,765 348,753 348,745 348,745 1011189-90 517,925 524,727 532,368 532,755 532,755 532,797 532,797 532,797 1011/90-91 424,314 429,480 452,068 458,251 460,113 460,440 460,440 460,440 460,440 ]0/1191-92 282,784 283,225 283,79b 296,498 296,49$ 296,498 296,498 296,498 296,498 296,498 10!(!92-93 146,649 154,569 157,647 159,251 159,251 159,220 159,220 159,220 159,220 159,220 159,220 ]0/1/93-94 112,171 265,234 308,395 361,098 379,780 390,860 424,025 433,842 441,000 445,538 445,538 445,538 10/1/94-95 109,079 271,707 295,776 321,806 333,296 393,683 408,652 415,886 419,780 422,946 423,115 423,271 10/1/95-96 99,042 175,620 204,311 216,106 220,242 221,377 222,907 223,360 223,360 223,360 223,360 223,360 1011196-97 225,930 403,305 426,b00 427,119 427,119 428,282 489,575 518,897 533,462 547,013 550,785 10/U97-98 149,960 251,821 271,855 288,384 297,852 302,389 336,234 351,759 355,334 359,128 10/1/98-99 84,301 168,242 ]72,164 172,481 173,049 178,774 179,219 179,219 179,219 10/1/99-00 215,224 543,750 618,222 624,611 627,314 629,319 632,263 641,134 1011!00-01 310,111 644,570 813,129 829,650 831,220 831,441 831,441 1011101-02 190,486 460,807 483,127 500,165 512,601 542,214 1011/02-03 159,982 402,427 511,898 571,513 619,567 1011103-04 609,014 871,135 955,699 1,042,082 1011!04-OS 121,377 223,915 228,431 L011/OS-06 177,566 535,355 1011I0b-07 278,685 Fund Report-to-Report Development Factors Year l2 - 24 24 - 36 36 - 48 48.60 60 -72 72 -84 84 -96 96 -108 108 -120 120 -132 132 -144 144 -156 1011187-88 1.000 1.000 1.001 1.000 1.000 1.000 1011/88-89 1.004 1.00] 1.005 1.048 1.000 1.000 1.001 1011189-90 1.013 1.015 1.001 I.000 1.000 1,000 1.000 1.000 10/1!90-91 1.012 1.053 1.014 1.004 1.001 1.000 1.000 1.000 1.000 1011191-92 1.002 1.002 1.045 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1011192=93 1.054 1.020 1.010 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 10!1!93-94 2.365 1.163 1.171 1.052 1,029 1.085 1.023 1.016 1.010 1.000 1.000 1.000 1011194-95 2,491 1.089 1.088 1.036 1.181 1.038 1.018 1.009 1.008 1.000 1.000 1.000 1011195-96 1.773 1.163 1.058 1.019 1.005 1.007 1.002 1.000 1.000 1.000 1.000 i 011196.97 I.78S 1.058 1.001 1.000 1.003 1.143 1.060 1.028 1.025 1.007 1011197-98 1.679 1,080 1.061 1.033 1.015 1,112 1.046 1.010 I.D 11 1011/98-99 1.996 1.023 1.002 1.003 1.033 1.002 1.000 1.000 1011!99-00 2.526 1.137 1.010 1.004 1.003 1.005 i.vi4 1011!00-01 2.079 1.262 1.020 1,002 1.000 1.000 1011/01-02 2.413 1.048 1.035 1.025 1.058 1011102-03 2.515 1.272 l.llb 1.084 1011/03.04 1.430 1.097 1.090 1011/04-OS 1,845 1.020 1011105-06 3.015 Calculated Factors Weighted Average 2.034 1.127 1.054 1.022 1.030 1.032 1.015 1.007 1.010 1.001 1.000 1.000 Linear Average 2.147 1.113 1.052 1.422 1.034 1.033 1.013 1.006 1.009 1.001 1.000 1.000 Average of Last 5 Years 2.244 1.140 LOSS 1.024 1.022 1.052 1.024 1.010 1.011 1.001 1.000 1.000 Excluding Hi & Lo 2.133 1.107 1.046 1.018 1.023 1.026 1.010 1.004 1.006 1.000 1.000 1.000 Comparison Factors ISO Technical Analysis 2.161 1.306 1.144 L080 1.047 1.031 1.023 1.016 1.165 NCCI-Texas 2.180 1.233 1.093 1.055 1.042 1.036 1.027 1.104 NCCI-All States (Loss) 2.237 1.278 1.121 1.062 1.035 1.023 1.016 1.197 Selected Factors Incremental 2.250 1.130 1-.103 1.054 1.030 1.025 1.020 I.O15 1.010 1.005 1.001 1.000 Cumulative ~ 3.285 1.460 1.292 1.17I 1.111 1.078 1.052 1.031 1.016 1.006 L001 1.000 2/24/2009 WCExhibit07,DentonTr1angles 19 ROBERTKUGHESASSOCIATES1NC. City of Denton Exhibit WC6 Sheet 2 Loss Development History Total Reported (Paid plus Case) Indemnity, Medical and Expenses Fund Months of Development from Inception Year 12 24 36 48 60 72 84 96 108 120 132 144 1011/87-88 520,978 520,978 521,236 521,978 521,978 521,588 1011188-89 397,175 432,391 334,975 337,880 359,778 348,745 350,745 10/1189-90 545,768 533,053 539,525 532,755 532,755 532,791 532,797 532,797 1011190-91 454,526 446,300 459,359 458,251 460,114 460,440 460,440 460,440 460,440 1011191-92 299,849 283,225 284,327 29b,498 296,498 296,498 296,498 296,498 296,498 296,498 1011192-93 171,715 169,669 161,944 159,251 159,251 159,220 159,220 159,220 159,220 159,220 159,220 1011193-94 275,886 330,051 332,840 388,631 383,467 398,967 427,267 538,282 464,741 464,741 445,538 445,538 1011194-95 331,745 353,712 315,398 321,806 385,352 423,302 408,652 440,136 419,780 425,766 423,115 423,27( 10/1/95-9b 281,486 193,708 211,291 216,156 222,292 22],377 222,907 224,407 223,360 223,360 223,360 223,360 10!1196-97 482,087 443,044 426,850 427,119 427,719 428,282 530,136 534,785 539,972 572,503 572,503 1011!97-98 308,407 281,385 285,180 406,278 339,533 332,713 393,608 418,663 405,54$ 359,128 10/1198-99 275,919 184,537 175,564 172,481 184,329 178,774 179,219 179,219 179,219 1011/99-00 519,280 816,152 702,435 631,390 641,136 b39,533 668,730 651,097 10J U00-01 656,16b 795,457 878,556 854,164 838,461 831,441 831,441 1011/O1-02 594,272 600,007 537,519 520,920 536,265 568,214 1011/02-03 445,145 659,338 660,085 840,b35 855,794 i 011103-04 1,790,790 1,844,438 1,832,303 1,829,935 1011104-05 462,493 256,508 245,455 1011105.06 595,407 634,70b 1011106-07 857,346 Fund Report-to-Report Development Factors Year l2 - 24 24 - 36 36 - 48 48 - 60 60 -?2 72 -84 84 -96 96 -108 108 -120 120 -132 132 -144 144 -156 1011187-88 1.000 1.000 1.001 1.000 0.999 1.004 1011188-89 1.089 0,775 1,009 1,065 0.969 1.006 0.996 10/1189-90 ` 0.977 1.012 0,987 1.000 1.000 1.000 1.000 1.000 10/1/90-91 0.982 1.029 0,998 1.004 1,001 1,000 1.000 1.000 1.000 1011191-92 0.945 1.004 1.043 1.000 1.000 1.000 1.000 1.000 1.000 1.000 10/1192-93 ° 0.988 0.954 0.983 1.000 1.000 1.000 1.000 1,000 1.000 1.000 1.000 1011193-94 ' 1.196 1.008 1.168 0.987 1.040 1.071 1.260 0.863 1.000 0.959 1.000 1.000 1011194-95 ' 1.066 0.892 1.020 1.197 1.098 0.965 1.077 0.954 1.014 0.994 1.000 1.000 1011/95-96 0.688 1.091 1.023 1.028 0,996 I.OD7 1.007 0.995 1.000 1.000 1.000 1011196-97 Q919 0.963 1.001 1.001 1.001 1.238 1.009 1.010 1.060 1.000 1011197-98 ' 0.932 0.992 1.425 0.83b 0.980 1.183 1.064 0,969 0.886 1011198-99 0.669 0.951 0.982 1.069 0,970 1.002 1.000 1.000 n.. n nnn . n. r n nnn ~ nii n nn~ 1011199-00 't.512 u.uot u.ayy i.uia ~,yyr i.v~ty a.7~~+ 1011100-41 1.212 1.104 0.972 0.982 0.992 1.000 1011101-02 1.010 0.896 0.969 1.029 1.060 1011102-03 1.4 81 1.001 1.2 74 1, 018 1011/03-44 1.030 0.993 0.999 1011/04-05 O.SSS 0.957 1011/OS-06 L066 Calculated Factors Weighted Average 1.054 0.97? 1.033 1.004 1,014 1.047 1.010 0.979 1.003 0.992 1.001 1.000 Linear Average 1,030 4.977 1.048 1.010 1.014 1,047 1.012 0.983 1.002 0.992 1.001 1.000 Average of Last 5 Years 1.028 0.990 1.022 1.023 1,000 1.094 1.011 0.985 0.992 0.990 1.000 1.000 Excluding Hi & Lo 1.024 0.976 1.028 1.009 1.010 1.037 1,011 0.993 1.008 0.995 1.000 1.000 Comparison Factors 1S0 Technical Analysis 1.317 1.089 1.038 1.022 1.012 1.011 1.008 1.004 1.063 NCCI-Texas 1.418 1.089 1,037 1.026 L023 1A14 1.009 1.088 NCCI-All Skates (Loss) 1.363 1.095 1.040 1.020 1,013 1.008 1.006 1.098 Selected Factors Incremental 1.150 1.050 1.045 1.030 ].025 1.020 1.015 1.005 ].003 1.000 1.000 1.000 Cumulative ' 1.390 1.209 1.151 1.102 1.070 1.044 1.023 1.008 1.003 1.000 1.000 1.000 2/24/2009 WCExhibit07,DentonTriang1es 20 ROBERTHUGHESASSOCIATESINO. City of Denton Exhibit WC6 Sheet 3 Loss Development History Case Reserves for Indemnity, Medical and Expenses Fund Months of Development from Inception Year 12 24 36 48 60 72 84 96 108 120 13? 144 10!1187-88 0 0 0 400 400 0 1011188-$9 67,858 101,627 3,927 5,115 11,025 0 2,000 1011189-90 27,843 8,326 7,157 0 0 0 0 0 1011190-91 30,212 16,820 7,291 0 1 0 0 0 0 1011191-92 17,065 0 531 0 0 0 0 0 0 0 1011192-93 25,066 15,100 4,297 0 0 0 0 0 0 0 0 10/1193-94 163,715 64,817 24,445 27,533 3,687 8,127 3,242 104,440 23,741 19,203 0 0 10!1194-95 222,66b 82,005 19,622 0 52,056 29,619 0 24,250 0 2,820 0 0 1011/95-96 182,444 18,088 6,980 SO 2,050 0 0 1,047 0 0 0 0 1011196-97 256,157 39,739 250 0 640 0 40,561 15,888 6,510 25,490 21,718 1011197-98 158,447 35,564 13,325 117,894 41,681 30,324 57,374 66,904 50,214 0 1011/98-99 191,618 16,295 3,400 0 11,280 0 0 0 0 1011199-00 304,056 272,402 84,213 6,779 13,822 10,214 3G,467 9,963 1011100-O1 346,055 150,887 65,427 24,514 7,241 0 0 1011!01.02 403,286 139,200 54,392 20,755 23,664 26,000 10/1/02-03 285,163 256,911 148,187 269,122 236,227 1011!03-04 1,181,776 973,303 876,604 787,853 10/1104-OS 341,116 32,593 17,024 1011105-06 417,841 99,351 10/1106-07 578,661 Ratio of Paid to Reported Indemnity, Medical and Expense Fund Report-to-Report Development Factors Year 12 24 36 48 60 72 84 96 108 120 132 144 101U87-88 1.000 1.000 1.000 0.999 0.999 L000 1011188-89 ' 0.829 0.765 0.988 0.985 - 0,969 1.000 0.994 10!1/89-90 0.949 0.984 0.987 1.000 1.000 1.000 1.000 1.000 1011190-91 0.934 0.962 0.984 1.000 1.000 1.000 1.000 1.000 1.000 1011191.-92 0.943 1,000 0.998 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1011192-93 0.854 0.911 0.973 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1011193-94 0.407 0.804 0.927 0.929 0.990 0,980 0.992 0.806 0.949 0,959 1.000 1.000 1011194-95 0.329 0.768 0.938 1.000 0.865 0.930 1,000 0.945 1.000 0.993 1.000 1.000 1011195-96 0.352 0.907 0.967 1.000 0.991 1.000 1.000 0.995 i.v0u i.00u i.000 i.000 1011196-97 0.469 0.910 0.999 1.000 0.999 1.000 0.923 0.970 0.988 0.955 0.962 1011!97-98 0.486 0.87b 0.953 0.710 0,877 0.909 0.854 0.840 0.876 1.000 1011198-99 0.306 0.912 0.981 1.000 0.939 1.000 1.000 1.000 1.000 1011199-00 0.414 O.b66 0.880 0.989 0.978 0.984 0.945 0,985 10!1100-01 0.473 0,810 0.926 0.971 0.991 1.000 1.000 1011101-02 0.321 0.768 0.899 0.960 0.956 0.954 10!1102-03 0.359 0.610 0.776 0.680 0.724 1011/03-04 0.340 0:472 0.522 0.569 1011104-OS 0.262 0.873 0.931 1011105-06 0.298 0.843 1011/06-07 0.325 Comparison. Factors ISO Technical Analysis 0.367 0.603 0.723 0.797 0.842 0.871 0.888 0.902 0.912 NCCI-Texas (Loss) 0.493 0.758 0,858 0.905 0.930 0.948 0.968 0.986 NCCI-All States (Loss) 0.407 0.669 0.780 0.841 0.876 0.895 0.908 0.917 2/24/2409 WCExhibit07,DentonTriang!es 21 ROBERTHUGHESASSOCIATES INC. City of Denton Exhibit WC6 Sheet 4 Loss Development history Closed Claim Counts Fund Months of Development from Inception Year 12 24 36 48 64 72 84 96 108 120 132 144 1011/87-88 232 232 236 236 237 237 10/1/88-89 203 204 208 208 208 209 209 10/1189-90 182 184 187 188 189 190 190 190 1011/90-91 195 197 198 202 204 205 2DS 205 205 1011/91-92 124 128 ]29 133 133 133 133 133 133 133 10/1/92-93 125 140 151 155 156 157 157 157 157 157 157 10/1193-94 69 139 152 163 168 169 169 170 171 171 172 172 1011194-95 86 129 144 155 155 155 157 158 158 159 160 160 ]011195-96 42 112 137 141 142 144 146 146 147 147 147 147 1011196-97 76 127 141 145 145 146 146 146 146 146 146 10/1/97-98 51 95 115 121 122 123 123 123 123 124 10/1198-99 39 87 96 97 98 99 100 100 100 10/1/99-00 48 100 117 123 127 127 127 128 ID/1100-01 86 153 164 169 178 183 183 1011101-02 b8 130 154 159 160 161 10/1102-03 53 137 150 154 155 10/1103-04 3I 108 122 123 10/l/04-OS 56 117 119 10/1/OS-06 70 114 1011/06-07 43 Fund Report-to-Report Development Factors Year 12 - 24 24 - 36 36.48 48 - 60 b0 -72 72 -84 84 -96 96 -108 108 -120 120 -132 132 -144 144 -15G 10/1/87-88 1.000 1.017 1.000 1,004 I.ooo I.OD4 10111$8-89 1.005 1,020 1.000 1,000 1,005 1.000 1.010 10/1/89-90 1.011 1.016 1.005 1.005 1,005 1.000 1.000 I ,ODD 10!1190-91 1,010 1.005 1.020 1.010 1.005 1,000 1.000 1.000 1.000 10/ 1191-92 1.032 1.008 1.031 1.000 1.000 1.000 1,000 1.000 1.000 1.000 1011192-93 1.120 1.079 1.026 1.006 1.006 1,000 1.000 1,000 1.000 1.000 1.006 1011193-94' 2.014 1.094 1.072 1.031 1.006 1.000 1.006 1.006 1.000 1.006 1.000 I.D00 1011194-95 1,500 1.116 1.076 1.000 1.000 1,013 1.006 1.000 1.006 1.006 1.000 1.000 10/1195-96 2.667 1.223 1,029 1,007 1.014 1.014 1.000 1.007 1.000 1.000 1.000 10!] /96-97 1,671 1.110 1.028 1.000 1.007 1.000 1.000 1.400 1.000 1.000 10/119?-98 1.863 1.211 1.052 1,008 1.008 1,000 1.000 1.000 1.008 1011!9$-49 2.231 1.103 1,010 1.010 1.010 1.010 1.000 1.000 ~ n l ~ rnn nn ~ nQZ ~ 17(1 1 D 51 1 033 1:[700 l .ODD 1.008 1011!00-Oi 1.779 1.072 1.030 1,053 1.028 1.000 1011/D 1-02 1.912 1.185 1.032 1.006 1.006 1011/02-03 2,585 1.095 1.027 1.006 1011103-04 3.484 1.130 1.008 1011/04-05 2.089 1.017 1011/OS-06 1.629 Calculated Factors Weighted Average 1.997 1.123 1.042 1.016 1.010 1.007 LOOS 1.004 1.002 1.002 1.000 1.003 Linear Average 2.116 1.127 1.041 1.015 1.010 1.007 1.004 1,003 1.002 1.002 1,000 1.003 Average of Last 5 Years 2.340 1.100 1.030 1.022 1.011 1.002 1.002 1.001 1.003 1.002 1.000 1.002 Excluding Hi & Lo 2.048 1.128 1.040 1.013 1,009 1.006 1.003 1.002 1.001 1.002 1.000 1.002 Selected Factors Incremental 2.250 1.135 1.050 1.030 1.008 1.007 1.005 1.005 1.003 1.00 l 1.000 1.000 Cumulative 2.843 1.264 1.113 1.060 1.029 1.021 1.014 1.009 1.004 1.001 1.000 1.000 2124!2009 WCExhibit07,Denton Triangles 22 ROBERTHUGHESASSOCIATESWC. City of Denton Exhibit WC6 Sheet 5 Loss DevelopmentHistary Reported (Closed plus Open) Claim Counts Fund Months of Development from Inception Year 12 24 3b 48 60 72 84 96 108 120 132 144 10/1187.88 238 238 238 238 238 238 1011188-89 211 211 211 211 211 211 212 1011189-90 190 190 190 190 190 190 190 190 1011/90-91 205 ZOS 205 205 205 205 205 205 205 1011/91.92 133 133 133 133 133 133 133 133 133 133 10/1192-93 157 158 156 158 158 158 158 158 158 158 158 10/1193-94 153 171 171 171 171 171 171 172 172 172 172 172 1011194-95 ISO 189 159 159 159 159 160 160 160 160 160 160 1011195-96 131 145 145 145 145 147 147 147 147 147 147 147 1011196-97 136 i46 146 14fi 147 147 147 147 147 147 147 1011197-98 108 118 120 124 124 124 124 124 124 124 1011198-99 90 98 100 100 100 100 100 100 100 10!1199-00 76 128 124 129 129 129 1Z9 129 1011100-41 174 183 183 183 t83 183 183 10!1101-02 143 160 161 161 162 162 1011/02-03 150 158 158 159 189 10/1103-04 113 128 129 129 1011/04-05 117 121 121 10/1/OS-D6 118 124 1O/1IOb-07 101 Fund Report-to-Report Development Factors Year l2 - 24 24 - 36 36 - 48 48 - 60 60 -72 72 -84 84 -96 96 -108 108 -120 120 -132 132 -144 144.156 lpl llg7_88 1.000 1.000 1.000 1.000 1.000 1.004 1011!88-89 1.000 I.OOD 1.000 1.000 1.000 1.005 1.000 10/1/89-90 I.O0O 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1011190-91 1.000 1.000 1,000 1.000 1.000 1.000 1.000 1.000 1.000 /011/91-92 !,DOD 1.000 L,O0O 1.000 1.000 1.000 1,000 l.DD0 1.000 ].400 1011192-93 1.006 1.000 1.000 1.000 1.000 1.000 1.000 I,DO0 1.000 1.000 1.000 1011193-94 1.118 1.000 1.000 1.000 1.000 1.000 1.006 1.000 1.000 1.000 1.000 1.000 1OI l 194-95 l .064 1.000 1.000 1.000 1.000 1.006 1.000 1.000 1.000 1.000 l .000 1.000 10/1195-96 1.107 1.000 1.000 1.000 1.014 1.000 1.000 1.000 1.000 1.000 1.400 1 Ol 1196-97 1.074 1.000 1.000 1.007 1,000 1.000 1.000 1.000 I.000 1.000 I 011197-98 1.093 1.017 1.033 1.000 1.000 1.000 1.000 1.000 1.000 10!1198-99 1.089 1.020 1.000 1.000 1,000 1.004 1.000 1.400 1011 /99-00 1.684 1, 00 8 1.000 1.000 1,000 1.000 1.000 10! 1100-41 1.052 1.000 1.000 1.000 1.000 1.000 1011!01-02 I.119 1.006 1.000 1.006 1.000 l 011/02-03 1.053 1,000 1,006 1,000 1011/03-04 1.133 1.008 1.000 1011104-05 1.034 1,000 1011105-06 LOS I Calculated Factors Weighted Average 1.108 1.004 1.403 1.001 1.401 1.000 1.000 1.000 1.000 1.000 1.001 1.001 Linear Average 1.128 1.005 1.003 1.001 1.001 1.000 1.000 1.000 1.000 1.000 1.001 1.001 Average of Last 5 Years 1.078 1.003 1.001 1.00.1 1.000 1.000 1.000 1.000 1.000 1,000 1.000 1.000 Excluding, Hi & Lo 1.086 L,4O4 1.001 1.001 1,000 1.000 1.000 1,000 1.000 1.000 1.000 1.000 Selected Factors Incremental l .l SO 1.008 1.005 1.001 1,001 1.001 1.001 1.000 1,000 1.000 1.000 1.000 Cumulative 1.170 1.017 1.009 1.004 1.003 1.042 I .DO1 1.000 1.000 1,000 1.000 1.000 2/24/2009 WCExhibit07,Denton Triangles 23 ROBERTHUGHESASSOCIATES INC. City of Denton Exhibit WC6 Sheet 6 Loss Development History Open Claim Counts Fund Months of Development from Inception yeu 12 24 36 48 60 72 84 96 108 120 132 144 101118,7,=88 0 0 0 0 0 0 6 6 2 2 1 1 1011188-89 0 0 0 0 0 8 7 3 3 3 2 ~ 1011189-90 0 0 0 0 8 6 3 2 1 0 0 0 1011190-91 0 0 0 10 8 7 3 1 0 0 0 0 1011191-92 0 0 9 5 4 0 0 0 0 0 0 0 10/I192-93 0 32 18 7 3 2 1 1 1 1 1 I 1011193-94 84 32 19 8 3 2 2 Z 1 1 0 0 10/1194-95 64 30 15 4 4 4 3 2 2 1 0 0 ! 011195-96 89 33 8 4 3 3 L 1 0 0 0 0 1011196-97 60 19 5 1 2 1 1 1 l 1 1 10/1197-98 57 23 5 3 2 1 1 1 1 0 1011198-49 51 ll 4 3 2 1 0 0 0 1011199-00 28 28 12 5 2 2 2 1 10/1/OO-01 88 30 19 14 5 0 0 10!1101-02 75 30 7 2 2 1 10/1102-03 97 21 8 5 4 1011/03-04 32 20 7 6 101(104-OS 6 I 4 2 ]0!1105-06 48 10 1011106-07 S8 Ratio of Closed to Reported Claims Fund Months of Development from Inception Year 12 24 36 48 60 72 84 96 108 120 ~ 132 144 1011187-88 0.975 0.975 0.992 0.992 0.996 0.996 1011188.89 0.962 0.967 0.986 0.986 0.986 0.991 0.986 1011/89.90 0,958 0.968 0.984 0.989 0.995 1.000 1.000 1.000 1011190-91 0.951 0,961 0.966 0.985 0.995 1.D00 1.000 1.000 1.000 1011191-92 0.932 0,962 0,970 1.000 1.000 1.000 1.000 l.oao l.oao 1.000 IDI1192-93 0.796 0.886 0.956 0.981 0.487 0.994 D,994 0,994 Q.994 0.994 0.994 1011193-94 0.451 0.813 0.889 0.953 0,982 0,988 0.988 0.988 0.994 0.994 1.000 1.000 10!1194-95 0.573 0.811 0,906 0,975 0,975 0,975 0.981 0.988 0.98$ 0.994 1.000 1.000 1011!95-96 0,321 0.772 0.945 0.972 0.979 D.480 0.993 0.993 1.000 1.000 1.000 1.000 0.8-0 u.yoo u,77J v.~pU v.»~ 1011196-97 0.559 " ^ ^ noc n not n oo~ n oar 0,443 0,993 0.493 10!1197.98 0.472 0,805 0.958 0,916 0,984 0.992 0.992 D.992 0.992 1.000 1011198-99 0.433 0.888 0.960 0.9'10 0,980 D.990 1,000 1.000 1.000 10/1199-00 0.632 0.781 0.907 0.953 0,984 0,984 0.984 0.992 1011100.01 0.494 0,836 0.896 0.923 0.973 1.000 1.000 1011101-02 0.476 0.813 0.957 0.988 0.988 D,994 1011102-03 0.353 0.867 0,949 0.969 0.975 10/1103-04 0.214 0.844 0,946 0.953 1011104-OS 0.479 0.967 0,983 10!1!05-06 0,593 0.919 1011106-07 0.426 2/2412009 24 WCExitibit07,Denton Triangies ROBERTHUGHESASSOCIATES INC. ltd Of ent0ll Appendix Comparison of Selected Ultimates Selected Selected Losses Losses Change Fund & ALAS & ALAE in Year a 9/30105 9/30/07 Estimate { 1) (2) (3} (4) 1011187-88 521,638 521,638 0 1011/88-89 352,482 373,071 20,589 10/1189-90 532,797 532,797 0 1011190-91 460,440 460,440 0 1011/91-92 296,498 296,498 0 10/1192-93 159,220 159,220 0 1011/93-94 445,538 445,551 13 10/1/94-95 425,442 423;271 {2,171) 1011/95-96 227,403. 223,3.60 (4,043} 1011/96-97 550,285 572,503 22,218 1011197-98 443,459 359,128 (84,331) l 011198-99 212,520 1$5,604 (26,916) 1011199-00 690,330 661,760 (28,570) 1 Oll I00-01 907,966 860,196 {47,770) ,nr~ tn~ n~ 24(~ X1(1 ~'lQ (1d 4111 lU/ 1/U1-UL vL~,~v~ viv,v ~ v ~l ~,J 1 1~ 10/1102-03 706,279 905,815 199,536 10/1103-04 1,419,036 1,257,500 (161,536} 10/1104-OS 716,672 381,623 (335,049) Total 9,693,394 9,230,853 (462,541) Notes: {2) Selected ultimates as of 9130105. (3) Exhibit 1, Sheet 1, Column (2}. (4} Column (3) -Column (2), 2/24/2009 WCExhibit07,Comparisor~ 25 ROBERTHUGHESASSOCIATES INC. REPORT TO CITY OF DENTON . SELF-INSURANCE FUND REGARDING GENERAL LIABILITY PROGRAM REQUIRED FUNDING LEVELS AS OF 9130/07 Prepared By ROBERT HUGHES ASSOCIATES, INC. 508 TWILIGHT TRAIL, SUITE 200 RICHARDSON, TEXAS 75080 (972) 980-0088 February 24, 2009 R~BERTHUGHESASSOCIATES INC. REPORT TO CITY OF DENTON SELF-INSURANCE FUND REGARDING GENERAL LIABILITY PROGRAM REQtJ~ED FUNDING LEVELS AS OF 913 a/07 Purpose and Scope At the request of the managers for the City of Denton Self Insurance Fund (City), Robert Hughes Associates, Inc. (RHA) performed an actuarial analysis of the fund's general liability program loss experience as of September 30, 2007. The intent of the review is to provide the City with a perspective on the financial status of the self insurance fund. Specifically, we estimated the total reserves required for outstanding losses and allocated loss adjustment expenses (ALAS) for the City as of September 30, 2007 using loss data evaluated as of this date. In addition, we provided projected ultimate loss and allocated loss adjustment expense for the prospective funding periods 1011/07-08 and 1011 /08-09, Distribution and Use This report is prepared for use by the management and board of the City to assist in evaluating the financial status of the self insurance fund and appropriate funding levels for the funding periods 1 011107-08 and 1011108-09. we understand that copies of this report may also be provided to accountants and auditors for the City, current and potential excess insurance carriers, and state regulatory authorities. We request that if this report is distributed, it be furnished in its entirety. All recipients should be made aware that RHA personnel are available to answer any questions regarding the report or the underlying actuarial analysis. Further distribution or alternative use of this report other than that described above is not authorized without the prior consent of Robert Hughes Associates, Inc. Summary and Conclusions Exhibit Summ, Sheet 1(page 6) summarizes our recommendation of General Liability (GL) Program loss and allocated loss adjustment expense reserves for the City as of 9/30107. As shown on Exhibit Sumrn, Sheet 1(page 6), our analysis produced total retained outstanding losses and all loss adjustment expenses (LAE} for the City of $345,423 as of 9130/07. The City does not carry case basis reserves for the GL fund so this entire reserve amount must be considered incurred-but-not-reported (IBNR) reserve. Discounting loss reserves provides an allowance for investment income. ~Ve assumed an investment rate of return of 4.0%. Formula discounted total outstanding losses and LAE as of 9/30/07 are estimated to be approximately $316,699. Our projected ultimate loss and ALAS for the prospective periods are shown on Exhibit Summ, Sheet 2 (page 7}, The total ultimate loss and loss adjustment expense (L~iLAE) for the periods 1011/07 through 9130109 are: Fund Year Ultimate L&LAE Discounted Ultimate L&LAE 10/1107-08 $245,660 $224,779 10/1108-09 $259,104 $227,961 Total $504,764 $452,740 1 ROBERTHUGHESASSOCIATESILAC. When funding for losses in aself-insurance fund, it is generally advisable to include an additional amount to cover the possibility of an unexpected frequency or severity of loss. This is especially true when the funding levels are below the specific retention levels. The City retains $500,000 of each claim, and the formula funding for all periods is less than this amount. A single maximum claim could exhaust all fund monies. Using a Monte Carlo statistical technique, we have simulated the fund's loss potential with assumed statistical loss frequency and severity distributions for 1,000 trials. The results of these simulations provided us with a risk loading for the City at the 7S%, 8S% and 90% confidence levels. The loss and ALAS reserve level for the City is $356,286 at the 75% level for fund years 10/1/97 through 9130107. In other words, loss reserves of $356,286 would be adequate to fund the losses and ALAE in 750 out of 1,000 simulations of the 1011197-07 experience period. The total Loss and ALAE for fund years 1a/1/07 through 9/30109 is $509,333 at the 75% level. The choice of an appropriate confidence level for funding purposes is up to the prerogative of fund management. The level selected is generally based on the risk aversion of management'and the availability of surplus funds. It is our experience that a confidence level of at least 75% is reasonable and supportable. . Background Effective October 1, 1997, the City of Denton began self insuring its general liability (GL} . coverage, including automobile liability and other multiple peril coverages. The program provides coverage on an occurrence basis with the City retaining the first $500,000 per claim. After the City has met this obligation, commercial insurance pays up to $S million for all claims arising from that occurrence. The City has a workforce of about 1,120 employees and has an effective safety and risk management program in place. The City provides law enforcement, fire safety, paramedics/rescue, refuse collection, sanitary landfill, electric distribution and transmission, water, wastewater, storm sewer, animal control, parks/recreation, library, airport services, street maintenance and traffic control. Reliances and Limitations There are a number of factors that are pertinent to the proper interpretation of our results. . ~n the course of our analysis we relied without audit or verification on data and information ~ . r - provided bythe City. We also relied without audit or verification upon data from insurance industrysources as required. We did, however, review all information for reasonableness based on our knowledge of the property and casualty insurance industry. The estimation of ultimate loss and loss adjustment expense underlying our conclusions is subject to potential errors of estimation due to the fact that the ultimate liability for claims is subject to the outcome of events yet to occur. For example, for open .suits, the decision of an administrative judge or a jury may be required to ultimately determine the amount of loss. Furthermore, not all claims that have occurred have been reported at this time. While we have estimated the expected ultimate lass and lass adjustment expense amounts in accordance with what we consider to be reasonable judgments and actuarial techniques, it should be recognized that actual future loss emergence will likely deviate, perhaps substantially, from the RHA estimates. Due to the nature and degree of uncertainties involved in projecting future losses, no assurance can be offered that any specific funding level will be adequate or not excessive. In our estimation of recommended funding for the City, we have anticipated future investment income. The projected investment income is based on the probable length of time between the 2 ROBERT~UGHESASSOCIATES INC. occurrence of an incident and the ultimate settlement and payment of the resulting loss or expense. It should be noted that an additional source of variation is introduced in estimating liabilities and computing funding levels on a discounted basis. That is, besides the risk of underestimating or overestimating the overall amount of the loss and expense liabilities, there is the additional risk that the timing of the future payment of those liabilities may differ from our expected payment pattern. Also, capital gains or losses, or significant changes in economic conditions may affect the yield on assets supporting the liabilities. we have assumed a 4.0% rate of return on investments which is slightly below current CD rates due to the uncertainty of projected payment patterns. Unless otherwise noted, any reference to loss(es) within this report includes a provision for allocated loss adjustment expenses. The exhibits attached in support of our results should be considered an integral part of this report. Methodology and Description of Exhibits The exhibits documenting our analysis are arranged in approximate order of calculation, from back to front. Details regarding the calculations are generally contained in the footnotes to each exhibit. Historical Loss Development Triangles Loss development triangles with the fund's own experience were not available. We have relied on Commercial Multi Peril loss development triangles from Schedule P of A.M Best's Aggregates and Averages. In general, the development triangles shown in Appendix A, Sheet 1 (page 17) shows the loss and ALAS amounts for each fund year as of each year-end 12/31/ from 1997 through 2006. Report-to-report development factors are computed based upon the observed changes in losses at the successive evaluations. we will continue to update these triangles and will continue to use more of the fund's own development experience as time goes on. Appendix A, Sheet 1(page 17) shows paid indemnity, medical and expense experience. Sheet 2 (page 18) displays claim counts. The Appendix A, Sheet 3 (page 19} triangle shows average .paid losses and was calculated by dividing the payments from Sheet 1 by the claim counts in Sheet 2. Although we believe the industry factors chosen are reasonable, there can be substantial differences in settlement patterns between self insured entities and commercial insurers. There are also differences in settlement and payment patterns between funds administered by different third party administrators. Loss Development Projection of Ultimates Exhibit GLS (pages 1S & 16) details the development projections of ultimate lass amounts and counts for all periods through 9l3 0107. Sheet 1(page 15}contains the projections of ultimate losses and ALAS using the City's paid experience. Since the City does not set individual case reserves for this coverage, there is no comparable incurred projection. Selected cumulative paid development factors from Appendix A, Sheet 1(page 17) are applied to the paid lass amounts as of 9/30107. Based on the paid loss development analysis, the estimated ultimate losses and ALAS far ali years through 9/30107 total $1,671,305. Sheet 2 of Exhibit GLS (page ld} shows the development projections of ultimate claim counts, Closed claim counts as of 913 0/07 are multiplied by the cumulative development factors from Appendix A, Sheet 2 to produce estimated ultimate counts for all years of 469. The lower section of Exhibit GLS, Sheet 2 (page 16} shows the projection of ultimate average paid 3 ROBERTHUGHESASSOCIATESINO. amounts. The City's average GL payments as of 9/30/07 are projected using development factors from Appendix A, Sheet 3 to generate the ultimate average losses in Column (7}. On the lower section of Exhibit GLS, Sheet 1(page 15), the projected ultimate average losses paid from Sheet 2, Column (7} are multiplied by the projected ultimate claim counts from Sheet 2, Column (4) to generate another estimate of ultimate losses and ALAE. Based on the average paid times number of claims closed projections, the estimated ultimate losses and ALAS for all years through 9/30107 total $1,634,946. Estimation of Expected Loss Costs Exhibit GL4 (page 14) documents our estimation of expected loss costs for the City. Based on payroll far the fund, and the average of the two projection methods on Exhibit GLS, Sheet 1 (page 15), We have computed the indicated loss costs per $100 of payroll. Loss costs, or pure premiums, remove the effect of changing exposure volumes. Based on indicated loss costs in Column 4 we have selected an initial loss cost of 0.300 for all years. Bornhuetter-Ferguson Projection of Ultimates Exhibit GL3 (page I3) projects ultimate losses using the Bornhuetter-Ferguson (BF}method applied separately to paid data. The BF procedure is a compromise between the responsiveness of a straight development method and the stability of a loss ratio approach to reserving. This method is often used in cases where loss fluctuations are great from year to year.. To estimate the ultimate losses using the BF method, we first extend the expected loss costs from Exhibit GL4 (page 14} by the payroll and the expected percentage of losses unpaid at 9130107. The result is an estimate of unpaid losses as of the evaluation date. The projections of ultimate losses and ALAE are then calculated by adding actual paid losses as of 9130107 to the generated estimates of unpaid losses. The Paid BF projection of ultimate losses and ALAE for all years is $~~1~699,134. Selection of Ultimates In .Exhibit GL2, Sheets 1 through 3 (pages 10 through 12), We bring together the results of the various projection techniques described above and document our selection of expected ultimate losses and claim counts by fund year. F.xhihit CTT.~. ,~'~1P,Pt ~ I naaP, ~ chnWC nllr CP,1P.C'.ttfln d11~t~mafP maim rn~infe ~11en ir► ChAAt'~ a..~,u~av►r vt.+~, r.r a.e~~r r ,p+~~~ ate/ vanv rr ✓ vNS v~~vv4ly Ai Vi NJf.1111 N.{.V Y161.1.J31 VV{.ll,({.A~• 4 I..IJV .~jl ~l~`/~{. .J (page 12), We relate our ultimate counts to the payroll exposure to calculate the claim frequency, We often look at claim count results to judge the reasonableness of our loss projections. We have selected an ultimate claim count of 469 or 0.085 claims per $100,000 of payroll. Our projections of ultimate losses and ALAE are displayed in Exhibit GL2, Sheet 2 (page 11). The three projection methods are compared and an appropriate selection is made. The selections for the periods 10/1197-03 are based on the average of all three methods. The selections for the periods 1011103-07 are based on the Paid BF method. The total selected ultimate loss and ALAE for all years combined is $1,707,769. Sheet 1 of Exhibit GL2 (page 10) summarizes our ultimate selections as well as the indicated . . average claim amounts. We estimate the ultimate losses and ALAE for the City to be $1,707,769 on 469 ultimate claims for an indicated average claim amount of $3,641. Loss and ALAE Funding Levels Exhibit GLI, Sheet 2 (page 9) documents the calculation of factors that are applied to outstanding loss estimates in order to recognize investment income on loss reserves. An 4 ROBERTHUGHESASSOCIATESINO. expected return on investment of 4.0% is assumed. The payment pattern assumed is based on paid loss development factors selected in Appendix A, Sheet 1 (page I7). The discount factors displayed in this exhibit are calculated to recognize the remaining expected payout pattern as of the evaluation date. Because the payment patterns are not uniformly decreasing, the formulas will occasionally produce discount factors that are not steadily increasing. On Exhibit GL 1, Sheet 1 (page 8), we calculate loss costs that will be applied to exposure in the prospective years in order to calculate the total loss and ALAS for the future years. The selected ultimate lass and ALAE in column (2) are divided by the payroll in column (3} to estimate the loss costs for each year. These loss costs are adjusted to the cost levels that we expect will prevail in the l0/1107-08 period. we selected a loss cost of 0.375 based on the average of Column (6) excluding the highest and the lowest loss costs. On Exhibit Sunarn, Sheet 2 (page 7), we calculate the ultimate loss and ALAE for fund years 1 O/1107-08 and 10/1/08-09. we adjust the selected loss costs calculated in Exhibit GLI, Sheet 1 to the cost levels for each of the future periods. This adjusted loss costs is then combined with the estimated payroll for the year to project the ultimate loss and ALAE for that year. The total estimated loss and ALAE for the funding periods 1011/07-09 is $504,764 on an undiscaunted basis and $452,740 on a discounted basis. On Sheet 1 of Exhibit Summ (page 6), we remove losses and ALAE paid by the fund through 9/30107 to develop a loss reserve indication as of this date. when we subtract out payments made through the evaluation, the loss and LAE reserve estimate is $345,423 on an undiscounted basis and $316,699 on a discounted basis. As previously mentioned, simulation techniques provided us with risk margin factors that produce reserve or funding estimates at various confidence levels as of 9130/07. The addition of risk margins to the required funding level provides protection from adverse development that would normally be absorbed by surplus in an insurance company scenario. The total discounted funding as of 9130107 at a 75% confidence level is $356,286 for. all fiscal years through 9130107. The total funding at the 75% level for the prospective periods 1011/07 through 9130109 is $509,333. Comparison to Previous Projections Qr~nenriix R ~na~e 2~1 ~rr~vir~e~ a cc~rnn~risnn of the nrniecteci ll~tii'i'iAtP, lr~~~~c in tic ar~~lvcic -t-r-------- - ~r--o- - r- - - -----r--__---_ r- w..».l with those projected in our analysis as of 9/30/05. Our projected ultimate losses for all fund years 1011197-9/3 015 using data evaluated as of 9/3 0107 are $23 0,1341ess than the proj ections made as of 9130/05. Respectfully submitted, BERT SSOCIATES, INC. ~ { ~K'~ f p Jeanne H. Camp, FCAS, I41AAA Chief A ry Kofi Senior Actuarial Con ~ ltant 5 R~BERTHUGHESASS~CIATES INC. City of Denton Exhibit Summ General Liability Self Insurance Fund Sheet I Recommendation of Loss and ALAS Funding Total Loss and ALAE Reserves as of 9134147 Retained Retained Indicated Indicated Discounted Including Including Including Selected Paid Case Loss IBNR Loss Total Loss Total Loss Contingency Contingency Contingency Ultimate Losses &ALAE &ALAE &ALAE &ALAE Margin @ Margin @ Margin @ Fund Losses &ALAE Reserves Reserves Reserves Discount Reserves 75th 85th 90th Year &._ALAE 9130107 9130107 9130107 9130/07 Factors 9/30107 Percentile Percentile Percentile (1) ~ (2) (3) (4} ~ ~ (5) (6) (7) (8) (9} (10} (11) 1011197-98 94,738 93,965 0 773 773 0.981 758 853 894 1,023 1011198-99 68,271 66,884 0 1,387 1,387 0,962 1,335 1,502 1,575 1,802 1011199-00 149,628 145,934 0 3,694 3,694 0.948 3,502 3,940 4,132 4,728 ]011100-O1 174,059 165,885 0 8,174 8,174 0.936 7,651 8,607 9,028 10,329 1011!01-02 420,625 394,383 0 26,242 26,242 0.930 24,405 27,456 28,798 32,947 1011/02-03 222,004 197,716 0 24,288 24,288 0.924 22,442 25,247 26,482 30,297 1011103-04 102,494 71,301 0 31,193 31,193 0.919 28,666 32,249 33,826 38,699 1011/04-OS 94,432 46,442 0 47,990 47,990 0.916 43,959 49,454 51,872 59,345 1011105-06 224,174 153,270 0 70,904 70,904 0.910 64,523 72,588 76,137 87,106 1011106-07 157,344 41,440 0 115,904 115,904 0.913 105,820 119,048 , ]24,868 142,857 Total 1,707,769 1,317,220 0 330,549 330,549 303,061 340,944 357,612 409,132 ULAE Reserves: 14, 875 13, 638 1 S, 342 16, 093 18, 411 Total L&LAE 345, 423 316, 699 356, Z86 373, 705 427, 543 Notes: (2) Exhibit GL1, Sheet 1, Column (2); (3) Exhibit GLS, Sheet 1, Column (2). (4) City of Denton do not set case reserves for the multi peril claims. (5) Column (2) -Column (3) -Column (4). rit n_~~_.____ rep , n_I_____ ~oJ t,oiumn ~~+J -r ~uiumn J. (7) Exhibit GLI, Sheet 2, Column (7). (8) Column (6) X Column (7}. (9) thru' (11) Column (8) adjusted to reflect confidence levels. 2/2412009 6 GL~xhibit07,Projection & Outstanding, ROBERTHUGHESASSOCIATESINO. Clty Of ~~A~O~I Exhibit Summ General Liability Self Insurance Fund sheet2 Funding for Prospective Years Including Including Including Trended Indicated Factor Indicated Discounted Contingency Contingency Contingency Lass Costs Estimated Ultimate to Adjust Ultimate Ultimate Margin @ Margin ~u Margin c~r Fund per $100 Payroll Losses for Losses Discount Losses 75th 85th 90th Year Payroll in 100's & ALAE ULAE &LAE Factor &LAE Percentile Percentile Percentile (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (I 1) 1011/07-08 0.375 ~ 626,883 235,081 4.50% 245,660 0.915 224,779 252,876 265,239 .303,451 1011/08-09 0.384 645,063 247,946 4.50% 259,104 0.880 227,961 256,457 268,994 307,748 Total 1,271,946 X83,027 504,764 452,740 509,333 534,233 611,199 Notes: (2) Selected from Exhibit GL1, Sheet 1, Adjusted for Trend, (3) Estimated Payroll based on Exhibit GL4, Column (2). (4) Column (2) x Column (3). (5) Selected based on Industry Experience. (6} Column (4) x [ 1 + Column (5)]. (7) Discount factors -Exhibit GLI, Sheet 2, adjusted to the respective prospective period. (8) Column (6) x Column (7). (9) thru' (l I) Column (8) adjusted to reflect confidence levels. J24{? 009 GLExhibit07,Projection & Outstanding 1 ROBERTHUGHESASSOCIATESINO. t;ity of Denton Exhibit GL] General Liability Seaf Insurance Sheet l Projection of Trended Loss Casts Per Payroll Selected Indicated Indicated Trended Ultimate Loss Costs Trend Loss Costs Fund Losses Payroll per $100 Factors per $100 Year & ALAE in 100's Pa roll 2.50% Pa r~oll_ (1) (2} (3) ~4) (5) (6} 1011/97-98 94,738 439,408 0.216 1.280 0.276 1011/98-99 68,271 468,382 0.146 1.249 0.182 1011199-00 149,628 563,306 0.266 1.218 0.324 10/1100-O1 174,059 550,998 0.316 1.189 0.376 1011!01-02 420,625 671,544 0.626 1.160 0.726 10/1!02-03 222,004 529,525 0.419 1.131 0.474 1011103-04 102,494 540,209 0.190 1.104 0.209 1011104-05 94,432 558,077 0.169 1.077 0.182 1011/05-06 224,174 582,809 0.385 1.051 0.404 1011/06-07 157,344 609,216 0.258 1.025 0.265 Total 1, 707, 7b9 5, 513, 475 0.310 0.353 Trend All Years: 2.60% Avera es Trend 10/1/00-01 through 10/1/06-07: -8.50% All Years 0.342 Last 5 Years 0.307 Last 3 Years 0.284 Excluding Hi & Lo 0.314 Selected 0.375 Notes: (Z} Exhibit GL2, Sheet 2, Column (6}. (3) Exhibit GL4, Column (2). (4} Column (2) I Column (3). (5} Trend factor to adjust for changes in cost levels. (6) Column (4) x Column (5). 2/24!?009 [GLExhibit07jGL $ ROBERTHUGHESASSGCIATES!NC. L~lt~ Of ~elltOn Exhibit GLI General Liability Self Insurance Sheet 2 Calculation of Discount Factors Assuming a 4.0% Investment Rate of Return Discount Present Present Factors at Payment Pattern Value Value of Beginning Year Cumulative Incremental Factors Payments of Year (1) (2) (3) (4) (S) (6) 1 36,58 % 36.58 % 0.981 0.359 0.915 2 59.45 % 22, 86 % 0.943 0.216 0, 913 3 71.34 % 11.89 % 0.907 0.108 0.910 4 80.75 % 9.42 % 0.872 0.082 0.916 5 87.21 % 6.46 0.838 0,054 0.919 6 91.57 % 4.36 % 0.806 0.035 0.924 7 94.69 % 3.11 % 0.775 0.024 0.930 8 96.58 % 1.89 % 0.745 0.014 0.9.36 9 98.03 % 1.45 % 0.717 0,010 0.948 10 99.01 % 0.9.8 % 0.689 0.007 0.962 11 100,00 % 0.99 % 0.662 0.007 0.981 Total 100.00 % 91.54 Notes: (2) 1=Cumulative Factors from Exhibit GLS, Sheet 1. l~l ('nlmm~ ('~l rnrrant vaor _ (`'nlt~mn 1`31 nrrrtr vnnr `.~1 VV1Ullltl `c.~, vuilvtt~,'vCLI - vVlt.111111 `G~, ~.111V1 yVL11. (4} Present value factors assume single payment at mid-year. (5} Column (3) x Column (4). (6} Discount factor for beginning of year based on Column (S). 2/2412009 {GLExhibitD7]GL 9 RGBERTHUGHESASSGCIATESINO. ~.lty Ot .l~ent0ll Exhibit GL2 General Liability Self Insurance Fund Sheet 1 Xndicated Ultimate Loss and ALAS ~tatios Summary of Ultimate Amounts, Counts, and Averages Selected Selected Indicated Ultimate Ultimate Ultimate Fund Losses & Claim Average Year ALAS Counts Claim (1) (2) (3} (4) 10/1/97-98 94,738 42 2,256 1011198-99 68,271 37 1,845 1011199-00 149,628 43 3,480 10/1 /00-0 l 174,059 5 8 3,001 10/1 /O l -02 420,625 46 9,144 10/1102-03 222,004 62 3,581 1011103-04 102,494 3 8 2,697 1011/04-OS 94,432 32 2,951 1011/05-06 224,174 57 3,933 1011106-07 157,344 54 2,914 Total 1, 707, 769 X69 3,61 Notes: (2} Exhibit GL2, Sheet 2, Column (6}. (3) Exhibit GL2, Sheet 3, Column (4). (4) Column (2} =Column (3}. zlz4izoo9 10 [GLExhibit07~GL R~BERTHUGHESASSOCIATES INC. City of llenton Exhibit GL2 General Liability Seif Insurance Eund Sheet 2 Selection of Ultimate Losses and ALAE Summary of Ultimate Loss &ALAE Projections Projected Ultimate Losses &ALAE Selected Average Paid Paid Ultimate Fund Paid x Closed Bornhuetter- Losses Year Development Claim Counts Ferguson &ALAE (1) (2) (3} (4} (5} 1011/9?-98 94,905 94,038 95,270 94,738 1011/98-99 68,228 66,933 69,653 68,271 1011199-00 151,100 146,071 151,712 149,628 1011/DO-O 1 175,193 172,318 174,667 174,059 1011/O1-02 430,673 419,842 411,359 420,625 1011/02-U 226,705 221,278 218,029 222,004 1011/03-04 88,295 85,766 102,494 102,494 1011/04-05 65,103 63,936 94,432 94,432 1011105-06 257,826 254,334 224,174 224,174 . 10/1106-07 113,277 110,430 15 7,3 44 15 7,344 Total 1, 671, 305 1, 634, 946 1, 699,134 1, 707, 769 Notes: (2) Exhibit GLS, Sheet 1, Column (4). (~1 F,rhihit ('TT S ChPPt 1 ('nlmm~ (71 ~untiivi~ vi.+, viivvt, i, VVltaatul (4) Exhibit GL3, Column (7). (5) 1011/97-03, based on Average of all methods; 1011103-07, based on the Paid BF method. 2124/2009 [GLExhibit07]GL 11 ROBERTHUGHESASSOCIATESWC. L~Ity of llenton Exhibit GL2 General Liability Self Insurance Fund Sheet 3 Selection of Ultimate Claim Counts Indicated Ultimate Claim Frequencies Per X100,000 Payroll Indicated Projected Selected Claim Ultimate Ultimate Frequency Fund Claim Count Claim Payroll Per $100,000 Year Development Counts in $100's Payroll (1 } (2) (3) (4) (5) 1011197-98 42 42 439,408 0.096 1011198-99 37 37 468,382 0.079 1011199-00 43 43 563,306 0.076 1011100-O1 58 58 550,998 O.I05 l0/1101-02 46 46 671,544 0.068 1011102-03 62 62 529,525 0.117 10/1103-04 38 38 540,209 0.070 1011/04-05 32 32 558,077 0.057 10/1105-06 57 57 582,809 0.098 1011106-07 54 54 609,216 0.089 Total 469 469 5,513,475 0.085 Notes: (2) Exhibit GLS, Sheet 2, Column (4). ~3) Based on the Closed Claim Development Method. (4) Exhibit GL4, Column (2). (5) Column (4) =Column (5) X 1,000. 2/24/2009 ~ 2 [GLExhibit07]GL RQBERTHUGHESASSOCIATES/NC. ~,'it~ Ot~ llellton Exhibit GL3 General Liability Self insurance Fund Projection of Ultimate Losses and ALAS Paid Bornhuetter-Ferguson Projection Expected Expected Loss Costs Percentage Fund per $100 Payroll Unpaid Year Payroll in $100's 9/30/07 (1) (2) (3) (4) 10/1197-98 0.300 439,408 0.99 10/1198-99 0.300 468,382 1.97 1011199-00 0.300 563,306 3.42 1011100-01 0.300 550,998 5.31 1011101-02 0.300 671,544 8.43 1011102-03 0.300 529,525 12.79 1011103-04 0.300 540,209 19.25 .1011/04-OS 0.300 558,077 28.66 1011105-06 0.300 582,809 40.55 10/1106-07 0.300 609,216 63.42 Expected Unpaid Paid Projected Losses Losses Ultimate Fund &ALAE &ALAE Losses Year n 9/30107 a 9130/07 &ALAE (1} (5} (6) (7) 1011197-98 1,305 93,965 95,270 1011/98-99 ~ 2,769 66_~R4 ~q ~S~ 1011199-00 5,778 145,934 151,712 1011/00-O1 8,782 16S,885 174,667 1011101-02 16,976 394,383 411,359 1011/02-03 20,313 197,716 218,029 1011103-04 31,193 71,301 102,494 10/1104-05 47,990 46,442 94,432 1011/05-06 70,904 153,270 224,174 1011106-07 115,904 41,440 157,344 Total 321,9.14 1,377,220 1,699,134 Notes: (2} Exhibit GL4, Column (5). (S} Column (2} X Column (3) x Column (4}. (3} Exhibit GL4, Column (2). (6) Exhibit GLS, Sheet 1, Column (2}. (4) 1- [1=Exhibit GL 5, Sheet I, Column (3)]. (7} Column (5} + Column (6). 2/2412009 (GLExhibit07]GL 13 RGBERTHUGHESASSGCIATESINO. C,~ity of llenton Exhibit GL4 General Liability Self Insurance Fund Estimation of Expected Loss Costs Based on Development Projection Results Average Projected Indicated Ultimate Loss Costs Selected Fund Payroll Losses per $1 QO Initial Year in 100's & ALAE Payroll Loss Costs (1) (2} (3) (4) (5) 10/1197-98 439,408 94,472 0.215 0.300 10/1/98-99 468,382 67,581 0.144 0.300 10/1199-00 563,306 148,586 0.264 0.300 1011100-01 550,998 173,756 0.315 0.300 10/1/01-02 671,544 425,258 0.633 0.300 10/1/02-03 529,525 223,992 0.423 0.300 1011/03-04 540,209 87,031 0.161 0.300 1011/04-OS SS8,077 64,520 0.116 0.300 10/1/05-06 582,809 256,080 0.439 0.300 1011106-07 609,216 111,854 0.184 0.300 Weighted Average: 0.300 Linear Average: 0.289 Average of last 5 years: 0.265 Average of last 4 years: 0.225 Average excluding high & low: 0.268 Selection: 0.300 Notes: (2) From City of Denton. (3) Average of Columns (4} and (7} from Exhibit GLS, Sheet 1. (4) Column (3} _ Column (2). (5) Selected based on averages. zrz4izoog [GLExhibit07]GL 1 ~ ROBERTHUGHESASSOCIATES1NC. ~'ity of llenton Exhibit GL5 General Liability Self Insurance Fund Sheet ~ Projection of Ultimate Losses and ALAE Paid Loss Development Projection Paid Paid Projected Losses Development Ultimate Fund &ALAE Factors to Losses Year cr 9130107 Ultimate &ALAE (1) (2) (3) (4) 10/1197-98 93,965 1.010 94,905 10!1/98-99 66,884 1.020 68,228 10/1199-00 145,934 1.035 151,100 1011/00-01 165,885 1.056 175,193 1 OI 1101-02 3 94,3 83 1.092 43 0, 673 1011/02-03 197,716 1.147 226,705 1011103-04 71,301 1.238 88,295 1011104-OS 46,442 1.402 65,103 1011105-06 153,270 1.682 257,826 1011/06-07 41,440 2.734 113,277 Total 1,377,220 1,671,305 Average Paid x Closed Claim Projection Projected Projected Projected Ultimate Ultimate Ultimate Fund Average Claim Losses Year Paid Counts &ALAE (1) (5) (6) (7) 1n1114'7_4R ~ 7'~q d7 Od n'2Q 1Vf if / / /V fr,lr✓/ 14 lT,VJU 1011/98-99 1,809 37 66,933 1011/99-00 3,397 43 146,071 1011100-01 2,971 58 172,318 1011101-02 9,127 46 419,842 1011102-03 3,569 62 221,278 1011103-04 2,257 38 85,766 1011/04-05 1,998 32 63,936 1011105-06 4,462 57 254,334 1011106-07 2,045 54 110,430 Total 3,486 1, 634, 946 Notes: (2) From City of Denton. (5) GL5, Sheet 2, Column 7. (3) Appendix A, Sheet 1. ~ (6) GL5 Sheet 2, Column (4). (4) Column (2) X Column (3). (7) Column (5) x Column (6). ?i?a~2oo9 [GLExhibit07)GL 1 ~ ROBERTHUGHESASSOCIATESWC. ~,lty Of 1)e~1t0l1 Exhibit GLS General Liability Self Insurance Fund sheet 2 Projection of Ultimate Claim Counts Closed Claim Count Projection Closed Closed Projected Claim Development Ultimate Fund Counts Factors to Claim Year a~9130/07 Ultimate Counts (1) (2) (3) (4} 10/1197-98 42 1.000 42 1011/98-99 37 1.002 37 l 011199-00 43 1.004 43 10/1/00-01 57 1.009 58 1011101-02 45 1.023 46 1011102-03 60 1.037 62 1011/03-04 36 1.063 38 1011104-05 29 1.101 32 1011/05-06 48 1.178 57 1011106-07 3 Z 1.672 54 Total 429 469 Average Paid Claim Projection Average Paid Projected Average Development Ultimate Fund Paid Factors to Average Year a~9130107 Ultimate Paid (1) (5} (6) (7) 1011197-98 2,237 1.001 2,239 10/1198-99 1,808 1.001 1,809 10/1/99-00 3,394 1.001 3,397 l0/1100-01 2,910 1.021 2,971 1011/01-02 8,764 1.041 9,127 1011102-03 3,295 1.083 3,569 1011103-04 1,981 1.139 2,257 1011104-OS 1,601 1.248 1,998 1011105-06 3,193 1.397 4,462 1011/06-07 1,295 1.579 2,045 Total 3,210 3,486 Notes: (2}, (5) From City of Denton. (6) Appendix A, Sheet 3. (3) Appendix A, Sheet 2. (7) Column (5) x Column (6). (4) Column (2) X Column (3}. Z~Za~?oo9 16 [GLExhibit07]GL ROBERTHUGHESASSOCIATES INC. A.M Best's Aggregates & Averages Appendix A Consolidated Industry Totals sheet 1 Schedule P, Part 3E Commercial Multi Peril Loss Development History Total Paid Xndemnity, Medical and Expenses (Amounts in 1,00~'s) Fund Months of Development from Inception Year 12 24 36 48 60 72 84 96 108 120 1997 4,4$7,329 7,186,581 S,b49,382 9,925,782 10,865,989 11,4b3,678 11,793,896 12,048,440 12,208,027 12,33b,749 1898 5,350,584 8,522,481 10,20$,187 11,427,961 12,431,b37 13,0$6,217 13,539,151 13,792,117 13,986,712 1999 5,615,650 8,951,726 10,705,759 12,118,105 13,017,555 13,613,008 13,915,599 14,186,235 2000 5,533,500 9,055,122 10,909,b97 12,295,167 13,353,534 13,740,306 14,178,142 2001 6,12$,692 9,454,434 11,440,301 12,951,002 13,717,230 14,445,680 2002 4, 822,5 l 6 7, 833,33 8 9,483,014 10,767,154 11,696,460 2003 5,079,568 7,977,737 9,3b1,756 10,675,667 2004 5,860,558 9,386,712 10,940,742 2005 5,664,334 10,522,453 200b 5,496,249 Fund Report-to-Report Development Factors Year 12 - 24 24 - 36 3b - 48 48 - 60 60 - 72 72 - 84 84 - 96 96 -108 108 -120 120 - Ult 1997 1.602 1.204 1.148 1.095 l .055 1.029 1.022 (.013 1.01 I 1998 1.593 1.198 1.119 1.088 1.053 1.035 1.019 1.014 1999 1.594 1.196 1.132 1.074 1.046 1.022 1.019 2000 1.636 1.205 1.127 1.086 1.029 1.032 2001 1.543 1.210 1.132 1.059 1.053 2002 i.b24 1.211 1.135 1.086 2003 1.571 1.173 1.140 2004 1.602 1,166 2005 1.858 Calculated Factors Weighted Average 1.625 1,195 1.133 1.081 1.047 1.029 1.020 1.014 1.011 Linear Average 1.625 1.195 1.133 1.081 1.047 1.029 1.020 1.014 1.011 Excluding Hi & Lo 1.603 1.198 1.133 1.084 1.051 1.030 1.019 Linear Average -Last 5 Yrs 1.b39 1.193 1.133 1.079 1.047 l .029 1.020 1.014 1.011 Selected Factors lncrementa] 1.625 1.200 1.132 1.080 1.050 1.034 1.020 1.01 S 1.010 1.010 Cumulative 2.734 1.682 1.402 1.238 1.147 1.092 1.056 1.035 1.020 1.010 2/2412009 ROBERTKUGHESASS4CIATESILAC. GLExhibit07,Triangles 17 A.M Best's Aggregates & Averages Appendix A Consolidated Industry Totals sheet 2 Schedule P, Part lE (From Various Year Ends) Commercial Multi Peril Claim Count Development History Fund Months of Development from Inception Year 12 24 36 48 60 72 84 96 108 120 1994 2,438,165 2,605,672 2,620,334 2,643,999 2,589,122 2,758,702 2,729,741 2,690,42Q 2,852,128 1995 1,659,846 2,390,441 2,474,903 2,524,47b 2,534,798 2,672,176 2,692,321 2,664,207 2,794,323 1996 1,810,131 2,476,689 2,590,370 2,632,407 2,763,227 2,857,939 2,852,744 2,923,168 1997 1,588,193 2,199,740 2,328,492 2,426,958 2,579,533 2,566,073 2,585,910 1998 1,637,506 2,298,409 2,478,363 2,666,562 2,698,109 2,718,331 1999 1,584,324 2,287,223 2,538,226 2,662,120 2,707,604 2000 1,625,269 2,364,042 2,554,174 2,643,740 2001 1,594,960 2,242,892 2,4]4,772 2002 1,309,297 1,894,216 2003 1,248,006 Fund Report-to-Report Development Factors Year 12 - 24 24 - 36 36 - 48 48 - 60 60 - 72 72 - 84 84 - 96 96 - l 08 108 -120 120 - Ult 1994 1.069 1.006 1.009 0.979 1.065 0.990 0.986 1.060 1995 1.440 1.035 1.020 1.004 1.054 1.008 0.990 1.049 1996 1.368 1.046 1.016 1.050 1.034 0.998 1.025 1997 1.385 1.059 1.042 1.063 0.995 1.008 1998 1.404 1,078 l .076 l .012 1.007 1999 1.444 1.110 1.049 l .017 2000 1,455 1.080 1.035 2001 1.406 1.077 2002 1.447 Calculated Factors tirvc►~iitCU hvCra~G i.~~ ~ i.uvy t.u» >.u~~ l.u14 1.Uly I.UU2 1.017 1.060 Linear Average 1.419 1.069 1.035 1.026 1.014 1.020 1.001 1.017 1.060 Excluding Hi & Lo 1.421 1.068 1.032 1.022 1.012 ].008 0.990 Linear Average -Last 5 Yrs 1.431 1.081 1.044 1.029 1.014 1.020 1.001 1.017 1.060 Selected Factors lncrementa) 1.420 1.070 1.035 1.025 1.014 1.014 1,005 1.002 1.002 1.000 Cumulative 1.672 1.178 1.101 1.063 1.037 1.023 1,009 1.004 1.002 1.000 212412009 ROBERTHUGHESASSOCIATESWC. GLExhibit07,Triangles 18 A.M Best's Aggregates & Averages Appendix A Consolidated Industry Totals sheet3 Commercial 1V~ulti Peril -Average Paid Development History Fund Months of Development from Inception Year 12 24 36 48 60 72 , 84 96 108 120 1994 2,948 3,319 3,788 4,110 4,428 4,275 4,414 4,538 4,325 1995 3,224 3,565 4,125 4,527 4,904 4,897 5,029 5,177 5,005 1996 3,102 3,614 4,133 4,603 4,711 4,'163 4,878 4,853 1997 3,484 4,116 4,685 5,066 5,177 5,355 5,483 1998 3,743 4,113 4,616 4,857 S,084 5,314 1999 3,044 3,425 3,736 4,045 4,320 2000 3,125 3,375 3,665 4,038 2001 3,674 4,185 4,531 2002 4,326 5,555 2003 4,404 Fund Report-to-Report Development Factors Year ] 2 - 24 24.36 36 - 48 48 - 60 60 - 72 72 - 84 84 - 96 96 -108 ] 08 -120 120 - Ult 1994 1.126 1.141 1.085 1,077 0.966 1.032 1.028 0.953 1995 1.106 1.157 1.098 1.083 0.999 1.027 1.029 0.967 1996 1.165 l , t 43 l , t l 4 1.023 l .011 1.024 0.995 1997 1.181. 1.138 1.081 1.022 1.034 1.024 1998 1.099 1.122 1.052 1.047 1.045 1999 1.125 1.091 1.083 1.068 2000 1.080 I.086 1.102 2001 1.139 L083 2002 1.2$4 Calculated Factors Weighted Average 1.152 1.118 1.093 1.053 1.032 1.011 1.018 0.995 0.953 Linear Average 1.147 1.118 1.096 1.055 1.033 1.010 1.019 0.997 0.953 Excluding Hi & Lo 1.136 1.1 18 1.095 1.055 1.030 1.024 1.029 Linear Average -Last 5 Y 1.145 1.104 1.086 1.049 1.033 l .010 1.019 0.997 0.953 Selected Factors Incremental l .130 1.120 1.095 1.052 1.040 1.020 1.020 1.000 1.000 1.001 Cumulative 1.579 1.397 1.248 l .I39 l .083 1.041 1.021 1.001 1.001 1.001 2i24n_oo9 ROBERTHUGHESASSGCIATESWC. GLExhibit07,Triangles 19 ity of Denton Appendix B General Liability Comparison of Selected Ultimate Losses & ALAE (000's) Report Fund Evaluated Evaluated Increase/ Year 9/30/2005 9/30/2007 ~DecreaseL (1) (2} (3} (4} 1011197-98 96,573 94,738 (1,836} 10/1198-99 71,364 68,271 (3,092} 10/1/99-00 159,022 149,628 (9,394} 10/1/00-O1 188,994 174,059 (14,935} l 011101-02 465,369 420,625 (44,744) 10!1102-03 267,411 222,004 (45,407) 10/1103-04 129,241 102,494 (26,747) 1011104-05 178,411 94,432 (83,979) Total 1,556,385 1,326,251 (230,134) Notes (2} RAH Report evaluated as of 9130/05, (3} Exhibit GL2, Sheet 2, Column (3). (4} Column (3) -Column (Z). 2~z4~2oa9 GLExhibit47,Comparison 20 RGBERTHUGHESASSGCIATES INC. AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 DEPARTMENT: Finance ACM: Jon Fortune SUBJECT Receive a report, hold a discussion, and give staff direction regarding the evaluation and implementation of a fixed asset/job cost accounting system. BACKGROUND In December 2007, the Denton Municipal Electric Accounting System Review prepared by the firm of RJ Covington was discussed with the Public Utilities Board (PUB). Following this discussion, the Finance department outlined its approach to implementing and evaluating the Covington recommendations on January 14, 2008. Both of these documents are attached for your review. Sixteen (16) recommendations were presented in the Covington report. Of these, nine (9) recommendations are specifically related to fixed asset/job cost accounting. The remaining seven (7) recommendations are concerned with a variety of accounting and management issues. The purpose of this item is to provide the City Council with an update of the progress staff has made in implementing the nine (9) recommendations related to fixed asset/job accounting. The status of the remaining items will be addressed at future PUB and Audit/Finance Committee meetings. Following an analysis, staff has developed a strategy to implement many of the recommendations contained in the Covington report. The central theme of this strategy is to implement a fixed asset/job cost accounting module in the JD Edwards financial system currently operated by the City of Denton. To do this properly, staff suggests that a Needs Assessment/Gap Analysis be conducted to 1) determine the organizational needs for fixed asset information and 2) to determine whether these needs can be met in the JD Edwards system. Based on this analysis, a fixed asset system implementation plan will be developed for the organization. The above fixed asset/job cost strategy was discussed with the both the PUB and Audit/Finance Committee. The presentation included information concerning the project justification, current accounting system, costs, and an estimated project timeline. The full presentation accompanied the AuditlFinance Committee minutes that were sent to the City Council in February. In the interest of time, a more abbreviated presentation will be presented in the work session for this item on March 3rd Agenda Information Sheet March 3, 2009 Page 2 FISCAL INFORMATION The Needs Assessment/Gap Analysis phase of this project is expected to cost $150,000 to $200,000. The implementation phase is expected to cost $400,000 to $500,000. Temporarily supplementing Information Technology and Accounting staff is expected to cost $197,000 to $260,000. The total cost of the project is expected to cost $747,000 to $960,000 for all phases. PRIOR ACTION/REVIEW (Council, Boards, Commissions) The Public Utilities Board discussed this item during its February 9, 2009, meeting. During this meeting, the PUB directed staff to move forward with implementing the suggested strategy. The Audit/Finance Committee discussed this item during its February 16, 2009, meeting. During this meeting, the Committee directed staff to move forward with implementing the suggested strategy. EXHIBITS 1. PowerPoint Presentation 2. Needs Assessment/Gap Analysis Request for Proposal (includes Covington Report and Finance Department Response in Appendix) Respectfully submitted: Bryan Langley Director of Finance r W v~ O ~ ~ ~ ~ ~ ~ U ~ bA ~ • ~ Q-' ~ ~ ~ O ~ ~ O ~ ~ U ~ ~ U O O O ~ ~ O j--' O ~ ~ ~ «i ~ ~ ~ c~ ~ N DC ~ a--+ ~ ~ ~ ~ ~ O ~ ~ O ~ O ~ N ~ O ~ ~ Q ~ ~ ~ ~ ~ U ~ U W C~-~ ~ Q ~ o • ~ o ~ 3 ~ v O ~ ~ ~ ~ ~ ~ cC ~ a~ ~ ~ ~ ~ r" ~ v~ ~ ~ ~ ~ o U ~ ~ O v W ~ ~ ~ ~ ~ va Q ~ ~ ~ ~ ~ O ~ ~ O ~ U ~ ~ s-' p ~ ~ ~ ~ ~ ~ ~ ~ cd ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 3 f~ ~ ~ ~ W fS a~ rd ~ ~ ~ ~ ~ ~ O ~ U O ~ ~ ~ U O ~ ~ ~ . ~ ~ ~ ~ ~ ~ ~ a ~ ~ Q-' p~C, O a~ ~ ~ ~ ~ U o \ ~ ~ ~ ~ ~ ~ p v~ O v~ a~ ~ Z ~ ~ ~ U ~ ~ ~ O ~ ~ ~ U U v~ G~i C/1 Q', a~ ~ ~ a~ ~ ~ ~ o ~ ~U ~ ~ ~ ~ y""' C~ ~ Q ~ ^ ~ ~ C~ ~ C7 ~ a~ ~ ~ ~ ~ ~ ~ W ~ ~ Q U ~ ~ ~ N Qi ~ ~ ~ ~ z o ~o U ~ N G.> Q., H ~ ~ 0 0 0 0 0 0~ °o °o °o °o °o °o ~ ~ ° °o °o °o ° ~ ~ o ~ N ~ r+ ~ ~ ~ . ~ bA ~ ~ ~ ~ N ~ ~ ~ ~ ~ ~ O ~ ~ O 0 0 0 0 0 0 ~ ~ O O O O O O ~ ~ ~ O o~0 ~ ~ ~ ~ ~ O ~ ~ ~ O ~ ~ ~ v ~ ~ ~ v ~ ~ ~ ~ ~ ~ ~ a~ a~ ~ ~ ~ o ~ ~ ~ ~ o ~ ~ v w ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ H ~ 3 ~ a ~ ~ ~ ~ ~ ~ ~ ~ c~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~+p v ~ ~ ~ v~ ~ ~ ~ ~ ~n ~ o a~ a~ ~ ~ ~ ~ ~ N L/~ ~ ~ ~ ~ ~ ~ CCU ~ ~ .r, ~ O . ~ ~ ~ ~ • r--+ ~ ~ ~ ~ ~ x ~ .p ~ ~ ~ ~ ~ ~ . ~ ~ ~ O 0 ~ O ~ ~ O ~ ~ O ~ ~ ~ ~ ~ ~ ~ U N ~ c~ ~ ~ O .~I ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ U ctS ~ O ~ ~ ~ ~ o ~ ~ ~ cis • ~ ' ~ ~ ° a~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ N V ~ ~ ~ CCU ~ Q ~ ~ ~ ~ 0 ~ ~ ~ ~ ~ ~ C~ 4~ ~ ~ w ~ ~ ~U U ~ ~ ~ ~ ~ ~ O H ~ Q ~ ~ W ~ ~ a Z ~ ~ ~ ~ ~ ~ O ~ ~ ~ cC O ~ ~ c~ . ~ ~ v ~ ~ a ~ o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ U ~ o~v a`'~o ~ ~ ~ ~ ~ N ~ ~ ~ ~ b ~ ~ ~ ~ ~ ~ O ~ ~ O ~ U ~ N v~ ~ ~ ~ O ~ ~ ~ ~ ~ ~ ~ ~~~a~~~w EXHIBIT 2 CITY OF DENTON, TEXAS RFSP # 4225 FIXED ASSET/JOB COST SYSTEM NEEDS ASSESSMENT JD EDWARDS FIXED ASSET/JOB COST SYSTEM GAP ANALYSIS PROPOSAL DUE JANUARY 5, 2009 RFSP 4225 -FIXED ASSET SYSTEM NEEDS ASSESSMENT/GAP ANALYSIS I. INTRODUCTION The City of Denton (City) is interested in receiving proposals to contract with a qualified consulting firm to perform a fixed asset system needs assessment and gap analysis. The needs assessment will identify the fixed asset system functionality needs of each department within the City including the following: Denton Municipal Electric Facilities Department Fleet Services Police Department Fire Department Solid Waste and Landfill Water-Waste Water Department Materials Department Streets Department Technology Services Finance Department/Administration Library Parks System functionality specifications will be developed based on the needs of each department. A gap analysis will be performed to compare the functionality specifications identified in the needs assessment with the functionality of the JD Edwards Fixed Asset System and associated JDE/Oracle sub-systems that are used in the tracking of project costs. The following tables summarize information provided by departmental personnel. Table I provides information regarding accounting and operational system functionality that should be considered during the performance of the needs assessment/gap analysis. Table II provides information regarding accounting and operational data specifications that should be considered. Table III provides information regarding JD Edwards software licensed for use by the City detailing Modules that are currently used or inactive. The tables are intended to provide additional departmental background information and should not be considered all-inclusive. Page 2 of 15 RFSP 4225 -FIXED ASSET SYSTEM NEEDS ASSESSMENT/GAP ANALYSIS Table I Identification of the Scope of the Needs AssessmentlGAP Analysis a` ~ v~ The purpose of the Needs AssessmentlGap Analysis is to identify the functionality ~ ~ ~ ~ m resident in the JD Edwards system and determine the system's ability to satisfy the ~ ~ ~m `o~,~ 0~~ needs of each de artment within the Cit ~ S~ ~ ~ 0 0 ~ (Includes information from departmental meetings -not intended to beall-inclusive.) `S~ o ~ ~ o` 0 ~ ~ ~ ~ S~ ~ Q ~ v Assess the needs., gaps and feasibility of: Implementing an integrated JD Edwards system to perform the following fixed asset accounting functions, in addition to the standard depreciation calculation and reporting: Track acquisitions, transfers, and disposals X X X X X X X X X X Record fixed asset transaction activity as transactions occur X X X X X X X X X X Compare current and year to date asset acquisitions to capital budget X X X X X X X X X X Track assets by location X X X X X X X X X X Track assets by serial number X X X X X Track assets by GIS identification number X X X Track assets by identification number X X Record serial # ranges, manuf, model qty, unit cost of group or bulk purchases X X X X X Track equipment located within each facility/substation, including serial numbers X X X Track assets by property unit number X Track project costs/construction in progress X X X X X X X X X X Provide inventory of facilities X Perform departmental allocations X X X X Perform vehicle allocations to project cost X X X X X X X X X X Perform administrative overhead allocations to project cost X X X X X X X X X X Use asset numbers currently used in the Faster System X Use asset numbers currently used in the Paradigm System X Provide inventory of vehicles and their related componentslequipment X Track assignment of assets to employees X X X X X X Track condition of assets X X Track OCI -Overall Condition Index X Track acquisitions, transfers, and disposals queried by user defined fields X X X X Provide user-defined comment fields to record other identification information X X X X X X Provide detailed schedules of assets sold at auction X X Perform payroll allocation to project costs X X X X X X X X X X mp emen ing an in egra a war s sys em o pe orm e o owing operationa unctions as ey re a e o ixe asse s an ~o cos s` Track equipment warranty information X X X X X X X X X Track facility maintenance history and cost by property X X Track maintenance history and cost by asset X X X Track expected life cycle in addition to remaining depreciable life of asset X X X X X Track replacement value for damage claims when property is damaged by others X Data for PUC filings X FERC Reporting X Query of purchase or disposal of specific assets for specific time period X Earnings monitor reporting X Provide detail of maintenance and janitorial supplies used at each facility X Provide instantaneous recording of expense to the correct department X Provide reporting for cost allocations if instantaneous recording is not achievable X Maintain data for ADA compliance X Maintain asbestos documentation X Maintain documentation of elevator inspections and maintenance X Maintain documentation of facility fire system requirements X Maintain documentation of boiler requirements X Track engine size X Track chassis and body components separately Track emission standards X Track fuel useage X Track hour useage X Track preventive maintenance X X Calculate replacement value X Record and track equipment testing X Track assets purchased with grant funds X X Track disposal of assets purchased with grant funds X X Track maintenance supplies/parts used X X Maintain maintenance parts inventory X X Track cart destruction X Record field notes X X X Track landfill tonnage -disposed, diverted, recycled X Track placement of refuse X Track landfill cash receipts X Provide information for State and Environmental reporting X X Track vehicle mileage and fuel for route optimization X Track containers in, containers out X Track non-capital assets X X Track software licenses X Track property room inventory (criminal evidence) X Engineering document retention X Track permits X Page 3 of 15 RFSP 4225 -FIXED ASSET SYSTEM NEEDS ASSESSMENT/GAP ANALYSIS Table II Miniumum System Requirements and Data Specifications for Fixed Asset Accounting via ~ ~ and Additional Operational Functionality a ~ ~ ~ a~ ~ ~ ~ ~ ~ ~ (Includes information from departmental meetings -not intended to beall-inclusive.) ~ ~O a ~ r ~ Off. ~o ~m Qo Minimum system requirements and data specifications for fixed asset accounting exclusive of operational functionality: Rational asset numbering structure X X X X X X X Rational asset numbering structure that groups the equipment with the related substation X Rational asset numbering structure that groups the facility with all related components X Rational asset numbering structure that groups the vehicle with all related components X System integration with purchasing, accounts payable, project cost, payroll, work orders, materials issuance, and the general ledger X X X X X X X X X X Record fixed asset transaction activity as transaction occurs X X X X X X X X X X Compare current and year to date asset acquisitions to capital budget X X X X X X X X X X Department allocations X X X X X X X X X Report asset values adjusted for inflation X User defined fields required in addition to the standard fields necessary for depreciation calculations: Substation X Location of asset X X X X X X X X Equipment manufacturer X X X X X X X Model number X X X Serial numberlserial number ranges X X X X X X X Property unit number X Asset numbers currently used in the Faster System X X Asset numbers currently used in the Paradigm System X Dell identification number X GIS identification number X X FERC category X Quantity and unit cost of items purchased in bulk X X X Comment field for recording useful historical information for identification purposes X X X X X X X X Comment field for recording useful historical information for life cycle tracking X X Department allocations X X X Individual identification of an asset that was purchased in a group or in bulk X X X Assignment of asset to employee X X Field for sale of item at auction X X Capital lease start and expiration dates X Track capital lease terms X Software license data fields X Page 4 of 15 RFSP 4225 -FIXED ASSET SYSTEM NEEDS ASSESSMENT/GAP ANALYSIS Table III J.D. Edwards Enterprise0ne JDE Version 8.11 Tools Release 8.96C1 Oracle Version 10.1.04 MODULES ACTIVE INACTIVE Accounts Payable X Accounts Receivable X Advanced Pricing X Advanced Stock Valuation X Agreement Management X Bulk Stock Invento X Capital Asset Management X Configurator X Content Builder X Contract and Service Billin X Fixed Asset Accountin X Foundation -Address Book X Foundation -Order Processing X Foundation -Work Order X General Led er X HCM Foundation X Human Resources Management X Inventory Management X Manufacturing - ETO Foundation X Manufacturing - PDM X Manufacturing -Shop Floor X Procurement and Subcontract X Management Pro~ect Costin X Qualit Mana ement X Real Estate Management X Requirements Planning X Sales Order Entry X Sales Order Processing X Service Mana ement Foundation X Solution Concurrent Users X Suite-Concurrent Full-Use User X Technolo Foundation X See Section III for addition project scope details and proposal requirements. The City of Denton seeks Proposals from qualified Respondents interested in providing the services as described in this RFP. Page 5 of 15 RFSP 4225 -FIXED ASSET SYSTEM NEEDS ASSESSMENT/GAP ANALYSIS II. HISTORY RELATED TO FIXED ASSET IMPLEMENTATION EFFORTS The City of Denton installed and activated the JD Edwards Fixed Asset Module along with the select accounting modules (See Table III) effective October 1, 2001. The Fixed Asset Module was active for select City Departments through August 2003. During the active period the system calculated depreciation, calculated gains and losses on disposals, and recorded transfers and additions. Subsequent to August 2003 through the current period, Excel spreadsheets were used to record fixed asset activity and calculate depreciation. Depreciation and other fixed asset adjustments were recorded in the General Ledger by the posting of journal entries. As a result of the incomplete implementation in prior years, tables within the Fixed Asset Module contain incomplete and inaccurate information. The assessment of issues related to using or removing the data currently housed in the Fixed Asset Module system tables will be a requirement of the future implementation process. A summary of the existing data within the Fixed Asset Module tables follows: Table Number Table Name Current Status of Table Fixed Asset Data F1200 Fixed Assets Constants Default data General hedger account data loaded for select F12002 Default Accounting Constants City Departments -Asset/Accum Depr/Depr Data loaded for select City Departments loaded F12003 Default Depreciation Constants in Table F12002 2,477 Fixed assets of select City Departments F1201 Asset Master File loaded for acquisitions and disposals through August 2003 Asset balances loaded for fiscal years 1999 F1202 Asset Account Balances File through 2003 F1204 Location Tracking Table Locations maintained through January 2003 F12141 Disposal Account Rule Table Minimal data loaded for testing purposes Rules loaded for frequently used depreciation F12851 Depreciation Rules methods System defaults loaded with customization F12852 Annual Depreciation Rules modifications - to be analyzed System defaults loaded with possible F12853 Depreciation Formulas customization modifications-to be analyzed F12854 Depreciation Period Spread Rules System defaults loaded Contains posted transactions through August F0911 General Accounting Detail Table 2003 and un-posted transactions thereafter Page 6 of 15 RFSP 4225 -FIXED ASSET SYSTEM NEEDS ASSESSMENT/GAP ANALYSIS III. SCOPE OF WORK A. EFFORT REQUIRED 1. Scope of the needs assessment: a. Performance of a Fixed Asset/Job Cost System needs assessment addressing the needs of all City Departments as identified in Section I. Reporting should include Needs Assessment Report. b. Development of system functionality specifications based on departmental needs. Reporting should include System Functionality Specifications. c. Gap analysis comparing system functionality specifications with the functionality of the JD Edwards Fixed Asset/Job Cost System. Reporting should include GAP Analysis Report. d. Reports should address the tracking of job costs and the integration of job cost data with the Fixed Asset System for all City Departments. 2. Other considerations: a. Review JD Edwards software licenses for all JD Edwards applications currently licensed. Assess the appropriateness of implementing a fixed asset system using the versions currently licensed vs. upgrading to more recent versions. b. Provide assurance that the JD Edwards/Oracle system data base can be migrated as Oracle products evolve. c. Identify system functionality requirements and data specifications for fixed asset accounting and reporting for all departments. Considerations should include: i. Requirements of GASB 34 (Governmental Accounting Standards Board) 11. Generally Accepted Accounting Procedures (GAAP) 111. FERC Reporting iv. Public Utility Commission Filings v. Any other fixed asset reporting requirements d. Review of the Accounting System Review Report prepared for Denton Municipal Electric by R.J. Covington Consulting, LLC. (See Appendix) The purpose of the review shall be the Page 7 of 15 RFSP 4225 -FIXED ASSET SYSTEM NEEDS ASSESSMENT/GAP ANALYSIS identification of Denton Municipal Electric needs to be incorporated in the needs assessment. 3. Deliverables and reporting should include, but not be limited to, recommendations addressing the following: a. Continued use of the following third party software, interfacing third party systems with JD Edwards systems, replacement of third party system functionality with JD Edwards functionality. Currently available third party interfaces should be identified. See Table I. Third party systems include, but are not limited to the following: SYSTEMS VERSIONS MicroMain 7.1.863 Faster 5.69.109 B Fuel Software System Petro Vend Phoenix PWP 3.1 Phoenix AFC Administrator 2.7 Rev 5 PhoenixAFC Administrator 2.1 Rev 0 NAPA Parts Inventory System Web Connect through NAPA Paradigm System Compu-Route 5.0.422 Compu-Weigh 32 3.6.0.1578 City Works 4.4SP4 Scraps System HEAT Work-Order System 8.4.0 Visual Asset Mana ement 5.7.1 VisionAlR (Police Propert Room Inventor) RMS 4.2 Carte raph Work-Order S stem 7.0 Pavement View Plus Solution Corp Traklt V.0924 (2008) Laserfiche 7.2.1 Millennium Librar S stem 20071.1 Crew Mana er 3.4.4 The City would like to avoid mass customization due to the risk of complexity and complication of maintenance and upgrade activities. The City welcomes recommendations to minimize business process reengineering. b. Recommended departmental prioritization for an implementation timeline with Denton Municipal Electric included in the initial phase. c. Draft of the recommended scope for the System Implementation Request For Proposal. Page 8 of 15 RFSP 4225 -FIXED ASSET SYSTEM NEEDS ASSESSMENT/GAP ANALYSIS B. FIRM REQUIREMENTS The Firm must demonstrate compliance with the following requirements: 1. Direct employees of the Firm's company must perform all services in this Contract. 2. Firm must have in its employment amulti-disciplinary staff of a size sufficient to perform the services. The disciplines of the staff must inc u e: o JD Edwards and Oracle implementations o IT consulting for governmental agencies o Experience working with electric utilities o Knowledge of governmental fund accounting o Application development 3 . The proj ect manager must have at least eight years of system design and implementation experience. PROJECT IMPLEMENTATION SCHEDULE 1. The City has developed the following ro osed project implementation schedule: Distribution of RFP: November 21, 2008 Pre-Proposal Conference December 3, 2008 Proposal Submittal Deadline: January 5, 2009 Firm Selection: February 25, 2009 Firm Contract Negotiation: March 6, 2009 Firm Contract Award: March 20, 2009 Firm Starts Work: April 6, 2009 APre-Proposal Conference will be held at 2:OOPM on December 3, 2008 in the City Council Work Session Room located in City Hall at 215 E. McKinney Street, Denton, Texas 76201. Questions and/or requests for information should be submitted to Tom Shaw via e-mail at tom.shaw(a,cityofdenton.com prior to November 28, 2008. IV. SELECTION PROCESS The responses should address each of the following areas in the same order in which they are set forth below. A. STATEMENT OF INTEREST Page 9 of 15 RFSP 4225 -FIXED ASSET SYSTEM NEEDS ASSESSMENT/GAP ANALYSIS Provide a statement of interest relative to this specific project, including a statement of availability to undertake this project, personnel proposed for the project team, firm's perspective on the development of a System Needs Assessments and GAP Analysis and providing services to assist the City in developing the scope and objectives of the implementation of the JD Edwards Fixed Asset System throughout all Departments within the City. B. FIRMS ORGANIZATION 1. Name and Address of the Firm 2. General overview of the Firm 3. Firm Profile, including: a. Age b. Type of firm (limited partnership, corporation, etc.) c. Firm History d. Firm Size (including number in each required discipline) e. Telephone number and fax number f. Areas of special concentration -particular attention should be paid to identify expertise in the following areas: i. Developing system needs assessments, GAP analysis, and system implementations 11. JD Edwards and Oracle system implementations, including fixed assets implementations 111. Integration of multiple JD Edwards software modules iv. Integration of third party software data with multiple JD Edwards software modules v. System design and application development for local governments and utility operations that require FERC reporting. vi. IT consulting for governmental agencies vii. Knowledge of governmental fund accounting Vlll. JD Edwards Version 8.11 system implementations ix. Electric Utility system implementations 4. Description of the Team: a. Identification of the proposed Project Manager b. Identification of key personnel c. Organization Chart d. Resumes for each key individual on the team and definition of that individual's role in the project (include individual's licenses and certifications) e. Standard hourly rate for team members Page 10 of 15 RFSP 4225 -FIXED ASSET SYSTEM NEEDS ASSESSMENT/GAP ANALYSIS 5. How the firm will be organized in order to provide continuity of project. 6. Sample of report deliverables. 7. Technical acknowledgements and awards. C. RELEVANT EXPERIENCE AND CAPABILITIES Relevant experiences and capabilities of the Firm's team members and team as a whole will be rated by the City by a review of both completed and on-going assignments, years of relevant experience, credentials; greater weight will be given to project experience within the past five (5) years containing the team members proposed: 1. Project Understanding: Briefly describe your understanding of the project scope, important issues, and City requirements. 2. Project Approach: State briefly the firm's opinion about the most important considerations and challenges that must be addressed in this project, and how the firm intends to handle them. Specifically address the following considerations and challenges: a. Multiple unique departments currently using non-integrated third party software systems to manage operations. b. Resistance of staff to support change. c. Lack of understanding by staff that fixed asset responsibilities are shared rather than owned by the Finance Department. d. Limited staff to support the project due to the demands of ongoing operations. e. Limited Technology Services staffing to provide current JD Edwards and third party system information. 3. Relevant project experience information to include: a. Entity name, contact information, and location. b. Project description with specific descriptions of responsibilities, successes and failures related to project scope. c. Nature of professional services delivered by Firm on each of these relevant projects, including identification of the responsibility and scope of the team member proposed for participation on the City project. Page 11 of 15 RFSP 4225 -FIXED ASSET SYSTEM NEEDS ASSESSMENT/GAP ANALYSIS d. List of municipal and private client references for relevant projects with contact names and telephone numbers. (Indicate accessibility for site visits.) 4. Proposed project plan and timeline with key milestones detailed. 5. Team Organization: Discuss the firm's proposed team organization and communication methods. Be specific with regard to internal and external communications, quality control, electronic capabilities, and individual responsibilities V. SELECTION PROCEDURES /DESCRIPTION OF PROCESS All submissions of proposals must be received by 2:00 p.m. (local time) on January 5, 2009 to be considered. A. SUBMITTAL OF PROPOSALS 1. One original copy signed by an officer authorized to bind the company, nine hard copies of your completed proposal, and a portable data file (pd~ version must be submitted in a sealed envelope by 2:00 p.m. on January 5, 2009. Proposals may be mailed or hand delivered. However, if sent by mail, the proposer is responsible for the timely delivery of the proposal. 2. Proposals shall be no more than thirty 8-1/2" x 11" pages, not including cover sheet. An additional 1-page cover letter is also allowed. 3. Each sealed proposal shall be properly addressed with the name of the Firm's firm and the item description "RFSP #4225 FIXED ASSET SYSTEM NEEDS ASSESSMENT/JD EDWARDS FIXED ASSET SYSTEM GAP ANALYSIS" written on the outside of the package and delivered to: City of Denton Materials Management /Purchasing 901-B Texas Street Denton, TX. 76209 Attn: Tom Shaw 4. Proposals received after 2:00 p.m. on January 5, 2009 will not be considered, and any proposal received after the schedule closing time will be returned to the proposer unopened. Page 12 of 15 RFSP 4225 -FIXED ASSET SYSTEM NEEDS ASSESSMENT/GAP ANALYSIS 5. Questions concerning technical issues related to this proposal should be directed to Harvey Jarvis at 940-349-8174. 6. Questions concerning procurement issues related to this proposal shall be directed to Tom Shaw at 940-349-7133. B. PROPOSAL WITHDRAWAL No proposal may be withdrawn after having been formally opened by the City. C. LEGAL DISPUTES Proposer agrees and stipulates that in the event any litigation should occur concerning or arising out of any proposals submitted in response to a Request for Proposal, the sole venue of any such legal action shall be in Denton County Texas. D. CITY AND LICENSES The Proposing Firm must be registered by the State of Texas. Any and all fees and taxes are the responsibility of the offerer. E. REJECTION OF PROPOSALS The City reserves the right to: 1. Reject any and all proposals, and 2. Issue subsequent Requests for Proposals F. PROPOSER RESPONSIBILITY -PROPOSAL COSTS Proposer understands and agrees that this Request for Proposals does not obligate the City to pay any costs incurred by the proposer in the preparation and submission of a proposal, or oral interview. G. PROPOSALS -PUBLIC INFORMATION After evaluation and award by the City, the unsuccessful proposer may request a debriefing regarding their proposal. Please contact Tom Shaw at the above telephone number. H. PROPOSAL FORMAT Telecopy (facsimile) proposals will not be accepted by the City. I. EQUAL OPPORTUNITY /AFFIRMATIVE ACTION Page 13 of 15 RFSP 4225 -FIXED ASSET SYSTEM NEEDS ASSESSMENT/GAP ANALYSIS All Equal Employment Opportunity laws apply to this project. J. STANDARD REQUIREMENTS Any resulting contract will be subject to the standard requirements, terms and conditions of the City covering such contracts. An Official and signed copy of the contract requirements (Agreement) will be furnished to the firm awarded this contract. Attached is the City's Standard Agreement. Any objection or modifications to the Agreement, other than the information needed to consummate it, need to be addressed in the proposal. The City reserves the right to consider these objections or modifications. K. CANCELLATION The City reserves the right to cancel the contract if the services provided are not meeting the City's needs. Notification will be provided in writing. Payment will only be provided on those services that are performed prior to possible cancellation of the contract. VI. EVALUATION AND SELECTION PROCESS A. PROPOSAL REVIEW A Selection Team will review the proposals. This Selection Team will include members of the staff of the City and others familiar with this proposed project. Selection for the professional services in this Request will be made on the basis of demonstrated competence and qualifications to perform the services required. The firms most highly qualified and responsive to the City's need maybe invited for an oral interview, if necessary. Once this selection has been made, the City will attempt to negotiate a contract with the selected firm at a fair and reasonable price. Evaluation of proposals will be based on the following: 1. Identification and understanding of the City's requirements and needs for this project; this includes an understanding of the codes, processes, and caseload: FACTOR 25% 2. Firm's past performance and experience on projects of this magnitude and complexity: FACTOR 25% 3. Firm's experience with specific issues related to this project: FACTOR 25% 4. Experience and qualifications of key personnel available for this project: FACTOR 25% B. FURTHER INFORMATION Page 14 of 15 RFSP 4225 -FIXED ASSET SYSTEM NEEDS ASSESSMENT/GAP ANALYSIS The City has the option to request that a firm provide further information in order to complete the evaluation. C. CONTRACTING The selected firm will be offered a contract for three months for performing these services, although the City reserves the right to select other firms for future contracts. D. NOTIFICATION All proposers will be notified of the firm selected to perform the requested work, upon final determination by the City. Page 15 of 15 _ , ® _ _ _ _ FORM CIQ - ~ _ ~ _ _ For vendor or other person doing business with local governmental entity This questionnaire reflects changes made to the law by H.B. 1491, 80th Leg., Regular Session. OFFICE USE ONLY This questionnaire is being filed in accordance with Chapter 176, Local Government Code Date Received by a person who has a business relationship as defined by Section 176.001(1-a) with a local governmental entity and the person meets requirements under Section 176.006(a). Bylaw this questionnaire must be filed with the records administrator of the local governmental entity not later than the 7th business day after the date the person becomes aware of facts that require the statement to be filed. See Section 176.006, Local Government Code. A person commits an offense if the person knowingly violates Section 176.006, Local Government Code. An offense under this section is a Class C misdemeanor. ~ Name of person who has a business relationship with local governmental entity. 2 Check this box if you are filing an update to a previously filed questionnaire. (The law requires that you file an updated completed questionnaire with the appropriate filing authority not later than the 7th business day after the date the originally filed questionnaire becomes incomplete or inaccurate.) 3 Name of local government officerwith whom filer has employment or business relationship. Name of Officer This section (item 3 including subparts A, B, C & D) must be completed for each officer with whom the filer has an employment or other business relationship as defined by Section 176.001(1-a), Local Government Code. Attach additional pages to this Form CIQ as necessary. A. Is the local government officer named in this section receiving or likely to receive taxable income, other than investment income, from the filer of the questionnaire? Yes No B. Is the filer of the questionnaire receiving or likely to receive taxable income, other than investment income, from or at the direction of the local government officer named in this section AND the taxable income is not received from the local governmental entity? Yes No C. Is the filer of this questionnaire employed by a corporation or other business entity with respect to which the local government officer serves as an officer or director, or holds an ownership of 10 percent or more? Yes No D. Describe each employment or business relationship with the local government officer named in this section. 4 Signature of person doing business with the governmental entity Date A(~(lntP.C~ ()~i~~~~~()n7 . ~ r APPENDIX R. J. COVINGTON CONSULTING, LLC Denton Municipal Electric Accounting System Review Task Order No. DEN 06-C Final Report 11~28~2~~~ Denton Municipal Electric Accounting System Review Report 11/28/2007 RJ Covington Consulting, LLC Executive Summary The focus of this high level review to-date has been on the accounting systems specifically affecting DME, including the chart of accounts, accounting entry systems, and the books and reports. However, the review has identified issues which may also affect the City's other utility functions including water, wastewater, solid waste and drainage. In order to identify the range of issues to be addressed, RJC evaluated the current accounting systems and existing accounting policies and procedures to insure that the systems are providing the appropriate level of information needed for the effective operation of DME and for the adequate financial and reporting purposes by the City. As a result of this review, RJC believes there are opportunities to improve the City of Denton's accounting systems and procedures in order to provide more reliable data necessary to calculate the appropriate level of transmission revenue for DME. Because DME transmission rates had not been regulated by the Public Utility Commission of Texas (PUC) prior to Senate Bill 373, the historical accounting practices have been sufficient for the City's internal operations. However, additional investments in its transmission system will eventually require DME to file a request to increase its revenue requirement for transmission service with the PUC. With the electric system representing approximately 70% of total enterprise fund revenues and the recent legislative interest in electric utility issues, it is imperative that accounting procedures reflect industry practice and regulatory authority standards. There is an acute need for accuracy in DME's books and records because if the PUC cannot determine from the City's accounting records the appropriate amount of transmission rate base and operations expenses, the result will be a rate reduction and reduced revenue from other electric entities for transmission service. To the extent there is a shortfall in transmission revenue resulting from the inability to prove up DME's transmission revenue requirement, DME ratepayers will be required to make up the difference between the total costs of running the DME system and the amount of revenue received ($4.2 million) from other electric entities for transmission service. R.J. Covington Consulting, LLC 11044 Research Blvd., Suite A-325 Austin, Texas 78759 Page 2 of 15 Denton Municipal Electric Accounting System Review Report 11/28/2007 RJ Covington Consulting, LLC Introduction Denton Municipal Electric (DME) has retained R. J. Covington Consulting, LLC (RJC) to provide a review of the utility accounting systems used by the City of Denton to determine the appropriateness ofthose systems in: • Providing data necessary for various regulated proceedings, • Meeting internal controls and reporting needs, • Meeting utility and City-wide financial and accounting reporting requirements; and • Coordination between utility record keeping and City accounting systems. This Report presents Findings and Recommendations based on RJC's review. The focus of this high level review has been on the accounting systems specifically affecting DME, including the chart of accounts, accounting entry systems, and the books and reports. However, the review has identified issues which may also affect the City's other utility functions including water, wastewater, solid waste and drainage. In order to identify the range of issues to be addressed, RJC evaluated the current accounting systems and existing accounting policies and procedures to insure that the systems are providing the appropriate level of information needed for the effective operation of DME and for adequate financial and reporting purposes by the City. The electric utility related systems reviewed include the present work order recording systems, continuing property records (CPR), entry of utility expenses and revenues to the general ledger (GL), capitalization and depreciation procedures, and other issues as identified. As part of the review, RJC interviewed DME staff, other City accounting staff, and reviewed the books and records of DME in order to gain an understanding of these systems. RJC also reviewed the time keeping processes and determined that the time reporting system is providing complete and timely information based on the time reported by employees. This report provides a summary of our findings and identifies recommended improvements to the current system. Recommendations to address certain items listed below will require additional study and analysis in order to implement the recommended actions. These recommended policies and procedures will act as a guide with respect to the appropriate treatment of utility accounting issues in order to establish a resource for consistent application of utility accounting standards for DME. The City should review any suggested policies and procedure changes with its internal and external auditors before implementing such changes. R.J. Covington Consulting, LLC 11044 Research Blvd., Suite A-325 Austin, Texas 78759 Page 3 of 15 Denton Municipal Electric Accounting System Review Report 11/28/2007 RJ Covington Consulting, LLC Background In 1995 the 74th Texas legislature, recognizing that the wholesale electric market was becoming increasingly competitive, passed Senate Bill 373 authorizing competition in Texas' wholesale electric market and mandating non-discriminatory open access to the State's electric transmission system. The PUC adopted new transmission rules to carry out this legislative mandate for the Electric Reliability Council of Texas (ERGOT) in February 1996. The Commission rules were designed to remove impediments to third-party access to the transmission system and encourage increased competition in wholesale power markets. In May 1996, all electric utilities in ERGOT (including municipal utilities) were required to file tariffs and cost information for transmission and ancillary services to permit the Commission to establish rates for these services. The Commission required the utilities to file their tariff information using the Federal Energy Regulatory Commission (FERC) standard chart of accounts. The Commission then used these individual filings to establish an ERGOT-wide postage stamp transmission rate. Because DME rates had not been regulated by the PUC prior to Senate Bill 373, they had not historically used the FERC accounting system. All of their transmission costs, as well as other costs, were passed on to their consumers and there was no reason to differentiate by type of plant. With the beginning of the ERGOT-wide postage stamp rate approach, DME's transmission rates became regulated by the PUG, while its distribution rates remained under the control of the City Council. This situation created the need for DME to maintain detailed accounting records of its operations by FERC account to support Transmission Cost of Service (TCOS) rate filings at the PUG. These TCOS filings are reviewed by the PUC staff and approved by the PUC Commissioners. The reason that having good accounting practices for transmission assets and operating costs is so important lies in the difference in the way transmission costs are assigned to DME versus how DME collects revenues for use of its own transmission system. Under the postage stamp rate approach, the revenue DME receives from other utilities in ERGOT for the use of its transmission system is based on the value of DME's transmission assets, transmission operation and maintenance expenses and an allocation of administrative and general expenses to the transmission function. DME thus pays for transmission service based on the costs of all ERGOT transmission systems, while collecting from other utilities in ERGOT the DME transmission related costs approved by the PUG. Therefore, the inclusion of all recognizable direct and R.J. Covington Consulting, LLC 11044 Research Blvd., Suite A-325 Austin, Texas 78759 Page 4 of 15 Denton Municipal Electric Accounting System Review Report 11/28/2007 RJ Covington Consulting, LLC allocated transmission costs in the development of DMEs transmission rate serves to protect and benefit DME ratepayers. Although DME has attempted to separate their assets into different classifications, they have been limited by the capabilities of the City of Denton's fixed asset accounting system. Furthermore, DME's procedures for assigning and booking costs have needed to be adjusted to reflect the new regulatory environment. Before DME's transmission costs were regulated by the PUC, there was no regulatory requirement for detailed fixed asset accounting. Consequently, many transmission/distribution substation costs were classified on the books as distribution plant. In addition, in preparing the TCOS filings, RJC found that DME had often not specifically identified transmission related costs and expenses on its books. As a result, DME's transmission costs in its early TCOS filings were significantly understated. This resulted in having to recover costs from DME ratepayers that could have been recovered from other utilities in ERGOT. As part of an effort to better reflect the actual amount of transmission plant in service, DME authorized a Fixed Asset Study in 2003. In this study, RJC physically inventoried all substation assets in each of DME's substations to identify the transmission versus distribution equipment actually in place at each substation. Once this was completed, an estimate of the replacement cost for each of the components in each substation was determined. The substation costs were then separated and identified as transmission, distribution or joint costs (fencing, buildings, grounds, etc). The final task in the RJC Fixed Asset Study was to use the inventory and replacement costs as the basis to develop an adjusted net book value for these facilities for FY 2002 for use in supporting the 2003 TCOS tiling with the PUG. This study was accepted by the PUC as part of that filing, but DME reports that an entry to record this adjustment within the City's accounting system was not made until 2007. RJC has continued to discuss with DME the importance of accurately reflecting all transmission related expenses on their books. This includes not only the capitalized costs associated with installing the transmission facilities, but also the expenses associated with operating and maintaining those facilities. In summary, in order to protect DME ratepayers and maximize the benefit of DME to the City, proper utility accounting records and procedures are necessary. The current Accounting System Review is a continuation of this process to ensure that DME's accounting procedures are in place to correctly assign costs to the proper FERC accounts. R.J. Covington Consulting, LLC 11044 Research Blvd., Suite A-325 Austin, Texas 78759 Page 5 of 15 Denton Municipal Electric Accounting System Review Report 11/28/2007 RJ Covington Consulting, LLC Fixed Assets -Current Capital Project Processes Capital projects are initiated when developers approach DME with an initial plan requiring electric utility services or as a result of the need for additions to the system to provide adequate service. These additions may require addition of distribution facilities, transmission facilities, or both. As the project develops, the DME engineering department consults with the developer's engineering firm and the developer until a determination is made that the project is feasible and funding available. At this time, DME assigns a Proj ect Number and begins the actual project electrical system design. The cost of preliminary analysis by DME for potential projects should be booked to engineering overhead which is later allocated to multiple completed projects. This overhead includes engineering analyses on projects which never make it past the initial conceptual phase. Once a proj ect is approved for construction, the DME engineering department consults with the construction crew leader to identify problem areas, crew availability, etc. A Job Packet is then prepared which includes the diagrams of the electrical system design, a materials list, the projects priority and the estimated/required completion date. Required Right of Way Permits from TXDOT, railroads, etc. are obtained and, if necessary, construction power facilities are scheduled and/or installed. The construction crew is scheduled and local permits are obtained. The Job Packet materials list identifies the facilities required which the City's Purchasing Department procures and releases from a common warehouse. Upon completion of construction the crew chief prepares an "As Built" document detailing the facilities actually installed. This is subsequently reviewed by a Quality Control official who compares the As Built detail with the engineering department original Job Packet. Construction variances are either approved or corrected. The Engineering Department performs a detailed review of the transmission project costs and facilities and a more cursory review of distribution projects. The As Built facilities are entered into the Geographic Information System (GIS) which provides DME with historic physical property records. The GIS identifies the physical location of plant items but it does not identify the booked cost of these facilities. Project costs are not recorded in Construction Work In Progress (CWIP) until the end of the fiscal year, at which time the project is closed and facility costs are transferred to plant in service in the J.D. Edwards software. The GIS model identifies plant and J.D. Edwards reports identify project costs. However, there is no link between the GIS and J.D. Edwards software. An excel spreadsheet is prepared with information from the J.D. Edwards reports and sorted to create R.J. Covington Consulting, LLC 11044 Research Blvd., Suite A-325 Austin, Texas 78759 Page 6 of 15 Denton Municipal Electric Accounting System Review Report 11/28/2007 RJ Covington Consulting, LLC information by FERC account that is used to create a j ournal entry to record the amounts closed from CWIP to Plant in Service accounts. Findings and Recommended Improvements In this section of the Accounting System Review Report, RJC presents its findings and recommended improvements. The following recommendations are presented in order of importance of implementation. 1. There is an opportunity to improve the documentation of processes in the accounting area. In the review conducted by RJC, we found few written accounting procedures for basic processes necessary to provide adequate accounting reports, and in many cases, the documentation had not been updated recently. The lack of accounting procedures and policies has caused inconsistent treatment of costs from year to year due to turnover in the accounting department. It is understandable that individuals may approach accounting problems and entries in different manners. However, clearly developed written policies and procedures are required to maintain consistent application. Recommendation -Develop or update written policies and procedures for all accounting processes including: 1Vlonth-end and year-end closing Creating and recording a journal entry Setting up a project Transferring CWIP to CC1VC orplant-in-service Booking depreciation expense Other policies and procedures as identified. 2. The City and DME use two software programs to record fixed assets. The GIS identifies the physical location of plant items, but it does not identify the booked cost of the facilities. The J. D. Edwards software is used to record facility investment and generate the financial statements, but there is no link or reconciliation between the two packages. Property records are initially recorded in an Excel worksheet and then transferred to the J. D Edwards records. This approach has the potential to fail to provide detailed information for compliance R.J. Covington Consulting, LLC 11044 Research Blvd., Suite A-325 Austin, Texas 78759 Page 7 of 15 Denton Municipal Electric Accounting System Review Report 11/28/2007 RJ Covington Consulting, LLC with regulatory reporting requirements. In the past, the use of Excel worksheets and the lack of proper controls have also allowed errors to go undiscovered. The current system does not contain the detailed continuing property records necessary to provide critical information for regulatory filings and for the development of depreciation rates. Recommendation -Three options are submitted for consideration: a. Continue using the current J. D. Edwards software to record property records. The J. D. Edwards software has a property accounting function; however, consultation with other electric utilities that utilize J. D. Edwards and additional training of DME staff will be needed to facilitate use of the property accounting function. b. 1Vlodify the GIS records to include accounting data. The GIS includes property identification numbers for each piece of equipment, but it doesn't include costs associated with these facilities. It may be possible, but very difficult, to identify costs associated with each GIS facility record. c. Purchase additional software commonly used in the utility environment to maintain these property records. 3. Utility costs are coded to both the City's Government accounting system and the FERC uniform system of accounts (required for regulatory filings) at the time they are booked. However, when DME is required to produce reports for regulatory proceedings (Earnings Monitoring Reports, transmission rate filings, etc.) the accounting records must be cross-referenced to the FERC account data. The fact that this process only occurs at the time a regulatory filing is being prepared makes it difficult to identify problems until already in the filing process, leading to delays. This also results in the problems being recognized too late to address the underlying issues causing the problems before the filing is made. With the electric system representing approximately 70% of total enterprise fund revenues and the recent legislative interest in electric utility issues, it is imperative that accounting procedures reflect industry practice and regulatory authority standards. R.J. Covington Consulting, LLC 11044 Research Blvd., Suite A-325 Austin, Texas 78759 Page 8 of 15 Denton Municipal Electric Accounting System Review Report 11/28/2007 RJ Covington Consulting, LLC Recommendation -Study the feasibility of keeping DME books on an ongoing basis using the FERC uniform system of accounts rather than the City accounting structure. This would allow for the production of regulatory dings without the effort and potential for error currently required in deriving FERC-based reports from the City's Government accounting system. This would also allow for timely production of operating and~nancial reports to be produced utilizing the FERC accounting system, for review by D1VfE management. Since the FERC accounts are specifically for utility systems, this can provide a better set of reports for utility management than is currently available using only City object accounts. 4. While there has been recent improvement in the timeliness of financial reporting, monthly financial statements have not been consistently produced on a set schedule in the past. The City has historically not produced monthly financial reports on a consistent basis in time for the Utility Board to review the reports on a timely basis. Without these detailed reports of DME's financial position, DME and the Utility Board cannot make informed decisions to effectively run the utility. Recommendation -Establish procedures to provide monthly financial statements on a set schedule to ensure that reports are available for review at the Utility Board's second meeting each month. The proposed Utility Board monthly reports should reflect regulated utility accounting practices based on the required FERC system of accounts with supporting documentation tying the information to the City's current cash flow based accounting system and the City's annual reports. 5. The accounting department does not record costs in certain accounts each month including plant additions and retirements, depreciation expense and bad debts expense. Historically these costs have not been recorded until the end of the fiscal year. This makes the year-end closing process very difficult. Error checking and correction is less burdensome, and more likely to occur, if records are maintained on an ongoing process. Individuals' memories of the events and transactions which led to erroneous data entries will be fresh if records are updated as transactions occur. Due to the sheer volume of data, an end of year R.J. Covington Consulting, LLC 11044 Research Blvd., Suite A-325 Austin, Texas 78759 Page 9 of 15 Denton Municipal Electric Accounting System Review Report 11/28/2007 RJ Covington Consulting, LLC data reconciliation is much more difficult than an ongoing monthly reconciliation process. Recommendation -Record all expenses and close additions/retirements to plant in service on a monthly or at least quarterly schedule. In order to accomplish this recommendation, procedures will have to be established to insure that costs are developed and available for the closing date each month. 6. The method of booking depreciation expense has not been consistently applied. Prior to 2004, the City's depreciation expense was calculated in the following manner: if plant went into service in the first quarter of the fiscal year, the plant was depreciated for the entire year, and if plant went into service in the second, third or fourth quarter of the fiscal year, the plant was depreciated for a half year. In 2004, the City implemented a depreciation methodology which depreciated plant starting in the month the plant is placed into service. For example, noting that the City's Fiscal Year runs from October 1 through September 30, if plant is placed into service on November 1, the plant was depreciated on a straight-line basis for 11 months rather than a 12-month time period. RJC's review of current statements has shown that the current methodology has been changed again to a method where depreciation is calculated at one half year of depreciation on all plant additions for the entire year. Recommendation - Develop a consistent methodology and develop written processes to ensure depreciation is applied on a consistent basis. 7. During the last TCOS filing, the PUC reviewed (and did not offer any changes to} DME's proposed treatment of adjustments to DME substation plant-in- service to reflect the findings in the Fixed Asset Study prepared by RJC. That study identifies almost three million dollars of investment that was classified as distribution which should be assigned to the transmission function, the cost of which is recovered by other ERGOT entities instead of DME's retail ratepayers. DME's books should be adjusted to reflect the changes in plant booked to accounts 3 53 and 3 62. In addition, the different methods of depreciation to be used for plant booked to these accounts prior to the study, versus plant booked R.J. Covington Consulting, LLC 11044 Research Blvd., Suite A-325 Austin, Texas 78759 Page 10 of 15 Denton Municipal Electric Accounting System Review Report 11/28/2007 RJ Covington Consulting, LLC subsequent to the study needs to be verified, documented, and approved by the City's auditors. Recommendation -Verify that the changes to the books for substation plant and depreciation for accounts 353 and 362 have been implemented and approved by the City's auditors. NOTE: This recommendation has already been implemented by management. 8. Substation plant separation between transmission and distribution is not well documented. DME's transmission cost of service filing before the PUC provides the basis for collection of revenue from other ERGOT entities for the transmission of power over DME's transmission facilities. Due to the lack of supporting documentation identifying applicable facilities, DME has historically experienced an under-assignment of investment to the transmission function. This has resulted in TCOS rates and revenues that are less than would otherwise be authorized by the PUG, leaving DME's ratepayers with the financial burden that would otherwise be recovered from other ERGOT users of those facilities. Recommendation -For new distribution substation installations the Job Packet should clearly identify facilities on the high side of the transformer (transmission) as well as facilities on the low side (distribution) and joint costs. 9. Another issue identified during the preparation of the TCOS filings was that DME completed construction projects had not been closed to plant-in-service on a regular basis. FERC accounting dictates that, upon completion of construction of a proj ect in CWIP, the projects final costs are transferred to Completed Construction Not Classified (CCNC). Then, at the end of the year, the amount remaining in CCNC should be transferred to plant-in-service. It is important for regulatory filings, that all plant that is used and useful (plant-in-service) be identified on a timely basis. Energized plant which has not yet been placed in service understates rate base which erroneously overstates the return on rate base, the PUC's primary measure of earnings. An artificially inflated actual earned return will reduce any increase in allowed TCOS revenue requirement which places additional burden on DME retail ratepayers. R.J. Covington Consulting, LLC 11044 Research Blvd., Suite A-325 Austin, Texas 78759 Page 11 of 15 Denton Municipal Electric Accounting System Review Report 11/28/2007 RJ Covington Consulting, LLC Recommendation - Develop a policy for closing CWIP either to CC1VC or directly toplant-in-service on a regular basis. 10. Work crews have historically been concerned with completing construction and/or making repairs to ensure reliable service to DME customers. However, work performed by these crews have not consistently accounted for time and expenses by utility function. For example, a comparison between the TCOS filed in 2003 and FY 2006 booked costs shows that transmission plant has increased in value by 61 but transmission expenses have decreased by 37%. Such illogical inconsistencies provide regulatory authorities with the means to implement lower transmission rates at the expense of DME retail ratepayers. Having costs and expenses properly classified by type of plant/expense is necessary to meet regulatory reporting requirements. Recommendation -Establish an efficient system to ensure that all transmission related expenses including labor, travel, and overhead are properly recorded whether they are for the construction of new facilities, performing routine maintenance or on special service calls. Procedures should be established so the work crews are not required to perform accounting functions in addition to their construction and service functions. 1 1. The construction of transmission substations owned by TMPA within the DME service territory have been subcontracted to DME, and during construction, DME incurred costs that were paid out of the City's bond fund. When the City is reimbursed by TMPA, the money should go back into the bond fund but it is sometimes booked as Revenue. This accounting treatment has the potential to overstate revenue. While this accounting treatment may be considered proper according to Generally Accepted Accounting Principles, there may also be opportunities to record the entries differently if it can be shown that the alternate accounting methods will more accurately present financial data. . Recommendation -Explore alternate accounting procedures with external financial auditors to ensure most accurate treatment of funds received from TMPA or any other third party for construction of facilities. R.J. Covington Consulting, LLC 11044 Research Blvd., Suite A-325 Austin, Texas 78759 Page 12 of 15 Denton Municipal Electric Accounting System Review Report 11/28/2007 RJ Covington Consulting, LLC 12. Contributions In Aid of Construction (CIAO) are identified as Revenue received by the City, not as a reduction to the value of plant-in-service. The value of distribution facilities paid for by the developer or consumer are included in the DME plant-in-service. This type of accounting treatment has the potential to overstate the distribution function which will understate TCOS. While this accounting treatment may be considered proper according to Generally Accepted Accounting Principles, there may also be opportunities to record the entries differently if it can be shown that the alternate accounting methods will more accurately present financial data. Recommendation -Credit CIAC funds received to capital projects. This will correct the problem prospectively, but will not resolve the plant balances resulting from past practices. RJC recommends a detailed review of historic contributions to properly account for installed plant. Reducing the booked value of distribution plant associated with historic CIAC will increase the TCOS allocated value of transmission costs and properly recover transmission investment from ERCOT entities instead of the D1VfE ratepayers. This review of historical contributions should be conducted with the assistance and advice of the external audit firm to insure compliance with generally accepted accounting principles and GASB (Governmental Accounting Standards Board). 13. RJC also recommends that all miscellaneous utility revenue items be reviewed to determine that the appropriate accounting is recognized. The only engineering costs charged to capital projects is the time charged directly to active projects. Other overhead charges that should be accounted for in capital project costs are: time spent on projects that do not materialize, other administrative time, facilities use, office supplies and computer costs. Failure to properly account for these other costs understates the actual capital cost of projects. Expensing these costs provides a means of cost recovery but does not provide the needed management information required to identify the complete cost of capital projects. In addition, understating capital costs effectively reduces the amount of rate base identified in regulatory filings which, because of the PUC's heavy reliance on rate of return regulation, puts DME at risk of aving presume excess return. R.J. Covington Consulting, LLC 11044 Research Blvd., Suite A-325 Austin, Texas 78759 Page 13 of 15 Denton Municipal Electric Accounting System Review Report 11/28/2007 RJ Covington Consulting, LLC Recommendation Develop an efficient and accurate system to record engineering overhead costs to capital projects to insure that capital projects reflect the total cost of providing the facilities. 14. Used transformers which have either been replaced by larger kVa facilities or which have been damaged and repaired are returned to inventory. When re- issued the transformers are capitalized on the books for a second time at the average cost of transformers in inventory. While this represents a small amount in terms of dollars, it overstates the booked distribution investment which will understate TCOS. For example, assume a transformer placed into service has a booked cost of $2,000. At the end of 30 years, the books and records should reflect a fully depreciated value. However, assuming that in the twelfth year the transformer shorts out and is replaced, subsequently repaired, restocked and reissued at the then current average inventory cost of $2,768 (assuming a 3% inflation rate). Since the transformer was reissued it is treated as a new transformer on the books and records and at the end of its original 30yr life $1,015 remains on the books as plant in service. Note that used/repaired transformers go out of the warehouse before new transformers. DME indicates that the city has attempted to address this problem by setting up used transformers as a separate item at the cost of $ l . While this accounting treatment may be considered proper according to Generally Accepted Accounting Principles, there may also be opportunities to record the entries differently if it can be shown that the alternate accounting methods will more accurately present financial data. Recommendation -Record transformer investment in capital cost when the materials are purchased. This would avoid the potential for overstatement of the inventory resulting from the practice of charging out the transformer cost a second time. As part of this recommendation we would suggest that a review of the impact on previous booked amounts be made to determine the effect on plant-in-service balances. 15. When a j ob is finished any leftover material is returned to the warehouse and there is a 10% restocking fee. However, the warehouse does not accept any R.J. Covington Consulting, LLC 11044 Research Blvd., Suite A-325 Austin, Texas 78759 Page 14 of 15 Denton Municipal Electric Accounting System Review Report 11/28/2007 RJ Covington Consulting, LLC wire less than 200' long. The warehouse will also not issue any amount of wire less than a reel. As an example, if a job requires 50' of wire the warehouse will issue only a reel of wire. If the reel has 225' of wire and 50' feet are used the remaining 175' of wire cannot be returned to the warehouse but the entire 225' of wire is charged to the j ob. Recommendation -Warehouse should establish procedures to allow for the provision of only the materials that will be required on the job. 16. Vehicle operating and repair charges are made to operation and maintenance (0&M) accounts each month as they occur. In the past, 0&M has been credited and capital projects charged based on labor hours charged on each project. The City motor pool charges DME for the cost of the vehicles through depreciation of the vehicles used by DME. However, the charges from 0&M to capital projects have not been made for the current fiscal year. Recommendation -Develop procedures for the charging of vehicle costs, to the appropriate 0~1V1 account or Capital project without materially increasing work crew's time reporting efforts. R.J. Covington Consulting, LLC 11044 Research Blvd., Suite A-325 Austin, Texas 78759 Page 15 of 15 t ~ + Finance Department * 215 E. McKinney * Denton, Texas 76201 (940) 349-8288 * DFW Metro (972) 434-2259 * Fax (940) 349-7206 November 28, 2007 Denton Municipal Electric Ms. Sharon Mays, Director of Electric Utilities 1659 Spencer Road Denton, Texas 76205 Dear Ms. Mays: Per your request, I have reviewed the Denton Municipal Electric (DME) Accounting System report that was prepared by the firm of R.J. Covington, LLC, on October 12, 2007. After reviewing the recommendations in the report, I offer the below comments related to each of the conc usions presente . Recommendation 1 Develop written policies and procedures for all accounting processes. Finance Department Response We agree with the recommendation. Written procedures for the accounting department should be strengthened and improved. We are currently working with staff to fully document all of our procedures so that processes can be consistently followed. Recommendation 2 Consider the use of one software platform to record and track fixed assets. Finance Department Response We agree with the recommendation. The Covington report identifies the following three potential options for consideration related to recording fixed assets in a software application. Continue using the JD Edwards software system. Use the current Electric Utility GIS system and modify it to include accounting data. Purchase additional software commonly used in the utility environment. After carefully considering each of these options, our recommendation is to continue using the JD Edwards system to record and track our fixed asset investments. This recommendation is 1 based on the assumption that the JD Edwards system is the City of Denton's centralized financial application. As such, the records in this system should be the central record for any operation within the city. If the Electric Utility wishes to continue to use the GIS system for management purposes, we recommend that an interface be developed between JD Edwards and GIS. It is important to note that the JD Edwards application is meant to be used as a financial system, and as such, the data recorded and stored in the system maybe of limited use for non-financial reporting purposes. We agree that the current system of Excel spreadsheets is prone to data integrity issues. As such, we agree with the finding that this manual system be replaced with an automated approach structured around the JD Edwards application. Recommendation 3 Study the feasibility of keeping DME books on an ongoing basis using the FERC uniform system of accounts rather than the city accounting structure. Finance Department Response We do not agree with this recommendation. The Covington report incorrectly concludes that the city's accounting structure interferes with FERC reporting. The city's accounting structure is actually a supplemental form of reporting that simultaneously uses the FERC accounting structure. As such, we believe the reporting irregularities mentioned are a result inadequate oversight related to the selection of the correct FERC account given by DME employees during the procurement process. As such, we recommend additional training for DME staff related to FERC account codes and a more robust review process by DME and the Finance department for actual expenses recorded. Recommendation 4 Establish procedures to provide monthly financial statements on a set schedule to ensure that reports are available for review at the Public Utility Board's second meeting each month. Finance Department Response We agree with this recommendation. Management will work with staff and DME to implement a realistic and sustainable financial reporting cycle. It is important to also note that financial reporting has been timely and consistent since the addition of an accountant by DME. Recommendation 5 Record all expenses and close additions/retirements to plant in service on a monthly or at least a quarterly schedule. Finance Department Response We agree with this recommendation. Management will implement a more periodic closing process to more quickly record actual costs and provide more accurate financial reporting. This 2 process, however, will require projects to be reviewed on a consistent and timely basis by DME staff. In prior periods, this has been difficult to accomplish given the time constraints of DME engineers. To meet the spirit of this recommendation, DME and Finance staff will need to work closely with each other to coordinate the timing of these reviews. Recommendation 6 Develop a consistent methodology and develop written processes to ensure depreciation is applied on a consistent basis. Finance Department Response We agree with this recommendation. Management will work to standardize procedures and depreciation methods. Recommendation 7 Verify that the changes to the books for substation plant and depreciation for accounts 353 and 362 have been implemented and approved by the City's auditors. Finance Department Response We agree with this recommendation. Management has implemented this recommendation. Recommendation 8 For new distribution substation installations, the Job Packet should clearly identify transmission and distribution facilities. Finance Department Response We agree with this recommendation. Management will work with DME staff to clearly document transmission and distribution costs in the future. Recommendation 9 Develop a policy for closing Construction Work in Process (CWIP) either to Completed Construction Not Classified (CCNC) or directly to plant-in-service on a regular basis. Finance Department Response We agree with this recommendation. Management will work with DME staff to develop a routine closing process for completed construction projects. This process, however, will require projects to be reviewed on a consistent and timely basis by DME staff. In prior periods, this has been difficult to accomplish given the time constraints of DME engineers. To meet the spirit of this recommendation, DME and Finance staff will need to work closely with each other to coordinate the timing of these reviews. 3 Recommendation 10 Establish a system to ensure that all transmission related expenses including labor, travel, and overhead are properly recorded. Accounting procedures should be established so the work crews are not required to perform accounting functions in addition to their construction and service functions. Finance Department Response We agree in principle with the recommendation, but do not agree with the notion that this is purely an accounting related issue. The accounting system is responsible for recording costs, but a separate and distinct administrative structure needs to be implemented by DME to adequately track and report time worked by utility crews. Without such a system, the accounting processes will never be able to accurately and efficiently capture these costs. Management will work with DME staff to develop a system that meets this administrative requirement and is also integrated into the financial reporting process. Recommendation 11 Establish accounting procedures to ensure correct treatment of funds received from TMPA or any other third party for construction of facilities. Finance Department Response We do not agree with the notion that the subcontractor expenses mentioned have been booked improperly. Generally Accepted Accounting Principles (GAAP) and the Governmental Accounting Standards Board (GASB) dictate that the TMPA reimbursements be recorded as revenue for DME, and this is precisely how they have been recorded. After discussing this issue with DME, however, we agree to fully explore this issue with our external financial auditors to determine whether there is any latitude in how this information is recorded. In addition, we also pledge to work with DME staff to determine how other electric utilities account for these reimbursements. Recommendation 12 Credit Contributions in Aid of Construction (CIAO) funds received to capital projects and conduct a detailed review of historic contributions to properly account for installed plant assets. Finance Department Response We believe this recommendation is clearly contradicted by Generally Accepted Accounting Principles (GAAP) and the Governmental Accounting Standards Board (GASB). Management, however, will work with DME and our external financial auditors to fully explore whether there is any latitude in how this information is recorded. 4 Recommendation 13 Establish accounting procedures for the recording of engineering overhead costs to capital projects to insure that capital projects reflect the total cost of providing the facilities. Finance Department Response We agree with this recommendation. Management will work with DME and our external financial auditors to develop an efficient and accurate cost allocation system for capital project reporting. Recommendation 14 Record transformer investment in capital cost when the materials are purchased and conduct review of the impact of previous booked amounts to determine the effect on plant-in-service balances. Finance Department Response We agree with this recommendation to the extent it does not contradict Generally Accepted Accounting Principles (GAAP) or Governmental Accounting Standards Board (GASB) guidelines. Management will work with DME and our external financial auditors to fully consider this recommendation. Recommendation 15 Warehouse should establish procedures to allow for the provision of only the materials that will be required on the job. Finance Department Response We agree to study this issue with Materials Management and DME staff to determine whether we should modify our warehouse procedures. However, any review of the warehouse operation will be conducted using a holistic approach so that all components of the operation are thoroughly examined and understood before making any decision. In addition, we agree to benchmark our warehouse services to other similar operations to determine whether any additional changes are warranted. Recommendation 16 Develop procedures for the charging of vehicles costs, to the appropriate operation and maintenance account or capital project without materially increasing the work crew's time reporting efforts. Finance Department Response We agree in principle with the recommendation, but do not agree with the notion that this is purely an accounting related issue. The accounting system is responsible for recording costs, but a separate and distinct administrative structure needs to be implemented to adequately track 5 and report vehicle costs. Management will work with DME staff to develop a system that meets this administrative requirement and is also integrated into the financial reporting process. Sharon, the Finance Department wants to be a strategic partner in the success of Denton Municipal Electric. To do so, we need to ensure that our department is communicating effectively with DME. As such, I recommend that we meet at least on a quarterly basis to discuss the status of these recommendations, as well as, any other additional items that may need attention. I look forward to working with you and your staff to implement and study the above recommendations. If you need any additional information, please let me know and I will be happy to discuss with you. Best regards, Bryan Langley Director of Finance City of Denton 6 This page left blank intentionally. AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 DEPARTMENT: Police ACM: Fred Greene SUBJECT Receive a report, hold a discussion and give staff direction regarding renewing the Red Light Camera contract. BACKGROUND The City of Denton Automated Traffic Signal Enforcement Program has been in operation since May 8, 2006. The current program consists of six (6) cameras that monitor approaches at four (4) different intersections. These intersections were originally selected based on a combination of red light violations and red light related accidents. At the time the system was installed, the City was not allowed to place cameras at intersections involving Texas Department of Transportation (TXDOT) roadways. The current program is operated under contract with Redflex Traffic Systems out of Scottsdale, Arizona. Redflex was selected through an RFSP process by a diverse committee of City employees representing the Police, Legal, Traffic Engineering, and Purchasing Departments. The contract with Redflex provides for the City of Denton to pay Redflex a flat rate per camera per month that covers the prorated installation costs and the expenses for maintenance of the system and back office processing for the violations. The contract also includes a guarantee clause that provides that the City does not have to fund revenue losses in the event the system does not produce sufficient funds to pay the monthly contract costs. In essence, this clause ensures that the Red Light Camera program is self sufficient and does not draw off of the general fund. The only caveat to this is the small amount of time invested by City personnel in the operation of the program, such as police officers reviewing and approving violations. When there is sufficient revenue to cover these costs, they are paid by the RLC funds. When there is not sufficient revenue, these costs are absorbed by the individual Department budgets. The bulk of this time is in the Police Department and Municipal Court, and typically comprises approximately 20 - 25 hours a month. Effectiveness of the Program In thirty one months of operation, the system has experienced a significant decrease in the number of recorded violations at the monitored intersections. From May 8, 2006 through December 31, 2008, there has been a reduction in overall recorded violations of just over 74%. Four of the individual monitored approaches experienced declines in violations ranging from 65.4% to 89.8%. Only one approach experienced an overall increase in violations. That 1 intersection increased by 13.5%. Appendix 1 provides a full graph of the recorded violations at the monitored intersections. A second method for determining the effectiveness of the RLC program is through an analysis of reported motor vehicle accidents at the monitored intersections before and after the installation of the cameras. Staff reviewed the accidents at the monitored intersections for two years prior to RLC installation and in the preceding two year period. In this review, staff examined the primary and contributing factors for the reported accidents. Of importance for this review are those accidents that are directly or indirectly caused by a red light violation and those accidents that are typically considered as being related to the use of red light cameras (following too close and failure to control speed). While the cameras monitor specific approaches at each intersection, this analysis did not differentiate between monitored and unmonitored approaches. The results of this analysis indicate a positive trend in the number and type of accidents that can be attributed to the use of the cameras. In the charts below, the first two columns cover accidents prior to camera installation. The second two columns cover accidents after the cameras were operational. ■ T~~~~ ~~~i~~r~t~ ~ ■ T~~~ I ~~~i ~ ~nt~ '1 ■ Li~~~ ~ ~ ~ ~ ~ 2 Iii I I 1 ■ T~~~ I ~~~i ~ ~r~t~ ~ ~ ~ ~I I E ~ H il~ ■ T~~~I ~~~i~~r~t~ ' ~ ~ ~ Program Expansion Staff proposed additional intersections for red light cameras following the State legislative action in September 2007. This legislation provided guidelines for installation of camera systems and opened up the opportunity to install cameras on TXDOT roadways. Staff conducted an analysis of potential intersections based on traffic volume, red light violations, accidents, and the overall construction of the intersection in terms of utilizing traditional traffic enforcement. Based on this analysis, staff recommended additional cameras for the following intersections: University @Mayhill University @ Carroll University @ I35 Service Road Ft. Worth Drive @ I3 5 Service Road Loop 288/Lillian Miller @ I35 Service Road Due to on-going or near-future construction, only the intersections of University @Mayhill and Ft. Worth Drive @ I35 Service Road could be considered at this time. Staff recommended the installation of two cameras on University @Mayhill monitoring both directions of University. 3 This intersection was the site of a double fatality red light accident in 2004. Staff also recommended a single camera for south bound Ft. Worth Drive at the I3 5 Service Road. These intersections were presented to the Traffic Safety Commission, who recommended installation. These intersections have also been previously discussed with Council. The required intersection analysis and related data have been forwarded to TXDOT for approval. The remaining intersections can be considered at a future time when construction is completed on those roadways -provided that the construction projects do not alleviate the red light concerns. Contract Terms The original contract covered athree-year period from May 8, 2006 -May 8, 2009. The contract allows both parties to agree to an extension/renewal for up to three consecutive one-year terms. Redflex has proposed an extension of three years with several changes. The primary change in the proposed contract is in the detection technology. Currently, the RLC program uses a video detection program that monitors lane approaches from above the intersection. Redflex is proposing a move to induction loops that are imbedded in the roadway. These loops have a superior accuracy in detecting violations and a reduction in "false positives." The "false positive" occurs when a vehicle approaches a video monitored intersection at a sufficient speed to be detected, yet manages to brake in time to stop prior to the intersection. This typically results in the camera flashing, but not in a valid violation. The inductive loops perform at an average of 150% improvement in detected violations. The second change in the proposed contract is in the pricing structure. The current cameras carry a flat monthly charge of $5,153 per camera per month. Because the current approaches have experienced such a sharp decline in violations, Redflex is proposing a base fee of $4,870 per camera with a variable credit of up to $2,000 per camera based on performance. In essence, for the existing cameras that have a relatively low volume of violations, Redflex would credit the City for that camera to reduce the carried debt for the entire system. The rationale for this is that the low producing cameras do not require the same level of back office support from Redflex. State law prohibits the use of a pricing structure that is based on percentage of each violation. Therefore, the use of the credit is intended to reduce the overall cost to City on the lower producing cameras, while maintaining compliance with this law. Any new camera approaches would carry the flat rate of $4,870 per camera per month. OPTIONS 1. Council can direct staff to renew the contract with Redflex Traffic Systems under the new terms. 2. Council can direct staff to explore a new bid process for the operation of the RLC program. 3. Council can direct staff to end the RLC program at the termination of the current contract. RECOMMENDATION Staff recommends renewal of the contract with Redflex Traffic Systems under the new terms. 4 PRIOR ACTION/REVIEW 10/04/04 -Council Work Session on Red Light Cameras. 12/07/04 -Council adoption of Red Light Camera Ordinance. 10/03/05 -Council Work Session on RLC Vendor Selection. 11/14/05 -Council approval of ordinance 2005-345 authorizing contract with RLC Vendor. FISCAL IMPACT The current RLC contract with Redflex Traffic Systems contains a "cost neutrality" clause. The City of Denton has a guarantee that the RLC program will be self sufficient outside of the cost for City personnel to operate the program. As stated above, this cost is typically limited to approximately 20 - 25 hours per month. Where there is sufficient monthly revenue from the RLC program, these personnel costs are covered from RLC funds. In the event the cost neutrality clause is in effect, the personnel costs are absorbed by the appropriate City Department. For the past several months, the RLC contract has been operating under the neutrality clause. Based on this clause in the contract, there is no anticipated negative impact to the City from renewing the RLC contract. Respectfully submitted, .S ~ . , _ Roy W. Minter Chief of Police Prepared by: Scott Fletcher Captain 5 ~ o 0 ~ ~ ~ a ~ ~o ~ 3 V ~ i O o _~nooo 0 o~orn,~ n~ >00~~ ~ ~ o a m ~ ~ ~ - s ~ o ~ L V ~ o~~~ ~ N ~ ~ > ~ ~ ~ r~ O L ~ ~ O O O ~ ~ ~ a~o~oo ~ v ~ ~ ~ N M ~ ~ ~ r..~ ~ ~ ~ o ~ o n ~ ~ o N ~ > N rl ~ r~ m C~ ~ ~ v ~ v L ~ o 0 0 ~ ~ ~ ~ a ~ ~ ~ v s ~~°0~0010 ~ v ~ ~ ~ ~ ~ ?c O ~ ~ ~ ~ ~ ~ ~ v o _ ~ _~ooa~ Q ~ > N ~ N b,A a ~ ~ ~ ~ \ \ ° ~ ~ a N ~ ~ ~ ~ ~ ~ Ol ~A ~ s ~ ~ ~o = u m L ~ lD O I~ o ._rn~m ~ > m m ~ U_ ~ ~ 0 0 0 ~ ~ \ ~ ~ rl s ~N~oNo ~ u 0 U_ _ c-I l0 ~ o~o~~ - > N N ~ 4J 00 i lD I~ 00 ~ ~ O O O L ~ O O O ~ ~ N N N O AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 DEPARTMENT: Planning ACM: Fred Greene SUBJECT - DCA08-0009 (Development Code Amendments) Receive a briefing, hold a discussion and give staff direction on proposed amendments to Subchapters 12, 13, and 23 of the Denton Development Code (DDC). These are staff initiated Code amendments to clarify standards and regulations regarding outside storage and outside display requirements; revise the requirement for window and door areas for single-family residential dwellings, multiple unit residential dwellings and multi-family development; provide definitions for windows and doors; and revise the definitions of front lot line, front yard, rear yard and side yard. The purpose of this work session is for the City Council to review the proposed amendments and provide staff with direction. The Planning and Zoning Commission recommended approval of the proposed amendments (6-0). (DCA08-0009) BACKGROUND The following Code amendments are proposed to provide clarity and consistency in the interpretation and enforcement of regulations related to outdoor storage and facade requirements. Item 1-Clarifying Outside Storage and Outside Display Requirements Issue: Amendments to the Denton Property Maintenance Code regarding outside storage and outside display are currently underway. As such, language regarding this topic in Subchapter 35.12 of the Denton Development Code (DDC) is being amended to reflect the proposed amendments to the Denton Property Maintenance Code. The proposed amendments to the Denton Property Maintenance Code will regulate both commercial and residential outside storage. In addition, language differentiating outside storage from outdoor display is proposed for purposes of clarity and congruency between the two documents. Recommendation: Subchapter 35.12.7 "Outside Storage" of the DDC be stricken in its entirety and replaced as follows: 35.12.7 Outside Storage and Outside Display A. Outside Storage: The storage of any objects, items, products or materials outside an enclosed building, and that are not intended for immediate sale shall be designated as outside storage. In addition to complying with all EPA regulations, the International Fire Code, and all other applicable rules and regulations, outdoor storage: 1. Shall be located in the side or rear yard only, and shall be opaquely screened from public view using screening materials that are in conformance with Sections 35.13.8 and35.13.9. 2. Shall not be stacked higher than eight (8) feet. 3. Shall be setback at least five (5) feet from the property line and shall be maintained so as to not become a nuisance to the public or any adj Dining property. B. Outside Display: The displaying of objects, items, products, or other merchandise outside an enclosed building that is intended and available for immediate sale, rental or special order shall be designated as outside display. Refer to Outdoor Display requirements in the Denton Property Maintenance Code. Recommendation: Add the following definitions to Subchapter 35.23.2 of the DDC: Outside Storage: The storage of objects, items, products or materials outside an enclosed building that are not intended for sale. Outside Display: The displaying of objects, items, products, or other merchandise outside an enclosed building that is intended and available for immediate sale, rental or specia or er. Item 2 -Revising the requirement for window or door areas for single-family residential dwellings, multiple unit residential dwellings and multi-family developments Issue: Pursuant to Subchapter 35.13.13.1.E. of the DDC, all walls, except gabled roof areas, which face a street other than an alley, must contain at least 25% of the wall space in windows or doors. This provision applies to single-family residential structures only. The way this provision has been interpreted by staff is that both sides of a residential structure located on a corner lot and facing a street must provide at least 25% of the facade with windows or doors. According to applicants, it is difficult to achieve a functional floor plan while meeting both the 25% door or window requirement and exceeding the Energy Code requirements by 10%, as required by the City. In an attempt to comply with the requirement for 25% windows and doors on a facade while exceeding the Energy Code rating requirement by 10%, faux windows or doors have been employed. However, staff is of the opinion that use of faux windows and doors is not within the spirit and intent of the Code. Furthermore, these measures have resulted in structures with compromising aesthetic value and character. Developers of multi-family developments and multiple unit residential dwellings have identified similar issues as being challenging. Pursuant to Subchapter 35.13.13.2.A.l.b, buildings that are located within twenty (20) feet of a property line adjacent to a front yard, or within thirty (30) feet of the curb line of a private street shall have at least 40% of the Page - 2 facade facing the street comprised of windows or doors. This requirement has been applied to both sides of multi-family developments or multiple unit residential dwellings that front streets on corner lots, requiring 40% windows or doors be incorporated on two sides of a building. Similar to single family developers, multi-family developers have stated that it is difficult to achieve a functional floor plan while meeting both the 40% door or window requirement and exceeding the Energy Code requirements by 10%. In an attempt to comply with the requirement for 40% windows and doors on a facade while still exceeding the Energy Code rating requirement by 10%, faux windows or doors have been employed. Again, staff is of the opinion that use of faux windows and doors is not within the spirit and intent of the Code, and that these measures have resulted in structures which have compromised aesthetic value and character, or which may result in the inappropriate or unsafe placement of windows. Summary: To meet window and door requirements for single-family residential structure and multi- family developments, structures are being designed and constructed with faux windows and/or doors that may not be architecturally compatible with the structure. Alternative Development Plans (ADP) are the only option available currently to obtain a waiver from the minimum window or door area requirements; ADPs must be applied for separately for every structure or development not able to meet the minimum window or door requirements, and must be considered by the Planning and Zoning Commission. This process consumes valuable resources, and adds additional time to the development review process. To alleviate the need for ADPs to address the requirements for windows and doors and meet the established energy code guidelines, a reduction in the window or door area minimum requirements is proposed. Recommendation: Staff recommends that Subchapter 35.13.13.1.E of the DDC be stricken in its entirety and be replaced as follows: All single-family residential structures shall have at least 25% of the wall along the front facade (front adjoining a public or private right-of way where the entrance/address is located) in window or door areas (excluding garage doors). All other facades, which face a public or private right-of way (excluding alleys) must contain at least 10% of the wall space in window or door areas (excluding garage doors), or one opening per sleeping area (as defined by the Building Code), whichever is greater. Shutters, trims, or false windows will not be counted towards the minimum requirement. Recommendation: Staff recommends that Subchapter 3 5.13.13.2.A. l .b of the DDC be stricken in its entirety and be replaced as follows: All multi-family development and multiple unit residential dwellings, except for structures that are part of anon-residential and mixed use building in a Pedestrian Oriented District, shall have at least 25% of the wall along the front facade (front Page - 3 adj Dining a public or private right-of way where the entrance/address is located) in window or door areas (excluding garage doors). All other facades, which face a public or private right-of way (excluding alleys) must contain at least l o% of the wall space in window or door areas (excluding garage doors), or one opening per sleeping area (as defined by the Building Code), whichever is greater. Shutters, trims, or false windows will not be counted towards the minimum requirement. Window and door area requirements for structures that are part of anon-residential and mixed use building in a Pedestrian Oriented District, refer to Subchapter 3 5.13.13.4. Recommendation: Add the following definition to the Subchapter 3 5.23.2: Dwelling, Multiple Unit Residential: A structure designed for three or more dwelling units. This includes, but is not limited to, triplexes, fourplexes, and multi-family units. Item 3 -Providing definitions for windows and doors Issue: Currently the DDC does not have a definition for windows or doors. As such, no consistent criteria are available which has resulted in the inclusion of faux windows and doors to meet the minimum area requirements described above. Incorporating definitions of windows and doors into the DDC will provide consistent criteria against which building plans may be evaluated. Recommendation: Add the following definitions to the Subchapter 3 5.23.2: Window: An opening in the wall of a building or structure for admitting light and fitted with a frame containing panes of glass. Window, False: A device in the wall of a building or structure fitted with a frame containing panes of glass so as to resemble a window, but not admitting light. Door: A hinged, sliding or folding barrier for providing access to a building, structure or room. Door, False: A device that resembles a door, but does not provide access to a building, structure or room. Item 4 -Revising the definition of front lot line, front yard, rear yard and side yard Issue: The definitions of front lot line, front yard, rear yard and side yard are being revised to provide clarity. Currently, the definitions of these terms have been found to be vague. For Page - 4 instance, side yard is defined as "a yard between the principal structure and the side lot line, extending from the front yard to the rear yard. A corner lot shall have one front yard and one side yard." This definition has been interpreted such that the side yard facing the street is considered part of the front yard. In comparison, the definition of front yard is "a yard extended across the full width of and situated between the front lot line and the principal structure line proj ected to the side lines of the lot." In addition to the overlap between these definitions, they do not clearly address corner lots. The proposed definitions are intended to address confusion arising from the existing definitions, and to clarify how the definitions are applied to corner lots. Recommendation: Staff recommends that Subchapter 35.23.2 of the DDC be amended as follows: Lot Line, Front: The lot line separating the lot from the street other than an alley. In the case of a corner lot, there shall only be one street line considered the front lot line. The front lot line adjoins the public or private rights-of way where the entrance/address is located. Yard, Front: A yard extended across the full width of and situated between the front lot line and the principal structure extending to the side lot lines. In the case of a corner lot, the front yard adjoins the public or private rights-of way where the entrance/address is located. Yard, Rear: A yard extended across the full width of and situated between the rear lot line and the principal structure extending to the side lot lines. In the case of a corner lot, the rear yard shall not extend past the corner side yard. Yard, Side: A yard extended across the full width of and situated between the side lot line and the principal structure extending from the front yard to the rear yard. In the case of a corner lot, the corner side yard shall extend from the front yard to the rear lot line. Page - 5 INTERIOR LOT CORNER LOT Rear Lot Line Rear Lot Line i i Accessory Accessory ~ Structure ~ Structure ~ a (Garage) a (Garage) ~ a a ~ b ~ ~ ~ Rear Yard Rear Yard ~ ~ b ~ ~ ~ ~ b ~ ' ~ House ~ ~ ; a~ House ' a ~ b b b ~ ~ ~ ~ ~ ~ ~ ~ ------------------------------1----- Front Yard Front Yard Front Lot Line Front Lot Line Street Page - 6 PRIOR ACTION/REVIEW November 5, 2008 Planning and Zoning Commission Work Session November 19, 2008 Planning and Zoning Commission Public Hearing OPTIONS 1. Direct staff to proceed with the proposed amendments 2. Direct staff to proceed with the proposed amendments with changes 3. Direct staff to take another direction RECOMMENDATION On November 19, 2008, the Planning and Zoning Commission conducted a public hearing and, after hearing and reviewing all materials presented, recommended approval of the proposed amendments by a 6-0 vote. EXHIBITS 1. November 19, 2008 Planning and Zoning Commission Minutes Prepared by: Respectfully submitted: Ron Menguita, AICP Mark Cunningham, AICP Planning Supervisor Director of Planning and Development Page - 7 1 CHAIRMAN WATICINS: Let's see. public hearing 5 H, 1 dwellings, multi unit residential dwellings, and multi family ~ amendments to Subchapter 12, 13 and cf the Denton ~ development, As you recall, the code specifically states that 3 Development Code. DCA-g8~t~~g9. Ran, 3 if you are abutting a street, and we are talking about single ~ MR. MENGIIiTA: Thank your Chairman, members cf the ~ famify, that it shall have at least ~5 percent in window ar ~ Commission. I brought forward to you again, as we had 5 door areas, That means if you are in a corner lots your 25 6 disc~,ssed in previous work session, went through this at length G percent applies to the front, aS welt as the side. l for the public view viewing public, that is. I am going to ~ Now, trying to comply with the side iS a little $ ga ahead and present it briefly. ~ ~ 8 bit difficult. The front nay not be as difficult. And also 9 The request here is to amend Subchapters 12, 13 9 looking a~t the energy code, as well as the layout of t11e 'I0 and ~3 cf the Denton peveiopment Code.. The code amendments are 1Q .building, it may not be feasible to have ~5 percent of that listed here. There are a total of four. 1Ne are pulling number side lot. ~a Staff isrecommending that that be dropped or 1~ 2, which IS clarifying buffers screening, and fencing ~ 'I~ changed, ~3 requirements. And the reason far that is as we left the work ~3 ~n addition to single family, we are also looking '14 Sessions there were same changes that we thought would be ~4 at multi family. Multi family right now says the same thing, valuable. We didn't get to het it off done before~the packets ~5 percent far bath front and side. And sa in concurring with 1fithat went out.. We had an internal meeting end there were more 'Ifi the amendments this is an example cf a way that developers have ~7 changes and so Earth, So we are req~,esting that we~ will mane ~7 addressed the 7S percent window~dcar areas, by putting up fa~,x ~8 ~ forward with the four out of the five. ..Ands again, we are not "I$ windows. 1Nhich you can see it is kind of hard to see on the 19 considering Item iVo, 2, which is clarifying buffer, Screening, 19 tap two, but they are there, And the way they are classified 10 and fencing requirements. ~D as faux windows, and we have accepted it to date, is they have 2'! 1Nith that, the first code amendment is clarifying a different brick pattern, And I knave this doesn't really meet 2~ outside storage and outside display requirements. These the intent, but that is what happened. Some of them have the 2~ requirements are for the purpose cf being consistent with our 23 shutters, which really don't lack too appealing. ~4 Denton Properfiy Maintenance Code, which is being revisedr as ~A~ Sa what Staff is going to recommend iS that I ~ well. Z5 went through these already this is the summary of what g8 COQ '1 The recamrnendatian by Staff is to strike what is "i options they have They can either do an ADi~ or do the faux . currently in Subchapter 35.7 and replace it with the following; 2 windows, which Staff iSn=t really too inclined to accept. l~hat .3 Dutside Storage is defined as the storage of any objects, 3 Staff is recommending is that we amend the subchapters that 4 itemsr products, or materials outside an enclosed bUifding and 4 pertain to w'rndaws and door areas. ~ And that~all single famify 5 ~ ~ that are not intended for immediate Sales shall be designated ~ and multi famify structures, except for that are part of a non- e as outside storage. In addition to other additiana! complying $ residential or mixed use building and pedestrian~nriented ~ with all FPA regulations, Ere coder and all the other ~ district, in any of those areas any ~of those buildings that $ applicable rules and regulations, outside storage shalt comply $ are within this pedestrian district, there are another set of 9 with the following criteria; One, that it be located on the 9 window and door area requirements.. That. iS why we left them ~4 side cr rear of the praperty~ `Chat the outside storage shall 'I~ ❑ut. 1'I not be stacked greater than eight feet. And shall be Set back Continuing, these single familyJmulti family 'I~ from the property line by five feet. ~2 structures shall have at least 25 percent of the front wall 'I3 The other component of this is the outside '13 again, this is facing the front at 75 .percent, Ali other ~4 display, And autsid~e display is del•Ined as the displaying of '14 facades which face a public streets this is your side street '15 objectsr items, products or other merchandise outside an ~5 facing the building, wilt have at least ten percent of window 'IG enclosed building that is intended and available for immediate 'Ifi and door areas. 1Ne have also added language here that will not 'I~ safe, rental, ar Special order Shall be designated as outside count shutter trim and false windows towards that ~5 percent, 18 display. The property maintenance code will have the 1$ or ten percent of window and door areas, ~9 requirements set forth for the outside display when it occurs. ~9 AS far as the amendments we are also going to In addition to amending Subchapter 35a1~, we are 2~ include a definition for dwellings multi unit residential, also recommending that these two definitions be included in ~'I which currently does not exist in our develapr~ent code. That Subchapter 35.3. And, agains outside Storage and outside ~ is defined as the structure designed for three ar more dwelling 2~ display as shown here ~3 units, This includes, but not limited tos tripfexess ~4 Item 3, we are lacking at revising the requirerr~ent ~4 faurplexes and multi family units, ~5 for window or door areas for Single family residential Item 4 deals with the definition of window and . PUBLi~ SE~Si~N I~QVFMR~FR 1 ~ ~nnR _ . ~ 1 doors. we don't have any in the Denton Development Code, and 1 ar the pause and the rear fat line, and extends from the side ~ we ere introducing it as paE'•t of this amendment. 1Nhat staff is 2 lot lines from here to here. In the case of a corner lot the 3 recommending is that the definition oi= windows be as follows: 3 rear yard will extend from. the property line to the corner side 4 An opening in the wail of a building or structure for admitting 4 yard line, which is here. The side yard extends from the house 5 light and fitted with a frame containing panes of glass, False ~ to the property line and extends from the front yard to the ~ windows is a device in the wall of a~ l~.uildin~ ar structure ~ rear yard, So these are your rear yards. ~ fitted with a frame containing frames of glass so as to 7 In the case of a corner lot, the corner yard $ resemble a window, but not admit light. 8 side yard, that is extends from the house to the iat line ~ Again, the purpose of the definition, as we ~ and from the front yard all the way back to the property line. discussed with the previous item, when a permit application And the reason why we extended it past here is that accessary comes in we are better equipped with definitions to address 'I'~ structures, if they were permitted they are permitted in the '1~ those regulations, And having these definitions does ~►eip, rear yard they can easily come up to~the street. And we are In addition, we ar~~also introducing the '~3 trying to avoid them having as muc~i visibility from tike public, ~4 d~ehnition of doors and false doors. A door is defined as a '14 so we are saying they have to be outside of this corner side hinged, sliding, or foiling barrier for providing access to a 'f~ yard. 16 building, structure, or room. A false door is a device that 1~ That concludes my presentation. I know that there .resembles a door, but does not provide access to a building, was a lot of infarmatinn there, and I would be happy to answer 1$ structure, or room, 18 eny questions that you may have. 19 ~ And East item for your consideration this evening "I~ CHAIRMAN WATKINS: Any questions far Ran? .~0 is the definition of front line, fro~n.t yard, rear yard, and COMMISSIgNER THOMAS; Can I make a statement? . side yard. We da have defin~tians for these, Havuever, they ~'I CHAIRMAN WATKINS: Sure can. are either~in conflict or hard to understand, So, hopefully, COMMISSIONER THOMAS: I would just like to thank 23 what we are providing as an amendment is a little bit more 23 lion on these fast two issues, 5 G end 5 H. 1Ne have been ~4 clear. ~4 wflrking on this, I don't know, I think I was in cub scouts when ~5 Front fine I am going ahead and reading this we started on this. So I really appreciate your patience in . 10~ ~ 0~4 for tl~e viewi~ig public is the lot li.n.e separating the lot 'I continuing to ga through the manipulations that we have had, I ~ from the street other than an alley, ~ in case of a corner lot, ~ know probably to the viewing audience it doesn`t look like many 3 the front line shall be designated by the owner, Again, the 3 of us were paying a whole lot of attention to you, But we have 4 intent there is if .you are do a corner lot, typically the front 4 been through all the work sessions that we have had, we have ~ is where the house faces, And, typically, when an Applicant 5 Batten fairly well versed on this, So I appreciate you ~ comes in and develops a lot, and designates the front as the ~ continuing and trying to work to clarify the code, 7 front of their house, that ultimateEy makes it the.fror~t yard, ~ MR. MElti1GUITA: Thank you far that. ~ That was the front line. $ CHAIRMAN 1NATKINS: All right, This is a public 9 Front yard is the yard extending across the full 9 hearing, so is there anyone else that wishes to speak for or ~ ~ width of and situated between tl~e front line and the principal 'I~ against this item? For or against this item? Discussion? ~ structure extending to the side lot line, And I have an ~'I COMMI55IONBR THOMAS: I would like to recommend 12 illustration of what that really is. And I will go through ~ ~ for approval. that es we get through the other two. CHAIRMAN iNATKIIV: Commissioner Thomas recommends 'f4 Rear yard is defined as a yard extending the full ~4 approval, 'I ~ length situated between the rear lot line and the principal '15 COMMISSIOIV~R EAGLETON: Second. '~G structure Arid extending to the side lot line. 'IG CHAIRMANV WATKINS: Commissioner Eagletan second. Side yard is the yard extending across the full Rlease vote. Six to zero in favor of these amendments, ~1$ width of and situated between the side lot line and the "I$ ~9 principals structure extending from the front yarl and the rear ~9 ~0 yard. ~D And this is an illustration that, hopefully, will ~'I 22 help restate the definition. Front yard, again, extends from ~3 the street to the principal the pause, and extending to the 23 Z4 side lot line, which is here and here. ~4 The rear yarl is the area between the principal 25 C'~CiRi l~'.~',~~fil~l~3 A1~111FAA~2G~ ~o • ~ v~.r v~yr~. lfY Y~ll11..+>,.i IVY LVV4J - v ~n ::~n~~EY.3'- This page left blank intentionally. AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 DEPARTMENT: Planning . ACM: Fred Greene SUBJECT - DCA08-0012 (Buffer, Screening and Fencing Requirements) Receive a briefing, hold a discussion and give staff direction on the proposed amendments to Subchapters 13 and 23 of the Denton Development Code (DDC). These are staff initiated Code amendments to clarify the buffer, screening and fencing requirements in Subchapter 13, and to provide definitions for master planned development, buffer, fence, perimeter fence, screening, and refuse containers. The purpose of this work session is for the City Council to review the proposed amendments and provide staff with direction. The Planning and Zoning Commission recommended approval of the proposed amendments (5-0). (DCA08-0012) BACKGROUND In concert with these amendments, staff is updating the Denton Property Maintenance Code. The update of the Denton Property Maintenance Code includes sections that refer to the DDC, or has similar language as the DDC, regarding buffer, screening and fencing. These amendments will assure consistency and congruity between the two documents. Issue: Staff is proposing language to clarify the buffer, screening and fencing requirements found in Subchapter 13 of the DDC. For instance, language is added to Subchapter 35.13.8 to address screening requirements between commercial and industrial uses that does not currently exist in the DDC. In addition, language is added to Subchapter 35.13.9 to address location and setbacks of fences and to provide approved fencing materials. The proposed amendments will also provide for additional opportunities for adequate mitigation between incompatible uses, and allow a certain percentage of the tree canopy within a required buffer to count toward the minimum tree canopy coverage required under the Code. Recommendation: Staff recommends that Subchapter 35.13.8 "Buffer and Screening Requirements" of the DDC be stricken in its entirety and be replaced as follows: The provision of landscaped buffers are required between certain abutting land use categories to mitigate or minimize potential nuisances such as noise, light, glare, dirt and litter, signs, parking or storage areas and to provide a transition between uses that may not be compatible with each other. A. Buffer Requirement 1. The buffer matrix, Table 3 5.13.1 outlines the requirements for buffers, and is based on the intensity/density between land use categories. The letters A, B, and C in Table 35.13.1 refer to specific types of buffers which are illustrated in Section 35.13.8.B. The letter "N" means no buffer is required between the land use categories. When an abutting property is vacant, the land use category designation of the vacant abutting property will determine the type of buffer required on that side of the property at the time of development. 2. Buffers shall be located on the outer perimeter of a lot(s) or parcel(s) extending to the limits of the developed area of the site. They may not occupy any portion of an existing, dedicated, or reserved right-of way or be located on public property. a. In instances where there is an easement located within a buffer area, the easement area will count as part of the buffer area requirement. No trees or shrubs are allowed within the easement. However, if the remaining buffer area outside the easement is greater than ten (10) feet, trees and shrubs are required as outlined in Table 3 5.13.1. b. In those instances where a perimeter fence or wall is used in conjunction with a buffer the perimeter fence or wall shall be a minimum six (6) feet high and shall be constructed of a permitted material in accordance with Section 3 5.13.9.A.1 of this code, and shall be located on the inside of the required buffer. 3. Vegetation planted within a required buffer shall be comprised of a combination of evergreen and deciduous plants and trees. 4. It shall be the responsibility of the owner of the property upon which the buffer is located to care for and to maintain all buffer areas so as to present a neat, healthy, and orderly appearance that is free of refuse and debris. This shall include the replacement of all dead plants or trees, as needed. 5. Areas designated as tree preservation areas may be used as, or may be included in a buffer. 6. Up to forty percent (40%) of canopy tree coverage, consisting of Quality Trees located within a required buffer area, may be counted towards the minimum canopy coverage required under the tree code. Table 35.13.1 Land Use Cate ories/Classes Abutting UsesBuffer Requirement g M I I ~ ~ ~ +,U ~ o ~ ~ N~ ~ NN ~ I ~ ~ ~ ~ ~ v ~ ~ ~ ~ ~ ~ ~ 0 ~ U ~ ~ ~ ~ ~ bIJO 0 v~~U ~~U ~ ~ U~U ~U Single-Family Residential -Class 1 N A B C C All other Residential -Class 2 A N B C C AgriculturaULivestock -Class 3 B B N A N Commercial/Institutional -Class 4 C C A N N Industrial -Class 5 C C N N N B. Types of Buffers: 1. Type A: Ten (10) foot planted strip that includes 2 Canopy trees, 3 ornamental trees and 30 shrubs per 100 linear feet. 2. Type B: Fifteen (15) foot planted strip that includes 2 Canopy trees, 4 ornamental trees and 25 shrubs per 100 linear feet. 3. Type C: Thirty (30) foot planted strip that includes 3 Canopy trees, 5 ornamental trees and 20 shrubs per 100 linear feet. Buffer Types (Not to scale) Type A Buffer 100 feet Ten (10) foot planted strip that includes 2 Canopy trees, 3 ornamental trees and 30 shrubs per 100 linear feet. Type B Buffer 100 feet Fifteen (15) foot planted strip that includes 2 Canopy trees, 4 ornamental trees and 25 shrubs per 100 linear feet. Type C Buffer 100 feet Thirty (30) foot planted strip that includes 3 Canopy trees, 5 ornamental trees and 20 shrubs per 100 linear feet. Lend Canopy Tree Ornamental Tree Shrub - . - . -Property Line ______.Fence C. Exceptions to Buffering Requirements. Buffer requirements that are internal to a development may be waived by the Director of Planning and Development or his or her designee when the affected site is in conjunction with a master planned development orwithin amixed-use development. Recommendation: Staff recommends the definition of "Master Plan Development, Existing" in Subchapter 35.23.2 be stricken in its entirety and be replaced as follows: Master Planned Development: A development focused on one or more sites within an area that identifies site access and general improvements and is intended to guide growth and development over a number of years, or in several phases. Recommendation: Staff recommends Subchapter 3 5.13.9 Fence and Screening Requirements, of the DDC be stricken in its entirety and be replaced as follows: 35.13.9 Perimeter Fences and Screening Requirements A. Perimeter Fences. Perimeter fences are not mandatory; however, when used, all perimeter fences or walls shall be constructed in compliance with applicable provisions of the Building Code of the City and all other applicable rules and regulations and are subject to the following requirements: 1. Perimeter Fence Materials. Perimeter fences shall be constructed of wood, wrought iron, masonry, brick, vinyl, PVC, or composite material, and shall be designed and constructed to allow proper drainage flow. The structural support members of wooden perimeter fences shall be located on the interior of the fence and shall not be visible from public view. In addition to the above artificial materials, natural vegetative edge row is also permitted. 2. Security Fences. Barbed wire, razor wire or electrified fences may only be used when strictly associated with a permitted agricultural or industrial use. 3. Fence Height. Fences constructed along rear and side property lines shall not exceed eight (8) feet in height. Fences that are constructed in front yards or forward of the front building line shall not exceed three and one-half (3 1/2) feet in height. 4. Fence Location. Fences shall not be located within any rights-of way, an easement, a designated fire lane, or within any required parking spaces. Fences shall not obstruct safe vehicular or pedestrian passage; ingresses or egresses; nor obscure any sight visibility lines or sight visibility triangles. 5. Setback. Perimeter fences shall be setback at least ten (l o) feet from the edge of right-of way pavement or five (5) feet from sidewalks, whichever is greater. The measurement associated with the sidewalk shall be taken from the edge of the sidewalk that is closest to the property line or the most remote edge of the sidewalk from the centerline of the road. 6. Clear Visibility Area. A vision clearance area shall be provided at intersections which meets the standards contained in the Transportation Criteria Manual. B. Screening. Screening is required for the following applications and shall be provided as follows: 1. Refuse Container Screen. Refuse containers required on commercial properties shall be screened from public view. For the purpose of refuse container screening requirements, commercial properties represent any attached arrangement of four (4) or more living units and all non-residential properties. Materials used for enclosure construction shall be of masonry and metal materials. Refuse containers not visible from public view, are not required to be screened. All refuse and recyclables materials shall be contained within the screened refuse and recyclables area. 2. Mechanical Equipment Screen. All mechanical equipment, including those on roof tops, shall be screened from all rights-of way and residential uses or zoning districts. 3. Outside Storage. All outside storage shall be screened from all rights-of way. 4. Inoperable or Junk Vehicle. Unless otherwise provided, all inoperable or junk vehicles that are stored outside an enclosed structure shall be screened from all rig is-o -way. C. Exceptions to Buffering and Screening Requirements. Screening requirements may be waived by the Director of Planning and Development or his or her designee if an opaque screening of equivalent height or greater exists immediately abutting, and on the opposite side of the lot line. Recommendation: Add the following definitions to Subchapter 3 5.23.2: Buffer: A strip of land that includes landscaping, fencing, walls, vegetated earthen berm, or any combination thereof. Fence: A vertical device used as a boundary or means of providing protection, con mement or privacy. Fence, perimeter: An enclosure used as a boundary or means of providing protection, confinement or privacy and is located along the limits of the developed area and is adj acent to an alley, or rights-of way. Screening: A method of visually shielding or obscuring land-uses or structures via fencing, opaque buffer, or some other opaque physical barrier. Refuse Container: A container used for the temporary storage of rubbish or materials to be recycled awaiting collection. Recommendation: Staff recommends that Sections 16-129 "Fencing required", 16-130 "Characteristics of fencing", and 16-131 "Fence may include solid walls and doors in Chapter 16 LICENSES, PERMITS AND BUSINESS REGULATION of the Denton Municipal Code be stricken in their entirety. PRIOR ACTION/REVIEW November 5, 2008 Planning and Zoning Commission Work Session December 10, 2008 Planning and Zoning Commission Work Session January 7, 2009 Planning and Zoning Commission Public Hearing OPTIONS 1. Direct staff to proceed with the proposed amendments 2. Direct staff to proceed with the proposed amendments with changes 3. Direct staff to take another direction RECOMMENDATION On January 7, 2009, the Planning and Zoning Commission conducted a public hearing and, after hearing and reviewing all materials presented, recommended approval of the proposed amendments by a 5-0 vote. EXHIBITS 1. January 7, 2009 Planning and Zoning Commission Minutes Prepared by: Respectfully submitted: Ron Menguita, AICP Mark Cunningham, AICP Planning Supervisor Director of Planning and Development ~~9 13~, COMMISSIONER EAOLE7DN; !~h-huh, 1 CHAIRMAN VtiIATKIN; Public Hearing 5A~ ~ CHAIRMAN VIfATl~IN: --the tree would ha~re ~ Consider m~lcing a reaommendatian City Council 3 grown a~und it, It would have split the sidewalk. 3 regarding an ar~endnlent to Subchapters 13 and 23 of the ~4 CDMI~ISIONER EAC~ETON: Right, 4 Denton Development Cade, Ran. Thank you. 5 MR. DRAKE. It's 5 MR. MENGUITA: Thank you, chair members of . ~ CHAIRMAN VIfATK~N And I lave trees. i ~ the Commission. Before you tonight is a consideration ~ really. do. Buts by the same taken, the City Council 7 for a code amendment in regards to buffer, screening, ;8 voted to put sidewalks down. 8 and fencing uiremer~ts. The request is to amend ~ DMMISS~ONER EAt,ET~N: Uh~huh, 9 Subchapters 35,13,8, 35.13.9, as well as 35.23.2. CHAIRMAN INATKINS: And we said, we don't 10 The iss~,e ar the summary here is that there 11 want them on the interstate highway are some information that is lacking in the Development COMMiSSIDNI~R EACtETON~: Uh-huh. Code and is sometimes difficult to understand the CHAiI~MAN ATI~CiNS: And we voted against l~ufFerir~g, screening, and fencing req~uirernents. Sa that, Eat this is a neighborhood that's been there a t~ staff is recomrnerrd~ng that the Subsections be stricken long time. ~5 and be replaced with the following: COMMISSIONER fAGI-ETOAI; Ri€~I~t. ~,G As an amendment to the coder staff is ~7 CHAIRMAN 1NATKINS; And I don't know about 17 praposinr~ a buffer matrix which is shown in your backup .you, but I think you probably see the same thing I do. as table 35.13,1 which outlines the buffer type. There A whole lot of people are riding bicycles and pushing ~9 are three buffer types: A, B, and C. Each one is baby carriages ~o illustrated in are exhibit as well as identified ir} a COMMfS~ION~R EAOL.ETDN: Sure, ~f table where it also depicts where vrtrat buffer type is CHAIRMAN UI~ATK~NS: on the sidewalks. 23 required when it is adjacent to a subject land use, ~ It's going to be difficult to vote against a sidewalk. 23 which I'll go further into that later in the CO~fMISS~ONER THOMAS: For clarification, 24 presentation. since I have voted most of ~the~time with Walter on these z5 In addition to that matrix, staff has also 130 132 variances, again, I would like to say that if this was ~ added a number of languages in regards to the location not in that downtown locations i would have definitely 2 of buffers. No. ~ here states that buffers shall be 3~ been voting the other way, Sorryr but different 3 located~on the outer perimeter of a lot or lots ar locations deserve different things. The ones Chet r~le've ~ parcels~extending to the limits of a developed area of - _ voted..on dram thepast have been~three ~o~ five -miles - .5. the site So we're not we're' rat looking at . away front the co~arthause square. a individual lots, but, rather, a development ~r d~v~lvped ~ CDMMISSIONER SCHAAKE: That's true. 7 area. An example would be single-family the buffer 8~ COMMISIQNER EAOtETON: I'll give you that, 8 v~ould be around the single-family development, oat COMMISSIONER TI~OMAS; This is just ~ 9 necessarily between lot lines, i0 different animal I want to make it clear that I'm oat No. 2A talks about easements. And when vacillating an this issue. I dust think that this they are proposed ar currently proposed that these . particular location is different. This is a highly buffer requirements would also apply. But, however, the populated area, Ire my mind, it's different. And that's tree planting requirements are nit going to be required, the only reason that I voted differently than I normally again, because of the potential of trees in easements 15 do. ~.5 will often cause same root damages to say, for ~i6 And tree lovers will probably hate me. But ~s example, water or utility lines, ~ the tree is in the wrong place. As we move forward, the ~ this should ~B CHAIRMAN WATIQNS: 1Nell, we won't critic€ze fs be 2C and 2 I'm sorry. That's correct. 26, In i9~ you because of this. instances where there are fences proposed within these - CC~MMISI~ONER THOMAS: I'rn a big bay, I can 2~ buffers, the minimum height for these walls or fences handle it. shall be six feet, Alsaf we've added section a CHAIRMAN WATKINS; Well, you can't win. ~2 reference to section 35,13.9 Al which talks abort ~3 COMMISSIDNER THOMAS: That's right. ~3 material type or use of rnaterial~ And also that the MR. BATES: Okay. Thank you, fence shall be located on the inside of the required ~5 ~ ~5 buffer. Again, away from sai~# street ar sa. ~E~iTON PI.AN~IN~ AND BONING ~~lNMISSION JANUARY 29 Pi~~~ ~ 29 to 32 ~fi h...: . ~ , ~ ~a~: 1~3 x.35 1 ~ 1Fegetation associated with the buffer ~ replace any dead punts ar trees as needed, Areas ~ planted shalt comprise of a combination of evergreen and ~ designed as tree preservation areas maybe used as or 3 diduaus trees. We've had same discussion at work 3 may be included in the buffer, so we will not we session of is there going to be a percentage of one or ~ would include these tree preservation areas with the the ether. I think we' gaing to leave it up to the 5 buffer. ~ developer to determine tf7e type of trees that they would ~ And, also, we've added language that only ~ prefer to put an or in that Buffer area. ~ ~5 percent of the canopy tree caverage located within j ~ This is the table that I was referring to, 8 the required buffer €nay be taunted towards the minimum There are five different classes: ~ingle~family ~ canopy caverage rewired under the tree code, And the residential, other residential, agricultural live stock; intent here is not to have all the tree canopies located t~~ commercial institutional, and industrial. And what in one buffer area and hopefully spread out some of the . we've prepared here what we're proposing is that if ~z trees that are proposed far the site elsewhere. i~3 you were adjacent to for exarnplef the cl~rrer~t Is there ar~y questions sa far, f~ development is single-family and you're adjacent to COMMI~DNER THOMAS: I don't know. They ~ multi-familyr you're required to pvide a type A buffer ~s really it seems like you're penalising the property and so Earth, owner in that regard. You've got to have x number of 1~~ Does anybody have any questions regarding ~a square feet of canopy under our requirement, w~l~ich, as this rr~atrix ar this table here? ~8 we discussed, is gaing to Ise --those things are gaing i~~ I'm gaing to ga further now into the 19 to be changing a little bit anyway. different types of buffer. Type A is aten-fast planted 20 Ml~. MEI~CUTTA: Uh-huh. strip. That includes two canopy trees, three ~t COMMISSI4N~ER THOMAS: So we don`t really ornamental, and D shrubs per linear feet per ~a~ know what it's gaing to be check out to be in next two linear feet, Excuse me. 23 or three weeks with tree ordinances and new landscape Type B consists of a 1~-~aot planting strip z4 requirerr~ents, o we don't really I just think that that consists of two canopy trees, four ornamental z5 paragraph six is stilt a li~kle premature. Plus, it . :.trees, and ~5 shr~l~s per 1~0 Iineat` feet. ~ does seem like it penalises the prapert~r owner, I mean And, lastly, type C is a 30-foot pia rated 2 you got a great sta nd of trees we're constantly ...strip Frith three canopy trees Eve o~narnental trees, 3 asking somebody to save stand trees and 20 shrubs per square per 1D0 linear feet. Ass ~ MR~ MEND~"A; fight. 5 you get~further down with type C, it is mainly to buffer 5 C4M~ISSI4NER TI~~MAS: but we're not G~ more incompatible uses, As you can look at the matrix, G going to let yn~ taunt them. ~ type C's are referred to far example, asingle-farn~ly ~ MR. MEN~~ITA: 1Nelf, !t only toc,nts 8 ~ adjacent to acommercial or asingle-family ad}atent to 8 okay, 9 an industrial-type use. So that's v~hy you have a ~ CDIk+IMII~NER THOMAS: We're not gaing to greater amount of planting strip with type C as opposed ~D let you taunt 7~ percent, to be exact ~.i tv Pe A. tt MR. CUl~I~IIN~HAM: If I may address it. 12 This is an illustration of what the buffer Actually, what we're trying to da and I understand. ~3 would look like or proposed to look like, Again, this i3 It`s a point well taken. But if you would appr~aach it i~~. is a repeat of the rn~atrix or the desc~ption of each from a different angle. ~,5 ; buffer type. Again, it just illustrates haw it would be ~ What we're trying to do is to allow to yore, designed or laid out. Again, the larger circles are f~ basically, to da€~ble dip to a point. Item 4 said that your canopy trees. The smaller circles here are your t~ yon can use if you already have that tree 1$~~ ornamental trees, And then the even smaller trees are ~8 preservation area and you would be required to put a i9 your shrubs, designed sporadically to create a buffer buffer, then the tree preservation and the buffer can be ~o between two incompatible uses. tan suffice as one. 2~ Additional language in regards to However, when we got down to Item 5, the maintenance. Who is responsible fvr the buffer area. reason why we limited to the ~5 percent was if you had a Z3. It i stated here that the responsible party is going tD ~3 larger lot where you had a tree that runs around the be the owner of the property They're responsible to 2a~ peripheral of the lot, then you possibly could have all ~S ~ maintain all buffer areas. And if when needed, to the tree canopy area within that buffer and then not o~~ro~ ~tA~~~~~ At~a ~on~~~ss~o~a ~A~~A~Y 7. cos ~ Paae ~ 3 to ~ 3B ~f 1 B8 _r ].~7 1~9 - ~i really get ar~y effettive'dispersion of the trees i staff came ~up with ~5 percent? ~ throughout the lat. ~o that's why we're trying to al=low ~ MR. CUNNINGNAM: Well, staff came up with 3 same double dipping but to limit the amount of double 3 the 2~ percent. And we did send the revisions back to ~ dipping, so to speak, ~ those who are involved. And T can't speak to that 5 ~OMMTSIOlV~R TWO~IA Weil, daob~e would be 5 l~eca~use I didn't attend all the meetings. G 54 you know 6 MR. MENOIi~'A: Right. He hasn't responded 7 MR. CUNNINCHAM: Well, I rr#ean, using 7 back. Bat and he hasn't attended the work session B using 8 that we had. Arid, obviously, he is not here to respond. 9 COMMISSI{~f~ER THOMAS; 5~ percent. ~ ~OMN#IS~ION~R BAGLETON: Would there be . I~+lR. CUNNINCHAM: Using the two diflererrt ~Q anything wrong with having a larger percentage? ~i requirements. 11 MR. CUNNIi`IGHAI~; There wouldn't be anything ~OMMISTONER THOMAS: I know what you're i~ wrong with hawing a larger percentage. But we just want ~3 saying. But it stll•I seems like a very law percentage 13 to keep ire mind that 1Ne're trying toachieve a balance ~4 to rr~e. I'd like ~ bigger number because, you know, 14 which is not always easy. ~5 we're trying to get people to preserve those. I mean, ~5 A larger peroentage an a smaller lot is iG we've been working on that for seems like most of my 16 fine once you get to for instance, a development like ~7 adult life. i~ a Raynor Ranch type development. You could have all of ~8 But, you know, I feel like ti~at them ought t8 your canopy trees around a perimeter or included in the to be a little lit more benefit to trying to preserve ~9 buffer. And'then the rest of the development would just same trees around the edge. ~specia~ly since we've ~o be barren. . in previous things t1~ey.'ve already said that it's gqt to . ~i OOMI~ISSIOi~~R THOMAS: Mark, theoretically, be quality stands of trees. It may be a moat point I agree with you,. ~6oCr again, I'll refer beck to the _ because. in this part of the wand there are no quality - 23 1~Ct that you're to#king about a ~Rayror Ranch. Yor~'re ?~4~ trees a~ro~,nd the perimeter of a piece of property 2~ talking about a large track of properky that's been used ~5 anyway. They're ail Bois d'ares. I'd just Tike to see ~5 far agricultural uses for years and years. I'rn sorry x.38 140 '1 a little bit more. i We're not going to have iced Oaks. We're not going to SIR. M~NG€~ITA: paes the Commission have any ~ have Post Oaks in any appreciable numbers along the alternative to the percentage ar any recanlmendatian? 3 fence lines. Tt jusk doesn't happen aro~rnd here. COMMISSIONER EACL~TON: I remember when we 4 MR. CUNNTNGHAI~: Right. It goes back to 5 talked about this once before. 5 what you said. It might be a moot point. h~R. ME~1G[1ITA. Yeah. 6 COMMISSIONER THOMAS; It might be a moat 7~ CO~IMISSTON~ER EAGI.ETON: It was ,-that ~ paint. So, you know, make it 5fi percent and everybody's number way just kind of out there, I mean B happY• ~ I~R. I~ENGUITA: Right. 9 COMMISSIONER SCHAAK~: Okay. It seems to ~0~~ COMMISSIONER ~AGL~TON: vylhat'.~ the ~0 me we need a compromise, t+et's go for 40. i~ standard by which you determine tie number. a, you si ~ MR. ~RAKB. Wren ft says canopy tree 1$ known if we wanted to say 30 or 33 percent or T mean, coverage, does that is that limited or~iy to the what does it you know, I fink it depends an the 13 protected trees? 14 property. i~ MR. MENOUITA: No. That would be as the ~5 ~+IR. iNENOUITA: Right. 15 development developed. i~ 1+9R. CUNNINOHAM: Actually, the way and I #.6 MR. ~RAKi:: If the canopy tree coverage #7 don't want to speak on behalf of Lamy because he's rrot i7 were to include the last Oaks and Bois d'arc, yon know, . ~8 here. But we actually didn't have a percent there. Arid 18 then the paint Mr, Thomas made I don't know is really 19 Larry actually brought it to our attention that if you f9 COMMISSIONER THOMAS: I did not think aS ~0 ~ don't put a percentage there, you literally could have 2~ far as development was concerned that we were even ~1 all of the trees along the butler and not get any canopy 21 allowed to count anything except stated quality trees, coverage, which will be, basicafiy, counter-productive z~ MR. C~I~AKE: Right. And my point is it's to the whole purpose of requiring a canopy coverage. ~3 not stated that way here. And so we came up with the 2~ percent. COMMTSSIDNER THOMAS: lilfell, when we go back OOM~IISSiOiVfR SCHAA~B: is that "we" ar ~ ~5 ta~aur definitions, though. I]E~'TON PLAN~II~IC At~o ZONING COMI~►IlSSIOC~ ~AI~UARY ~~o~ ~ i~n ~ do ~ 'I %dr %W 4 1 %dr X41 t4~ ~ MR. DRAKE; Right. ~ Again, the idea is a mass#ue plan ~ ~OMMI~IONER TMQMA~: Maybe we need to put 2 development. You're looking at something like lyzor 3 the word quality in front of this, 3 Ranch or something to that effect where it's a lithe 4 . MR. DRAKE; That's v~rhat I waS, basiCallhy, 4 bit rrlore comprehensive review of the subject 5 asking is if we need to qualify that somehow to, you 5 development. 6 knaw~ maybe a larger nut~ber could tae offset somewhat by ~ MR. DRAKE: And that's even if it's not a ~ the fact that you if we're only talking about quality ~ master plan community? . ~ trees as opposed to the Haclcberries, the --and ~ MR. MENGU~TA; That's correct, It's not ~ mesquites and trees of that nature. 9 considered massive --there's two distinct types. ~Mt~IiS~ION~R THOMAS: ~ dust think than 1D The second part of this development code you know, the tree ordinance that we've bin working on ~ ~ amendment is referencing ,-fence and screening trying on -W we keep trying to keep an an incentive requirements. Arid as the previous one, we are ~3 base. Arid then we take a step back. So if you put the 13 recommending that Subchapter 3~.~3.9 be stricken and i~ ward quality in and raise ttae percentage, that ought to x4 replaced with the following: work, ~.s First, language proposed is that perimeter MR, Ot~.NNII~OHAM: Okay. o let me make sire #,6 fences ~ not mandatary, However, when they are used ~17 that we understand. So we'll. go raise it ~p to 4a all perimeter ferroe or walls shell be constn,cted in percent of canopy trees or canopy quality trees. Is 18 compliance with approval, codes, such as the building that what we're saying? ~ code and fire code and soon, MR. DRAKE: ~asically~ they'd be quality 2~ Materials far perimeter fencing shat be trees that's your canopy tree coverage. ~i constructed of wood, wrought iron, masonry, brick, MR. ~t1NNIN~HAM; ~DnSisting of quality vinyl, PVCr or composite rr~aterial. Same of the trees 23 additional materials that were riot currently included in ~4 MR. Dft►AK~; Yeah, ~ assume t#rat, you know, tie cods are vinyl, PVc, and aornposite material. And so ~5 we can work oat the details in the language. But t#~at Z5 we're adding that to prorride additional apporkunities 14~ 144 as long as the concept is covered that when we ~Ik ~ for different types of materials far fences perimeter ~ about the 40 percent of the canopy trees, that would ~ fences. . 3 only be those trees that w~td be cDnsideretl quality 3 Also, that the structural support members trees• ~ of wooden fences shall be located on the interior of the 5 COMMISSIONER i-YKE: duality treesa 5 fence and shall be ~-and shall not be visible from the 6 MR, DRAKE: Vllhether we do that by ~ public view. In addition to the above arb~icial 7 definition or wards materials, natural vegetation edge rail is also S COh~MF~SIONER TF~OMA: It still seems 8 permitted. v, again, there can be a combination there. 9~ arbitrary But, heyr I'm for it. 9 Security fences. This is to address the MR. ~UNNINOHAM: Uh-huh, Well, we'll give i~ fences that are proposed ar often proposed with Dr. Schaake the glo€y for the percentage, industrial type developments, We're locking at barb ~2 MR. MEIVGU~I'A: There is there is a t2 wire, razor wire, or electri~red fences rrray be Used when ~3: provision that gives the director of Planning and 13 strictly associated with a permitted agricultural or Development the ability to waive any 'buffer requirements i4 industrial use. When used they shaii be set back at 15 as long as the site is in can~unction with the massive 15 least 15 feet frorrr all rig#~ts-a€ way or public property, plan developmer~ or a mixed-use development. ~G and shall be located cut of human reach. Staff is also recommending that we add the ~7 CDMMISSTONER THOi~AS; Ron. ~5..~ definition of massive plan development since it is not tB MR, MENCUITA; Yes, sir? currently in the definition section of the bDC. What 19 COMMI~IONER THOMAS: In this particular ~0 staff: is proposing as a definition for massive plan 20 area forgive me far acting like a ranch kidr but I development is as folbws: Development focused nn one can't help it. Why are we even referring to ~ or mare sites within an area that identifies site agricultural? ~3 access, general improvements, and is intended tv guide 23 MR~ MENGUfTA: For the barb wire. growth and deve~pment over a number of years in several ~4 COMMISSINER THOMAS: I understand, But, I phases. ~5 mean, when you start getting iota these buffering . . .~E~ITDN ~~ANNiNC~ AND ZDNiNG DOMIVIiISSiON JANUARY 7.2Q~9 Race ~."i to 't dd of 1 ;f. ~ . . ~ requirements we're talking about development. ~a, you i the need to make the change, it's converrier~t to address krrolNr the agriculture is going to take place until: they ~ these issues while wetro making changes in this 3 actually start the development process. ~ subchapter anyway. it's not that they're necessarily ~ l~lR. IM~NGUITA: Right. 4 tied together for all cases. ~ ~OMi~I5IQl~~R TH~I~IAS; o it's ready a moot ~ C~MI~IiI~~I~R THOMAS; Well, convenient it ~ paint there. ~ may be, but convoluted it also is, I mean, we're 7 I~R. MEIwGUITA; 11Vellr i think ~ talking about two completely difrerent things between an ~ COMMI~I~N~R T#i4MAS~ As far as an 8 industrial fence ar~d an agricultural fence. And y~~i're 9 agricultural type of fence, And if itTs not a moot 9 trying to drive it home with the exact same hammer. Arid point, if you read down further in that ire that deal ~0 I just think that it really is sorr~e bad language in this in that particular paragraph 11 particular this particular area. i~ MR. M~NGUITA~ ~lh-huh, i~ I thir~k~that paragraph just needs work or 13 INfISIQ~I~R TH~.I~IAS: It talks about, you 13 needs to have the agricultural pert taken out because in 14 know, the fence shall be located out of human reach. 14 when we're talking about well or you can just i'S dell, a eve wire barb wire fence down=t d~ a whole Iot put at the er~d of the sentence and shall be located cut to keep livestock off the rand if it's out of human iG of human reach, with the exception of livestock fences, i~ reach, i7 Then you you're delineating between two different ~8 . 1HR, MEN~UITA: Okay, ~ ~8 types of fences. And you've got to. t9 ~DMI~I~SIONBR THOMAS: ~o there's a little 19 ~1R, CUl~INIi~I~HAM: What if we say shall be . problem there. It doesn't seem to the like the terra zo located cut of public reach? Vii. agriculture should even be ~in there. ~i COMMiSSIOI~~R Ti'f~MAS: Deli, in an MR. CUNNIIVGHAM; Il: I can ar~wer that I agrarian-type environment, what exactly is that? z3 think this `rS already in the coder and we wanted to z3 i~+lR. CUI~NINOHAM: Well ~4 maintain it. life did modify by adding cut of human ~4 ~MMISSIf~N~R THOMAS; If I can drive down ~S` reach, il~e didn't want to have --and you weren't here z5 the county rand and walk across the far ditch, is that ~.4b ~4$ ~ for the work session but I did a little diagram and ~ rto longer irr public reach? so forth. But I underi~nd where you're going. But it 2 MR. CUNNIN~GHAM; dell, by then you'd 3 . was already in the code, and we wanted to 3 probably be on private property. 4 C~MMISI~N~R Ti-iOMA Oh, I uriderStand the 4 COI+~NII~~N~R TH~~►IA~: Vl~eiir t#1e fence Is . out of human reach. But it'sr generally, when you're ~ located on private property right at the edge, That's G- taikiflg abort an industrial site where yo€~'ve got chain ~ how it works ~ link and then wire up an the top. 7 MR. CUNNINGHAM~ Right. The intent here ~ MR. CUNNI~IGHAM. All right. 8 and maybe we`re not capturing the language ~rrectly. 9~ C~MMISI~NEi~ TNON#A5: Believe me, there's 9 But the intent here is that if you have an agricultural . i~. been a lot of times when on horseback I wish the wire i~ .property that adjoins or directly abuts the ii fences had beery out of human reacf~~, Butt you know, it ti rig#~t-of;;wayr that that fence be setback t5 feet, s~ if i~ just makes no sense, iz I have to came 15 feet onto our ra Y p lam, by then t'm 13 1HR, DRAKE. 1Neli, I think the way in which ~3 trespassing as apposed to if that fence is right there i~ it does make sense is that this ardrrance is actually i~ clang the property line, 15 addressing a couple of different iss+~es. It is COMIHISIONER THQIA~: Like I said, I'm a i~ ~ addressing buffering requirements. And it is addressing iG ranch kid., And telling me that you cant grape 1~ Beet ~7 fencing quirernents. Now, some of the fencing i~ of your perimeter of your property, that takes out a 18 : requirements made sense to change in conjunction with 18 whole lot of the property. 19 the buffering requirements that ga along with ~9 OMMIsSIDNER ~AOLET~I~: DD we have an zo.. development. 2~ example oar instance of this? zi ~ ~ But there are some fencing requirements ~i MR. I~EI~~UITA; 1Nhere there are there's a 2~.~ that are being changed here, such as with the barbed zz setback of 15 feet? wire and what have you, ti~at don't necessarily ga along 23 C~~IMISSI~NER EACL~I'DN. Yeah. Where this ~4 with the same type of development where you'd have the ~4 might occur. ~5 . ~,rffering, it`s jast while we're in there anyway seeing ~~5 MR. CUNNINGHA~I: liven that this is a ci~r DEI~TDN Pi,ANNiNG AND Z{~NiNG GOMNiISSiON JANUARY T. 2a09 pang '9 d!5 to d#t r►f ~ ..,+~+v ~ vv 4v r'rv vi r1d1.+ 151 i this is going to be very, very seldom that you see this t enough. ~ that yap, run into this. ~ MR. I~RAI~E; What if you 3 COMMi55I(7NER TH(~MA~: Right. 3 COl~MI55I~N%R EAGLETi~N: I see what you're ~ MR. ~UI~iN~ING~AM; Again, it was just ~ saying. 5 C(~MMISSI~NER THOI~: l~iith the exception of 5 MR. DRAKE: you know, I'n~ wandering if 6 all this new property .that we're bringing into ~e City B there's ~ distinction to be made between a right~of-way ~ and all these new 'big developments that are vn the 7 end a paved pathway, like a street or sidewalk ar . '8 perimeter of the City, then it's a big issue, And 8 sornethir~g like #~at. You couldperhaps have something 9 they're. gaing to they're going to utilize those far ~ that's ~5 feet away or a certain setback away Pram a i~ agricultural purposes as long as they possib#y can, 1~ sidewalk where somebody m#ght be riding past it with a And. since those M~RC's are gaing. to be 11 bicycle or something like that. but the difference from t2 phased in aver a 2~-year period, they're wanting 1~ the right-of--way may not he as much. Does that help the i~ they►'re gaing to want to keep their agricultural ~3 cansideratian any? tike you may it may be only exemption for tax purposes as long as they possibly can. 14 two feet away from ~e r~ghtRaf-way. Yau can't build # And they should ~be able ta. i5 the fence beyond the right-of way, Dr it might even be ~G And #f yo~a'ro telling Cher-r} that ar~y new ~.G an the right-a~ way. ~T fences that they build are going to have to be setback COM~MI~SiDNER THOMAS: No, Yau'r a going to i$~ from property lines ar can't be, you know, built like i8 build it an your property line. That's kind of the i~: your traditional four, five wire barb wire #ence, then 19 MR. C€JNNINGHAM:.Okay~ This #his is it`s a ~probiem. I can tell several people dar~'t ~ ~0 what we'!I da, IIVe'll just strike the last sentence 2~ understand where I'm going. ~1 CQMIHISSIOER THOMAS: Okay. it just has. a . . COMMISSIONER EAOtE~'Q~#: I'm not sure that I there is a problem You're farting people to break da. But I'rr~ willing to IiSten. ~3 our cad~5 when they're gaing to continue to use. their 2~ ~ C4~MMisIONER TH~MA$; Dlu~y. property far agricultural reasons until it's devoped. ~5. M~R. DRAKE: I'm just wondering I think 25 And there's a lot of that all the way out East McKinney 15~ 152 i. Mark made the paint earner though that if this is the i to soap 288, You knave, there's there's livestc~k existing standard and we're not changing it 2 being grazed all the way out there. You know, I knave ~ MR, MENGUITA: Except for the last ~ we're all urban#zed. But there's still a !at of seance. 4 livestock afid four ar~d live win? livestock fencesr barb 5. MR. CU~iNIN~HAM: Yeah, out of human roach. 5 wire fences inside the c€ty limits. ~ . G MR. DI~4KE: pkaY• G ~ C~MMFSSI~N~R ~HAAK~; o s1:a#f i~ now ~ MR. MENGUITA: The last sentence added. 7 recommending that the last sentence 8 MR. DRAKE: So the 15-foot setback exists. $ MR. MENGt11`i•A: Be removed. 9~ MR. MENGUITA; No. Na, it does nat. The 9 COMMiSSIUNER C~IAAKE: -y be eliminated? 1~ : last sentence of iD MR, MENGU~`A: Right. ii MR. CUNNINCHAM: Na. The last thing 1~ ~OMMISSIO~ER BCHAAKE: (}kay, Ali right. . 12 sentence was new. 12 MR. CUi~NINGHAM: 5a it would just read barb i~. MR, NiE~3GUITA: Yes. The last sentence was ~3 wire, razor wire, electrifii fences may only be used i~ ~ adder. ~4 when strictly associated with a permitted agricultural 15 CO~IMISSIOI'~ER THOMAS: Just write comma with 15 Dr industria# use. ~~~.:....the exception afr'you know, liriestack fences, You can't iG CDMMISIONER S~HAAKE; Yes. ~ put those out of human reach. They go from the ground ~7 COMMISSIONER F~C~.ETOI~: I think probably ~8~. to about four-and-a-hatf feet, 18 when we were talking about this we were thinking mare . ~9.:. MR, C~NNiNGHAM: o, in ad~er wards, you're 19 of, like, the jail. And we really weren't thinking ?A ~ saying that about agricultural uses. : C~MM~SSiONER THOMAS: Barb wire fence Zi MR. DRAKE: Well, bear i~n mind also that as MR. CUNNIIII~HAM: at the end of two, sa far as the long standing agricultural uses, you iCnaw, a .2~ that this standard skrall not apply to agricultural 23 change in the o~inar~Ce ~isnTt gaing 5udder~ly make application. ~4 somebody's existing fence illegal. They're rtiat going to ~5 ~ ~ COMMISiONER THOMAS: Right. That's easy a5 have tc~ take it down and move it. But it would dust D%i~0i►i PLANNI~I~ ANA ~QI~INC~ COMi,1118sIQtV .#ANIJARY 2~D9 Parr? d~ t ~ ~l ~7 of fi ~A -40 govern sarnebody putting up a new agricultural fence if ~ screened, 2 you left it in. ~ MR. C~NI~I#VGHAM: If I can, I a+vauld like to 3 . COMMISSIONER TMpMA: Vat's true. ;But ~ make one minor change. Taday at the property ~ livestock tend to wear those aut. And you have to daze ~ maintenance meeting we actually in same of these 5 them down and rebuild them from time to time. ~ codes that we're doing is to be consistent with what's ~ Mli. ~MENGUITA: I~ think we're going to ~ being done with the Denton Praperty Maintenance Cade. we're going to see this again when we get into setbacks. ~ And they actually changed outdoor to outside. ~ lout, T`fn going to move a#ong, s COMNIISSIDNER THOMAS: play. 9 Fence height. l=ence constructed slang the 9 MR. CIJNNiNpHAfi+1; I would like to change i0 rear site of the property line shall not ex€~ed ~o that just far raansistency to say outside storage. eight feet. 1=ences that are associated with a front COMMISIO~IER CHAAI~: IWo.r lea. 3? i~ yard setback shall not exceed three and a half feet. MR. CTlNNINCHAM: Far No, Ala. fence location. Fences shall not be MR. MENOUITA: The last section ar last ~ located within any right-of-way, an easement, ar paragraph is taken right out of the code, but I'm going 15 designated hre lane, or within any required parking iS to go ahead and read it. ~G ~ spaces. Fences s#~all not abstract safety vehicle, ar ~s Screen requirements may be waived by the ~ pedestrian passage, ingresses o~r egresses, nor obstruct 17 director of Planning and Develaprnent or his or her any site visibility ar site visibility triangle. 18 designee if an opaque screening or equivalent height ar Setback. Demeter fences shall be setbaclt ~9 greater exists i~nrnediately abutting and on the apposite at least ~,D feet of the ~-from the edge of pavement or zD side of the lot line, ~rve feet from ~ sidewalks, whichever is greater. The 2~ As part of these Deve#opment Code rneasurement associated with a sidewalk shall he taken amendments, stafF is recommending that we provide the ~3. ,from the edge of the sidewalk that is closest to the ~3 following definitions tv Subchapter 23..And those are h property line. far buffer, fence, perimeter fence, and screening. Any discussions an setbacks T think we ~5 Staff is also recafnr~ending that the language in the 154 15~ ~ discussed this in the work session. And there was same ~ Chapter 1G of the Denton Municipal Cade where references 2 questions regarding -y Commissioner Lyke had some 2 Section 16,129,1G.1~4, as well as 1G.131 in regards to ~ questions. I think we were able tv resa~ve that. 3 fencing be stricken entirely. COMMISSIONER LYKE: I'm good. 4 Again, the intent is to eliminate the s~ MR. MEl~GU1TA: play. Clear visibility S aanfusian or double regulations that may have some ~ area. ~ think this is: taken right out of the rode. A a canflict~~ Sa, again, sfF is recammendi~ng that those t vision clearance area shall be provided at 'rntersectians t sections listed in Chapter 1G of the Denton Municipal ~ which meet the standards contained in the Transportation s Code be stricken. 9: Criteria Manual. 9 MR4 DRAKE: Ron, is there a definition of ~o Screening. Screening is required far the ~o refuse confiner in here? I don't recall seeing one, fallowing applications: Refuse container screen. 1~ And the reason why I ask is I'rn looking at this Section i~ Refuse container shall be screened from public view. 35.1.9. And as I'm looking at the refuse container Materials used for enclosures constructed shall be of ~a screen, it appears that what we're really talking about 1~ masan~y and metal materials. Refuse I'rn sorry. are revetments for dumpstersr primarily. 1$ Refuse containers not visible from the public view are 15 Ml~. CUi~I~VIN~HAM: light. not required to be screened. MR. DRAKE: And, you know but, you know, t~ i~lechanical equipment screening. A#! a Later at sarnebody's house could potentially be a ~8 mechanical equipment including those an rooftops shall i8 refuse if you think about it and don't define it. And 19 be screened frarn all rights-af way. I believe this is 19 taken in that context, we'd be saying that if you have a ~D dsreckly out of the code. ~o refuse container outside that would otherwise be ire putdoor storage. All outdoor storage shall 21 public view would have tca he screened with rr~asonry anti he screened from all. ~rights+of way. 2~ metal. ~3 Inaperab#e or junk vehicles. Unless ~3 MR. C~lltllll~GHAM: Sa, in other wards, what otherwise provided, al! inoperable and junk vehicles you're saying is that we need tv provide a definition that are stored outside an enclosed structure shall he z5 far refuse container to DEa~ PI„ANN~NG AND ~ON~NG C~M~I~~~N .iAN~ARY 7.2D~9 Pans 1 '+n 1 of ~ ~R T , . ~v.r ~.u ~vv v1 ~tilV t57 15g i MR~ I~RAICE: Yeah. If it means durnpster nr i cam~nent, I guess, ~ ~ commercial container, perhaps 2 ~HAIRi'~AN WATI~I~ Dh, I'm going to, ~ MR. CUNNIIVGHAM: That's what we meant, so 3 COMi~I5SICNER SCHAAKI=; Now that tie public 4 we'll A hearing is closed, I would liiCe move approva# of the 5 ~lR, I~fNGUITA: he'll state that. ~ proposed amendments with the changes as was just G MR. l]RAICE; Right. ~ sumrr~arized by Ran. Ci~I~ll~IISSI~NER E.ACLETON: Yeah. I. act~rally 7 C~iAIRMAN 1NATKrNS: Hold onto that right :8 thought about that because, I mean, if it's at your ~ there. Is there anyone tf~at wishes to speak for or .9 house you'll more than likely you might put up a picket 9 against this item? Anyone for or against this item? type. i~ Now I'll accept #i I~#R, CUNI!~I~#GHAM: Well, the way the code is ~i MR. DRAKE, I thought we'd already closed. ~2 right now you can't have those displayed outside anyway. 1~ CQMMISSIGNER SCHAAKE: Yeah, I thought ~3 COMMISSIONER fAG#~fTDN~: Right: okay. i3 you'd already closed it, taa, Mr. Chair~aan, or I i~ ~1R. I~IENI~ITA: But, no; we will add that i4 wouldn't have made the motion. . _l~_ . definition, 15 CHAIRI~RAN iIVATtCINS; ~1llell, I.waS trying to MR. GUNNI~IGHAIN: This was specifcally i~ about an hour ago, 17 intended for the larger cammercial~type dumpster, We'll COI~lMISIONER EAGl.ETON: Second, ~S provide a definition. CHAIRI~IAN WATKII~t~: second by 19 h9R, MENCUITA: lllte'll provide a deftni~an i9 Commissioner Eagletan. Please vote an the board, And ~D for that. za it passes, That concludes ~y presentation. I"d be ~i MR. CIfNNINGI~AM: Yau didn't vote George, happy to answer any questions at this t~me~, ya~a didn't vote, There you go. ~3~ COMMISSIONER EAGL~TDN: Can yon go over the z3 CHAIRMAN WATKIN Now it's five ~ zerQ in ~4. because I th€nk that we're probably going to be to a ~4 favor of the motion. 25 point of a recommendation or recommendation with changes ~5 MR. CLiNNINGHAM: I just want to make one 1S8 ~~Q or samethir~g like that. 1 more comment referring to the rertuse container. If when . ~ ~ I++IR. MENI~ITA: Correct. ~ we're looking at this il• it makes sense to add the word ` ~DI►~I~fISSIONE~i EAGLN: Can you just klr~d 3 commercial this says commercial refuse container. of ~ We'fl also add that 5: MR. I~EIVGIIITA: Go over the changes, 5 MR. DRAKE: Yeah. I think that makes fi COMM~SSID~IER EA~f.EfDN: the changes, G sense, ~ yes. ~ CHAIRMAN wATNS: Yes. It would, 8 MR. MEhIGIIITA: Sure. The first change will 8 be to in rga~is to the canopy coverage, We`ll g 14 change that to ~D percent of quality tree canopy fee 1~ i~ car►erage. We will strike the last sentence a€ the ii 13 proposed 35. ~3.9.A.~. 1Ne will change the ward outdoor i2 ~3 to outside storage, And this is in regards to 13 i~ 35.~3.g~B,3. And, also and lastly, we will adt~ the 14 1~ definition for refuse container to ~e definition ~5 1~ . seiar~ of the Uet~tvn Development Code. I think that i~ 17~ was all I had. 17 ~8 COMMISSIONER EAGtI=TQN; Thank you, 18 19 CHAIRMAN WATIQNS: Sound goad? 19 C0~lMI5~i(~NI=R EA~I.ETON: Sounds good. 2q ~i CHAIRMAN WATI<INS; llVell, I suppose I should ~2 close the public hearing. ~2~ COMMISSIONER CHAAKE: And alder you have ~3 ~4 closed ~4 MR. DRAKE: You didn't offer anyone to 25 . f~Ei~N PLANKING AND ZONING ~~MMISSIDN ~ ~ JANUARY 2DO9 Pa~~ ~7 t n 'I F[I of ~ ~R r w• • • 4 Y 1 V Y V 1 1 Vpf V~/ This page left blank intentionally. AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 DEPARTMENT: Finance ACM: Jon Fortune SUBJECT Consider adoption of an ordinance of the City Council of the City of Denton, Texas, authorizing the City Manager or his designee to execute a second one-year extension to the depository services contract with Wachovia Bank, N.A.; and providing an effective date. The Investment Committee recommends approval (5-0). BACKGROUND On June 6, 2006 the City of Denton entered into a two (2) year Depository Services Contract with Wachovia Bank, N.A. The contract terms allowed for three (3) one-year extensions after the period ending on May 31, 2008. The City approved the first one-year extension to the contract in April 2008. Since the City is satisfied with the services provided, staff recommends the second one-year extension be approved for the period beginning June 1, 2009 and ending May 31, 2010. Wachovia Bank, N.A. is the City's depository for operations and payroll accounts, banking, depository, safekeeping, lockbox, merchant and Internet credit card payment services. Account Analysis fees for the fiscal period ending September 30, 2008 were $256,606.93. These fees were offset by $81,830.16 in earnings credits due to the City's bank balances. Thus, net fees incurred were $174,776.77. On January 1, 2009, Wachovia Corporation was acquired by Wells Fargo & Company. Wells Fargo & Company has been in business since 1852 and is currently ranked #2 in banking deposits in the U.S., home mortgage originations and servicing, retail brokerage, and debit cards. The "new" Wells Fargo holds over a trillion dollars in assets, more than $700 billion in deposits, and greater than 6,600 banking stores. Wells Fargo & Company has one of the highest debt ratings of any financial services company. In this regard, staff is looking forward to working with a financially stronger, newly merged entity. At this point, there have been no changes in the City's banking procedures. RECOMMENDATIONS Staff is satisfied with the current banking relationship and recommends approval of a second one-year extension to the City's depository contract with Wachovia Bank, N.A. Agenda Information Sheet March 3, 2009 Page 2 PRIOR ACTION/REVIEW (Council, Boards, Commissions) On April 19, 2006, the Investment Committee reviewed depository bids and unanimously recommended the designation of Wachovia Bank, N.A. as the City's primary depository for City funds. On June 6, 2006, the City Council approved an ordinance designating Wachovia Bank, N.A. as the City's primary depository for City funds. On February 19, 2008, the Investment Committee unanimously recommended approval of a one-year extension to the depository services contract with Wachovia Bank, N.A. On April 1, 2008, the City Council approved an ordinance authorizing the City Manager or his designee to execute aone-year extension to the depository services contract with Wachovia Bank, N.A. On February 3, 2009, the Investment Committee unanimously recommended approval of a second one-year extension to the depository services contract with Wachovia Bank, N.A. Respectfully submitted: Bryan Langley Director of Finance s.l~ur docnment~lor~inancesl0~lwachovia bank.doc ~RDINAN~E ND. AN DRDINANE DF THE CITY ~~~TN~L DF THE CITY DF DENTIN, TEA, AUTHQR.I~YNC THE CITY MANAGER, ~R HIS DEICNEE, T~ E~T'E A EOND ENE-YEAR ETENION TO THE DEF~SITI~Y ~ER~I~E ~~NTRAT wITH wAH~~A BAND, N.A.; AND ~R.~IDINC~ AN EFFETIE DATE, wHEREA, on June ~aa~, the pity of Denton and wachovia Bank, N,A, entered into a Depositary services contract whereby wachovia Bank, N.A. was designated as the primary depasitory far operatians and payroll accounts, banking, depositary, safekeeping, lockbox, rrierchant and Internet credit card payment services beginning June I, 2a0~ and ending May 3 ~~a, with three possible one-year extensions of the contract not to extend beyand May 3 ~ , Z~ 11, in accardanee with the requirements of hapter 1 US of the Local Government fade; and wHEREA, the 1ty of Dentan and wa~chovla Bank, N.A. desire to initiate the second one-year extension which will begin June 1, ~a~ and ending May 3 I, X01 New, THEREFORE, THE ~IJNIL ~F THE CITY ~F DENTIN HEREBY GRDAIN; ETI~N I. The pity Manager, or his designee, is authorised to execute ecand Amendment to the Depositary services antract between the pity of Denton and wachavia Bark, N.A, extending the term of the contract to May ~ 1, ~0I 0, a copy of which is attached hereto and made part hereof for all purposes ETIGN 2, The following officials: ~rearge . Campbell, pity Manager; ,Ian Fortune, Assistant pity Manager; Howard 1Viartin, Assistant pity Manager; Fred Greene, Assistant pity Manager; and Bryan Langley, Director of Finance are hereby authari~ed to transact business with the above listed institution regarding daily banking transactions or investments far the pity of Dentan. E~TIDN . The pity Manager is authari~ed to mare the expenditure of funds and fees and take the actions as required by the Depository er~rices contract as amended. ETI~N 4. This ordinance shall become effective immediately upon its passage and approval. PAED AND APP~~VED this the day of , ~a~~. MARK A. BI.JRR~~T~HS, MAYDR i s:lour docu~nentslardinances1491w~chavia batjkdac ~TTET: JE~F'ER ALTER, ZTY ERETARY i APPR~'VED A T~ LEGAL A~1ITA BUE ITS ATTORNEY 4 I Page I s:laur d~cumentslcontractsl~~lwachov3a dep ext.dac STATE ~F ~'E~.AS ~ COUNTY 0~' DENTIN ~ ~ . This second Anxendment to that certain Depository Services antract executed on June 2~0 between the pity of Denton, Texas, rnux~.icipal corporation located in the state of Texas, hereinafter referred to as "pity," and achovia Bank, N.A., a banl~ located in the state of Texas, hereina~er referred to as "Depository"; said contract, includ~,n all agreements executed pursuant to the Contract, axe herelna~er referred to as the "contract"; . N~, 'TIEF~RE, under the conditions and for the considerations hereinafter expressed, the parties hereby agree a follov~s: E~TIDN I. In accordance v~ith .Article 1 "Selection and Term" of the contract, the contract is hereby extended for a second one-year extension v~hich mill begin Jane l , 2~~~ and ending May ~ 1, 2a 1 a. SECTION Save and except as amended hereby, all the remaining articles, terms, condlt~ons, sections, sentences, clauses, and phrases of the contract shall remain in full force and effect IN ITNE of ~rhich this Contract has been executed on this the of ~~0~ by the duly authorized officers of Depository and pity, fTY ~F DEN~'~N: ~y. George a~npbe~l pity Manager Address: fit of Denton 21 E.1Vf cI~inne Denton ~'exas 7G~01 ATTEST: ~ENN~EI~ V~AI,TER, CITY SECRETARY BY: i s:lour d~c~ment~lcon~actsl~~lw~~hovia yep ext.doc APPR~~~~] A T~ L,~~AL FOP1Vi ANIT~ BUR.E, CITY TTRN~Y BY: A~IOVIA BANS, ~y. Authar~~ed Signature Name: Title: Page ~ i AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 DEPARTMENT: Finance ACM: Jon Fortune SUBJECT Consider approval of a resolution reviewing and adopting revisions to the Investment Policy regarding funds for the City of Denton; and providing an effective date. The Investment Committee recommends approval (5-0). BACKGROUND At least annually, the City Council and the Investment Committee are requested to review and approve the Investment Policy per the Public Funds Investment Act (PFIA). Staff is proposing that the City's Investment Policy reflect changes in the PFIA, as well as incorporate needed administrative and procedural modifications which have occurred over time. The key elements of the proposed changes are outlined below. It is important to note that the overall investment strategy has not changed. The focus of the revisions, are to clarify the language in the Policy and improve the overall management of the investment portfolio. One of the goals of the City's investment staff is to convert the majority of City funds to an internal investment pool as reflected in the revised Investment Policy. Conversion to an internal investment pool will provide for a more equitable distribution of investment earnings, more accurate and timely reporting, improve investment management, as well as save staff time. Currently, staff divides individual investments among particular funds and then, depending on month end fund cash balances, will further subdivide investments by performing inter-fund sales and purchases within the portfolio. This tedious process distorts the true purchase and sale dates of investments and may adversely impact the investment's yield without further maintenance. The new internal investment pool will be made up of all the City's funds (except for reserve funds tied to utility bond issues) and have a weighted average maturity (VVAM) of 550 days. Utility bond reserve funds will have a 650 day wAM. Investment income will be spread to all funds by a JD Edwards program based on monthly fund cash balances. It is important to note that although fund monies may be combined into a single asset portfolio for investment purposes, proportional fund ownership of the pool will still be accounted for by the accounting department. The revised Investment Policy also incorporates language from the PFIA as it relates to the Certificate of Deposit Account Registry Services (CDARS) program which the City participates in, as well as other information concerning investment advisors and reporting requirements. The Policy has been updated to allow for future flexibility as the City grows and its needs become more complex. It allows for bond proceeds to be managed outside the internal investment pool, if necessary, and addresses the handling of any new fund types not yet used by the City. The revised Policy will also require an annual review by the Investment Committee of Agenda Information Sheet March 3, 2009 Page 2 all money market mutual funds and local government investment pools used in the portfolio, as well as necessitate that all funds and pools maintain a AAA rating, or an equivalent, by at least one nationally recognized rating service. Primary, as well as government money market mutual funds will be allowed in the new Policy, although currently staff recommends investing in only government money market funds at this time. Letters of credit issued by a U.S. agency or instrumentality have also been added as eligible collateral to secure the City's bank deposits. First Southwest Asset Management, Inc., the City's investment advisor, has reviewed and approved the revised Investment Policy. RECOMMENDATION Staff recommends approval of Investment Policy 403.06 with the recommended changes. PRIOR ACTION/REVIEW (Council, Boards, Commissions) The Investment Committee recommended approving revisions to the Investment Policy with the above changes on February 3, 2009, 5-0. Respectfully submitted: Bryan Langley Director of Finance s:lo~r d~curn~ntsltesalu~ons1091inve~tmenx policy.dQC ' RE~LUTI~N ND. A RE~LUTI~N REVIEwINC AND AD~PTIN REV~II~N~ T~ THE INVETENT P~L~CY REARDIN FINDS FAR THE CITY ~F DET~N; AND PR~VZDIN AN EFECTIVE DATE. WHEREAS, the City Council passed Resolution Na. 9~-OG l an October 15,197 which adapted an investment Palicy far Funds for the City, in co.pliance with the Public Funds investment Act, 7~4~~ Leg., ch. 402, 1995 Tex. less. Law Sere. 2958 ~vernon} ATE. CDV'T CDDE Ann. Ch, 225}; and wHEREA~, by Resolution Na. 97-02~, passed by the City Council on June 1 ~ 997, the City's investment Palicy was amended; and WHEREAS, by Resolution No. 97.077, passed by the City Council on December ~ , 1997, the City's Investment Palicy was amended; and wHEREA, by Resolution No. 98-OG7, passed ~ the City Council ors December 15, 1995, the pity's Investment Palicy was reviewed and adapted; and WHEREAS, by Resolution Na. 99-047, passed by the City Council on September 1999, the City's Investment Palicy was amended; and WHEREAS, by Resolution Na. 20a0-0~5, passed by the City Council on December 19; 2000, the City's Investment Policy way ar~.ended; and WHEREAS, by Resolution No. 2001 W 072, passed by the City Council an December 18, 2041, the City's Investment Palicy was amended; and wHEREA~, by Resolution Na. 2002-0557 passed by the City Council on December 10, 2002, the City's Investment Palicy was amended; and wI~REAS, by Resolution Na. 2004-008, passed by the C1ty Counc1l on February 2004, the City's Investment Policy was amended; and wHEREA~, by Resolution No, 2005-008, passed by the City Council on February 2~.7 2aa5, the City's Investment Palicy was amended; and WHEREAS, by Resolution No. 2005-a47, passed by the C1ty Cauncll on November 15, 2005, the City's Investment Policy was amended; and wHEREA, by Resolution No. 2007-OZS, passed by the City Council an September 25, 207, the City's Investment Palicy was amended; and wI~REAS7 by Resolution Na. 2008-0097 passed by the City Council an March 4, 200, the City's Investment Palicy was amended; and i s:lou~ d~cumer~tslresoluti~nsl0~linvestmet~t policy.~oc i WHEREAS, the City Council desires to reprise the Investment Policy in order to reflect changes in the Public Funds Investment Act ~PFIA}, as well as incorporate seeded administrative and pracedural ~nvdi~.cations which have occurred over tune; N, THEREFORE, THE ~U~CIL ~F THE CITY ~F ~ENT~N HEREBY RE~LVE: SECTION 1. The City Council has reviewed the attached City of Denton Investment Policy, which captains the Cit~r' ~ lnvestrrient policies and ~nve~nent strategies for each of the funds under its central and hereby' adopts the attached In~restn~ent Policy, which is rriade a part of this Resal~utian for all purposes. SECTI~~ The City Council authari~e the City's designated Investment off icers to revise the Investment Policy in order to reflect changes in the Public Funds Investment Act ~PFIA}, a Drell 1norporate needed adminlstrat~ve and procedural mod~~icatlons which have eccur>~ed aver time. ECTI~N . All reselutlons or parts of resolutions in farce when the provlslens of this Resolution became effective which are inconsistent or in cen#Iict with the terms or pravi~ians contained in this Resolution are hereby repealed to the extent of any such cenflict onl~r. The nanWconflrcting sect~ans, sentences, paragraphs, and phrases shah remain in full force and effect, SECTION 4. Save and except as amended hereb~r, all the pravisians, sectiens, subsections, paragraphs, sentences, clauses, and phrases of Resalution Na. 9G-~l, Resolution No. 97-~~~, Resolution N~a. 97-077, Resolution No. 95-0~7, Resolution No. 99047, Resolution Na. 200-0~5, Reso~utian No. 2001-072, Resolution Igo. 2002-055, Resolution No. 2004-008, Resolution Ida. 2005-~~8, Resolution No. 2005-047, Resolution Ne. 2007-028, and Resolution Na. 2~~8-009 shall remain in full fence and effect. SECTION This Resolution shall become effective immediately upon its passage and approval. PASSED ~ APPR~~E~ this the of_~ , 2oa9. NIARI~ A, BUROUHS,1ViAYOR ATTEST: ~EN~'ER SALTERS, CITY SECRETARY BY: APPROEI) AS TO LEGAL FORS: ANITA BLTROESS, CITY ATTORNEY BY: Page 2 of 2 i Page I of t 5 I~IY~ADMINISTRAT~ PR~~DLIREJAI~MINI"I`R~T~ DIRE'!'I' sECTI~N: FIl~ANCE PGLICIE REFERENCE NUMBER: 4U3,46 SUBJECT: IE~TMENT IN~TtAL EFFECTIVE DATE: ~~11?I8'7 RE~ISt~N TITLE: nV~ETMENT P~LI~Y 031D3109 I. PUR~~~ It is the objective of the City of I~en#an to invest public funds in ~ mer which will pra~ride maximum security and the best commensurate yield while meeting the daily cash flow demands of the City and conforming to all federal, state and local statutes, rules and regulations governing the investment of public funds. This Policy serves to satisfy the statutory requirements of defining and adopting a formal investent policy. The Policy and investment strategies shall be reviewed annually by the investment Committee and C1ty Council who will formally approve any modifications. This Investment Policy, as approved, is in compliance with the provisions of the Public Funds Investment Act of Tex. Gov't. Cade Chapter ~~d. II. SIIPE A. This Investment Policy applies to the investment activities ofthe City ofDentan, Texas. The specific funds cited herea.~er in section I.~, shall be excluded from this Invest~aent Policy. All financial assets of all funds, including the General Fund and any other accounts of the City not specifically excluded in these policy guidelines are included. These funds axe accounted for in the City's Comprehensive Annual Financial Report ~AFR}. These funds, as well as funds that may be created from tie~to-tune, shall be administered iu accordance with the provisions of this Policy, All funds will be pooled for investment purposes. Currently the City e~nplays a strategy developed for this pooled fund group that addresses the varying needs, goals, and objectives of each fund by dividing blocl~s of ecuri~es into particular funds and employing inter-fund sales and purchases. Although not currently implemented, it is the City's objective to combine the majority of its fund groups into an internal investment pool to facilitate investment management and allow for a more equitable allocation of interest earnings. This Policy is written with this Baal in mind, Until an internal investment pawl is realised, the City will continue with its current fund allocation process. In addition to this Policy, the investment of bond proceeds and other bond funds including debt service and reserve funds} shall be governed and controlled by their governing ordinance and by the provisions of the Tax Refarrn Act of I9S6, including all regulations and rulings promulgated there under applicable to the issuance of tax,exempt abllgatlon. B. Funds covered by this Policy and managed as a pooled fund group; 1. General Fund - used to account far resources traditionally associated with government, . which are not required to be accounted for in another fund. special Revenue Funds -used to account for the proceeds from specific revenue sources which are restricted to expenditures for specific purposes. i Page 2 of 15 I~IYIA~IVIINITRA~TI'VE PR~EDEJADNIINIT~ATIV~ DIlTIVE TITLE: YNVE~T~VIENT P~L~CY REFERENCE NUMBER: 443.06 3. Debt Service Fund used to account far resources to be used for the payment of principal, interest and related costs on general obligation debt. 4. Capital Project Funds -used to account far resources to enable the acquisition or construction of major capital facilities which are not financed by enterprise funds, internal ser~lce funds, or trust funds. 5. Enterprise Funds used to account far operations that are financed and operated in a ' manner similar to private business enterprises, Internal Service Funds - used to accouut for the cost ofproviding goads or services between City departments. 7, Trust and Agency Funds -used to account for assets held by the City in a trustee capacity or as an agent for individuals, private argani~ations, other governments, andlor other funds. S, dew funds available far investment by the City, such as abut not limited to} resources associated with Public Improvement Districts or Tax Increment Financing pones, unless specifically excluded herein. Funds covered by this Policy and managed as separately invested assets: ~ . Bond Funds funds established with the proceeds from specific bond issues when it is deter~n.ined that segregating these funds from the pooled funds' portfolio wi11 result in maximum interest earning retention under the provisians of the Tax Reform Act of 1 X56, Bond Reserve Funds -funds set at prescribed levels by certain band ordinances to pay principal andlar interest if required to prevent default. 3. Endowment Funds -funds given to the City with the instructions that the prrnc~pal is to remain intact, unless otherwise agreed to, and the income generated by the investments be used for specified purposes, D. This policy shall not govern funds, which axe managed under separate investrnent programs in accordance with the Tex. rov't. Code Sec. 2~~6,Oa4. Such programs currently include all funds related to employee retirement programs, other funds established by the City far deferred employee compensation, and certain private donations. The City shall and will maintain responsibility for these funds to the extent required by Federal and State Law, the City Charter, and donor stipulations. . I~VETMENT ~~TIV~ ~ TR~TEGI~ It is the policy of the City that, giving due regard to the safety and risk of investments, all available funds shah be invested in conformance with State and Federal Regulations, applicable Bond ordinance requiremen#s, adopted Investment Policy and adopted Investment strategies. In accordance with the Public Funds Investment Act, the following priariti~ed objectives din order of importances in accordance with the Tex. ~ov't, Code Sec. ~Z~~.aaS~d} apply for each of the City's investment strategies. . i Page 3 of ~ 5 POL~C~IADIITRAT~ PRE~3~TREIADIIV`~T~tATi D~RETE TYTLE: TES'TPViENT P~LtCY REFERENCE M~ER: ~a~.a~ A. Stcr'~ability -Understanding the suitability of the investment to the financial requirements of the City i impartant. Any investment eligible in the Investment Palicy suitable far all City funds. B. Safes - Preservation and safety of principal are the primary objectives of the Investment Policy, Ail investments wi11 be in high quality securities with na perceived default risk. . ~~quidi~y -The City's investment portfolio will remain sufficiently liquid to meet operating requirements that might be reasonably anticipated. Liquidity shall be achieved by matching investment maturities with forecasted cash flaw requirements and by investing in securities with active secondary markets. chart-term investment pools and maney market mutual funds provide daily liquidity and may be utilized as a corripetitive yield alternative to fixed income investments. D. ~Iarke~abi~i~y -Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. ~Iistorical market "spreads'} between the bid and offer prices of a particular security type of less than a quarter of a percentage paint sha11 define an efficient secondary market. E. ~ivr~s~ cation - Investment maturities shall be staggered throughout the budget cycle to provide cash flow based on the anticipated needs of the City. Diversifying the appropriate maturity structure will reduce market cycle risk. F. ~iela~ - Attaining a competitive market yield, commensurate with the City's investment risk constraints and the cash flaw characteristics of the portfolio, is the desired objective. The goal of the City's investment portfolio is to regularly meet ar exceed the average rate of return on Treasury Bills at a maturity level comparable to the portfolio's weighted average maturity in days. The yield of an equally weighted, rolling six-month Treasury Bill portfolio shall be the m,imun~ yield objective or "benchmark". Six-month U.. Treasury Bill information is derived fxom the Federal Reserve Statistical release H,15 far constant maturities. A secondary objective will be to obtain a yield equal to or in excess of a lacaf government investment pawl or maney market mutual fund. The first measure of success in this area. will be the attainment of enough income to vff`set inflationary increases. Although steps will be taken to obtain this goal, the City's staff will follow the `Prudent Person" statement relating to the standard of care that must be exercised when investing public funds as expressed in the Tex. Gov't. Cade dec. 2~6.Oa~a-b}, Tie investment Officers shall avail any transactions that might impair public confidence in the City's ability to govern effectively. The governing body recagni~es that in diversifying the parlfalio, occasional measured unrealized losses due to market volatility are inevitable, and must be considered within the context of the overall portf`olio's investment return, provided that adequate diversiicatian has been implemented, The prudence of the investment decision shall be measured in accordance with the tests set Earth in the Tex. av't. Code dec. 2~~~.a0~~b}. ~V. I~T~1VT TR~ITEY ~'~R SP~C~'I FU11~D R~UP In order to better diversify, maximise interest earnings and otherwise meet stated. ab~ectives, fund groups may be combined into one or more internal investment pools. Although fund monies may be combined into a single asset par~folio, proportional fund ownership will be accounted far i Page 4 of t 5 P~LI~YIA~NIINI'A'TI~E PR~D[TRFIADN~NI7.~RATI DATIVE TITLE: IN~ETMENT P~LtCY REFERENCE NU~VtBER: separately. The City maintains separate portfolios for some individual funds ar groups of funds has listed under section II} that are managed in accordance with the terms of this Policy and by the corresponding investment strategies listed below ~It should be noted that until an internal investment pool is realized, the City will continue with its current fund allocation process,} A. I~vstmn~ Pooh Strafe ~ The City's >rvestment Pool is an aggregation of the majority of City funds which includes tax receipts, enterprise fund revenues, fine and fee revenues, as well as same, but not necessarily all, bond proceeds, grants, gifts and. endowments. This portfolio is maintained to meet anticipated daily cash needs for the City's operations, capital projects and debt service. ~n order to ensure the ability ofthe City to meet obligations and to minimize potential liquidation losses, the dollar-weighted average sta#ed maturity of the Investment Pool shall not exceed 1.5 years ar 550 days, The objectives ofthis portfolio are to: ~ , Ensure safety of principal by investing in only high quality securities for which a strong secondary market exists. 2. Ensure that anticipated cash flows axe matched with adequate investment l~qu~dity. Limit market and credit risk through diversification.. 4. Attain the best feasible yield commensurate with the objectives and restrictions set forth in this Policy by actively managing the portfolio to meet or exceed the six month moving average yield an a six month I1.. Treasuxy Bi11 as derived from the Federal Reserve statistical Release x,15 for constant maturities. B. Bond ~'~nds S~a~e~ ~ ~ccasior~ally, separate non~paoled portfolios are established with the proceeds from bond sales in order to maximize earnings within the constraints of arbitrage regulations. The objectives afthe portfolios are ta; 1. Ensure safety of principal by investing in only high quality securities for which a strong secondary market exists. Ensure that anticipated cash flaws are matched with adequate invest~nnent liquidity. Limit market and credit risk through diversification. 4. Attain the best feasible yield commensurate with the objectives and restrictions set forth in this Policy and the band ordinance by actively managing the portfolio to meet or exceed the bond yield. C. Bond Reserve ~'~nd ~ate~y - lion-pooled reserve funds for outstandirig~revenue bonds are set at levels required by their respective bond ordinances, These funds will be used to pay principal and~~r interest, if required, to prevent default, securities should be of high quality ~ and, except as may be required by the bond ordnance spec~ic to an individual issue, of short ~ to intermediate-term maturities with stated final maturities not exceeding dive years or a dollar weighted average maturity of X54 days ar less. The objectives of the portfolios are to: 1. Ensure safety of principal by investing in only high quality securities far which a strong secondary market exists. i Page 5 of 15 P[~L~Y1AD14~IN~~TRATI ~'~~EDU~EIADIVITRATI DECTI TITLE: INVE~TNIE' P~LtCY REFERENCE NUMBER: 403.~d 2. Create a dependable revenue strew frasn securities with a low degree of volatility. 3, Limit market and credit risk through diversification. 4, Attain the best fea~s1ble yield commensurate with the objectives and restrictions set Earth in this Policy and the bond ordinance by actively managing the portfolio to meet or exceed the bond yield. D. ~r~wrraerat ~'~cnd gate - Funds received as gibs to the City with instructions that the income generated by the investment of said funds be used for specified purposes are invested as separate non-pooled portfolios in order tc maxiniize return. The objectives of the portfolios are to: 1. Ensure safety of principal by investing in only high quality securities for which a strong secondary market exists. Ensure that anticipated cash flows are snatched with adequate investment liquidity. 3. Limit market and credit risk ~hrat~gh diversification. . 4. Attain the best feasible yield commensurate with the objectives and restrictions set forth in this Policy. V. ETI"NT C~IVLVIITT~E ~en~~ers The Investment Committee will consist of the City Manager, Assistant City Manager, Director ofFinance, Mayan, and one member ofthe City Council. ~op~ -The investment Committee shall meet at least quarterly to determine general strategies, investment guidelines and to monitor results. included in its deliberations will be such topics as: economic outlook, portfolio diversification, maturity structure, potential risk to the City's funds, authorized brakerldealers cif applicable, and the target rate of return on the investment portfolio. procedures -The Investment Committee sha11 provide minutes of its meetings. Any two members of the Investment Committee may request a special meeting, and four members shall constitute a quor<un. The hvestment Committee shall establish its own rules of procedures. VI. ~P~N~BIL AND TANT~ARD ~F ~ A.. ~e~ega~ior~ ~rainr~ag -The management responsibility for the investment program is delegated to the Director of Finance, who shall establish written procedures for the operation of the investment program, consistent with this Investment Policy, Such procedures shall include explicit delegation of authority to the individual~s~ responsible far investment transactions. The primary individual who shall be involved in investment activities will be the Treasury Debt Manager. The Treasury Debt Manager may delegate the day to day activities to a responsible individual~s~ who has received the appropriate training required by state statute. The Assistant City Manager and Director of Finance are designated as the Investment Officers, pursuant to Tex Gov't. Code dec. 225.~~5~f~. Accordingly, the investment Df~icers and persons authorized to execute investment transactions shall attend at least one gaining session relating to their responsibilities under the Public Funds Investment Act within ~Z months aver assuming duties and receive no less than ~0 hours of instruction i Page ~ of 15 1~~YIADNI~I~'RATIV~ PR~DUREIADI~`RA,~I~E DIRECTIVE TITHE; tN~TETMENT POLICY REFEREN~~ NUMBER: 4a3.0~ relating to investment functions even two years. The training must include education in investment controls, security risks, strategy risks, rnarket risks, and compliance with the Public Funds Investment Act. The uavestment training session shall be provided by an independent source approved by the Investment Committee. Far purposes of this policy, an `independent source" from which investment training shall be obtained shall include a professional argani~ation, an institute of higher learning or any other sponsor other than a business organization with whom the City may engage in investment transaction, Thus, these independent sources will be training sessions sponsored by the Ooverntnent Treasurers Organization of Texas ~GTOT}, Center Far Public Management at the University of North Texas AUNT}, Government Finance Officers Association of Texas ~OFOAT}, Texas Municipal League ~TML}, North central Texas Council of Governments ~NCTCOO}, Association of Public Treasurers United Mates Canada RAPT US C}, and Government Finance O~cers' Association ~GFOA}, Na persons may engage in investment transactions except as provided under the terms of this Policy, The Assistant City Manager shall require an annual compliance review by an external auditor that will consist of an audit of management con~als an investments, adherence to the City's investment Policy and a review of the quarterly investment reports. The reviews will provide internal control by assuring compliance with policies and procedures. The Assistant City Manager, Director of Finance, Mayor, City Council, City Manager and other Finance employees shall be personally indemnified in the event of investment lass provided the fnvestent Policy has been followed. B. 'or~f Picts of Ir~~e~~s~ -All participants the investment process shall seed to act responsibly as custodians of public assets. Officers and ezrrployees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment programs., or which could impair their ability to make impartial investment decisions. C. ~isclosur~e -Anyone involved in westing City funds shall ale with the Investment Committee a statement disclosing any personal business relationship with a business organization offering to engage in investment transactions with the City or is related within the second degree by affinity or consanguinity as determined under the Tex. Gov't. Cade Ch. 573, to an individual seeking to transact investment business with the City. A disclosure statement must also be filed with the Texas Ethics Commission and the City Council. An Investment Officer or other employee has a personal business relationship with a business arganizatian if any one of the following three conditions are met; l . The Investment Officer ar employee awns 1 a°l~ or more of the voting stock or shares of the business organization or owns $~,a4a or mare of the fair market value of the business organization. Funds received by the Investment Officer ar : employe from the business organization exceed l a°l~ ofthe investment officers grass income for the prior year. 3. The Investment Officer ar employee has acquired from the business organization fluxing the prior year investments with a book value of $~,~aa or more for their personal account. D. ~cd -The standard of prudence to be used by the investment af~icials shall be the "Prudent Person Rule", as set forth in Tex. Gov't. Cade sec, ~~5~.aa6 and will be applied in the context of managing an overall portfolio; "Investments shall be made with judgment I Pag~7af15 P(~~IYIAI~M~NITRATI PR~CEDT.~R~IAD~IIl~IST~.tATI~E DII~'IVE TITLE; Il~1~ETM~NT POLICY REFERENCE N~TMBER; 403.Od ~ care under prevailing circumstances, that a person of prudence, discretion and intelligence would exercise in the management of the person} own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived." Investment officials acting in accordance with the Investment Policy and exercising due diligence shall be relieved of personal responsibilities for an individual security's credit risk or market price change, provided deviat~ans from expectations are reported in a timely fashion and appropriate action is taken to contras adverse developments. In determining whether an investment official has exercised prudence with respect to an investment decision, the determination shall be made taking into consideration the inveshnent of all funds aver which the official had responsibility rather than consideration as to the prudence of a single in~retment and, whether, the investment decision was consistent with the City's Investment Policy. ~ar~er~y -Not iess than quarterly, the Director of Finance shall submit to the investment Cvn~nittee and City Council a written report of the Cry's investment transactions within one hundred twenty ~iZ~} days of the preceding reporting period. The report shah: 1} describe in detail the investment position of the City as of the end of the reporting period, be prepared jointly by all Investment ~ffcers, 3~ be signed by each Investment Officer, 4~ contain a suna,mary statement, prepared in can~pliance with generally accepted accounting principles, of each pooled fund group including a~ beginning market value for the reporting period; b~ additions and changes to the market value during the period; c} ending market value for the period; anal d} fussy accrued interest far the reporting period, 5} state the book value and market value of each separately invested asset at the beginning and end of the reporting period by type of asset and fund type invested, } state the maturity date of each separately invested asset that has a maturity date, 7~ state the account ar fund or pooled fund group far which each individual investment was acquired, and S} state the compliance of the ~nvestn~ent portfolio a5 It relates to the investment strategy expressed in the investment Policy and with relevant provisions of the Tex. Gov't, Cade Ch. ~2~, ~rarzuad~y -The City Council shall review and approve the Investment Policy and investment strategies at least annually and be documented by rule, order, ordinance or resolution which shall include any changes made. Cona~~~a~zce ~tudi~ The City's external, independent auditor will conduct an annual review of the quarterly reports in conjunction with the annual financial audit. The results of the audit will be reported to City Council, The audit will also review compliance with management controls on investments and adherence to this Policy, F. The guidelines of retaining records far seven years as recommended in the Teas ~'~a~e ~i~rary ~I~r~~cr~a~ ~ecvrs a~rr~a~ should be followed. The Director of Finance shall oversee the fling andlor storing of investment records. Market prices for all public fund investments will be obtained and monitored through the use of interactive Data Inc., an an-line data service ar a similar qualified successor agency. i Page S of 1 ~ P~I~I~'1AI~M~NI'TRA'TIVE P~~DLTREIADM~V`I'I~RATIVE D~RECT`~ TtTL~: ~STMENT ~~LIC~ REFERENCE NUB~1~~ 403.OG YII. Ul'~'ABLE ANI~ AUTHO~E~ Il~~TENT E A. ~ic~ive ~'orto~io ~rzaeme~at The C1ty intends to pursue an active versus passive investment management ph~losaphy, That is, securities may be sold before they mature if marl~et conditions present an opportunity for the City to benefit from the trade. Refer to Section VIII of this Policy.} In addition, the Investment Officers nay at times restrict or prohibit the purchase of specific types of investments or issuers due to current market conditions. The City shall take all prudent measures consistent with this Investment Policy to liquidate an investment that na longer meets the required minimum rating standards, as per the Tex. ov't. Code Sec. 2~5~,01, However, if it is determined by the Investment Comu~ittee that the City v~ould beneft from holding the securities to maturity to recapture its initial investment then the Investment officers may act accordingly, The City is not regr~ired to liquidate investments that were authorized investments at the time of purchase. Tex Gov't, Code Sec. ~25G.~i7} i B. ~ut~ori~ed Irave~tnaes -City funds governed by this Policy may be invested in the instruments described below, all of which are authorized by the Public Funds Investment Act. 1. Direct obligations{ of th~.e United States of America, its agencies and instrumentalities ~mat~infir ~ iV MT MLi it T ~ 7 V~4 Other obligations, the principal and interest of which are unconditionally guaranteed or insured by, yr backed by the full faith and credit of, the United States of America ~n~aturing in less than five ~5~ years}. , Direct obligations of the State of Texas or Its agencies thereof, Counties, Cities and other political subdivisions rated as to investment quality by a nationally recognized investrrtent rating firm not less than AA or its equivalent ~maturirig in less than two yearn. Dther obligations ~ the principal and interest of which axe unconditionally guaranteed or insured by, yr backed by the full faith and credit of, the State of Texas, rated as to investment quality by a nationally recognized investment rating f~ not less than AA ar its equivalent maturing in less than. t~vo years}. 5. Fully insured or collateralized certificates of depasitlshare certificates issued by state and national banks or savings bank or a state or federal credit union shaving its main or branch office in Texas} guaranteed or insured by the Federal Deposit Insurance Corporation or its successor or the National Cxedit Union Share Insurance Pond or its successor; and secured by obligations in accordance v~ith Section III herein ~tnaturYng in less than two ~~}years}. In addition to the City's authority to invest funds in certificates of deposit and share certificates stated above, an investment m certificates of deposit nude in accordance with the fallowing conditions is an authorized investment under Tex. govt, Code Sec. ~2~~.~10 ~b~: ~l~ the funds axe invested by the City through a depository institution that has its {Hain office or a branch office in this state and that i selected by the City; the depository institution selected by the City under Subdivision ~I}arranges for i Page 9 of 15 P~L~IADM~~iATIV~ PRO~~UREIADIVSTR~'~IVE ~IRE'I`I~E TITLE: ITEST`~NT P(~LtCY REFERENCE NUNiEER: 403 ~Od the deposit of the funds in certificates of deposit in one or more federally insured depositary institutions, wherever located for the account of the City; the full amount of the principal and accrued interest of each of the certificates of deposit is insured by the United States or an instrumentality of the United States; ~4~ the depositary institution selected by the City under Subdivision ~l}acts as custodian far the City with respect to the certificates of deposit Issued far the account of the City; anal ~5} at the same time that the funds are deposited and the certificates of deposit are issued far the account of the City, the depository institution selected by the City under Subdivision ~ i ~ receives an amount of deposits from customers of other federally insured depositary institutions, wherever located, that is equal to or greater than the amount of the funds invested by the City through the depositary institution selected under Subdivision ~ 1 Fully collateralized repurchase agreements provided the City has on file a signed ll~aster Repurchase Agreement, approved by the City Attorney, which details eligible collateral, callateralizatians ratios, standards for collateral custody and antral, collateral valuation, and conditions far agreement termination. The repurchase agreement must have a defined termination date and be secured by obligations in accordance with Section ~II of this Policy. It is required that the securities purchased by the City be assigned to the City, held in the City's name and deposited at the time the investment is made with the City ar with a third party selected and approved by the City. Repurchase agreements must be purchased through a primary government securities dealer, as defined by the Federal Reserve or a financial institution doing business in this State ~tern~ination date must be thirty X30} days or less}, 7. Commercial paper that has a stated maturity of ~7a days ar less from the date of issuance and is rated A-1 or F~1 ar an equivalent rating by at least two nationally recognized rating agencies. 8. Public Local} Fund Investment Pawls with a dollar weighted average maturity of ~a days ar less, The pawl must be approved Eby resolution} by the City Council to provide services to the City. The pawl must be continuously rated no lower than Aaa ar AAAm yr at an equivalent rating by at least one nationally recognized rating service. A public funds investment pawl created to function as a money market mutual fund must mark to market daily and stabilize at a I net asset value, i Ta be el~grble to receive funds from and invest funds an behalf of the City, an investment pool must furnish to the Investment C~ff~cer ar other authorized representative an offering circular ar other similar disclosure instrument that contains information required by the Tex. av't Code Sec. 2~5d~Olb. Investments will be made a Iacal govermnent investment pawl only after a thorough investigation of the goal and approval by the Investment Committee which shall at lea~t_ annually review, revise and adapt the 1oca1 government investment oal(s}. . ~ Securities and L~change Conissian SEC} registered, na load money market mutual fund which has a dollar weighted average stated maturity of a days or less and whale investment ab~ectives includes the maintenance of a stable net asset value of 1 far each share. Furthermore, it must be rated not less than Aaa, AAAm ar an equivalent rating by at least one nationally recognized rating service and the City mast be provided with a prospectus and other information required by the SEC Act of 1934 ar the Investment Company Act of i ~4a. Investments will be made in a money i Page 1~ of P~LIY~ADMINI'I'IT~ ~R~~~~U~ElA~NIST~ATI~E DIR~C:T~ T~ A 1JL: I~VE~TMENT P~LIY REFERENCE NUMBED. ~0.~6 market mutual fund only aver a thorough investigation of the fund and approval by the Investment ~ammittee which shall, at least annually, review, revise and adapt the money market mutual funds}. ~ro~tibit~d ~~vestr~e~~~ -The City's authorized investment options are mare restctive than those allowed by Mate law. Furthermore, this Policy specifically prohibits investment in the securities listed below: Obligations, whose payment represents the coupon payments on the outstanding p~ncipal balance of the underlying mortgage-backed security collateral and pays no principal. Obligations whose payment represents the principal strew of cash flov~ from the underlying mortgage-backed security collateral and bears no interest, ' A11 collateralized mortgage obligations. 4. reverse repurchase agreements. Diverse ~ca~iort - It is the policy of the pity to diversify its investment portfolios. The diversification will protect interest income from the volatility of interest rates and the avoidance of undue concentration of assets in a specific maturity sector; therefore, portfolio maturities shall be staggered. ~ establishing specific diversification strategies, the following general policies and constraints shall apply: 1, Risk ofinarket price volatility shall be controlled through maturity diversification and by controlling unacceptable maturity extensions and a mismatch of liabilities and assets. The maturity extension will be controlled by limiting the weighted average maturity of the internal investment pool portfolio to X50 days and the bond reserve fund to d5~ days, All longterm maturities will be intended to caner long-term liabilities. In addition at least five ~5°l0} percent of the funds in the investment pool portfolio will be liquid at all tames. The Investment Committee shall establish strategies and guidelines for the percentage of the total portfolio that may be invested ~ U,, Treasury Securities, federal aencies~instrumentalities, repurchase agreements, and insuredlcollateralized . certificates of deposit and other securities ar obligations. The Investment Committee shall conduct a quarterly review of these guidelines, and shall evaluate the probability of market and default risk in various investment sectors as part of its considerations. Risk of principal loss in the portfolio as a whole shall be minimized by diversifying investment types according to the following li~pitations: o Po oho • . . Trea,s Notesllills I • Agencies Instrumentalities 1 ~~°Io • State of Texas Obligations, Agencies Local Cov't, 1 °Io • Laval avernment Investment Pools ~0°Io i Pager 1 of 15 P~LIYIADII~STRATIYE ~R~E~]U~EIADIV~NIS'~`RATI~E ~~RETIYE TITLE: IlE'I'MENT P~LIC~ REFERENCE N~TBER 4D3.o~ • Repurchase Agreements ~~~/o • ert~ficates of Deposit fully insured or collateralized ~ 5°Ia j • U. . Money Market ll~utual Fund 3 5°I~ • callable T~. S, Agenciesllnst~umentalities 20°Io • commercial Paper 5% By ~nstitutian: Repurchase Agreements ~Ta mare than ~ 0°I~ All ether No mare than 3~°Io 4. Purchases of securities with stated maturities greater than the maximum authorized under this section require prior rty council approval. with respect to band proceeds, the pity nay specifically authorize in the bond ordinance investments in repurchase agreements with maturities in excess of ~4 days s~zbject to any required approvals from band insurers. VEIL SALE ~F ~ The pity's policy is to hold all securities to maturity. However, securities maybe sold to minimise the potential lass of principal on a security whose credit quality has declined, to swap iota another security which would improve the quality, Meld ar target duration of the portfolio or to meet unanticipated liquidity needs ofthe portfolio. A horizon analysis is rewired fvr.each swap praying benefit to the pity before the trade decision is made, and will be held in the file far record keeping ~MPE~`ITNE ~~DDIN ~t is the policy of the pity to require competitive bidding for all individual security purchases and sales except for: ~ - . A. Transactions with money market mutual funds and local government investment pools v~hich are deemed to be made at prevailing market rates. B. Treasury and agency securities purchased as new issues through an approved brokerldealer, financial ~nstltutlon or investment advlsor. Automatic overnight "sweep"transactions with the City's depositary bank. At least tl~rree bids or offers must be solicited for all other transactions involving individual securities. The pity's investment advisor is also required to solicit at least three bids or offers when transacting trades on the pity's behalf. In situations where the exact security is not offered by other brokerldealers, offers on the closest comparable investment may be used to establish a fair market pace for the security. The quotes .ay be accepted ora~ly~ in writing, electronically, or any combination of these methods. The Investment onittee nay approve exceptions on a ease by case basis or on a general basis in the form of guidelines. These guidelines shah take into consideration the investment type, maturity date, amount and potential disruptiveness to the City's investment strategy. i Rage t2 of 15 P~3LIY1AI~IVIIN'ITRATi ~R~C~~UR~1AD11~INIT~tAT~YE DIRET~Y~ TIT~,~: IlE'TMENfi POLICY REF~REI~CE NUMBER: 443.0 ARB~TI~AE The Tax Reform Act of 198G provided limitations restricting the City's investing of tax-exempt General obligation Bond proceeds and debt service income. Revised arbitrage rebate provisions require that the City compute earnings an investment from each issue of bonds an an annual basis to determine if a rebate i required. To determine the City's arbitrage position, the City is required to perform specific calculations relative to the actual yield earned vn the investment of the funds and the yield that could have been earned if the funds had been Invested at a rate equal to the yield an the bonds Bald by the City. The rebate provision. states that periodically knot less than once every five years, and not later than sixty days aver maturity of the bands}, the City is required to pay the U. Treasury a rebate of excess earnings based on the City's positive arbitrage position, The Tax Reform restrictions require precision in the monitoring and recording facets of investments as a whole, and i particularly as they relate to yields and computations sa as to insure compliance. Failure to comply may dictate that the bands become taxable, retroactively from the date of issuance The City's investment position, relative to a revised arbitrage restrictions, is the continued pursuit of maximizing yield on applicable investments while ensuring the safety of capital and liquidity. it a fiscally prudent to continue the maximization of yield and rebate excess earnings, if necessary, ~I. ~LE~TI~1~ OF BA1~~, B~t~I?EALEI~ ADD IlETME~''I' ADVIOIi A. Depository -City Council sha11, by ordinance, "select anal designate one or more banking institutions as the depository far the monies and funds of the City" in accordance with the requirement of Tex. Lac, Gov't. Cade Ch.145, At least every flue years a depositary shall be selected through the City's banking services procurement process, which shall include a formal request far proposal ~RFP}. The selection of a depositary will be determined by competitive bid and evaluation of bids will be based on the following criteria: 1. qualified as a depositary far public funds in accordance with state and local laws. 2. Provided requested infornxation or financial statements for the periods specified. 3. Complied with all requirements in the banking RFP. 4. Completed responses to all required items an the bid form, 5, offered lowest net banking service cost, consistent with the ability to provide an appropriate level of service. G. Met credit worthiness and financial standards. B. Iresf~zerrt BrokerlD~aders The investment Committee shall be ~ responsible for adapting the list of qualified brol~ersldealers .and financial institutions authorized to engage in investment transactions with the City. Authorized firms may include primary dealers or regional brokerldealers that qualify render ABC Rule 1503-1 {uniform net capital rule} and qualified depositaries as established by the Tex. Loc. Gov't, Cade Ch.1 a~. The Investment Committee shall base its evaluation of security brokerldealers and financial institutions upon: 1. Financial condition, strength anal capability to fulfill commitments. i Page 13 of 15 P~LI1ADlVIIIlVITRATiVE PRDCEDURIADITRATIVE DE~T~VE T1TLF; INTMENT POLICY RE~`ERENCF NCJMB~R: 4D3.aG 2. Cvcrall reputation with other brakerldeaiers ar investors. 3. Regulatory status of the brol~erldealer. 4. ~acl~ground and expertise of the individual representativesi ~ ~ Ability to provide additional advisory services. The Investment Committee must annually review the list of qualified brokerldealers authorized to engage in investment transactions with the City. Investment C~cers, ar their authorized representatives, shall not conduct business with any firm with whom public ~ entities have sustained realized losses on investments or whose name the ~nvestn~ent Committee has removed from an approved list Inve~~Tlzert~ 1Qc~tl~sor The Clty may retain the services of an investment advisory frrn registered under the Investment Advisers Act of 194Q ~l~ U.Q.C. section dab-l et seq.} or with the Mate securities hoard to assist in the review of cash flow requirements, the forxnulatian of investment strategies, and the execution of security purchases, sales and deliveries. The investment advisory contract with the City may not be far a term longer than two years and its renewal or extension must be approved by the City Council by ordinance or resolution as required by the Tex. av't~ Code c.~~~,a03~b~. D. `on~p~ia~tc~ ~ A qualified representative from any firm offering to engage in investment transactions with. the City is required to sign a written instrument upon receiving and reviewing a copy of the City's Investment Policy Investments shall only be made with those business organizations including money marl~et mutual funds and local government investment pools} which have provided the City with this written instrument executed by a qualified representative of the acknowledging that the business organization has: . 1. Received and reviewed the City's Investment Policy, Im le~nented reasonale racedures p p and controls m an efr'ort to preclude ~nvest~aent transactions conducted between the City and the organization that are not authorized by the City's Investment Policy, except to the extent that this autharizatian is dependent an an analysis of the makeup of the City's entire portfolio ar requires an interpretation of ~ub~ective investment standards. III. ~D~LATE~ALIZATION, A~'EI~EEPIN~ AND UTDDY A. C`o~~at~rali~a~io~ -The City requires that ail uninsured collected balances plus accrued interest, if any, in depository accounts be secured in accordance with the requirements of state law. Financial institutions serving as City depositaries will ~ be required to sign a depository agreement with the City which details eligible collateral, coilateraliaatian ratios, standards far collateral custody and control, collateral valuation, rights of substitution and candlt~ons for agreement terinatlon. The City requires that all securities purchased under the terms of a repurchase agreement be assigned to the City in accordance with state Iaw. Dealers and financial institutions wishing to transact repurchase agreements with the City will be required to sign a Master Repurchase Agreement which details eligible collateral, collateral%zation ratias~ standards for collateral i Page t4 of 15 P~LICYIAD~IT~ATIV PROEDUIIAD[NI~T`A'1~VE DI~ETIVL TITLE: IN~ESTN~NT POLICY REFERENCE N~[~EER: 4~3 custody and control, collateral valuation, rights of substitution, and conditions far agreement term~natlon, The City requires that all uninsured certificates of deposit plus accrued interest held with a depositary be secured in accordance with the requirements of state law. Financial institutions will be required to sign written depositary and security agreement which stipulates eligible collateral collateralizatian rations, standards far collateral custody and control, collateral valuation, rights of substitution, and conditions for agreement tern~inatian, Collateral wilt always be held by an independent third party with which the City has a current custodial agreement and shall be reviewed at least monthly to ensure that the market value of the pledged securities is adequate. All deposits and investments of City funds, other ~ than direct security purchases, money market mutual Funds and local governn~.ent investment goals shall be secured by pledged collateral set at na less than 14Z percent of the market value of the principal and accrued interest an the deposits ar investments less an amount insured by FDIC. Eligible collateral to secure the City's deposits include: 1. Direct obligations of the United States government. Dther obligations, the principal and interest of which are unconditionally guaranteed ar insured by, or backed by the full Earth and credit of, the United States government. Direct obligations of agencies or instrumentalities of the United States government, including letters of credit. The City will reject adjustable rate mortgages ~ARs}~ collateralized m.artgage obligations {CMOs}, Step,ups, variable rate securities or securities that are not found on cam~r~on pricing systems. Sa~ feke~,pin~ acrd C'us~ody ~ afel~eepi~ and custody afthe pity's investment securities snail be in accordance with state law. All security transactions, except local government investment pool and money market mutual fund transactions, shall be conducted on a delivery versus payment ~DVP~ basis. Investment securities will be held by a third party custodian designated by the City, and be required to issue safekeeping receipts clearly detailing that the securities are owned by the City. Safekeeping and custody of collateral shall be in accordance with state Iaw. Collateral will be held by a third party custadlan designated by the City, and pledged to the City as evidenced by safekeeping receipts from the institution holding the securities, ~'u~je~~ ~o ~udi~ ~ All collateral shall be subject to inspection and audit by the Director of finance, or designee, as well as the City's independent auditors III.1"~ANA~1V~ ADD Il~'I'ERNAL ~NT'R~L Controls shall be designed to prevent losses of public funds arising from fraud, employee error, and misrepresentation by third parties, unanticipated changes in financial markets, ar imprudent actions by employees ar divestment officers of the City, i Page 15 of 1 ~ P~LI~IADIV~NITRA~IV~ PR~~~I3UREJAI'~IVIIlVITRATIY~ ~IR~CTI~E TITLE; ~STENT POLICY REF~RE~CE NUMBER: 4a3.0~ Controls and managerial emphasis deemed mast ~rnportant that shall be en~plnyed include the following: erative Controls Custodian safekeeping receipts records management i - Avoidance of bearer-fon securities I~ocumentatian o~ investment bidding events - Written confirmation of telephone transactions - Reconc~lements and campaxisons of security receipts with the investment retards - Compliance with Investment Policy - ~eri~ication of all interest income and security purchase and sell computations Controls where Practical - Control of Collusion - Separation of duties - Separation aftransactian authority from Accounting and Retard-keeping Clear delegation ofauthority - Accurate and timely reports Validation. of investment maturity decisions with supporting cash flow data - Adequate training and development of Investment Officials - Review of financial conditions of ail brokersldealers, and depository institutions - staying informed about market conditions, changes and ixends that require adjustments to investment strategies. V. INVESTMENT P~LIC`Y A~~1~'~'~~N The Investment Policy shall be formally approved and adopted resolution afthe City Council and reviewed annually in accordance with the provisions ofthe Public Funds Investment Act afthe Teas C~overnrnent Cade Chapter 225, i This page left blank intentionally. AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 DEPARTMENT: Parks and Recreation ACM: Fred Greene SUBJECT Consider approval of a resolution adopting the City of Denton Parks, Recreation and Trails System Master Plan; and providing an effective date. The Parks, Recreation and Beautification Board recommends approval 6-0. BACKGROUND Over the last nine years Denton has grown from a 77,300 populated community to 115,506. The city has grown by approximately 38,000 individuals, which is a 49% increase in just under a decade. Even though the City has grown significantly and can no longer be considered a small town, there are still qualities of small town life present throughout the community. If the City continues to grow in population and economic strength over the next 5-10 years, park facilities will need to be addressed by adding to the number of parks and the types of amenities provided to meet the needs and demands of the citizens of Denton. This document includes specific recommendations for park expansion, trail linkage, and park development to serve the growing population and needs of Denton. The inventory section of this document includes a complete inventory of the existing parks and facilities. Documented in the Public Input & Needs Assessment section of this plan are the results of the citizen survey, which identifies the recommended priorities for the community. The following section is Standards Analysis; this section uses guidelines set forth by the Recreation, Park and Open Space Standards and Guidelines 4th printing publication, to set up a customized classification system for planning Denton's parks. This is an important point to be considered as all communities should have a number of different types of parks. This section also covers suggested facility development standards. The Trail section offers up a hierarchy for the trail system and a plan to meet the goals set by the Parks Department, mainly to have an interconnected trail system throughout the city. The final section of this plan contains the Ten Year Action Plan and a variety of Funding Sources. This Master Plan should be the basis for the future development and fiscal planning of the Denton parks system for the next five to ten years. Annual reviews of the Master Plan should be performed by the City to ensure that the implementation is on course and addresses any specific changes in priorities and/or needs. Agenda Information Sheet March 3, 2009 Page 2 RECOMMENDATION Staff recommends Council approve the Parks, Recreation and Trails System Master Plan. PRIOR ACTION/REVIEW (Council, Boards, Commissions) The Parks, Recreation and Beautification Board recommended approval of the Master Plan with a vote of 6-0 at the November 3, 2008 meeting. EXHIBITS 1. Resolution 2. Parks, Recreation and Beautification Board Meeting Minutes of November 3, 2008 3. The City of Denton Parks, Recreation and Trails System Master Plan Respectfully submitted, Emerson Vorel Director of Parks and Recreation Prepared by: Cynthia Mayo, Landscape Architect Parks and Recreation Department llco~a~l~e~a~tme~t~llegallaur ~ocumentslresolutions1~1parks, recreation ~d trail system master ~~an.doc RE~DLUTIN N~. A RE~L~JT~~N ADDP~IN~ THE ~IT'~ ~F DENTIN ~AR~, RECREATION AND TRAILS YTE MASTER PLAN; AND PRO~IDINO AN EF~`EOTI~E DATE. WHEREAS, on November 3, ~oo~, the Parr and Recreation Board recon~nende approval of the Parrs, Recreation and Trails stem Master Plan; and WHEREAS, the Oita Oouncil finds that it Is ~n the public ~~iterest to~ adopt this Pars, Recreation and Trails System Master Playa; NOS, THEREFORE, THE O~NIL OF THE CITY OF DENTON HEREBY RESOLES: SECTION ~ . The City council of the Oity of Denton, Texas hereby adopts the pity of Denton Pars, Recreation and Trails System Master Plan. SECTION 2~. This resolution shall become effective immediately upon its passage and appro~'al. PASSED AND AP~RD~ED this the ~ day of , 209. MARS. A. BL~RROUHS, MAYOR ATTEST. JENNIFER SALTERS, ~~TY SECRETARY B~Y: APPRD~ED A TO LEGAL FDRM: .ANITA BI~RESS, CITY ATTORNEY ~3Y: 1 Approved 1/12/09 2 Parks, Recreation and Beautification Board 3 Minute s 4 November 3, 2008 5 Civic Center Conference Room 6 7 Members present: Carol Brantley, Allyson Coe, Dale Conway, Jo Kuhn, Ross Richardson, Jennifer Wages 8 Members absent: Reggie Heard 9 Staff present: Amanda Green, Cindy Mayo, Jim Mays, Bob Tickner, Mary Aukerman, Eric Miller 10 11 Chairperson Jo Kuhn called the meeting to order at 6:03 p.m. 12 13 AWARDS AND RECOGNITIONS: 14 a) Jim Mays told the Board that the City of Denton Parks Maintenance Department came in second 15 overall in their Region at the TRAPS Region 2 & 3 Park Rodeo. Eric Miller was present at the 16 meeting to represent the group and was introduced to the Board, after which he was excused to leave. 17 18 APPROVAL OF MINUTES OF August 4, 2008 MEETING: Chairperson Jo Kuhn asked for any 19 amendments to the minutes. Hearing none the minutes stand approved as written. 20 21 ACTION ITEMS: 22 a) Recommendation of Comprehensive Parks and Recreation Master Plan to City Council -Amanda 23 Green asked Cindy Mayo, project manager, to take the lead on this item. Cindy assured the Board 24 that she had been working with the consultants to get the changes made that were observed and that 25 she would continue to work with them until all corrections/changes were completed to our 26 satisfaction. The majority of the errors were typos and references to wrong pages, etc. The content 27 was not an issue. With Board approval tonight, the Master Plan will go to City Council for review on 28 December 2nd 29 30 MOTION: Jo asked that a motion be made to send the City of Denton Parks, Recreation, and 31 Trails System Master Plan, with the corrections, to City Council. Jennifer made the motion, Allyson 32 seconded and the motion passed with a vote of 6-0. 33 34 After the vote Jo commended Cindy on her efforts as the document is quite extensive. Amanda 3 5 pointed out that it was a collaborative effort as the key players from all areas of PARD came together 3 6 at a meeting to go over their "wish list" for each individual park and facility. 37 38 DIRECTOR'S REPORT 39 PROJECT STATUS REPORT -Avondale Park Lighting and Landscape Improvements - A 40 neighborhood meeting was pulled together by Carol Brantley at her home a few weeks ago and they got to 41 meet people that were directly affected by what's going on in the park. There have been email and phone 42 discussion about the type of lighting and the placement of the lights. 43 44 Briercliff Park Design and Development Project -This project has been through the survey phase and 45 water lines are being added which has bumped the timeline back a bit. The design will have to go through 46 the review process so construction will probably start in early spring. 47 48 Citywide Parkland Acquisition - We are on schedule with the paperwork for acquiring the 196 acre tract 49 of land for a park in the southwest quadrant of the city. 50 1 Denia Park Trail Project -The final plans have been received for the concrete trail and they should start 2 construction this winter. 3 4 Denton Branch Rail Trail Bridges Project -This project is being fast-tracked. Bob expects work to 5 begin in early spring. We have to work out the arrangements for DCTA to be on our rail property. There 6 are still several things to work out for crossings, etc. The trail bridges should fall right in line with the 7 railroad construction and may be built at the same time. 8 9 Senior Center Renovation and Expansion Project -The bid documents are ready and the ad should go 10 out on November 7th, with the bid opening on November 24th. Once approved, there will be a 11 preconstruction or bid question meeting at the Senior Center, with the start projected in January. It will 12 take a year for this phase to be completed. Carol Short of the Festival Foundation has been informed that 13 the contractor will try to take up the least possible amount of park during the 2009 Arts and Jazz Festival. 14 15 No programs will be canceled but may be moved to another location during the project. Seniors will be 16 able to choose if they want to go to another location to participate. 17 18 Soccer Field Land and Development Project -Property for this project has been discussed with City 19 Council and offers are being made. 20 21 Unicorn Lake Trail and Landscape Project -There have been a lot of plans picked up for this round of 22 bidding which makes Bob optimistic. The last time we bid there was only one bidder and they were 23 significantly over the estimate. He is hoping that the economy is such that they will have more bids this 24 round. The opening of the re-bid is Thursday November 6th 25 26 North Lakes Park Goldfield Tennis Center -Cindy is looking at grant possibilities to help fund this 27 project. 28 29 KEEPDENTONBEAUTIFUL -Director's Report 30 Annual Community Tree Giveaway -This event was very successful with pre-registration over the 31 proj ected amount for the trial run. 32 33 KDB'S Growing Beautiful Fundraising Breakfast - KDB has invited the Park Board as VIP guests at 34 this event. Please pre-register by Wednesday, if possible, to insure a space at a table. 35 36 PUBLICART COMMITTEE MEETING MINUTES 3 7 Public Art Policy -Amanda pointed out that we have had several requests to place items deemed as 3 8 Public Art and the paperwork, including the donation form, has been give to the requestors. She is waiting 3 9 for the paperwork to be returned. Amanda explained that after the paperwork is submitted, a Public Art 40 sub-committee will review it before presenting it to the entire committee; upon approval by the committee, 41 it will come to the Park Board for approval and recommendation to the City Council, who ultimately has 42 final approval. 43 44 ITEMS FOR UPCOMING MEETINGS: 45 a) Additional Chapter 26 Items 46 b) DCTA Documents 47 c) Texas Parks and Wildlife Grant 48 49 With no further business on the agenda, Jo asked for a motion to adjourn; Ross made the motion to 50 adjourn, Carol seconded the motion and the meeting was adjourned at 6:34 p.m. The Parks, Recreation and Trails System Master Plan is available for viewing at the City Secretary's Office. AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 DEPARTMENT: Parks and Recreation ACM: Fred Greene SUBJECT Consider approval of a resolution approving a Memorandum of Understanding to loan the watercolor painting, Spring Dusk, to the Pearl Fincher Museum of Fine Arts in Spring, Texas; and providing an effective date. The Parks, Recreation and Beautification Board recommends approval (7-0). BACKGROUND A request has been made to the City of Denton to loan the water color painting, Spring Dusk, to the Pearl Fincher Museum of Fine Arts in Spring, Texas. The water color painting currently hangs in the City Hall Work Session Room and was painted by Rob Erdles, who is now deceased. Mr. Erdles' widow, Millie Giles, has requested the art work be loaned to the newly constructed library building where the Pearl Fincher Museum is located. The painting would be on loan to the Museum from April 2009 through August 2009. Ms. Giles has offered to temporarily display other paintings by Mr. Erdles in the Work Session Room while the Spring Dusk painting is on loan. The Public Art Committee recommended approval to the Parks, Recreation and Beautification Board with the condition that the museum covers all expenses associated with the transportation, packing and insurance of the art piece. The Committee also recommended that the City have the piece appraised and be responsible for the expenses of the appraisal. The recommendation was approved by a vote of 8-0. RECOMMENDATION Staff requests City Council's approval of the Parks, Recreation and Beautification Board's recommendation to loan the water color painting, Spring Dusk, to the Pearl Fincher Museum of Fine Arts, in Spring, Texas with a vote of 7-0. The Public Art Committee recommends approval of the loan of Spring Dusk with a vote of 8-0. Agenda Information Sheet March 9, 2009 Page 2 PRIOR ACTION/REVIEW (Council, Boards, Commissions) • Public Art Committee made recommendation of artist selection on February 12, 2009. • Parks, Recreation and Beautification Board made recommendation of loan of February 23, 2009. EXHIBITS 1. Resolution 2. Memorandum of Understanding 3. Parks, Recreation and Beautification Minutes of February 23, 2009. 4. Public Art Committee Meeting Minutes of February 12, 2009. 5. Letter of Request Respectfully submitted: Emerson Vorel Director Prepared by: r Janie McLeod Community Events Coordinator s:lour dacume~~tslresolut~ons1~91mou loan a~ work.dac RE~LTION N~..~ RANDL~IVI ~UNDERTAN~ING TO LGAI~ A R~ES~LUTIGN APPRG~VING ~ EIVI~ THE PEARL ~'~NHER N~I~S~UN~ THE ATERGLGR PAINTING, SP~~ ~ AS • AND pR~~~I~NG AN E~FET~VE DATE, GF FrNE ARTS IN SPRING, TES 'nand Beautification Be'd and the Pbl~c Art WHEREAS, the Parks, Recreatia ' end a rova~ of the Haan of ~p~~~ Des, and om~nit~ee reco~n pp ' at it is in the u~lie interest t~ lean the ~ratere~Ior WHEREAS, ~h~ lty ~OU1~C1~. finds th ~ + ' useu~n of dine Arty 1n Spring, Texas, N~, aintin ' rin ask, to the Pearl ~'~ncher ~ ~ THEREF`~RE, THE QTY G~ DE~TGN HEREBY RESDL~ES: THE GNC~L G~ ' it of Denton, Texas hereby approves the loan of SE~TI~N ~ .The qty Council of the C y ~ to the Pearl ~'ineher Il~useu~n of Fine Arts ~n Spr~ng~ the ~vaterca~or pa~nt~ng, Sp~~~ ~~s~, Texas. . e effective inaediately upon. its passage and ETIGN 2. This resolution shall beeon~ approval. is the da of , 2~D~. PASSED A.ND APPRG~E~ th ~ _ Y A.RI~ A. B[.JRRGLJGHS, AYGR ATTEST: JENNIFER SALTERS, ~T~ SECRETARY BY: APPRGED AS TO LEGAL F~RII~: ANITA BLJRGES , CITE ATTORNEY BY: s:lonr documentslcontracts1~91mou Loan o~artwork.doc ~E~VI~RANI~~JIVI ~JE1~TANI~I~ ~~~~1~ ~~E~~o~ ~ ~o~ Proper of Cif of De~.ton DEL~~'~ Pearl Fischer ll~useun~ of Fine Arts must procure the serr~iaes of Displays Unlimited, Ina. ~a~ handlers} of Arlington, T to pack and transport Bald pleae of art to and from ex.hlbitran site. ~TALLATYDN No mark ar exhihitlan conapanent may be rerrloved from the Museum premises ante installed ithaut permission of the City of Denton. . The pearl Pincher Museum of 'xne Arts staff produces a111abe1s far the e~.hibition. The appropriate 1ahe1 test for each piece of artv~ark should, at a minimum, include the artist's name, title, and medium. Il~U~tANCE The value of the work is required for insurance proposes. The C ity of Denton v~i11 prav~de an appraisal of the art and the amount of necessary insurance. Museum must show certificate of insurance from the time of removal from all of Denton City Hall until it is safely returned to its permanent location. This may he covered by art handlers and museum barxov~ers insurance}. The u~orl~ of art will be insured while on the premises and during shipment. Experienced gallery personnel mill light the shams. I have read and agree to folla~ the Memorandum of Understanding, CITY OF DENTQN George Ca~nphell Date City Manager APPROVED AS T~ ~EGAI, FARM: Anita Burgess, City Attorney ~Y: PEAR. FINCR MUSEUM ~F FINE A1T Rosemary Hickman ~ Date Education Director I 1 DRAFT 2 Parks, Recreation and Beautification Board 3 Minute s 4 February 23, 2009 5 Civic Center Conference Room 6 7 Members present: Carol Brantley, Allyson Coe, Dale Conway, Reggie Heard, Jo Kuhn, Ross Richardson, 8 Jennifer Wages Members absent: None 9 Staff present: Emerson Vorel, Cindy Deckard, Jim Mays, Janie, McLeod, Kathy Schaeffer, Bob Tickner, 10 Mary Aukerman, John Knight-Deputy City Attorney, Mark Nelson-Director of Transportation, Becky 11 Guthrie-Engineering 12 13 Chairperson Jo Kuhn called the meeting to order at 5:58 p.m. 14 15 AWARDS AND RECOGNITIONS: 16 a) Emerson introduced Kathy Schaeffer to the Board and announced that she had been promoted to 17 Superintendent of Leisure Services and would be attending the meeting on a regular basis. 18 19 APPROVAL OF MINUTES OF January 12 3, 2009 MEETING: Chairperson Jo Kuhn asked for any 20 corrections or amendments to the minutes. Hearing none the minutes stand approved as presented. 21 22 ACTION ITEMS: 23 a) Request for Art Piece to be Loaned to Museum -The City has been asked to loan a water color 24 painting, Spring Dusk, by Rob Erdles, to the Pearl Fincher Museum of Fine Arts in Spring, Texas, 25 from April to August 2009. The museum is doing a tribute to Mr. Erdles, now deceased, and has 26 footage of him painting Spring Dusk, so having the actual finished piece is very important to their 27 exhibit. The painting has been appraised at $15,400. The museum will cover all expenses associated 28 with getting the painting to the museum and returning it to the City. Mr. Erdles' widow has offered 29 to loan the City other pieces that Mr. Erdles painted to fill the spot while Spring Dusk is on loan. 30 With the new policy regarding Public Art, this process will be the norm for items such as this. The 31 Public Art Committee approved this loan at the Februaryl2, 2009, with a vote of 8-0. 32 3 3 MOTION: Jo asked that a motion be made to loan the water color painting, Spring Dusk, to the Pearl 34 Fincher Museum of Fine Arts in Spring, Texas. Ross made the motion to approve the loan, Reggie 3 5 seconded and the motion passed with a vote of 7-0. 36 37 b) Proposed City of Denton DCTA Railroad Easement on the Denton Branch Rail Trail -Mr. Ray 3 8 Green from DCTA was introduced to the Board. John Knight, Deputy City Attorney, explained that 3 9 the agreement is still being finalized but that the intent of the document included in the packet isn't 40 going to change and that the Parks portion of the agreement is sufficient enough to bring before the 41 Board. The document is intended to protect the City's interest in the trail and in the waterline that is 42 parallel to the easement. City Council hasn't reviewed the document yet, but the Board needs to be in 43 agreement with the contents before it goes to City Council for their input on March 3rd. According to 44 Mark Nelson, Director of Transportation, DCTA will consider the document at their Board meeting 45 on February 27th. The 10-year clause will protect our interests in the event the railroad is not 46 constructed. If the interlocal agreement and easement are not accepted by either party, a "RIGHT OF 47 ENTRY AND POSSESSION" document has been included in the packet so that DCTA can access 48 the property to begin preliminary preparations to meet their 2010 proposed completion date. 49 1 MOTION: Jo asked that a motion be made for acceptance of the proposed City of Denton-DCTA 2 Railroad Easement on the Denton Branch Rail Trail agreement. Jennifer made the motion, Carol 3 seconded and the motion passed with a vote of 7-0. 4 5 DISCUSSION ITEMS: 6 a) Chapter 26 Review: Water Line Easement on the Denton Branch Rail Trail for City of Denton Water 7 Utilities -Becky Guthrie of the Engineering Department was introduced. Chapter 26 reviews allows us 8 to have input where a recreational area will be used for anything other than park and recreation use. If 9 anyone has issues they may state those before the Park Board. The City Council will also hold a public 10 hearing in this regard. This easement will connect the two existing stubs on either side of Loop 288. 11 This item has been in the works for sometime but Engineering couldn't complete their plans without the 12 actual plans from DCTA to know where the placement of bridge piers would be located. This item will 13 be an action item at the next Park Board meeting. 14 15 PARKS PROJECT STATUS REPORT 16 The Parks Department is looking at requesting some of the proposed "Stimulus Package" for energy 17 efficiency programs, such as lighting. We are putting together our package with projects we would like 18 funded by that program. The delay to some current projects would be minimal, no more than 60 days, 19 because the government is trying to get projects started in 90 to 180 days. Cindy Deckard is coordinating 20 this for the Parks Department. All projects have to be approved by the City Manager's office. 21 22 Briercliff Park Design and Development Project -The water lines are being reviewed. 23 24 Comprehensive Parks and Recreation Master Plan Update -The final copy of the Master Plan will 25 go to City Council for adoption on March 3, 2009. 26 27 Denia Park Trail Project -This project doesn't qualify for the "Stimulus Package". 28 29 Evers 3, 4, 5 & 6 & North Lakes 5 ~ 6 Improvements -Evers fields are "playable" and the crew has 3 0 moved to North Lakes to make them "playable". Other improvements will follow. 31 32 Senior Center Renovation and Expansion Project -The contractor has received the "Notice to Proceed" 3 3 and should start on the proj ect this week. 34 35 Unicorn Lake Trail and Landscape Project -This project is moving forward. 36 3 7 KEEP DENTON BEA UTIFUL UPDATE 3 8 KDB is now fully staffed with the addition of Menthe Schmidt from the Water Department. Great 3 9 American Cleanup is on Saturday, March 7tn 40 41 PUBLICART COMMITTEE MEETING MINUTES 42 Two months of meeting minutes were included in this packet. In the February 12, 2009, meeting a possible 43 donation of a calendar with a picture President Obama from Nairobi, Kenya, was discussed and will be 44 voted on a their next meeting, which will then come to the Park Board for their recommendation. 45 46 ITEMS FOR UPCOMING MEETINGS: 47 The wording in this area will remain on the agenda as, in conjunction with Section 551.042 of the Texas 48 Open Meetings Act, items not on the agenda will not be deliberated or a decision made about the subject at 49 that time. It will be placed on the agenda for discussion at a future date. 50 51 With no further business on the agenda, Jo asked for a motion to adjourn; Reggie made the motion to 52 adjourn, Dale seconded the motion and the meeting was adj ourned at 6:28 p.m. DRAFT Public Art Committee Minutes February 12, 2009 Civic Center Conference Room Members present: Jo Williams, Carol Phillips, Robyn Lee, Betty Roy, Joy Siegmund, Carol Collins, Cheryl Key and Jack Davis. Members absent: Billie Mohair and Margaret Chalfant. Staff present: Janie McLeod. Chair Person Jo Williams called the meeting to order at 4:05 p.m. APPROVAL OF MINUTES OF JANUARY 8, 2009. Carol Collins made a motion to approve the January 8th minutes as distributed. Betty Roy seconded the motion and it was approved with a vote of 8-0. ACTION ITEMS Selection of Location and Medium for 2009-2010 Art Project. Robyn said the sub-committee recommends South Lakes Park as the location and a kinetic sculpture that could have something to do with sound. Action: Carol Phillips made a motion to accept the recommendation for South Lakes Park to be the 2009-2010 location and that a kinetic sculpture be commissioned that could include interactions involving sound. Joy Siegmund seconded the motion and it was approved by a vote of 8-0. Request for Art to Be Loaned to a Museum. Janie said that the City has been requested to loan the water color painting, Spring Dusk, to the Pearl Fincher Museum of Fine Arts, in Spring, Texas. The water color painting currently hangs in the City Hall Work Session Room and was painted by Rob Erdles who is now deceased. His widow, Millie Giles, has requested the art work be loaned to the newly constructed library building where the Pearl Fincher Museum is located. The painting would be on loan to the Museum from April through August. Action: Jack Davis made a motion to approve the request to loan the Spring Dusk color painting to the Pearl Fincher Museum of Fine Arts with the condition that the museum covers all expenses associated with the transportation, packing and insurance of the art piece. He added that the City would need to have the piece appraised and would be responsible for the expenses of the appraisal. Joy seconded the motion and it passed by a vote of 8-0. The committee agreed to accept Ms. Giles offer to loan some of Mr. Erdles painting as temporary art and will be hung in place of the Spring Dusk while on display a the Museum. Jack Davis recommended that an appraisal be done on all of the City's public art. DISCUSSION ITEMS Public Art Donation to the MLK Recreation Center by James Smith. Janie reported that James Smith, with the Robson Ranch Democrat Club, has offered to donate, for permanent display, a framed poster of a calendar featuring a picture of President Obama. The poster was distributed in a newspaper was received by Mr. Smith as a gift from a traveler to Nairobi, Kenya. Discussions were held and the Committee decided that they appreciated the offer of the newspaper calendar and decided it is not considered public art. The Committee will take action on the request at the March meeting and then will make a recommendation to the Parks, Recreation and Beautification Board on the proposed donation. Calendar of Projects Report. Janie reviewed the calendar of proj ects and there were no questions. Items for Upcoming 1Vleetings. 1. Janie said she had been contacted by an artist requesting to paint a mural on city property on areas such as drainage culverts. She asked if the Committee would like to consider this request at their next meeting. The Committee said that the commissioned works have been selected for 2009 and 2010. The Committee said they will take under advisement and if they decide on a mural for the culvert, the artist is welcomed to submit his proposal. 2. Action Item -Public Art Donation to the MLK Recreation Center by James Smith. There being no further business, the meeting was adjourned at 4:57 p.m. 2/12/09 Dear Ms. McLeod, My name is Rosemary Hickman and I am the person organizing the exhibition of Rob Erdle's work at the Pearl Fincher Museum of Fine Arts in Spring, TX. We are hoping to borrow the watercolor, Spring Dusk, from the City of Denton. It is a very important piece for the exhibition and would be the only watercolor representing the Denton area that the artist called home. The theme of the exhibition is travel with a special focus on Mr. Erdle's waterscapes. We think it is necessary also to show the waterscapes that Mr. Erdle's painted around his own area as well as during his travels. The painting is also important because it is the only painting of which footage exists of it being painted. From a pedagogical standpoint, it would definitely be a more meaningful experience for our visitors to see the film of Mr. Erdle painting and then the final product. The Pearl Fincher Museum of Fine Arts is a new museum housed in a fully renovated Harris County building, in partnership with the Museum of Fine Arts, Houston. We have astate-of the- artclimate control system which maintains a constant temperature and humidity level in the gallery. If the City of Denton agreed to lend the painting, it would only be handled by our staff and professional art movers who have prior experience of moving Mr. Erdle's work. We also have a full security array with cameras, glass breakage sensors, door sensors, and motion detectors. Please let me know if I can provide any additional information that would aid you in making this decision. Thanks for your consideration. Sincerely, Rosemary Hickman Rosemary Hickman Education Director Pearl Fincher Museum of Fine Arts 6815 Cypresswood Drive Spring, TX 773 79 281-376-6322 281-376-2944 fax www.pearlmfa.or~ ro semary(a~,pearlmfa. orb This page left blank intentionally. AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 Questions concerning this acquisition may be directed DEPARTMENT: Materials Management to Mike Ellis 349-8424 ACM: Jon Fortune SUBJECT Consider adoption of an ordinance authorizing the City Manager to execute change order number one to a contract for the rebuilding of a D7 Caterpillar Landfill dozer between the City of Denton and Holt Cat.; providing for the expenditure of funds therefor; and providing an effective date (File 4221-Repair of D7 Caterpillar Landfill dozer in the amount of $92,705.82 and Change Order Number One for the rebuilding of the transmission of the dozer in the amount of $32,859 for a total award of $125,565). The Public Utilities Board recommends approval (7-0). FILE INFORMATION A D7 Caterpillar dozer was purchased for the Solid Waste Department in May 2003 at a cost of $515,043. This unit (SW0324) has seen continuous service at the Landfill and has accumulated approximately 9,250 hours of run time. Although preventative maintenance schedules have been adhered to, extensive repairs to the undercarriage, final drive system and engine are currently require . Holt Cat submitted an estimate in the amount of $92,705.82 for replacement of worn undercarriage parts, rebearing and resealing of final drive components and as a preventative measure, a level II engine overhaul and this was approved by City Council on December 9, 2008. However, additional repairs for this piece of equipment have been identified and include the replacement of a turbo charger and rebuilding of the final drive and transmission for the amount of $32,859. With this revision, the total of repairs to this unit would be $125,565. The replacement costs for this piece of equipment are greater than $600,000 and it is still advantageous for the City of Denton to repair this piece of equipment. PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS) The Public Utilities Board approved this item at its February 23, 2009 meeting. RECOMMENDATION Approve Change Order One to Holt Cat for the repair of SW0324 in the amount of $32,859. Agenda Information Sheet March 3, 2009 Page 2 PRINCIPAL PLACE OF BUSINESS Holt Cat Irving, TX ESTIMATED SCHEDULE OF PROJECT Upon issuance of purchase order, repair of the dozer should be completed within 90 days. FISCAL INFORMATION This item (SW0324) will be funded from account 660300.7844. Requisition 90973 has been entered in the Purchasing software system. 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J ORDINANCE N0. AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE CHANGE ORDER N UMBER ONE TO A CONTRACT FOR THE REBUILDING OF A D7 CATERPILLAR LANDFILL DOZER BETWEEN THE CITY OF DENTON AND HOLT CAT.; PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE (FILE 4221-REPAIR OF D7 CATERPILLAR LANDFILL DOZER IN THE AMOUNT OF $92,705.82 AND CHANGE ORDER NUMBER ONE FOR THE REBUILDING OF THE TRANSMIS SIGN OF THE DOZER IN THE AMOUNT OF $32,859 FOR A TOTAL AWARD OF $125,565). HEREAS, on December 9, 2009 byOrdinance No.2009-314, the City approved the expenditure of funds to Holt Cat in the amount of $92,705.82 for the repair of a Caterpillar Model D7T Dozer for the City landfill; HEREAS, the Staff having recommended, and the City Manager having recommended to the Council that a change order be authorized to amend such expenditure with respect to the scope of work and an increase in the payment amount, and said change order fees under the proposed contract are fair and reasonable and are consistent with and not higher than the recommended practices and fees published by the professional associations applicable to the Provider's profession and such fees do not exceed the maximum provided by law; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The Change Order Number One, increasing the amount of the contract between the City and Holt Cat, which is on file in the office of the Purchasing Agent, in the amount of Thirty Two Thousand Eight Hundred Fifty Nine and 0/100 ($32,859) Dollars, is hereby approved and the expenditure of funds therefor is hereby authorized in accordance with said change order. The total purchase order amount increases to $125,565. SECTION 2. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2009. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY 5 BY: 3-ORD-File 4221 DRAFT MINUTES PUBLIC UTILITIES BOARD February 23, 2009 After determining that a quorum of the Public Utilities Board of the City of Denton, Texas was present, the Chair of the Public Utilities Board thereafter convened into a Closed Meeting on Monday, February 23, 2009 at 9:00 a.m. in the Service Center Training Room, City of Denton Service Center, 901-A Texas Street, Denton, Texas. Present: Chair Charldean Newell, Dick Smith, Bill Cheek, Phil Gallivan, John Baines, Randy Robinson and Bill Grubbs Ex Officio Members: George C. Campbell, City Manager Howard Martin, ACM Utilities OPEN MEETING: CONSENT AGENDA: The Public Utilities Board has received background information, staff's recommendations, and has had an opportunity to raise questions regarding these items prior to consideration. 11) Consider recommending adoption of an Ordinance authorizing the City Manager to execute change order number one to a contract for the rebuilding of a D7 Caterpillar Landfill dozer between the City of Denton and Holt Cat.' Providing for the expenditure of funds therefor; and providing an effective date (File 4221-change Order Number One for the rebuilding of the transmission of a City of Denton Landfill dozer in the amount of $32,859 for a total aggregated contract price of $125,565). Board Member John Baines moved to approve with a second from Board Member Randy Robinson. The motion was approved by a 7-0 vote. The meeting was adjourned by consensus at 11:25 a.m. This page left blank intentionally. AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 Questions concerning this acquisition may be directed DEPARTMENT: Materials Management to Phil Williams 349-8487 ACM: Jon Fortune SUBJECT Consider adoption of an ordinance of the City of Denton, Texas authorizing the City Manager to execute a professional services agreement for electric design and engineering services pertaining to the Jim Christal Substation and other engineering and related consulting services for CIP projects for Denton Municipal Electric with Ampirical Solutions, L.L.C. (in an amount not-to- exceed $188,032); authorizing the expenditure of funds therefor; and providing an effective date. The Public Utilities Board recommends approval (7-0). FILE INFORMATION This agreement is for Ampirical Solutions, L.L.C. to design a protective relay and control system for the reconstruction of the Jim Christal Substation. The agreement will also provide for additional engineering and consulting services including a concept plan for the reconstruction of the Pockrus Substation and the addressing of technical questions relating to relay settings. A more complete description of the projects associated with this agreement is included in the attached Public Utilities Board Agenda Information Sheet (Exhibit 1). PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS) The Public Utilities Board approved this item at its February 23, 2009 meeting. RECOMMENDATION Approve a professional services agreement with Ampirical Solutions, L.L.C. in an amount not to exceed $188,032. PRINCIPAL PLACE OF BUSINESS Ampirical Solutions, L.L.C. Covington, LA ESTIMATED SCHEDULE OF PROJECT Project designs will commence upon Council approval and will take approximately six months to complete. Agenda Information Sheet March 3, 2009 Page 2 FISCAL INFORMATION The charges for work performed under this contract will be funded from account 602489491.1360.9230. Requisition# 92098 has been entered in the Purchasing software system. EXHIBITS Exhibit 1: Public Utilities Board Agenda Information Sheet With Out Exhibits Respectfully submitted: . 1 Tom Shaw, C.P.M., 349-7100 Purchasing Agent 1-AIS-File 4264 Exhibit 1 PUBLIC UTILITIES BOARD AGENDA ITEM #12 AGENDA INFORMATION SHEET AGENDA DATE: February 23, 2009 DEPARTMENT: Utilities UTILITIES ACM: Howard Martin, 349-8232 SUBJECT: Consider recommendation of approval of a professional services agreement with Ampirical Solutions, LLC., an engineering firm located in Covington, Louisiana, for protective relay and control design for the Jim Christal Substation and for other engineering and related consulting services for CIP projects for Denton Municipal Electric in an amount not to exceed $188,032.. BACKGROUND: Denton Municipal Electric (DME) is undertaking a project to completely reconstruct the 138kV section of the Jim Christal Substation. The proj ect's purpose is to restructure the station to add five 13 8kV circuit breakers. This will change the station 13 8kV configuration from a tap off of the to an in-an-out arrangement whereby the Denton West to Denton North 138kV transmission line is converted into two lines, one from Denton West to Jim Christal and one from Jim Christal to Denton North. This change improves performance by allowing faults to the north or south of Jim Christal to trip only the portion of the line where the fault is located rather than the entire ine. A protective relay and control system is required to make the station reconstruction functional. DME does not have the manpower to complete the design for the relay and control system and proposes retaining the services of Ampirical Solutions, LLC (Ampirical) to produce the design for this project. The Jim Christal project was approved as a part of the 2008-2009 Budget and CIP. The station structural design is 95% complete. Circuit breakers, instrument transformers, and switches have all been purchased. Remaining items to be purchased are bus and miscellaneous station material, relay and control panels and devices, substation steel, and the construction contract. The relay system design must be completed before the relay and control panels and devices can be purchased. DME also proposes to include an amount of $30,000 in the professional services contract for other engineering and consulting services. This amount will be used to have Ampirical develop a concept plan for reconstruction the 13 8kV section of the Pockrus Substation and to provide a small reserve to address technical questions that may arise from time to time such as needing assistance with relay settings. DME has used Ampirical for the design of a portion of the relaying for North Lakes Substation. Performance was excellent, and the project was completed within a reasonable time frame. Texas Municipal Power Agency (TMPA) is planning to use Ampirical for design of the terminals in Denton West and Denton North. These are the opposite ends of the transmission lines that serve the Jim Christal Substation. Having the same company to work on the relaying for all three stations is a definite advantage and cost savings for both DME and TMPA. AIS -PUB Agenda Item #12 February 23, 2009 Page 2 of 2 OPTIONS: 1. Recommend approval 2. Not recommend approval RECOMMENDATION: DME recommends approval of the proposed contract with Ampirical Engineers, Inc. ESTIMATED SCHEDULE: Project designs will commence immediately upon approval by the City Council and will take approximately six months. PRIOR ACTION/REVIEW (Council, Boards, Commissions): None FISCAL INFORMATION: The charges for work under this contract will not exceed $188,032 and will be funded out of amounts budgeted for specific projects. BID INFORMATION: The State of Texas does not allow bidding for professional services. DATE SCHEDULED FOR COUNCIL APPROVAL: March 3, 2009 EXHIBITS: 1. Proposed Professional Services Agreement 2. Jim Christal Site Plan 3. Panel Layout Drawings Respectfully submitted, Phil Williams General Manger of Electric Utilities Denton Municipal Electric Prepared by: Chuck Sears Engineering Division Manager Denton Municipal Electric ORDINANCE N0.2009- AN ORDINANCE OF THE CITY OF DENTON, TEXAS AUTHORIZING THE CITY MANAGER TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT FOR ELECTRIC DESIGN AND ENGINEERING SERVICES PERTAINING TO THE JIM CHRISTAL SUBSTATION AND OTHER ENGINEERING AND RELATED CONSULTING SERVICES FOR CIP PROJECTS FOR DENTON MUNICIPAL ELECTRIC WITH AMPIRICAL SOLUTIONS, LLC. (IN AN AMOUNT NOT-TO-EXCEED $188,032); AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City Council deems it necessary and appropriate and in the public interest to engage the engineering firm of Ampirical Solutions, Inc., LLC., a Louisiana Limited Liability Corporation ("Ampirical"), to provide the City with professional electric design and engineering services pertaining to Ampirical's work in support of the city's capital improvement plan on approved electrical power system construction projects and for its design and engineering work on the Jim Christal Substation for Denton Municipal Electric; and WHEREAS, the City staff has reported to the City Council that there is a substantial need for the hereinabove described professional services by Denton Municipal Electric, and that limited City staff cannot adequately perform the specialized engineering and other services and tasks, with its own personnel; and WHEREAS, Chapter 2254 of the Texas Government Code, known as the "Professional Services Procurement Act," generally provides that a city may not select a provider of professional services on the basis of competitive bids, but must select the provider of professional services on the basis of demonstrated competence, knowledge, and qualifications, and for a fair and reasonable price; and the City Council hereby finds and concludes that Ampirical is appropriately qualified under the provisions of the law, to be retained as an engineering firm for the City and for Denton Municipal Electric, respecting this engagement; and WHEREAS, the City Council has provided in the City budget for the appropriation of funds to be used for the procurement of the foregoing professional services, as set forth in the "Professional Services Agreement for Electric Design and Engineering Services Pertaining to the Jim Christal Substation Project for Denton Municipal Electric";NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The recitations contained in the preamble hereto are true and correct and are incorporated herewith as a part of this Ordinance. SECTION 2: The City Manager is hereby authorized to execute a "Professional Services Agreement for Electric Design and Engineering Services pertaining to the Jim Christal Substation Project for Denton Municipal Electric" (the "Agreement") with the engineering firm of Ampirical Solutions, LLC, a Louisiana Limited Liability Corporation, for professional design and engineering services pertaining to the interests of the City and of its electric department, DME, as hereinabove described, in substantially the form of the Agreement which is attached hereto as Exhibit "A" and incorporated herewith by reference. I SECTION 3: The award of this Agreement is on the basis of the demonstrated competence and qualifications of the firm of Ampirical, and the ability of Ampirical, to perform the professional design and engineering and related services needed by the City for a fair and reasona e price. SECTION 4: The expenditure of funds as provided for in the attached Agreement is hereby authorized. SECTION 5: This ordinance shall become effective upon its passage and approval. PASSED AND APPROVED this the day of , 2009. MARK BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY By: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY By: G Exhibit A T1~T TEx1~ ~~T~ t]TD ~ P~~"~~~L ERE A~EIV~NT L~T~ I~ETG~I ADD N~IIV~I~I~1I I~~~vII~a ~TTIN T~ T~ JINI T~RTTAI1 ~JBT~I~ ANA] ~~R EII~EF~T Al~~ ILTED ~~LT~ EIRE ~I~ ATP PT ~~It I)EI~T~ N.ITTNI~AL ~~T~ TAI A~~T is wade and entered into as of ti~a of ? aa9, by and betv~een the City of Denton, Texas3 a Texas 1Vlunicipal arparatian, v~ith its pri~acipal offices at ? t5 fast 1Vlcir~ne treet~ Denton, Texas 7~?~ 1 ~l~ereinaf~er "~~77~ and Arnpirical alutians~ L.L.Q., a Limited Libi~~t arparatian~ ~ritl~ its apices at Diver Highland ~aulevard, avingtan~ Louisiana ?a433 ~hereina~er "~~~TA~1T~'~; the parties acing herein, b and thraugl~ ti~ir dull-authorised officers and representatives. ~vITN~TH, that in cansideratiori afthe covenants and agreements herein contained, the parties hereto da rnutua.ll~ as follows: ARTtL~ t E~A~IIr~NT ~F ~1~RYN This Agreement is far the purpose of retaining the engineers and support persormel of Ampiricat Solutions, L.L.Q. to perform professional design and electric engineering services for the pity of Denton, Texas. ~~SLILTAI~T hereby agrees to perfari the services herein in connection iti~ the Project as stated ire file articles to follow, with diligence and in accordance with the professional standards cutomarii~ obtained far such services in the State of Texas. The prafessiarial services set fords herein are connec~on with ~e follong: Professional electrical engineering and design services regarding floe fallaing matters: The ~inl i~ristal Substation and far other engineering and related consulting services for CAP prod ects ~l~ereinafter the "Proj ect'~} 1~RTIL~ ~ ~P~ ~F vI The ~1~ULTANT shall perform the following services in a professional manner: To perform all those services and tasl~s a set forth in ~~1L~LTA1T'S written papas issued an F`ebruax~r 1 ? which is appended to the letter dated Pebrua-r~ ~ ZD~~ issr~ed b~ attl~ov~ aaol~, president of Arripirical alutians~ LLB to Chuc1~ dears, engineering Adminis~ator~ Denton ~c~p electric a department of ~~ER, i~~h letter and proposal are attached hereto and incorporated hereth b~ reference as Exhibit "A " B. If there is and can~ict het~reen tl~e terms of this Agreement and axe exhibits attached to this greernent~ tl~e specific terms and conditions of the proposal shall con~ol over the general i terms and candi~ons of Agreement, ARTIL III PEI~D ~F ~~IE This Agreement shall became effective upan execution by die ~wNER and tlxe G~JLTAT and upon the issuance ~ n~~ce to proceed by the and shall remain in farce far e period that nay reasonably be required for e can~pletian of die Project, and any required extensions approved by the DwER; or until the monetary cansidera~on expressed 1lerein is wholly exhausted, whiche~rer e~rent shall I*irst occur, This Agreement maybe sooner terminated in accordance with the provisions hereof. Tune is of the essence in tl~s Agreement. The ILTAT shall m~1~e all reasonable efforts to can~ploto the services set forth herein as expediently as passible and to meet the schedules established by the ~wN~R, acting tl~raugh its General IVTanager of D~ ar tl~e engineering Adinis~atar of DMA, - TILE I ~IVIPITII ~PNATIGi~1 Tom: "Direct Non-Labor pence" is defined as that expense, based upan actual cast, far any expense reasonably incurred by tl~e ~N~ULTANT in tl~e performance of this Agreement and other incidental reasonable expenses incurred in connection with the Pray ect. Provided however, any reasonable sub~consultant billings reasonably incurred by GI~I~LTA.T in connection with the Project shall be inaiced to at their cost plus up to an additional ~if~een ~ ~ J °~o~ percentr B. BILLn~G AND PAYIVI~NT: p'ar and inconsideration of tl~e professional services and related expenses to be performed by the 1L~LTAT herein, tt~e agrees to pay GLTAT based upan the rates set ~for~h ambit which is attached hereto and incorporated by refer~n~e herewith; a total fee, not to exceed 1 ~ 5,~3?. . Partial payments to tl~e ~I~I.ILTT will be made an tho basis of detailed monthly statements rendered to ar~d appr~~red by the ~wNE~ through its General Manager of DIVI~ or her designees; however under na circumstances shall any rrzonthly statement far services exceed the value of the word performed at the time a statement i rendered The ~wNE may witl~iald dive ~5°l0~ percent of the can~act amount until satisfactory can~pletian of the Pray ect. lathing contained in this Article shall require the ~wNE~ to pay far any worl~ which is unsatisfactory as reasonably determined by the General IVlanager of DME, andlar the ngineeriug Ad~nir~istrator, or which is not submitted to the ~wE in compliance with the terms of this Agreement. The ~wlR shall not be required to rr~al~e any payments to the NL~LTAIT when the G1LTAT is in default under t1~is Agreement, ~t is specifically understood and agreed that the ~~U~T~T shall not be authari~ed to undertal~e any arl~ pursuant to this Agreement loch auid require additional payanents b~ the ~v~R for any charge, expense or reimbursement above the ~naimuan not to exceed fee as stated hereinabove. ~A~T the fans to n~al~e payments due e ~I~~TAI~T for services and expenses ~rithin thirty ~~a~ days after receipt of the ~~~~JLrTAI~T'~ undisputed statement thereof, the arriounts due the ~NT~T mill be increased by tl~e rate of one percent ~~~Io} per month from the said thir~eth nth} days and in addition ~e O~~JLTAT may, after giving ten ~ 1 days' written notice to the suspend services under this Agreement until the ~ULTA has been paid in for ail amounts then due and owing, and eat disputed by for services, expenses and charges. ~'ravided, hoe~er, nothing herein shall require the to pay tl~e late charge of one percent ~l °l~} per month as set far~l~ herein, if tl~e ~ reasonably detennines within been X15} days subsequent to the receipt of a billing invoice of ~NU~TT, with such notice prodded to ~ONLTA~IT v~ithin that tine period, that the ~rarl~ is unsatisfactory, in accordance with Article of this Agreement. I~'II~ ~B~RVT~~N ADD REV~~v ~F TIDE ~R The ~~N~ULTANT ~dl exercise reasonable care and due diligence in discaver~ng and promptly reporting to the any defects or deficiencies in the orl~ of the ~LT1~NT ar any of its subcontractors or subconsultants. ARTICLE ~v~NERI~' ~F D~L~NT ill doe~ents prepared or furnished by the ~NULTA~T hand ~~~TA~1T's subcontractors ar subcansultants pursuant to this Agreement are instruments of service and shall become the proper of the upQn the tern~nation of this Agreement, The ~NULTA~T is entitled to retain copies of all such documents. The documents prepared and furnished by the ~~L~LTI~NT axe intended only to be applicable to this project and ~N.' use of these documents in other projects shall be at C~~ER' sole risk and. expense. In the event the DAR uses the Agreement in another p~•oject ar for other purposes than specified herein any of the information or materials developed pursuant to this agreen~ent~ ~I~L]LT1~NT is released franc any and alI 11ab11ity relating to their use m that project. A~.T`IL EPF~I~EI~T ~~I~TRA~T~R ~~NULTANT sha11 provide services to as an independent contractor, not as an employee ofi the ~1tTAT shall not ha.~re or clam any right arising from en~playee states, ARTICLE vIII I~~ITY A~~~T The ~NIJLTAT shall indenify and save and hold harmless the ~~R. and its officials, o~.cers, agents, attorneys ar~d employees from and against any and all liability, claims, demands, damages, lasses and expenses, including but not limited to court costs aid reasonable attorney fees incurred ~ t1~e ~~Vl~ER, and including trout lii~~iitatioi~ darriages far bodily and personal injury death and property danaagex resulting from the negligent acts or omissions of the ~ULTA~iT or its oicers~ shareholders, agents, attorneys and employees in the eecutian, operation, or performance ai~ this Agreement. l~othing in this Agreement shall be constraed to create a liability to any person mho is not a pY to this Agreement and nothing herein shall waive ar~y of the part's defenses, both at lam or equity, to y claim, cause of action or litigation filed by anyone not a party to this Agreement, ~ncludi~g tl~e defense of governmental in~nunity, Mich defenses are hereby expressly reserved. ARTI~L~ LJRA During the perfarn~ance of the services under this Agreements ~~NLTAT shall maintain e follo~ring insurance with an insurance company licensed to da business in the state of Teas b the Mate lnsurarice ornrrzission or any successor agency, that has a rating Frith . Best date farriers of at least an "A~'? or above: oinprehensive general Liability Insurance v~ith bodily injury limits of not less than for each occurrence and not less than ~00,00~ in the aggregate, and with property damage limits of not less than l 0,000 far each occurrence and not less than l ~~,ooo in the aggregate. B. Automobile Liability Insurance Frith bodily jury lets of not less than for each person and not Tess than for each accident and with property damage limits for not less than loo,ooo for each accident, . orl~er's arripensation Insurance ~ applicable} in accordance with statutory requirements and rnployer's Liabillt~ Insurance t171irr~its of not less than 1 Do,ooo far each accident, D. Professional Liability Insurance with limits ofnot less than 00,00 annual aggregate. DN~CJLTANT shall garnish insurance certificates or insurance policies at the D~Ul~~'s request to evidence such coverage to the extent that is possible. ~therise ~~]LTANT shall furnish to itl~in been ~1~ days of tl~e date of approval of is Agreement, cer~~cates of ~surarice evidencing the required coverage. The i~suxance policies shall name file ~~R as an additional insured on all such policies to the extent legally possible save and except the coverage described ubpa~agraph . and D, of this Ar~.cle~~ and shall contain a provision that such insurance sha11 not be cancelled or modified ithout thin ~3 days prior written notice to and ~ULTAl~T. In such event, the ~~LTAT shall, prior to ~~e effective date of the change ar cancellation of coverage, deliver copies of any such subs~tute policies furnishing at least the carne policy limits and coverage to ~~R. A~TTL~ ARBITRATT~1~ AND ALTERNATE I~II'UTE ~LUTI~ The parties may agree to settle any disputes under this Agreement ~y submitting the dispute t0 ~Tbi~~tlan ar other mean of alternate dispute resolution such mediation. ~ arbttrat~on or alternate dispute resolution arming out of ar relating to, this Agraernent involving one party disagreement may include the other party to the disagreement vv~tllout the otherr approval, ARTICLE T~ATT ART ~at~thstanding any abler provision of this Agreen~cnt~ either park may terminate tl~s Agreement by providing ~-~~D~ days advance v~ritten na~ce to the other B. This Agreement may be terminated in v~hole or in part the event of either party substantially failing to fulfill its obligations under this Agreement. Flo such termination mill be effected unless the other park is given ~ 1 ~ written na~ce delivered by cer~ied mail, return receipt requested of intent to terrninate and setting fortih the reasons spearing the nanpearmanae ar other reasan~s}, and not less than ~3 calendar days to cure the failure and an opportunity for cansultatlon with the ter~ninatrng party pr~ar to terminatlan. I~` the Agreement is tenni~aated prior to carnple~an of the services to be provided hereunder, ~NL~LTANT shall immediately aerie all services and shall render final bill far services to tlae v~itlaan ~ ~3a~ days after tl~e date of terna.intian. The ~~R shall pay ~~NULTANT for all services properly rendered and satisfactorily perfarn~ed~ and for reimbursable expenses prior fia notice of termination being receivad by C~I~I~LTAI~T, in accordance nth Article I of tl Agreement. should the subsequently contract nth a new consultant far the cantlnnuatlon of services on the ~ro~ ect, ~l~I~LTAI~T shall cooperate in providing infoi~rnation to the and tt~e new consultant. The TAT shall tum over alI documents prepared or u~.isl~ed by ~I~ULTANT puru~.nt to this Agreement to the ~~R on or before the date o terrninatian but nay maintain copies of such documents for its files. ~NULTAIVT agrees that it shall also fully can~ply v~ith any and all mitten requests reaeived from the thraugl~ its T~irector of valid aster to maintain confidentiality respecting certarn designated records, daaun~ents~ and other written materials related to the ~rajeat, which the reasonably deterlniT~e is campe~tively sensitive, and would lil~ely cause damage to the ~~R i disclosed to the public ar to any other persona park, Qr entity, ARTILY I REP~l~IBILITY FAR CI~AIlI~I ~ LIAEILITIE Approval of the orl~ by the ~~R shall not cons~tute nor be deemed a release of the responlbillty and Ilab~l~ty of ~I~fTLTANT, its af~icers3 einplayees, agents5 subcon~actors, and sub-consultants far the accuracy and carnpetency of their ~varl~ performed pursuant to this Agrecrnent; nor shall such approval ~ the ~~R he deemed as an assun~.ptian al~ suah raspansihilit~ the ~~ER ~`or and de~act in ~ design ar agar arl~ ~rapared the ~ITAT, its aicers, en~pla~ees, agents, suhcantractors, and sub-consultants. ARTIL DTI All notices, cammunica~ons, and repar~s required or pern~tted under this Agreement shall be persanall~ delivered ar mailed to die respective parties b depositing see in the United states mail at the addresses shown hela, by means of U. . ll~ail, postage prepaid, certed ~nai.l, return receipt requested, unless atherse specified herein. Ta CD1~ULTANT; Ta ~~TER: Apirical alutions, pity oDenton, 'leas ~~l River highlands Boulevard its Manager ovington~ Louisiana 7a433 Denton i I~ah Telephana: X98} ~~-~?4 ? 15 Bast McRinrte~ treat Denton, Teas 7~?~~ Telephone. ~~4a} 3~9-847 and pity of Denton, Teas Engineering Admini.s~ator Denton Municipal Electric 1 ~ spencer Road Denton, Teas 7~? a Telephone: ~94a~ 497111 All naticas under this Agreement shall be e'active upon their actual recaipt tha park to ~rhon~ such native is given. ARTI~~ ~ El~T1R ~~NT This Agreement, cnnsis~ng o~ nine pages and ono ~1~ e~l~.ibit, constitutes a completa and final expression o~ the Agreement of the patties and is intended as a complete and exclusive statement a~ the terms of tl~air agreeinent~ end supersedes all prior cantemparaneor~ oer~ pramisas, rapresenttions, negotiations, discussions, communications understandings, and agreatnents Mich mad have been made in connection with the suhj ect mater a~ this Agreement. ARTIL~ ~ BBRABI~,IT~ ~ and provision ol`tl~is Agreement is found or deemed by a caur~ o competent ~urisdictian to be invalid or unen~arceable, it shall ba car~sidered severable ~rarn the remainder a this Agreement and shall not cause the remainder to he invalid ar unenforceable. ~ such event, the parties shall reform this Agreement, to the extent reasonably possible, to replace such stricken provision with a valid and enforceable provision which comes as close as possible to expressing the original intentions of the parties respecting any such stricken provision. ARTICLE XVI COMPLIANCE WITH LAWS The CONSULTANT shall comply with all federal, state, local laws, rules, regulations, and ordinances applicable to the work performed by CONSULTANT hereunder, as they may now read or as they may hereafter be amended. ARTICLE XVII DISCRIMINATION PROHIBITED In performing the services required hereunder, the CONSULTANT shall not discriminate against any person on the basis of race, color, religion, sex, national origin or ancestry, age, or physical handicap. ARTICLE XVIII PERSONNEL A. The CONSULTANT represents that it has or will secure at its own expense all personnel required to perform all the services required under this Agreement. Such personnel shall not be employees or officers of, nor have any contractual relations with the OWNER. CONSULTANT shall inform the OWNER of any conflict of interest or potential conflict of interest that may arise during the term of this Agreement. B. All services required hereunder will be performed by the CONSULTANT or under its direct supervision. All personnel engaged in performing the work provided for in this Agreement, shall be qualified, and shall be authorized and permitted under state and local laws to perform such services. ARTICLE XIX ASSIGNABILITY The CONSULTANT shall not assign any interest in this Agreement and shall not transfer any interest in this Agreement (whether by assignment, novation or otherwise) without the prior written consent of the OWNER. CONSULTANT shall promptly notify OWNER, in writing, of any change of its name as well as of any material change in its corporate structure, its location, and/or its operations. 7 AF~T~LE IVIQDIFIATID Ida waiver ar rnodi~icat~ar~ of this Agreement or a~ and covenant, condi~on, li~it~tian herein contained shall be valid unless in writing and duly executed ~ the party to be charged therewith. 1~a evidence of ar~y waiver or rriadi~ica~ion shall be afered or received in evidence in an~r proceeding arising between the parties hereto o~zt of or a~`ecting this Agreement, or the rights or ~bliga~ons of the parties hereunder, unless such waiver or rnodi~icatian is in writing duly executed. The parties further agree that e provisions of this Article will nat be waived unless herein set forth. ATILT I CIS A, The following exhibit is attached to and nude a part of this Agreement: ~xl~ibit "A" ~NULTAl~T~ letter together with attached proposal to hucl~ dears, engineering Administrator, Denton Iunicipai electric dated February 1?~ B. The its shall have the right to audit and male copies of the boars, records and con~putatian pertaining to this Agreement. The ontractar shall retain such bao~, records, documents and atl~er evidence pertaining to this agreement during the contract period axed dive dears thereter, except if an audit is progress ar audit findings are yet unresolved, in which case records shall be Dept until all audit tasks axe completed and resolved. These boos, records, docmnents and other evidence shall be available, within ten 1 business days of written request. Further, the ontractar shall also require all ubcontractar, material suppliers, and other payees to retain all bQal~~ records, documents and other evidence pertaining to s agreements and to allow the 1t sinular access to those documents. All Baas and records will be made available within a fifty n~11e radius of the ~ of Denton; The cost of the audit will be borne by the pity unless the audit reveals an overpayment of ~ °I~ or greater. If an overpayment of i or greater occurs, the reasonable cost of the audit, including any travel casts, must be borne by the ompan which must be payable within ~i~ve ~5}business days of receipt of an ~nvalce. Failure to corrzpl~ with tl~e provisions of this section shall be a material breach of this contract and shall constitute, in tl7e ity~s sole discretio~a, grounds far termination thereof. ~ach of the terms "'baol~"r~ ~"r~Cprd"~~ r'documents"r and ""other evidence"~, used above, shall be construed to include drafts and electronic fles, even if such drafts ar electronic .les are subsequently used to generate ar prepare a final printed document. venue of y suit or cause of action under this Agreement shall lie exclusively in Denton bounty, Texas, This Agreement shall be governed by and construed accordance with the lags of the State of Texas. D. Far the purpose of this Agreement, tl~e ley persons who will sere as Prod ect IVlanager D respecting this engagement shall be il~e ulcer, principal and James agie, ~ra~ect tanager of ~1~LTA~T. however, natlaing herein shall hit ~I~ULTA~T from using ather qualified aid competent canultants and administrative support personnel o~ their Erna to perfar the services required herein. ~I~ULTAI~T shall commence, carry onx and corr~plete its word on the Pray ect with all applicable dispatch, and in a sound, ecanomical, efficient n~an.ner, and in accardance with the provisions hereof. In accarnplishing tlae ~ro~et~ ~ULTANT shah tale such steps as are a~pprapriate to ensure that the warp involved is praperly coardinated with related war berg carried an by the F. The ~w~R shall assist the ~~I~~JLTA~IT by placing at the ~~NLTATrs dispasa~ all available in~'ar.ation pertinent to the Pra~ect~ including previous reports, y other data reltxve to the Prod ect and arranging fir floe access to, and mare aIJ provisions for the ~~NULTANT to enter in ar upon pudic and private property as required for floe ~t~LTANT to perfarna pra~'essianal services wader this Agreement. . The captions of this Agreement are far infornaatianal purposes only and shad riot in any way affect floe substantive terms or candi~ons afthi Agreement, ~ wJT floe pity o~ Benton, Teas hay executed this Agreement in four ~4} anginal counterparts by and through its duly~authon~ed oicials~ and ~ULTAI~T has executed this greerent by and through its duly-authorised undersigned aver, an this floe day of ~ ? ~~9. ITS ~F ~T~N~ TEA A Teas N~unicipal arporation By; ~E~R~ AIFBLL, CITE TANA~~ ATTEST: wALTE~, CITY ~iTAR~ ~y. ApP~~ AS T~ LAL ABTA BUR~E ITS ATT~RN~~ i ~i "~NULTAT" ~~I~L LL]TI~N, L.L.Q. ~ ~~rte~ Lia~~~xt~ arpartian B: Y its 10 ~ ~ ~ Arrxpirical Solutions, LLB ~ u r nr S~ River Highlands Blvd. 1.L~ ovingtan, L 7088 Phone: X98} 809-~~4a Fax: ~98~} 809-~~~0 icJ~kh~~'ll~ as February ~ , g~9 Propel: ~lP~9-~~~ Mr. hunk Sear Denton Municipal Electric ~ ~9 Spencer Road Denton, TX ~5~05 Re: Substation belay Design ~ Substation Engineering Services Support Proposal Dear lUlr. Sears; Arr~pirical Solutions, LL is pleased to submit the ~ollo~rir~g proposal to Denton Municipal Electric. The scope o~ pork car~sists a~ supplying substation engineering uppark servicesx and the corr~plete relay design a~ ~8} Neu Relay Panels, vuhich consist a~ Line Panels, Trans~orrner Differential Panels, Auxiliary~Bus Differential Panels, omr~unication Panel, . and {~1 } Breaker antral Panel, empirical Solutions, L~ shall provide relay design engineering services for the interconnect ~viring fior the equiprr~ent breakers and transfarrners} to tho relay panels as outlined in this proposal. vVe look fior~vard to the opportunity of providing these services. Please revievu this proposal to see if all necessary items have been covered to your satisfaction. if you have any questions at all, please do not hesitate to calf meat ~98~} 8~g~~4a. Sincerely, l~latthe~r Saacks . ~ President Ampirical Solutions, LL AmpiricaI Soludons. LLC - 661 River Highland 81 vd - Covington, LA 7 0433 • phone 985.809.5240 .Fax 985.809.5250 . www.ampiricaLcom ~x~4~~hr~~~~ ~a~ Dn~~n l~~n~~pl ~Itri ~~a~rn ~ ~ ~ N n~~~ ~ Pry 1 ".R t}o Si ~rvo-a~r-0 F ~.~s ~e ;r ~ mil, ' v~.n ~ i `.m . A ~ ~ ~ The~informatian contained in this document is proprietary to Arnpirical solutions, LLB. It is pra~rided to the intended party far the purpose of can~reying engineering methad~ to complete the design of the subject project, lyeither this document of the information contained f~erein may be duplicated andlor cant~eyed in ar~y manner to any person other than the originally intended individuals} without written permission frarn Ampirical alutions~ LLC. i`A~tachmen~ ~ ~ ~ ~ Denton Municipal Electric ~ropol: A~IP~9-~ ~~R~ EI~~JET ~I~~R1vlEw This proposal covers providing Engineering support Bervices, and the relay design of New Relay Panels, which consist of Line Panels, ~~}Transformer Differentia! Panelsr Au~ciliarylBus Differential Panels, orr~munication Panel, and Breaker control Panel. Arr7pirical Bolutians~ LLB shall provide substation engineering services, and relay design engineering services far the interconnect wiring far the equipment breakers and transformers} to the relay panels located at the Denton Municipal Jim hristal substation located in Denton, Teas. This proposal encompasses a basis of design documentations design engineering, drawings, field equipment verification, and review equipment specifications, BSI DF PRDP~AL This proposal is based on Ampirical alutions, LL interpretation of the meeting held at the Denton Municipal Electric office with Il~r. shuck dears, dlr. Brent Heath, and Ids. Laura cheek to go aver the scope of services and electrical drawings on February ggg. DOPE ~F L~PPL~Y ~ ~VERV~Ew Engin~erin~: Pi~il Lacantro and Mark Stephens, P.E. will be assigned to this project and shall oversee the Basis of Design document, end all aspects of detailed design, which is outlined in the Scope of supply - Engineerin below. ~ocu~menta~ion: Three {}sets of signed and stamped drawings by a Licensed Teas Professional Engineer shall be supplied to customer once the design has been completed and approved along with one ~ DD with AutaAD forr~at files. V V ~E D~F ~~~~L~ r i.r~ V ~~E~~~1 Design engineering, drawings and specifications gill be furnished covering the fallowing with in the boundaries for scope stated in Project ~~verview above. Relay protection & control AlD schematics ~ belay protection & control ACIDS wiring diagrams Provide 3-line diagrams ~ Provide operational ~-dine and associated drawings Donnection Diagrams of all associated interface connections ~ Power ~ contro! cable schedules interconnection diagrams for circuit breakers and transformers ~ Cor~plete design of all panels interface cabling, ~ Provide design for ACII~C supply panels ~ Engineering Support services Denton Municipal Eie~tri~ r r ❑ ~ropasal: AN~~~9-~ 0~~ ~ ~ ~ ~ ~ P~~P~AL DLARIFID~TI~N general Design: The engineering services covered by this proposal are based on Ampirical Solutions, LLB understanding of the meeting held at the Denton Municipal Electric offce with Mr. Chuck Sears, Mr. Brent death, and Ids. Laura Dheek to go over the scope of services and electrical drawings an February 5, Ogg. The engineering of the project will include preparat'ran of a carnplete set of detailed drawings that will be provided to the customer for review and approval. Design drawings will be stamped by a Professional Engineer licensed in the state of Texas. Ampirical Solutions, LLC shall submit the issue for approval {IFA} drawings to Denton Municipal Electric far comments before submitting the ~r~al issue for construction {IFC}drawings. larifcations: ~ , ethers shall be responsible far performing the protective relay settings and coordination study. The Ampirical Solutions, LLC will forward to customer the completed set of drawings far review. Approval and~ar request far changes must be received in writing to Arr~pirical Solutions, LLC, within weeks to keep the project an schedule. ~f~~P~s~IL 1~~1DIIV TE~I~iS Ampirical Solutions, LLC shall perrorr~ the above scope of work on a Time & Material Basis in accordance with our attached ~aaB~~00~ Rate Sheet for the following Not-~to~Eceed cost of ~~8,Q3~.DD ~~ne Hundred Eighty Eight Thousand Thirty Two Dollars}. Line item breakdown of the cast shall be: 1. Relay design engineering services; ~58,~3~.~~ ~~ne Hundred Fi~#y Eight Thousand Thirty Tuuo Do~lar~. Supportive Substation Engineering services: $3~~0~~.~4 Thirty Thousand Doilar~ Price Basis: Pricing is based an the basis of prapasaC, scope of supply- o~rervie, scope of supply engineering, and proposal clarifications detailed in this submittal. Pricing includes time to assist customer in review of equipment~material vendor drawings. The drawings shall be provided to Ampirical Solutions, LLD through err~ail, or a hard copy sent to Ampirical solutions, LLB ❑ffce in Covington, LA far evaluation. Pricing includes the follcwir~g travel allotment of trips for the following engineering personnel throughout the project: ~~}Trips for ~'1 } belay l~ngineer to perform field verification of existing equiprr~ent, and design reviews, • ~~}Trips for }Substation Engineer to perform verifiication of existing equipment, and design reviews, Relay engineering pricing is based an the Jim hristal substation electrical drawings provided for the issued far bid of this projects. D~r~~~n ~iunicipa! E~~c~ric ~ : ~ ~ Proposal: AM~~~-~~aR~ ~ ~ ~ ~ ~ ~ 1laGdi This praposaf shalC remain valid far ~0 days, Additional 11Uork orTravel: Ampirical olutians, LLB ~o~~ Fee Schedule has been provided that will apply far any additiar~al engineering ar travel required outside the scope of this prapasal. 1JVorl~ Schedule C~uoted price i based on u~rarl~ing standard 8-hour workdays, 5 days per week. Any required af#er hours, weekend or holiday uuark requested by customer will be subject to additional charges to cover the premium labor rate differentiaC. Don#ract Terms This project shall be performed in accordance Sri#h agreed upon terms between Denton Municipal Electric and Ampirical Solutions, LLB before any engineering is perfarrned,111oother terrrtsand conditions shall apply unless agreed upon b Ampirical Solutionsr LL in writing utorner Responsibi,i~~ie ~ . Designate a representative to serve as the contact for technical inquiries and coordination of actlvitles, Designate a Field Technician for an estimated ~ corking days to work with Ampiricaf Solutions, LLB Engineer when perrarnling fiield verification of exis#ing cable wiring. l~ravide all existing drawings of station and relay standard drawings in Auta-DAD. Obtain all required permits, and pay any utility fees associated with the project, H~DULE Project SC~edute Field E ui ment 1lerification ~ da s En ineerin vela horn fete l FA Mcn#hs Err ineerin Rely tom late I1= ~ Month Substation En ineerin Services ~ Month Payment hedules Time Sheets shall be submitted on monthly basis, and shall be paid hIFT 3g~ ~~il~i~~l ~{~LC~~ I, ~0~8 EN~NE~R~N RATE ~LAI~IAT~~N HOURLY RATE Principal Engineer ~~9.~4 Design Manager ~3+~~ Engineering Expert Project Manager ~31.~D Construction Manager ~ Lead Engineer ~,Oo senior Engineer ~~8.00 Engineer III Engineer it 9~,gg Engineer I Technical specialist ~~b,0~ senior Designer ~g~,gD Designer ~8g.g~ eniar Drafter $~~,g~ Drafter ~~7,~g Clerk $3~,gg The above rates include direct labor plus a!~ other component, such as payroll tapes, benefits, insurance, worker's compensation, overhead, and croft, -rilerefore, the total amount billed ~ilf be the straight time ilours ~uorked multiplied by the above numbers, Overtime Overtime rates are the above hourly wages multiplied by These rates begin as soon as 10 hours per day or 40 hours per week are exceeded or for any work on holidays and weekends. t~~bcentracto~s !f any subcontracting is necessary, these services will be invoiced at cost plus ~ 5°l~. ~ff~er C#~ar es 'ravel ~ Yravel time shall be billed at straight time not to exceed 8 hours - Cast of travel expenses {Airfare, Oar ~ental~Fuelr Lodging, Meals, etc, shall be billed plus ~0~1~ of Receipt - CompanylPersonal Car mileage shall be reimbursed at the current standard IR5 Rate drawing Reproduction A 5i2e ~$,5"x~ ~g~~ ~ per copy services A~II 8 ire 1 ~g~27 per copy AN1 C ~~e {~~"x~2r"}; ~,7~ per capY ARCM D Sipe ~~4"~~~"~; ~,~3 percopy ARCH 3i~ ire {30n~4~'~~~ $~,fi percopy ARCH E Sipe: 36"~t48" : $3.~5 er ca Il~aterial Cost ius ~ E ui ment Cost lus ~ 5°l~ 1 DRAFT MINUTES 2 PUBLIC UTILITIES BOARD 3 February 23, 2009 4 5 After determining that a quorum of the Public Utilities Board of the City of Denton, Texas was 6 present, the Chair of the Public Utilities Board thereafter convened into a Closed Meeting on 7 Monday, February 23, 2009 at 9:00 a.m. in the Service Center Training Room, City of Denton 8 Service Center, 901-A Texas Street, Denton, Texas. 9 10 Present: Chair Charldean Newell, Dick Smith, Bill Cheek, Phil Gallivan, John Baines, 11 Randy Robinson and Bill Grubbs 12 13 Ex Officio Members: 14 George C. Campbell, City Manager 15 Howard Martin, ACM Utilities 16 17 OPEN MEETING: 18 19 CONSENT AGENDA: 20 The Public Utilities Board has received background information, staff's recommendations, and 21 has had an opportunity to raise questions regarding these items prior to consideration. 22 23 6) Consider recommending approval of a Professional Services Agreement with Ampirical 24 Solutions, LLC, an engineering firm located in Covington, Louisiana, for protective relay and 25 control design for the Jim Christal Substation and other engineering and related consulting 26 services for CIP projects for Denton Municipal Electric in an amount not to exceed $188,032. 27 28 Board Member John Baines moved to approve with a second from Board Member Randy 29 Robinson. The motion was approved by a 7-0 vote. 30 31 The meeting was adjourned by consensus at 11:25 a.m. 32 This page left blank intentionally. AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 Questions concerning this acquisition may be directed DEPARTMENT: Materials Management to Emerson Vorel 349-7460 ACM: Jon Fortune SUBJECT Consider adoption of an Ordinance accepting competitive bids and awarding a public works contract for the construction of concrete pavement for the Evers Park Athletic Complex and North Lakes Park fields 5 and 6; providing for the expenditure of funds therefor; and providing an effective date (Bid 3 516-awarded to the lowest responsible bidder meeting specification, Floyd Smith Concrete, Inc. in the amount of $229,974.86.). BID/RFSP INFORMATION This item is for the construction of three concrete plazas with attached retaining walls and mow strips at the Evers Park Athletic Complex and North Lakes Athletic Complex. A line item description of the project's cost is included in the attached proposals from Floyd Smith (Exhibit 1). Bid 3 516 is an annual contract to provide miscellaneous concrete related repair and for small construction projects. Council stipulated that any projects costing $100,000 or more that are quoted through this bid must obtain separate Council approval. PRIOR ACTION/VIEW (COUNCIL, BOARDS, COMMISSIONS) Bid 3 516 was originally awarded by Council on June 25, 2006 and has been renewed through June 25, 2009. RECOMMENDATION Approve the award of a contract with Floyd Smith Concrete, Inc. in the amount of $229,974.86. PRINCIPAL PLACE OF BUSINESS Floyd Smith Concrete, Inc. Denton, TX ESTIMATED SCHEDULE OF PROJECT This project will begin upon Council approval and is estimated to be completed within 60 days. Agenda Information Sheet March 3, 2009 Page 2 FISCAL INFORMATION This item will be funded from accounts 400075457.1360.40100. Requisition 91003 has been entered in the Purchasing software system. EXHIBITS Exhibit l : Proj ect Estimate Information Sheet Respectfully submitted: . ~ Tom Shaw, C.P.M., 349-7100 Purchasing Agent 1-AIS-Bid 3516 Exhibit 1 Fib 1 ct3(1~ 1t3«Cl~4~t ~'lca Smith C~ar~cr€~t~ Ir°sc ~3~ ~'s ~l p.l i , _ Y d~T F~PI?S#~L h,., ~`~1 -~0 tl i rt l t~ 1 rt ~y~ n r~, 1 Fix rt i t "l C~Ca. °1'~A t 'fit t~ 1 TICS 1 ~ Y rural r~r~l A~ ~ y. (~'ii iir~ Cl} { car ~ i t° tam Nov 0 2008 3:53PM rloo f i Smith C;orcr 'tom Trlc 7403825 i , Floyd Smith Concrete, Inc. - P. O. Brix 1781 Benton, 76202 TE Phone: 940-666-0114 Fax., 940-332-5691 61~L TO i PROJECT amity of Denton ~ City of L?es~io ;I cor~~ -'!:;"T Accounts Payable Parks & : ~ aation Depa rna C 215 E. McKinney Cindy 349 > Denton, TX 76201 Fax 349-3166 Evers Plaza ~1 si s F ITEM, QTY ' DE SCRIPT;QN RAT E SFr} - - ,7 7(3 5" Cuciete Sidewalk (.with steel) r ~ O Mist 4 EA Allow per Day Concrete Frump (I ~:D 2, dc"a EGMS Y ) ( ~ E 1 Total L µ'"x l ~v r er' .mss i Feb D6 2009 10:29FIM Floyd Smith Concrete Inc 940382691 p,~ Floyd Srnith Concrete, inc. pRpp~gaL P.O. Box 17$'1 Dentin, TX 7GiZQ2 DATE PROPOSAL N... Phone: 940-5fi5-0114 ~19/2009~ 2DU9-oo2 Fax: 940-382-5691 BILL TQ PROJECT Gity of Denton City of Denton Contract #3516 Accounts Payable Parks & Recreation Departmen# 2'15 E. McKinney Cindy Mayo 349-7182 Fax 349-8166 Denton, TK 76241 Evers Park Baseball Diamond Retaining Walls P.O. NO. TERM5 Net 'CO STEM QTIf DESCRIPTION RATE AMOUNT 11A 36 CY Structural Concre#e~Class R) 5- Sack (9 426.82 15,365.52 CY per each Field} Total $15,365.52 ORDINANCE N0. AN ORDINANCE ACCEPTING COMPETITIVE BIDS AND AWARDING A PUBLIC WORKS CONTRACT FOR THE CONSTRUCTION OF CONCRETE PAVEMENT FOR THE EVERS PARK ATHLETIC COMPLEX AND NORTH LAKES PARK FIELDS 5 AND 6; PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE (BID 3 516-AWARDED TO THE LOWEST RESPONSIBLE BIDDER MEETING SPECIFICATION, FLOYD SMITH CONCRETE, INC. IN THE AMOUNT OF $229,974.86.). WHEREAS, the City has solicited, received and tabulated competitive bids for the construction of public works or improvements in accordance with the procedures of State law and City ordinances; and WHEREAS, the City Manager or a designated employee has received and recommended that the herein described bids are the lowest responsible bids for the construction of the public works or improvements described in the bid invitation, bid proposals and plans and specifications therein; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The following competitive bids for the construction of public works or improvements, as described in the "Bid Invitations", "Bid Proposals" or plans and specifications on file in the Office of the City's Purchasing Agent filed according to the bid number assigned hereto, are hereby accepted and approved as being the lowest responsible bids: BID NUMBER CONTRACTOR AMOUNT 3516 Floyd Smith Concrete, Inc. $229,974.86 SECTION 2. The acceptance and approval of the above competitive bids shall not constitute a contract between the City and the person submitting the bid for construction of such public works or improvements herein accepted and approved, until such person shall comply with all requirements specified in the Notice to Bidders including the timely execution of a written contract and furnishing of performance and payment bonds, and insurance certificate after notification of the award of the bid. SECTION 3. The City Manager is hereby authorized to execute all necessary written contracts for the performance of the construction of the public works or improvements in accordance with the bids accepted and approved herein, provided that such contracts are made in accordance with the Notice to Bidders and Bid Proposals, and documents relating thereto specifying the terms, conditions, plans and specifications, standards, quantities and specified sums contained therein. SECTION 4. Upon acceptance and approval of the above competitive bids and the execution of contracts for the public works and improvements as authorized herein, the City Council hereby authorizes the expenditure of funds in the manner and in the amount as specified in such approved bids and authorized contracts executed pursuant thereto. SECTION 5. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of ,2009. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY r r= 5 BY: 3-ORD-Bid 3516 This page left blank intentionally. AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 Questions concerning this acquisition may be directed DEPARTMENT: Materials Management to Phil Williams 349-8487 ACM: Jon Fortune - SUBJECT Consider adoption of an Ordinance accepting competitive bids and awarding a public works contract for the construction of five overhead distribution line projects for Denton Municipal Electric; providing for the expenditure of funds therefor; and providing an effective date (Bid 4243-awarded to the lowest responsible bidder meeting specification, Finway, Inc. in the amount of $364,146). The Public Utilities Board recommends approval (7-0). BID INFORMATION This bid is for the installation of overhead electric infrastructure for five Denton Municipal Electric projects by a third party contractor. The bid specifies that the contractor will provide all labor, equipment, tools, crew supervision, and cover all administrative and insurance costs necessary to complete the installations of the electric distribution proj ects. A complete description of the five construction projects is included in the attached Public Utilities Board Agenda Information Sheet (Exhibit 1). PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS) The Public Utilities Board approved this item at its February 23, 2009 meeting. RECOMMENDATION Approve the award of Bid 4243 to Finway, Inc. in the amount of $364,146. PRINCIPAL PLACE OF BUSINESS Finway, Inc. Conroe, TX ESTIMATED SCHEDULE OF PROJECT All five construction projects are scheduled to be completed by September 2009. Agenda Information Sheet March 3, 2009 Page 2 FISCAL INFORMATION This project will be funded from the following accounts: 602334494.1365.3640 $ 46,000 602273494.1365.3640 $109,434 602039486.1365.3640 $ 71,000 602088493.1365.3640 $ 52,891 602291494.1365.3640 $ 84,821 $364,146 Requisition# 92101 has been entered in the Purchasing software system. EXHIBITS Exhibit 1: Public Utilities Board Agenda Information Sheet With Out Exhibits Exhibit 2: Bid Tabulation Respectfully submitted: . 1 Tom Shaw, C.P.M., 349-7100 Purchasing Agent 1-AIS-Bid 4243 Exhibit 1 PUBLIC UTILITIES BOARD AGENDA ITEM #4 AGENDA INFORMATION SHEET AGENDA DATE: February 23, 2009 DEPARTMENT: Utilities UTILITIES ACM: Howard Martin, 349-8232 SUBJECT: Consider recommending approval of Bid #4243 for award of a contract for construction of overhead electric distribution projects to Finway Inc., Conroe, Texas, in the estimated expenditure amount of $364,146. BACKGROUND: Denton Municipal Electric (DME) is proposing in accordance with the bid specifications that the contractor provide all labor, equipment, tools, crew supervision, and cover all administrative and insurance costs incurred by the contractor necessary to complete installations of overhead electric distribution proj ects under the direction of Denton Municipal Electric (DME) staff. DME will provide all permanent electric materials installed by the contractor. Bid #4243 consists of the following five overhead electric distribution line construction projects. Project 1: Co-Gen site project along Foster Road at the Landfill (Upgrade facilities and re-conductor 3,000 linear feet ofthree-phase overhead line) Project 2: FM 1515 (Airport Road) Phase I and Phase II Projects (Upgrade facilities and re-conductor 3,800 linear feet ofthree-phase overhead line to a double circuit line) Project 3: Rails to Trail Phase III Project (Upgrade facilities and re-conductor 1,500 linear feet of a single three-phase overhead line to a double circuit line) Project 4: Water Reclamation Plant Feeder Project (Construct 3,900 feet of new overhead three-phase overhead line and retire 3,200 ofthree- phaseoverhead line from Treatment Plant Road) Project 5: Underwood and Avenue A System Improvement Project (Upgrade facilities and re-conductor 950 linear feet ofthree-phase overhead line) These construction projects must be performed by contract due to the following issues: 1. The critical timing of overhead electric infrastructure that must be constructed and connected to the RD Wells Substation project, which will reroute power to two of DME's largest industrial customers, PeterBilt and TetraPak. 2. Upgrade facilities that accept the power which DME is purchasing power from the DTE Biomass site. 3. Reroute overhead distribution to improve reliability to the Waste Water Plant and open up physical access for a future expansion of the landfill. 4. Finish electrical construction improvements to a new double circuit along the rails to trail prior to the light-rail construction beginning. AIS -PUB Agenda Item #4 February 23, 2009 Page 2 of 3 5. Complete circuit re-conductor and improvements south of UNT near McCormick and Interstate 3 5 East. Standard City of Denton purchasing procedures were used, and bid packages were provided to 33 prospective bidders. Nine companies attended the pre-bid meeting on Wednesday the 28th. Five bids were received at bid opening on February 12th. DME proposes to accept the bid from Finway Inc. for the following reasons. Anecdotal information about the present market place indicates that many contractors have opportunities for more work than they can do, such as, construction to support active wind generation projects, and transmission construction within the ERGOT and surrounding regions to keep up with transmission and distribution load. Generation growth projects currently underway to mitigate congestion in anticipation of the nodal market. Second, the Finway, Inc. bid price appears to be in line with what would be reasonable. From discussions with other utilities and contractors over the past year, DME expected bids to be between $20 to $1 OS per foot for construction labor alone, depending on the type of proj ect, single or double circuit to be constructed, minimizing outages to existing customers on facilities being installed and the obstacles that will be encountered during construction. The range in project costs is due to the differences in work required for the different projects. Third, it is critical that the distribution lines are installed for the RD Wells Interchange and Substation which will be in service by June. RD Wells will provide the transformer capacity in the western part of the system to aid in insuring reliability. Finally, DME recommends acceptance of the reasonable and lowest cost bid from Finway, Inc. The following tabulation is a summary of bid information by project: Project 1 $ 46,000 ($15.33 labor per foot) Project 2 $ 109,433.26 28.80 labor per foot) Project 3 $ 71,000 47.33 labor per foot) Project 4 $ 52,890.96 ($13.56 labor per foot) Project 5 $ 84,821 89.29 labor per foot) Total $ 3 64,145.22 3 8.862 average labor cost/foot, all projects) OPTIONS: 1. Recommend award of a contract to Finway, Inc., Conroe, Texas, for construction of the overhead distribution projects. 2. Not recommend approval of the proposed contract and direct that other actions betaken. RECOMMENDATION: DME recommends approval of Bid #4243 from Finway, Inc., Conroe, Texas, and award of a contract for construction of the five projects in the total estimated amount of $364,146. ESTIMATED SCHEDULE OF PROJECT: Construction of the projects will begin as soon as the contracts have been awarded and crews can mobilize to Denton. Completion of two projects must occur prior to the end of May 2009 in AIS -PUB Agenda Item #4 February 23, 2009 Page 3 of 3 order to get the RD Wells Interchange and Substation on-line and operational in June. All five projects are to be completed by the end of September 2009. PRIOR ACTION/REVIEW (Council, Boards, Commissions): None FISCAL INFORMATION: All five projects are approved CIP projects. The total expenditure for the proposed line construction will be $364,146. The projects will be funded with bond funds for each of the five different CIP project accounts. BID INFORMATION: The bid information is summarized on the previous page. DATE SCHEDULED FOR COUNCIL APPROVAL: March 3, 2009 EXHIBITS: 1. Location Map showing all five proj ect locations 2. Contractor Bid Tab Evaluation Respectfully submitted: Phil Williams General Manager of Electric Utilities Denton Municipal Electric Prepared by: Jeff Morris Operations Division Manager Denton Municipal Electric O O O O O ~ a ~ O O O O O ~ ~ O O O O O 0 ~ Q ~ O ~ O ~ O W W ~ ~ O O N ~ M ~ ~ U~ ~ o ~ 0~1 om4 0~1 N ~ ~ bg f~ bg f~ 5r~ ~ d ~0 N ~ ~ O N O ~ O N ~ ~ ~/1 Q ~ O m O 001 N ~ Z ~ 0 O ~ O o4 00 ~ W W ~ ~ `0 ~ ~ N ~ ~ U ~ ~ ~ ~ ~ ~ U ~ ~ O ~ O O O 0 ~ ~ U ~ O O O O O a? ~ O ~ O O O ~ ~ U z W ~ ° N o ° ° ~ W ~ W ~ ~ ~ 00 ~ ~ ~ ~ 0 + 5~ ~ 5~ ~ ~ ~ ~ ~ ~ x 0 ~ C~ 0 0 0 0 0 0 ~ ~ 0 0 0 0 0 0 O ~ ~ ~ N N N N OM1 ~ Q V1 U ~ ~ Z ~ ~ O ~ ~ M 01 l~ In W N W ~ ~ 0 00 ~ ~ ~ 00 l~j ~ N ~ ~ ~ 00 ~ ~ a U b~} f~ ~ f~ 5r~ 514 m ~ = A w ~ ~ ~ ~ o 0 0 0 ~i ~ N O O O O O ~ • ~ N `0 ~ O ~ ~ V1 ~ Q ~ c+~ ~ oN0 001 N M W W ~ ~i ~ 01 N c~ p i..~ ~ Q ~ c~ O l~ `0 N M W ~ ~ ~ ~ c~ N ~ ~ ~ ~ ~ ~ ~ A ~ W ~ ~ ~ ~ W ~ ~ ~ ~ W ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ N 0 ~ ~ a~ 'o o 0 U ~ ~ N a~ ~ Z O O ~ N ~ ~ ~ ~i U~ N a ~ w ~ ~ as ~ ~ U o x c ~ ~ ~ ~ ~ ~ N ~ V ~ ~ ~ ~ Q; ~ ~ w 0 Q a ~ o ~ ~ ~a U ~ Q ~ ~ ~ ~ ~ N = o ~ ~ ~ ~ ~ ~ ~ A4 U a ~ ~ ~ ~ ~ ~ ~ ~ W o M W ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~4 ~ ~ U~ w~ ~ ~P~ ~ ~ ~Q ~ W Z ~ ~ A N ~ v~_ Qr 0 W r' N M ~ ~ ~ ~ ~ A U ORDINANCE N0. AN ORDINANCE ACCEPTING COMPETITIVE BIDS AND AWARDING A PUBLIC WORKS CONTRACT FOR THE CONSTRUCTION OF FIVE OVERHEAD DISTRIBUTION LINE PROJECTS FOR DENTON MUNICIPAL ELECTRIC; PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE (BID 4243-AWARDED TO THE LOWEST RESPONSIBLE BIDDER MEETING SPECIFICATION, FINWAY, INC. IN THE AMOUNT OF $364,146). WHEREAS, the City has solicited, received and tabulated competitive bids for the construction of public works or improvements in accordance with the procedures of State law and City ordinances; and WHEREAS, the City Manager or a designated employee has received and recommended that the herein described bids are the lowest responsible bids for the construction of the public works or improvements described in the bid invitation, bid proposals and plans and specifications therein; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The following competitive bids for the construction of public works or improvements, as described in the "Bid Invitations", "Bid Proposals" or plans and specifications on file in the Office of the City's Purchasing Agent filed according to the bid number assigned hereto, are hereby accepted and approved as being the lowest responsible bids: BID NUMBER CONTRACTOR AMOUNT 4243 Finway, Inc. $364,146 SECTION 2. The acceptance and approval of the above competitive bids shall not constitute a contract between the City and the person submitting the bid for construction of such public works or improvements herein accepted and approved, until such person shall comply with all requirements specified in the Notice to Bidders including the timely execution of a written contract and furnishing of performance and payment bonds, and insurance certificate after notification of the award of the bid. SECTION 3. The City Manager is hereby authorized to execute all necessary written contracts for the performance of the construction of the public works or improvements in accordance with the bids accepted and approved herein, provided that such contracts are made in accordance with the Notice to Bidders and Bid Proposals, and documents relating thereto specifying the terms, conditions, plans and specifications, standards, quantities and specified sums contained therein. SECTION 4. Upon acceptance and approval of the above competitive bids and the execution of contracts for the public works and improvements as authorized herein, the City Council hereby authorizes the expenditure of funds in the manner and in the amount as specified in such approved bids and authorized contracts executed pursuant thereto. SECTION 5. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of ,2009. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY r r= 5 BY: 4-ORD-Bid 4243 1 DRAFT MINUTES 2 PUBLIC UTILITIES BOARD 3 February 23, 2009 4 5 After determining that a quorum of the Public Utilities Board of the City of Denton, Texas was 6 present, the Chair of the Public Utilities Board thereafter convened into a Closed Meeting on 7 Monday, February 23, 2009 at 9:00 a.m. in the Service Center Training Room, City of Denton 8 Service Center, 901-A Texas Street, Denton, Texas. 9 10 Present: Chair Charldean Newell, Dick Smith, Bill Cheek, Phil Gallivan, John Baines, 11 Randy Robinson and Bill Grubbs 12 13 Ex Officio Members: 14 George C. Campbell, City Manager 15 Howard Martin, ACM Utilities 16 17 OPEN MEETING: 18 19 CONSENT AGENDA: 20 The Public Utilities Board has received background information, staff's recommendations, and 21 has had an opportunity to raise questions regarding these items prior to consideration. 22 23 1) Consider recommending approval of Bid #4243 for award of a contract for construction of 24 overhead electric distribution projects to Finway Inc., Conroe, Texas, in the estimated 25 expenditure amount of $364,146. 26 27 Board Member John Baines moved to approve with a second from Board Member Randy 28 Robinson. The motion was approved by a 7-0 vote. 29 30 The meeting was adjourned by consensus at 11:25 a.m. 31 This page left blank intentionally. AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 Questions concerning this acquisition may be directed DEPARTMENT: Materials Management to Bryan Langley 349-8224 ACM: Jon Fortune SUBJECT Consider adoption of an Ordinance to the City of Denton, Texas authorizing the City Manager to execute a professional services agreement between the City of Denton and MarketSphere Consulting, LLC for a fixed asset/job cost system needs assessment and gap analysis; authorizing the expenditure of funds; and providing an effective date (RFSP 4225-Fixed Asset/Job Cost System Needs Assessment JD Edwards Fixed Asset/Job Cost System Gap Analysis awarded to MarketSphere Consulting, LLC in an amount not to exceed $194,930). RFSP INFORMATION In December 2007, the Denton Municipal Electric Accounting System Review prepared by the firm of RJ Covington was discussed with the Public Utilities Board (PUB). Following this discussion, the Finance department outlined its approach to implementing and evaluating the Covington recommendations on January 14, 2008. Sixteen (16) recommendations were presented in the Covington report. Of these, nine (9) recommendations are specifically related to fixed asset accounting. The remaining seven (7) recommendations are concerned with a variety of accounting and management issues. The purpose of this item is to provide the PUB with an update of the progress staff has made in implementing the nine (9) recommendations related to fixed asset accounting. The status of the remaining items will be addressed at a future PUB meeting. Following an analysis, staff has developed a strategy to implement many of the recommendations contained in the Covington report. The central theme of this strategy is to implement a fixed asset accounting module in the JD Edwards financial system currently operated by the City of Denton. To do this properly, staff suggests that a Needs Assessment/Gap Analysis be conducted to 1) determine the organizational needs for fixed asset information and 2) to determine whether these needs can be met in the JD Edwards system. Based on this analysis, a fixed asset system implementation plan will be developed for the organization. Agenda Information Sheet March 3, 2009 Page 2 RFSP INFORMATION (CONTINUED) Four proposals were submitted in response to RFSP 4255. A committee comprised of staff from various finance related areas evaluated the proposals and ranked them according the criteria listed below. The evaluation ranking sheet is included as Exhibit 1. 1. Identification and understanding of the City's requirements and needs for this project: FACTOR 25% 2. Firm's past performance and experience on proj ects of this magnitude and complexity: FACTOR 25% 3. Firm's experience with specific issues related to this project: FACTOR 25% 4. Experience and qualifications of key personnel available for this project: FACTOR 25% After interviews with the top two ranked firms, the committee unanimously recommended MarketSphere Consulting, LLC. RECOMMENDATION Award a contract for professional consulting services to MarketSphere Consulting, LLC in the not to exceed amount of $194,930. PRINCIPAL PLACE OF BUSINESS MarketSphere Consulting, LLC Irving, TX ESTIMATED SCHEDULE OF PROJECT The project timeline for the Fixed Assets/Cost Assessment estimates completion on or before the end of July 2009. FISCAL INFORMATION This project will be funded from account 840020744.1360.20100. Requisition# 92198 has been entered in the Purchasing software system. EXHIBITS Exhibit l :Vendor Evaluation Ranking Respectfully submitted: . 1 Tom Shaw, C.P.M., 349-7100 Purchasing Agent 1-AIS-RFSP 4225 Q U w ~ ~ ~ ~ w ~ ~ ~ Q` 0 4~ ~ ~ ~ 0 ~ ~ ~ `J ~ ~ 0 ~ ~ N ~ ~ ~~U ~ ~ ~ ~ ~ a,j~ W ~ ~ ~ ~ ~ ~ Q 0 Z ~ o ~ ~ ~ ~ ~ ~n O ~n ~n Q O ~ o ~ ~ O ri r: c+~ o0 0 ~ ~ M 0~ M ~ M N M ~ p o o ~ N ~ ~ N M ~ ~ ~ o0 0~ 0 0 0 0 N ~ ~ ~ ~ ~ v~ N N N N N O ~ O O O O C Q M O O O O O ~ ~ O ~ O O ~ l~ l~ 00 ~ ~ ~ N ~ ~ ~ c ~ N O ~ ~ ~ 0 ~ ~ ~ ~ LL W W O ~ O O O r"' ~ ~ N O O v~ v ~ N ~ ~ O ~ ~ ~ ~ U ~ N N ~ l~ ~ l~ ~ ~ U N ~ p ~ ~ +~►~0 ~~0 ~ U LL ~ U ~ ~ ~ N ~ ~ ~ ~ ~ ~ ~ N a1 00 ~ ~ ~ 0 ~ ~ a? ~ ~ N N 0 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ Z ~ 4~ ° ~ ~ o ~ N ~ ~ ~ ~ .o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ a~ ~ W W~ o ~ d ~ ~ ~ ~ ~ ~ o c ~ ~ ~ ~ ~ ~ ~ ~ ~ U ~ ~ ~ ~ ~ ~ ~ U ~ h ~ H y N ~ 0 N ~ ~ ~ 0 ~ ~ Q ~ w ~ [--i~wwW Z•~ ORDINANCE N0. AN ORDINANCE TO THE CITY OF DENTON, TEXAS AUTHORIZING THE CITY MANAGER TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT BETWEEN THE CITY OF DENTON AND MARKETSPHERE CONSULTING, LLC FOR A FIXED ASSET/JOB COST SYSTEM NEEDS ASSESSMENT AND GAP ANALYSIS; AUTHORIZING THE EXPENDITURE OF FUNDS; AND PROVIDING AN EFFECTIVE DATE (RFSP 4225-FIXED ASSET/JOB COST SYSTEM NEEDS ASSESSMENT JD EDWARDS FIXED ASSET/JOB COST SYSTEM GAP ANALYSIS AWARDED TO MARKETSPHERE CONSULTING, LLC IN AN AMOUNT NOT TO EXCEED $194,930). WHEREAS, the professional services provider (the "Provider) mentioned in this ordinance is being selected as the most highly qualified on the basis of its demonstrated competence and qualifications to perform the proposed professional services; and WHEREAS, the fees under the proposed contract are fair and reasonable and are consistent with and not higher than the recommended practices and fees published by the professional associations applicable to the Provider's profession and such fees do not exceed the maximum provided by law; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION I. The City Manager is hereby authorized to enter into a professional service contract with MarketSphere Consulting, LLC, to provide professional consulting services for a Fixed Asset/Job Cost System Assessment and Gap Analysis, a copy of which is attached hereto and incorporated by reference herein. SECTION II. The City Manager is authorized to expend funds as required by the attached contract. SECTION III. The findings in the preamble of this ordinance are incorporated herein by reference. SECTION IV. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of ,2009. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY r r= 5 _ _ ~ BY: 3-ORD-File 4225 f ' ~n~~~d i s. off` - ~ . ~ ~d ,~e~e ~a i .off ~~a~~g ~ 'fie ~~.~.~~~a~ ~ ~ R ~.T~~ ~ . , . . 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' ~ a 1~~ ~ 1,~ k~~~~' ~n~~r~ ~~d for ~~htd . 4 : . . . ~k 4 F F' ~h ~ n ~uh~~ yen. ~ k.~~~ ~ ~ ~~oc ~ ~ ~r~~N ~ ~x~~~~ ~ . ~~~~~~n ~~i~~~d~~,, r~~~~, ~ r~~ a~ ~ ~u~~ no~~ tai ~r~~ per t ~v~t.~ ~ ~~~N~~~n~ ~ ~a~C fhb ~l~~~~.~ ~ { ~i~~ ~ ~~~~~r~ ~ ~ ~ G~ ~~~~~~~d~~~~ ~r" ~~€~~M~M~l,FiMTf~ ~L4l+IlNY ~'h~ ~r~~~~ ~r~~r*, ~~~dtr~~ any ~p~ni~;, hd~u~,,~~.~l~r. ~~~hme~; ~~cu~c~~ hen t~~~n~ I~~r"~ ~r~ rk~p~~ ~:rru~~ir~; ~ ~ ~ ~ . ~ ~~~1~ in r` c~ u~: ~d I~ ~~i~ ~r~~;~,~~w~~n n~mr~~~~~v~~~~ ~p to ~ . :m~~i~~~.~a~ hn~ gin! ~:ir~ ~rr~~i h~~~: ~~d ~~a~~~;~' ~ ~ ~ . ; . . . :ov~t bar ~~d~r~g ~~~u~v~~ a~ ~h r~p~~i~~ :~~:n~ . ~ ~ . , ~~:~~~~~r~ :lie ~~r~~~~~r~~c~~i ~~~ri .i~~.~~~n ~ ~~i ~ on~a ~~~Id ~~ar~ nth c~i~~ ~~~~~ly ~v ~:1~ ~ ~~crr~~ the ~~~an ~~b~~ i~r+~di~l~ Gov . ~ " A~~ . . ~d~~~~ ,~~~~~g~ ~ ar", ~ ~hr* ~~~~:n~~i; :~i~~~: re ~ ors ~r_ ~ior~ i~m~~~~e~~ ~~ve ~~i~i~ ~ ien~ ~ o~i~~l~~~. ~~fia~~ ~~~1 i~~~~~cly ~~~i~~~~~~~ I I IMI ~ ~ MI~MI~M~III ' ~ ~ tai ~~i~~ ~~r i ~~re ~~~et phi r~ ~~~i~ i~~ x~~ Y ~~~~be any ~ t~ ~er~~, ~~~ud~n ~ n~ ~~i~~ ~r~~~ i ~~r~ ~ n~r~, di~~ ~~i o~ ~i~ ivi~; :i~h ~~oi~ ~ . ~ ~hi~,.~~i~~ ~r i~ i~~r ~r~ r~~~, d~~~~ hi an ~i~ . ~cn Mrt.IW ~~~i~e i~p~ n hang ~~v.~ il1 h~ ~n n~ x~ri~;.ar~ ~ ~~h~ ~ ~~d~r~ ~~.ur~, B~; ~i~~ ~w AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 Questions concerning this acquisition may be directed DEPARTMENT: Materials Management to Phil Williams 349-8487 ACM: Jon Fortune SUBJECT Consider adoption of an ordinance of the City of Denton, Texas providing for, authorizing, and approving the expenditure of funds for the purchase of protective relay, control, monitoring, metering, software, and integration products manufactured by Schweitzer Engineering Laboratories, Inc., which is available from only one source, KD Johnson, Inc. in accordance with the pertinent provisions of Chapter 252 of the Texas local government code exempting such purchases from the requirements of competitive bidding; and providing an effective date (File 4265-Purchase of Protective Relay, Control, Monitoring, Metering and Integration Hardware for Denton Municipal Electric in the estimated amount of $662,575). The Public Utilities Board recommends approval (7-0). FILE INFORMATION Protective relay, control, monitoring, metering, and integration hardware are all necessary to make substations functional. The majority of these devices are microprocessor based and highly technical in their design and application. They are used to operate and protect substation components, such as circuit breakers, busses, and transformers; to protect transmission lines in the event of faults, overloads, overvoltage, and other abnormal conditions; to provide metering; and to interconnect devices for communication, access, interaction and retrieval of information. A complete description of this purchase is included in the Public Utilities Board Agenda Information Sheet (Exhibit 1). KD Johnson, Inc. is the sole source vendor for Schweitzer Engineering Laboratories, Inc. Section 252.022 of the Local Government Code provides that procurement of items that are only available from one source do not have to be competitively bid. PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS) The Public Utilities Board will consider this item at its February 23, 2009 meeting. RECOMMENDATION Consider sole source award to Schweitzer Engineering Laboratories, Inc. c/o KD Johnson, Inc., in the estimated amount of $662,575. Agenda Information Sheet March 3, 2009 Page 2 PRINCIPAL PLACE OF BUSINESS KD Johnson, Inc. Leonard, TX ESTIMATED SCHEDULE OF PROJECT Product shipment has been estimated to satisfactorily meet project schedules. FISCAL INFORMATION The purchase of the products listed on Exhibit 3 will be funded from individual project accounts on an as needed basis. EXHIBITS Exhibit 1: Public Utilities Board Agenda Information Sheet Exhibit 2: Sole source Letter Exhibit 3: Schweitzer Engineering Laboratories, Inc. Product List and Pricing Sheet Respectfully submitted: . 1 Tom Shaw, C.P.M., 349-7100 Purchasing Agent 1-AIS-File 4265 Exhibit 1 PUB AGENDA ITEM # PUBLIC UTILITIES BOARD AGENDA INFORMATION SHEET AGENDA DATE: February 23, 2009 DEPARTMENT: Electric Engineering ACM: Howard Martin, 349-8232 SUBJECT: Consider recommending approval of Schweitzer Engineering Laboratories, Inc., acting through their manufacturer's representative, which is presently KD Johnson in Leonard, Texas, as the sole source provider for Schweitzer Engineering Laboratories, Inc., protective relay, control, monitoring, metering, software, and integration products. BACKGROUND: Protective relay, control, monitoring, metering, and integration hardware are all necessary to make substations functional. The maj ority of these devices are microprocessor based and highly technical in their design and application. They are used to operate and protect substation components, such as circuit breakers, busses, and transformers; to protect transmission lines in the event of faults, overloads, overvoltage, and other abnormal conditions; to provide metering; and to interconnect devices for communication, access, interaction and retrieval of information. Before designs can be prepared for substation relay and control systems, specific protective, metering, control, monitoring and integration equipment must be selected. DME has chosen Schweitzer Engineering Laboratories, Inc. (SEL) as its standard for these types of hardware. There are several reasons for this. SEL has a larger line of devices than any other manufacturer. The SEL devices offer the greatest selection of features and the best capability for integration. Integration is the term used to refer to the ability for devices to communicate with each other and with other systems such as SCADA. The warranty period for SEL devices is ten years. Customer support is superior. No other manufacturer offers the on-call application assistance and technical support that SEL offers. SEL handles marketing on a nation-wide basis through manufacturer's representatives. There is no network of dealers for this highly technical product. Each area of the country is handled by only one representative. Because of this, there is no mechanism for competitive bidding. Therefore, DME is requesting a sole source designation for SEL products. The sole source designation is required to allow purchase without having to go through a meaningless competitive bidding process that would only net one bid. A letter from SEL stating that they are the sole source for marketing their products is attached as Exhibit 1. Exhibit 2 is a listing of the products that DME anticipates will be needed in its active design effort for approved projects. This is not intended to limit purchases to these devices only. Specific design needs may require other that additional devices be incorporated into a project. Further, SEL is active in bringing new and improved products to the marketplace. DME will want the flexibility to address design challenges with the best hardware for the application. SEL also has software products that are companions to various hardware devices. Some are necessary to set or use selected devices. DME intends that software purchases also be approved. The following pictures are examples of SEL hardware. i 311 L Line Current Differential Relay 734 Meter ~ 1 351 S Overcurrent Relay 2032 Communications Processor 3351 Rugged Computer and Communication Processor OPTIONS: 1. Recommend approval of a sole source designation for SEL for purchase of protective relay, control, monitoring, metering, and integration hardware for installation in su stations. 2. Not recommend approval of a sole source designation for SEL and instruct other actions to betaken. RECOMMENDATION: DME recommends approval of a sole source designation for SEL. PRIOR ACTION/REVIEW (Council, Boards, Commissions): None FISCAL INFORMATION: Expenditures for protective relay, control, monitoring, metering, and integration hardware and software would be funded from approved . BID INFORMATION: The bid information is summarized in Exhibit 5. DATE SCHEDULED FOR COUNCIL APPROVAL: March 3, 2009 EXHIBITS: 1. SEL Letter 2. Product List Respectfully submitted: Phil Williams General Manager of Electric Utilities Denton Municipal Electric Prepared by: Chuck Sears Engineering Division Manager Denton Municipal Electric Exhibit 2 HVIf EITHER EN~INEERIN~ LAB~RATORIE, INS. X360 NE Hopkins Court ~ Pullman CIA 99163~bC3 USA Phoe~ 509~~.1~0 ~ Fax: 5~9.33~.T~90 ~ wrrwrselinc.aam ~ inflinccom January 26, 2009 Chuck Sears City of Denton 1659 Spencer Rd Denton, TX 76205 Dear Mr. Sears: This letter is to confirm that KD Johnson Inc. is the sole authorized sales representative for Schweitzer Engineering Laboratories, Inc. (SEL) in the state of Texas. As such, KD Johnson Inc. is authorized to sell SEL products to the City of Denton. Any quote inquiries or purchase orders should be sent by the City of Denton to KD Johnson, Inc. at the address listed below: Schweitzer Engineering laboratories, Inc. C/0 KDJohnson, Inc. PO Box 1208 Leonard, TX 75452 Ph: (903) 587-3373 Fax: (903) 587-2509 Jeannie johnson~kdjohnsoninc.net Jeff steib~kdjohnsoninc.net If you anyquestions regardingthis, please don't hesitateto contact me. I can be reached at chris matthews~selinc.com or 830-249-1945. Regards, Chris Matthews Regional Business Manager cc: Tom Butler, KD Johnson Inc., Jeff Steib, KD Johnson Inc. dip ~ ~ 1~e~ f~~[~ O O O O O O O O O O O O O O O O O V1 O O O V1 ~ 0 0 0 0 0 0 0 0 0 0 0 ~n O O O O o0 10 O H O l~ ~D O ~ ~ 00 ~ 00 N ~ N c+l c~ 00 O O ~ ~ v'~ ~ ~n O v~ ~ 0 V~ ~ ~!1 M o0 ~ N N l~ O cr1 ~ ~D N N ~ ~ ~ v1 ~ ~D N ~ U ~ oa oo m ~ ~ ~ m ~ ~ ~ s9 ~ ~ ~ cn ~o ~s~~~ s~ ~s~~~ s~~~ ~~o ~ ~ W r ~ ~n ~ N N o 0 o cf, ~ ~ ~ N ~ ~ ~ m ° N o 0 v O O~ O O O O O r+ r-+ ~ r+ N r+ ~ O O ..r_" 0 z ~ ~ N o 0 0 0 0 0 0 0~~ o 0 0 0~ o 0 r ~ ~ ~ U ~ ~ ~ ~ U . ~ U ~ V1 ~ N N O O ~ N ~ ~ r+ N ~ r+ ~ m ~ r+ O r+ ~ ~ ~ b~ r 'f ' U v s f ~ o ~ ~ ~ ~ ~ ~ ~ L ~ ~ N X Q W ~ r 0 W O ~ ~ ~ ~ ~ N N O N O N ~ ~ ~ N ~ ~ ~ N ~ ~ N f U H H ~p ~ ~ U y J v r1 ~ l~ ~D ~ N N O CO l~ ~ ~ ~ ~ ~ ~ ~ ~ ~ V~ N ~ ~ ~ . h-I ~ H ~ U W O 4~ a V ~ ~ ~ O ~ O O O O O O O O O O O O O O O O O V1 O H O 0 0 0 0 0 0 0 0 0 0 0 V1 0 0 0 0 0 v1 ~ O cd J a1 O ~ CO ~ 00 ~ c~ ~D l~ 01 6R3 N O O r1 b4 ~ ~ ~ O ~D c+1 c+1 ~ ~ ~ ~ N c*1 ~ ~--i ~--i ~.j N 59 b4 ff3 64 ~ ~ U ~ 69 b4 b4 SR3 69 b4 b4 b9 69 b9 b4 69 ~ ff} b9 ~ !f~ ~ ~ O ~ ~ ~ cn O ~ o ~ ~ U ~ U ~ N N d O Q. cC ti O ~ ~ ~ ~ ~ ~ U ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ N ~ m N m C/1 ~ by ~ Q - ~ y rll ~ . ~ ~ s-. ~ J ~ N P~ O O cC ~ O ~ ti cd O . ~ 0 ~ O ~ Q H~ Q~ w W U~~~ Q; U -i ~i U U w U W H U W U N~~ N O l~ O ~ ~ O m N V1 O O ~ ~ ~ ~ ~ c*1 O O \O ~ V1 O N N ~ ~ V'1 ~ CO V~ 00 ~ cr1 O ~ ~ ~ ~ c*1 ~ ~ ~ V'~ l~ O O m cn ~ ~n ~ ~ N N N U N cn ~ ~ ~ ~ N ~n ~n ORDINANCE N0. AN ORDINANCE OF THE CITY OF DENTON, TEXAS PROVIDING FOR, AUTHORIZING, AND APPROVING THE EXPENDITURE OF FUNDS FOR THE PURCHASE OF PROTECTIVE RELAY, CONTROL, MONITORING, METERING, SOFTWARE, AND INTEGRATION PRODUCTS MANUFACTURED BY SCHWEITZER ENGINEERING LABORATORIES, INC., WHICH IS AVAILABLE FROM ONLY ONE SOURCE, KD JOHNSON, INC. IN ACCORDANCE WITH THE PERTINENT PROVISIONS OF CHAPTER 252 OF THE TEXAS LOCAL GOVERNMENT CODE EXEMPTING SUCH PURCHASES FROM THE REQUIREMENTS OF COMPETITIVE BIDDING; AND PROVIDING AN EFFECTIVE DATE (FILE 4265-PURCHASE OF PROTECTIVE RELAY, CONTROL, MONITORING, METERING AND INTEGRATION HARDWARE FOR DENTON MUNICIPAL ELECTRIC IN THE ESTIMATED AMOUNT OF $662,575). WHEREAS, Section 252.022 of the Local Government Code provides that procurement of items that are only available from one source, including; items that are only available from one source because of patents, copyrights, secret processes or natural monopolies; films, manuscripts or books; electricity, gas, water and other utility purchases; captive replacement parts or components for equipment; and library materials for a public library that are available only from the persons holding exclusive distribution rights to the materials; need not be submitted to competitive bids; and WHEREAS, the City Council wishes to procure one or more of the items mentioned in the above paragraph; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The following purchase of materials, equipment or supplies, as described in the "File" listed hereon, and on file in the office of the Purchasing Agent, and the license terms attached are hereby approved: FILE NUMBER VENDOR AMOUNT 4265 Schweitzer Engineering Laboratories, Inc. c/o $662,575 KD Johnson, Inc. BAs listed on Exhibit A SECTION 2. The acceptance and approval of the above items shall not constitute a contract between the City and the person submitting the quotation for such items until such person shall comply with all requirements specified by the Purchasing Department. SECTION 3. The City Manager is hereby authorized to execute any contracts relating to the items specified in Section 1 and the expenditure of funds pursuant to said contracts is hereby authorized. SECTION 4. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2009. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: 3-ORD-File 4265 O O O O O O O O O O O O O O O O O V1 O O O V1 ~ 0 0 0 0 0 0 0 0 0 0 0 ~n O O O O o0 10 O H O l~ ~D O ~ ~ 00 ~ 00 N ~ N c+l c~ 00 O O ~ ~ v'~ ~ ~n O v~ ~ 0 V~ ~ ~!1 M o0 ~ N N l~ O cr1 ~ ~D N N ~ ~ ~ v1 ~ ~D N ~ U ~ oa oo m ~ ~ ~ m ~ ~ ~ s9 ~ ~ ~ cn ~o ~s~~~ s~ ~s~~~ s~~~ ~~o ~ ~ W r ~ ~n ~ N N o 0 o cf, ~ ~ ~ N ~ ~ ~ m ° N o 0 v O O~ O O O O O r+ r-+ ~ r+ N r+ ~ O O ..r_" 0 z ~ ~ N o 0 0 0 0 0 0 0~~ o 0 0 0~ o 0 r ~ ~ ~ U ~ ~ ~ ~ U . ~ U ~ V1 ~ N N O O ~ N ~ ~ r+ N ~ r+ ~ m ~ r+ O r+ ~ ~ ~ b~ r 'f ' U v s f ~ o Q H ~ ~ ~ L ~ ~ N X Q W ~ r 0 W O ~ ~ ~ ~ ~ N N O N O N ~ ~ ~ N ~ ~ ~ N ~ ~ N f U H H ~p ~ ~ U y J v r1 ~ l~ ~D ~ N N O CO l~ ~ ~ ~ ~ ~ ~ ~ ~ ~ V~ N ~ ~ ~ . h-I ~ H ~ U W O 4~ a V ~ ~ ~ O ~ O O O O O O O O O O O O O O O O O V1 O H O 0 0 0 0 0 0 0 0 0 0 0 V1 0 0 0 0 0 v1 ~ O cd J a1 O ~ CO ~ 00 ~ c~ ~D l~ 01 6R3 N O O r1 b4 ~ ~ ~ O ~D c+1 c+1 ~ ~ ~ ~ N c*1 ~ ~--i ~--i ~.j N 59 b4 ff3 64 ~ ~ U ~ 69 b4 b4 SR3 69 b4 b4 b9 69 b9 b4 69 ~ ff} b9 ~ !f~ ~ ~ O ~ ~ ~ cn O ~ o ~ ~ U ~ U ~ N N d O Q. cC ti O ~ ~ ~ ~ ~ ~ U ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ N ~ m N m C/1 ~ by ~ Q - ~ y rll ~ . ~ ~ s-. ~ J ~ N P~ O O cC ~ O ~ ti cd O . ~ 0 ~ O ~ Q H~ Q~ w W U~~~ Q; U -i ~i U U w U W H U W U N~~ N O l~ O ~ ~ O m N V1 O O ~ ~ ~ ~ ~ c*1 O O \O ~ V1 O N N ~ ~ V'1 ~ CO V~ 00 ~ cr1 O ~ ~ ~ ~ c*1 ~ ~ ~ V'~ l~ O O m cn ~ ~n ~ ~ N N N U N cn ~ ~ ~ ~ N ~n ~n DRAFT MINUTES PUBLIC UTILITIES BOARD February 23, 2009 After determining that a quorum of the Public Utilities Board of the City of Denton, Texas was present, the Chair of the Public Utilities Board thereafter convened into a Closed Meeting on Monday, February 23, 2009 at 9:00 a.m. in the Service Center Training Room, City of Denton Service Center, 901-A Texas Street, Denton, Texas. Present: Chair Charldean Newell, Dick Smith, Bill Cheek, Phil Gallivan, John Baines, Randy Robinson and Bill Grubbs Ex Officio Members: George C. Campbell, City Manager Howard Martin, ACM Utilities OPEN MEETING: CONSENT AGENDA: The Public Utilities Board has received background information, staff's recommendations, and has had an opportunity to raise questions regarding these items prior to consideration. 5) Consider recommending approval of purchasing protective relay, control, monitoring, metering, software, and integration products from Schweitzer Engineering Laboratories, Inc., acting through their manufacturer's representative, which is presently KD Johnson in Leonard, Texas, as the sole source provider for Schweitzer Engineering Laboratories, Inc., Board Member John Baines moved to approve with a second from Board Member Randy Robinson. The motion was approved by a 7-0 vote. The meeting was adjourned by consensus at 11:25 a.m. AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 Questions concerning this acquisition may be directed DEPARTMENT: Materials Management to Phil Williams 349-8487 ACM: Jon Fortune SUBJECT Consider adoption of an ordinance accepting competitive bids and awarding a contract for the purchase of tree trimming and vegetation management services for Denton Municipal Electric; providing for the expenditure of funds therefor; and providing an effective date (Bid 4233-Tree Trimming Services awarded to ABC Professional Tree Services, Inc. in the amount of $450,000). The Public Utilities Board recommends approval (7-0). BID INFORMATION This bid is for tree trimming services for five electric distribution circuit projects and also provides fora "Hot Spot Crew" to be used during emergencies such as power outages and repair of storm damage and also right of way clearance for new construction. A complete description of the services is included in the attached Public Utilities Board Agenda Information Sheet (Exhibit 1). PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS) The Public Utilities Board approved this item at its February 23, 2009 meeting. RECOMMENDATION Approve the award of Bid 4233 to ABC Professional Tree Services, Inc. in the amount of $450,000. PRINCIPAL PLACE OF BUSINESS ABC Professional Tree Services, Inc. Houston, TX ESTIMATED SCHEDULE OF PROJECT The five electric distribution circuit projects are scheduled to be completed by the end of December 2009. Agenda Information Sheet March 3, 2009 Page 2 FISCAL INFORMATION This project will be funded from account 600200.7899.5930. EXHIBITS Exhibit 1: Public Utilities Board Agenda Information Sheet With Out Exhibits Exhibit 2: Bid Tabulation Respectfully submitted: . 1 Tom Shaw, C.P.M., 349-7100 Purchasing Agent 1-AIS-Bid 4233 Exhibit 1 PUBLIC UTILITIES BOARD AGENDA ITEM #3 AGENDA INFORMATION SHEET AGENDA DATE: February 23, 2009 DEPARTMENT: Utilities UTILITIES ACM: Howard Martin, 349-8232 SUBJECT: Consider recommending approval of Bid #4233 for award of contract for Tree Trimming and Vegetation Management Services to ABC Professional Tree Service in the estimated expenditure amount of $450,000. BACKGROUND: DME is going to a Lump Sum Bid for tree trimming on electric distribution circuits, each circuit listed below to be trimmed will be an individual project. Circuits being trimmed will consist of starting at the substation and trimming the entire circuit, including all lateral lines and also inspecting and trimming all service lines to the house. Project 1: Hickory 212 and Hickory 213 (Double Circuit) Project 2: Kings Row 213 and Kings Row 221(Double) Project 3: North Lakes 211 and North Lakes 221(Double Circuit) Project 4: Kings Row 212 and Kings Row 223 (Double Circuit) Project 5: Locust 221(Single Circuit) DME will also have the availability of using a "Hot Spot Crew" this crew(s) will be based on an hourly rate and used during emergencies and new line construction needs (power outages, thunderstorm, ice storm damage, and right of way clearance for new construction). DME will benefit in the following areas: 1. Issuing a Tree Trimming Contract based on a lump sum bid will help ensure that the electric lines will be trimmed properly in a timely manner that will be cost effective for DME. 2. Accessibility will be easier for crews to perform routine maintenance on the overhead lines and structures. 3. During thunderstorms, ice storms, and high winds; damage will be less likely to happen if the vegetation around the overhead power lines is maintained to the electric industry standard. 4. Severe thunderstorms, fast growing trees and vegetation can lead to long term power outages, "Hot Spot Crew" can be used to improve power restoration during these outages. 5. Overhead and underground construction crews will be able to utilize the "Hot Spot Crew" for clearing trees that are in the easement or right of way, enabling the DME crews to finish jobs at a much faster rate. AIS -PUB Agenda Item #3 February 23, 2009 Page 2 of 3 Tree Trimming Public Education Plan To inform DME customers who will be affected by the upcoming tree trimming project and educate them about the necessity of tree trimming, the Community Relations Department will be designing a direct mail piece to be mailed to customers. This direct mail piece will be a half letter size flier, which alerts customers that DME will be conducting tree trimming in their neighborhoods. It will also provide them with education about why trimming trees is vital to ensure continuous electric service. Customers will be directed to view additional information about tree trimming on the DME Web site, www.dmepower.com, and given a contact phone number for questions and concerns. This direct mail piece will be mailed to customers four weeks prior to the beginning of the project. Two weeks prior, door hangers will be left at homes that will receive tree trimming. The door hanger also provides customers with information about how the trees will be trimmed and a contact phone number for questions or concerns. During the week the proj ect begins, customers will also receive a reminder phone call alerting them that tree trimming will be taking place in their neighborhood during the next few weeks. OPTIONS: 1. Recommend award of a contract to ABC Professional Tree Service, for Tree Trimming and Vegetation Management. 2. Not recommend approval of the proposed contract and direct that other actions betaken. RECOMMENDATION: DME recommends approval of Bid #4233 from ABC Professional Tree Service, Inc., and award of a contract for Tree Trimming and Vegetation Management Services of the five projects in the total estimated amount of $450,000. ESTIMATED SCHEDULE OF PROJECT: All projects will be completed by the end of the 2009 calendar year. Hot Spot Crew is on an as needed basis and will be ongoing. PRIOR ACTION/REVIEW (Council, Boards, Commissions): None FISCAL INFORMATION: This purchase is included in DME's approved FY09 Operating budget $550,000 under the following codes: 600200.7899.5930 BID INFORMATION: None DATE SCHEDULED FOR COUNCIL APPROVAL: March 3, 2009 EXHIBITS: 1. Contractor Bid Evaluation AIS -PUB Agenda Item #3 February 23, 2009 Page 3 of 3 Respectfully submitted: Phil Williams General Manager of Electric Utilities Denton Municipal Electric Prepared by: Jeff Morris Operations Division Manager Denton Municipal Electric ~ ~ ~ ~ ~ ~ O O ~ ~ ~ ~ ~ O O O p m ,N L ~ p N N N I~ +-I ~ t0 ~ Z a ~ ~ ~ ~ M O I,A n 00 ~ ~ ~ 0 0 = n LA M M LA ~ ~ ~ a L = ~ ~ ~ ~ ~ V H O O O O O O N ` O O ~ ~ O ~ p ~ 0 ~ N O ~ ~ N OJ ~ W ~ _ (rj N ~ (Yj ~ ,M-i ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ _ ~r ~ ~ X 0C L ~ ~ 0 0 0 H V N ~ ~ O O p s Q~ O O O O O l0 ~ L O O N N Z = 0 ~ ~ O O O ~ ~ 0~ OJ W 7 0. = O LIl ~ N ~ ~ {f} a ~ u = ~ H o 0 0 0 0 ~ ~ 0 0 0 0 0 0 N ~ p~ ~ ~ o 0 0 0 0 0 0 0 ~ Z L ,U = V~ ~ ~ 00 00 CO 00 ~ ~ O N OJ ~ m W O i Q 0= N ~ L.f) N ~ 0 N W ~ N ,--i C 0 - N O ~ ~ ~ ~ ~ ~ !Yl J N ~ ~ 0 C C~~ L D N N Z Z~ -6 ~ 0 C ~ Y Y N V1 °'~u~ oc O °-~~o N 3 3 J a ~~3~~ - ~ to Y O 0 ~ ~ ~ o~~~ _ ~ ~ r 3~~0 a~~ a~ a~ (n U1 C -O cn U cn ~ ~ O ~ v p v N ~ j ~ W ~ c u 0 ~ ~ Z w.-.~ ~ c O Y N c z a~ _ 3 O ~ = L ~ ~ ~ -p c~ ~ ~ N ~ O ~ ~ 0 U1 C ~ rrWAA V ~ ~vL.~ ~ ~ ~ Z W~ Q~`~6~ o ~ o~~~ N Vl ~ U ~ ~ ~ ~ N ~ ~ N ~ J ~ ~ O ~ ~ C L .Q~ W 1 N a~ UW w~~ca~ ~ ~ U rl ~ ~ c o vi ~ = 3 3 U ~ ~ Q s O ~ ~ ~ p - o ~ a~~ Z a oo~v ~ ~ ~ ZU ~ Jas ~ a~ ~ ~ U ~ ~ ~w~ ~ ~ ~ ~ L J ~ w=~UJ ~ ~ c _ U 3 ~ ~ ~ ~ ~ U U C C ~ O. 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AN ORDINANCE ACCEPTING COMPETITIVE BIDS AND AWARDING A CONTRACT FOR THE PURCHASE OF TREE TRIMMING AND VEGETATION MANAGEMENT SERVICES FOR DENTON MUNICIPAL ELECTRIC; PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE (BID 4233-TREE TRIMMING SERVICES AWARDED TO ABC PROFESSIONAL TREE SERVICES, INC. IN THE AMOUNT OF $450,000). WHEREAS, the City has solicited, received and tabulated competitive bids for the purchase of necessary materials, equipment, supplies or services in accordance with the procedures of State law and City ordinances; and WHEREAS, the City Manager or a designated employee has reviewed and recommended that the herein described bids are the lowest responsible bids for the materials, equipment, supplies or services as shown in the "Bid Proposals" submitted therefore; and WHEREAS, the City Council has provided in the City Budget for the appropriation of funds to be used for the purchase of the materials, equipment, supplies or services approved and accepted herein; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The numbered items in the following numbered bids for materials, equipment, supplies, or services, shown in the "Bid Proposals" on file in the office of the City Purchasing Agent, are hereby accepted and approved as being the lowest responsible bids for such items: BID NUMBER VENDOR AMOUNT 4233 ABC Professional Tree Services, Inc. $450,000 SECTION 2. By the acceptance and approval of the above numbered items of the submitted bids, the City accepts the offer of the persons submitting the bids for such items and agrees to pur- chase the materials, equipment, supplies or services in accordance with the terms, specifications, standards, quantities and for the specified sums contained in the Bid Invitations, Bid Proposals, and related documents. SECTION 3. Should the City and the winning bidder(s) wish to enter into a formal written agreement as a result of the acceptance, approval, and awarding of the bids, the City Manager or his designated representative is hereby authorized to execute a written contract in accordance with the terms, conditions, specifications, standards, quantities and specified sums contained in the Bid Proposal and related documents and to extend that contract as determined to be advantageous to the City of Denton. SECTION 4. By the acceptance and approval of the above enumerated bids, the City Council hereby authorizes the expenditure of funds therefor in the amount and in accordance with the approved bids. SECTION 5. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this day of , 2009. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY r r• ' pl 5 i F BY: 4-ORD-4233 BID # 4233 Exhibit A DATE: FEBRUARY 12, 2009 BID FOR TRIMMING SERVICES FOR DME ITEM DESCRIPTION VENDOR ABC Professional Tree Services, Inc. Principle Place of Business: Houston, TX DESIGNATED PROJECTS: Furnish all supervision, labor, traffic control personnel, material, supplies, tools, equipment and transportation to 1 trim and remove trees, brush, and vines as needed to comply with DME Tree Trimming Specifications for the following projects. A DME Feeder Hickory HK212 and Hickory HK213 (Double $70 320.00 Circuit B DME Feeder Kings Row KR212 and Kings Row KR223 $51 025.00 (Double Circuit) C DME Feeder Kings Row KR213 and Kings Row KR221 $33 528.00 (Double Circuit) D DME Feeder Locust LC221 $35,770.00 E DME Feeder North Lakes NL211 and North Lakes NL221 $54 819.00 (Double Circuit) EMERGENCY & ADD. LINE CLEARING WORK AS NEEDED -AERIAL LIFT CREWS: HOURLY LABOR FOR AERIAL LIFT CREWS - 55' MIN. WORKING HEIGHT -Total of one (1) crew (capable of 2 back lot work )with three (3) persons: one working Foreman with a CDL, one qualified line clearance tree trimmer with CDL & one trimmer trainee or ground man. A Standard Time (8 hour notice) $85.00 B Emergency Time (less than 8 hours notice) $116.00 SUPPORT CREWS: TRIM & BRUSH PICK-UP - Total of one 3 (1) crew (trim & brush pickup), two (2) persons (one working foreman with CDL & one ground man) A Regular Time $63.50 B Overtime $83.50 EMERGENCY & ADD. LINE CLEARING WORK AS NEEDED -IND. LABOR & EQUIPMENT RATE 4 Supervisor Tree Trimming- HOURLY $39.50 Supervisor Tree Trimming- OVER TIME $58.45 5 Foreman Tree Trimmer (climbing)- HOURLY $24.50 Foreman Tree Trimmer (climbing)- OVER TIME $36.26 5a Tree Trimmer- HOURLY $22.00 i i i i BID # 4233 Exhibit A DATE: FEBRUARY 12, 2009 BID FOR TRIMMING SERVICES FOR DME ITEM DESCRIPTION VENDOR ABC Professional Tree Services, Inc. Principle Place of Business: Houston, TX Tree Trimmer- OVER TIME $32.56 6 Line Clearance Trainee or Ground Man/Flagman- HOURLY $19.00 Line Clearance Trainee or Ground Man/Flagman- OVER $28.12 TIME 7 Equipment Operator (tractor)- HOURLY $24.00 Equipment Operator (tractor)- OVER TIME $35.50 8 Aerial Lift with dump bed & disc chipper 75-ft. minimum $27 00 working height & associated equipment- HOURLY Aerial Lift with dump bed & disc chipper 75-ft. minimum $27,00 working height & associated equipment- OVER TIME 9 Chip truck, 10 cu. Yd. covered dump body with disc $16.00 chipper & associated equipment Chip truck, 10 cu. Yd. covered dump body with disc $16.00 chipper & associated equipment- OVER TIME 10 Tractor, WD with bush-hog & associated equipment- $37.00 HOURLY Tractor, WD with bush-hog & associated equipment- $37.00 OVER TIME 11 Chipper only (DISC Chipper only)- HOURLY $6.00 Chipper only (DISC Chipper only)- OVER TIME $6.00 TREE REMOVAL - To be utilized at the sole discretion of DME to have contract crews while working on the associated circuit remove entire trees as identified by DME 12 TREE DIAMETER, 3" - 6" Dbh Removal Rate $25.00 13 TREE DIAMETER, 6" - 12" Dbh Removal Rate $45.00 14 TREE DIAMETER, 12" - 18" Dbh Removal Rate $125.00 15 TREE DIAMETER, 18"+ Dbh Removal Rate $350.00 ADDENDUM # 1 YES i i i i 1 DRAFT MINUTES 2 PUBLIC UTILITIES BOARD 3 February 23, 2009 4 5 After determining that a quorum of the Public Utilities Board of the City of Denton, Texas was 6 present, the Chair of the Public Utilities Board thereafter convened into a Closed Meeting on 7 Monday, February 23, 2009 at 9:00 a.m. in the Service Center Training Room, City of Denton 8 Service Center, 901-A Texas Street, Denton, Texas. 9 10 Present: Chair Charldean Newell, Dick Smith, Bill Cheek, Phil Gallivan, John Baines, 11 Randy Robinson and Bill Grubbs 12 13 Ex Officio Members: 14 George C. Campbell, City Manager 15 Howard Martin, ACM Utilities 16 17 OPEN MEETING: 18 19 CONSENT AGENDA: 20 The Public Utilities Board has received background information, staff's recommendations, and 21 has had an opportunity to raise questions regarding these items prior to consideration. 22 23 7) Consider recommending approval of Bid #4233 for award of contract for Tree Trimming and 24 Vegetation Management Services to ABC Professional Tree Service in the estimated 25 expenditure amount of $450,000. 26 27 Board Member John Baines moved to approve with a second from Board Member Randy 28 Robinson. The motion was approved by a 7-0 vote. 29 30 The meeting was adjourned by consensus at 11:25 a.m. 31 This page left blank intentionally. AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 Questions concerning this acquisition may be directed DEPARTMENT: Materials Management to Phil Williams 349-8487 ACM: Jon Fortune SUBJECT Consider adoption of an ordinance accepting competitive bids and awarding a contract for the purchase of transmission control and relay panels for Denton Municipal Electric; providing for the expenditure of funds therefor; and providing an effective date (Bid 4245-Relay Panels for RD Wells Interchange and Hickory Creek Substation awarded to Electrical Power Products in the amount of $188,893). The Public Utilities Board recommends approval (7-0). BID INFORMATION This bid is for the purchase of control and relay panels for the RD Wells Interchange and Hickory Substation Capital Improvement Projects. Control buildings to house the control and relay panels have already been purchased. A complete description of the projects is included in the attached Public Utilities Board Agenda Information Sheet (Exhibit 1). PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS) The Public Utilities Board approved this item at its February 23, 2009 meeting. RECOMMENDATION Approve the award of Bid 4245 to Electrical Power Products in the amount of $109,691 for the RD Wells Interchange and $79,202 for the Hickory Substation for a total award of $188,893. PRINCIPAL PLACE OF BUSINESS Electric Power Products Des Moines, IA ESTIMATED SCHEDULE OF PROJECT The control and relay panels can be delivered within twelve weeks of receipt of a purchase order. Agenda Information Sheet March 3, 2009 Page 2 FISCAL INFORMATION This project will be funded from the following accounts: 600128488.1350.3530 $70,000 600128488.1350.3620 $ 9202 600005488.1350.3530 $82,461 600126493.1350.3620 $27,230 $188,893 Requisition #92093 and #92094 have been entered in the Purchasing software system. EXHIBITS Exhibit 1: Public Utilities Board Agenda Information Sheet With Out Exhibits Exhibit 2: Bid Tabulation Respectfully submitted: . 1 Tom Shaw, C.P.M., 349-7100 Purchasing Agent 1-AIS-Bid 4245 Exhibit 1 PUBLIC UTILITIES BOARD AGENDA ITEM #5 AGENDA INFORMATION SHEET AGENDA DATE: February 23, 2009 DEPARTMENT: Electric Engineering ACM: Howard Martin, 349-8232 SUBJECT: Consider recommending approval of Bid #4245 and awarding the purchase for manufacturing and delivery of transmission control and relay panels to Electrical Power Products, Des Moines, Iowa, for the RD Wells Interchange in the amount of $109,691.00 and for the Hickory Substation in the amount of $79,202.00 for a total expenditure amount of $188,893.00. BACKGROUND: The RD Wells Interchange and Hickory Substation projects are approved CIP projects. The station locations are shown in Exhibit 1. Control and relay panels are required to complete the projects. Control buildings to house the control and relay panels have already been purchased. The control and relay panels contain the wiring and devices that monitor conditions in a station and on the transmission lines attached to the station and control circuit breakers, transformers, and other equipment. Protective relays continuously monitor currents and voltages, provide metering data, make adjustments, store information, transmit alarms, detect faults, operate circuit breakers to clear faults, record fault data, and perform a number of other important and necessary functions. Most of these devices are microprocessor based. Substations cannot exist without the control and protective relay devices that are included on relay panels. Figure 1 below is a picture of a typical control building for substations. Figure 1 AIS -PUB Agenda Item #5 February 23, 2009 Page 2 of 4 Figure 2 shows pictures of the front and rear of relay panels similar to what the RD Wells and Hickory relay panels will be like. Figure 2 Exhibit 2 contains site plans for the RD Wells Interchange and the Hickory Substation showing the locations for the control buildings. Exhibit 3 contains floor plans for the RD Wells and Hickory buildings showing where the relay panels will be placed in the buildings. Exhibit 4 contains drawings of the relay panels for both stations. Purchase of transformers, circuit breakers, instrument transformers, transmission switches, distribution switchgear, insulators, bus material, steel, control buildings, have all been completed for both stations. The construction contract has been awarded for RD Wells. Construction of the Hickory substation has been an in-house effort. The bid for the control and relay panels did not include the protective relay, control, monitoring, metering, and integration devices. It has been DME's practice to purchase this hardware directly to take advantage of discounts for quantity purchases. These relays and devices are then provided to the panel manufacturer for installation in the panels or, in some cases, installed by DME technicians after the panels are received. Purchase of the relays will be a separate item presented to the PUB. The estimated cost for protective relay, control, metering, monitoring, and AIS -PUB Agenda Item #5 February 23, 2009 Page 3 of 4 integration equipment is $294,100 for these two projects. A listing of the items necessary and their estimated costs are included in Exhibit 6. Bid #4245 was advertised in accordance with standard Purchasing Department procedures. Bid packages were provided to 30 vendors. Six bids were received. One bid was withdrawn because of a mistake on the bid. One bid was disqualified because the required bid bond was not provided. Information from the accepted bids is summarized in Exhibit 5. OPTIONS: 1. Recommend approval for purchase of transmission control and relay panels in accordance with Bid #4245. 2. Not recommend approval for purchase of control and relay panels for the RD Wells Interchange and Hickory Substation from Bid #4245 and instruct other actions to betaken. RECOMMENDATION: DME recommends approval of Bid #4245 from Electrical Power Products for purchase of control and relay panels for the RD Wells in the amount of $109,691.00 and for the Hickory Substation in the amount of $79,202.00 for a total purchase of $188,893.00. PRIOR ACTION/REVIEW (Council, Boards, Commissions): None FISCAL INFORMATION: The total expenditure for the control and relay panels for the RD Wells Interchange as a part of Bid #4245 is estimated to be $109,691.00 and will be funded with bond funds from project account 600005488 and 600126493. The total expenditure for the control and relay panels for the Hickory Substation as a part of Bid #4245 is estimated to be $79,202.00 and will be funded with bond funds from project account 600128488. BID INFORMATION: The bid information is summarized in Exhibit 5. DATE SCHEDULED FOR COUNCIL APPROVAL: March 3, 2009 EXHIBITS: 1. Station Location Map 2. Site Plans 3. Building Floor Plans 4. Relay Panel Drawings 5. Summary and Evaluation of Bid #4245 6. Estimated Relay and Monitoring Equipment Cost AIS -PUB Agenda Item #5 February 23, 2009 Page 4 of 4 Respectfully submitted: Phil Williams General Manager of Electric Utilities Denton Municipal Electric Prepared by: Chuck Sears Engineering Division Manager Denton Municipal Electric ~ ~ ~ ~ ~ ~ 0 U ~ U ~ ~ G ~ ~ ~ > ' ~ ' ~ ~ ~ ~ ~ ~ ~ U U ~ Q~ ~ Q~ ~ o ~ o ~ ~ o ~ ~ ~ 0 ~ ~ ~ ~ ~ ~ ~ ~ ~ o ~ o ~ ~0 ~ W W W U~ O U~ O ~ Z > ~z ~ ~z ~ N o o ~ o o ~ ~ ~ ~ ~ ~ ~ ~ ~ o y ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ ~ ~ ~ p U1 V1 ~ Z ~ ~ ~ ~ ~ ~ ~ Z O ~ ~ o ~ o ~ ~ V o o N ~ o C~ o C~ ~ U U H 0 w ~ ~ ~ ~ ~ ~ ~ ~ Opp ~ W W 0 0 ~ ~ o o ^ ~ W ~ ~ ~ ~ 04 ~ ~ G~ G~ 04 A Z ~ ~ ~ ~ ~ W Q W Q ~ ~ ~ ~ ~ ~ O ~ ~ ~ N O 0 ~ ~ ~ O x ~ ~ U U O ~ ~ ~ ~ o ~ a ~ ~ ~ N N N W ~ ~ ~ ~ Q 4~ ~ ~ ° ~ ~ ~~~~a ~ ~ ~ ~ o ~ ~ ~ ~ ~ o ~ ~ ~ y o o ~ ~ H ~ a ~ U ~ ~ ~ ~ ~ ~ ~..a ~z~~ ~W■ ~ ~ A ` W ~ N c+~ I■■I ~ 4~ ~ ~ ~ ~ ~ ~4 A ~ ORDINANCE N0. AN ORDINANCE ACCEPTING COMPETITIVE BIDS AND AWARDING A CONTRACT FOR THE PURCHASE OF TRANSMISSION CONTROL AND RELAY PANELS FOR DENTON MUNICIPAL ELECTRIC; PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE (BID 4245-RELAY PANELS FOR RD WELLS INTERCHANGE AND HICKORY CREEK SUBSTATION AWARDED TO ELECTRICAL POWER PRODUCTS IN THE AMOUNT OF $188,893). WHEREAS, the City has solicited, received and tabulated competitive bids for the purchase of necessary materials, equipment, supplies or services in accordance with the procedures of State law and City ordinances; and WHEREAS, the City Manager or a designated employee has reviewed and recommended that the herein described bids are the lowest responsible bids for the materials, equipment, supplies or services as shown in the "Bid Proposals" submitted therefore; and WHEREAS, the City Council has provided in the City Budget for the appropriation of funds to be used for the purchase of the materials, equipment, supplies or services approved and accepted herein; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The numbered items in the following numbered bids for materials, equipment, supplies, or services, shown in the "Bid Proposals" on file in the office of the City Purchasing Agent, are hereby accepted and approved as being the lowest responsible bids for such items: BID NUMBER VENDOR AMOUNT 4245 Electric Power Products $188,893 SECTION 2. By the acceptance and approval of the above numbered items of the submitted bids, the City accepts the offer of the persons submitting the bids for such items and agrees to pur- chase the materials, equipment, supplies or services in accordance with the terms, specifications, standards, quantities and for the specified sums contained in the Bid Invitations, Bid Proposals, and related documents. SECTION 3. Should the City and the winning bidder(s) wish to enter into a formal written agreement as a result of the acceptance, approval, and awarding of the bids, the City Manager or his designated representative is hereby authorized to execute a written contract in accordance with the terms, conditions, specifications, standards, quantities and specified sums contained in the Bid Proposal and related documents and to extend that contract as determined to be advantageous to the City of Denton. SECTION 4. By the acceptance and approval of the above enumerated bids, the City Council hereby authorizes the expenditure of funds therefor in the amount and in accordance with the approved bids. SECTION 5. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this day of , 2009. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY r r= 5 BY: 4-ORD-Bid 4245 1 DRAFT MINUTES 2 PUBLIC UTILITIES BOARD 3 February 23, 2009 4 5 After determining that a quorum of the Public Utilities Board of the City of Denton, Texas was 6 present, the Chair of the Public Utilities Board thereafter convened into a Closed Meeting on 7 Monday, February 23, 2009 at 9:00 a.m. in the Service Center Training Room, City of Denton 8 Service Center, 901-A Texas Street, Denton, Texas. 9 10 Present: Chair Charldean Newell, Dick Smith, Bill Cheek, Phil Gallivan, John Baines, 11 Randy Robinson and Bill Grubbs 12 13 Ex Officio Members: 14 George C. Campbell, City Manager 15 Howard Martin, ACM Utilities 16 17 OPEN MEETING: 18 19 CONSENT AGENDA: 20 The Public Utilities Board has received background information, staff's recommendations, and 21 has had an opportunity to raise questions regarding these items prior to consideration. 22 23 9) Consider recommending approval of Bid #4245 and awarding the purchase for 24 manufacturing and delivery of transmission control and relay panels to Electrical Power 25 Products, Des Moines, Iowa, for the RD Wells Interchange in the amount of $109,691, and 26 for the Hickory Substation in the amount of $79,202 for a total expenditure amount of 27 $188,893. 28 29 Board Member John Baines moved to approve with a second from Board Member Randy 30 Robinson. The motion was approved by a 7-0 vote. 31 32 The meeting was adjourned by consensus at 11:25 a.m. 33 AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 DEPARTMENT: City Manager's Office CM/DCM/ACM: George C. Campbell, City Manager SUBJECT: Consider adoption of an ordinance of the City of Denton authorizing an agreement between the City of Denton, Texas and Denton Parks Foundation to assist with preparation for the 2009 Cinco de Mayo Celebration; providing for the expenditure of funds therefore; and providing for an effective date. BACKGROUND: This agreement allows for the total expenditure of $1,450 (Mayor Mark Burroughs, $100; Mayor Pro Tem Pete Kamp, $200; Council Member Charlye Heggins, $300; Council Member Jack Thomson, $200; Council Member Chris Watts, $150; Council Member Moreno, $300 and Council Member Joe Mulroy, $200) from Council Contingency Funds. Key provisions of the agreement include: ■ Funds shall be used by the Denton Parks Foundation to assist with the costs of entertainment, decorations, promotions and/or children's activities for the 2009 Cinco de Mayo Celebration. ■ In addition to other reporting requirements, documentation in the form of cancelled checks and/or corresponding receipts specifically detailing expenditure of funds for the purpose provided is required for reimbursement from these designated funds. FISCAL INFORMATION Funding for the contract will come from respective Council contingency fund accounts. Respectfully submitted: 4. r. i - r. _ ~ ~ 4y~ - - ~ f George C. Campbell City Manager Prepared by: Linda Holley Executive Assistant s:lour dar~u~x,~~lor~anoesV09hden~ parks f~undwtian-c~toa da mayo.dac 4 ORDINANCE NO. AN ORDINANCE OF THE CITY' OF DENTON AUTHORTLTNGANAGREFMENTBETWEEN THE CITY OF DENTON, TF.,~AS AND DENTON PARKS FOUNDATION TO ASSIST WITI~ PREPARATION FOR THE 2049 CINCO DE MAYO CELEBRATION; PROVII)ING FOR THE F~PENDIZ'URE OF FUNDS; AND PROVIDINCr FOR AN EFFECTNE DATE. WHEREAS, the Denton Parks Foundation, a Texas non-profit corporation, the ' "Organization"}provides assistance to the Cinco de Mayo Committee for the cost of entertainment, decorations, promotions,and/or children's activities for the Annual Cinoo De Mayo Celebration the "Prag~ram"~. and WHEREAS, the Organization and the City of Denton desire to enter into as agreement to provide far the continuance of the Program which agreement is substantially in the same farm as the agreement attached hereto and made a part hercof by referee ~thc "Agreement"}; and ' WHEREAS, the City Council of the City of Denton hereby funds that the Agreement between the City and the Organization attached hereto and made a part hereof by reference serve a municipal and public purpose and the Agreement is in the public interest; NOW, THEREFORE, 'TIS COUNCII, OF THE CITY OF DENTON HEREBY ORDAINS: S TION 1. The findings set forth in the preamble of this Ordinance are incorporated by reference into the body of this Ordinance as if fully set forth herein. SF, TI~ ON 2. The City Manager, or his designee, is hereby authorized to execute the Agreement and to carry out the duties and responsibilities of the City under the Public Service Agreement, including the expcnditure of funds as provided in the Public Agreement. SECTION 3. This Ordinance shall become effective innnediately upon its passage and approval. PASSED AND APPROVED this the day of 2049. MARS A. BURROUGHS, MAYOR s:l~r dacurr~en~lord~nas~Q9'~en~ p~1cs found~ion•cmco de nmyn.doc ATTEST: JENNIFER 1~Ai,TERS, CITY SECRETARY BY; APPROVED A5 TO LEGAL FORNY; ANYTA BURGESS, CITY ATTORNEY ~ . BY: ~ ~ ~ Page ~ s S:VQur Dacumaaal~Copt~ctsl~enban Farka Faund~ion ZDO~.dac SER'~ICE AGREEMENT BETWEEN THE C'TrY 4F DENTON, TEXAS AND DENT[~N PARKS FGUNDATYaN This Agreement is hereby entered into by and between the City of Denton, Texas, a Home Rule Municipal Corpora~.an, hereinaIIer referred to as "City", and Denton Parks Foundation, a Texas Non-Profit Corporation, hereinafter referred to as `T~enton Parks Founda~on"; WHEREAS, City has determined that the proposal for services merits assista~ace and can provide needed services to citizens of City and has provided funds in its budget for the purpose of paying for contractual services; and WHEREAS, this Agreement serves a valid municipal and public purpose and is in the public interest; NOW, THEREFORE, the parties hereto mutually agree as follows: I. SCDPE ,~F SERVICES Denton Parks Foundation shall in a satisfactory and proper manner perfann the following tasks, far which the marries provided by City may be used: The funds being provided shall be used by Denton Parks Foundation to assist with the costs of ~ i entertainment, decorations, promotions andlor children's activities for the Zo(19 Cinco de Mayo Celebration. f II. DBLICATI~NS__C~F~JENT~N_P„~R1 F~uNDA ~ In consideration of the receipt of funds fi~om City, Denton Parks Foundation agrees tQ the following terms and conditions: A. One Thousand, Four Hundred Fifty Dollars and noll~ (1,450.04} shall be paid to Denton Parks Foundation by City to be utilized for the purposes set forth in Article I, 8. Denton Parks Foundation will maintain adequate records to establish that the City funds are used for the purposes authorized by this Agreement. C. Denton Parks Foundation will permit authorized officials of City to review its books at anytime. D. Upan request, Denton Parks Foundation will provide to City its By Laws and any of its rules and regulations that may be relevant to this Agreement. E. Denton Parks Foundation will not enter into any contracts that would encumber City fiords for a period that would extend be}rond the term of this Agreement. F. Denton Parks Foundation will appoint a representativc who will be available to meet with City o~cials when requested. G. Denton Parks Foundation will submit to City copies of yearend audited financial statements. III, TIlV[E DF PERF RMANCE The services funded by City shall be undertaken and completed by Organization within the following time frame: The tern of this Agreement shad commence on the effective date and terminate September 34, 2409, unless the contract is sooner terminated undex Section ~II "Suspension or Termination". IV. AYMENTS A. PAn~r~'s'r~a D~rrrorr PA~xs FovNDA~o~v. City shall pay to Denton parks Foundation the sum specified in Article II after the effective date of this Agreement. B. E~C~SS PAYMENT. Denton Parks Foundation shall refund to City within ten X14}working days of City's request, any aura of money which has been paid by City and which City at any tune thereaftcr determines: 1} has resulted in overpayment to Denton Parks Foundation; or 2) has not been spent strictly in accarda~acc with the terms of this Agreement; or 3} is not supported by adequate dacumcntation to fully justify the expenditurc. EVALUATION Denton Parr Foundation agrees to participate in an impleraenta~ion and maintenance system whereby the scrvices can be continuously monitored. Denton Parks Foundation agrees to make available its financial records for review by City ax City's discretion. In addifion, Denton Parks Foundation agrees to provide City the following data and reports, ar copies thereof: A. All external or internal audits. Denton Parks Foundation shall. submit a copy of the annual independent audit to City within ten ~14~ days of receipt. B, All external or internal evaluation reports. C. An explanation of any major changes in program services. i Page ~ of 7 D. To comply with this section, Denton Parks Foundation as'► to maintain records that will provide accurate, cun~ent, separate, and complete disclosure of the status of funds received and the services performed under this Agreement. The record system of Denton Parks Foundation shall contain su~cient documentation to provide in detail full support and justification for each expenditure. Denton Parks Foundation agrees to retain all books, retards, documents, reports, and written accounting procedures pertaining to the services provided and expenditure of funds under this Agreement far eve years. E. Nothing in the above subsections shall be construed to relieve Denton Parks Foundation of responsibility for retaining accurate and current records that clearly reflect the level and benefit of services provided under this Agreement, VI. D~CTOI~S' MEETINGrS During the term of this Agreement, Denton Parks Foundation shall deliverta City copies of all ' notices of meetings of its Board of Directors, settling forth the tune and place thereof wherein this program i$ a part of the subject matter of the meeting. Such notice sha11 be delivet~l to City in a timely manner to give adequate notice, and shall include an agenda and a brief description of the matters to be discussed. Denton parks Foundation understands and agrees that Cites representatives shall be afforded access to all meetings of its Board of Directors. Minutes of alI meetings of Denton Parks Foundation' governing body shall be available to City within ten ~l~}working days of approval. TE,RMINATTON The City may terminate this Agreement for cause if Denton Parks Foundation violates any covenants, agreements, ar guarantees of this Agreement,the Denton Parks Foundation's insolvency or filing of bankruptcy, dissolu~on, or receivership, or the Denton Parks Foundation' violation of any law or regulation to which it is bound under the teens of this Agreement, The City may terminate this Agreement for other reasons not specifically enumerated in this paragraph. VIII. EQUAL OPPOI~ AND COMPLIANCE WITH LAWS ~ r u i r~~w.w^i r ~r.~~rrr - r~ ~~r . . A. Denton Parks Foundation shall comply with all applicable equal employment opportunity and affirmaxive action laws or regulations, B. Denton Parks Foundation will furnish all infar~mation and reports requested by City, and will permit access to its books, records, and accounts for purposes of investigation to ascertain compliance with local, State and Federal rubs and regulations. C. In the event ofnon-compliance by Denton Parks Foundation with the non-discrimination requirements, the Agreemment maybe canceled, terminated, or suspended in whole or in part, and ~ Denton Parks Founda#ion relay be barred from further contracts with City. ~ . Page 3 of 7 LA. w S Denton Parks Foundation represents and warrants that: A. All information, reports and data heretofore or hereafter requested by City and fiirnished to City, are complete and accurate as of the date shown on the information, data, or report and, since thax date, have not undergone any signific~t change without written notice to City. B. Any sugparting financial statements heretofore requested by City and furnished to City, are complete, accurate and fairly reflect the financial conditions of Denton Parks Founda~on an the date spawn an said report, and the results of the operation for the geriod covered by the report, and that since said data, there has been no material change, adverse or otherwise, in the financial condition of Denton Parks Faundaition. C. No litigation or legal proceedings are presently pending ar threatened against Denton Parks Foundation. D. None of the provisions herein contravenes ar is in contiict with the authority under which Denton Parks Foundation is doing business or with the provisions of any existing indenture or agreement of Denton Parks Foundation. E. Denton Parks Foundation has the power to enter into this Agreement and accept payments hereunder, and has taken all necessary action to authorize such acceptance under the terms and condi~ons of this Agent. F. None of the assets of Denton Parks Foundaation are subs ect to any lien or encumbrance of any character, except for current taxes not delinquent, except as shown in the financial statements furnished by Denton Parks Foundation to City. Each of thc~ representations and warranties aha11 be continuing and shall be deemed to have been reputed by the submission of each request far payment. X. GES AND AMEND S A. Any alterations, additions, or deletions to the terms of this Agreement shall be by written amendment executed by both pa~ies, except when the terms of this Agreement expressly provide that another method shall be used. B. It is understood and agreed by the parties hereto that changes in the State, Federal or j local laws or regulafions pursuant hereto may occur during the #~m of this Agreement. Any such ~ modiflca~ons are to be automatically incorporated into this Agreement without written amendment ~ hereto, and sha11 become a part of the Agreement on the effective date specified by the law ar regulation. Fage ~ of 7 C. Denton Parks Foundation shall notify City of any changes iA personnel or governing board composition. . ~I....~ NIl~T1F`~~N To the extent authorize by law, the Denton Parks Foundation agrees to indemnify, hold harmless, and defend the CITY, its officers, agents, and employees from and against any and all cleans yr suits for injuries, damage, loss, or liability of whatever kind or chazactex, arising out of or in connection with the performance by the Denton Parks Foundation or those services contemplated by this Agrec~aaent, including all such cleans or causes of action based upon common, constitu~onal or statutory law, or based, in whole or in part, upon allegations of negligent or mtenfional acts of Denton Parks Foundation, i~ officers, employees, agents, Subcontractors, licensees and invitees, XII. CCNFL~CT OF IlyTEREST A. Denton Parks Foundation covenants that neither it nor any member of its governng body presently has any interest, direct or indirect, which would conflict in any manner or degree with the performance of services required to be performed under this Agreement. Denton Parks Foundation furkhercovenantsthat intheperfornaance ofthis Agreement, no person having such interest shall be employed or appointed as a member of its governing body. B. Denton Parks Foundation further covenants that no member of its governing body or its staff, subcontractors or employees sha11 possess ar~y interest in or use hislher position for a purposc that is or gives the appearance of being motivated by desire for private gain for himselflherself, or others; particularly those with which heJshc has family, business, or other ries. C. No off cer, member, or employee of City and no member of its governing body who exercises any function or responsibilities in the review or approval of the undertaking or carrying out of this Agreement shall participate in any decision relating to the Agreement which affects his personal interest or the interest in any corporation, patttiership, or association in which he has direct or indirect interest. VIII. NOTICE Any notice or other written instrument required or permitted tQ be delivered under the teens of this Agreement shall be deemed to have been delivered, whether actually received ar not, when deposited in the United States mail, postage prepaid, registered or certified, return receipt requested, orviahand-delivery or facsimile, addressed to Denton Parks Foundafion or City, as the case maybe, at the following addresses: Page 5 of 7 I CITY DENTON PARKS FOUNDATION City of Denton, Texas Simone Anderson, Treasurer Attn: City Manager Denton Parks Foundation 215 E. McKinney 601 E. hickory, Suite B Denton, TX 76201 Denton, TX 76201 Fax No. 940.349.8591 Fax No. 940.349.8384 Either party may change its mailing address by sending notice of change of address to the other at the above address by certified mail, return receipt requested. XN. MI,~CEhLANEOU~ A. Denton Parks Foundation shall not transfer, pledge or otherwise assign this Agreement or any interest therein, ar any clabrn arising thereunder to any party or parties, bamk, trust company or other financial institution without the prior written approval of City, B. If any provision of this Agreement is held to be invalid, illegal, or unenforceable} the remaining provisions shall remain in full force and effect and continue to conform to the original intent of both parties hereto. C. ~ no event sha11 any payment to Denton Parks Foundation hereunder, or any other actor failure of City to uasist in any one or more instances upon the terms and condi~ons of this Agreement constitute or be construed in any way to be a waiver by City of any breach of covenant or default which may then or subsequently be committed by Denton Parks Foundation. Neither shall such payment, act, or omission in any manner impair or prejudice any right, power, privilege, or remedy available to City to enforce its rights hereunder, which rights, powers, privileges, or remedies are always specifically preserved. No representative or agent of City may waive the effect of this provision, D. This Anent, together with referenced exhibits and attachments, constitutes the entire agreement between the parties hereto, and any prior agreement, assertion, statement, understanding, or other commitmcnt occurring during the term of this Agreement, or subsequent thereto, have any legal force ar effect whatsoever, unless properly executed in writing, and ifappropriate, recorded as an amendment of this Agrreement. E. This Agreement shall be interpreted in accordance with the laws of the State of Texas and venue of any litigation concerning this Agreement shall be in a court of competent jurisdiction sitting in Denton County, Texas. Page6af? IN WITNESS WHEREOF, the parties do hereby affix their signatures and enter into this Agreemcmt as of the day of 2~D9. i MARK A BURROUGHS, MAYOR ATTEST: JENNIFER WALT'ERS, CITY SECRETARY . BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY r BY: , DENTON PARKS FOUNDATION BY: ANDERSON ATTEST; BY: BOARD SECRETARY Page 7 of 7 AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 DEPARTMENT: Transportation Operations ACM: Howard Martin, Utilities, 349-8232 SUBJECT Consider adoption of an ordinance of the City of Denton, Texas approving an interlocal cooperation agreement between the City of Denton and the Denton County Transportation Authority (DCTA) granting an easement to the DCTA on the Denton Branch Rail Trail for the purpose of building a public commuter rail line. (Mobility Committee Recommends Consideration 3-0). BACKGROUND In 1993 the City of Denton purchased the former Missouri, Kansas and Texas (MKT) rail line between mileposts 721.5 and 729.5 from the Union Pacific Railroad by Ordinance 93 -117 for interim trail use. The City of Denton Parks and Recreation Department subsequently developed a hike and bike trail along the corridor known as the Denton Branch Rail Trail. The Parks and Recreation Department has utilized this corridor for the Denton Branch Rail Trail since May 2001 when the trail was opened. The Denton County Transportation Authority (DCTA) has requested the use of Denton Parks and Recreation property for the purpose of providing public transportation services in Denton County. As part of an Alternatives Analysis Study conducted by DCTA, the former MKT rail corridor was identified by DCTA as the Locally Preferred Alternative as the most efficient route to provide commuter rail service to Denton. Rail service will connect Denton to the Dallas Area Rapid Transit (DART) system in Carrollton with service through Lewisville and Highland Village. As part of a grant application process with the Federal Transit Administration, DCTA was required to demonstrate they had easements in place or were engaged with property owners to secure rail easements for the proposed commuter rail corridor. In November 2006, DCTA and the City of Denton entered into a memorandum of understanding (MOU) that was anon-binding agreement demonstrating the parties' intent to utilize the Denton Branch Rail Trail for the purpose of providing commuter rail service. In December of 2008 DCTA staff and DCTA general counsel began meeting with City of Denton representatives to review terms and conditions relating to an interlocal cooperation agreement that would grant DCTA an easement in the Denton Branch Rail Trail corridor. A draft interlocal cooperation agreement (ICA) and easement has been developed by DCTA and city representatives which is attached as Exhibit 2. Major points of consideration are: maintaining status of Denton Branch Rail Trail for park/recreational use, preserving City of Denton's rights relating to future use of the right of way (ROW), maintaining integrity of existing City of Denton utilities in and adj acent to the corridor, mutual plan review and approval by each party for improvements in the corridor, ownership of improvements should project be abandoned and mutual indemnification. DCTA has agreed to language in the draft ICA indicating that, if they are successful in receiving reversionary rail rights, they will not actively pursue or nor will they support the reestablishment of freight rail to the corridor. DCTA is currently negotiating with DART for these rights and has requested that the City of Denton not engage in negotiations with DART for these rights as they believe it would undermine their position and delay the DCTA A-Train rail project. The DART reversionary rights only provide DART the initial or primary right to reintroduce freight rail to the corridor. Should another rail operator desire to initiate rail operations in the corridor, that operator has the right to make application to the Surface Transportation Board. The applicant would be required to demonstrate the need and benefit of returning rail operations in the corridor. This process may be more involved and require additional effort from what DART would be required, however, the right and opportunity remains that a third party may be able to re- establish freight rail service in the corridor. In conjunction with the DCTA rail project, City Council requested that staff review and consider the replacement of the raw water line that is located inside the rail corridor and the raw water line that is in a parallel easement adjacent to the boundary of the rail corridor. Water Department staff has concluded that it would not be advisable to replace either of the two pipelines at this time. However, staff is recommending budgeting for a pipeline leakage survey and a rehabilitation of some of the pipeline appurtenances (air release valves, drain lines, etc.). This project will be proposed to be included in the Fiscal Year 2010 Water Utilities CIP, and the Public Utilities Board and City Council will have an opportunity to review and approve this proposal as a part of the upcoming budget/CIP review process. DCTA is requesting that access to the ROW be granted as soon as possible so their general contractor may access the corridor to initiate construction activities. This timeline suggests that DCTA will have final plans and funding in place to initiate the construction phase of the commuter rail project by mid to late March. DCTA and City of Denton representatives are also considering a right of entry document to allow DCTA temporary access to the corridor in order to maintain DCTA's target completion date of December 2010. PRIOR ACTION/REVIEW The Mobility Committee recommended approval of the draft ICA and easement 3-0 on February 24, 2009. The Parks, Recreation and Beautification Board recommended approval 7-0 on February 23, 2009. Staff briefed the City Council on the proposed ICA and easement in an Executive Closed Session meeting on February 17, 2009. An MOU was approved by Ordinance 2006-324 on November 7, 2006. FINANCIAL The proposed interlocal cooperation agreement will require DCTA to relocate and enhance the existing bicycle and pedestrian trail in consideration of the easement. Relocation of existing City of Denton utility infrastructure will be DCTA's financial responsibility. SCHEDULE: DCTA expects 100-percent construction plans to be submitted by their consultant on February 27, 2009. DCTA has targeted March 2009 to initiate construction activities along the corridor. DCTA has indicated construction will start at each end, Carrollton and Denton, and will meet in the middle with rail service by December 2010. EXHIBITS: 1. Ordinance 2. Draft Interlocal Agreement and Easement 3. Draft Mobility Committee Minutes, February 24, 2009 4. Draft Parks, Recreation and Beautification Board Minutes, February 23, 2009 Respectfully Submitted: Mark Nelson Transportation Director I~codad~departments~legailour documentslardir~ar~tes109~d~ta interlocal agreement commuter rail line.dec ORDINANCE NO. AN ORDINANCE OF THE CrTY OF DENTON, TEA, APPRO.VG AN INTERLOCAL COOPERATION AGRF~EENT ~~TEF~N THE CITY OF DFINTON AND THE DENTQN COUNTY TRANSPORTATION' AUTHORITY ~DCTA} GRANTn~G AN EA.~ENIENT TO THE DCTA ON THE DENTON BRANCH RAIL TRAIL FOR THE PI]RPOE OF BUILDrNG ~ PUBLIC COMMUTER R.AI.L LINE; AND DECLARING AN E~`FETIVE DATE. HEREA, the City of Denton purchased the former issauri, Kansas and Texas ~~T} rail line het~een mileposts 721,5 and 729.5 for interim trail use and the Parks and Recreation Departrnent has utilised this corridor for the Denton Branch Rail Trail since day 201; and ~U'HEEA., the Denton County Transportation Authority CT,A} has requested the use of Denton Parks and Recreation property for the purpose of providing public transportation services in Denton County; and HEREA~, as part of an Alternatives Analysis study conducted by DCTA, the farmer MIST nail corridor was identified by DTA as the Locally Preferred Alternative as the most efficient route to provide commuter rail service to l]enton; and ~IEREA, rail service will connect Denton to the Dallas Area Rapid Transit DART} system in Carrollton .th service through Lesvi~le ~.nd Highland ~Vil~ae; NOS, THERF~RE, THE COUNCIL OF THE CITY OF DENTON DEREBY ORDA~: SECTION 1. The City 1Vlanger or his designee is hereby authorised to execute an Interlocal Cooperation Agreement het~veen the City of Denton and DCTA granting an easement to the DCTA on the Denton Branck~ Rail Trail for the purpose of building a public co~m~nuter grail line, a copy of which is attached hereto and incorporated by reference herein. ECTrON This Ordinance shall become ~ffectxve in~n~ediately upon its passage and approval. PACED AND APPROVED this the day of , 20D9, MA1~ A. BURROUCH• MAYOR ATTEST: JENNIFER ~VALTER~ CITY SECRETARY B~: i i APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: Ilc~dadl~epar~men~sliega~lour dacu~entslc~n~acts1~91dcta rail revised X22?09 final}.day T~.'TE ~F TExA ~~TERL~CA.I~ ~~PERATI~N AREEIVIE~T '~I~NTY ~ENT~]~ ~ This lnterlocal Cooperation Agreement the "Agreement"} i made and entered into by and between the City of Denton "Dentan"} a Texas home rule municipality, and Denton County Transportation Authority, ~"DCTA"}, a coordinated county transportation authority enacted pursuant to Chapter 4~~ of the Texas Transportation Code, as amended each acting by and through their respective go~ern~n bodies and officals in accordance with the "rnterloeal Cooperation Act", Chapter 791 of the TEA C~~vERNMENT C~D~ the "Act"}; and RECTAL HEREA, Denton owns that certain property known as the Denton Branch Rail Trail subject to certain rights held by the MKT railroad; and 4 HEREA Denton urchase the Denton Branch Rail Trail in ~ 994 in a rail banking line sale contract wzth the Missouri Pacific Company ~"11~I~C}'} far the purpose of a recreational "lnterirr~ Trail Use" undex the provisions of the rational Trail Act, to protect and hold the corridor for future transportation purposes; and wHEREA, Denton desires to transfer and grant an easement the "Rail ~asen~ent"} to DCTA to permit DCTA to install, ma~nta~n and operate its passenger rail system within the apprax~rnately eight ~S} mile length of the Denton Branch Rall Trail right-ofWway described in Attachment "1" the "Dentan Rail Corridor'}} to connect downtown Denton, Teas to Carrolton, Texas with proposed further connection from Carrollton, Texas to downtown Dallas, Texas through the Dallas Area. Rapid Transit Authority ~"DART"~ right-of v~ay the "DART Cor>;~dor"} and WHEREAS, DCTA and Denton have mutually punned for DCTA to install, operate and maintain its planned passenger rail service within approximately eight miles of the Denton Branch Raiff Trail right-of way to connect downtown Denton, Texas to Carrol~tan, Texas with proposed further connection to downtown Dallas, Texas utilizing the DART Corridor; and WHEREAS, Denton owns and operates a raw water supply transn~i~sion system within and immediately add scent to portions of the Denton Rail Corridor and Dart Cor.~dor, which water supply transmission system is a vital component of the Denton mater Utility sys#~n~ and consists of a 3~ inch raw grater transmission pipeline and underground communications cable system located within the Denton Rail Corridor and DART Corridor, and a 7 inch raw water transn~issian pipeline and electrical power transmission line located in a ~ foot wide water line and electric line easement in~rnediately add scent to the east side of the Dentan Rail Corridor and DART Corridor; and DCTAICity of Denton tntextocal Cooperation Agreement for Denton Raiff Corridor Page 1 3332 i I I F ti5 w~REA, Denton has used portions of ~e Denton ~1 orr~dor and DART arridor as a means of previously accessing the raw water supply transn~ssion system facilities and will need to continue to use these corridors in the future as a means of accessing the raw water supply transn~.issian system facilities in the future for routine aper,tion, n~ai~.tenanCe, emergency repair, and future replacement of these facilities; and wgERE,~, DATA agrees that Denton's raw water supply ~ansnussior~ fac~ll~.es are a vital component of the Denton water [utilities system both now and ~n the future and desires to preserve and protect these facilities and sustain enton's continued use of portions of the Denton Rail orri~r and DART corridor as a means ofi aces the ram mater suppi~ tranmi~ton system facilities in the future for routine operation, maintenance, emergency repair, and future replacement ofthese facilities; and wHER~A, DATA has or intends to enter into an Interlocal aoperatian Agreement with DART to allow DATA to connect the Rail Easement described herein to the DART corridor to permit DATA to operate its can~mute rail service on the DART orridar for connection and service initially to the Trinity dills station in arrolltan, Texas; with future connecting service from the Tri Wills station to Downtown Dallas, Texas; and ~R~A, DATA agrees a consideration for the .ght to operate and ~naintaxn its passenger rail serice within the Denton Rail corridor pursuant to the Rail Easement to relocate and reconstruct the Denton. Branch Rail Trail as necessary in accordance with plans approved by Denton in order to provide recreational use and alternative transportation oppor~inities to Denton citx~ens; and in 20~I the ~Jnion Pacific Railroad, successor to Missouri Pacific company sold its remahun interest in the Denton Rail corridor to DART by quit claim deed; and HERS,, DATA intends at its sale cost and expense to ac~u~re whatever rights DART may have in the Denton Raa.i orari.dor; and wHERE~, DATA has conducted extensive studies to determine the most effective route to provide passenger rail service from downtown Denton to the pity of Dallas, Texas and has determined that the mast cost efficient route is within the Denton Rail arridar; and wHE1~EA, Denton has previously conducted the necessary public hearing pursuant to chapter Z of the Texas Parks Recreation bode to permit DCTA to install, maintain and operate its planned passenger rail service lmown a the "A-Train's within the Denton Rail arrl or; an wHEREA, the Act authorises Denton and DATA to enter into this Agreement far the purpose of achieving the governmental functions provided for herein by this collective, cooperative undertaking; DCTAIity of Denton Interto~at aape~a~an Agreement far ~en~an Rail arridor Page ~ 333~~ i N~V'1~"~1, far and in consideration afthe premises and the mutual covenants set forth in this Agreement, and for other valuable consideration the receipt and sufl"lciency of which are hereby acl~nawledged the Parties agree as follows: A~ti~~e ~ De~t~o~~ For purposes ofthis Agreement, each ofthe fallowing terms shall have the meaning set forth herein unless the context clearly indicates otherwise. "ammencemer~t of anstruction" shall mean that ~i} the plans have been prepared and all approvals thereof required applicable governmental authorities have been obtained far construction of the Denton Branch ~ Trail Project; ~11} all necessary permits far the construction of the Denton Branch Rail Trail Project pursuant to the approved plans therefore having been issued by all applicable governmental authorities; and viii} the construction of the Denton Branch Rail Trail Project has corizmenced. "ampletion of onstructian" shall mean ~i} the construction of the Denton Rail Trail Project has been substantially completed; iii} a certificate of substantial completion has been issued to the general contractar~s~ and engineers}larchitect{s} for the Denton Rail Trail Project; viii} Denton has accepted to relocate and reconstruct the Denton Branch Raiff Trail and issued any applicable Sinai inspection far the Denton Branch Rol Trail Project. "DART corridor}' shall mean that certain right of way described in Deed from Union Pacific Railroad ornpany to Dallas Area Rapid Transit dated June ~5, 2aai, and effective June S, 2~a ~ , recorded as Dacun~.ent No. ~0~ 1-R~4~~97~ in the Real Property Records of Denton County, Texas. "DCTA" means the Denton onty Transportation Authority acting by and through its President. "Denton" means the pity of Denton, Texas acting by and through its pity Manager. "Denton Branch Rail Trail" shall mean that certain public pedestrian and bicycle owned and operated by Denton located within the Denton Rail orridar. For purposes of this definition, Denton Branch Rail Trail shall have the same meaning whether at its location as of the Effective Date or at its location after it is relocated pursuant to this Agr~elnente `Denton Branch Rail Trail Pro j ect" shall mean the relacat~on. and reconstruction of the Denton Branch Rail Trail as necessary, in conjunction with the DATA passenger rail ~vrridor construction in accordance with plans approved by Denton in order to provide recreational use and alternative transportation opportunities to Denton citizens following completion of the DATA passenger rail construction. . DTAIi ofDonton ~terloca~ cooperation Agroe~aent for Dentin Raiff ~nrri~or . Pogo 3 33342 1 i "Dentan Rail orridor~' shall mean that approximately eight miles of right~of~ way described in Attachment "1". "Denton lnfrastructu~re" shall mean raw water transmission supply lines, water distribution lines, electric lines, communication lines, drainage facilities, street pavement sidewalks, bridges, tra~"ic control devices, sanitary sewer facilities, park and recreational in~proven~ents and other ~unicipa~ utility systems owned d opearated by the pity of Dentan, Texas. "Effective Date" shall mean the last date of execution hereof, whether an the same document ar in multiple original counterparts. "Event of Farce ~euxe" shall mean any contingency or cause beyond the reasonable control of a Party including, without limitation, acts of dad or the public enemy, war, terrorist act, riot, civ~ canamotion, insurrecct~on, government action ar inaction sunless caused by the inter~ona~ acts or o.issio~as of the Party, fires, earthquake, tornado, hurricane, eplasions, foods, str~es, slowdowns or work stoppages. "Party" means DATA and Denton, respectively each acting by and through theix authorized representatives. "parties, shall mean bath DATA and Denton, collectively "Rail Easement" shall mean that certain easement granted by Dentan to DTA for use of the Denton Rail Corridor ~ the fv~n set forth in Attachment attached hereto. Article ~ 'Tuna The term of this Agreement shall begin on the Effective Date and. continue until the terminated as provided in section 7.1, herein. Article ~ ~urpo~e The purpose of this Agreement is to implement the mutual planned use of the Dentan Branch Rail Trail by DCTA to install, operate and maintain its planned passenger rail system to provide service f~an~ downtown Dentan, Texas to Carrollton, Texas with proposed connection and service from Carrollton, Texas to downtown Dallas, Texas through the DART Rail Corridor and to provide for .e relocation and reconstruction of the Denton Branch Rail Trail by in accordance with plans approved by Denton to accommodate the planned passenger rail system as well as to provide recreational use and a~terr~ative transpar~atian opportunities for Denton citizens. DCTAICity of Denton Inte~r~oca~ Coaperatiun Agreement for Dentan Rail Corridor gage 4 332 i Article rV Rail Easement 4.1 Grant. Denton agrees, not later than three (3) business days after the Effective Date, to grant an easement within the Denton Rail Corridor to DCTA by the execution and delivery of the Rail Easement in the form attached hereto as Attachment "2" to DCTA's General Counsel. The grant of the Rail Easement shall be AS IS WITH ALL FAULTS, without warranty of title and shall be subject to the existing Denton underground 30 inch water line constructed pursuant to that certain Correction Easement granted by Missouri-Kansas-Texas Railroad Company to the City of Denton dated April 11, 1975 filed for record at Volume 742, Page 589 Deed Records of Denton County, Texas; and other matters of record as described in Rail Easement. This Agreement and any subsequent grant are to be made pursuant to Section 8(d) of the National Trails System Act, 16 U.S.C. § 1247(d). 4.2 Denton Rail Corridor Granted As Is. (a) DCTA represents that as of the Effective Date that it: (i) will have fully inspected the Denton Rail Corridor; and (ii) will have made all investigations as it deems necessary or appropriate and will be relying solely upon its inspection and investigation of the Denton Rail Corridor for all purposes whatsoever, including, but not limited to, the determination of the condition of the structures, improvements, soils, subsurface, drainage, surface and groundwater quality, and all other physical characteristics; availability and adequacy of utilities; compliance with governmental laws and regulations; access; encroachments; acreage and other survey matters and the character and suitability of the Denton Rail Corridor. (b) The Parties agree that there are certain existing utility infrastructure in place at the time of this Agreement that are located less than 54" below the ground surface and that such utilities shall not be required to be relocated as a result of this Agreement. (c) DCTA acknowledges and agrees that the Rail Easement is being granted "AS IS" by Denton with all faults and defects, whether patent or latent, as of the Effective Date. (d) The Parties acknowledge that Denton owns and operates a raw water supply transmission system within and immediately adjacent to portions of the Denton Rail Corridor and DART Corridor. This raw water supply transmission system is a vital component of the Denton Water Utility system and consists of a 30 inch raw water transmission pipeline and underground communications cable system located within the Denton Rail Corridor and DART Corridor, and a 27 inch raw water transmission pipeline and electrical power transmission line located in a 30-foot wide water line and electric line easement immediately adjacent to the east side of the Denton Rail Corridor and DART Corridor. DCTAICity of Denton Interlocal Cooperation Agreement for Denton Rail Corridor Page 5 33362 (e) The Parties acknowledge that Denton has used portions of the Denton Rail Corridor and DART Corridor as a means of accessing the raw water supply transmission system facilities and will need to continue to use these corridors in the future as a means of accessing the raw water supply transmission system facilities in the future for routine operation, maintenance, emergency repair, and future replacement of these facilities. (f) DCTA agrees that the Denton raw water supply transmission facilities are a vital component of the Denton Water Utilities system both now and in the future and desires to preserve and protect these facilities and sustain Denton's continued use of portions of the Denton Rail Corridor and DART Corridor as a means of accessing the raw water supply transmission system facilities in the future for routine operation, maintenance, emergency repair, and future replacement of these facilities. (g) The Parties acknowledge that there have been no representations, warranties, guarantees, statements or information, express or implied, pertaining to the Denton Rail Corridor, its condition, or any other matters whatsoever, made to or furnished to DCTA by Denton or any employee or agent of Denton, except as specifically set forth in this Agreement or the Rail Easement. 4.3 Plan Review and ApprovaL Denton shall have right to review and approve all plans for enhancements or modifications to the DCTA Rail System to determine whether such enhancements or modifications will unreasonably interfere with Denton Infrastructure within the Denton Rail Corridor, such review and approval not to be unreasonably denied, delayed or withheld. 4.4 Use to be Lawful. DCTA agrees to conduct its passenger rail service within the Denton Rail Corridor in compliance with all applicable and lawfully adopted federal, state, and local laws and regulations; provided, however, notwithstanding anything to the contrary in Section 7.1, below, Denton may not terminate this Agreement or the Rail Easement if DCTA is found to have violated any such applicable federal, state, or local law or regulation, the sole remedies against DCTA being an enforcement action brought against DCTA by the entity with lawful jurisdiction to enforce the subject law or regulation or a suit for injunctive relief to seek DCTA's compliance with the subject law or regulation. 4.5 Ere' L Rail Service. DCTA agrees that it will not initiate nor affirmatively consent to the re-establishment of freight rail service in the Denton Rail Corridor by DCTA or a third party contracting with DCTA; provided; however, it shall not be a default of this Agreement if DCTA fails to actively protest or litigate any action taken by a third party to seek from the appropriate state or federal agency re-establishment of freight rail service within the Denton Rail Corridor. DCTA/City of Denton Interlocal Cooperation Agreement for Denton Rail Corridor Page 6 33362 i Article V Denton Branch Rail Trail Reconstruction 5.1 Construction. DCTA agrees to relocate and reconstruct, or to cause to be relocated and re-constructed, the Denton Branch Rail Trail pursuant to plan(s) approved by Denton, such approval not to be unreasonably denied, delayed or withheld. DCTA shall, subject to events of Force Maj eure, cause the Commencement of Construction of the Denton Branch Rail Trail Project to occur within thirty (30) calendar days after Denton's approval of the first plan(s) submitted by DCTA for the Denton Branch Rail Trail Project, and subject to events of Force Majeure, to promptly and timely cause Completion of Construction to coincide with revenue operation of the DCTA passenger rail service anticipated to occur on or before December 31, 2010. As a minimum specification, the construction of the reconstructed Denton Branch Rail Trail shall consist of a minimum trail width, being 8 feet wide, and constructed of concrete a minimum of 5-inches in thickness, with a minimum yield strength of 3,000 psi. Such construction shall be performed by DCTA, at its sole cost and expense, in a good and workman like manner and shall be subject to final inspection and acceptance by Denton. 5.2 Denton Branch Rail Trail Closure. The Parties acknowledge that the Denton Branch Rail Trail Project shall be constructed over an extensive period of time and in one or more phases and that during such construction the Denton Branch Rail Trail shall be closed to the public use and will be unavailable for any public recreational use for extensive periods of time. Denton agrees to cooperate with DCTA and its contractors in implementing and enforcing appropriate construction and safety measures during periods of closure of the Denton Branch Rail Trail. The Denton Branch Rail Trail shall only be reopened upon the mutual agreement of Denton and DCTA and may be reopened in sections, as the situations may warrant. 5.3 Denton Water Line. Subject to the provisions of the Rail Easement, DCTA agrees not to unreasonably interfere with Denton's use of the Denton Branch Rail Trail for the 30 inch water line. 5.4 Construction Requirements. (a) General, DCTA shall comply with all federal, local and state laws and regulations regarding the relocation and construction of the Denton Branch Rail Trail, as necessary, in accordance with the plan(s) approved by Denton. (b) Desism and Construction Purposes. The design, relocation and reconstruction of the Denton Branch Rail Trail Project shall protect the Denton 30 inch water line and permit DCTA to install, maintain and operate DCTA passenger rail system and shall utilize the 30 inch water line as the anchor element of the design. 5.5 Maintenance. After Completion of Construction of the Denton Branch Rail Trail Project, Denton shall, at its sole cost and expense, maintain, repair and operate the Denton Branch Rail Trail as relocated and reconstructed. Denton agrees that its use of the Denton Branch Rail Trail following the relocation and reconstruction shall not interfere with DCTA's DCTA/City of Denton Interlocal Cooperation Agreement for Denton Rail Corridor Page 7 33362 use of the Denton Rail Corridor pursuant to the Rail Easement. The Parties shall enter into an agreement within ISO days after the Effective Date hereof to detail the specific allocation of the responsibilities for the maintenance of the Denton Branch Rail Trail, and the related costs thereto (the "Maintenance Agreement). . 5.6 Indemnification. To the extent permitted by law, each Party shall indemnify and save harmless the other Party, its officers, agents and employees from all suits, actions, losses, damages, claims, or liability of any character, type, or description including, without limiting the generality of the foregoing, all expenses of litigation, court costs, and attorney's fees for injury or death to any person, or injury to any property, received or sustained by any person or persons or property, arising out of, or occasioned by, the acts of the Party, its officers, agents, or employees in the execution or performance of this Agreement. 5.7 Governmental Immunity. It is expressly understood and agreed that, in the execution of this Agreement, no Party waives, nor shall be deemed hereby to waive, any immunity or defense that would otherwise be available to or against claims arising in the exercise of governmental functions relating hereto or otherwise. By entering into this Agreement, the Parties do not create any obligations expressed or implied, other than those set forth herein, and this Agreement shall not create any rights in any Parties not signatory hereto. Each Party agrees to and accepts full responsibility for the acts, negligence and/or omissions of such Parry's officers, agents and employees Party's in the execution and performance of this Agreement. 5.8 Insurance. During periods of construction, DCTA shall require its contractors and subcontractors to obtain and maintain insurance in the amounts and types of coverage as may be reasonably required by Denton. Article VI Denton Utilities and Public Improvements 6.1 Existing Utilities within the Right of-Way and Adjacent Easement Corridor. Denton and DCTA acknowledge the existence within and adjacent to the Denton Rail Corridor of certain Denton Infrastructure. 6.2 Utility _Maintenance. Denton shall have the right to use the relocated Denton Branch Rail Trail to provide maintenance personnel access to the existing parallel utility easement corridor which contains a 27-inch raw water transmission supply line and a Denton Municipal Electric power line. 6.3 Plan Review and Approval. (a) DCTA shall have right to review and approve any plans for enhancements or modifications by Denton to the Denton Branch Rail Trail to determine whether such enhancements or modifications will unreasonably interfere with DCTA use of the Denton Rail Corridor pursuant to the Rail Easement, such review and approval not to be unreasonably denied, delayed or withheld. DCTA/City of Denton Interlocal Cooperation Agreement for Denton Rail Corridor Page 8 33362 fib} The use of the Denton Rail Carrldor by Denton bother than lts exlst~ng uses and others is subject to Chapter 2~ of the T exas Par1~s &wildlife Code and shah be subject to the prior review and approval of the Parties. ~c} Denton and DCTA agree that the Parties a well a others may require future utility infrastructure, utility crossing, andlor other public worl~s, public worl~s infrastructure within the Denton Rail Corridor. Denton and DCTA agree to work an mutually agreeable process to faei~itate joint review and approval andlor permitting for such i.n~provenaent within ~ S~ days after the Effective Date. ~cle Ter~int~pn; Remed~e~ ~.1 Ter~n~t~~~. This Agreement maybe terminated as follows: ~a~ by mutual written agreement of the Parties; ar [b~ by either Party, if the other Party defaults or breaches any of the material terms ar conditions ofthis Agreement anal such default or breach is not coxed within ninety ~9~}days after written no~.ce thereof is delivered to the defaulting party ~"tlie Cure Period"};provided, however, if the default cannot reasonably be cured on or before the end of the Cure Period and the defaulting party has diligently pursued such remedies shall be reasonably necessary to cure such default, then the Cure Period will be extended for additional ninety ~9~} days. l~otwithstanding anything to the contrary above, if the defaulting party is prevented from curing the default by an Event of Farce N~ajeure, the number of days in which the Event of Force ajeure is in effect shall b added to the Cure Period and any authorized extension as provided above; or ~c~ subject to Events of Farce j cure or the v~ritten direct~an ar agreement of Denton, by Denton providing written notice of termination to DCTA in the event Commencement of Construction of the Denton Branch Rail Trail Project does not occur an ar before the ih ~5~} anniversary of the Effective Date; ar ~d} subject to Events of Farce ~ajeure or the written consent of Denton, by Denton providing written notice of termination to DCTA in the event passenger rail service using the Denton Rail Corridor does not commence an ar before the tenth ~l~t~} anniversary of the Effective Date; or fie} by Denton providing written notice to DCTA if DCTA abandons the Rail Easement as provided in Section 7.~, below; or ~f} by either Party if any subsequent Federal or State legislation. or any decision of court of competent jurisdiction declares or renders this Agreement invalid, illegal ar unenforceable. DCTAJCity ofDenton Interlacal Cooperation Agreement for Denton Rail Corridor Page 9 333~~ i ~ i I 7.~ ~emedie~. ~n the event of termination either Party pursuant to Section 7. ~ ~c~ the non breading Party may seep ijuac~ive relief, mandamus and specific perforn~.ance provided that in such event the breading Party shall not be liable for any da.ages, consequential, punitive ar otherwise. 7. Federal Pre~m~~ti~n. In the event Dentan's rights to the Denton Rail arridar andlar the Rail Easement are terminated for any reason beyond the canol or authority of Denton, any casts incurred by DATA, including but not limited ta, legal fees, capital improvement costs and all other fees and casts shall be sale respansihiiity of DATA. Such fees and costs shall be the sale responsibility of DATA, its successors ar assigns. 7.4 o~ridor Improv~rnent~ on Ter~~at~a~. ~Jpon termination of this Agreement pursuant to section 7.1, above, ar upon DTA's abandonment of the use of the Easement far the purposes set Earth therein, DATA may either remove, at DTA.'s cast, any personal property of DCTA located widin the Dentan Rail corridor or, with the written consent of Dentan, abandon DTA's prope~y in place, in which case title to such properly shall be conveyed to Denton. 7.5 Aba►d~nment~ DATA shall be deemed to have abandoned the Rail Easement if: ~a~ prior to the con~rnencement of passenger rail service in the Denton Rail or.~dar but after commencement of construction of the passenger rail system, DATA voluntarily and without the written consent of Dentan suspends construction of the passenger rail system and fails to recommence construction far a period of twelve ~ 12} consecutive months; or } after the canenccrnent of passenger rail service in the Denton Rail corridor, DATA voluntarily and without the written consent of Denton suspends passenger rail service within the Denton Rail Corridor far a period of twelve ~ 12~ consecutive months. Far purpose of this ectian 7.5; the Rail Easement shill not be considered abandoned if construction of the passenger rail system ar the operation of passenger rail service is suspended a the result of an Event of Pone a~eure. Article vlll Rel~cati~n In the event IOTA deter~.ines dot it is necessary to relocate any existing Dentan. Infrastructure, such relocation shall be solely at DTA's expense and shall only be carried out ~ accordance with written plans approved by Dentan. DTAICit~ of Dentan tnterlacal Cooperation Agreement for Denton Rail arridar Page 14 3336 i if intended for Denton: with copy to: ~earge a~pbell, City 114anaer Anx Burgess, pity Attorney ~ ~ 5 E. cinney pity of Denton, Texas Denton, Tx 7~2~ ~ 21 E. c~inney 4a-349-5307 Telephone Denton, Teas 721 94~-349-559 Facsimile 94~-349-8333 94a-382-'7923 Facsimile 9.9 vanterp~r~. This Agreement maybe executed by the Parties hereto in separate counterparts, each of which when sa executed and delivered shah be original, but all such caunterpaxts shall together constitute one and the sane instru.rnent. Each counterpart nay consist of any number of copies hereof each signed by less than all, but together signed by all of the Parties hereto. ~.1 a Atch~n~n~s. The Attachments attached hereto are incorporated herein and made a part hereof for all purposes. 9. ~ ~ Re~~~. The recitals to this Agreement are incorporated herein and made part hereof far all purposes. 9.12 Aut~nr~atien. Each Party represents that xt has full capacity and authority to grant all rights and assume all obligations that are granted and assumed under this Agreement, 9.1 u~viva~ a ~~ven~nta. Any of the representatlnns, warranties, covenants, and obligations of the Parties, as well a any rights and benefits of the Parties, pertaining to a period of time following the tern~inatian of this Agreement shall survive termination hereof. 9.14 Apprev~i efPartie~, whenever this Agreement requires or permits the approval or consent to be given by ~ a Party} the Parties agree that such approval or consent shall not be unreasonably withheld, conditioned or delayed. 9.15 meter Aurnn Each Party hereby agrees that it will. tape all actions and execute all documents necessary to fully carry out the purpases and intent of this Agreement. 9.1 G Time for ~eo~e. Time is of the essence in the performance of each .Party's obligations hereunder. %~ure ~~e ~a f~~ DCTA1ity of Dentan Inter~o~a1 cooperation Agreement for inton Ra~.~ Corridor Pale 12 . ~33~2 i ~~]T~~ this dad of , 2~~9, ~ F ~lE~'I'~N, 'TEA E~. enre . Ca~n.~be~~, Ct Manager ATTEST: By: Jennifer afters, City Secretary APP~~~E A'~~ SEAL FARM: B~: Anita burgess, ~t~ Att me E~]'I`ED this dad of 2~~9. ~ENTN [~UNTY'~1NSF~I~TATI~~ AUTHORITY B~: Scott Nee~~, E~ecut~~e ~'~-Presi~.ent for Raiff Deve~a~~nent AFPRHYED AS TH F~RII~: Ey• Peter C~. ~t~., Creneral Counsel ~CTAICity of Denton Interlocal Cooperation Agreement for De~tan Raiff CorridoF ~ag~ 1 ~ 3G i Att~ce~rt "1" De~cript~un of tie I~e~ton ~ orridnr All that certain lots, tracts, or parcels o~ land lying and being situated ~ the Cities of Denton and Corinth, Denton County, Texas, and being more secica.lly described in that certain uitcla~m Deed frarri the Missouri Pacific R~ulroad Company to the C1ty of Damon dated august , ~ 993, and recorded on August 24, 193, under Clerl~'s File Number 93-Ra~SS~~, Real Property Records, Denton County, Texas; and also being thane same tracts described in that certain Correction ~u~tcla~rn Deed ~I"Om LJn1on Pacific Railroad Company to the City ~ Denton, Teas, dated June 1, 2001, and recorded on June 13, 201, under Clergy's File Number 20~1~R0~571, Real Property Records, Denton County, Texas; and alsa being those same tracts described that certain Correction to Correction quitclaim Deed ~rorrr ~Jnion Pacific Railroad Company to the City of Denton, Teas, dated June 2001, with effective data o~ June ~ , 200, and recorded ~n July 27, 200 as Clerk's File Number 200 ~ -R407~013, Real Property Records, . Denton County, T~~as. At~ach~~.t to DCTAICit~ ~~Dentan Interlacal Cooperation Agreemen# for Dent~a~ Ra~~ Condor Page 1 33342 i Attachment " . N~TIC~ C~ENT~ALIT~ RIFT: I~ YOU AID A NA P~R~N, Y~~1 MAC RROVE QTR ANY ~R AFL T ~'~LL~N ~~~ATI~N ~R~M A1~Y Il1~Tl~iT1V~N'r TEAT TRAN~R AN INTEREST ~N" ~FA~J~PR~PEItTY BR~'RE IT I k~LED FAR 1tEC~RD Il~ ~ PUBLIC IIEC~RD: YOUR ~CIAL ~ NU1I+IBE ~R Y~I~t D~IVRI~' LICENSE NUIV~ER RAC EAEIV~ENT F~~ C~~STRUCTI~~~ ~~ERATI~I~ AND ~ NACE ~F PAS~NERRA~L TRANSP~RTATI~ YSTEIVI TA,TE T~I~A ~ IAN ALL 1VIE~ B~ TI3E PRESENTS: C~v~N~T~ ~~r~roN That the City of Denton, ~ Tee hanae rye muni~ipa~ity ~hereina~ter caller "grantor"~ of the bounty of Denton, Mate of Texas, far and ~ consideration of the sun of TEN .AND N~1100 D~~LARS {1a.aa} to in hand paid to ~xrantar by Denton County Tran~partatian Antharity, a caard~nated aunty tran~partatxon authority created pur~aant to Chapter 4~a of the Te~a~ Tr~portatian Cade, a~ amended {hereinafter call "Cxrantee"} whose address ~ ~ Goa . Stemnxons, Suite 25a, Le~isvi.e, Dentan Jaunty, Texas, 75047, together with other . goad and valuable considera~an, the receipt and sufficiency of which are hereb acknov~led ed Y and confessed, has granted, and does hereby grrant unto grantee, its successors and assigns, that certain easement {"the Easement"} in, aver, above, under, and across, all that certain, lat, tract, ar parcel of land in Denton bounty, Texas described in Exhibit "A," attached hereto and .corporated herein by reference far all purposes {"the Property"} far the purpose of constructing, installing, operating, and maintaining Passenger Rail Transportation System {"the Rail System}'}, and related fclllttes, nnpravemr~ts, and equipment {including, but not lhnited to, equipment houses, rail control boxes, railroad crossing safety equipment, electrical lines, pales, conduit, transformers, generators and related equipment, bridges, baiiast, trestles, drainage facilities, rail switches, passenger stations andlar any portion thereof, and motor vehicle and train parking}, and appurtenances in connection with and as a part of the operation and .a ~ntenance of the Rail System.{"the Permitted Uses"} This grant inctudes the right of ingress, egress, and regress therein from adjacent public rights of may and other ~t or parcels of land ov~ned by Grantor ar for v~hich xrantar has ~ sufficient legal rights to grant such rights to xrantee, for the purpose of erecting, constructing, reconstructing, installing, replacing, repairing, operating using, inspecting, rriodifying, removing and maintaining the Rail System. The gralat of the Easement herein shall be subject to the fallowing addi~.onal terms and conditions: . i . 'ara~~er o ~ase~ne~z~. The Easement is nonexclusive. ~rat~on of as~ae~. The duration of the Easement is perpetual, ~eservatior~ of ihts. Grantee's right to use the Property for the permitted used i exclusive, but is otherwise non-exclusive to the extent of Cxraiitor's reserved uses; Attachment to DCTA1City ofDenton ~nte~~ocal Coo~erat~on Agreem~a~t for ~7enton Rail corridor Fage t 33362 i provided, howe~rer, Grantor reserves for Grantor the right to use all or part of the Property ~n conjunction with Grantee, its successors and a~ss~gns, as fang as such use by Grantor does not interfere with the use of the Property Grantee far the purposes set forth herein, and the right to grant to others the right to use ail or part of the Propety in conjunction Grantee, as long as s~ich further grant is subs ect to the terms of this Easement. 4. Secondary ~asrer~~. Grantee has the right, without cost to Crrantee and with the approval of the Cxrantor the "econdaxy basement''} to use as much of the surface of Grantee's property that is add scent to the Proper ~"Adjacent Property"~ as may be reasonably necessary to erect, construct, reconstruct, install, replace, repair, operate, rise, inspect, modify, remove and maintain the bail ~yten~ within the Property that is reasonably suited far the purposes set forth herein. ~aprove~tc~~ and ar~~~tar~ce o, f Proper; ~e~nov~~ of .ncroa~~n~nts. ~rriprovement and maintenance of the Property far use in con~uncttan with the fail system will be at the sole cast and expense of Grantee. Grantee has the right to eliminate and remove any encroachments into the Property bother than encroachments by Grantor's property} including, but not limited to, fences, permanent ar temporary buildings, landscaping, and any other obstructions or encroachments that unreasonably interfere with Grantee's use of the Property for the purpose stated herein with no obligation of Grantee to replace or restore any encroachments so re~naved or to otherwise pay Grantor far same except to the extent otherwise agreed by Grantor and Grantee in wr~.ting including, but not limited to, that certain ~rt~cr~oca~ ~#~ee~nc~~ ~e~wcr~ 'i o ~e~~o~ are D~~~on 'o~n~y ~'rar~sportatior~ .~~~~ori~y dated , ~U09 ~"the Interlocal Agreement"~, a true and correct copy of which is available in the G~iice of Grantor's city secretary and incorporated herein by reference. xist~n ~r~cr~r~rart~es~. This Easement is subject to ~a} all easements, rights-of way and prescriptive rights, whether of retard or not, pertaining to any portion of the Property, fib} all previously recorded oil, gals, andlor rriinral except1an, rights of develvptnent or leases, royalty reservations, anC~vr ~nt~'~?nents COnstitUt~'lg oll, g~ other rn~neral interest severances of any kind, ~c} all previously retarded covenants, tens, conditions, contracts, provisions, zoning ordinances, and other items, ~d} all other previously recorded instruments bother than liens and conveyances by, through, or under grantor} that affect the Property, fie} any condition that would be revealed by a physical inspection of the Property, and the terms and conditions set forth. in that certain Line dale Contract between Grantor and ll~issouri Pacts ~ailraad Company ~"PRC"} signed an July 2; 193, pursuant to the authority of City of Denton. Qrdinance 93 ~ l ~ 7, a true and correct copy of which is attached hereto as Exhibit "B" and incorporated herein by reference; provided, however, Grantee does not assume Granttor's abllgatlons to PF.C pursuant to sections l ~ and i of said Line Sale Contract. 7. ~a~er Lire and C"oan~~~acat~or~ Lies. Grantor and Grantee and erstan and acknowledge that Cxrantor owns, operates, and maintains ~a~ a ~~inch underground water line ~"the water L1n~"~ and cammun~ctlon i~nes the "Canlmunlcat~an Lines"~, and that a fiber optic cable is generally located withi~a an area of the Property described in that At~achmnt "2" to DCTAICity ofDenton Inter~ocal Cooperation Agreement far Denton Raiff Condor Page 2 33G~ i certain '~~rc~ao~ aserne~t from issouri~I~ansas-Texas Railroad company to the pity of Dentan dated April 1 1975, and filed in volume 742, Page 555, Deal Property Records, Denton bounty,. Tees {"the dater Line Property"} and other public facilities and improvements including, but not limited to, water distribution lines, electric lines, transformers, and other equipment and appurtenances, drainage facilities, street pavement, sidewalks, bridges, tra'ic control devices sanitary sewer facilities, park and recreational improvements and other municipal utility systerr~s located in, on, or across various parts of the Property {the water Line, communications Line, and additional public facilities and improvements collectively referred to hereaer as the "Denton Infrastructure'~~. ~xrantor reserves frvrn this grant the right to continue to operate, maintain, repay, replace, and remove the Denton ~nfrstructure~ prodded, however, notwithstanding anything herein to the contrary, Grantor agrees that: A. grantee nay utilize the surface o~'the water Line Property for so long as such use does not unreasonably interfere with Grantor's rights reserved herein or cause any damage to the water Line ar the communication Line; provided, however, Grantee .ay not install or construct any track, equipment, or other permanent struuctores on the water Line Property; At no time dll grantor's employees, contractors, agents, andlor assigns enter the Safety done unless grantor prodder Grantee written notice not less than. dive calendar days prior to entry rota the Safety done far the purposes reserved in this Section; provided, however, in the event Grantor requires access to the Safety Zone to perform repairs, replacement, or maintenance to the Dentan Infrastructure, which, if not performed immediately, will reasonably result in damage to real ar personal property andlar will endanger the public health, Crrantor peed only provide oral native to tee prior to entry rota the Safety bane to perform such emergency repairs or naair~tenance. For purposes of this Easement, `Safety done" shall mean a distance of twenty-,ve feet {Z5.0'~ from the centerline of any of grantee's track or such greater distance from grantee's track as may from time to time be established by federal or state law or regulation within which no person or property may enter without the implementation of mandated te.porary o~ permanent safety measures. However, grantor may use the relocated Denton Branch Rail Trail paved surface to access the Denton Infrastructure located within the Property far the purposes reserved in this Section. Furthermore, nothing in this Easement shall be construed as prohibiting any person from entering upon areas {i} on the Denton Branch Rail Trail or {ii} on any street or sidewalk located an, adjacent ta, oar across the Property, to which the public generally are authorized to access. Far purposes of this Easement, the phrase "Denton Branch Rail Trail" shall mean that certain public pedestrian and bicycle trail owned and operated by Dentan located within the Property as reconstructed and relocated by Grantee pursuant to the Interlocal ~.greement. 8. ether ~oaa~ a~ ~I~i~i~y rossrr~s. Notwithstanding anything herein. to the contrary, but subject to Section above, and to rights of third parties existing in documents executed and on ale with the Denton bounty clerk prior to execution of this Easement, Cxrantor shall not have the Attachment "2" to DCTAICity of Denton ~terlncal Cooperation Agr~emea~t tox Denton Rail ~arridar Page 3 ~3G2 i right to cross on, over, or under the Property with any public street, road, alley, sidewalk, water line, sewer .line, drainage line or facility, electric line, telephone or cable line, or other public utility, or otherwise grant any third party the right to cross on, over, or under the Property with any public street, road, alley, sidewalk, water line, ~ sewer line drainage line or facility, electric line, telephone or cable line, or other public utility, without the prior written consent of Grantee, which shall not be unreasonably denied, delayed of withheld. . ~4~aorn~. ~xrantee shall be deemed to have abandoned this Easement, and this . Easement shall terminate, if: A. prior to the commencement of passenger rail service ~ the Easement but aver commencement of construction of the passenger rail system, Grantee voluntarily and without the written consent of Grantor suspends construction of the passenger rail system and fails to recommence construction for a period of helve ~12~ consecutive months; or E. ai~er the con~mence~nent of passenger rail service in the Easement, Grantee ~roluntarily and without the written consent of Grantor suspends passenger rail service within the Easement for a period of twelve ~ I consecutive months. For purpose of this section , this Easement shall not be considered abandoned if construction of the passenger rail system or the operation of passenger rail service i suspended as the result of an Event ~ of Farce aj cure, which sha11 be defined as any confingency or cause beyond the reasonable control of rrantee including, without limitation, acts of Gad or the public enemy, terrorist act, riot, civil commotion, insurrection, government action or inaction sunless caused by the intentional acts ar omissions of the grantee}, fires, earthquake, tornado, hurricane, exp~osxans, floods, strikes, slowdowns or work stoppages. 1 a. ~indi~t This ~reen~~nt binds and ~n~res to tie benefit of the parties end their respective heirs, su~Ces~rs, and pez~naitted assign. 11. '~aaice a Law. This agreement will be construed under the laws of the state of Texas, without regard to choice-of-lave rules of any jurisdiction. venue is in Denton County, Texas. . 12. 'a~~a~~rpar~s. This agreement may be executed in any number of counterparts with the same effect as if all signatory parties had signed the same document. All counterparts will be construed together and wilt constitute one and the same instrument. I ~ . ~a~ver o ~]ef It is not a waiver of or consent to default if the non,default.g party fails to declare immediately. a default ar delays i~ taking any action. Pursuit of any remedies set Earth in this agreement does nit preclude pursuit of other remedies in this agreement or pro.ded by law. 14. ~`art~a~r~ ~Css~r~ances. Each signatory party agrees to execute and deliver any additional documents and instruments and to perform any additional acts necessary or appropriate to Attachment `~2" to DCTAIC~ty of Denton Interlocal CaaperatiQn Agreement for t]e~ton Rail Corridor Page 4 . 3336 i perform the terms, provisions, and conditions of this agreement and all transactions contemplated by this agreement. TO HAVE AND TO HOLD unto the said Denton County Transportation Authority, its successors and assigns the above described Easement, together with all and singular the rights and appurtenances thereto in anywise belonging unto Grantee, its successors and assigns except as to the reservations, exceptions, terms, and conditions provided herein. EXECUTED by Grantor this day of 2009. GRANTOR: CITY OF DENTON, TEXAS By: Mark A. Burroughs, Mayor ACKNOWLEDGMENT STATE OF TEXAS § COUNTY OF DENTON § This instrument was acknowledged before me on the day of 12009, by Mark A. Burroughs, Mayor, City of Denton, Texas, a Texas home rule municipality, for and on behalf of said municipality. Notary Public, State of Texas My Commission expires: Attachment "2" to DCTA/City of Denton Interlocal Cooperation Agreement for Denton Rail Corridor Page 5 33362 E~hihit `~A" ~e~c~~tian of the ~rvperty All that certain lots, tracts, or parcels of land lying and being situated the Cities of~ Denton and Corinth, Denton County, Texas, and being mare specica~ly described that certain quitclaim Deed ~ran~ a Missouri Pacific Railroad Company t~ the City o~ Denton dated August 9, ~~9~, and recorded an August 24, 199, under lerl~'s Pile l~un~ber 93-Ra~~S4~5, Real Property Records, Denton County, Texas; and also being those same tracts described in that certain Carrect~on quitclaim Deed dram Union Pacific Rai~xaad Company to the City of Denton, Texas, dated June 1, 2~~ and recorded on June ~ , ~~a 1, under Clerk's File Number 1- R~~575b1, Read Property Records, Denton County, Texas; and also being those same tracts described in that certain Corxection to Correction uitciaina Deed from ~Jnian Pacific Railroad Company to the City of Denton, Texas, dated June 2~~ 1, with an eectiv~e date of June 1 , ~D~ 1, and recorded on Judy Z7, 20~i, as Cier~'s Pile dumber ~0~1-R~~7~~ ~ , Real Property Records, Denton County, Teas. Attach~aent to DCTAICity ofDent~n Inter~ocal Cooperation Agreera.ent for Denton Rail Cor~i~or Page ~ 3342 i E~hib~t "B" . dopy of dine Sale ~nt~ac~ be~veen Mi~aou~i P~ci~c ~o~~ omp~ny~ and ~ of De~~on, T`e~as, ~i~ae~ Judy x,1993 E~€hibf~ E ~ lwpoa~Va~ol~t~ a I~ NO DFCS DF ' CIS ~F ~ r A~I~G ' CI',!'3C ~ ',~D 1T T~ CI' t8 B~ ITT C~Il~ ' 1~'1'~.'~iD L ~AI~ ~ITfi~ ~iS~ P~`IC ~ OPA~Y P'GR ' F~R-~ C~TAS~ OF ~ RiIIL ~ P~CU'~RL~i DCRIBD I~ SHIT ~ ~ L~ ~ ~~T~ ~OSG ~ ~ A~ '1' ~r D~ 8 I~BD 1~1~ X18 ~I~' B TD T ~i"1"~~ICD S , A~~ ~D~ 0~ ~ ~ 0~ R~ CDRRIDD~~~ D D~~ 11~ ~"1'IVAC ' t~s ~ii~y a~ man s baa~ pte~nt~d xith trie o~paac- t~m~ty ~a aagpr~ a~.~,art s~,,t .es o~ rail aorr~dvr to ~a a,~a~- do~ed ~~sri ~#iff~ ilraad far tha ptit~poaa a! ~t ~ i3 far waatars~ed traff~a, and ~iB, eiait~ of t~ia ~a~.l aorr~.da~ wi11 pve~ ~~t~~ ~e~~ ~ tou~ista ~itp o~ neon with ~n u~aom~an~r~c~ t~analaoilit , ba~ anl~ gird ►c~ ~~~1-tar~raxl ~vnv~ras~rr in 8t~e i ~ ~ ~ t. ~ fifty ~ i~ bara~~ a~t~ar~~ad tc act tote Ci~y~a bait e~i the a~t~a~sd L Sai~ ~onat ~r~t~ ~i Fsoi~ia .~t~oad ~t~ for t purc~as~ a~ a ra~1 . ~ ccrr~. ~ ~ ~icnl~rl~ drabad Bx~ib~~t I~ to ~ t~ ~tch~d . ~ t~ Ct~ ~ is a~►tt~o~iaed ~o ~ ~ . acaap~t at o~a~iaq i ~iYl of aaie and quxtal~tm dae~t ~ttaa~ed ~b~~ 'B to ~ # a~ta~d ~ 8a1~ tract T~ t ~d~~ cf teu~da aa, ~ranrida~l ~,n tote Cent a ~ ~ut~cr3~sad . T~a~ t~i~ ordin~►noe ~~all ~e a~aat~,vs sd1~ ataxy et~n~, i#~ pe~asaq~ ~d a►~►a~ . ~D ! 'ls day a~ ~ ~~93 ~AST3~H~R1~ r YOR Attachment "2" to DTAICit~ of~entvr~ Interlvcal ~vvperation Agreement for Benton .ail ~vrridor Page 7 3~~ ~r ~ ~ ~r ` ~ - i i I i ~ a attachment to DCTAIity afDantan~~nterloca~ ~aaperatian Agteen~ent fay Dton Raab ar~idar Page 8 333G2 i ~ ~ ~ ~ Q~ t ~ ~ P~FI ~1~iD # ~ 1~.a ~orpOr~tl ~ P" } ~ ' ~ ~ ~F ~1~, ~ ~ ~ Tee ~ZCip~lity ~ "~~tl► ~ ~ '~S8$T~ A to IBC x~a~ a ~~f~.oat~ of ~~rin Tx'afl ~ ~ ~'C~TU" j ~ slr~s to sill i Dunn ~ burr 7~~. 5~ ~t .~n~ ~ end _ . ~i~~poe~ x~~ ~ ~ ~ ~ ~ h~~aftax~ ~ ~Lir~~~ t~ t1~ ~~y ~ of fan d~ae~ to . p~ t ~ Hare ~~ul~riy dv~crd ~ ire . 8 ~bvvrd'ibad aa~e sc~,~stl~y l~d~ee a1~ of tt x~~l ~ ~ie#~, attohe~ r offer t.rac m~~e~~al ~e.lst~d ~ppar~~ ~ along . Ana, th ~ ~ ~ . ~va~ a~ balms ~i ld No ~ td~ ~o xr~u~a $e the ease The lid gAda~lyfn~ L ~'°r,~"~ ~s to be ~r~c~.ud~d _ p of tl~ ~ r~ to ~~or~ ~ ~ tho ~~~~.a~~l ~~~~1~ X16 ~ ~ C ~1~4'~ (d~ ~ ~ ~r and ~ c~t~id~~or~ ~ mnt~ paca~t~~~ and other , aon~~~~.~n e1~ ~ forth, the partle8 a~grea f~~lo ~P ~gr~s s~~aace of ~ ~ ~ ~h~ ~~.y ~f 1~ maw t nacry r~~t to the ~nter~t~ ~~-ce ~~~a ~o~ i~auc~ of a C ~ . ~ r ~~ct~c~ deaar~bed hatexn X11 b~ cad on a ► ~11Y a+~b~.~ ~ . p~ttiaa ~ (the ~~~.j" ~ ~ ~t i~ no ~v~n~ ~ sixty day's fo~,lo~nq s ~s~oa of ahova~~ CIS b~ in~re~ata moo ~1d~lr ~t a loa~~~v~ an~rll~ ~vcapbZs to a A~ .osi, r1! ds1~.v~r ~ 8x11 ~ ~a3.e the ~or~ atohad h~a d ~ertd ih#~ '"8", a~lg to ~ C~t~ of Deft ~h~ I~ ~ a " ~ IS" ~tiop ~ ~r~ttt anY a- any ka~nd at8aev to qu~l~ty~ ~il~~y, ar ►l~l ~1, ho, ~ Doom r Attachment "2" to ~3'AlCity ofDenty~ teriocal ~ooperat~on Agreement for Benton Rail ~orrida~ Pale 9 333~~ ~ ~a d+r~e or oevc~ttion of litigation re~,atsrx~ to the title to ~ personal prc~arty raia~. on the Ling ar any por~xoa thereof ~ ~ tee this A~a~eet all th~,r~y ~3D~ year bung ~ ~~.aaing~ ~~r ~r that ~a~, ~t xts option, teati~naa ~ ire aocordanoa vith the prav~.,a~ona S~atian ~ ~ - Lim malty X11 be ~d ~u~tala~.mad to the #.ty of ~ntan by ~r~.thant waxxarity title ar gpxat one o~wnt ~ ~ . . a ~ub~~ct to ell antatandin~ and sr~.or rx~h~s reeervg ~a SIP . ~ . . ~ 1 ~ all coal ~ all g~ae ~ oas~r~g brad has # aid ra~rals of . ~y . nattera aid oa~ater teoaver ~ - ~.ike ar un~, + kna~n er ~ f - uer3ying the Lx and malty, ~ alz - prey nw~ed It ~ , . and manal by eeau~ri Ieprovent loony; ~ien~ ~aax~sc ~~ty~ . or upland ~ Inetrxas Cox~poratton, FROVI~ t the >~►xn~.r~g explaratiaa ax~ related aativitias or aperatxa► ~ ~ ax~ its suooeaso~r ar aee~gns results in ~ or enoe to Clty of auc~h ~d er e~hall ba paid to the City o~ Anton ' . ~rith~n fi~te €l~ d Qf raae~~t ~f the mineral ~ntest oar ~e ~ p~ a floe of thO Cyst or ~en,~es, aad Fi'IDSI3 ~ - . that in the qt that such ~~n~dg oper~.txona ean~nbi~ . ate pith pity o~ nta~ ~ e use a~ a L#ne t or xt~ ~ - . - su,cQe~s ash ase~.e X11 bear ,all re~eo~atle coats that ~ b~ . ~ ~ . rrad ~Y the City of . De~~on . Qrder to fac~.l~t~te 1~ ~ s a~t~niti ~ - - , STIf ~ ~ CIT,,,Y ~F„B&~ ~ . At .csir t~a~ City of dantan ~ha1Z del~r to ~ certified ~ ~ . . or caehi~ ~ ■ eon payable to ~iasc~uci ~ao~.fio ilyd er~y -in 4 addit3.o~t~ ~ City Dal~tO~ will day ~ a~A1'iQ~ i~l~ ~"eB ~N~ Al[~ ~0'~1~~ ~ ~ ~ ~ ~D~ ~ Payable ~n 118 ~n ~C~ ~ ~ ttl1~ It ~o~' ~ f~r~~ ~1YA ~8~ ing ~ 3 data of this rat his ~t a~ any eubsequant aanveyan~e to r . peruan~ bo tlon ~ ~d~ a~ Nat~ann~ ~rai~ac B~Ste~ Aat~ - ~ S C ~ 1~4? ~d~ ~ the avant radc~iv`ation of rail aerviae ~zperi the ~;~.na ia~ r~eaaary, the pity of Stan ogress to tranater .the Lx~~ to other a►fx~i~ t~ty far a ~ nit to e~CCd the total cf the griaa o~ th$ ,Lips ae pe~.d the pity of ~~Ato~ ~ total . aacu~lated ~s8gs f~8~ pold by @ City Qf tin to uEp to the date the Lit>e repvxcha►sad by miry PhG~ 2 Attachment to DTA~City ofDe~ton Inte~locai ~ooperatiop A~gree~nent fog De~tan Rail ~o~ridor Page 1 D 333b2 I i ~~a its opt~o~ ra~ss tie L~.~s lra~ the o~ De~~atY y tie upon cirri nir~s ~~o} ~ay~ pr~ar ~r~.tt~n uoti~~.oatia~ a~ ~,ts indent ~epurah ~►e L1 to City of tin 1~ ~oi~~,~n of ~ ~~1~ ~ ~ the C1t~ a~ Dt a~reee ~ crept f ~ e#xu~.o~ ~ m~inter~anc end , a~ o~ thu Neil tq ~e o ~d~ X11 ~utiS public uee of t~s e,~.l s~tll be ~olaiy by nart~rata~~~ed news ~~H ? ~u t ~ ~ele~ts to ct~e optx to r~ur~ha the Ls~s ~u'arrt t~ ~ pz~ov~e~ a~ Bect,~arx ~ eho~~ ~ fix' ~ pe~io~ t to ~ ~ 10 ~ pew ~ra~ Claeir, ~rgee ~a Seim- . bu~ee tba City of ] ~ reaseu~ble e~.l develor~t ~ ~ncurre~ the City o~ Dentorx~ up t~ a mautum a~ DRED ~ ~ alter tie f ~~ri ap~ra~val o~ ~ ~ p~~c~ 1~'P X111 t IiD~~ ei~ ~ ~ oaf 1 ~ C~p~ r end nth ~ OIL ~1e ~ 11 ~`idye8 ~~1 b~►11aet rs'l~► on to Lf~m ~til1 ~etin 1~ p1a~Ce g 'the tack ' ~~0~► ~ ~ril~, ~k~i~1 ~ul1 x'~I~fba~l~ty ~o~ " ~~~pe~ ~lsposal t~k~ t~s~ ~d o'er aC~C m~l`i~l~ Owed ~ ~ ~~e d ~~ll ~p~oue of y ~et.iaz ~to~ed #~e ea~ocrdenus ~3~t~ axietiug v~rouaarate~. reg~tlat~o~~~ ~ ~.'he Cif o~ D~n~ will b~ ea~.ely ~c~ble ~a~ t sta. ~nrrad to ro~vext the Ltue to a 1 till, ~~i~ ale thm ~afam ~a a tialy ~~r falla~riag Clceing cif a~ Anton ~ ~i11 ~~,e~ bit pf~1e ~o~ a1~. cats ~se~oxa~.~d ~i aperati~ ~d ~,lnq the trail ~.ncludi bct n ~ meted to, . ~ecu~fty and !mod caa~#.~o1, ep~ ~c~ traa"k r~l ~ s~.~~ed ~ . ~ea.~n ~ ~ x~eato~i~q tha trail as prav, in fiction prae~sr~t line opet~q agreements carer the ope~rat~on ci' 1 r~lurry pi~el~n~ee or etue lor~t ~~.oag tha ?pine e epacif~lly Ciudad ~ ~ ~Igreement r~~erve~ ~xg~t t~ ~ lta ~y g~ ~a~l~t~a on t~ L~.Yte lte~*t~uee i'ra~ ~ suoh ua~ o~ the eba~.l avoxua eoiely . ~p ~n ~ e~nt e~arciae~ ~ r~.~ht ~o ~ fiber aptia ~a~lit~, t.~a ~ City ltdr! yyt~fy ~~0~ d~~a}}~~~r~tte3~~ R, ~ 1u the ~t that snap ~sber c~pta~a , ~~C111~~Q~1 ue~aoar- fly ttl ~ ~h~ City ~f D~1t~A ~ s 1 #A ~~pBrata L e~ ~ tblic trail ~ o~ its aeeeors ur ar~stgr~a X11 b$a~r ~ A~tae~ment to DCT~ICity o~Denton Intorlocal Cooperation ,agreement for Denton ~a~i Corridor Pale ~ ~ 33G~ i alb eanabie aosts ~ci~ted ~rit~ radtoring the one tQ use as ~fia trail wing specif~,l~y c:onta~,d this Agreement . th~ri ~ or third to extend these fiber tic faail~. ~ aael s~ i~fran r ~ t~ha~. prase~t l~cat~.e ~,nta der air ~f~ sit li~ite tha Ci nt dent t . n a'hall phis great ~~~bo~i~e 1~P ~or ~n ,ird lx ur affar f o#~ls aft xsmita u~ ~ s Ci ~Y ~ y th ►ton and c,~oode rvia~~ ~ie~od over ~cuh fiber aptica f~~xiitxe~ or ~a~l ~1r~r~ ~ixn~~ This ~xei~a ah~l1 gat groh~bit ur ~ thud party ~ ob~ir~ing the athor~ty neasn cte~d theca fiber of~ faailitiaa ar ■luxa~y pipelines ar to ~efi ~~ods or vx agar s ~ibe~ ept~c ~ ~aai~.s~t~es ~r 1 s],grry pipa~.~ ~rftb the ~,xt~ of a City DtOn STI 19. ~i~.h sixth ~dQy dam a~ dosing, 1~P ~ril~. deli~e~r to ~it~ of ~n o~ opetfng agre►e~ts alg the rxc~t~of~ ~o~ L~ d viii ate ~ tai hssxg~t ase~.gng l~p~s rfghta et~d nb~ti~~ urger fee aperatxng ~e~tonte to ~tha ~~t~ . a~ t A11 csaa~ 11e~d ~ agr~~s Clue ~xlx aaarua Cat of Ali, inaa~e rul~ted fra~t addst~.ol o~r~.t~.nq a~r~ts taking e~~e after ~~lass . wf11 ~tue the C~.t~ Benton ~ ~ ~ ~ ~ - ~'a the extent alla~d b~ 1~ ,e qty o~ Benton agx~ to ~ii"1r , fete affi+a~ its affix~atas a theca af~iaers, f ~ Ito ~d 11e~~xo~~e~ f yii~'~r#~a~ ~n~ afl l~ia~i~~y ~ ~Q~~ ~ ~ Ci~R ~ ~ "its i4AU ~X~e~f ~ 1~~##L~ ~ Benton ~n~ be he~.d liable or x~espons~ble 'under Mate a ~edern~, anvxrotal t~~r~ a aseaa~ated try Ala aa~ ~ ~ Frith the 1 and ~aalt~ aaryed by a City v~ - eapt far da~ages ~rasolti frog ~isee ode b~ 1~P, its 9I~4aes~ . ~ ~f assigns r ar tithe ~xth ~ 1~ ~ - a etra~i ~a# ~a ~t alloyed age~r fir and bold . harm~,ass the i o~ 1~enton ~ its offic~e,~ts, sts - af~xlfate~s snd. a fx offxoers# and the City of.: t+on+~ egrrd~s playees~ against d fraw~ ~ and ail 1ieh~lit~, ].vss, doge, ~ c~.axms, ~~m~ra, its d nae+a~ of tsoever rst~~ ~nalu~xt~g oaurt costs a attoxln a fees ~ tort fah or ~ any Ord psrt~ ~hsr hae or had ~ 'e~al reiatf~p ~~th ~F, mad held liable ar. r~ne~- ~~e ceder - ate and Feral rs~l 1~t~, and ~h1ob are a~ssoaxated in whole ar is ~ ~rit~ tie lx~ and realty oar~►eped . ~P to the itg o! Denton P~G$ ~ ~ Attah,~nent "2" tv DCTAICi~y v~Dentvn ~nter~vcal ~ooperativn Agreement fv~ Benton ~a~l orridar Page 1~ 333d~ i i i ~~.ldld ~ ld~x the CZty ~~1 rel~~i ~Q 31adi and ~tOld Iea~ r i ~~~x~ ~ af~il~,a~ai a their a~~cs i ark ~ ~ i ~ and 1~~ ~ a~aina~ and ~rv~ any a ell lfl~ty, ~.oa~, d►gs, ~l~r~ de~da, cam and ~t- wtev~r t~~`8, incl~di~ag c~ eke a a~~oarr ~ a ~een~ ~o~ the Cii of ntan qty ha hail ~.ily ls~a~le, and ~h a ae~e~ia~ in ale or f~ park ~rzth tha and rrlty . ~ar~ye~ ~P fi.~e ~ of ~eor~ ~o tie e~c~er~h el~.d laid, a~eea ~o dn~~y hold bear ! ,ty ~r ire Of~tC~ra~ ft~ 8f~~,~,xa~ea and 'hair ~tf f era, end 'fie City panton ~ a agent and ~oyee~ ~ agains and ~ ~d ail llabii~.~y~ 1~ee~ d~~~ a~.ai~ dends# . . Coate and axser ~ wl~at~e~var nature, lud ~vt~r~ ar~d a~~ey a feen ~ for rich m~a~ held laga~ 11y l~a~la ~ d which . . . are aac~ad ~n i~hole ar ~ p ~t~th the lie and malty ~c~n- . . veyad by to hh~r ~it~r n~ Doi ~ , . A ~ha icy of Den~~n hail be renp~netbla all ta~ea attd ~e~~e ~ e~s~al and ape~~al ar othella@ ~ ~.ah day be ~avied, . asa+sa~d,, or ~ the Linn any c~ng ~u~i~cs~~.an B to ra~~ui~itio~t of the Lina ~o re~rea~~~a~. tra~1 uas# real a and spe~~a~, aaaaasta~ any, e~all ~ ba ~roxd beten and tha pity of pen~tm ae ~ . C].oefng a Ci~p Din sh~l~ he r~alhle ~ for PAY any . ~ . . and alb ~b ucea~ fees oar anae~ssner ester ~la~~r e3~d t~.x pair ar ire won ~~or tha pair the o! ~ ary~ wed ~dur~xj ~r hated ~ ~ prior too ~luaing~ . iYID~r ~ the year 1993+ tha ~l~y vt Eton mall onl~r ba reepsi~le ~ t ~i ~f tc ~ tha Line ~ ~ . , ~Y "g a~rthorytp ~o hs die an the Line as a _ , reawt~~ of the pity a~ a user ~ the L1~r as a pqb~~~ tra~~ . ~~D~ 19 ~hle Dr c~ ~ ~rndia~ a a~feot~,ve 1~nlesi tii ~~catian, ~dd~.tior~ or a~dendaan~ is ~i~c~,t~.r~g and s~,~ bey part~e'e ~ ~ pia ~g~~ shall be bxnd~ng upan and ira~xe to t ~be~efi~ o t moors and a 1C o~ each ~y aesigas t,e ,cant 1n ~tho~,e or ~r park shall only be ef~ec~i Frith tha ~tritn t~nsa o~ MP ~ ri~rciee ~.ts ap~ion ~o aaai thta ~gre~ ~n whaxe ~n ~ upon ivl P]~GS 5 Attachment "2" to D~T"Al~ity of ~en~on ~nterlecal Cooperation Agreement for ~]enton Ra~~ Corridor Page 1 333b~ I mety ~9~~ des prior written not~~ic~tie~ a~ its tint assign this to t City of reran . d ~ Dement X11 ~ov$rne~ d erdae Sri the Beata o~ # State a~ '~a►~ ~ sre ep~Y3,oeb~,e, tha ln~t a~ the meted 8ta► o~ ~ime~ci ~ art ~~1 lis ~n ~ty~ Texas ~ urileaa ~ elae~rherer off` i~ the ih~~ted Btu ~~atr3c~ Court a~ttg in the trim ! division ser~tn~ Benton qty, ~ex~ta ~ 'tin 1~t may tae cutmd ~ y , ~ rich shall be ~ d~ to bs ~ an origil nll o~ wttf ah toge~ X11 b~ ~ to be one ar~d ~ sa~►n t $ ~~l rep~aset~~ tatinns and rra~ttiee ride fn this ~t mil survive lass ~ ~ ~y ~~i ~ ~ ~r otter ~ ~o~#ttiorta , ~ . re~uireA~ or peitt,~d this lent a~ ~ lair ehs11 h~ duly ~ ~t tie ~ftp o~ ~o~ ~rhen persor~al~,y d~~.~ve~red thv Ci ~e~ o~ the C~,ty ~ ~e ~ e~ o~ ~t~h pexs secs ~ ~ t~ua n~taes deposited ~ ~'n~.te~ ►taa #I~tflr Ce~i~iad ~e~ R~ Re~eate~f eased to ~ C~t~ ~gvr o~ the City o~ ~et~toa, y nice to ah~l~ b~ served the ~ ~ a ~ax~ to the ~rttefon o~ ~~ce aside-xt 115 ~ street, ~e]ca aB~.79 ~ _ any ter~u ar proviai~ of this ~ Agra iii ~~~'~1B ~ ~ i~i~rii~4~ ~ " ~ eVq~t ~t~.oA Df ~ peiea ~t0 that Yal~.d ~ ~#~~~C~d the ~~r~t permuted by ].sly • • , Dsr~ton ~ e~~~~ ~ perm~tsa~,~m to to '8 th0 ~ Gity ~of Denton ~'or the ~.i~zt purpose . en~orCing the is ~ this ~ dine 8als Co~trect, the went it heoo~ee na~,ry to ~p I~ ~IIT~$SS ~F~ Pelee hers~~ hakes moused th~.e ~r~ lase meted is on oriq~ala o~ tt~e date first e Britten SaoGRI ~A~C RAI17t~ ~ Tale B Attachment to DCTAf City of Denton Inte~rtocal Cooperation Ag~reetnent for Denton Rail Condor Pale I4 33~~ i A"1'EST 'i'ce CI'~C D~~r ~ HIF~R ~ r ~IT~ ~~TARY ~ "G` 4F R~~t~.~ ] TD Lii~ ~ Dpi A ~ A'!.'~DY I~R ' CxT~C ~F D~ ~ ~B 8Y 3 LAS F ~ ~ RAY FAR 1~5~0 ~~1C~~IC RA~L~O~ ~ . P~ Attacnent to DTA1~it~ afDentan.~te~~oca~ Caaperat~an Agreement fair Denton Rail ~orr~dor Page ~ ~ . . 3~3d2 i ~ ~ D~ '1`lrxas T ' ~ ~ '~'a . ~1 ~e~d Sri oi~~o d ~opY ~0~~~ pity of ~ ~lx r#,qh~, tad i~t~ in u to rat o~ ~ l~ and bps of fide ~ o~ ~h~ Drag Hran of x~i Faai!!~a ~t~i s~ ~Y' aras~ ar Braid Tina ~ar~ is ~ ~s~~aar~.y i~r ~e its railxaad ~ii#~~ ~ ~i00 of Ld t~~: ~hite~r0 bdi~fa~ h~~q in firs pYra~,].el. 1l~,tb tnd ~srt ~adia~t ~i ~ ~iq ttk o s ~Y ~1~ ~Y op~oca~d, ~ ~ ~iS 7D ! ~grtl~l o~ ~ ~ ~ of ar ~ t~ ta~linr o s ~ - raid ~ being ~ 1~~~~5~ 3f ire o~n~ aRd aor~ar f~Z1oAr~,pg ~~qt~ ~ubd~►~trt ~ ~ - ~tl.~l 11ddi~.oe ~o # G~,~p o~ o~ sirca • ~ ~ ~ t 1i8~~ ~ ~a ~ to t~ City of Eton ~~.~o ~ ~ ~ ~ ~ 1i64*j ~ - - ~ . t0 ' Cif Of ~ 8 dim ~ ~ ~lb~ ~ s~i ~ ]Iddit► to ~ n~ ~t~ X11 ~iil ~ H 1!Ab~ b~3~ M A G~i~ ~ - - ~ a ~ ~ P ~ R Co . (Rom B inr abet ~4~ ] 46 ~ ~ ~ ~ R ~ ds {v 8onq~ Est * ~ 811 ~7 ~ ~ $ ~ ~ P k R ~ ~ R ~Ib 9# - ~ ~pea~ - ~ ~ ~Ibst i93Q* d ~ lldl - ~ Abet ~38~~ . ~ de~irtm ~ ~ ~ art ~47~` ~ R ~ti~lr - ~ ~ t d89* Tbvr IO~~a ~y ~37~~ ~ ~ ~ ~ - - - 8 H ~1#,~I~C Bn llbs~ 1~~0# ~ - - - ~r a/ ~ra~ ~o~ #s ~,r►tr of as nerai tea!! O~~a app pied ,1~ ~is~q rrtrom a,~~ ~ prraaii of . lid rites i~ ~ i~iaoa - 8 A ~]C ~ 3~ess par11 rrft~ QO fad dim ~ saw ~idr t Berl o rs~ abaa~o~ed ~xsa0r bl~~ ~l~oee c pela of ~~d ~ ~ofo~s a,nir*d by ~~►11s* & l~i~bite ~Y t~ iri Sao€~x~ rsa tsd~ ~i ~ k~~ a ~ri#a aid ~ ~ Qa,~ir~a! a ~3~e ~r P ~d 330 ~ 1~~~~ rroa~dad ~ ~d, 10~ ~ #4 at ~ ~ivel~r, # xds ~f ~ Co~n~~, 'fir r ~iNR~ ~ - A~~a~ment #`2" to D~TAl~ity of Denton Inter~acal Cooperation Ag~eeme~t ~o~ Denton Rail ~urridar Page I d 33G~ i ~IS~O~tI F]ICIF3 PA, ~ ~~a~are ca~p~raon (~~~lle"~ gar in ~o~a~io~ a~# One l ~1 4~j a~ ot,.h luad~~~ ao~s~tio~ d+ h~~y i~~ trans~ar and ,i~r nnta c~e~ asssq~ns, ia1~.aArg p~a~Y. Ali l~a~t ~i~ lava ~►l 8~11ar' ~ Dton anal ~ ~i~t ~1 D~aar asp and 1~iaet 7~~ ~ a~ ~Tex~s~ - , , ~ - ~ 8~ a~ ~~1~ to .1 0~ the ~ d c~~dit~ons ao~d ~ tit aerta~~ Line 8~ C~t~►~t been S~~ler and ~ dew . . , . # ~99~ ~'he ~ aid ~i~io~s aantaf s~ 'fie ~ Crdar . ~ .fie ~ - . tae ~v ~~~~n i,~ ~ ~a 3 Sub-~~ 99~~ ~ ~ or~t drai~d ~pri~ l~, 19~~, aid moved ~1~1 ~9 ~ 19~ ~ t ~~i~~d ~ ~e11e~r tv, d~. a ra#.,ian - af~ree~~,d ~~~.~~t~on saved the Co~~ia~, the ~ - m~.as~o~ ~e~ a ~a~l-bc ~nterYn t~1 a ~oz~d~~~on ~tant ' S~.o~ 8 of I~~t~ol ~~a ~ ~ - S~ ~iB ~D CITY, ILI'~Y; ~ GR ~ S~i3~A8~,.. ~ $G - ~ - - ~ . ~TTS t~la 8e,~~ex has dull exets~d t~tl~ ~il~ of i S~}.e a~ ~ ~ dad D~ _ _ r ~,~93 - ~~tria - ~I~SOVRI ~~FI~ Rl~~ ~ ! 1B1~ ~ PAGE ~ ~ . ~r At~ac~a.~ment "Z" to DCTAI~ity of~er~toa ~terlocal ~aoperation Agreement fog ~entan Rail Carr~dor Page ~'7 333G~ _ i t~ac~m~~t Ins~ce R~quirem~~t~ 1. ~nr~nce uir~d - ~e~~~. Prior to commencement of construction of the Rail system or~the Benton Rail Trail Project, IOTA at its own expense, shall purchase, and shall maintain or cause to be purchased and maintained in force during the .entixe period of construction of the Rail system. and the Denton Rail Trail Project, adequate insurance that will protect I~entan, its o~cers and employees from clairn w.ch nay arise out of or result from operatian~ under this Agreement and the construction of the Rail ysten~ and the Denton Rail Trail Project, The insurance required sha~~ provide adequate protections from alt dais, whether such operations be by DATA, its contractors, subcontractors or by anyone dixectly or indirectly employed by any of them, or by anyone whose acts of any of them may be liable and from y special hazards, such as blasting, which may be encountered in the performance of this Agreen~er~t in the following types and amounts: A. Genera ~i~~~lity In~~ran DATA shall provide a~ad n~auatain t its own cast during the term of this Agreement, Cxeneral f,labll~ty insurance with combined single limits of not less than 1,~,~4(1.~~. The policy shall be written on an occurrence basis either in a single policy or a combination of underlying anal umbrella or excess policies suh j ect to the following: ~ l } Zf the Commercial general Liability form SID Form 4a01 current edition} is used: ~a} Coverage A shall include premises, operations, products, and ca~npleted operations, independent contractors, contractual liability covering this contract and broad farm property damage average. fib} Coverage ~ shall include personal injury. ~c~ Coverage C; medical payments, is ~.ot required If the Cainprehensive Cxeneral Liability form ~I~C Farm CAL ~aa~ current ditian and IUD Form GL a4a4} is used, it shall include at least ~a} Bodily injury and Property Damage Liability for premises, operations; products and completed operations, independent contractors and property damage resulting from explosion, collapse or underground C exposures. ~ Broad farm contractual liability preferably by endorsement} covering this contract, personal injury liability and brand form property damage liability, Attachment "3" to DCT1ity ofDenton ~nterlocal Cooperation Agreement for Benton ~a~~ arr~dor Page ~ 33G~ Autom~~~,e L~ilrt In~uran~e; DATA shall provide and n~vintain at its oven cost during the term of this Agreement, omn~.ercial Automobile Liability insurance with on~bined dingle Limits ~L} of nut less than SD~,~O~.~~ either in a single policy or m a combi~aat~on of basic and umbrella ar excess alicies. The olio ~ ~ ~ mill include bodily injury and property damage liability arising out of the operation, maintenance and use of all automobiles and mobile equipment used in conjunction with this contract. Satisfaction of the above requirement shall be in the form of a policy endorsement far ~ 1 ~ any auto, or ~2}all ov~ned, hired and non-awned autos. orlr~ ompen~~ation ~ranc~: l]TA shall purchase and maintaan orl~er's ompensatian insurance ~rhich, in addition to meeting the minimum statutory requirements for issuance of such ~surance, has Employer's Liability limits of at least l aa,Da~ for each accident, ~ 0~,~00 per each employee, and a $~aa,~a~ policy limit for occupa~onal disease. Denton need not be named as an "additional Insured" but the insurer shall agree to wive all rights of subrogation against Denton, its of.cials, agents, employees and volunteers far any arl~ performed for the pity by the Named Insured. Ice tom an Standard: Each policy shall be 'issued by a company authorized to do business in the State of Texas with an A.M. hest ampany rating of at least Endar~ement~: Liability policies shall be endorsed to provide the follov~ing: A. additional In~nred: Name as additional insured the pity ~f Denton, its officials, Agents, Employees and volunteers. B. Inanra~ce Primary: such insurance is primary to any other insurance available to the additional insured with respect to claims covered under the policy and that this insurance applies separately to each insured ~vinst v~hom claim is made or suit is ~ brought.. The inclusion of more than one insured shall not operate to increase the insurerfis limit of liability. ~4. NotYCe o~ cancellation, eta.: Each insurance policy shall contain a provision requiring that ~ 0~ days prior to expiration, cancellation, nun-renewal or any material change in coverage, a notice there of sha11 be given by certified mail to pity of Denton, Attnity Manager, ~ l E. McKinney, Denton, Texas X20 l . a. ll~ade Pnlieie~: Should any of the required insurance be provided under a claims-made farm, DATA or its contractor, as the case xnay be, shall rr~vintain such coverage continuously throughout the term of this contract and, without lapse, far a period of three years beyond the completion of the v~or or the expiration of the agreement, v~hichever is applicable, such that occurrences arising during the Agreement term which. give rise to claims made after expira~on of the Agreement shall be covered. Attachment to DCTAI~~ty of Denton ~ Interlocal oaperatxon Agreement for Denton Raiff o~ridox Page 2 333d~ i certificate of Durance. DATA sha~~ ha~re er~i~ca~te of insurance issued to Denton that indicates a insurance coverage required by this Agreement, ma. be appropriate, . along with a~~ ~`~qu~"ed endorsements, is 1n effect. 7. ontctar dove e. During periods of construction ~y third park contactors, DATA sha1~ require its contractors and subcontractors to obtain and maintain insurance in the taes and amounts required by this Attachment , inclusive of all required endorse.ents. Attachment "3" to D~'Ality of Denton ~nterlocal ~oaperation~ Agreement far Denton Rail corridor Rage 3 . 333d~ i 1 DRAFT MINUTES 2 City Council Mobility Committee 3 Tuesday, February 24, 2009 4 5 6 After determining that a quorum of the Mobility Committee of the Denton City Council was 7 present, the Chair of the Committee on the Mobility thereafter convened into a meeting on 8 Tuesday, February 24, 2009 at 2:04 p.m. in the City Council work session room, 215 E. 9 McKinney Street, Denton, Texas. 10 11 Present: Chair Pete Kamp, Mayor Mark Burroughs and Council Member Chris Watts 12 13 Staff Present: Howard Martin, ACM Utilities; Fred Greene, ACM; Anita Burgess, City 14 Attorney Jim Coulter, Director Water Utilities; Mark Nelson, Transportation 15 Director; Frank Payne, City Engineer; John Knight, Assistant City Attorney; Tim 16 Fisher, Assistant Director, Water Department, Bud Vokoun, Traffic Engineer; 17 Bob Tickner, Supervisor Parks & Recreation; and Ann Forsythe, Boards and 18 Committees Coordinator 19 20 Also Present: John Polster, ITS; Scott Neeley, DCTA Vice President of Communications & 21 Planning; Phillip Ullman, Paul Luedtke, and Darren Fox, HDR Consulting; 22 Jeremy Sain, Brian Shamburger, and Dennis Seale, Kimley Horn Consulting; and 23 Greg Johnson, Elk River 24 25 OPEN MEETING 26 27 7) Receive a report, hold a discussion and consider a recommendation to adopt an ordinance of 28 the City of Denton, Texas approving an interlocal cooperation agreement between the City of 29 Denton and the Denton County Transportation Authority (DCTA) granting an easement to 3o the DCTA on the Denton Branch Rail Trail for the purpose of building a public commuter 31 rail line. 32 33 Mark Nelson presented this item stating this is a follow up item from last month's meeting to 34 advance for consideration by the City Council on March 3, 2009. A substantially complete draft 35 interlocal cooperation agreement and easement has been developed by DCTA and City 36 representatives. Major points of consideration are: maintaining status of Denton Branch Rail 37 Trail for park/recreational use, preserving City of Denton's rights relating to future use of the 38 right of way (ROW), maintaining integrity of existing City of Denton utilities in and adjacent to 39 the corridor, mutual plan review and approval by each party for improvements in the corridor, 40 ownership of improvements should proj ect be abandoned and mutual indemnification. 41 42 DCTA is requesting access to the ROW be granted as soon as possible so their general contractor 43 may access the corridor to initiate construction activities. This timeline suggests that DCTA will 44 have final plans and funding in place to initiate the construction phase of the commuter rail 45 project inmid-March. 46 47 48 1 Draft Minutes of the Mobility Committee meeting 2 February 24, 2009 3 Page 2 of 2 4 5 6 Nelson stated that there was also discussion about looking at including a community advocacy 7 fund to assist impacted neighborhoods as part of the agreement. This was pulled out of the 8 negotiations for consideration at this point in time, but it is understood that there is a desire to 9 continue to advance the idea with the DCTA Board. Part of the discussion with Council was the 10 acquisition of reversionary rights from DART to reduce the opportunity of reverting the rail 11 banked corridor back to freight rail service. DCTA has agreed to include language in the 12 agreement to not initiate or consent to the reestablishment offreight rail service in the corridor 13 by DCTA or a third party contracting with DCTA. Nelson referenced paragraph 4.5 of the 14 interlocal cooperation agreement. 15 16 Council Member Watts stated he recalled part of the discussion at the Work Session was 17 reversionary rights and there was some question whether DART can assign those rights to 18 another rail entity. Watts asked if DCTA is pursuing those rights. Nelson replied that DCTA is 19 pursuing that and further stated that DCTA requested that the City not approach DART in 20 acquiring the reversionary rights independently as it would undermine DCTA's negotiating 21 position with DART on this issue. 22 23 Nelson then stated that one of the items staff received direction on in the Work Session was 24 replacement/reconstruction ofthe city water lines prior to construction of the rail line. In 25 working with the City's Water Utilities Department, the indication was that the cost is 26 prohibitive at this time as it has not been budgeted and securing bond funds would be difficult 27 due to the downturn in the economy. 28 29 Mayor Mark Burroughs asked if DCTA staff was pursuing the Tax Increment Reinvestment 3o Zone (TIRZ). Mayor Burroughs stated he had a conversation with Rider Scott who indicated 31 DCTA is still pursuing it at the legislative level. Scott Neeley, stated he had information from 32 the Chairman that DCTA is not pursuing the TIRZ. Mayor Burroughs then stated that he also 33 had an email from the Chairman stating the same. Nelson stated that staff has indicated to 34 Members of the Legislature that the City is opposed to a TIRZ. Neeley stated he could not speak 35 for the Board but he could state that the Chairman is very adamant about not pursuing a TIRZ. 36 37 Tim Fisher, Assistant Director of Water, stated that concerning replacement of the water lines 38 concurrent with the construction of the rail line, staff will evaluate the condition of the pipe line 39 and take a proposal through the budget process to budget about $500,000 to look at preexisting 4o conditions to try to identify weaknesses in lines and be proactive. Economically it is not feasible 41 at this time to replace the lines based on the current condition and remaining life of the existing 42 Ines. 43 44 Council Member Chris Watts moved to approve with a second from Mayor Mark 45 Burroughs. The motion was approved by a 3-0 vote. 46 47 The meeting was adjourned by consensus at 4:11 p.m. 48 1 DRAFT 2 Parks, Recreation and Beautification Board 3 Minute s 4 February 23, 2009 5 Civic Center Conference Room 6 7 Members present: Carol Brantley, Allyson Coe, Dale Conway, Reggie Heard, Jo Kuhn, Ross Richardson, 8 Jennifer Wages 9 Members absent: None 10 Staff present: Emerson Vorel, Cindy Deckard, Jim Mays, Janie, McLeod, Kathy Schaeffer, Bob Tickner, 11 Mary Aukerman, John Knight-Deputy City Attorney, Mark Nelson-Director of Transportation, Becky 12 Guthrie-Engineering 13 14 Chairperson Jo Kuhn called the meeting to order at 5 : 5 8 p.m. 15 16 AWARDS AND RECOGNITIONS: 17 a) Emerson introduced Kathy Schaeffer to the Board and announced that she had been promoted to 18 Superintendent of Leisure Services and would be attending the meeting on a regular basis. 19 20 APPROVAL OF MINUTES OF January 12 3, 2009 MEETING: Chairperson Jo Kuhn asked for any 21 corrections or amendments to the minutes. Hearing none the minutes stand approved as presented. 22 23 ACTION ITEMS: 24 a) Request for Art Piece to be Loaned to Museum - 25 b) Proposed City of Denton DCTA Railroad Easement on the Denton Branch Rail Trail -Mr. Ray 26 Green from DCTA was introduced to the Board. John Knight, Deputy City Attorney, explained that 27 the agreement is still being finalized but that the intent of the document included in the packet isn't 28 going to change and that the Parks portion of the agreement is sufficient enough to bring before the 29 Board. The document is intended to protect the City's interest in the trail and in the waterline that is 30 parallel to the easement. City Council hasn't reviewed the document yet, but the Board needs to be in 31 agreement with the contents before it goes to City Council for their input on March 3rd. According to 32 Mark Nelson, Director of Transportation, DCTA will consider the document at their Board meeting 3 3 on February 27th. The 10-year clause will protect our interests in the event the railroad is not 34 constructed. If the interlocal agreement and easement are not accepted by either party, a "RIGHT OF 35 ENTRY AND POSSESSION" document has been included in the packet so that DCTA can access 36 the property to begin preliminary preparations to meet their 2010 proposed completion date. 37 3 8 MOTION: Jo asked that a motion be made for acceptance of the proposed City of Denton-DCTA 39 Railroad Easement on the Denton Branch Rail Trail agreement. Jennifer made the motion, Carol 40 seconded and the motion passed with a vote of 7-0. 41 AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 DEPARTMENT: Transportation Operations ACM: Howard Martin, 349-8232 SUBJECT Consider the adoption of an ordinance authorizing the City Manager to enter into an interlocal cooperative agreement between the City of Denton and the North Central Texas Council of Governments for a Local Air Quality Program traffic signal project; and providing for an effective date. (Mobility Committee Recommends 3 -0). BACKGROUND In April 2005, the North Central Texas Council of Governments (NCTCOG) Regional Transportation Council (RTC) approved funding for implementation of a Local Air Quality Program in the Dallas-Fort Worth Metropolitan Area for the implementation of projects and programs that address the federal 8-hour ozone standard. Subsequently the NCTCOG issued a call for projects in the fall of 2005 with project submittals due in March 2006. The call for projects was for projects that will improve air quality control such as traffic signal progression, employer trip reduction, van pool programs, bicycle/pedestrian regional connectors, high emitting vehicle programs, diesel freight programs, off road construction vehicle emissions reduction programs, park-and-ride facilities, special studies and other air quality control strategies. In July 2006 the RTC awarded funds to the City of Denton to enhance Traffic Signals and amended the scope in 2008. The project will reduce vehicle omissions that create harmful ozone through traffic signal upgrades and retiming of intersections. The project will also include enhancements to the communication system to enhance the traffic management system. This project encompasses Carroll Boulevard from Forth Worth/Collins Intersections to FM 428 (Sherman Drive). Exhibit 3 has been attached for your reference demonstrating the project corridor. The following intersections will be enhanced as part of the project: Location Descri tion of Work Carroll and Congress Communications Carroll and Crescent Cabinet, communications Carroll and Eagle Communications Carroll and Sherman Cabinet, communications Carroll and Hickory Communications Carroll and Mulberry Cabinet, communications, video detection Carroll and Parkway Cabinet, communications, video detection CarrolllFt. Worth and Collins Cabinet, communications, video detection Carroll and Oak Communications NCTCOG has requested that the City of Denton enter into an interlocal cooperative agreement (ICA), attached as Exhibit 2, to facilitate the $182,500 80%-20% grant match project. SCHEDULE Upon effectuating the ICA, the Traffic Operations Division should be able complete the project within six-months. PRIOR ACTION/REVIEW The Mobility Committee recommended Council consideration of the proposed ICA, 3-0 at the February 24, 2009 meeting. FINANCIAL This is an 80%-20% grant match project through the NCTCOG's Local Air Quality Program. Total project is $182,500 with local 20% share totaling $36,500. The City of Denton will be financially responsible for any cost overruns. Funding for the project was approved as part of Traffic Operations 2008-2009 budget. EXHIBITS 1. Ordinance 2. Draft Interlocal Cooperative Agreement 3. Corridor Map 4. Draft Mobility Committee Minutes, February 24, 2009 Respectfully Submitted: Mark Nelson Transportation Director ll~odadl~epartments~legall~ur ~ocumentsl~rd~nan~esl~~lnctcog tic si~,mal pro~ect.~oc ~RDINAN~E , AN ~RDINANE AUTHR~~IN THE CITY iVI.ANAER T~ ENTER INTO AN INTEREC~AL ~DRERATIVE A~REEENT BETWEEN THE CITE OF DENTIN AND THE NORTH ENTRAI~ TExAS ~UNIL ~F C~~ERNENTS FAR A L~AL AIR [~A~~TY ~RDCRA~rI TRAFF~ SIGNAL PR~JET; AND PR~IDIN~ AN Ek'FETI~E DATE. WHEREAS, the North central Texas council of governments ~N~T~~} has been designated as the 1Vletropolitan Planning ~rani~ation for the Dallas~Fart Worth Nf etrapaliltan Area by the Covernar of Texas in accordance federal IaW; and WHEREAS, the Regional Transportation council ~RT~, cam riled rimaril of local ~ ~ Y elected Officials, ~s the regional transpartat1on policy body associated With NT~DC and has been and continues to be a forum for cooperative decisions on trans ortation; and p WHEREAS, it is the goal of the RTC to encourage the implementation of pia j ects to seduce vehicle emissions that create Ozone; and WHEREAS, an April ~ 4, ~a05, the RTC approved funding for implementation of a LOCaI Air rlity Programs in the Dallas-Fart Worth 11~etropolitar~, Area for the in~plementat~on of projects and programs that address the federal S-hour axone standard; and WHEREAS, on duly ~ , ~aa~, the RTC awarded funds to the pity Of Denton far traffic signal projects; and WHEREAS, the Interlooal aoperation Act, chapter 7'91 of the Texas overnn~,ent bode, provides authority far the North entrap Texas council of overriments and the pity of Denton to enter into this agreement for the provision of a~ernmental functions and services of mutual interest; and WHEREAS, the qty auncil finds 1t to be in the public interest to enter into an interlocal cooperative agreement With North central Texas council of C~overnn~ents for the expenditure of $~,~~a ~n n~atching funds far the Traffic Signal Project; NOW, THEREFORE, THE ~DUNIL ~F THE CITY' OF DENTDN HEREBY ORDAINS: SETIDN ~ . The findings set forth ~n the preamble of this Drd~nance are incorporated by reference into the body of this Ordinance as if fully set forth herein. SECTION 2. The pity council hereby authorizes the pity Manager, or his designee, to execute an interlOCal cooperative agreerr~ent between the pity Of Denton and North Cenral Texas auncil of C~overn~nents, substantially in the form that is attached hereto, and made a part hereof as Exhibit "A" the "Agreement"}, On behalf of the City. i ETI~N This ordinance sha~1 hecon~e eecti~e ~edi~.te~y upon its passage and appro~a~, SASSED AEI) AFPR~~EI~ this the dad o~ , ~~~9. MARK A. B~JRROU~HS, MAYOR ATTEST. JENNIFER ALTARS, YT SECRETARY APPROVED A TO LEGAL FDRM: ANITA BURES, OITY ATTORNEY t Exhibit . . . - , ~ . ' ~ ~ ~ it ~ y, ~ ~ ~ . . d: ~ . - . . ~;:p~~o~rr~ ~th~~~.=a~~ ~de~~~, S=l~~u~ ~~r~ :~~~d~, r~~, ~ ~ - - ~ _ . . . 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C~~~ ~Ct~f'~l yy ~~r fn~t~f'~.A~C~ C~.~ ~r~ ~0~~1~ i/~' , . i ,~h~ tM~ ~IfC ' ur~t~~~ the ~-riu~~ a ~v~tt~~ .a~~t~;:~~~o~~~~r~~t:~T~_ ~C~~~~r~~.~: ti~ef ~~o ~~~i ~ ~~-~v~~~~k. ~~rrd.~ en~i~e~ r~q~ ' ~ h'~~~ - - . ~~~f1~~0~. ~~~f ~~~ty~ r~~~ -f`I ~D ,~~fff~~':t~~ . ~ r ~'1F~ ~ .p c~~,, #rrr~i~r~a#~~~ ~r~t~s#~~~~.~:~ro~id~~ i~~~ v~if~.~~;~ sfia~~l~ ~~~e r~~o ~ar~#e.ri~t~~on;, ;nd~ ~~~~r~vrd~e ~o:r ~a ~m~~i'u :oaf ~0~ :d . ~cu~~~th~ ~ ~ . - ~ ~~~`~''r~t"~~I~.~:~1~< ~'~~~~I~~ ~r~~: f~~:t~'!~''~@~'1~ ~~~;:~:~I"~ ~~~fE~~: ~CU~~::t~'I`~':"~~'~ ~ £'In~:~~~'~~'llf~1~#I~~1'~C~~~f' ~1f~C~~,IC~~f"~n ~~~N~~~_~~~![~~'f!~~~~rfr h ~~r~rne~# ~ #erm~r~~te~r- h~7~ ~~al~~~~a~i~~r ~~~e=;li~b~::~or,y~r~t~'f~~: ~ - : - e-~e rend~~d~ -~~fof ~t~~.:~~i~~ ~at~. ~f;~~r~~in~#~:; ~ f~~~~ra~~~1 ct ~lv~~u#. c~sts~, ~~p ag~eed~ u~ar~. y.. Pa~i~: ~r~ tei~#~ thfi~°~r~er~#. ~a# ~ t~~e ~}ul=~tt~en~ ~ - . ~ ' . ~ c~~.~~renc~ ~~~~ie :al.o ~~~ee~~~at ~~~u~~d ~a~:;~~~~~d~ ~u~~~~ i~~.~: ~u~ ~~~~::~~d°~rlr furl oc~r ~~t`'~:t~y~~~c~.p.~ #i~#~~. ~~i ~r~ ~ ~ ,T. U~n:~s.e~~~o~ l~e~h~. #J~an~ ~or~pfe#i~n y~~ ~~:#~~~t,., ~d:r:tri~~i~~:~~~~ ~ ~ #he~ A~rment, ~n~ ~rern:~~~Eng ~~~c~ .i~l~a#ch fury ~r~~i~l~~ ~b~ ~#~e ~ ~ ~ - ~e r--~#u~ne~ to the ~PI~~~R ar ~m~y -b u~~ a ~ #1~,::~t~'€ . ~ ano#h~ :pro~ec# ~o~ ~~pe Amity aa~re~ fur~~s~ y =at t~h~e.~ d:~~~t~~ ~f --tom . ~ - . ~.8 ,~ae~~~rt., ~~~e~~t=~~l ~ocu~r upon ~~p~~~a. ;of~adh ; ~ ' . ~ ~ . ..y C~~ple~e ~f~~~~f .~'~..~rf~e~t, f~C~-~lf~~~t~~ ~~~~~`~~~01!~~`~, . . i~~eou# o #hi~ Ar~~~# ~d~e na# ~~~aii~~#e~ ~ ~.~:nt~~t~in: d~i~:or~-: r ~ ~ ~ ~ ~ ' ' 1. , ra ~ ~ , r ,c., 5.. ,.5 ~ ' tai r M. sj .RJ n. .r... H.. w.. ~ .r.. r, _ i'{+.: .fie ~ "=r'r~~. .`r ii,; ~a, ~i :,tu ~ , ee7~d.L k:Zr.~~.~r^: L . ;..a"+'~'F.: ~ ~~w.ti ~ i~oa'-r g3a',T }Y t~ :4 : ti : r - i i ~ . V■~■ ~ ~~~~1~~~~~~~~~.~~~ tiff . , ' . ~~~i~~tv, ~::~u~~-~~a~r.~ ~~~~ro~sll:~prir~:-i~~e~~i~~~";'~~ ~ ~ ~ ~ . . ~ ~ ree~rn~.~~~~~~~~~~ -=~r~r~ `he~~~~t~°~~ ~u~~~d~..iil - ~~f . ; _ ~ ~ - . ..pravi~orr~.~ ~I~~revf; - Ord ~h~ ~re~e~t f~a~l ~~e '~v~e~=~~o ~ to c~r~~ s i:r~r~i~, ~I~e~g~i; ~~r~~~r~o~f~~cef~e ~~r~vtsiori~~} fo carry ~uf-~a~ ~r~a~ ~a~~-~ ~ P - . ~h~~n~~ ~i~~r~. ~if`fu~~~e}~~ede~al, 'fi#~; or iocl~~~ta~u#,.~~~~:.. ~~e~g.u~l~'r~~, ruiet or~~.r~i~~n r~~~~r ~i~~~~~i~rme~t; :in-~uf~oie gar i~~~k~.~ii~~l~ ~ ~ ; ' ~ ~ ~ - in~i~, une~~~r~ele; ar ~~~r~t~~; =~~e~~p~r~~i~e~ ~~~~e :to~ ~~fete ~-a~~`:t~~ ~i ' - . ~ ~~.uc~ por~i~n of ~~e ~eem~~~~'- ~a~: ~e~ear~~to~-ren~~. i#.v~i~d;-.~e~a~~ ~ ~ ' a~olor raid, ~ , . - . . ~ ~~h ~c~~~n, :.~ar~ rah t ~ o~:.pro~r~or~ ~f ` f~~~: ~~r~~r~~: ~a~#~r ~ ~ . b ~~o~i:~er~d.-~ve~ae, and: if} for n.,re~ont :any: s~~tio~r~: :ara ~ ~ ~ : h.:~:. ~ ~ . ~ ~ ~ . - ~ ~ .~ra~ii~o~ #~er~~n: i d~e~m~ned ~f~ ~e~~in~~f~ ~~d~er-~~urr~f-~~~~~~~_~ . ~ ~ - ~~1~~ef.'~VL I''#~YIQ~~41~~L~ r7~~i k.}~` ~:~R~~ i~~,~,~~`L~~#~F:~~ Vi ~~~~~~1~?~`~ ' 4~~ .1~~~' ~~I~LIV~.c~f ~i~l.ti7 , i~~k7~r~~~~4. ~ ~ ~ ~ ~ - ~ t~M, , ~~~V~'~1~+~a, CV~~~~~.~ ~~r.f 6 rrR1' 1~~.^I'I IW4.'1~~il -R~~?~ ~ ~~i'F41J:'! - , ~~~~er a ~ . r~~~i~~~~fed~~~ ~~r ~at~~-p~:r; app A~ii r~~y~~~;~o ~onr:,:f ~~il~~~e -r~C~'.~le' ~i~.l~r~ Ur~C~`~~~ e~~~.,.c~~~.~: ~ - ' . ~ ~ 4.'~. ~~~~'~g:.. ~~i rin~~ure.~h~~~~~~~~~~~::_~l~~~~i~:<e~c~. ~~~~ci~ ~ - ~ - ~ ~ ~ 4' ~~p~e ~a~ ~~~a~ ~~~t ~~~~eed ~~~he~, ~v~~~dd'f~~~ ~r~~i~rd ~in 4~pend~i~c:-A: Fu~~ nay rr~# -~aiRa~i~ ~o~ reir~b~ernr~t .p~i~r~~o; ff~~:'-~i1' ~ . yer~~c~o~ber t~r~~h. e~m~er 0~'}~ :~~-id~t~ied~:i~n t~h.~~`~~~.~: ~ ~ ~ - par#y .payir~ for the~rfor:nce of c~a~~err~m~~~i f~r~~#io:;`~o~~~~r~r~e~.r~~~: ~ ~ - ~ ~ . . . ~ ~ma~ke: ~h~ae ~,paym~n~: ~r~r~ curr~#. r~►~n~ `a~il~~e~~~~~ ~ ~'~i~ ~ ; . - Acct a~:~i:rr~~ed~ ~ ~ ~ ~ ~ ~ - . ~ ~ ~ . , . ~~i~er~~~~c ►~i. ~ Vii' ~ R~ ~ ~ ~'i'~ - lci~:p~ . ~ -t~~~ti'ie~ ~~~r.~h ~rt~~'~: ~'e~ :o~n~rf ~f o~►~er~~n~r :~~'.~~,~ri~~s~~~ ~ , - ~ ~ ~ ~ . ~~►~~~~~ix. :~>o~rc to P~~oe~. for-.~f~ .~pe:~it~ ~~i`, ~ ~ ~u - ~ ~ ~ ~ u~~s= or -~n~l:~tf~e~~i~1~ ~ma~~ for ~co ~~lti ~h~~-~eer~ r~~~~ ~f~~#~~ fecal r~a~ch a.~un~ for ~~~y o~~e ~i~ity f~~ ~~t ~~~:n ~r~i~v~ed~'~i~~ - ~ ~ ~ ' ` ~ - . . years ~~af ~l~e ~da~~e~:~hf A~~reemer~~ ~I exeu~e~, ~~11fT~~ °r~eee Sri-"to . ~ ~3..~ ~~ost ~~r~~r~. ~.P~~N~~~-~~r~pr~~i,~~~: fv~~:a:~ ~:v~r~~ ~ ~ - . , , r ~ ~ i t . . , . , ~ry - i, - h;::., ~'1'. ~M• ray ti7'•. .a4J• ~ qC: ~fN. r,, .:3...:x.-, u•f.:.. ~r-rr+r.~_7.. t+l.r Xryle}-.w~+. .y. r:.w,~: :~r'.`^ ~d.~~'~:r,r17. ~,.r, _ ..t,:..5 _w ~+~~.~a:,TF. ~W~.~io'oNS :F14~~ ie4~`h^~. i ..i ~ ' ' . r ° ~~h~afi~;~ - P; any ~~~~-e~~~~.~-~f~i~r~~:-~r~:: ~b:~~~~tu~r~e~ -t~~ ~~P~~l~ ~ -.~~'c~,~t~;~:a:~ ~y~~th:e ~r~~~ ~p~ra~~ :r~a~~r~~~:~~:~T:L~oca# f~r~~s~° ~s~~~~~ ~b~ : . F , - ~ ; ~ ~ ~ ~~e~ri~b~~~~~. ~:li~voic~ ~sh~~f-~~e: bittd u~r~ ~tu~~~.l.~~ri~ ~ t~ ~ ~ - ~ ~G~ ~~I~iCUF~d~~~~.~` ~Dp.~Ct~~~ty.. A~ddit~~~~~~.t ~.111~~~.~~~~~ ~ ~ ~ . - ~r~tt~ed c~b~r:. ~ ,off: eh ~ y~e~=fia~r ~~ch ~ . =~A~ti~ fog ~ ~ - ~ . ~ ~ . ~ : - ~ ~ ~ ' . r~o~d ~bu~ r~ot~~~~v~i~c~d ~du~~t~~~:the ~preirfous~~~i ~ ~~~~~t`~:~h~~~l bye ~a ~~t ~h~::e ~ ~ - ~t~~ - ~ . 4~ :~J. . ~ arid; Upon - ~ - . C ~t~: . , ~ 0~~ ~ - . ~ ~ ~ . - ' ~ ' . ~ ~~b~~~~o~p ~ ~'pr~s~es~~ai~d ~ e~~ac~r~ r,~e . - ~ri~~r ~ti:~:pa~e~ was ~nr~rr~ed_~~d ~:~~~~~p~ Acti~~t.: ;.-~r~ri~~r~ ~~ere~c~-~~~r~~~er sho~~~d ~b~ ~r~d:i~~t~ed~r ~~c~eh-h ~ ~ ~ ~ti ~ ~ : ~Eli~ie:;~~:~er~. -ads -~~:,s~ be~-trrr~~ne~=b ~ . ~ reo~~~:~; ~~e, anal;. ~':i~~-~~~.~~~~~rui~ : ~ ; - ►~~VIt . s~~~~~~~~ I.~tI~It~ I~~Ct~~.~~ :1NI~~~ 1~~~~ ~ ~ ~ ~ - ~ ~ ~ ~ ~ ~ t~=~~=~ . ~ ~ ~ ~t~~~~~ :~f~:~r~n~:~ ~h~~s~~ ~~~~r~e~n~.~r~d~~a~l~~~~:i~ ~ ~ ~ ~ ~ ~ : . . a~,~~n under o~ r~~d5 ~~~-#h~ ~-~re.e~t ~ar ~ . j ~ ~b~dt :td: ~r~~~~~t~~:~:~~r"~ ~~t - ~ p- cai:,~~~ndt-:~~f~TlL~I~n~~iti:r~t::;a~i~~~~~=~~~-~~.~~~:~ de~a~a~ of~~lac~rl~~#~~d: big d.."~v~~VT~ ~ + ; ,;ti , .Y A . , ~reflec~ the :~edu~~ed. u~ai~~~~tl~i#y~~o€~ ~~r~ds: ~ ~ ~ ~ . ~ - ~ ~ ~ ~ ~ ~ ~ ~ , ~ - ~~u~~~~~ . Tie ~ ~0~1 ~ ~ha~.., ~ ~ ~ ~ . , ~ . ; k:~~v~ ~~~~eut~~ ~~~-.t:~r~~o~r~~~~o ~~I~~~~ :p~v~er, use; a~ poi rat e~te~p~ise -~r granted ~r ~~~~ed~: ~ ~'h~ ~~~I~~ ~~~y~ gat - in~ur.a~y- debts, o~li~ation, epe~~~.~,~ a~~`~iar~ttie:~"~~~~~a~y.~~~rd~ or~.'b~~}~i'~of ~ - - i . ~~~~nmen~, ith~au~'~he p~iar wrifi#~~ orient t~k~, ~T~' ~t~ `P$JR:. ~ ~ i I may ,~vt ~t~n-er~~~ si~,any ~~h~~ reg.pn~bi~iti~.~~:ur~~~r~~or:r~~:in~~'~t ~n ~ . ~th~~ ~igre~nent: ~ ~ . ' - ~ i. k ' n.~: ..i. ~ .t . ~ , y .II- y~~-?'At S .'l~ '~1' ,5~ ~I..i ~~I~r:f~;~.++~~1y.': .Sr . -.r:. - ~.tti - ..2 .~H~~ . 1r„u> kr. , . d~. r -...,~.X'~-.,. 4:~a'~°t}o....att• ;`ii.. u~ .v:'-~ a~~~ i ' ice' ~ ~~~~++yy++ ~r ~ ~~de~'n~f~, .~~~e ~d ~ol~ ~~1~`fQ~C1~T~C; ~ a~ff~~~; o~~~; r~d~ e~~s: ~ ~ . ' ~ h~~~r~rl•~~fr:~r~ ~r~d a~l~ ~ai~r~. Bbl' a~E~i~~ ~~l~m-~ ~d~ ~e~ ~ ~a ' ~ ~ : . ~ ~ ~o~ ~~~~~r~d, :~d~~~~; .~n:~~~} .end.: J~~~~~~~e ~ir~~ ~~r~~t:~:o~~ in~ -',air . . ' , . - , ~re~d t ~ ~.~r ~~i~o :f ;the ~~I'N~~=~t~~, ~ i~::e~ri;plo~;, va.fur~~~; . ; ~ ~ . ~~~n~~a~, ~vr ~clinfeie;.~.~ ~t~ ~p~~~orm~aric: vft~ ~r f~ii~~a ~~a 'p~r~ =~r~d~:r, . . ~ ~ ~ T~ ~~:~~h~e~ ~~y~ Tut the P~I~R .h~l~:ind~m~~:i, : , ~ ~ ~ ~ ~:NT~R~ ~ ~~~:~oc~il- o~fr~ ~~~~.d rr~ fo ~ ~s.~hl~.~~~r ~F~~J±~:; ; ' 1 $ p ~y~y . . ~ : its im~~~rn~~n~ation ~f fhe~ ~.~co~e ~~i~~ti~d~ecr~~~~d~~ under~~~I~i ~ar~~: i ~ - ' ~ . . ~ ~ ~F~r~e ~N~a~+~~r; ~t ~ ~~rpre~ly ur~d~~s~~~vd ~an~= ~e~ed by. the par~i~s ~t~:~~hi:: ~ . t r q:rr~i~en~~ that; if ~~e ~e~~rr~nce-v# eny~ p~ro~ii~n ~of ~~~~~A~~eer~~n~: °:d~i~i~ . ~ . . y ~ ~e °ma~~~u~~, ~~r~ ~ ~ r~eor~ o war, . ~v~ . ~~n, ~ -~o ~ . . ~ ~ gor~rnen~l ~r~tc~~or~~ re~c~l~i~n~~r ~r-~#rfr-~~.~~e, fi~;~~~fo~i~o~i.,1~:~c~~,~~~: ~ : fl.aad, f~il~ o~:~~rp~rta~i.~n; °uo~~#~ in~u~ct~an,. ~r:ny ~i~r~rr~~-nce ~ - ~ : ~~aona~~~ b~~dr;~i~~ ~cv~fr~l :~f fh~~:~~~~y,.'~~ige~d~~~~~ .~p~rrtd~~ ~~~~e~~~,~~ ~ ~ . ; ' ~ . ~ ~ ~ ~ ~ ~f ~~hi ~~er~at~-~-:d~=~or ~~fo:~~~~~ .a~~ne.~ a~dle ~~~~he~h~~`~~: : . .~r~~~~~r~~ ~ ~t~~l~~~.t~rn tf~a~~ en~~l~era~~~~~f~~r~~r~,. the,:~a~~~~~~~a~~ ed~. . ' ~ or p~~rr~~~d sh~~l• ~~.~~~'~~`fry':Cf~l~~~~r:~~~.~~rl'~1~1~:~~~:~~~~1'.~ ~~~'~fl~;'E~C~~~:::~: ; ~ . ~~~i ~~'C~~~~~ ~~t ~I"I~~.,~~lvd` ~D~ ~ ~eq~u,i~~C~~~'I~~~t~~`.-~3`~ ~ ~ : : ~a~r~~e~ ~~r ~pr~~l~ ~f fi 1= ~~.~~f ~o~d ::~f:f ~~n sub -~~t~ ~ : . ~ . ~~~~~~pa~rky .rrr~t i~~or~ :~h~- ath~~ ~ir~ ~~~ir~ thy- reaan~~ -t~ ~ ' ~ ~ " : ~ ~ ~ ~ ' . : ~ xit~r~~of u fie ajeu~~~: ~ ~ ~ ~ ~ - ~ , ~ , : ' ~ . . - 1.~, ~ ~~~#ra~~~ ~F~ir~t~~~f~i~:'~it~~i ~u~~~e:~s#~d: i~~~ ~a~~ed :t~a~~:fC~~~~r~~~~s~~~~ . ~ ~ d~~cr~~ed ~~~~h~~ .~ee~er~t =~r~ ti~.~:ar~ie ~o~ratc~~ial; i~=.~~tr~: a~:i~. . . ~~#°f~ `he~~~con~~ed td ~c~e'k ==p~~~hip ~f~~~v~r~~~ v~e~ture~~'~r a~~ ~la~~;~~ri~p' : ~ , ' - b~wr.~~e~~ the p~~s. ~.or ~al~~.~n~~`par~~ I~~~~ far~n~ ~d:e~~~t-~~~~ur~~~~~~~ . .her Y i°~ ~~he :~c~~duct ~f: ~u~~ ~ather ~rt~' bu~tnes off: ~f~rti.; ' ~ : ~ . u~de~~~~:a~nd~~ P~~d~~~s..:~~"~ .P~I~~R ~~a to ir~p~lrnnt ~~cf::~, . ~ ail- pope ~Activiti~~ ~n~ co~d~~nre v~~tf~ ~~~~~'t~n~. ta~d~~~.:r~~~ prc~d~r' ~ ~ ~ ~ ; ~st~~lil~ed ~by~ P~I~QR';:vr~ernirr'~~~~~~; . ~ ' ~ ~ ~ ~ : - ~ ' ~ '~a, f~~u~rane~~ ~h~ ~P;~~`!~ s~~a~I ~~~~rY v~i~h tie ~~r~au~~nt rqui~~~~r~t : ~ . ' - . , : ~ ~ . ' - . ipas~~d ;i~~~ t~~~ ~r~~~:~~oca~i ~lavvt r.uli~n; ~~nd a~rdirr~r~a, , : ; . . a~pt~r~~ Thy ~~:pt~~~n~,~ h~a~i~:, :aid ~r~~rr~r~t~:ud~~~~~t~:i:a~.~~~ ~ . ~r~ for cove~i~e~ce '~r~ly ~n~~ ~h~:ll~ rro~ ~r~ any ~r~y. ~f~,~~ lirn:if, ~rr~l~ ~~~o~~~y': ~ ~.7. ~i~.~~~- ~a~d~: neg. T'~ P~~Q~R aid. ~~a'I~i ~~~~~~e~~~~~ g.:d.~::~ . ~ . faith t~~v~~r~~ ra'Iv~n~ :}~:d~~~ut~~that°~r~s. t~t~~r ~~~:n~;, ~ ~ . 7.~8~ P-uf.~c:~rtr.~~=~~~ ~~i~. end°~p~li~c~~ k~i~ ~r~ri~:: ~ . ~i•~j~ct ~~hai~ ~~~~~dd~ ~ ~►i~~~~ f~v~~ ~~~~at~:~ ' - - ~ ~ ' " . ..r ' - ...r _ 1 . k r ~ . t ~C. .f ~:s; 414 .`i; - "~k''s ,?,b'irk...~~:,}m1~~r~'`~r"r~..'AA~i~`4~a.~.. _!~~~4iCa'r~~r?a. N~!> •;^rr';N .,5. ~.1."Lti,{.. 'k~. niMizTfiS "s+~+ilrv ..L f,w-..,Rif:, i{''. ~:~,'~.,'C" '.,,~~,~'~4.: NJ.i,Jf ::'J:r ~~.o-'~J„ ''};.;r.. ..k. - w~ . s'kh v..xy~"!as o-' r.. ~ ~r .fir; ~f~.M~. < ~ cv~~n~~I01~; ~~nt~ pre a~~°'r `ads ~ - {r , . ~St~D~ -ha~ii ~he. ~.~~ti~e~I~ to ~#h~~=~T~;;;~~~ = -~err~ ~tlntfd~ t~~ ~~r~~rnen#~ C~oue~ h~~et ~vi~hin~ ~thi . ~ ~ ~ ~ ~ . r 4~~.;:~da . fl~aw~~ -r~~~~ . •~~~~~h~r;,p~r#y ~y~:t-h.~#~h~t~~:p~~y=~ u~~~~l°.uni~.r~~~s: ~ . - . k... ~~#~r~ ~rid~d~i~~~r~.~oY~~- dreg ~oi~ ~~~~~ow ; ~ . ~ . d _ If ~ - ~ ~ pro~.~d ~r~~c# . P~rvr►, ~r~ . , . . ~ ~ . ~~er ft, =~f~h~e~~,p~r~~i re~e~viri~:natic~. ~ ~ . ~If~~ha~ •~1orris, ~P:~,;:~'ran~~ort~tian ~~re~cto~ ~ I~i~h~ae~~ ~l~rris,~,P~;~;,-Try : lr~h ~ patia:~lre~t~~::;. - ~ ~ . . s~ ~oun~l o#~ Cove~~m~~ts Forth ~e~#rl~~`~~xa~~:~u~l~~c~f ~~e~nr~~r~ Trar~pati~n ~ep~tr~e ~ ~ Tian Arlington; ~'e~a ~~5-5~$8 i~r~inan'.~'x, ~ ~ ~ . ~ . - T~~ep~ar~e Ala.; ~8-~~ ~ ~~-9~4~ ~ ~ • . M~tfg~~:Addres:~ ~ Ph~S~lai~A~dres~: ~ ~ : I . _ . ' . . ~ ~ ~~ark N~Ison, hi~~ ~`ransp~rta~ian~ ~ •~ark~l~n;.~C:i7lTir~ : ~atia:~~:. ~~~Y of Qen~on ~ ~ ~ Ci~y~ a~~~n~~on: ~ ~ ~ ~ i _ . . . ~ ~90~~ -T~~ . . ~ ' T~l~phor~@ iVa.: ~94~~.9~~~~8~ ~ ~ ~ ~ ~ . . . . - ~ ~ The..a~bo~~e~ar~t~t~ ir~'~mati~nt o~:th~ ~al~t~ i~i~o~,rt~~~~ : , ~ re~r~.en~:~v~~~. ~~e~t ~ ~rr~~a: ~ ~be ~ ' ~ ~ - , ~ ~ - I~~:'I~hll~D.Ut::C~~rrJ:l~:~'I~;i'~']lnt~:~Q i . ,y - ~ fh' ~~I~~.~i~r#~~ ~d- ~~rce re~~i~~ed~#~ere~rr w~li :`he,. rfarrr~e~~ . ~ . ~ ~und~~ ids up~~~o~~, ~1~~-R h~fl::en~r~ that o~~#~r~ ~ a ~ d~~in : ~ ~ th`~:p.~~rr~~~c~ v~or o~-~se~v~s ~hal~ ~e ~~ul~~~ ~~~~~a~~~ : ~~r~~~~.~ ~ ~ - : - . - -a~t~orize~~ r ~l~cer~~ u~~er:=the ~pl~ca~~~~ ~ed~~a~; state ~~:~~.~~~~~~ci ~l?~ , _tt~i ~~ce to .~~~orm Bch ~ ~~r ~e~ ~ ~ • ~ ~ - - . - Thy `~i ~h~~i e~~~e the ~~vice ~p~rf~ri~ ~t~~r ~~I~:~~~t~~#~ . ~ca~rnpi~r v~ith a~~ ~and~#~an o~ this r~ernn•t.~~:i'tF~:~~:~~~C~~ ~ ~ ' . . , - p~t~~ed uci~ rvice. V~hr t~~ ~~~I~~ coi~~rc# i~~ ana~i'a~ ~~ti ~ ~ ~ ~ ' ; ~ • . . i~divi~ual, i~~l~u~i~g ubgr~r~t re~i.en#~ ~~~~tr~~r ; :e~F~ar ,~or~ ~ ~ ~ ~ . a~ti ~~v~•the ~P~, the P~~V~~~ ~~~er:~~~~~~c~r.~r-at~a~ ~.~e~# ~ _ ~ ~ ~ . ~~q~i~. the ~ut~~can#ra~tor ~#o ~~m~~y with ~#~~e::~~~vii~n~ ~t~i ~ ~e~~rn~~#: ~ - - ~8.. ~ The ~~~~N~f~ ~har~: ~o~mp~~ ~F#h.~~he~r ~ # f~r~s~~r~ , , . ~l~#~~:g -~n• auii~~rg: ~al~~~ ~u~ban#tor. ~~r ca~~O~ ~1~Ic~~it: ~ ~ ~ - . - . . . - ~ . -.i.' : - i~ , . -x. 4~ r+S tea. . ~~w.. a rt ~'~r- . . ~.ti ~ r- o-. ~.~f=r,;~ f,:.',{.. . t .iti.'~'S: ...i.: +Y ~a".4".i'Ah' bey J~11 ~ ~tih i _ i :9~~, ~~e~~e. 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Thy °~P~>V~: ~~a~~ t~i~d~: ~ ~ . - , . ~ ' ~ ~~:t~~n#- ~#~:c~~~~e: ~vi~h Fderi~ .end #a#~ ~ ~~b~t~rn~n~~ ~nd~ i~~ ~ ~ , . - . . y gig, . Thy ~'f~ ~pr~h ~ , d ~ Barn- ~uEn~ ~~:r~~= ~ . , . , t rid:: ~t~n~r~-'~t~i; ~r~~met~t~~~~~~r;~ io~i~~ ~.~n ~.r ~s: ~ ~~'i~ . ~rice~ t ~ ~i ,P , . . ,t: - . ~ . pia: ~n=;:~ :~~~~~1° ~ ~~~~~r~~:,~~- ~ : ~ ~ a, s~l~~t~~n~ ~~~~"h~~~~Pr~. nt~ats. ~ ~ ~ .,r . , i~" - , ~ ~ ~ ~~I~-fir: ~a~l~s- .,~r~~ ~~~~o~r~e r-~rdi~- ~ i~isadvarn ~~~n~.~ - Entrpr ~~i~ ~I`t#CI~ ~tll ~~1 ~ar~yl~g -thy ~11~. ~f0~"M ~ . . ~i~ ' i~ V s:~ ~g~re~r~ . :P:~i~R :~hai~ : rem ~~~B~i~ ~'~r~ic~~pati~~, ~ . - ~ ~ ~ = - . ~ ~ ~ ~ ' - , . ' . , ~ : ~ . . 'ti f~ ~ca~ , tt~~,. ~a~rrd~;f~'d~e~r~l~:re~g°~i~~~~~~. ~ ~ : - - `~r~~g~~~s. ~E~a~c:pt ~~s at~~eru~~~ pr~~i:c~ in ~h~e ems ~~~~o~it~o -the , 1~r~~~~nt; ~T~~ is ~fr~~~ to o~~rih~± ~~y ba~~~; ~ui~:~i~t~° ~ oti~r ~ ~ap~r~~ht~b~1e~ r~~t~ria~' ~d~v~ei~~~~1. in ~~h~ ~~~~rse off.: ~ A~e~rn~ht: Exr~~~ ; = ~ . - ~ othrw~~ -~ro~ric~~d ..in t~ terrn~ ~ and aa~~iti~ns~~ of the ire, ~ ~~h~: ~i~.~'~Q~. ~ ~ ~ ~ ~h~~l~~~ ~r~r~.. ~r~~ait~~~re~ nan~~cci~~u~ rid i~rfv~~~ie~: ~~r;h~:,. ~~pro; ~ - ~ ~ publish, or o~herv~is~ - .:a~~ tv au~i~'~~i~~~~ v~~~~~~ t~ -::~us~e; ~ ~ ~i<~ ~.~r~~ ~ ~ . 1~3.~-~. C~o~a#~~a~. ~ f~~o~~~~~~~. fihe~ ~D~~V.4~R sh~ii:..rrot~~~ ~ - ~ ~ ~ . - ~are~r~t ~o~ ~th~ . ~~a~i~~tiar~,~ ~ ~vnst~ucti~.n-, ~ -~~~ti~~; ~re~~~~~t~rr~... o~~ : ~ - - _ ~ , i■■1~■' 1 ~[J.'~ly~ 1e {j ~I~Yj■. +LJYJ■111{■■■ J1 ~ y■1 ~ ~ . - ,A'i`r. ~ ~ ' ' ~ ~ ~ ~ - ~ ~ . Thy ~~~~u~~r~ ~~~pen~i~es ~ a~r~ ~~i~e~f~~,~a~n~ ~~ri~~d~~~~prt~ t ~ ; ~ . ; rem:~~~: AP~~r~ :A caps ~a~ ~erv~ias. ~ ' . ; . . ' - ` . 'Y M1 '~,o . r < - " ' , -'n ~ . r. yl ~ ~ . - ~ _ . _...:f r ~ . , - r - ~ ,...A3.. ~ ~ 1 ,Y., ~ Zvi ,r sY._ 1.. $.r}ii19~..~ 4.: ~M..... : ~ . - .Yi- ' ~ is 1 ~ 4. i~-,'~ ! . W.l}. .4 .I.. 4. r ,.,c.7 v~ .....~~,r.,. A:,..:-.~:.~~..,~ J".. :,.~4H 'i~~~i'y.: .'~:ri~..M :.y~- -:3.a .i,r.,:'!f'.... ;:~~'~M' .fn';'';,::' '~:j~„ ..nom . r~.,, .a ~ ' ~;M,~. 5 ~i'' ~i,~ k~ir~. # ~ . r.~. .95~ ,,:~~,;~;~j' ~`r4+}' ~~r~. ;1~';~y~a...7=.'. .~~r ~ *C:~,y",o~'~'; ;~d :I ~ a~ ~.4-'~" ' '~1.:~~ IN WITNESS HEREOF the parties have executed this Agreement in duplicate original" at Arlington, Tarrant. County, ;Texas, the day of 2009; PUBLI -SECTOR'S soR M41 TH -AL TEXAS COUNCIL OF-40VER%I'M'MTS Signature R. Michael -Eastland Executive `Director Printed Name APPROVED A$ TO FORM:" Title General: Counsel ATTEST:. APPROVED AS MFORM: CITY ATTORNEY CITY OF DENTON, TEXAS? By. I -10- L : Appendix A Scope of Services° RPPENDD A SCOPE IM412008 Revision _ ffic Signal R Scope ActMties for Denton Sim Cactsfl Blvd fm m FM 428 Sherman to Ft. fWorth/Caliins upgrade' signal controllers, including-vehicle detection-and communication to traignal retirrting; Traffic Signal Improvement Submittal of a list of ScopaActivitymilestones to NCTCOG. Subrriittaf of Statemeint of ITS Architectme-Consistency to NCTCOG. Rernittanoe of required 20%, Local Matctr (U6OD) o NCTCOG 1b 0 Status repoils shall be submitted :by the first of each month following iasuance of a Notice to Proceed for each month until com- pletion ofthe•Scope Activity and at the:-end of each fiscal year lh which costs are incurred for this Scope.Activity. Reports: shallIncludethe scope activity name, the date that the-report is submitted, a list of activities carried out during the previous month, a percentage-of tatits or loCatioris eompteted by month, and an indication of how far along the project it (including estimated let1comt*ti0p dates,and actual let/completion dates for all phases). . Em. rr. Total Reimbursable Costs- $ 182,500.170 zhftl RTC/Local Funds: 3 .146,000.00 805'0 Local Match: 'S 36,600,00 20'/c L-oeatlan=R®tertanca _.~T . Numbai' Locatlah Ignat ID Doseriptlon of Work ! 11809,001a Carroll:at FtWoithlColfins NWorate traffic signal hardware upgrades and retir6ing (cabinet and controller upgrades, signal lnterconnectj(no leadlag tG lead-lag) 11809-0001 Carroll at Congress 1.975 Moderate trafllc:signal hardware.upgraciez and retiming (cabinetand controller upgrades signal internonneet)(nb lepd4ag to lead4ag) mm 11809-0002 Carroll at Crescent 1976 Moderate traffic signal hardware upgrades and retuning (cabinet and controller upgrades, signal interconriedxno-lead-41o lead-lags 11809-0003 Carroll at Eagle 1963 Moderate trairesignal hardwareupgrades and-retuning (cabinet and controller upgrades sianat intereonnect)(no lead-lag to lead-lags 11809-0004 Carrot at Sherman_ 1996 Moderate traffic sI and r (cabinet and controller uhardware pgrades, gnalliinterconntect)(no lead-lag to lead-lag) 118094005 Carroll at-Hicko . 1867 Moderate traffic signal hardware.upgr>adas and rE4ming - - (cabinet and controller upgrades, signal'intarconnect)(no lead-lag.to lead4agi 11alignam Carroll atMulbe ry 1966 Moderate tratficsignal hardware upgrades and relining V - _ (cabinet and controller upgrades signW.Interconneet)(no lead lag to lead lag) 11809-0007 Carroll:at Oak l- -1968 Moderate traffic signal hardware upgrades and: refining - - - - (cabinet and controller upgrades, signal intemAnnect)(no lead=lag to lead-lag) 11809-0006 Carroll at Parkway 1969 Moderate traffic signal hardware upgrades and retuning - (cabinet and controller -upgrades, signallnteroonnect)(no 1ead4ag to lead-lag) A Location Reference PVumber should be.indicated for all'expenses When requesting refmbursaments Page 1 of I " Funding Year refers to the NCTCOG Fiscal Year which runs from October 1 through "September 30. CORRIDOR MAP Local Air Quality Program Project a 8, ~ - 4 , f - _ I tir ~f .u ■ ~ _ - .I ~ i ~ - - 't r f 'r ~ - } ~ _ ~ _ d III i - `-r Y 1 - / _ I .r - i 4 r _ - ~ i i 1 I - Y ~ - a - _ ~ a ~ , s 3' - .I I ~ ~ ~ _ a~ f w f 4 ~ - ~ ~i i Y II 3 } " - r I , I - - I _ I - ~7 ~ x. - I~ a~ ~ i I., - Il~II _ 4 - r• - _ I I _ x r ~ - 'f` - u r~ - _ - x - - 1 y 1 _ _ _ _ f' t r..~ - K vi ;i I - f I f I~ 1 1 I i r i I _ - - .I ~ _ .y, - ~1 r ~ I L _ i ~ ` i 'ti I i fr' - r- I ~ - ~r l i. i '~o 4 J. I ~ V _ _ f I _ ~ I y. ~ ' r ~ ~ . { 1 v ~ .ti r- EXH IBIT 3 1 DRAFT MINUTES 2 City Council Mobility Committee 3 Tuesday, February 24, 2009 4 5 6 After determining that a quorum of the Mobility Committee of the Denton City Council was 7 present, the Chair of the Committee on the Mobility thereafter convened into a meeting on 8 Tuesday, February 24, 2009 at 2:04 p.m. in the City Council work session room, 215 E. 9 McKinney Street, Denton, Texas. 10 11 Present: Chair Pete Kamp, Mayor Mark Burroughs and Council Member Chris Watts 12 13 Staff Present: Howard Martin, ACM Utilities; Fred Greene, ACM; Anita Burgess, City 14 Attorney Jim Coulter, Director Water Utilities; Mark Nelson, Transportation 15 Director; Frank Payne, City Engineer; John Knight, Assistant City Attorney; Tim 16 Fisher, Assistant Director, Water Department, Bud Vokoun, Traffic Engineer; 17 Bob Tickner, Supervisor Parks & Recreation; and Ann Forsythe, Boards and 18 Committees Coordinator 19 20 Also Present: John Polster, ITS; Scott Neeley, DCTA Vice President of Communications & 21 Planning; Phillip Ullman, Paul Luedtke, and Darren Fox, HDR Consulting; 22 Jeremy Sain, Brian Shamburger, and Dennis Seale, Kimley Horn Consulting; and 23 Greg Johnson, Elk River 24 25 26 OPEN MEETING 27 28 4) Receive a report, hold a discussion and consider a recommendation to adopt an ordinance 29 authorizing the City Manager to enter into an interlocal cooperative agreement between the 3o City of Denton and the North Central Texas Council of Governments for a Local Air Quality 31 Program traffic signal project; and providing for an effective date. 32 33 Mark Nelson presented this item stating that this is a great opportunity for the City to advance 34 not only a mobility issue but also an air quality issue. The project is an 80%/20% grant match 35 through the NCTCOG's Local Air Quality Program. The total cost of the project is $182,500, 36 with the City's portion being $36,500. The project encompasses Carroll Boulevard from Fort 37 Worth/Collins intersections to FM 238 (Sherman Drive). 38 39 Nelson stated that the grant application was made three years ago and when changes were made 4o in that corridor, staff worked with NCTCOG to revamp the scope of the project. NCTCOG was 41 amenable and staff is now ready to move forward with this proj ect. 42 43 Chair Pete Kamp questioned that the project is about the timing of the signals. Nelson replied 44 yes and includes enhancements to the communication system. 45 46 Mayor Mark Burroughs moved to approve Item 4 with a second from Council Member 47 Chris Watts. The motion was passed by a 3-0 vote. 48 49 The meeting was adjourned by consensus at 4:11 p.m. AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 Questions concerning this acquisition may be directed DEPARTMENT: Materials Management to Phil Williams 349-8487 ACM: Jon Fortune SUBJECT Consider adoption of an ordinance of the City Council of the City of Denton, Texas authorizing the City Manager to execute a First Amendment to Agreement for Professional Legal Services with the law firm of Walker Sewell, LLP for professional legal services relating to litigation styled: Texas Municipal Power Agency v. Cit~yan, Texas, Cause No. 28,169 pending in the 506th Judicial District Court in and for Grimes Count ,Texas; Cit of Br an Texas v. Cit y~y ~ ~ of Denton, et al, Cause No. 08-002233-CV-361 brought in the 361St Judicial District Court in and for Brazos County, Texas; Ex Parte Texas Municipal Power Agency, Cause No. D-1-GN-08-003426, now pending before the 250th Judicial District Court in and for Travis County, Texas; together with ancillary litigation involving the City of Bryan, Texas as plaintiff and the three northern cities of TMPA (Denton, Garland and Greenville) as defendants, which suit has been severed and is in the process of being transferred from Travis County to Hunt County, Texas; authorizing the expenditure of funds therefor in the amount of an additional $105,000 (for the total not-to-exceed amount of $195,000); and providing an effective date. The Public Utilities Board recommends approval (7-0). FILE INFORMATION This amendment is for additional legal services pertaining to legal representation of the City of Denton in several contested cases involving the Texas Municipal Power Agency, the three Northern cities (Denton, Garland and Greenville) and the City of Bryan. A complete description of the pending litigation is included in the attached Public Utilities Board agenda information sheet (Exhibit 1). PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS) The Public Utilities Board approved this item at its February 23, 2009 meeting. The original Professional Services Agreement in the amount of $95,000 was approved by the Acting City Manager on September 22, 2008. RECOMMENDATION Approve the First Amendment to a Professional Services Agreement between the City of Denton and Walker Sewell, LLP in the amount of $105,000 for a total contract amount of $195,000. Agenda Information Sheet March 3, 2009 Page 2 PRINCIPAL PLACE OF BUSINESS Walker Sewell, LLP. Dallas, TX ESTIMATED SCHEDULE OF PROJECT This professional services agreement is for a twenty four month period with an ending date of September 16, 2010. FISCAL INFORMATION This amendment will be funded from account 600001.7854. EXHIBITS Exhibit 1: Public Utilities Board Agenda Information Sheet With Out Exhibits Respectfully submitted: . 1 Tom Shaw, C.P.M., 349-7100 Purchasing Agent 1-AIS-File 4179 Exhibit 1 PUBLIC UTILITIES BOARD AGENDA ITEM #1 AGENDA INFORMATION SHEET AGENDA DATE: February 23, 2009 DEPARTMENT: Electric Utility UTILITIES ACM: Howard Martin, 349- 8232 SUBJECT Consider a recommendation of approval of the First Amendment to Agreement for Professional Legal Services by and between the City of Denton, Texas and the law firm of Walker Sewell, LLP, Dallas, Texas in the additional amount of $105,000 regarding legal representation of the City in several contested cases involving TMPA, the three Northern Cities and the City of Bryan (which amends the Agreement for Professional Legal Services entered into by the City and the Firm on September 22, 2008 in the original amount ofnot-to-exceed $90,000; now aggregating a not-to-exceed amount of $195,000). BACKGROUND The dispute centers around TMPA seeking judicial validation of approximately $434 million of its bonds. The City of Bryan, Texas, a TMPA member city, has firmly taken the position that it strongly opposes validation of the bonds. The City of Bryan has also interestingly enough stated in open court that they "want a divorce from TMPA." Inmid-September 2008 the City of Bryan initiated litigation on several fronts, including as parties, for the first time, the three Northern Cities of TMPA (Denton, Garland and Greenville). These multiple fronts dealt with tort claims against the three Northern Cities, conspiracy claims, derivative claims brought on behalf of TMPA, as well as Bryan filing pleadings in the previous 1997 Grimes County collection case, which was formerly only between TMPA and the City of Bryan. That case had just been decided and mandated by the Texas Supreme Court in July 2008. Initially there were three lawsuits in three different counties in Texas. The City (as did the other Northern Cities) decided to proceed each with their own attorneys. TMPA filed its bond validation lawsuit in Travis County, Texas. The validation suit is entitled to priority in accordance with Texas Government Code provisions. The City of Bryan has interposed roadblocks at every turn and refuses to agree on anything - even a holiday scheduling order. The litigation so far is proceeding through the Courts. Denton has hearings on its avoidance, jurisdiction, venue and improper joinder motions set in the Grimes County litigation on March 2, 2009. TMPA has a present trial setting for its bond validation suit on March 5-6, 2009. Advancing and maintaining our position and completing the discovery in an expeditious manner, inmulti-county litigation, has kept our outside law firm very busy. Denton is steadily moving forward in these cases. OPTIONS 1. Approve the First Amendment as is. 2. Approve the First Amendment in some lesser amount. AIS -PUB Agenda Item #1 February 23, 2009 Page 2 of 2 RECOMMENDATION The City Attorney and DME recommend approval of the First Amendment as is. PRIOR ACTION/REVIEW (Council, Boards, Commissions) PUB previously approved original PSA in September 2008. Approved by City Manager within his delegated authority (NTE $90,000). DATE SCHEDULED FOR COUNCIL APPROVAL: The City Council will consider this first amendment at its March 3, 2009 meeting. EXHIBITS 1. First Amendment to Agreement for Professional Legal Services Respectfully submitted: Phil Williams General Manager Denton Municipal Electric Prepared by: Michael S. Copeland. Utlllty Attorney ORDINANCE N0.2009- AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS AUTHORIZING THE CITY MANAGER TO EXECUTE A FIRST AMENDMENT TO AGREEMENT FOR PROFESSIONAL LEGAL SERVICES WITH THE LAW FIRM OF WALKER SEWELL, LLP FOR PROFESSIONAL LEGAL SERVICES RELATING TO LITIGATION STYLED: TEXAS MUNICIPAL POWER AGENCY V. CITY OF BRYAN, TEXAS, CAUSE N0. 28,169 PENDING IN THE 506TH JUDICIAL DISTRICT COURT IN AND FOR GRIMES COUNTY, TEXAS; CITY OF BRYAN, TEXAS V. CITY OF DENTON, ET AL, CAUSE N0. 08-002233-CV-361 BROUGHT IN THE 361ST JUDICIAL DISTRICT COURT IN AND FOR BRAZOS COUNTY, TEXAS; EX PARTE TEXAS MUNICIPAL POWER AGENCY, CAUSE N0. D-1-GN-08-003426, NOW PENDING BEFORE THE 250TH JUDICIAL DISTRICT COURT IN AND FOR TRAVIS COUNTY, TEXAS; TOGETHER WITH ANCILLARY LITIGATION INVOLVING THE CITY OF BRYAN, TEXAS AS PLAINTIFF AND THE THREE NORTHERN CITIES OF TMPA (DENTON, GARLAND AND GREENVILLE) AS DEFENDANTS, WHICH SUIT HAS BEEN SEVERED AND IS IN THE PROCESS OF BEING TRANSFERRED FROM TRAVIS COUNTY TO HUNT COUNTY, TEXAS; AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR IN THE AMOUNT OF AN ADDITIONAL $105,000 (FOR THE TOTAL NOT-TO-EXCEED AMOUNT OF $195,000); AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City Council deems it necessary, appropriate, and in the public interest to continue to engage the law firm of Walker Sewell, LLP, Dallas, Texas to provide further professional legal services relating to the above numbered and entitled litigation; and WHEREAS, City staff has reported to the City Council that there is a substantial need for the hereinabove described professional legal services, and that limited City staff cannot adequately perform the legal services with its own personnel considering their complexity and their diverse locations; and WHEREAS, Chapter 2254 of the Texas Government Code, known as the "Professional Services Procurement Act," generally provides that a city may not select a provider of professional services on the basis of competitive bids, but must select the provider of professional services on the basis of demonstrated competence, knowledge, and qualifications, and for a fair and reasonable price; and the City Council hereby finds and concludes that Walker Sewell, LLP is appropriately qualified under the provisions of the law to continue to be retained as outside legal counsel for the City; and WHEREAS, the City Council has provided in the City budget for the appropriation of funds to be used for the procurement of the foregoing professional legal services, as set forth in the First Amendment; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: I SECTION 1: The recitations in the preamble are true and correct and are incorporated by reference herewith as a part of this ordinance. SECTION 2: The City Manager is hereby authorized to execute a First Amendment to Agreement for Professional Legal Services" with the law firm of Walker Sewell, LLP for continued professional legal services relating to above numbered and entitled litigation in substantially the form of the First Amendment to Agreement for Professional Legal Services attached hereto and incorporated herewith by reference. SECTION 3: The award of this Agreement is on the basis of the demonstrated competence and qualifications of Walker Sewell, LLP and the ability of Walker Sewell, LLP to continue to perform the professional legal services needed by the City for a fair and reasonable price. SECTION 4: The expenditure of funds as provided in the attached First Amendment to Agreement for Professional Legal Services is hereby authorized, and the previous expenditures regarding this litigation are hereby ratified and approved. SECTION 5: This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2009. MARK A. BURROUGHS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY By: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY By: G TIC TATS ~F T~~A ~ ~UNT~Y DENTIN ~ FIRS' A~NDIV~~T T~ AEEIVI~IVT ~'~R FR~FFT~1VA~ L~A~ ERVIE TH~~ FIRST A~NDMENT to that certain "Agreement for Professional Regal services ~hereaher e ;~~g~.ee~~nent"~ in the original not-to-exceed amount of $~oxooo vas approved by the Public Utilities Board and thereaer approved vt~ithin the delegated authority of the pity of Denton pity Manager; and said Agreement eras heretofore entered into by and between ~e pity of Denton, Teas, a Teas IVlunicipal corporation with its offices at ? l5 bast Mc~u~ey treet~ Denton, Texas 7~~~1 thereafter referred to "CITY"~; and tl~e la~v fine of all~er eu~ell, LLP., whose principal office is at ~~1 Main street, quite Dallas, Teas ~hereaer referred to as the `~NULTA~T"~ on the ~hd day of epte~nber, to he effective from and after September ~~7 ~~~5; and IT'Y anal ~NTANT desire to further amend said Agreement for the rrst thne for the purpose of providing additional funds to add to the previous approved. Agreement far fur: ~l~er Iegal ~e~-~ices to be performed by N~ULTANT regarding the same engagements Ilerern ~NIJI~TANT is representing the ~~ty, regarding numerous contested cases and hearings brought by the pity of Brun, Teas and the Texas Municipal Poorer Agency ~"TMPA"} iri several counties, involving the three Northern pities the pities of Denton, Garland and Greenville} as Defendants and Inter~enars; and these ratters lave steadily progr essed toward frnal hearings; and It is necessar~r that ~NTANT continue representation of the pity of Denton through the entry of ~udg~nent regarding all of the pending cases that are nor pending, as well as far any potential appeal that may be made by the pity of Bryan, Texas or TMPA. pity and NLTANT estimate at this time that this case v~ill probably require at least 1 ~S,~~Q in additio~xal funds to be added to the existing 90,~~~ Agreement, thereby constituting an aggregate aano~~.~t ofnot-to-exceed 1~,OO~, N~ T~~'OI~E~ the QTY and ~NUI~TANT ~herea~er collectively referred to as the`Parties"~~ in co~~sideration of their mutual promises and covenants, as well as for other good and val~~able considerations, do hereby A~ to the following p`irst Amendment, v~l~ich atr~e~~ds the I'ollouring terms and conditions of the said Agreerrrent, to wit: I. The provrslo~~s of Paragraph Third Paragraph of the Agreement is hereby amended as follows, to wit: "~Nt~LTANT estinlate~, a it is presently unl~non about the extent of the involvement of tl~e pity in this TMP,AIBryan related litigation, and pity agrees that alI charges for the legal services hereunder, including reasonable out~o~ pocl~et expenses shall not exceed the additional amount of ~ 05,~0o authorized in this First Amendment 1 for ~rofcssional Legal er~i~es, and thereby a total amount of not-to-exceed $1~,00o in the aggregate is au~hor~~ed." T~, The Parties hereto agree, fat e~ce~t as speci~icah~ provided for b~ this First Amendment, that all of t~~e terms, covenant, conditions, agreements, rights responsibilities, a~ld ohligatio~~s the Parties? set forth in both the Agreement sha11 be acid mill re~aain in :~~il force and e~"ect. TI ~~~F, tine it off` Denton Teas and the ~a of all~er eell, LLP., have each executed ~.~is First A~endrnent to Agreement fir Professional Legal ekes in four ~A~} original counterparts, by and through theix respective duly authorr~ed represe~7tatives and officials on this fhe dad of 1Vlarch, but to be effective, ratified ar~d can~rn~ed from and after file dad of eccmher, ~~8, "ITS" CITY Dp" ~]F1'T~~ TEAS A Teas 1Viunicipa7 orparation E~~~ ~ AIP~~LL ~T ~~ANFR ATT~T: I~~ ALTE ITS E~R~TA~.Y APPRv~] A T~ LEGAL '~I; ANITA EL~RGE , CITY A'fT~RY By: "~NLTA~IT" ALEP. ~~LL, LLP. Teas ~L~11t~d L1a~~llt Parsers ' ~ er 1 DRAFT MINUTES 2 PUBLIC UTILITIES BOARD 3 February 23, 2009 4 5 After determining that a quorum of the Public Utilities Board of the City of Denton, Texas was 6 present, the Chair of the Public Utilities Board thereafter convened into a Closed Meeting on 7 Monday, February 23, 2009 at 9:00 a.m. in the Service Center Training Room, City of Denton 8 Service Center, 901-A Texas Street, Denton, Texas. 9 10 Present: Chair Charldean Newell, Dick Smith, Bill Cheek, Phil Gallivan, John Baines, 11 Randy Robinson and Bill Grubbs 12 13 Ex Officio Members: 14 George C. Campbell, City Manager 15 Howard Martin, ACM Utilities 16 17 OPEN MEETING: 18 19 CONSENT AGENDA: 20 The Public Utilities Board has received background information, staff's recommendations, and 21 has had an opportunity to raise questions regarding these items prior to consideration. 22 23 1) Consider recommending approval of a First Amendment to Agreement for Professional 24 Legal Services by and between the City and the law firm of Walker Sewell, LLP, Dallas, 25 Texas for the additional amount of $105,000 (aggregating $195,000) for continued legal 26 representation involving the City respecting the Texas Municipal Power Agency litigation 27 and the City of Bryan pending litigation. 28 29 Board Member John Baines moved to approve with a second from Board Member Randy 30 Robinson. The motion was approved by a 7-0 vote. 31 32 The meeting was adjourned by consensus at 11:25 a.m. 33 This page left blank intentionally. AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 DEPARTMENT: Transportation Operations ACM: Howard Martin, Utilities, 349-8232 SUBJECT Consider the adoption of an ordinance of the City of Denton, Texas, authorizing and directing the City Manager to execute a right of entry and possession in favor of the Denton County Transportation Authority (DCTA) authorizing DCTA to enter upon and take possession of certain real property of the City of Denton for the purpose of performing pre-construction surveying, installing erosion control, conducting clearing and grubbing and performing utility pot holing; an providing an effective date. (Mobility Committee Recommends Consideration 3- 0). BACKGROUND Denton County Transportation Authority (DCTA) staff and general counsel have met with City of Denton representatives to review terms and conditions relating to the proposed rail corridor right of way (ROW) agreement. The City of Denton (Parks and Recreation) has ownership of approximately eight miles of the former Missouri Kansas Texas (MKT) rail ROW as part of the Rail Banking program. The Parks and Recreation Department currently utilizes and maintains this ROW for the Denton Branch Rail Trail and the Water Department has an easement along the eastern boundary of the corridor fora 30-inch raw water line. DCTA is requesting the City of Denton provide a perpetual easement in the corridor to allow for the construction of the proposed regional rail line between Denton, Highland Village, Lewisville and Carrollton. DCTA is targeting March 2009 to initiate construction activities along the corridor. At the time this document was submitted, the City of Denton and DCTA did not have terms finalized for the perpetual easement, thus a right of entry and possession to initiate preliminary construction activities may benefit DCTA's construction schedule for the regional mobility project. The City of Denton staff is recommending a 90-day right of entry and possession agreement to allow DCTA to initiate specific preliminary construction activities along the corridor and providing the City of Denton the opportunity for oversight of certain construction activities. PRIOR ACTION/REVIEW Mobility Committee recommended consideration of the draft right of entry agreement 3-0 at their February 24, 2009 meeting. The Parks, Recreation and Beautification Board recommended approval of the draft right of entry agreement at their February 23, 2009 Board Meeting. Staff briefed the City Council on the proposed perpetual easement in a Closed Session meeting on February 17, 2009. RECOMMENDATION Staff recommends granting of the right of entry and possession as presented. FINANCIAL The proposed agreement will require DCTA to submit a sum of $10.00 to the City of Denton in consideration for the right of entry and possession. EXHIBITS 1. Ordinance 2. Location Map 3. Draft Mobility Committee Minutes, February 24, 2009 4. Draft Parks, Recreation and Beautification Board Minutes, February 23, 2009 Respectfully Submitted: Mark Nelson Transportation Director ~~HI~IT 1 ORDINANCE NO. AN ORDINANCE OF THE CITY OF DENTON, TEA, AUTHOR~~NC~ AND DIRECTINr THE CITE MANAGER TO EECL~TE A RIGHT OF ENTRY AND POSSESSION ~ FAVOR OF THE DENTON COUNTS TRA~NPORTATION AUTHORITY ~DCTA} AUTHO~I~INr DCTA TO ENTER UPON AND TAKE POE~ON OF CERTAIN REAL PROPERTY OF THE CrT~Y OF DENTON FOR THE P~IRPOE OF PERFORMING PRE CONSTRUCTION UREYTNCr, INSTALL~NCr EROSION CONTR.OE, CONDIJCTIN~ CLEARING AND GRUBBING AND PERFORMINCx UTILITY PDT HOIIINO; AND PROVIDING AN EFFECTIVE DATE. HEREA, the City of Denton, Texas is Hom.e~Rule City and a Municipal Corporation thereafter "Cantor"}, and claims an interest in and to the fo~~o~ing described tract of land: BEING all that certain lot, tract, oz parcel of land described in that certain uitclai~n Deed from Missouri Pacific Railroad Company to the City of Denton, Texas dated August 199, and filed on August 24, 199, as Clerl~ No. ~~,R~~SS455 in the Real Property Retards of Dentan County, Texas; and also being that sane property described in that certain Correction quitclaim Deed, dated June 1, ~aa 1 and filed for record in the Real Property Retards of Denton County, Texas as Volume 4557, Page a2a21 thereafter the "Property"} V~HEREAS, the Denton County Transportation Authority thereafter "DCTA"} expects to acquire an easement in the Property from the City of Denton, Texas for the purpose of constructing, operating and maintaining DCTA's passenger rail line tthe "Prv j ect"} far approximately eight miles, extending Southward through the City of Dentan, and much of which easement tract lies within the City of Dentan, Texas; and -IEREA.S, the City of Denton, Texas expects to grant unto DCTA perpetual easement upon reaching acceptable terms of agreement, in order that that DCTA can immediately conunence preparatory construction activities an the above-referenced Project in March ~aa~; and ~UHEREAS, DCTA needs lmmedlate possession of the Property ~n order to prepare the Property far DCTA construction activities, pending final negotiation of the terms of the easement with the City of Dentan; and WHEREAS, both the City of Dentan and DCTA recognize the urgency of conunencing construction on the Project as soon as is reasonably possible; and WHEREAS, The City Council deems it to be in the best interest of the City to grant a Right of Entry and Possession to favor of DCTA; NOS, THEREFORE; I THE ~I~NIL QF THE CITY ~F DENTON HEREBY ~RD~IN: ~TION 1. The pity IVlanager, ar hip designee, is hereby authorised and directed to execute a Right of Entry and Faession far the above described praperty in favor of DTI. copy of the paid Right of Entry and Possession is attached hereto as Attachment A and ix~eorporated herein for all purposes. ETI~N II. This ordinance shall become effective ~n~mediately upon its passage and approval. PA.ED AND APPR~ED this the day of , ~~~9. l1~AR~ A. BIJR~UH, MAYOR ATTEST: JENNIFER AFTERS, CITY ERETARY BY: APPR~ED A~ TO LEA. F~R~VI: ANITA BORES, CITY A.TT~RNEY BY: Page ~ of 2 4~wp Atta~~ment A RI~IT ~F ENT~~ AND ~~EION STATE ~F 'TLxA } . ND ALL KILN BY 'SHE E PEE NT`: AUNTY DENTIN } ~ERLA the fit of Denton, Texas is a I~on~e-Rule pity and ~ ~Vlu~icipa~ Y F 0 oration hereafter "Ci and claims an interest ~n and to the follon described tract of C rp ~ land: ~EiN~ all that certain lot, tract, or parcel of land described in that certain uitclain~ Deed from Nlissauri Pacific Railroad on~pany to the City of Denton, Texas dated Au st and filed on August ~4, 1993, as clerk No. 93-R0~5455 in the Real a Pro e Records of Denton Jaunty, Texas; and also being that same property described p ~Y . in that certain correction nitclaim Deed, dated June 1, 1 and filed fox record ~n the Real Pro e Records of Denton bounty, Texas as ~olurne 4$57, Page o~~~l thereafter ~ Y the "Property"}. ~V'1~IE1A, the Denton. bounty Transportation A.uthar~ty, a coordinated county trans ortatlon authorlt created under chapter 4~ of the Texas Transportation bode thereafter P ~ "DATA" ex ects to ac wire an easement m the Property from 1ty for the purpose of ~ P q canstructin o eratin and ~naintaanin D~TA's passenger rail dine the "Project"} for g~ p g ' h a roxirnatel ei ht miles, extending outhard through the pity of Denton, and much of hoc Pp Y g easement tract Iles th1n the City of Denton, Texas; and I~EREA i ex ects to giant to DCTA a perpetual easement upon reaching tY p acceptable terms of agreement v~ith DATA; and "I~~REA DATA needs imna.ediate possession of the Property in order to prepare the Pro e for DATA construction actl~'1t1es, pending final negotiation of the terms of the easement P lth. the ~1ty of Denton; and ~IERLA both ~ anal DATA recognize the urgency of commencing construction . on the Project as soon as is reasonably passible; N~ ~'HE1~EF~RE} for and in consideration of the sun of TEN DOLLAR ~10.~~} and other ood and valuable consideration to it in hand paid by DATA, the receipt and g suf~ cienc of v~hich is hereb acnav~ledged and confessed, C1ty grants to DATA the right to ✓ ~ i . . enter u on the Pro erty, the right to remove in~proven~ents, if any, nth ~rhlch the Property ~s p p encumbered, anal the xight to possession ofthe Property for Project purposes. This rant of right of entry and possession is conditioned upon the fo~loing: g Page 1 of I - traction sure 'n u on the property, such as activities of 1. DATA may perform pre cans Y~ P survey crews and pick-up trucks; and a install erosion control, such s erection of silt fences and the installation of D~'A rn y canstruuction entrances; and conduct limited clearin and grubbing on the Property, such as cutting and . DATA may g ' ve etation and ren~ovin stumps, roots, and debris. Any clearing and grubbing mulching g g F activit scheduled on the Property shall be subject to the fallow1n: a..A lan for the work shall be provided identifying locat~ans, means and p p(~ l~stln of contractors with contact znfana~ation along with a schedule meth g of who, when and where the work wzll be done. b. Ganamutucatlon with ~ of Denton personnel that will be inspecting or "toxin this work Grantee or Cxrantee's agents shall Initiate notifctian manl g throe h Alberto Lo ez with Denton dater Utilities at {940} 3~ -8~2~. ~ P c. DATA will rovide a aint of contact with the DCTA for cannrnunications p p coordination and claims resolution. learin and bbin of trees within the 20 feet of the eastern boundary of the d. ~ g . Pro e shall he limited to chain saws and stump grinders to avoid disturbance to p~ adjacent underground utilities, D~`A ma conduct of haling of utilities through coordination with the Denton water 4. y P Utilities subject to the following: A Ian for the work shall be rovided to pity identifying locations, means and , a. p ~ . s a listin of contractors with contact information along with a schedule method } of who, when, and where the work will be done b. communication with pity of Denton personnel that will be inspecting or monitorin this ~vark. Grantee or Grantee's agents shall initiate notification g ' ' ~ - throe h Alberta Lopes with Denton Water Utilities at {940} 391 8~ g c. D~'A will ravide Dint of contact with the DGTA. for carnmunication, P p. coordination and claims resolution. ' ' ht of En and Possession shall extend to DC~'A, its employees and its 5. Allis Rig contractors. ' f ~ntr and Possession shall be valid and effective for a period of ninety {a} This fight o y ' to of this document's a roval by pity, as evidenced by the signature of its days follow~.n the da pp fit Nana r~ thereafter it shall terminate and be of no further force and effect. g Page 2~ of 3 Q . EF~'ET~~E on die ~ day a~ , ~~a9. CITY THE ~~TY F ~E~TON, TE.~4 A Texas ~Vlur~ic~pl ar~orat~on C1E~RCrE , ~~PELL ~~TY ~VIAN~C~ER ATTEST: JENN~~E ALTER., ~~TY ERETA~Y ~~r: APF~D~ED A T~ ~E ~'DR1VI: AN~TA. BURC~E QTY ATT~EY ~a~e ~ of DENTON BRANCH RAIL TRAIL F. r ~r M - f y 1 DRAFT MINUTES 2 City Council Mobility Committee 3 Tuesday, February 24, 2009 4 5 6 After determining that a quorum of the Mobility Committee of the Denton City Council was 7 present, the Chair of the Committee on the Mobility thereafter convened into a meeting on 8 Tuesday, February 24, 2009 at 2:04 p.m. in the City Council work session room, 215 E. 9 McKinney Street, Denton, Texas. 10 11 Present: Chair Pete Kamp, Mayor Mark Burroughs and Council Member Chris Watts 12 13 Staff Present: Howard Martin, ACM Utilities; Fred Greene, ACM; Anita Burgess, City 14 Attorney Jim Coulter, Director Water Utilities; Mark Nelson, Transportation 15 Director; Frank Payne, City Engineer; John Knight, Assistant City Attorney; Tim 16 Fisher, Assistant Director, Water Department, Bud Vokoun, Traffic Engineer; 17 Bob Tickner, Supervisor Parks & Recreation; and Ann Forsythe, Boards and 18 Committees Coordinator 19 20 Also Present: John Polster, ITS; Scott Neeley, DCTA Vice President of Communications & 21 Planning; Phillip Ullman, Paul Luedtke, and Darren Fox, HDR Consulting; 22 Jeremy Sain, Brian Shamburger, and Dennis Seale, Kimley Horn Consulting; and 23 Greg Johnson, Elk River 24 25 OPEN MEETING 26 27 8) Receive a report, hold a discussion and consider a recommendation to adopt an ordinance of 28 the City of Denton, Texas, authorizing and directing the City Manager to execute a right of 29 entry and possession in favor of the Denton County Transportation Authority (DCTA) 3o authorizing DCTA to enter upon and take possession of certain real property of the City of 31 Denton for the purpose of performing pre-construction surveying, installing erosion control, 32 conducting clearing and grubbing, and performing utility pot holing; and providing an 33 effective date. 34 35 Mark Nelson presented stating this item is a safety net should something happen with respect to 36 the agreement either at City Council or at the DCTA level. The agreement (Right of Entry) will 37 allow DCTA t0 lnltlate SpeC1f1C prellminary Constructl0n act1v1t1eS along the Corrldor by 38 providing aright-of entry. The right-of entry is structured as a ninety day document and 39 establishes methods and processes as to type of construction or activities in that corridor. 40 41 Council Member Chris Watts asked what it is saying is the City is giving right-of entry to DCTA 42 to do work based upon an agreement that staff is not sure will be approved. Watts stated that 43 seems backwards. It is a safety net, and if there is a delay in approval, or if there is a potential 44 problem, and this agreement has to be reworked, he is not sure why the City would give right-of 45 entry to begin work with an agreement that is not in effect. 46 47 Nelson stated that it is just about the timing of the actual interlocal agreement (ILA). Staff 48 believes the ILA will eventually be approved, whether it is March 3 or April 7. The desire is to 49 5o Draft Minutes of the Mobility Committee meeting 1 February 24, 2009 2 Page 2 of 2 3 4 5 have a document in place to allow DCTA to initiate preliminary activities limited to pot holing, 6 silt fencing, clearing and grubbing, etc. 7 8 Mayor Mark Burroughs asked if there is a downside to performing those activities if, in the 9 worst case scenario, an agreement is not reached, will any of these activities be adverse to the 1 o interest of the City of Denton. Nelson replied maybe the removal and clearing of trees along the 11 corn or. 12 13 Council Member Watts asked if there is a limitation on the activities DCTA can perform. 14 Nelson replied yes. 15 16 Mayor Mark Burroughs moved to approve with a second from Council Member Chris 17 Watts. The motion was approved by a 3-0 vote. 18 19 The meeting was adjourned by consensus at 4:11 p.m. 1 DRAFT 2 Parks, Recreation and Beautification Board 3 Minute s 4 February 23, 2009 5 Civic Center Conference Room 6 7 Members present: Carol Brantley, Allyson Coe, Dale Conway, Reggie Heard, Jo Kuhn, Ross Richardson, 8 Jennifer Wages 9 Members absent: None 10 Staff present: Emerson Vorel, Cindy Deckard, Jim Mays, Janie, McLeod, Kathy Schaeffer, Bob Tickner, 11 Mary Aukerman, John Knight-Deputy City Attorney, Mark Nelson-Director of Transportation, Becky 12 Guthrie-Engineering 13 14 Chairperson Jo Kuhn called the meeting to order at 5 : 5 8 p.m. 15 16 AWARDS AND RECOGNITIONS: 17 a) Emerson introduced Kathy Schaeffer to the Board and announced that she had been promoted to 18 Superintendent of Leisure Services and would be attending the meeting on a regular basis. 19 20 APPROVAL OF MINUTES OF January 12 3, 2009 MEETING: Chairperson Jo Kuhn asked for any 21 corrections or amendments to the minutes. Hearing none the minutes stand approved as presented. 22 23 ACTION ITEMS: 24 a) Request for Art Piece to be Loaned to Museum - 25 b) Proposed City of Denton DCTA Railroad Easement on the Denton Branch Rail Trail -Mr. Ray 26 Green from DCTA was introduced to the Board. John Knight, Deputy City Attorney, explained that 27 the agreement is still being finalized but that the intent of the document included in the packet isn't 28 going to change and that the Parks portion of the agreement is sufficient enough to bring before the 29 Board. The document is intended to protect the City's interest in the trail and in the waterline that is 30 parallel to the easement. City Council hasn't reviewed the document yet, but the Board needs to be in 31 agreement with the contents before it goes to City Council for their input on March 3rd. According to 32 Mark Nelson, Director of Transportation, DCTA will consider the document at their Board meeting 3 3 on February 27th. The 10-year clause will protect our interests in the event the railroad is not 34 constructed. If the interlocal agreement and easement are not accepted by either party, a "RIGHT OF 35 ENTRY AND POSSESSION" document has been included in the packet so that DCTA can access 36 the property to begin preliminary preparations to meet their 2010 proposed completion date. 37 3 8 MOTION: Jo asked that a motion be made for acceptance of the proposed City of Denton-DCTA 39 Railroad Easement on the Denton Branch Rail Trail agreement. Jennifer made the motion, Carol 40 seconded and the motion passed with a vote of 7-0. 41 This page left blank intentionally. A~NDA IN~~I~TION ~IE~T ACxENDA DATE: March 3, ~~a9 DBPARTM~NT: legal Department CMIDCMIACM: Anita Burgess, City Attorney EJECT; An ordinance amending section ~ S-9Z "Prohibited far. Certain P aces}' of Cha ter ~ i • ~ ~ S Matar ~eh~cles and Traffic of tie Cade of Ordinances of the City of Denton; adding new section 1 ~-9~.1 "Parl~ing Nuisances" to Chapter 18; amending Chapter 2I "Offenses" of the Cade of Ordinances to add a new section 21-5 "Dumping;}' prodding a severabtlity c~~ause; . prodding a penalty cause; and declaring an effective date. BA~~UNII: As a result of the adoption of the Denton Property Maintenance. Code Chapter 17~, same provisions have been deleted franc Chapter ~a of the Code of Ordinances, These deleted pravis~ons are not being transferred to the Dentan Property Maintenance Cade . because they da not relate to property maintenance Issues. These deleted provisions are being transferred aver to Chapter 1 S "Motor Vehicles and Traffic" and Chapter ~ 1 "Offenses?' of the Code of Ordinances. The only provision that has been changed is the prodsian prohibiting a "for sale" sign on a vehicle an a city right~af way, as approved by the Citizens and Council Committees on Property Maintenance Cade issues. This ordinance relocates those previsions firam Chapter ~a to other sections of the Cade of Ordinances. OPTION: Approve or deny the ordinance. ~1V~NDATION: staff recommends approval. FISCAL INE~I~IVIATI~N: None ~espectfi~llysubmitted, Anita Burgess City Attorney ~ . H:1P~opert~ Mamten~ac~r 18 - Chan•F]g Lmaguagc A15 (Mffi. ~4D9),c~oc t , v. : . : " ~ q:.. j... . it i.~. a:~.. ~ i:Y '..4 k b. AN ORDINA.~E AlVIE1~D~N ET~OI~ ~ S-9Z "F~QHIB~TED FOR E~TA~N PURPOSES" CHAFTEk ~ S "N~OTO~ VEHICLES AND TRA~'F~" 'I`HE BODE O~DAI~CES THE CITE OF DE~TOI~; ADDCr NEw SE - CTION 1 S 9~. ~ "PARKI~O ~TCJ~ANCE'' TO HAPTE~ ~ S; AIVIENDII~C ~HTER ~ ~ "~p'FENSES" THE BODE OF ORDIl~ANCE TO ADD A NEB SECTION ~~-S "DUlIN•~' PRO~~D A. SEVE~.ABIL7fiY CLAUSE; PROVIDING ~ PENALTY ~AUSE~ AND DECLAR~G AN E~EECTI~E DATE. THE OO~JNC OF THE CITY OF DEI~TON HERESY O~DA~N: SECTION~~~. Section 1 "Prohibited far Cert:n P ores" of the Cade of . . Ordinances 1 hereby a.cnded to read ~ follows; Sec. ~ -9Z. Prohibited for Certain Purposes. ~ . loo person park a vehicle upon any street the city for the purposes af; ~a} washing, greasing, or repairing suc~i vehicle; fib} Advertising or a~liciting business; ar ~c} felling merchandise from such vehicle. It shall be an affirmative defense to prasecati~n. under subsection a if the r air wa.s necessitated. by a~; emergency and if the repair was done ar the vehicle was towed awa within . ZO hours of the time the vehicle bake dawn ar ceased to operate praperl a~. the road~va . Y ~ SECTION chapter 1 S "cto~ ~ehxcles and Traffic" of the bode of Ordinan ces ~s hereby amended by adding Section 15-92. ~ "~rkYng nuisances" to read as follows; See. ~S-9~.1. Parkin. nuisances. ~a} It shall be u~lawfal for a person to parr ar stare ar allow another to arl~ ar store a P recret~anal vehicle, travel trailer, bast ar boat trailer, taw truck, ar any vehicle other than n~atar vehicle on any pnblic right~af way any reside~.tial coned district. {b} ~o person shall parr any vehicle upon the street in any manner as to abstract the loadYng or unloading of any solid waste container. SECTION . Chapter 2I "Offenses" of the fade of Ordinances is hereb amended b Y y adding ect~an ~ 1 ~S "Dumping" to read as follows. _I_ fee. D~,mp~ng. It shall be unlav~ful and declared a nuisance far any person to dum , or .er~nit to be ~ p dumped upon any s~de~valk, alley, street, into or add scent to mater, ar .any other public dr ovate p property, any unv~holesame mater, refuse, rubbish, trash, debris, filth, earrian, junk, garbage, impure ar unwholesome n~a~tter of any kind or other objectionable or unsightly matter of ~vh.atever nd~ ETIQ~ If any section, subsection, paragraph, sentence, clause, phrase, ar nerd in this ordinance, or application thereof to any person ar circumstances i held invalid by any court of c~n~petent jurisdiction, such homing shall not affect the validity of the remaing portions of this ard~nance, and the 1ty aunc~l of the arty of Benton, Texas hereb declares it v~o~ld have y enacted such remaining portions despite ar~y invalidity. ETI~I~ 5. Any person found guilty of violating this ordinance b~ a .court of competent jurisdiction shall be fined a sure not to exceed five hundred dollars ~5~a} per day. Each day that a provision of this ordinance is violated shall constitute a separate offense. SE~T~GN This. ardinane providing far a penalty shall beca.e effective 14 days from the date of its passage, and the pity secretary is hereby directed to cause the caption of this ordinance. to be published Mice in the ~]~~ar~ cord `h~a~i~~~, the off cial news a er of the ~ i . qty of Denton, Texas, v~~thin I ~ days of the date of its passage PAS QED ,AND AP~~~VED this the ~ day of ~~~9. 1VIARI~ A. UI~UG~, I1~A~~ .ATTEST. JE~INIF'E~ ALTER, CITY ~~RETAR~ B~: APPRGVED A T~ LEGAL ~`~~M: . .ANITA BIJRCrE ITS ATT~INEY ,w ~Y; , ~ ~ S:lOar ~acumentsl0r~i~tancc5109~hapta 18 parking.doc ...ti:,:::.: This page left blank intentionally. AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 DEPARTMENT: Finance ACM: Jon Fortune SUBJECT Consider adoption of an ordinance considering all matters incident and related to the issuance, sale and delivery of "City of Denton General Obligation Refunding Bonds, Series 2009"; establishing parameters for the redemption of certain outstanding obligations of the City; authorizing the issuance of the bonds; approving and authorizing instruments and procedures relating to said bonds; and enacting other provisions relating to the subject. BACKGROUND The City's Debt Service Management Policy (403.07 XI) as approved by the City Council includes a provision that addresses the circumstance by which refunding or restructuring debt options will be considered. Specifically the Policy states: "The City shall consider refunding debt whenever an analysis indicates the potential for present value savings of approximately 3.5% of the debt service being refunded or if beneficial to the City in another way." The City's financial advisor, First Southwest Company, monitors existing City debt and market conditions to identify opportunities by which the City could save money on its debt service requirements. Based on current market conditions, refinancing the following bond issues generates present value savings of approximately $382,000 or 4.9% of the refunded par amount: PROPOSED REFUNDING CANDIDATES 1998 G.O. $ 965,000 1998 C.O. 135,000 1999 G.O. 1,23 0,000 1999 C.O. 885,000 1999A G.O. Ref 3,875,000 2000 G.O. 375,000 2000 C.O. 310,000 Total $7,775,000 Agenda Information Sheet March 3, 2009 Page 2 Since bond market conditions can change rapidly, staff is recommending that the City Council approve a "parameter negotiated refunding" bond sale. By doing so, the City will be authorized to execute the refunding issuance at any time before September 3, 2009, if market conditions are favorable and the present value savings are above the stated debt policy guidelines. Depending on market conditions, there may be additional debt issues included if they meet the targeted threshold. Other potential, but at this time borderline, callable refunding candidates are the: 2001 and 2002 General Obligation debt for $1,425,000 and $1,240,000, as well as the 2001 and 2002 Certificates of Obligation for $530,000 and $865,000 respectively. If the market environment continues to improve, then these issues maybe added to our current refunding. With the approval of the attached ordinance, the refunding may take place without additional Council approval. The ordinance authorizes the City Manager to award the refunding bonds to the purchaser provided that the present value savings meets the percentage guideline of at least 3.5% and that the maturity of the new bonds does not exceed the maturity of the old refunded bonds. As stated above, the delegation of the pricing authority would expire on September 3, 2009. If the savings threshold is not met prior to that time, further action by the City Council would be required to complete the refunding. Delegating the pricing authority provides flexibility to achieve the best value for the City since the pricing will not be limited to a council meeting date. For your review, staff has attached a copy of the ordinance and paying agent/registrar agreement. In addition, we have also included a draft of the preliminary official statement. Since this document is in draft form, it is likely that staff will need to modify and/or include additional information prior to the bond issuance. Once the refunding has been completed, staff will notify the City Council of the savings achieved and the number of bond issues affected. PRIOR ACTION/REVIEW (Council, Boards, Commission) The refunding was presented to the Audit/Finance Committee at the February 16, 2009 meeting. The Committee recommended that staff proceed with the refunding options presented. FISCAL INFORMATION The refunding will only occur if the 3.5% net present value savings can be met. The 3.5% net present value savings includes all costs associated with the refunding. The City has utilized this type of delegated sale for the Series 2007 Utility System Revenue Refunding Bonds and the Series 2007 General Obligation Refunding Bonds. Agenda Information Sheet March 3, 2009 Page 3 EXHIBITS 1. Ordinance 2. Draft Preliminary Official Statement Respectfully submitted: Bryan Langley Director of Finance ORDINANCE NO. Ga07^ AN ORI]INANCE CONSIDERING ALL MATTERS INCIDENT AND RELATED THE ISSI~ANCE, SALE AND D TD ELI'VERY OF "'CITY DENTON GENERAL oBLZGATION REFV~NDIN BONDS, SERIES ~aa~~~; ETABLIHrNG PA~ATER ~oR THE REDETION o~ CERTAIN ~UTTANDIN OBLIGrATIONS OF THE CITY; AUTH~RI~iNG THE IS SI~ANCE OF THE BANDS • APPRO~N AUTHORI~IN TN AND STRL~NT AND PRGCEDURES RELATING TO SAID BONDS A.ND ENACTING OTHER PR~YISIQNS RELATING TO T S[TBJECT. THE STATE OF TEAS COUNTY Ole' DENTIN CITY OE DENTDN ~VI~IEREAS, there are presently autstandrng bands and certificates of obli atian of ' Dentan, Teas the'"Issuer" a ~ the City of { • } p yabie frarn a pledge by the Issuer to levy ad valnrern taxes sufficient to princlpal ofand interest an the bands as fey became due an with res paY d, pact to the certificates ofabligation, further secured by a limited pledge of surplus revenues derived b the Issuer fram ' operation of the Issuer"s [~tili ~ ~ ~ the ownership and System ~cons~sttng of the Issuer"s combined waterworks system, rani sewer system, and electric light and war s stem ~ ~ ~ AREAS, the Issuer now desires to refund all ar part afthe bands and certificates . described in Schedule I attache of abiigtion d hereto, collectively, the "Eligible Refunded ~bliga#ions", and those Eli ible Refunded Obligations designated by the Pricin Officer in the Pricin ~ be refun g • g Cer~ficate, each as defined beiaw, to dad are herein referred to as the Refunded Gbhga#~ons"; WHEREAS, Chaptex 120?, Texas Govei7ninent Cade, authorizes the Issuer to issue refimdin and to deposit the raceeds fram the sale g bands . , , p thereof, together with any other available funds ar resources, directly with a paying agent far the Refunded Obligations ar a trust cam an or caminerci not act as a de asita far the I ~ ~ y . bank that does P ssuex and is named in these proceedings, and such deposit, ifmade before the . payment dates of the Refunded Obligations, shall constitute the makin, of firm bankin and ' arrangements far the dischar a and final ~ ~ financial . g payment of the Refunded ~bligatians; WHEREAS, Chapter 12D7, Texas Government Cade, further authorizes the Issuer to enter ' escrow agreement with such a ' a ant far the Re into an p ymg g funded Obligations ar trust company or caminercial bank with respect to the safekeeping, investment,reinvestment, administration and dis asition afan ' upon such terms and conditions a th P y such depas~t, e Issuer and such paying agent ar trust canipany or caercial. bank may agree; AREAS, the Escrow Agreement hereinaf~ex authorized beteen the I suer and The Bank afNew Park 11~ellan Trust Company, N.A., Dallas, Texas, constitutes an a ement of the kin ' permitted b said Cho ter d authorised and y p 1247, Texas Government Cade, and The Bank afNew York ellan Trust Ca~,pany, N.A., Dallas, Texas, is so named as the Escrow Agent in accoxdance with Section 12 Government Cade; and 0'~.0~ 1, Texas WHEREAS, this City Council hereby finds and determines that it is a ublic ` interests of the Issuer to refund the ~ puxpase and in the best Refunded Obligations in order to achieve a present value debt service savings of not less than 3.5°l~, with such savings, ainang other information and #exm ' to be included in a w pricing certt~cate {the "'Pricing erkificate"} to be exacu#ed b the Armin . all in accordance with the ' ' ~ Officer {here~rer designated}, prov~s~ons of ectian I ~~7,~07, Texas government bode; AREAS, alI the Refunded Obligations mature or are subject to redem tion within dears of the date of the bands herei J p prior to maturity na~er author~~ed; WHEREAS, the bonds hereinaer authari~ed are to be issued sold and ~apters 107, Texas Gavernm ~ ~ delivered pursuant to ent bode, as amended, the City"s Home Rule charter and other a livable laws; and pA WHEREAS, it is considered to be in the best interest of the ci that said inter • issued, NOS, THEREFORE ~ est bearing bonds be THE COUNOIL OF THE CITY OF DEIVTON I~EREBY ORDAINS: Section 1. RECITALS, AMOUNT AND PURAOSE ~F THE BOND• a • in the reamble hereofare ' ~ ~ The recitals set Earth A incorporated herein and shall have the same force and effect as if set forth in this Section, ~ The bonds ofthe pity afDenton, Texas ~the'tIssuer" are hereb auto . delivered in the a ~ ~ ar~zed to be issued and ggregate pr~nc~pal an~aunt hereinafter provided for the public purpose of rovid• funds to refund a portion afthe Issuer's outstandin Indebtedness and to ~ ~ pay the costs incurred. in connection with the issuance ofthe Bonds, section 2, DESIGNATION OF THE BOND• Each bond issued ors . be designated: fr~IT~ ~F DENT p uant this durance shall GN GENER~4L GBLIG,ATiON REFUNDING B~N~D, SERBS 2p~9 and initially there shall be issued, said, and delivered hereunder a sin le full ' coupons, a able in instal g y registered bond, without interest A Y tents ofprincipal the'Initial Bond'}, but the tYa1 Bond ma be assi ed transferred andlor converted into and exchan ed far and bon g . ~ a lie aggregate principal amount of fully registered ds, without interest coupons, having serial matur~.t~es, and in the denomination . or any irate I multi le of 5 ODII ordeno~,natxons af$5,4D0 A , all in the manner herei-rafter provided. The term "Bonds" as used ~n this Ordinance shall mean and include collectively the I~tial Bond and all substi~u to bands exchanged therefox, as well as all other substitute bonds and replacement bonds issued ursuant hereto anal mean any of~,e Bonds. ~ theter~n Bends shall section 3. DELEGATION TO PRICIl~~ OFFI~ER• ~a As authorised b S Governm ~ y ection 1207,~~7, Texas ent bode, as amended, the pity IVianager or Ass~staat City Nlar~a, er the „Aric' . Oc " ` authorized to act an be ~ ~ g ~ in er } is hereby half afthe Issuer m selling and dehver~n the Bonds, deter~mi-rain which afthe E . . Refunded Obligations shall be refunded and g hg~ble carrying out the other procedures specified in this 01'dinance, including, determining the date of the Bands, any additional or different deli • Bonds shall be kno the rice at w ` gnat~on ar tale by which the - p loch the Bonds will be Bald, the years in which the Bonds will mature the principal amount to ~naaturce each of such years, therate ofinterest to b - eborne byeach such maturity, the interest payment and record dates, the price and terms u an and at w ' . redem, tion rear A h~ch the Bonds shall be subject to p p to n~atur~ty at the option of the Issuer, as well as any mandato sin~in fdnd rede~n ti prov~s~ans, and all other matters relatin to the iss p on ofthe R ~ , uance, sale, and delivery afthe Bands and the refunding efunded Obliga~.ans, ~nclud~ng without I~mitatlon establrs the redem ti • the redem , ~ p on date for and effeCt]ng ptlon of the Refunded Obl~atlons and obtauung murnc~pal bond Insurance for alI or ~ . ofthe Bonds and providing for the terms and rovisions thereof Y portion be s ecified in th ` • p applxcabie to the Bands, all afwhich shall p e Facing erti#icate; provided that: 1 ~ the aggrega,#~ original principal amount ofthe Bonds shall not exceed 19 ,000,40; {ti} the price to be paid far the Bonds shall not be Tess than 97°I° ofthe e ~ • . amount thereof plus accrued interest thereon fir ' gate origins p~nc~pal oin its date to its delivery; viii} none ofthe Bonds sha11 bear interest at a rate greater than x.04°la er interest rate on the Bonds shall not ex p annum and the net effective teed d.~0~/~; Div} the maximum stated maturity ofthe Bonds shall oat exceed Feb ruary 1, 201; {v~ the refunding mustproduce present value debt service sa ` s afat least . ° contribution; and ~ I°, net ofany issuer Zvi} the delegation made hereby sha11 expire if not exercised b the Frio' ~ September 3, 2009, y mg #icer on or prior to fib} establishing the aggregate principal amount ofthe Bonds the Fricin an amount not exceedin the ~ g Officer shall establish aunt authari~ed in Subsection {~,}hereof, which shall be suffici to rovide for the ~ ant m amount p purposes for which the Bonds are authorized and to pay costs of issuin the Bands, Th Bonds shall be sold with and subject to such terms as set fo g e rth in the Pricing Certificate. section 4. TNIT~AL DATF, DENOMINATION', NUMBER MAT REGISTERED OwN~R ~l~E ~ URIT~ES, INITIAL ST AND C~IARACTERISTICS OF THE INITIAI, BAND. ~a) The Initial Bond is hereby authorized to be issued, sal and delivery ' full re istere ~ d hereunder as a single d Band, without interest coupons, dated the date set forth in the Pricin Ce ' . denomination and a e to rinci g rtificate, in the g~' gap pal amount set forth in the Pricing Certificate, numbered R- 1, a able in annual installments of p~ncipal to the vaitial re istered owner then p ~y assi ees of said B . g eof or to the registered assignee or gn . and or any portion or portions thereof {rn each case, the 'ire 'tend owner" wi annual installments of rinc~ al of the ~itial th the p , p Bond #o be payable on the dates, respectively, and ~ the principal amounts, respec~.vely, stated m the FORM OF ~TIAI~ BOND set f . ortli m this Ordinance. fib} The Initial Bond ~i} may be prepaid or redeemed rior to the res active of installments of rinci al then p P scheduled due dates p p eof, {iii nay be assigned. and transferred, {iii may be converted and exchanged for ether Bonds, ~iv~ shall have the characteristics and v shall ' rinci al of • , ~ { ~ be signed and sealed, and the p p . and interest on the Ini~ai Band shall be payable, all provided and in the moon ' indicated, m the FORM OF INITIAL BOND set f er required ar vrth in this Ordinance. ~c} The unpaid principal balance ofthe Initial Band shall bear intere . , Band to the res active sched l st from the date afthe ~tial . p u ed due dates, or to the respective dates of prepayment ar redem do of the installments ofprincipal ofthe Ini~a1 Bond,and said interest shah be p ~ payable, all in the manner provided and at the rates and an the dates stated in the FORM OF TNiTIAL BOND set forth in . this Ordinance, Section FORM OF INITIAL BOND, The form of the Initial Ban in l Re istration Certificate ~ c udrng the form of g of the Comptroller of Fubli c Accounts of the State of Texas to be endorsed on th Initial Bond, shalt be substantially as follows,with such a ro riate variatr e permitted or re aired b this ~ . pp p ons, omistvns or insertions as are r q y .Ordinance, and with the Im#~al Bond to be modii~ed pursuant to, and coin feted with infarina~on set forth m, the Pricing Certificate: p 3 FARM OF rNIT~AL BLIND N~. I UNITED STATES ~F AMERICA STATE DF TEXAS COUNTY OF DENTIN CITY DF DENTON GENERAL OBLIGATION REFUNDING BOND SERIES 2009 THE CITY GF DENTON, in Denton County, Texas the ~,rssuer~~ been a olitical ~ , . ~ Mate of Texas ~ g P subd~vis~an of hereby promises to pay to or to the registered assignee or assignees of this Bond or any portion ar ortions hereof in "registered owner" the i ~ { each case, the ~ aggregate principal amount of D~~,LARS} In annual installments of principal due and payable on in each of th • respective prince amounts asset forth in ~ e years, and m the P ~ the following schedule, and to pay Interest, from the date of this Bond, on the balance ofeach such installment of rind al res . to tie rem ` ~ un ~ ~ at the p P ~ pecttvely, from t~rne ~ pad, ra#es per annum as follows: PRINCIPAL INTEREST PRINCIPAL INTEREST YEAR AIVIOUNT RATE °I~ ~'E~AR AMD[]N'I'` ~ RATE l~ Information from Pricing Certificate to be inserted Interest shall first be due and payable on - and semiannuall on each therea~er while this Bored r ~ y and o any portion hereof is a~tstanding and unpaid. Said interest shall be calculated an the basis afa ~~0-day year composed oftwelve ~0-da man y T'I~E INSTALL11r~NTS OF PR~CIPAL ~F AND THE INTEREST N this Bond are ' lawful money ofthe [united States ofAmeri payable in ca, without exchange or collection charges. The installments of principal and the interest on this Bond are payable to the registered owner herevfthro h the ' BANK GF NEw YQR~ MELLON TRU services ofTHE T CDMPAN~, NATIONAL AS ~OCIATION, DAL~,AS, TEXAS, which ~s the TMPaying Agent~Registrar" for this Bond. Payment of all rind al of and i ' shall be made b the Pa in A entlR ~ P nteret on this Bond y y g g egistrar to the registered owner hereofon each principal andlar interest payment date by check, dated as of such date, drawn by the Payin A entlRe 'stray on and from, funds of the Issuer re • payable solely quued by the ordinance authari~ing the issuance of this Bond the "Bond ordinance"} to be on de osit with th f ~ e Paying AgentlRegistrar for such purpose as hereina~er provided; aril such check shall be sent by the Paying Agentll~eistrar by ~Jr~ited Mates mail first-class ' each such prince al andlor Interest a l~astage pxepaid, on P p yment date, to the registered owner hereof, at the address of the registered ovuner, as it appeared at the close ofbusiness on the da afthe month next rec ' - y p eding each 4 such date the "Record Date"~ an the Registration Books dept b the Pa in A entJlt ' described. The Issuer coven y ~ g eg1strar, as herernaer vats with the registered owner of this Band that on or before each rinci al andlor interest payment date far this Bond it viii make available ~ ~ to the Paying AgentlRegistr'ar, frorri the "In#erest and finking ~nnd" created b~ the Bond ordinance, the amounts re aired to ' in immediatel available funds ~ provide fvr the payment, y , of ail principal of and interest on this Bond, when due, tN T~ BVBNT of a nonpayment of interest on a scheduled payment date and forth' 3 therea~er, a new retard da#e for such in ~ ~Y ~ days serest payment ~a "'Special Record Date'} will be established 6y the Paying AgentlRegitrar, if and when funds for the payment of such interest have been ' Issuer. Notice ofthe cial Retard D received from the ate and ofthe scheduled payment date ofthe past due interest Special Payment Date', which shalx be fi~een X15} days aver the peciai Record Date shall b business da s rr ~ ~ e sent at least five y p ar to the Special Record Date by United States mail, first class osta a re aid to the address of each Holder of a Bond a earin anther p g ~ ~ ' pP g eg~stratlon banks of the Paying AentlRegistrar at the close of business an the l 5th business day next preceding the date of mail' of such no ' t~ce. ~ TIC DATE for the payment of the principal of or interest an this Bond shall be a 5atur Sunday, a legal holida ar a da an which day, y~ y banking 1~]st~tutians to the C1ty where the Paying AentlRegistrar is located are authorized by law or executive order to close, then the date far such a succeediri d which is not p yment shah be the next y such a Saturday, Sunday, legal holiday, or day an which b institutions are authorized to clase~ an ~ d payment on such date shall have the same farce and effect as ifmade on the ari 'nal date pay~.ent was due. THIS BDND has been authorized in accordance with the ~onstitutian and laws afthe Mate afT far the public purposes ofrefunding certain outstand' abli ations ofthe exas g Issuer, and to pay the cQSts incurred in conr~ec~on with the issuance of the Bonds, ~N , or on any date whatsoever therea~er, the un aid instailrnents of ' thrs Bond ma be re aid ar redeeme ~ principal of . y p p d prlar to their scheduled due dates, at the op~on of the Issuer, with funds de~.ved from any variable source, as a whale, ar in part, and, if in the Bond to be re aid or red part~cuiar partrvn ofth~s . p p eemed shall be selected and designated by the Issuer {pro►~ded that a artivn of this Bond may be redeemed only in an irate multi le of 5 0~0 P . ~ p at the prepayment or redemption price afthe par or principal amount thereof, plus accrued interest to the date fixed far pre eras ar redem Lion. Ym p THE BANDS ofthis Series scheduled to mature an _ and _ are subject to mandatory redemption prior to their scheduled maturities, d sh,a].i be redeemed b ..~~s y the Issuer, ~n part, pr~ar to them scheduled maturities, with money from the Mandata Redem tion Account of Interest and Sinin Fun with the antic p e ~ p ular Bands ar portion thereofta be redeemed to be selected b the Paying AgentlRegistrar, by lot or other custom method rovxde y ~ d that a part~an of a Band may be redeemed only in an integral multiple of 5,a0a}, at a redemption price ual to the ar ar rin ' thereofand accrued interest to the date ~ p P cipal atnaunt ofredemp~.on, an the dates, and m the pr~nc~pal amounts, respectivel , as show in the following schedule: y 1Vlaturi Mandatary Princi a1 Redem tiara p Dates Am maturity} ll~aturi ll~andatory Principal Reden~ tion Dates Amount The principal atnaunt of the Bands required to be redeemed on the Maiidato Red ' to the foregain shall be reduc at emptian Dates pursuant ed, the option ofthe Issuer by the principal amount of any Bonds out of the maturity scheduled far ~ and _ whic at least 45 da s . a ro F ~ ~ y prior to the aforesaid pp priate redemption date ~1~ shall have been acquired by the Issuer at a rice not exceedin the rin ' amount of such Bands lus accrued interes ~ ~ P cipal p t to the date of purchase thereof, and delivered to the Paying AgentlRegistt~r far cancellation or as shall have been redeemed ursuant to the o • provisions hereofand not revia 1 ' ~ plan. redemption p us y credited to the mandatary sinking fund redemption. During an eriod in which ownership afthe Bands is determined b a book en at a Y p fewer than al Y securities depositary far the Bends, if I of the Bonds o#'#~e same matu~t~ and bearing such interest rate ire to be redeemed th or pardons thereof, to be redeemed shall b e Bonds, e selected in accordance with the arrangements between the Issuer and the securities depositary, AT LEAST 30 days prior to the date fixed for any such prepayment ar redem tiara a written ' of such prepayment or redeniptian shall be mailed b the P P nonce y ay~ng AgentlRegistrar to the registered owner hereof. By the date fixed for any such prepayment or redem tion due rovisivn shad with the Fa ' A entlRe ` P p be made by the Issuer Y ~ gxs~ for the payment of the required prepayment ar redemption price fvr this Band or the portion hereof which is to be sa prepaid ar redeemed, lus accrued interest fixed for re ent ar red P thereon to the date p paym emp~an. If such written notzce of prepayment ar redemption is given, and if due provision for such payment i~ nude, alt a provided above, this Ban ar the artion th . . ~ p ereaf which is to be so prepaid ar redeemed, thereby autornaticaily shall be treated as pr aid yr redeemed riar to i due date, and shall not bear interes p is scheduled t after the date fixed for its prepayment ar redemption, and shall oat be regarded as being outstanding except far the right of the registered owner to receive redem tiara rice lus accrued ' the prepayment or p p P interest to the date fixed far prepayment ar redemption from the Pa in AentJRegistrarout ofthefunds provided for such a ent. The Pa in A y g Re 'stration Books p y g gentlRegistrar shall record in the all such prepayments or redemptions of principal of this Band or an artivn hereof yP THIS BAND, to the extent ofthe unpaid ar unredeemed principal balance hereof or an un ' unredeemed pardon herevfin an irate 1 m ' ~ Y paid and y gra ultiple of ,000, nosy be assigned bythe inftial registered owner hereofand shall be transferred v~nly in the Registration Soaks ofthe Issue~k t h the Pa ' . acting in the ca aci of re 'strar f y g A.ge11t1Registrar p or the Bonds, upon the terms and con ' 'ans set Earth in the Band Drd~.nance, Among other requirements far such tsfer, this Bond must be rented and s pr`e urrendered to the Paying AgentlRegistra~r for cancellation, together with proper iristru~ments of assi en ' guarantee of si tares satisfact ~ t, in farm and with ory tv the Paying AentlRegistrar, evidencing assignment by the initial registered owner of this Band, ar any portion or portions hereof in an irate multi le of Y ~ p X5,000, to the assignee ar assignees in whose name or names this Bond ar an such roan or rtio ' be transferred and re 'st Y pa po ns hereof is or are to i ered, Any instrument ar iristrunients of assignment satisfacto to the Pa ' AgentlRegistrarmay beused toevidencethe assi ent of Y b grim this Band or any such portion ar pardons hereof y the antral registered owner hereof. A new bond or bends pa able to such assi ee ar . y gn assignees ~wh~ch d k then will be the new registered owner or owners ofsuch new Bond or Bona , , . , as to an ar~an ofthi.s B } ar to the intt~al registered owner ~ p and which ~s not being assigned and transferred by the initial re istered owner sh be deli~rered by the Paying A. ent~Re 'stray in can all g version of and exchange fox this Bond or any portion or pardons hereof, but solely in the farm and manner as provided ire the next ara • and exchan a of this Band p aph hereaffor the conversion or any portion hereof. The registered owner of this Bond sha11 be deemed and treated by the Issuer and the Paying ~gentlRegistrar as the absolute owner hereof for . payment and dischar a of Iia ' ` all purposes, including g bility upon this Bond to the extent of such payment, and the Issuer and the Paying AgentlReg~strar sha11 not be affected by any notice to the cantr `y• AS PROVIDED above and in the Bond Ordinance, this Bond, to the extent of ' unxedeemed rind al balance hereof the unpaid or p p , may be converted into and exchanged far a like aggre ate rinci al amount of fully registered bonds, without interest cou ns a g , p p deli ted ' ' • . , . ~ p yable to the assignee or assignees duly gam. in writing by the in~tlal registered owner hereof, ar to the initial re istered owner as to ' ofthis Bond which is not bein assi ed and g any portion g gn transferred by the initial registered owner, i any denomination or denominations in any integral, multiple of5,00~ ~sub'ect to the re uirement ' substitute band issued in ex , J q here~na~er stated that each change for any port~an of this Bond shall have a single stated rind al maturi date, upon surrender ofthis Bond to the Pa i A entlRe ' p p • Y g gistrar for cancellation, all in accordance with the form and procedures set forth m the Bond Ord~narice, If this Bond or an ' • transferred or converted eac y portion hereof is assigned and h bond Issued exchange for any pardon hereof shall have a s' 1e stated principal maturity date carrespvnding to the due date of the instal lment afprincipal ofthis Band or portion hereof for which the substitute bond is being exchanged, and sha11 beax intere ' st at the rate applicable to and borne by such installment of pncipal or portion thereof, such bands r . redern Ilan rior to maturi } espectively, shall be subject to P p on the same dates and far the same prices as the conrespondin installment of principal ofthis Bond ar portion hereoffox which the are bei g in instalhnen y rag exchanged. No such bond shall be payable ts, but shall have only one stated principal maturity date. AS PROVIDED IN T ORDINANCE, THIS BOND IN ITS PRESE BOND NT FORM MAC BE ASSIGNED AND'~`RANSFERRED OR CONVERTED ONCE ONLV, and to one or mare assignees, but the bonds issued ' for this Band or ati onion her and delivered m exchange Y p eafn~ay be assigned and transferred, and converted, subs uentl , as rovided in the Bond Ordinance. The Issuer shall the Pa in A y p char ley y g gentlRegistrar's staridaxd ar custamary fees and es for transferring, converting, and exchanging this Bond or an onion thereof • suchtransfer conversio an y p , but the one re~ueshng n, d exchange sha11 pay any taxes or governmental charges re aired to be aid with respect thereto, The Paying AgentJe istrar shall not ~ p g be required to make any such assignment, conversion, ar exchange ~i~ during the period carnmencmg with the close of business on an Record D . the opening of business on the next follawin ~ ~ ate ar~d ending wrth g principal or interest payment date, or, {ii}with respect to any Bond ar portion thereof called for prepayment or redemption rior to mturi ~ . prepayment or reden~ tiara date ~ P ty, within 4~ days prior to its p • IN T~ EVENT any Paying AentlRegistrax for this Band is chari ed b the Iss ' otherwise ceases to act as such, the Issuer has cav g y uer, resigns, ar enanted in the Bond Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause wxitten notice th mailed to the registered owner of this Bond. ereof to be IT I I~REB~ cert%fied, recited, and covenanted that this Bond has been dal an ' authorised, issued, sal and deliver , . Y d validly voted, ~ ed, that all acts, condit~ans, and things requ~xed or xo er to be erfo exist, and be lane precedent to ar in the autha ' p P p rmed, rization, Issuance, and delivery of this Band have been performed, existed, and been lane an accordance with law; that this Bond is a en . issued on the full faith an ~ g enal obligation afthe Issuer, d credit thereof; and that annual ad valorem taxes sufficient to ravide for th payment vfthe interest on and principal ofthis Bon as such in p e ~ terest comes due and such principal matures, have been levied and ordered to be levied against all taxable roe in th p p e issuer, and have been pledged 7 irrevocably for such payment, within the limit prescribed by ia~v, BY BECOMING the registered owner ofthis Band, the registered owner thereb ackno~vled es a1I of the terms and pravisions of the Bond Ordinance ~ ~ ,agrees to be bound by such terms and provisions, acknowledges that the Bend Ordinance is duly recorded and available far ins ectian in the ocial and records of the overnin hod of ~ minutes g y the Issuer, and agrees that the terms and pravisiot of this Bond.and the Bond ordinance constitute a contract between the registered owner hereof and the issuer. iN wITNES wHBREOF, the Issuer has caused this Band to be signed with the manual. ar facsimile signature of the Mayar of the Issuer and countersigned and attested with the rnanuai ar facsimile ` ofthe City Secre afthe Issuer has caused th s~gn~.ture e official seal of the Issuer to be duly impressed, or placed in facsimile, an this Bond, ATTEST: CITY DENTON, TEAS By; By. Jennifer waiters 1VIariC A. Burrow s Ci Secretary, City of Denton, Texas Mayor, City ofDenton, Texas CITY SEAL} ~INSER.T BOND INSURANCE LEGEND, IF ANY} l~'~RM Ole REITRATI~N CI~RTIFICATE TAE . COMPTROLLER OF PUBLIC ACCOUNTS: "o be attached to Initial Band anly~ COMPTR~LLER,'S REITRATIOI~ C~RTIFICAT'B: R.BGITER N~, I hereby certify that this Bond has been examined, certified as to vatidi , at~d a roved b the Attorne General of the PA ~ y fate of Texas and that this Bond has been registered by the Co~aptraller of Public Accounts of the State of Texas. witness my signature and seal this ~omptraller of Public Acca~an~ of the State of Texas ~CGMPTROLLER'S SEAL} Section ADDITIONAL CHARACTERIS'I'rCS ~F B~NI~, a The Issuer ~ aid „Tra~fer, shall beep or cause to be Dept at the principal corporate trust oi~ice of THE BANK ~P NEw YORK IVIBLLON TRUST COMPANY, NATIONAL ASSOCIATY~N, DALLAS TEAS the "Pa in A entlRe 'strar„ books or ~ ~ ~ y g g ~ records of the reg~stra~.on and transfer ofthe Bands the ,~Re 'straatian Books" 8 1 and the issuer hereby appoints the Paying AgentlRegistrar as its re istrar and transfer a ent to k books ar records and nuke su g cep such ch transfers and registrations under such reasonable regulations as the Issuer and Paying AgentlReistrar nay prescribe; and the Paying Agent~Re istrar shall male such transf registrations as herein ravided. ers and p The Paying AgentlRegistrar shall obtain and record in the Registration Books the address of the registered owner of each Bond to which payments with res ect to the Bands be mailed, as herein ravided• p shalt F ~ p ,but ~t shall be the duty of each registered owner to notify the Pa in AgentlReg~st~rar m writing ofthe address to which a ents shall be Y ~ P mailed, and such interest payments shall not be mailed unless such notice has been given. The Issuer shall have the ri ht to ins ect the Re istra i Books d re tar business hours p ton ~ ofthe Paying AgentlRegistrar, but atherwase the Paying AgentlRegistrar shall keep the Reglstratran Boobs confidential and, unless otherwise re aired b law shall note . ins ectian b an other enti ~ y s p unit their p y y ty. Reg~stratian ofeach Band may be transferred in the Registration Banks only upon presentatlan and surrender of such Bond to the Paying Agen~Registrar for transfer ofre istration and cancellatiari, together with ro er written instruments of g p P assignment, m far, and with guarantee ofsignatures satisfactory to the Paying AgentlRegistraf', ~i}evidencing the assignment ofthe Band, ar an rtion thereof in any integral multiple of $5,000 to the assi ee ar a y gn ssignees thereof, and pia} the right of such assignee ar assignees to have the Band or any such portion thereofregistered in the name ofsuch assi ee or assi ees. ~ an the assi ~ ~ p gnment and transfer ofany Bond or any portion thereof, a new substitute Band or Bands shad be issued to conversion and exchange therefor in the manner herein provided. The initial Band to the extent of the unpaid ar unredeemed principal balance thereof, m.ay be assigned and transferred b the initi re istered owner thereof once y g only, and to one or more assignees designated in writing by the initial registered owner thereof. AlI Bands issued and delivered in conversion ofand exchan a for the In%tia1 Bond shall be in any denomination ar denarninatians g afany integral multiple of5,000 ~sub~ect to the requirement hereinaer stated that each subs~tute Band shall have a single stated princi al maturi date shall be ' form rescribed in p rn the p the F~R~VI ~F SUB~TITUTB BAND set far~h ~n this ordinance, and shall have the characteristics and may be assigned, transferred, and converted as hereinafter avided. Ifthe Initial B and or any portion thereof is assigned and transferred ar converted the Initial Band must be surrendered to the Paying AentlRegistrar for cancellation, and each Bend issued exchange for an onion ofthe Initial Band shall have a s' le stated rinci al rnaturt y p p p ty date, and shall not be payable in ~stallinents; and each suchBond shall have a principal maturity date corresponding to the due date of the installment of rinci al ar aril thereoffnr whichthe substitute Band is bein ex p p P on g changed; and each such Band shall bear interest at the Bangle rate applicable to and borne by such installment of principaa or portion thereof for which it is bein ex- changed. If only a portion of the Initial Bond is assi ed an g d transferred, there shall be delivered to and registered in the name afthe initial registered owner substitute Bands in exchange for the unassi ed balance of the Initial Band in the same manner as if the initial re i g stered owner were the assignee thereof. Lf any Bond or portion thereofathex than the Initial Band is assigned and transferred ar converted each Bond issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the B and for which it is exchanged. A form of assignment shall be printed ar endorsed an each Band exc tin th Initial Bond, which shall be executed b there istered owner ~ ep g e y g or its duly authorised attorney or representative to evidence an assigrmient thereof, Upon surrender of any Bands ar any portion or onions thereof far transfer of regis~'ation, an authorised r resents p ep ve afthe Paymg genfi~Regis~rax shall. make such transfer in the Registration Books, and shall deliver a new fully registered substitute Bond or Bonds Navin the characteristics herein described, a able to such assi ee ar ~ ' g p y assignees which then will be the registered owner ar owners of such new Band or Bonds}, or to the previous registered owner in case onl a organ of a Band is being assigned and transferr ail an conve y P . ~ rsian of and exchange far said assigned Band or Bonds or any portion or por~ans thereof, in the same faun acid manner, and with the saine~ effect, as provided in ectian bid}, below, far the conversion and exchange of Bonds by any registered owner of a Bond. The Issuer shall pay the Paying AgentlRegistrar's standard or customary fees and char es for makin such transfer and delivery afa substitute Band ar Bonds g g but the one requesting such transfer shad pay any taxes or other governmental charges required to be paid with respect thereto, The Paying AgentlRe 'stxar shalt not be 1 w required to tnal~e transfers of registration of any Bond ar any portion thereaf ~i} during the period camtnencing with the close afbusiness on any Record Date and ending with the opening afbusiness an the next following principal ar interest payment date, ar, iii} with respect to any Band ar any pardon thereof called far redemption prior to maturity, within 4 days prior to its redemption date } Ownershi of Bonds. The entity in whale name any Band shall he registered in the Registration Books at any time shall be deemed and treated as the absolute owner thereof far all purposes of this Ordinance, whether or rat such Bond shall be overdue, and the Issuer and the Paying AgentlRegistrar shall not be affected by any nafiice to the contrary; and payment o~ ar an account of, the principal af, premium, if any, and interest on ar~y such Bond shall be made only to such registered owner. A11 such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sutra ar sums so paid. ~c} Pa went of Bonds and Interest. The issuer hereby further appoints the Paying AgentlRegistrar to act as the paging agent for paying the principal of and interest an the Bonds, and to act as its agent to convert and exchange or replace Bonds, all as provided in this Ordinance, The Paying AgentlRegistrar lhallkeep proper records afall payments trade by the Issuer andthe Paying AgentlReist~ar with respect to the Bands, and of all conversions and exchanges of Bands, and all replacements of Bonds, a provided in this Ordinance. However, in the event of a nanpayn~ent of Merest on a scheduled payment date, and far thirty days thereaer, a new record date for such interest payment ~a "Special Record Date"} will be established by the Paying AentlRegistrar, if and when funds for the payment of such interest have been received from the Issuer, notice of the Special Record Date and of the scheduled payment date of the past due interest ~"Special Payment Date", which shall be ~ifleen X15} days aftcer the Special Record Date} shad be sent at least dive ~5}business days prior to the Special Record Date by United eta#es mail, first class postage prepaid, to the address of each Holder of a Bond appearing on the registration books of the Paying AgentlRegistrar atthe close afbusiness an the 15th business day next preceding the date of mailing afsuch notice. ~d} anversian and Exchan a or Re lacement• Authentication, Each Band issued and delivered pursuarlt to this Ordinance, to the extent ofthe unpaid ar unredeemed principal balance or principal amount thereof, may, upon surrender of such Bond at the principal corporate trust afflce of the Paying AgentlReistrar, together with a written request therefor duly executed by the registered owner or the assignee ar assignees thereaf, or its ar their duly authorized attorneys or representatives, with guarantee of signatuxes sa~sfactary to the Paying AgentlRegistr~ar, may, at the option of the registered owner ar such assignee or assignees, as appropriate, be converted rota and exchanged far fully registered bands, without interest coupons, in the farm prescribed in the PO1VI OF SUBSTITUTE BOND set forth in this Ordinance, in the denomination of $~,~OO, or any integral multiple of 5,~~4 sub j ect to the requirement hereina~er stated that each substitute Band shall have a single stated maturity date}, as requested in writing by such registered owner or such assignee ar assignees, In an aggregate prtnclpai amount equal to the unpaid or u~are- deemed principal balance ar principal amount of any Bond or Bonds so surrendered, and payable to the appropriate registered owner, assignee, ar assignees, as the case may_ be. If the Initial Bond is assigned and transferred or converted each substitute Bond issued in exchange for any portion ofthe Initial Bond shall leave a single stated principal maturity date, and shall rat be payable in installments; and each such Bond shall have a principal maturity date corresponding to the due date of the instalbnent of principal or pardon thereaf for which the substitute Bond is being exchanged; and each such Band shall bear interest at the single rate applicable to and borne by such installment of principal ar portion thereof far which it i being exchanged, If a portion of any Band father than the Initial Band} shall be redeemed prior to its scheduled maturity as provided herein, a substitute Band or Bands having the same maturity date, bearing interest at the same rate, In the denaminatlan or denon~lnatlons of any lntegral multiple of $S,~UO at the request of the registered 10 i 3 k owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered a~vner upon surrender thereof for cancellation. If any Band or portion thereaf~other than the initial Bandy is assigned and transferred or converted, each Band issued in exchange therefor shall have the sane principal maturity date and bear interest at the same rate as the Baud far which it is being exchanged. Each substitute Band shall bear a letter andlar number to distinguish it from each other Band. The Paying AgentlRegistrarsholl convert and exchange or replace Bands as provided herein, and each filly registered bond delivered in conversion afand exchange far ar replacement ofany Band ar pardon thereofas permitted ar required by any provision of this Ordinance shall constitute one of the Bands far all purposes of this ordinance, and nay again be converted and exchanged ar replaced. It is specifically provided that any Band authenticated in conversion of and exchange far ar replacement of another Bond on ar prior to the first scheduled Record Date for the initial Band shall bear interest from the d#~ of the Initial Bond, but each substitute Band sv authenticated after such first scheduled Record Date shall bear interest from the interest payment date next preceding the date on which such substitute Bond was sa authenticated, unless such Band is authenticated after any Record Date but an or befare the next following interest payment date, in which case it shall bear interest from such next fallowing interest payment date; provided, however, that if at the tune of delivery of any substitute Bond the interest on the Bond far which it is being exchanged is due but has not been paid, then such Bond shall bear interest frarn the date to which such interest has been paid in full, THE INITIAI, BAND issued and delivered pursuant to this Drdlaance is not required to be, and shall not be, authenticated by the Paying AgentlRegistrar, but an each substitute Band issued in conversion ofand exchange far arrepia~ement afany Bond orBands issued underthis Ordinance there shall be printed a bond, . in the farm substantially a follows: "PAY~N AENT~RE~ISTRAR' AIJT`NTI~ATI~N CERTICATE It is hereby certified that this Band has been issued under the provisions of the Bond ordinance described in this Bond; and that this Band has been issued in conversion of and exchange for ar replacement of a band, bands, ar a portion of a band or bands of an i slue which originally was approved by the Attorney general o the Mate of Texas and registered by the comptroller of Public Accounts of the State of Texas. THE BANK ~P NEw Y~RI~ ELf,~N TR~JST pMFANY, NATIONAL ASSOCIATION, DALLAS, TEXAS, Paying AgentlRegistrar . Dated By Authari~ed Representative" An authorized representative afthe Paying AgentlRegistrar shall, befare the delivery afany such Band} date and manually sign the above Band, and nn such Band shall be deemed to be issued or outstanding unless such Bond is sa executed. The Paying AgentlRegis~rar promptly shall cancel all Bands surrendered far conversion and exchange ar replacement. Na additional ordinances, orders, or resalifions need be passed or adopted by the governing body ofthe Issuer or any other body ar person so as to accomplish the foregoing conversion and exchange yr replacement of any Band ar pardon thereof, and the Paying AgentlRegistrar shall provide for the printing, execuhan, and delivery of the substitute Bands the manner prescribed herein, and said Bonds shall be oftype composition printed an paper with lithographed ar steel engraved borders afcusta~nary weight and strength. Pursuant to Chapter 1 ~a 1, Texas C~avernment Code, the duty of conversion and exchange or replacement of Bands as aforesaid is hereby imposed upar~ the Paying Aent~Registrar, and, upon the execution of the above Paying AgentlRegistrax's Authentication certificate, the converted and 11 LM I exchanged ar replaced Bond shall be valid, incontestable, and enforceable in the sane manner and with the same effect as the Initial Band which originally was issued pursuant to this Ordinance, a roved b the pp Y Attorney General, and registered by the Cornptraller of public Accounts, The Issuer shall pay the Paying AgentlRegistrar'"sstondard or customary fees and charges far transferring, converting, and exchanging any Band or any potion thereof, but the one requesting any such transfer, conversion, and exchange shall pay any taxes or gavern~nental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange, The Paying AgentlRegistrar shall not be required to make any such conversion and exchange or replacement of Bands ar any pardon thereof ~i~ during the period commencing with the close of business an any Record Date and ending with the opening of business on the next fQllawing principal ar interest payment date, or, ~ii~ with respect to any Bond ar portion thereof called for redemption prior to maturity, within 4~ days prior to its redemption date. fie} In general. All Bonds issued in conversion and exchange ar replacement afany other Band or portion thereof, ~i} shall be issued in fully registered form, without interest coupons, with the principal of and interest on such Bands to be payable only to the registered owners thereof, ~ii~ may or shall be redeemed prior to their scheduled maturities, ~iti~ may be transferred and assigned, (ivy may be converted and ex- changed for other Bonds, ~v} shall have the characteristics, Zvi} shall be signed and sealed, and vii} the principal of and interest an the Bands shall be payable, alI as provided, and in the manner required ar indicated, in the FORM OF S~TBSTITUTE BOND set forth in this Ordinance. ~ Pa went of Fees and Char es. The Issuer hereby covenants with the registered owners of the Bands that it will ~i}pay the standard ar customary fees and charges ofthe Paying AentlRegistrarfor its services with respect to the payment ofthe principal of and interest on the Bands, when due, and iii}pay the fees and charges afthe Paying AgentlRegistrarfor services with respect to the transfer of registration of Bonds, and with respect to the conversion and exchange afBonds safely to the extent above provided in this Ordinance. ~g~ Substitute Pa in A entlRe istrar, The Issuer covenants with the registered owners of the Bands that at all times while the Bonds are outstanding the Issuer will provide a competent and legally qualified bank, trust company, financial institution, or other agency to act as and perform the services of Paying AgentlRegistrar for the Bonds under this Ordinance, and that the Paying AgentlRegistrar will be one entity. The Issuer reserves the right to, and may, at i#s option, change the Paying Agentl~egistrax upon not Iess than 120 days written. notice to the Paling AgentlReg~istrar, to be effective not later than G~ days prier to the next principal ar interest payment date aver such notice, In the event that the entity at any tune acting as Paying AgentlRegistrar far its successor by merger, acquisition, or other method} should resign or otherwise cease to act as such, the Issuer covenants that it will promptly appoint a competent and legally qualified bank, trust company, financial institution, or other agency to act as Paying AgentlRegistrar under this Ordinance. Upon any change the Paying AgentlRegistrar, the previous Paying AgentlRegistrar shall promptly transfer and deliver the Registration Baaks far a copy thereof}, along with all other pertinent books and records relating to the Bonds, to the new Paying AgentlRegistxar designated and appointed by the Issuer. Upon any change in ,the Paying AgentlRegistrar, the Issuer pro~aptly will cause a written notice thereof to be sent by the new Paying AgentlRegistrar to each registered owner ofthe Bonds, by United States mail.,first- class postage prepaid, which notice also shall give the address of the new Paying AgentlRegistrar, By accepting the posi~on and perfartning as such, each Paying AgentlRegistrar shall be deemed to have agreed to the provisions afthis Ordinance, and a certified copy afthis Ordinance shall be delivered tv each Paying AgentlRegistrar. Section 7. FORM OF ~UBSTITUTB BONDS. The form of alt Bands issued in conversion and exchange or replacement afany other Bond ar portion thereof, including the forte afPaying AgentlRegistrar's 12 i Band to be printed an each afsuch Bands, and the Form ofAssignent to be printed an each nfthe Bands, shall bes respectively, substantially as fellows, with such appropriate variations, omissions, or insertions axe permitted or required by this Ordinance, and with the Bands to be modified pursuant to, and completed with information set Earth in, the Pricing certificate. FORM DF SDBSTITI]TE BOND ~BaokREntry Dnly Legend, if apprapriate~ N~. ~ U1~ITED STATES DF AIVIERI~A PRT~IPAL AMDIJNT STATE OF TEAS ~ DUNT'~ DF D1~NTDN CITY DF DENTDN GENERAL OBLIATIDN REFC~NDIN BOND SERIES 200 INTEREST RATE MATURITY DATE DATED DATE UIP ND. ~/a DN TIC MATURrTY DATE specified abave the CITY DF DENTON, in Denton bounty, Texas the "Issuer"~, being a political subdivision afthe State of Texas, hereby promises to pay to or to the registered assignee hereof neither being hereinafter called the 'registered awner'~}the principal amount of and to pay interest thereon, calculated on the basis of a 3b0-day year composed oftwelve ~-day months, from , _ , to the maturity date specified abave, or the date ofredemptian prior to maturity, at the interest rate per annum specified abave; with interest being first due and payable on _ , and semtannualiy on each and ~ thereafter, except that ifthe date ofauther~ti- cation afthis Band is later than the ~ Record Date ~hereinaner defamed}, such principal amount shall bear interest from the interest payment date next preceding the date of authenction, ut~ess such date of authentication is aver any Record Date ~hereiner defined but an ar before the next following interest payment date, in which case such principal amount shall bear interest from such next fallowing interest payment date. THE PRINCIPAL OF ADD INTEREST DN this Band are payable in lawful money of the IJt~ited Stags of America, without exchange or collection charges. The principal of this Band shall be paid to the registered owner hereof upon presentation and surrender of this Band at matte. or u on the date fire f r . P do its redemption prior to maturity, at the prtnc~pal corporate trust oftce of T BAND DF 1~Ew YDRI~ MELLDN TR[TST ~DIUiPANY, NATIONAL ASSO~YATION, DALLAS, TEAS, which is the "Paying AgentlRegistra~" far this Bond, The payment of interest on this Band shall be made by the Paying AgentlReisar to the registered owner hereof on each interest payment date by check, dated as of such interest payment date, drawn by the Paying AgentlRegistrar on, and payable solely from,, funds ~fthe Issuer required by the ordinance authorizing the issuance ofthe Bands the "Band Ordinance"} to be on deposit with the Paying AgentlRegistrar for such purpose as hereinafter provided; and such check shall be sent by the Paying AgentlRegistrar by United States mail, first-class postage prepaid, on each such interest payment date, to the registered owner hereof, at the address of the registered owner, as it appeared at the close of business l~ I k an the ~ day ofthe month next preceding each such date the "Record Date"'} an the Registraatian Boaks kept by the Paying AgentlRegistrar, as hereina~er described. However, the payment ofsuch interest maybe made by any other method acceptable to the Paying Agent~Registrar and requested by, and at the risk and expense af, the registered owner hereof. Any accrued interest due upon the redemption of this Bond prior to maturity as provided herein shall be paid to the registered awner at the principal corporate gust af~ce of the Paying AgentlRegistrar upon presentation and surrender of this Bond for redemption and payment at the principal corporate trust office ol`the Paying .Agent~Registrar, The Issuer covenants with the registered owner of this Bond that an or before each principal payment date, interest payment date, and accrued interest payment date for this Bond it mill make available to the Paying Agent! Registrar, from the '"Interest and Sinking Fund" created by the Band Ordinance, the amounts required to provide far the payment, in immediately available funds, of all principal of and interest an the Bonds, when due. IN TIC ENT of a nonpayment of interest on a scheduled payment date, and for thirty ~3~}days therea,er, a new record date far such interest payment ~a'~~pecial Retard I]ate"~ will be established by the Paying A.gentlRegistrar, if and when funds for the payment of such interest have been received from the Issuer. Notice of the special Record Date and afthe scheduled payment date a~'the past due interest ~"special Payment Date"', which shall be fifteen ~1~} days aver the Special Record Dated shad be sent at least eve business days prior to the Special Record Date by United Mates n~ait, frst class postage prepaid, to the address of each Holder of a Bond appearing an the registration books of the Paying AentlRegistrax at the close of business on the 15th business day next preceding the date of mailing of such native, IF THE DA~`E for the payment of the principal of or interest on this Band shall be a Saturday, Sunday, a legal holiday, ar a day an which banking institutions in the pity where the Paying AgentlRegistrar is located are authari~ed by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on v~hich banking institutions are authari~ed to claw; and payment an such date shall have the same force and effect as if made on the original date payment was due, TICS BOND is one of an issue ol~ Bands initially dated _ , authorized in accordance with the ~anstitution and laws of the State of Texas in the principal amount of ,for the public purposes afrefundin certain outstanding obligations of the Issuer, and to pay the costs incurred in connection with the issuance of the Bonds. ON _ _ , ar an any date whatsoever thereat~er, the Bonds of this Series may be redeemed prior to their scheduled maturities, at the option afthe Issuer, with funds derived from an available y and lawful source, as a whole, ar in part, and, if in park, the particular Bonds, or portions thereo f to be redeemed shall be selected and designated by the Issuer ~pro~ided that a porti.~n of a Bond may be redeemed only in an integral multiple of $5,~0~}, at the redemption price of the par or principal amount thereof, lus p accrued interest to the date fixed far redemption, THE BONDS ofthis Series scheduled to mature on , ~ and _ are subject to mandatary redemption prior to their scheduled maturities, and shall be redeemed by the Issuer, in part., prior to their scheduled maturities, with money from the 1Vlandatory Redemption Account of the Interest and Sinking Fund, with the particular Bonds or portion thereafta be redeemed to be selected by the Paying AgentlRegistrar, by lot or other customary method provided that a pardon of a Bond may be redeemed only in an integral multiple of $S,a00~, at a redemption price equal to the par ar principal amount thereafand accrued interestta the date afredernptian, an the dates, and in the principal amounts, respectively, as show in the following schedule: 14 I t IVIatLlr~ Manila#ary Prll~C~pal Redem tiara Dates A~naunts _ ~ ~maturity~ Maturi Mandatory Principal Redem tiara Dates Amounts ~~maturity~ The principal amount ofthe Bonds required to be redeemed an the Mandatory Redemption Dates pursuant to the foregoing shall be reduced, at the op~,on ofthe Yssuer by the principal amount ofany Bands out ofthe maturity scheduled far ~ and , ~ which, at least 45 days prior to the aforesaid appropriate redemption date shall have been acquired by the issuer at a price not exceedin the rinci al P p amount of such Bonds plus accrued interest to the date of purchase thereof, and delivered to the Paying AgentlRegistrar for cancellation, ar ~2} as shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credited to the mandatory sml~ing fund redemption. During any period in which ownership of the bonds is determined by a book entry at a securities depositary for the Bands, if fewer than ail ofthe Bonds afthe same maturity and bearing such interest rate are to be redeemed,the Bands, or portions thereof, to be redeemed shall be selected in accordance with the arrangements between the issuer and the securities depository, A'~ LEAST 34 days prior to the date fixed for any redemption afBonds ar pardons thereafprior to maturity a written notice of such redemption shad be seat by the Paying AgentlRegistrar by [united Mates mail, first-class postage prepaid, to the registered owner of each Band to be redeemed at its address as tt appeared on the 45th day prior to such redemption date; provided, however, that a facture to send, n~aft, ar receive such notice, or any defect therein or in the sending or mailing thereof, shall not affect the validity or eec~veness ofthe praceedmgs far the redemption ofany Band. By the date fixed for any such redemption due provision shall be made with the Paying AgentlRegitrar far the payment afthe required redemption price far the Bands or portions thereofwhich axe to be so redeemed, plus accrued interest thereon to the date fixed far redemption, if such written notice afreden~ption is given and ifdue provision far such payment is made, all as provided above, the Bonds or portions thereofwhich are to be so redeemed thereby automatically shall , be treated as redeemed prior to their scheduled maturities, and they shall not bear interest aver the date faced far redemption, and they shall not be regarded as being outstanding e~ccept far the right of the registered _ owner to receive the redem~ptian price plus accrued interest Pram the Paying AentfRe ' trar out ofthe funds provided for such payment. if a porfiion of any Bond shall be redeemed a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in any denomination or denominations ~ any integral. multiple af$~,Oaa; at the written request ofthe registered owner, and in aggregate principal a~naur~t equal to the unredeemed pavan thereof will be issued to the registered owner upon the surrender thereof far cancellation, at the expense of the Issuer, all as provided in the Bond Ordinance. 15 i x TFII~ BAND ~R ANY P~RTI~N P~RTI~N REEF IN ANY tNT~RAL M[JLTIPLE OF $5,000 may be assigned and shah be transferred only in the Registration Books of the Issuer ke t b the P y . Paying AgentlRegistrar acting in the capacity of regist~rrar for the Bands, upon the terms and conditions set Earth ~ the Bond ordinance. Aniang ather requirements for such assignment ar~d transfer, this Band must be presented and urrenderedto the Paying Agent~Registrar, tagether with proper instruments ofassigrunent, in farm and with guarantee ofignatures satisfactory to the Paying AgentlRegistrar,~viden cing assignment of this Band ar any portion ar pardons hereafin any integral multiple af5,D00 to the assignee or assignees in whose name ar names this Bond or any such portion or pardons hereaf is or are to be transferred and registered. The form of Assignment printed ar endorsed on this Band shall be executed by the registered owner or its duly authorized attorney ar representative, to evidence the assignment hereaf. Anew Bond ar Bands payable to such assignee or assignees which then will be the new registered owner ar owners ofsuch new Bond or Bonds}, or to the previous registered owner in the case afthe assignment and transfer afonly a pardon of this Bond, may be delivered by the Paying AgentlRegistrar in conversion of and exchange for this Band, all in the farm and manner as provided in the next paragraph hereof for the conversion and exchange of other Bonds. The Issuer shall pay the Paying Agent~Registrar's standard or customary fees and charges far making such transfer, but the one requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto The Paying AgentlRegistrar shall not be required to make transfers afregitration of this Bond or any pardon hereaf~i} during the period comenc' with the claw ofbusiness on an Record D y ate ar~d ending with the opening afbusiness on the next following principal or interest payment date, or, iii} with respect to any Bond or any portion thereof called far redemption prior to maturity, within 45 days prior to its redemption date. The registered owner afthis Band shall be deemed and treated by the Issuer and the Paying AgentlRegistrar as the absolute owner hereaf far alI purposes, including payment and discharge of liability upon this Bond to the extent of such payment, and the Issuer and the Paying Agent~Registrar shall not be affected by any native to the cantrary~ AIL BAND ~F TFII ~ERIE~ are issuable safely as fully registered bands, without interest coupons, in the denaminatian of any integral multiple of ~S,Oaa, As provided in the Band ordinance, this Bond, or any unredeemed pardon hereaf, may, at the request of the registered owner ar the assignee ar assignees hereaf, be converted rota and exchanged for a like aggregate principal amount of fully registered bands, without interest coupons, payable to the appropriate registered owner, assignee, or assignees, as the case maybe, having the same maturity date, and bearing interest at the same rate, in an denomination or denominations in an rote multi le f : ' ~ y gral p o $5,000 as requested m wilting by the appropriate registered owner, assignee, ar assignees, as the case may be, upon surrender of this Bond to the Paying AgentJRegistrar for cancellation, all in accordance with the farm and procedures set faith in the Bond ordinance. The Issuer shall pay the Paying AgentlRegistrar's standard or customary fees and charges far transferring, converting, and exchanging any Bond or any portion thereof, but the one requesting such transfer, canversian, and exchan e g shall pay any taxes ar governmental charges requixed to be paid with respect thereto as a candi~an precedent to the exercise of such privilege of conversion and exchange. The Paying AgentlRegis~ar shall not be . required to make any such conversion and exchange ~i~ during the period commencing with the claw of business an any Record Date and endir with the opening of business on the next falla~ving principal ar interest payment date, or, ~ii~ with respect to any Band ar portion thereof called for redemp~on prior to maturity, within 45 days prior to its redemption date. IN THE EVENT any Paying AgentlRegistrar far the Bonds is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Bond ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and will promptly cause written native thereof to be mailed to the registered owners of the Bands, 1~ i IT IS I~EEREBY Ce~'t1f ied, recited, end cv~enanted that this Bond hay been du1 and validly voted, authorised, issued, sa1d, and delivered; that all acts, conditions, and things required or proper to be pe~`ormed, exist, and be done precedent to ox in the authorisation, issuance, and delivery of this Band have been performed, existed, and been done in a.ccvrdance with law; that this Bond is general vbllgation afthe Issuer, issued on the full faith and credit thereof; and that annual ad valorem taxes sufficient tv provide for the payment vfthe interest vn and principal ofthis Bond, as such interest comes due ar~d such principal matures, have been levied and ordered to be levied against ail taxable property in the Issuer, and have been pledged irrevocably for such payment, within the limit prescribed by law, BY BECOMING the registered avvner afthis Bond, the registered owner thereby acl~nowledges all of the terms and provisions of the Bvnd Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Bond Ordinance is duly recorded anal available for inspection in the official minutes and records of the governing body of the Issuer, and agrees that the terms and provisions of this Bvnd and the Band Ordinance constitute a contract between each registered owner hereof and the Issuer. IN FITNESS HEREOF, the issuer has caused this Band to be signed with the manual yr facsimile signature of the Mayor of the Issuer and countersigned and attested with the manual or f acsimile signature of the City Secretary of the Issuer, and has caused the official seal of the Issuer to be duly impressed, yr placed in facsimile, on this Band, ATTEST: CITY OF DENTON, TEAS f !'y y t Jennifer falters bark Burroughs City Secretary, City of Denton, Texas Mayor, City of Denton, Texas {CITY SEAL} FORM OF PAYINCr AC~ENTfRECI~TRAR' AUTI~NTICATION CERTIFICATE PAYING AGENTIR,ECrISTRAR'S AUTHENTICATION CERTIFICATE ~To be executed if this Bvnd is not acca~npanied by an executed Registraativn Certificate of the Comptroller of Public Accounts of the State of Texas} It is hereby certified that this Bond has been issued under the provisions of the Band Ordirnce described in this Band; and that this Bond has been issued in conversion of and exchange for yr replacement of a bond, bonds, yr a portion of a Bvnd or bands of n issue which originally was approved by the Attorney general of the State of Texas and registered by the Gamptroller of Public Accounts of the State of Texas TIE BANK OF NE'YORI~ 11~LLON TRUST OIVIPANY, NATIONAL ASSOCIATION, DALLAS, TEAS, Paying AgentlRegistrar Dated By l7 i W Autharized Representative ~INSBRT BGNI~ I~VSURAN~E LEGBIrTD, IF ANY} FDIC GF AS~II~NT; AS SIGNIIr~NT FGR VALC~E RECEIVED, the undersigned registered owner of this Band, ar duly authorized representati~re or at~arney thereof, hereby assigns this Band to l ! Assignee's Social sprint or typewrite Assignee's name and Security ar Taxpayer address, including zip cede} . Identification ~urnber~ and hereby irrevocably constitutes and appoints attorney to transfer the registration ofthis Band on the Paying AentlRegis~xar~s Registration Books with ill paver of substitution in the premises. Dated; Signature Guaranteed; NGTICE; Signatures} must be guaranteed by Registered owner an eligible guarantor institution participating in ~ NGTICE; This signature must correspond with a securities transfer association recognized the name of the Registered Gwner appearing signature guarantee program. an the face of this ~erdficate in every particular without aiteratian ar enlargement or any change whatsoever. Section 8. TAB LEVY. A special Interest and Sinking Fund the "Interest and Sinking Fund" is hereby created solely for the benefit ofthe Bonds, and the Interest and Sinking Fund shall be established and maintained by the Issuer at an oi`icial depository bank afthe Issuer. A IVlandatary Redemption Account is hereby established within the Interest and Sinking Fund if sa required pursuant to the Pricing Certificate, The Interest and Sinking Fund shall be kept separate and apart from ail other fends and accounts afthe Issuer, and shall be used only for paying the interest an and principal of the Bands. AlI ad valorem taxes levied and collected far and an account afthe Bonds, together with any premium and accrued interest received upon sale ofthe Bonds, shall be deposited, as collected, to the credit ofthe Interest and Sinking Fund. During each year 18 i x while any afthe Bands ar interest thereon are outstanding and unpaid, the governing body afthe Issuer shall compute and ascertain rate and amount of ad valorem tax which will be sufficient to raise and produce the money required to pay the interest on the Bonds as loch interest becomes due, and to pravide and maintain a sinning land adequate to pay the principal of its Bonds as such principal matures ar is scheduled for redemption abut never less than 2°Io of the original principal amount of the Bends as a sinking end each year},including such amounts as are necessary to satisfy a mandatary sinking fund schedule for the Bonds as may be set forth in the Pricing ertifcate, which amounts shall be deposited into the IUlandatary redemption Account, with such mandatory redemption constituting payment at maturity. laid tax shall be based an the Latest approved tax rolls afthe Issuer, with full allowance being made far tax delinquencies and the cast of tax collection. Said rate and amount of ad valorem tax is hereby levied, and is hereby ordered to be levied, against all taxable property in the Issuer far each year while any afthe Bands ar interest thereon are outstanding and unpaid; and said ~ shall be assessed and collected each such year anal depasited to the credit ofthe aforesaid rnterest and Sinking fund. Said ad valorem taxes sufficient to pravide farthe payment of the interest on and principal of the Bonds as such interest camel due and such principal matures or is scheduled far redemption, are hereby pledged far such payment, within the limit prescribed by lavsr. Section 9. DBFEAANGE BONDS. ~a}Any Bond and the interest thereon shall be deemed to be paid, retired, and no longer outstanding ~a "Defeased Band"~ within the meaning ofthis Ordinance, except to the extent provided in subsection ~d~ ofthis Section when payment afthe principal ofsuch Bond, plus interest thereon to the due date whether such due date be by reason of maturity, upon redemption, or otherwise} either ~i) shall have been made or caused to be made in accordance with the terms thereof ~inc~ lading the giving afany requixed notice ofredemption}, ar iii} shall have been rovided for an or before such P due date by ilrevacably depositing with ar making available to the Paying Agenegistrar for such payment ~ 1 } lawful money of the United States of America suffcient to make such payment ar Government Obligations which mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money to provide far such payment, and when proper arrangements have been made by the Issuer with the Paying AgentlRegistrar for the payment of its services until all Defeased Bonds shall have become due and payable, At such time as a Bond shall be deemed to be a Defeased Bond hereunder, as aforesaid, such Band and the interest thereon shall no longer be secured by, payable Frain, ar entitled to the benefits af, the ad valorem taxes herein levied anal pledged as provided in this Ordinance, and such principal and interest shall be payable solely from such money or Governn:ient Obligations, ~ Any moneys so deposited with the Pa in A entlRe istrar ma at the written direcri n yg g g y oaf the Issuer also be invested in Government Obligations, maturing in the amounts and times as hereinbefore set forth, anal all income from such Oavernment Obligations received by the Paying AgentlRegistrar which is oat required for the payment ofthe Bands and interest thereon, with respect to which such money has been sa depasited, shall be turned aver to the Issuer, ar depasited as dixected in writing by the Issuer. ~c~ The term "Government Obligations" as used in this Section shall mean ~i} direct, noncallable abligatians ofthe United States ofAmerica, including obligations that are uncanditianally guaranteed by the United States of America., iii} nancallable obligations of an agency or ixistrurnentali of the United Mates . ~ of America, including abligat~ons that are uncand~tionally guaranteed or insured by the agency or intstrumentalityandthat, onthedate ofthepurchase thereafarerated as tainvestment quality by a nationally recognized investment rating firm oat less than AAA or its equivalent, and viii} noncallable abligatians~ of a state ar an agency ar a county, municiplaity , ar other political subdivision or a state that have been refunded and that, on the date the governing body of the District adopts ar approves the proceedings authorizing the financial arrangements are rated as to investment quality by a nationally recognized investment rating firm. not less than AAA or its equivalent. 1~ i (d) Until all Defeased Bonds shall have become due and payable, the Paying Agent/Registrar shall perform the services of Paying Agent/Registrar for such Defeased Bonds the same as if they had not been defeased, and the Issuer shall make proper arrangements to provide and pay for such services as required by this Ordinance. Section 10. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a) le placement Bonds. In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new bond of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in the manner hereinafter provided. (b) A lication for Replacement Bonds. Application for replacement of damaged, mutilated, lost, stolen, or destroyed Bonds shall be made by the registered owner thereof to the Paying Agent/Registrar. In every case of loss, theft, or destruction of a Bond, the registered owner applying for a replacement bond shall furnish to the Issuer and to the Paying Agent/Registrar such security or indemnity as may be required by them to save each of them harmless from any loss or damage with respect thereto. Also, in every case of loss, theft, or destruction of a Bond, the registered owner shall furnish to the Issuer and the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of such Bond, as the case may be. In every case of damage or mutilation of a Bond, the registered owner shall surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated. (c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event of any such Bond shall have matured, and no default has occurred which is then continuing in the payment ofthe principal of, redemption premium, if any, or interest on the Bond, the Issuer may authorize the payment ofthe same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity is furnished as above provided in this Section. (d) C e for Issuing Re lacement Bonds. Prior to the issuance of any replacement bond, the Paying Agent/Registrar shall charge the registered owner of such Bond with all legal, printing, and other expenses in connection therewith. Every replacement bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the Issuer whether or not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and proportionately with any and all other Bonds duly issued under this Ordinance. (e) Authority for Issuing Replacement Bonds. In accordance with Chapter 1201, Texas Government Code, this Section of this Ordinance shall constitute authority for the issuance of any such replacement bond without necessity of further action by the governing body of the Issuer or any other body or person, and the duty of the replacement of such bonds is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Bonds in the form and manner and with the effect, as provided in Section 6(d) of this Ordinance for Bonds issued in conversion and exchange for other Bonds. Section 11. COVENANTS REGARDING TAX-EXEMPTION. The Issuer covenants to refrain from taking any action which would adversely affect, or to take such action to assure, the treatment of the Bonds as obligations described in section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the issuer covenants as follows: 20 1 ~a} to take any action to assure that no mare than 10 percent of the proceeds of the Bonds ar the praj~cts financed therewith {less arnaunts deposited to a reserve fund, if any} are used far any "private business use", as defined ~ section 141 ufthe Code, ar ifmore than 10 percent of the proceeds or the projects financed therewith are so aced, such an~.oants, whether ar nut received by the Issuer, with respect to such private business use, du not, under the terms of this ordinance ur any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 1 ~ percent of the debt service on the Bonds, in contravention of section 141 ~b}~~} of the Code; fib} to #ake any actian to assure that in the event that the "private business use" described in subsection ~a} hereof exceeds five percent of the proceeds of the Bonds or the projects financed therewith bless amounts deposited into a xeserve fund, if any} then the am.aunt in excess of hve percent is used fora "private business use" which is "related" and not "disproportionate",wlthinthe meaning of section 141(b}~3 } of the Cade, to the governmental use; {c} to take any action to assure that no amount which is greater than the lesser of 5,~uo,0~~, ar five percent ofthe proceeds ofthe Bonds bless amounts deposited iota a reserve fund if any} is, directly ar indirectly, used to finance loans to ersans other than state ar local p f governmental units, in cun~avention of section 141 ~c} of the Code; ~d} to refrain from taking any actian which would otherwise result in the Bands being treated as "private activity bonds" within the meaning ofsectiun 1~1{b} ofthe Code; fie} to refrain from taking any ac~on that would result in the Bonds being "federally guaranteed" within the meaning of section 149~b} afthe Cade; ~f} to refrain from using any portion ofthe proceeds ofthe Bonds, directly or indirectly, to acquire arto replace funds which were used, directly ar indirectly, to acquire invesent property has defined in section 14S~b}(~} of the Code} which produces a materially higher yield over the terns of the Bands f ether than investment property acquiredwith ~ 1} proceeds ofthe Bonds invested for a reasonable temporary period of3 years or less, ur in the case of a refunding bands, for a period of0 days ar less until such proceeds are needed for the purpose for which the Bonds are issued, ~2~ amounts invested in a bona fide debt service fund, within the meaning of section 1,148-1 {b} of the Treasury regulations, and arnaunts deposited ~ any reasonably required reserve ar replacement fund to the extent such amounts da not .exceed 10 percent of the stated principal amount {or, the case of a discount, the issue price} of the proceeds of the Bonds; {g} to otherwise restrict the use of the proceeds of the Bonds or amounts treated a proceeds of the Bonds, as may be necessary, sa that the Bonds da not otherwise contravene the requixen~ents of section 14S of the Code {relating to arbitrage), section 149~g} ofthe Code relating to hedge bonds}, and, to the extent applicable, section 149~d} of the bode relating to advance refundings}; and ~h} to pay to the ~Tnited Mates of America at least once during each five-year period beginning an the date of delivery ofthe Bonds} an atnaunt that is at least equal to 90 percent ofthe ~1 i "Excess Warnings"', within the meaning ofsection 14S~f} ofthe Code and to pay to the CJnited Mates of America, not inter that days after the Bonds have been paid in full,100 percent of the amount then required to be paid as a result ofExcess Flarnings under section 148~f~ of the Code, For purposes of the foregoing ~a} and ~b}, the Issuer understands that the terra "proceeds" includes "disposition proceeds" as defined inthe Treasury Regulations and, inthe case ofrefundin bands, transferred. proceeds cif any and proceeds of the refunded hands expended prior to the date of issuance of the Bands. It is the understanding of the Issuer that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.. Depart~.ent ofthe Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated which nxodify, or expand provisions ofthe Cade, as applicableta the Bonds, the Iuerwill not be requiredto comply with any covenant contained herein to the extent that such failure to comply, inthe opinion afnationally-recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest an the Bands under section 103 of the Cade, In the event that regulations ar rulings are hereafter promulgated which impale additional requirements which are applicable to the Bands, the Issuer agrees to comply with the additional requirements to the extent necessary and reasonably possible, m the ap~nron of nationally-recognized bond counsel, to preserve the exemption frarn federal incorne taxation of interest on the Bonds under section 103 ofthe Cade. In furtherance of such intention, the Issuer hereby authorizes and directs the 1VCayar afthe Issuer to execute any documents, certificates or reports required by the Code and to make such elections, on behalf of the Issuer, which may be permitted by the Cade as are consistent with the purpose far the issuance of the Bands. The Issuer covenants to comply with the covenants in this section after defeasance ofthe Bonds. In order to facilitate compliance with the abo~re covenant a "Rebate Fund" is hereby established by the Issuer far the sole benefit of the United Mates of America, and such fund shall not be subject to the claim afany ether person, including without lirnitation, the bondholders, The Rebate Fund is established for the additional purpose of compliance with section 148 afthe Code. Section 12, DISP~SITI~N CF PROTECT. The Issuer ca~enant that the property constituting the projects ftnanced with the Refunded Obligations will not be said or otherwise disposed in transaction resulting in the receipt by the Issuer of cash or other compensation, unless the Issuer obtains an opinion of nationally-recognized bond counsel that such sale or other disposition will not adversely ai~ect the tax-exempt status of the Bands. Far purposes hereof, the Issuer shall not be obligated to comply with this covenant if . . it obtains a legal opinion that such failure to comply will net adversely aft`ect the excludability far federal income tax purposes from gross income of the interest. Section ~ 3. CUSTODY, APPROVAL, AND REC~ISTRATICN OF BANDS; BAND COUNSEL'S OPINE ON, CUIP NUMBERS, PREAl1~IBLE AND INSURANCE, The Mayor of the Issuer is hereby authorised to have control of the Inirial Band issued hereunder and all necessary retards and proceedings pertaining to the Initial Bend pending its delivery and its investigation, examination, and approval by the Attorney General ofthe Mate afTexas,and its registration by the Camp~aller afPublic Accounts ofthe Mate of Texas. Upon registration ofthe Initial Bond. said Comptroller ofFublic Accounts far a deputy designated in writing to act far said Comptroller} shall manually sign the Cam troller's Re istration Certificate an the p g Initial Bond, and the seal afraid Comptroller shall be impressed, or placed in facsimile, on the initial Band. The approving legal opinion afthe Issuer's Band Counsel and the assigned CUSIP numbers may, at the option of the Issuer, be printed an the Initial Band ar on any Bonds issued and delivered in conversion of and . exchange or replacement of any Bond, but neither shall have any legal effect, and shall be solely far the convenience and information of the registered owners of the Bonds. The preamble to this Ordinance is hereby adapted and made a part hereof far all purposes. If insurahce is obtained an any of the Bonds, the 2~ Initial Band and all other Bands shall bear an appropriate legend concerning insurance as pra~vided b the insurer. Sec~tian l4, ALB INITIAL BOND; BOND INSURANCE. {a} The Bands shall be said and delivered subject to the provisions of Section 1 and Section ~ and pursuant to the terns and provisions of bond purchase agreement {the 'Purchase Agreement"}, the terms and provision of which are to be determined by the Pricing Officer in accordance with section 3, and in which the purchaser ar purchasers {the "Underwriters"} afthe Bands shall be designated. The Pricing Officer is hereby authorized to execute and deliver the Purchase Agreement far an on behalfofthe Issuer. The Bands shall initially be registered in the Warne of the Underwriters as set forth in the Pricing Certificate, {b} The Pricing Officer is authorized, in connection with effecting the sale of the Bands, to obtain from a municipal bond insurance can~pany sa designated in the Purchase Agreement the "Insurer" a ~ n~umc~pal hand insurance pal~cy {the "Insurance Policy"} in support of the Bonds, To that end, should the Pricing Ocer exercise such authority and commit the Issuer to obtain a municipal bond insurance palic , y for sa long as the Insurance Policy is in effect, the requsrernents afthe Insurer relating to the issuance afthe Insurance Policy as set forth in the Pricing Certificate are incorporated by reference into this Ordinance and made a part hereof for all purposes, notwithstanding any other provision of this Ordinance to the can The Pricing Officer shall have the authority to execute any documents to effect the issuance afthe Insurance Policy by the Insurer. Section 15. OFFICIAL TATENIENTi The 1Vlayor and the City secretary are authorized and directed to execute and deliver for and on behalf ofthe Issuer copies ofa Preliminary Ofl~cial statement and Official Statement, prepared in connection with the offering of the Bonds by the Underwriters, in final form, as may be required by the Underwriters, and such final Official Statement ~ the form and content as approved by the Pricing Qicer or as manually executed by said officials shall be deemed to be approved by the City Council of the Issuer and constitute the Official Statement authorized far distribution and use by the Underwriters. Section l REFUI~DINC~ OF REFUNDEI] OBI~ICrATIONS. {a,} Subject to execution and delivery of the Purchase Agreement with the Underwriters, the Issuer hereby directs that the Refunded Obligations be called far redemption on the dates and at such prices as set forth in the Pricing Certificate, ~ The Pric' Offiicer is hereby authorized and. directed to issue or cause to be issued ~Vot~ce ofRedemption nfthe Refunded Obligations in substantially the farm set Earth in ~~iblt A attached hereto, ca~npleted with infarmatian from the Pricing Certsficate, to the paying agents for the Refunded Obligations. {b~ addition, the paying agents for the Refunded Obligations axe hereby directed to provide the appropriate notices afredempdon and defeasance as specified by the orders or ordinances authorizing the issuance of Refunded Obligations and are hereby directed to make appropriate arrangements so that the Refunded Obligations may be redeemed an their redemption dates. The Refunded Obligations shall be presented far, redemption at the paying agent therefor, and shall not bear interest aver the date fixed for redemption, ~c} Ifthe redemptionofthe Refunded Obligations results inthe part%aI refunding ofany maturity of the Refunded Obligations, the Pricing Officer shall dixect the payi~a agen#lregistrar far the Refunded Obligations to designate at random and by lot which ofthe Refunded Obligations will be payable from and secured solely from ad valorem taxes and pledged revenues, as the case maybe, pursuant to the ordinance ofthe Issuer authorizing the issuance of such Refunded Obligations {the "Refunded Obligation Ordinance"}. For purposes of such determination and designation, all Refunded Obligations registered in denominations 23 t greater than $5,000 shall be considered to 6e registered in separate $5,000 denominations, The a in agentlregistrarshall noti b first-class mail all re istered ~ y ~ y g owners of aZl affected bonds of such maturities that: ~i~ portion of such bonds have been refunded and are secured until final maturi spiel with cash and ~ y Investments maintained by the Escrow Agent in the Escrow Fund, ~ii~ the princi al amount of all affected bands of such maturities re istered ' p g m the Warne of such registered owner that have been refunded and are payable solely from cash and investments in the Escrow Fund and the remalnin rinci al amount of all affected bonds of such maturities r P p , eg~stered to the name of such registered owner,lf any, have not been refunded and are payable and secured solely from ad valore. taxes and pledged revenues, the case n~a be, of the Issuer described in the Refunded Dbli atian Ordinanc ~ y . f g e, ~r~~}the registered owner is required to submit his or her Refunded Obligations to the paying agentlregistrar, for the purposes afre~re isterin such registered owner's bonds and assi new ~ ~ g g gang CUSIP numbers m order to distinguish the source of payment for the principal and interest on such bonds, and Div} payment ofprincipal of and interest an such bands a in same circumstances, be Bela ed until such bonds have ~ been re-registered and new CUIP numbers have been assigned as required by viii} abave, ~d} The source offends for payment afthe principal ofand interest onthe Refunded Obli ations an their respective maturi or reden~ flan dates steal g ty p l be from the funds deposited with the Escrow Agent pursuant to the Escrow Agreement approved in Section 17 of this ordinance. Section l7. APPROVAL DF ESCROAC~REEENT AND TRANSFER ~F FU'ND. The Pricin Officer or the 1Viayor and Ci Secre are further authori g tY ~ to enter into and execute on behalf of the Issuer with the escrow agent named herein, an escrow agreement, in the form and substance as shall be approved by the Pricing Officer, which escrow agreement will provide for the payment in full of the Refunded Obligations. In addition, the hrlayor ar the Pricing off icer is authorised to purchase such securities } to execute such subscriptions for the purchase of the Escrowed Securities has defined in the Escrow Agreement}, and to authorize such contributions for the escrow fund as provided in the Escrow A en~ent. Section 18, DTC REC~ISTRATI~N. The Bonds initially shall be issued and delivered in such manner that no physical distribution of the Bonds will be made to the public, and The Deposito Trust Company ~'~DTC" ,New Yor New Yorl~ initi ~ rY ~ ally will act as depository for the Bonds DTC has represented that it is a limited purpose trust company incorporated under the laws of the State afNew York, a. member of the Federal Reserve System, a "clearing corporation" within the rneanirig of the New York Uniform Commercial Code, and a "clearing agency„ registered under Sectrun 17A ~fthe federal Securities Exchange Act of l X34, as amended, and the Issuer accepts, but in na way verifies, such representations. The Initial Bond authorized by this Ordinance shall be delivered to and registered in the name ofthe Purchaser. l`Iowever, it is a condition of delivery and sate that the Purchaser, irnniediately of lei such delive ,shall cause the Paying A entlRe 'strar as rovided for in ~ g s p this Ordinance, to cancel said Initial Band and deliver in exchange therefor substitute Bend for each maturity of such Initial Band, with each such substitute Bond to be registered in the name of CEDE ~ CO,, the nominee of DTC, and It sha11 be the du of the Pa ' A entlRe istrar to ~ y g take such actian~ It is expected that DTC will bald the Bonds on behalf afthe Purchaser andlar The DTC Participants, as defined and described in the Official Statement referred to and a roved In Section l5 hereof~the "DTC Partici ants" .Salon as ~ PA p } . g each Band is registered in the name afCEDE CO., the Paying AgentlRegistrar shall treat and deal. with DTC in all respects the same as ifit were the actual and beneficial owner thereof. It is expected that DTC will maintain a book entry system which will identi beneficial ownership of the Bonds by DTC Participants in i~itegral amounts of $5,000, with transfers of ownership being effected an the records ofDTC and the DTC Participants pursuant to rules and re ations . established by them, and that the substitute Bands initially deposited with DTC shall be immobilized and not be further exchanged for substitute Bonds except as hereinafter provided. The Issuer is not res ansible or liable for any functions of DTC will not be res on ' p p Bible for paying any fees ar charges with respect to its ~4 sexvices; will not be responsible ar liable for maintaining, supervising, ar reviewin the records of DTI ar the DTI Pa~ici ants, or ratectin an intere ~ P ~ ~ y sts or ~.ghts of the beneficial owners of the Bonds. It shall be the duty ofthe Purchaser and the DTI Participants to make all arrangements with DTI to establish this book- entrysystem, the beneficial ownership of the Bonds, and the method Qfpayin the fees and charges afDTC. The issuer does not represent} nor does it in any way covenant that the initial book-en s stun established with DTC will be y ` . mar.nta~ned m the future. The Issuer reserves the right and option at any tune in the future, m its sole discre~an, to terminate the I~T~ ~~EDE ,}book-entry only registration requirement described above, and to permit the Bands to be registered in the name ofany owner. Ifthe issuer exercises its ri ht and apt~an to terminate such re u~xement it shall ive " g q ~ wx~tten notice of such termination to the Paying Agentegistt~ar and to DTI, and thereafter the Paying AgentlRegistrar shall, upon presentation and ra er request} register any Bond in an name as ro~ided far in ~ y p this Qrd~nance. Notwrthstandxng the ~ntt~al establishment afthe foregoing book-entry system with DTI, if for any reason any afthe ari mall delivered substitute Bands is dui filed with the Pa " g y y yang A.gentlRegistrar with proper request far transfer and substitu- tiar~ as provided far in this ordinance,substitute Bonds will be duly delivered as rovided ~ this ordinance and there will be na assurance r ~ o representation that any baok~entry system wall be maintained far such Bands. section l9. C~NTI~UINC~ DILQURE" ~a~ _Annual deports. ~i} The Issuer sha11 ravide annually to eachN~~I and an SID within six man P y the after the end of each fiscal year ending in or after X049, financial information and operating data with respect to the Issuer afthe general a included in the final ~ffcial tte~nen t author~~ed by ~ectian l5 afthis ordinance, being the information described in the Pricing ertiftcate, Any financial statements so to be provided sha11 be ~ 1 ~ prepared in accordance with the accounting principles described in the financial statements appended to the official statement, ar such other accounting principles as the Issuer niay be required to employ hrom lime to tune pursuant to state law or regulation, and audited, if the Issuer commissions an audit of such statements and the audit is cam feted within the period Burin which the must be rani " ~ F g y p Bed. Yf the audit of such financial statements is not complete wl#lun such per~ad, then the Issuer shall provide unaudited financial statements by the re aired time and will provide audited financial statements forth q e applicable fiscal year to each NRMSIR and any sID, when and ifthe audit report on such statements became available. iii} Ifthe Issuer cl~an~es its fiscal year, it will notify each NR1VfIR and any III afthe char a and afthe date afthe new g ~ + fiscal year end} prier to the next date by which the Issuer othei~vise would be required to provide finaicial information and operating data pursuant to this ectian. The financial information and operating data to be provided pursuant to this ectian may be set Earth in full inane or mare documents ar may be included by specific reference to any document including an a~icial statement or other oe dacunient, ifit is available from the MRB that theretofore has ~ ~ been provided to each NRMIR and any III) or fled with the sEC" fib} IVlaterial. Event l~otices. The Issuer shall notify any SID and each NRMII~, in a timel mariner afany ofthe follawin events with res ect to the Bon ~ y g p ds, if such event is material within the meaning of the federal securities laws 1. Pri~icipal and interest payruent delinquencies; Nan-payment related defaults; 3" Unscheduled draws an debt service reserves refleccting fYnaticial diff€culties; 4. Unscheduled draws an credit enhancements reflecting financial di.culties; 25 h Substitutian of credit or liquidity providers, or their failure to perform; 6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds; 7. Madifcations to rights of holders of the Bonds; S. Bond ca11s; 9. Defeaances; 10, Reiease, substitution, or sale ofproperty securing repayment ofthe Bonds; and 1 I . Rating charges. The Issuer shall notify any SID and each NRMSIR, in a timely manner, ofany failure b the Issuer to rovide financial information or o eratin data in ~ ~ y p , p g accordance with subsection {a~ ofthls Section by the time required by such subsection, {c} Limitations Disclaimers and Amendments, {i} The Issuer shall be obligated to observe and perform the covenants specified in this Section for so long as, but only far a long as, the Issuer remains an "obligated person" with respect to the Bonds within the meaning of the Rule, except that the Issuer in an event gill give the notice re aired b Subsection b hereof y ~ Y { } ofany Bond calls and defeasance that cause the Issuer to no longer be such "obligated person", {ii} The provisions of this Section are for the sole benefit of the registered owners and beneficial owners ofthe Bonds, and nothing i~ this Section., express or implied, shall give any benefit or any le al or equitable right, reined , or claim hereunder to an oth g y y er person. "The Issuer undertakes to provide only the financial information, operating data, financial statenxents, and notices which it has ex ressl eed to provide ursuant to this Section and does no p , y P t hereby undertake to provide any other ~nformatron that maybe relevant ar material to a complete presentation of the Issuer's financial results, condition, ar ros ects or hereby undertake to u date an information rovi p , p p y p ded in accordance with this Section or otherwise, except a,s expressly provided herein. The Issuer does nit make any representation or warranty canoe ~ such information or its usefulness to a decision to invest in or sell Bonds at any future date. {iii} UNDER NO CIRCUI~ISTANCES SHALL THE ISSUER, ITS OFFICERS, AGENTS AND EMPLOYEES, BE LIABLE TO TIDE REGISTERED OWNER OR BENEFICIAL O~4VNER OF ANY BOND OR ANY OTI~R PERSON, iN CONTRACT OR TORT, FOR DAMAGES RESULTING IN THOLE OR IN PART FRO~Vi ANY BREACI~ BY TIDE ISSUER, ~'I'I~R NELICrENT OR WITHOUT FAULT ON ITS PART, OF ANY COYEI~ANT SPECIFIED IN TICS SECTION, BUT EVERY RIOfIT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCFI BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE, {iv} No default by the Issuer in observing or performing its obligations under this Section shall comprise a breach of or default under the Ordinance for purposes of any other provision of this Ordinance, Nothing in this Section is intended or shall act to disclaim, waive, or otherwise Limit the duties of the Issuer under federal and state securities laws. ~d behalfvfthe Issuer all such instrument, whether ❑r not herein mentioned, as rna be necess or desirable in order to c out the terms and rovisions of ~ ~ p this ~rdznance, the Bonds, ~e sale of the Bonds, and the ~iil~ial Statement; and the Assistant City l~Ianager of the City shall cause the ex enses of issuance of the Bonds to be aid from the roceeds of sal ~ P p e ofthe initial Bond or from any other lawfully available funds of the Issuer, In case any officer whose signature shall appear on any Bond shall cease to be such ocer before the delivery of such Bond, such signature shall nevertheless be valid and cuff dent for all ores the sam as if such officer had remained in office until such d 1' P e e xvery, Section ~Z, DPEN MEETINGS. The City Council has found acid determined that the meet' at which this Grdinance is considered is o en to the ublic and that no i ~ . P p t ce thereofwas given ~ accordance with the provisions of the Texas Dpen Meetings, Law, Tee, Gav'#. Code, Chapter 55 i, as amended, section ~3, EFFECTIVE DATE, This Grdinance shall become effective imrnedia~tel u on its passage and approval. Y p ~8 • a 3 PASSED ANI~ APPROVED this the 3rd day ofMarch, ~~o~. Mark Burroughs, Mayor ATTEST: Jenr~fer alder, Secretary A~'P~~~ AS Tp ~,EC~AL FDRM; Anita Burgess, CZ Attorney rr~~~~ rrr~~~~r r rr~~rrr r~~~rrr rrrr Y City of Denton Cert~icate~ of Qbligo~on, erie~ 199$ P~incr~al Amount lVfaturi Date ~utstand~n 5120 ~ ~ ~Sraoo 21151201 ~ ~a aoo Total ~ ~ ~ S,ooO City o~ Denton ~eoeral ~b~g~~on Band, erte~ 1998 Pr~n~~pal Amount Matr~ri Date ~utstandin 211512010 ~485,OD0 ?II512a1I _ _ 480,000 Fatal $9d5,D00 City ofDenton Cercate~ o~ Obla~on, er~e~ 1999 ~ri~cipal An~auut Matu~i Date Dutar~.din 2115124 ~ 0 $25,000 21J151}2~r0~` ~ ~~95,DOU +N 1512012 it#~4~V~ Tata1 $885,Oa0 City of Denton enerel ~bliga~on Bonds, eri 1999 Principal Amount Kati Date ~ Dutstandin~ 2115120 ~ 4 X410,000 21I 512011 4 ~ 0,000 211512012 4~D.D0~ Total $1,20,000 Cry of ~~ntan ~~eral ~b~tion Re~undin~ ads, er~~s ~999A Principal A~,ount ll~atur~i Date ~~tstand~n ~GIJ~ ~ffry~~q~~ ~A~~~~~~~ Lf ~ ~l L~ l ~ ~'~V~~~~ 211512~1~ ~9~,00~ 2l~512~ I3 X45,040 211 SI~Ol4 545,040 2JI51~015 435,OD0 I ~~~o ~ ~ goo Total ~3,8'7~,000 its of Dentan ercat~ of ~b~.an, erie~ ~aaa Principal Amount ~aturl Date Outstan ~I ~ S10 l 4 155,400 21I5l20~ 1 5~,p00 Total $314}D00 icy of ~en~On e~~r~ Ubliga~ia~ Band, ~erie~ ~aaa Pri~eipal A~nou~t Maturity ~ ,~~tst~ndin~ ~ . z~~ s~~o ~ o ~ ~a,aoo r5~~~~~ ass aoo Totai $375,400 pity of De~~on ~r~tes of Ob~iga~ian, e~ie~ Baal ~r7nclpa~ Amount Maw Date ~utst~n ~1151~0~4 590,OOD 21t51+'2D11 590,040 r~~e! ~~JIrU~~ L~~~~~V L~~ ~ ~ _ 25.004 Total $1,710,000 a i qty of Denton eneraz ~b~gahon ~~nd~, erie~ X001 Prlncipal Amount uri Date ~utstandin~ 21151201 $'~1U,00~ 21I5I2DI1 710,00 211512012 710,000 211512013 '~15 040 '~otai $2,545,000 City of Demon Certific~#~s of ~~I~ga~~~, er~e~ ~a0~ Principal Amount Maturl Date Outstanding 211512010 595,OOD 21151201 1 X25,000 211512D 12 6G5,DOD 211512013 420,040 211512 14 _ 445,000 Tatai $x,750,400 qty of Demon General ~bl~gat~an Bond, er~ea ~00~ Principal Amount Magi Date Outstandin 211512010 $515,000 211512011 545,000 . 211512012 575,400 211512013 645,000 211512014 635 004 Total 2,875,UDD 1"~ 1~OTI~ QF P1~~R It~D~TION ~'S~ L~T'~' ~F ~EIYTD~,'I`~XA NOTICE IS HEREBY ~I'~EN that the City of Denton, Texas has called far reden~ Lion the outstandin Certificates or Bonds of the City described as fol~aws: ~ [City ofDenton General ~bligativn Bands, Series dated _ scheduled to mature on February I ~ through l~ ebruary 15, aggregating ~ hand being ail afthe autstandin bonds ofs ' serves scheduled to mature an and after Feb 15 a.~d ~ 3 Call date: , redce~nable at a redemption price of par plus accra.ed interest at the rinci al corporate vices of The Bank ofNew York Mellon Trust Company, N.A., onl on resentati p P y p p on by the owner thereof.] ~~1 ofDenton Certificates ofObli atian Series dated on Feb ~ ~ scheduled to mature ~ ~ , ~ through February ~ 5, aggregating and bein all of the autstandin bonds of ~ ~ ~ ~ said series scheduied to mature on and after February f S, Call date: redeemable at redemption price of ar 1us accrued interest a the principal corporate offices of The Bank of p p t Ne~v York iVlellon Trust Company, N.A., only upon presentation by the ovvr~er thereof, If naaneys sufclent far the payment of such redemption price are held b ar on behalf of th ' the described Bands shall became due y ~ ~ agent, and payable an the redemption date specified, and the interest thereon shall cease to accrue from and after the redemption date, In compliance with section 340 of the Internal Revenue Code of 198G, a ors makin certain payments due an debt securities ma be abli aced to p ~ g y g deduct and withhold 3~ percent of such payment fra~n the remittance to any payee who has failed to provide such payor with avalid tax a er identification To avoid the im asi~an of the withh p y number. p aldtng of tai, such payees should submit a taxpayer identif"icafiion number when surrendering the bonds for redemption, ~ - . N~TtCE IS FURTHER LIVEN that all Bands shauid be submitted to the foiiowing address; The Bank ofNew York Mellon Tract Can~pany, National Association successor to TP1Viargan Chase Bank, N.A.~ 201 Bryan street, i Dth Floor Da11as, Texas 75~~ l Attn: Dated; ~O~g - . By. The Bank of New York Mellon Trust Company, National Association ii r; TES A1~~NT BnterBd ~~nto as of ~~4 this }',A Bement"band ~ ~ between the pity of Denton Teas the Issuer and 'fhe Barak of New York 1VIBllan `rust Ca Association a limited , ose n mpys Na~ianal purp atxanal bank~g ass~clatlon w1 trust powers the dank"~. - ~ - REITAL~ - the ~SSUer ~ duly authari~ed and pra~ded far ~e issuance of its genera ~bii atian Refundin Bonds ~ ~ , series ~aa9 the "Securities"} in the aggregate principal amount of ~ . - snch Securities to be issued ~n fully registered farm and as to and intere Y the parent of pr~nclpal st therBan; and wHI~R~~.AS, the ecuri~es are scheduled ta~ be delivered to the initia - ~ purchaser thBreaf an or about ~44~; and- - - - - - . wIR~A, the Issuer has selected the Bank to serve as ~ - - - Pay~ng AgentlReg~strar m connection - with the payment of the principal of, premium, if and -interest on said ecuri~e and i th respect to the reg~stra~vn, ~ansfer and exchange thereof by the registered owners thereof• aid ~ ~ - ~ ~ . - wH~RBA, the Bank has agreed to serge in such ca acities far an - ~ d an behalf of the Issuer and . s full power and authari~y ta~perform and serve- as Paying Agen#1Re 'stray far thB Secu~rit~ie • - s, - N~~V, T1=IEREF~RE, ~t is mutually agreed as follows: ARTICLE ~Nl~ - APPO~EIyT ~F BANi~ AS PAYING A~BNT' AND REIS'I'~.A,R ~ . Section 1.a1. A aintznent. ~ ~ . ~I'he Issuer hereby appoints the Bank to serve as Paying Agent wYth re ect to the ecuritxes. A Paying Agent far the Securities the Banks s hall be respo~,sible for paying an behlf of the Issuer the - principal, premium any}, and interest on the ecurritie as the sanYe became due and a p gable to the registered owners thereof, ail ~ accordance with this Agreement and the '~~~rdinance" ` ere~naf t~ defined}. The Issuer hereby aPpa~n#s ~iB Bank as Registrar with respect to the securities, As Re 's~rar far the ecuri~es~ the Bank shall kee and naaintaan far and ~ on behalf of the Issuer boeks and records as to the ownership of said ecurit~es and with respect to the transfer and exchan a thereof as - - and in the ~~rdinanc " g provided herein e. The Bank hereby accepts its appointment, and agrees to serve as the Pa ' A ent and R ' for the Securities. - ~g g egastrar Section I.~~. ~or~pe~.sati~~. As compensation far the Bank's services a Paying AgentlRegistrar, the Issuer hereb a ees to pay the Bank the fees and amounts set forth in schedule y ~ A attached hereto far the first year of tlu,s Agreement and therea.~er the fees and amounts set forth in the Bankrs current fee schedulB th ' en m effect for servace as Paying Agent~Registrar fvr municipalities, which shah be su lie pp ~ to the suer on or 6. before days prier to the ciase of e ~'isca~ Yeax-~f the l~suer and shall be e~`fect~ve upon the first day of the fa~~owing ~'~sca~ Year. . . In addition, the issuer agrees to reimburse the Bank u on its re nest far alb re ~ q - asanable expenses, disbursements and advances incurred ox-made by the Bank in accordance wi~ an of ~ the pxolons hereof ~includin~ the reasonable con~pensatian and the expenses and disbursement of its a gents and caunse~~. ~ . - ~ AR~'I~LB Two ~ ~ ~ , DB~IlT~~NS . Section ~ . Denitians. ~'or a~ purposes of this Agreen~.erxt, exc t as atherw~ise ex r ' ~ . p essly provided or unless the context o erwise requares: - - - . - - '~Acceleratian Date" on any Security means the date an and aver which the rinci ar ~ . insta~t~nents of interest or ~ P ~ ar~y ar a1~ both, are due and payable on any Security v~hich has become accelerated pursuant to the terns of the Security. ~ . "Bank ~f~ice"' means the princip ca orate test of.ce of e B - ank as mdlcated on the signature page hereof, 'the Bank will notify the ~SSUer in writing of any charge in location of the Bank ~ffiee. "F~sca1 Year" means the fisCa~ year ofthe Issuer, endln a terrlber 1/ r "alder"" and ""Security I~a~der"' each means the Person in whose name ~ a Securi is xe 'stered in the Security Register.. ~ - ~ ~ ~ ~►'Issuer-Request"' .and "Issuer ordinance"'~=means a~ written-request ~or~~ardinance si ed in the nom of the issuer by the a ar of the issuer deli~rered t ~ ~ Y o the Bank. "Legat Hotiday" means a day on which the Bank is required ar authorized to be closed. "`ordinance" rneans the ardtnance of the averr~in bad of g g y the Issuer pursuant to winch the Securities are issued, certified by the pity Secretary ox any other ~af~icex- of the Issuer and deliv Bank. ~ eyed to the "Person"' means any individual, corporations pa~nership, joint venture, associatia 'aint stock company, trust, unmc orated ar anizatian ar over~.n - ~ ~ g g ent or any agency or political subdivision of a government. "Predecessor Securities"' of any particular Security means every p~'evious ecuri evidencin all i or a portion of the same obligation as that evidenced by such paxticuiar ecu,~i an for the ores . . tY ~ burp of tlus de~tlan, any mutilated, lost, destroyed, ~or stolen ecuxity for which a ~ laceent Sec ' been re stered and deli ~ ~ u~ty has ~ vexed m lieu thereofpursuant to Section 4.~~ hereof and the ordinance . . ~ "Redemption Date"` when used with xespect to any Band to be xedeemed means the date fixed four such redemption pursuant to the terms of the ~rdinanee. '"Responsible officer`" when used with re ect to the Bank ' means the ha~xxnan or ~'~ce~ Chairman of the Board of Dizect~rs, the ha~xman or dice-chairman of the executive ommi ttee of the 1 i:, r. - r. - 'e . Board of Directors, the President, any dice President, the Secre an . - Treasurer an A . ~ Assistant Secretary, the ~ sslstant Treasurer, the ~ashrer, any Assistant cashier, any T.st Officer or .ssitan Trust Officer, or any other officer of ~ Bank t . customarily performing functions similar to hose performed by any of the above designated officers and also means with res trust matter an other of~i ~ pect to a particular corporate } y cer to wham. such matter is referred because of his la~awledge of and familiars with the paxticulax subject. ~ #'Security Register" means a register maintained b the Ban1~ an . , the re behf of the issuer pro.d~ng for . g~stratlon at~d transfer of the ecuri~.es. 'Mated 1Vlaturity" means the .date specified the Ordinance the ' ci al ' .scheduled to be due and - ~ - ~ ~ - , - - l~ P , of a ecur~ty ~s payable. - Section .0~: ether Deitions. ~ . - ~ ~ ~ ~ The terms "Ban~,'~ -Issuer,' and ecuri~.es Securi ~ ~ ~ ~ ~ - . - - ~ ty} have the ~neanings assigned to them m the ~ - rec~tal paragraphs of this agreement. ~ , : : - The term "Paying AgentlRe 'stray" refers to ~ B - ank ~ the performance of the duties and unctions of this agreement. ~ . ~ - THROB . - - ~ ~t~: ~ ~ PANG ~CEN'~' ~ ~ . ~ ~ - ti - . " ;-7'~ eVtlan ~ ~ . ~ ~,4: Duties of Pa ' A ent. ~ ~ ~ - - .1 -n - - - , ~ As Paying ,gent, tl~e Bank shall, rovided ade uate . - p - q collected funds have been prav~ded to it for . .a - uch-~ose by or on behalf of the suer, a on behalf of the ~SSU . - _ , P Y - er the pnc~pal of each ecur~ty at its ' tated~xaturrty, Reden~ptton Date, or ~~Celeratl0n Date, t0 a Folder u an s the Bank at the B ~ - - . ~ - ~ p ur~`ender of the Security to ~ Df~Ce, .As Paying Ager~.t, the Bank shall, prodded ode uate collected such ~ funds have been pro~.ded to It far purpose by or on behalf of the Issuer, pay on behalf of the Issuer the rnterest an each Sec - due, by co utin the amount of ' uric when g interest to be paid each Hotder and preparing and sending checks b ~Jnited Mates Nail, first class postage prepaid, on each a ent date t ~ their - p ~ ~ o the 1*Iolders of the Securities for Predecessor Secux~tres} on the respective Record Date, ~o the address a earin a . . Re 'ster orb such other - g n e security ~ y method, acceptable to a -Bank, requested ~ writing by e 1=Iolder at the folder's risk and expense-. ~ . - ~ . . ~ - . Sedan 3.0~. Pa ent Dates. ~ - The ~SSUer hereby instructs the Barak to a e rinci al F P y p p of .and Merest on .the Securities on the dates specified in the ordinance. ~ ~ . Section 3,03. Re ortin Re uire~ments. 3 To the extent required by the Code or the Treasury Regulations, the Bank shall report to the Holders and the Internal Revenue Service the amount of interest paid or the amount treated as interest accrued on the Bond which is required to be reported by the Holders on their returns of federal income tax. ARTICLE FOUR REGISTRAR Section 4.01. Security Re ister - Transfers and Exchanges. The Bank agrees to keep and maintain for and on behalf of the Issuer at the Bank Office books and records (herein sometimes referred to as the "Security Register"), and, if the Bank Office is located outside the State of Texas, a copy of such books and records shall be kept in the State of Texas, for recording the names and addresses of the Holders of the Securities, the transfer, exchange and replacement of the Securities and the payment of the principal .of and interest on the Securities to the Holders and containing such other information as may be reasonably required by the Issuer and subject to such reasonable regulations as the Issuer and the Bank may prescribe. All transfers, exchanges and replacement of Securities shall be noted in the Security Register. Every Security surrendered for transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer, the signature on, which has been guaranteed by an officer of a federal or state bank or a member of the National Association of Securities Dealers, in . form satisfactory to the Bank, duly executed by the Holder thereof or his agent duly authorized in writing. The Bank may request any supporting documentation it feels necessary to effect -a.re-registration, -transfer or exchange of the Securities. To the extent.possible: and under reasonable circumstances, the Bank agrees that, in relation to an exchange or transfer of Securities, the exchange or transfer by the Holders thereof will be completed and new Securities delivered to the Holder or the assignee of the Holder in not more than three (3) business days after the receipt of the Securities to be cancelled in an exchange or transfer and the written instrument of transfer or request for exchange duly executed by the Holder, or his duly authorized agent, in form and manner satisfactory to the Paying Agent/Registrar. Section 4.02. Bonds. The Issuer shall provide an adequate inventory of printed Securities to facilitate transfers or exchanges thereof. The Bank covenants that the inventory of printed Securities will be kept in safekeeping pending their use, and reasonable care will be exercised by the Bank in maintaining such Securities in safekeeping, which shall be not less than the care maintained by the Bank for debt securities of other political subdivisions or corporations for which it serves as registrar, or that is maintained for its own securities. Section 4.03. Form of Securi Register. The Bank, as Registrar, will maintain the Security Register relating to the registration, payment, transfer and exchange of the Securities in accordance with the Bank's general practices and procedures in effect from time to time. The Bank shall not be obligated to maintain such Security Register in any form other than those which the Bank has currently available and currently utilizes at the time. The Security Register may be maintained in written form or in any other form capable of being converted into written form within a reasonable time. 4 r. Section 4.04. List of Security Holders. The Bank will provide the Issuer at any time requested by the Issuer, upon payment of the required fee, a copy of the information contained in the Security Register. The Issuer may also inspect the information contained in the Security Register at any time the Bank is customarily open for business, provided that reasonable time is allowed the Bank to provide an up-to-date listing or to convert the information into written form. The Bank will not release or disclose the contents of the Security Register to any person other than to, or at the written request of, an authorized officer or employee of the Issuer, except upon receipt of a court ' order or as otherwise required by law. Upon receipt of a court order and prior to the release or disclosure of the contents of the Security Register, the Bank will notify the Issuer so that the Issuer may contest the court order or such release or disclosure of the contents of the Security Register. . Section 4.05. Return of Cancelled Bonds. All bonds surrendered to the Bank, at the designated PaymentlTransfer Office, for payment, redemption, transfer, or replacement, shall be promptly cancelled by the Bank. The Bank will provide to the Issuer, at reasonable intervals determined by the bank, a bond evidencing the destruction of canceled bonds.. Section 4.06. Mutilated Destro ed Lost or Stolen Securities. The Issuer hereby instructs the Bank, subject to the applicable provisions of the Ordinance, to delivexid issue Securities in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities as long as., the same does not result in an overissuance. riln case any Security shall be mutilated, or destroyed, lost or stolen, the Bank, in its discretion, may execute and deliver a replacement Security of like form and tenor, and in the same denomination- and -bearing a number not contemporaneously outstanding, m exchange and substitution for such mutilated Security, or in lieu of and in substitution for such destroyed lost or stolen Security, only after (i) the filing by the Holder thereof with the Bank of evidence satisfactory to the Bank of the destruction, loss or theft of such Security, and of the authenticity of the ownership thereof and (ii) the furnishing to the Bank of indemnification in an amount satisfactory to hold the Issuer and the Bank harmless. All expenses and charges associated with such indemnity and with the preparation, execution and delivery of a replacement Security shall be borne by the Holder of the Security mutilated, or destroyed, lost or stolen. Section 4.07. Transaction Information to Issuer. The Bank will, within a reasonable time after receipt of written request from the Issuer, furnish the Issuer information as to the Securities it has paid pursuant to Section 3.01, Securities it has delivered upon the transfer or exchange of any Securities pursuant to Section 4.0 1, and Securities it has delivered in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities pursuant to Section 4.06. 5 ARTICLE FIVE THE BANK Section 5.01. Duties of Bank. The Bank undertakes to perform the duties set forth herein and agrees to use reasonable care in the performance thereof. Section 5.02. Reliance on Documents Etc. (a) The Bank may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, on bonds or opinions furnished to the Bank. (b) The Bank shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Bank was negligent in ascertaining the pertinent facts.. . (c) No provisions of this Agreement shall require the Bank. to expend or risk its own funds or otherwise incur any financial liability for performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds =or adequate: indemnity satisfactory to it against. such risks or, liability is not assured to it. (d) The Bank may rely and shall be protected in acting or refraining from acting upon any ::resolution,- certificate,: statement, :.instrument, opinion, report, notice, : request, ; direction, consent, order, bond, note, security, or other paper or document. believed by it to be genuine and to have been signed or presented by the proper party or parties. Without limiting the generality. of the foregoing statement, the Bank need not examine the. ownership of any. Securities, but is protected in acting upon receipt of -.Securities containing an endorsement or instruction of ;transfer or,power of.transfer.which appears on its face: to be signed by the Holder or an agent of the Holder. The Bank shall not be bound to make any investigation into the facts or matters stated in a resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document supplied by Issuer. (e) The Bank may consult with counsel, and the written advice of such counsel or any opinion of counsel shall be full and complete authorization and protection with respect to any action taken, suffered, or omitted by it hereunder in good faith and in reliance thereon. (f) The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys of the Bank. Section 5.03. Recitals of Issuer. The recitals contained herein with respect to the Issuer and in the Securities shall be taken as the statements of the Issuer, and the Bank assumes no responsibility for their correctness. The Bank shall in no event be liable to the Issuer, any Holder or Holders of any Security, or any other Person for any amount due on any Security from its own funds- 6 n Section 5.04. May Hold Securities. The Bank, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Issuer with the same rights it would have if it were not the Paying Agent/Registrar, or any other agent. Section 5.05. Moneys Held by Bank. The Bank shall deposit any moneys received from the Issuer into a segregated account to be held by the Bank solely for the benefit of the owners of the Securities to be used solely for the payment of the Securities, with such moneys in the account that exceed the deposit insurance available to the Issuer by the Federal Deposit Insurance Corporation, to be fully collateralized with securities or obligations that are eligible under the laws of the State of Texas and to the extent permitted by the laws of the United States of America to secure and be pledged as collateral for such accounts until the principal and interest on such securities have been presented for payment and paid to the owner thereof. Payments made from such account shall be made by check drawn on such account unless the owner of such Securities shall, at its own expense and risk, request such other medium of payment. Subject to the Unclaimed Property Law of the State of Texas, any money deposited with the Bank for the payment of the principal, premium (if any), or interest on any Security and remaining unclaimed for three :years after the final maturity of the Security has become due and payable will be paid by the Bank* the Issuer if the Issuer so elects, and the Holder of such Security shall hereafter look only to the Issuer-for payment thereof, and all liability of the Bank with respect to such monies shall thereupon cease: If thessuer does not elect, the Bank is directed to report and dispose of the funds in compliance with Title zSix of the Texas Property Code, as amended. Section 5.06. Indemnification. To the extent permitted by law, the Issuer agrees to indemnify the Bank for, and hold it harmless against; any loss, liability, or expense incurred without negligence or bad faith on its part, arising out of or in connection with its acceptance or administration of its duties hereunder, including the cost and expense against any claim or liability in connection with the exercise or performance of any of its powers or duties under this Agreement. Section 5.07. In !=leader. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demand, or controversy over its person as well as funds on deposit, in either a Federal or State District Court located in the State and County where the administrative offices of the Issuer is located, and agree that service of process by certified or registered mail, return receipt requested, to the address referred to in Section 6.03 of this Agreement shall constitute adequate service. The Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction within the State of Texas to determine the rights of any Person claiming any interest herein. . Section 5.08. D osi Trust Co an Services. It is hereby represented and warranted that, in the event the Securities are otherwise qualified and accepted for "Depository Trust Company" services or equivalent depository trust services by other organizations, the Bank has the capability and, to the extent within its control, will comply with the "Operational Arrangements," effective August 1, 1987, which establishes requirements for securities to be eligible for such type depository trust services, including, but not limited to, requirements for the timeliness of payments and funds availability, transfer turnaround time, and notification of redemptions 7 and calls. ARTICLE SIX MISCELLANEOUS PROVISIONS Section 6.01. Amendment. hereto This Agreement may be amended only by an agreement in writing signed by both of the parties Section 6.02. Assignment. This Agreement may not be assigned by either party without the prior written consent of the other. Section 6.03. Notices. Any request, demand, authorization, direction, notice, consent, waiver, or other document provided or permitted hereby to be. given or furnished to the Issuer . or the Bank shall be mailed or delivered to the Issuer or the Bank, respectively, at the. addresses shown on the signature page of this Agreement. Section 6.04. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 6.05. Successors and Assi s. All covenants and agreements herein by the Issuer shall bind its successors and assigns, whether so expressed or not. Section 6.06. Severability. In case any provision herein shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the retraining provisions shall not in any way be affected or impaired thereby. Section 6.07. Benefits of A eement. Nothing herein, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy, or claim hereunder. Section 6.08. Entire Agreement. This Agreement and the Ordinance constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent/Registrar and if any conflict exists between his Agreement and the Ordinance, the Ordinance shall govern. Section 6.09. Counterparts. 8. r, This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Agreement. Section 6.10. Termination. This Agreement will terminate W on the date of final payment of the principal of and interest on the Securities to the Holders thereof or (ii) may be earlier terminated by either party upon sixty (60) days written notice; provided, however, an early termination of this Agreement by either party shall not be effective until (a) a successor Paying Agent/Registrar has been appointed by the issuer and such appointment accepted and (b) notice has been given to the Holders of the Securities of the appointment of a successor Paying Agent/Registrar. Furthermore, the Bank and Issuer mutually agree that the effective date of an early termination of this Agreement shall not occur at any time which would disrupt, delay or otherwise adversely affect the payment of the Securities. Upon an early termination of this Agreement, the Bank agrees to promptly transfer and deliver the Security Register (or a copy thereof), together with other pertinent books and records relating to the- Securities, to the successor Paying Agent/Registrar designated and appointed by the Issuer. The provisions of Section 1.02 and of Article Five shall survive and remain in M force and effect following the termination of this Agreement. Section 6.11. Gov_ezning Law. This Agreement shall be construed in accordance with and governed by the laws of the State of - Texas. [Remainder of page intentionally left blank] 9 Il~ the parties hezet~ have execute. ~s ~greeme~t as 4~ die day aid dear first a~4ve ~vrit~en. B.A ~F E Y~ M.LL~h~ TI~UT ~AT~~ ~~V~PA'Y, Tale X44 ~ Br~a~a street, ~ 4th ~~oor Dallas, Texas ?~~0~ t: F r. 1~Ia~0~ X15 E. ~~ne~ ~e~~a~, Texas 7G~~ I 1~ .C~~ V L~ ~'a~rirxg Agen#e~s~ra~ Fee c~edu~e 1~ • ~ r I I ~l i . PRELIMINARY OFFICIAL STATEMENT Ratings: Moody's: "Applied For" (See "Continuing Disclosure of Information" herein) Dated , 2009 S&P: "Applied For" (see "Other Information - NEW ISSUE -Book-Entry-Only Ratings" herein) In the opinion of Bond Counsel, interest on the Bonds will be excludable from gross income for federal income tax purposes under statutes, regulations, published rulings and court decisions existing on the date thereof, subject to the matters described under "Tax Matters" herein, including the alternative minimum tax on corporations. THE BONDS WILL BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS ~ll,845,000* CITY OF DENTON, TEXAS (Denton County) GENERAL OBLIGATION REFUNDING BONDS, SERIES 2009 Dated Date: March 15, 2009 Due: February 15, as shown below PAYMENT TERMS ...Interest on the $11,845,000 City of Denton, Texas General Obligation Refunding Bonds, Series 2009 (the "Bonds") will accrue from March 15, 2009, (the "Dated Date") and will be payable February 15 and August 15 of each year commencing February 15, 2010, and will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The definitive Bonds will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC") pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Bonds may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Bonds will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Bonds will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds. See "The Bonds -Book-Entry-Only System" herein. The initial Paying Agent/Registrar is The Bank of New York Mellon Trust Company, N.A., Dallas, Texas (see "The Bonds -Paying AgentlRegistrar"). AUTHORITY FOR ISSUANCE ...The Bonds are issued pursuant to the Constitution and general laws of the State of Texas, (the "State") including particularly Vernon's Texas Codes Annotated ("V.T.C.A."), Government Code, Chapter 1207, as amended, and are direct obligations of the City of Denton, Texas (the "City"),payable from a direct annual ad valorem tax levied on all taxable property within the City, within the limits prescribed by law, as provided in the ordinance authorizing the Bonds (the "Ordinance") (see "The Bonds - Authority for Issuance"). PURPOSE ...Proceeds from the sale of the Bonds will be used (a) to refund a portion of the City's outstanding general obligation debt as shown on Schedule I hereto, for debt service savings, and (b) to pay the costs of issuing the Bonds. MATURITY SCHEDULE* CUSIP Prefix: 248866 (I) Principal Interest CUSIP Principal Interest CUSIP Amount Maturity Rate Yield Suffix~I~ Amount Maturity Rate Yield Suffix~I~ - - $2,085,000 2010 $1,555,000 2014 2,350,000 2011 380,000 2015 2,425,000 2012 390,000 2016 2,660,000 2013 (Accrued Interest from March 15, 2009 to be added) (1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by Standard and Poor's CUSIP Service Bureau, a division of the McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. CUSIP numbers are provided for convenience of reference only. The City, the Financial Advisor and the Underwriters take no responsibility for the accuracy of such numbers. REDEMPTION ...The Bonds are not subject to redemption prior to maturity. LEGALITY ...The Bonds are offered for delivery when, as and if issued and received by the Underwriters and subject to the approving opinion of the Attorney General of Texas and the opinion of McCall, Parkhurst & Horton, L.L.P., Bond Counsel, Dallas, Texas (see Appendix C, "Form of Bond Counsel's Opinion"). Certain legal matters will be passed upon for the Underwriters by ,Dallas, Texas, Counsel for the Underwriters. DELIVERY It is expected that the Bonds will be available for delivery through The Depository Trust Company on , 2009. ~ Preliminary, subject to change This Official Statement, which includes the cover page and the Appendices hereto, does not constitute an offer to sell or the solicitation of an offer to buy in any jurisdiction to any person to whom it is unlawful to make such offer, solicitation, or sale. No dealer, broker, salesperson, or other person has been authorized to give information or to make any representation other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon. For purposes of compliance with Rule I Sc2-12 of the Securities and Exchange Commission (the "Rule'), this document constitutes an Official Statement of the City with respect to the Bonds that has been "deemed final" by the City as of its date except for the omission of no more than the information permitted by the Rule. The information set forth herein has been obtained from the City and other sources believed to be reliable, but such information is not guaranteed as to accuracy or completeness and is not to be construed as the representation, promise, or guarantee of the Financial Advisor. This Official Statement contains, in part, estimates and matters of opinion which are not intended as statements of fact, and no representation is made as to the correctness of such estimates and opinions, or that they will be realized. Any information and expressions of opinion herein contained are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City or other matters described herein since the date hereof. See "Continuing Disclosure of Information" for a description of the City's undertaking to provide certain information on a continuing basis. Neither the City, its Financial Advisor, nor the Underwriters make any representation as to the accuracy, completeness, or adequacy of the information supplied by The Depository Trust Company or MBIA Insurance Corporation or its financial guaranty insurance policy that secures payment of the Bonds for use in this Official Statement. The cover page contains certain information for general reference only and is not intended as a summary of this offering. Investors should read the entire Official Statement, including all appendices hereto, to obtain information essential to making an informed investment decision. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE THE MARKET PRICE OF THE OBLIGATIONS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, NIAY BE DISCONTINUED AT ANY TIME. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in the Official Statement in accordance with, and as part of, their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information. The agreements of the City and others related to the Bonds are contained solely in the contracts described herein. Neither this Official Statement nor any other statement made in connection with the offer or sale of the Bonds is to be construed as constituting an agreement with the purchaser of the Bonds. INVESTORS SHOULD READ THE ENTIRE OFFICIAL STATEMENT, INCLUDING ALL SCHEDULES AND APPENDICES ATTACHED HERETO, TO OBTAIN INFORMATION ESSENTIAL TO MAKING ANINFORMED INVESTMENT DECISION. This Official Statement contains "Forward-Looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such statements may involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, and achievements to be drfferent from future results, performance, and achievements expressed or implied by such forward-looking statements. Investors are cautioned that the actual results could differ materially from those set forth in the forward-looking statements. The Bonds are exempt from registration with the Securities and Exchange Commission and consequently have not been registered therewith. The registration, qual f cation, or exemption of the Bonds in accordance with applicable securities law provisions of the jurisdiction in which these securities have been registered, qual f ed or exempted should not be regarded as a recommendation thereof. TABLE OF CONTENTS PRELIMINARY OFFICIAL STATEMENT SUMMARY 3 TAX MATTERS 26 CITY OFFICIALS, STAFF AND CONSULTANTS 5 CONTINUING DISCLOSURE OF INFORMATION............................28 ELECTED OFFICIALS 5 SELECTED ADMINISTRATNE STAFF 5 OTHER INFORMATION..........................................................................29 CONSULTANTS AND ADVISORS 5 RATINGS.............................................................................................29 LITIGATION ............................................ ............................................29 INTRODUCTION 6 REGISTRATION AND QUALIFICATION OF BONDS FOR SALE.................29 LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN PLAN OF FINANCING 6 TEXAS....................................................................................29 THE BONDS 7 LEGAL OPINIONS ................................................................................30 FINANCIAL ADVISOR ..................................................... .....................30 TAX INFORMATION I I VERIFICATION OF ARITHMETICAL AND MATHEMATICAL TABLE I -VALUATION, EXEMPTIONS AND GENERAL OBLIGATION COMPUTATIONS 3O DEBT I4 UNDERWRITING..................................................................................30 TABLE 2 -TAXABLE ASSESSED VALUATIONS BY CATEGORY I S FORWARD-LOOKING STATEMENTS DISCLAIMER 3 I TABLE 3 -VALUATION AND GENERAL OBLIGATION DEBT HISTORY I6 MISCELLANEOUS 3 I TABLE 4 -TAX RATE, LEVY AND COLLECTION HISTORY I6 TABLE 5 -TEN LARGEST TAXPAYERS ...............................................16 SCHEDULE OF REFUNDED OBLIGATIONS......................... Schedule I TABLE 6 -ESTIMATED OVERLAPPING DEBT I7 APPENDICES DEBT INFORMATION 7 GENERAL INFORMATION REGARDING THE CITY A TABLE 7 -GENERAL OBLIGATION DEBT SERVICE REQUIREMENTS..... 7 EXCERPTS FROM THE COMPREHENSIVE ANNUAL TABLE 8 -INTEREST AND SINKING FUND BUDGET PROJECTION I9 FINANCIAL REPORT B TABLE 9 -COMPUTATION OF SELF-SUPPORTING DEBT I9 FORM OF BOND COUNSELS OPINION C TABLE I O -AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS ...................................................................................19 The cover page hereof, this page, the appendices included herein and any TABLE I I -OTHER OBLIGATIONS I9 addenda, supplement or amendment hereto, are part of the Preliminary Official Statement. FINANCIAL INFORMATION 21 TABLE I2 - CHANGES IN NET ASSETS 2I TABLE I2A -GENERAL FUND REVENUES AND EXPENDITURE HISTORY22 TABLE I3 -MUNICIPAL SALES TAX HISTORY 23 TABLE I4 -CURRENT INVESTMENTS 24 2 PRELIMINARY OFFICIAL STATEMENT SUMMARY This summary is subject in all respects to the more complete information and definitions contained or incorporated in this Preliminary Official Statement. The offering of the Bonds to potential investors is made only by means of this entire Preliminary Official Statement. No person is authorized to detach this summary from this Preliminary Official Statement or to otherwise use it without the entire Preliminary Official Statement. THE CITY The City of Denton is a political subdivision and municipal corporation of the State, located in Denton County, Texas. The City covers approximately 88.1 square miles (see "Introduction -Description of City"). TxE BONDS The Bonds are issued as $11,845,000 General Obligation Refunding Bonds, Series 2009. The Bonds are issued as serial bonds maturing February 15, 2010 through February 15, 2016. (see "The Bonds -Description of the Bonds"). PAYMENT of INTEREST Interest on the Bonds accrues from March 15, 2009, and is payable February 15, 2010, and each August 15 and February 15 thereafter until maturity or prior redemption (see "The Bonds - Description of the Bonds," and "The Bonds -Optional Redemption"). AUTHORITY FoR ISSUANCE.......... The Bonds are issued pursuant to the Constitution and general laws of the State, including particularly Chapter 1207, Texas Government Code, as amended, and the Ordinance passed by the City Council of the City (see "The Bonds -Authority for Issuance"). SECURITY FoR THE BONDS The Bonds constitute direct and voted obligations of the City, payable from a direct annual ad valorem tax levied, within the limits prescribed by law, on all taxable property located within the City (see "The Bonds -Security and Source of Payment"). QUALIFIED TAX-EXEMPT OBLIGATIONS The City will designate the Bonds as "Qualified Tax-Exempt Obligations" for financial institutions (see "Tax Matters -Qualified Tax-Exempt Obligations for Financial Institutions"). REDEMPTION The Bonds are not subj ect to redemption prior to maturity. TAX EXEMPTION In the opinion of Bond Counsel, the interest on the Bonds will be excludable from gross income for federal income tax purposes under existing law, subject to the matters described under the caption "Tax Matters" herein, including the alternative minimum tax on corporations. USE of PROCEEDS Proceeds from the sale of the Bonds will be used (a) to refund a portion of the City's outstanding general obligation debt as shown on Schedule I hereto, for debt service savings, and (b) to pay the costs of issuing the Bonds. RATINGS The presently outstanding general obligation debt of the City is rated "Aa3" by Moody's Investors Service, Inc. ("Moody's") and "AA" by Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P"). Applications for contract ratings on this issue have been made to Moody's and S&P (see "Other Information -Ratings"). BOOK-ENTRY-ONLY SYSTEM...... The definitive Bonds will be initially registered and delivered only to Cede & Co., the nominee of DTC pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Bonds may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Bonds will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Bonds will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds (see "The Bonds -Book-Entry-Only System"). PAYMENT RECORD The City has never defaulted on the payment of its tax-supported indebtedness. ~ Preliminary, subj ect to change 3 SELECTED FINANCIAL INFORMATION Funded Ratio Funded Fiscal Per Capita Tax Per Capita Tax Debt to Year Estimated Taxable Taxable Debt Funded Taxable % of Ended City Assessed Assessed at End Tax Assessed Total Tax 9/30 Population Valuation (1) Valuation of Year Debt Valuation Collections 2005 103,220 $4,374,943,831 $ 42,385 $113,800,000 $1,102 2.60% 99.47% 2006 108,381 4,789,376,811 44,190 121,000,000 1,116 2.53% 100.22% 2007 113,800 5,441,228,909 47,814 138,995,000 1,221 2.55% 100.54% 2008 115,506 6,089,499,775 52,720 153,730,000 1,331 2.52% 101.08% 2009 120,126 6,291,359,112 52,373 141,840,000 (3) 1,181 (3) 2.25%~3~ 86.74% (4) (1) Valuations shown are certified taxable assessed values reported by the Denton Central Appraisal District to the State Comptroller of Public Accounts. Certified values are subject to change throughout the year as contested values are resolved and the Appraisal District updates records. (2) Source: Denton Central Appraisal District as of August 5, 2008. (3) Projected, includes the Bonds. Excludes the Refunded Obligations. Preliminary, subject to change. (4) Collections for part year only, through January 31, 2009. For additional information regarding the City, please contact: Bryan Langley Laura Alexander Director of Finance David K. Medanich City of Denton First Southwest Company 215 E. McKinney Street or 777 Main Street, Suite 1200 Denton, Texas 76201 Fort Worth, Texas 76102 (940) 349-8224 (817) 332-9710 4 CITY OFFICIALS, STAFF AND CONSULTANTS ELECTED OFFICIALS Term City Council Expires Mark Burroughs May, 2010 Mayor Pete Kamp May, 2010 Mayor Pro Tem, At Large Place 5 Joe Mulroy May, 2010 Councilmember, At Large Place 6 Charlye Heggins May, 2009 Councilmember, District 1 Rudy Moreno May, 2009 Councilmember, District 2 Jack Thomson May, 2009 Councilmember, District 3 Chris Watts May, 2009 Councilmember, District 4 SELECTED ADMINISTRATIVE STAFF Name Position George C. Campbell City Manager Howard Martin Assistant City Manager Jon Fortune Assistant City Manager Fred Greene Assi stant C ity M anager Byan Langley Director of Finance Jennifer K. Walters City Secretary Anita Burgess City Attorney CONSULTANTS AND ADVISORS Auditors Weaver & Tidwell Dallas, Texas Bond Counsel McCall, Parkhurst & Horton L.L.P. Dallas, Texas Financial Advisor First Southwest Company Fort Worth, Texas 5 PRELIMINARY OFFICIAL STATEMENT RELATING TO ~ll,845,000 CITY OF DENTON,TEXAS GENERAL OBLIGATION REFUNDING BONDS, SERIES 2009 INTRODUCTION This Preliminary Official Statement, which includes the Appendices hereto, provides certain information regarding the issuance of $11,845,000 City of Denton, Texas, General Obligation Refunding Bonds, Series 2009 (the "Bonds"). Capitalized terms used in this Preliminary Official Statement have the same meanings assigned to such terms in the Ordinance adopted by the City Council of the City (the "Ordinance") except as otherwise indicated herein. In the Ordinance adopted on March 3, 2009, as permitted by the provisions of Chapter 1207, Texas Government Code, as amended (the "Act"), the City Council delegated the authority to certain City officials to establish the terms and details of the Bonds and to effect the sale of the Bonds pursuant to a pricing certificate executed by such officials. There follows in this Preliminary Official Statement descriptions of the Bonds and certain information regarding the City and its finances. All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each such document. Copies of such documents may be obtained from the City's Financial Advisor, First Southwest Company, Fort Worth, Texas. DESCRIPTION of TxE CITY ...The City of Denton, Texas is a political subdivision located in Denton County operating as a home- rule city under the laws of the State of Texas and a charter approved by the voters in 1959. The City operates under the CounciUManager form of government where the Mayor and six Councilmembers are elected for staggered two-year terms. The City Council formulates operating policy for the City while the City Manager is the chief administrative officer. The City is approximately 88.1 square miles in area. PLAN OF FINANCING PURPOSE ...Proceeds from the sale of the Bonds will be used (a) to refund a portion of the City's outstanding general obligation debt as shown on Schedule I hereto (the "Refunded Obligations"), for debt service savings, and (b) to pay the costs of issuing the Bonds. REFUNDED Bones ...Upon delivery of the Bonds, the City will deposit a portion of the proceeds from the sale of the Bonds with The Bank of New York Mellon Trust Company, National Association (the "Escrow Agent"). The amount of Bond proceeds so deposited, when added to other lawfully available funds contributed by the City, if any, will be sufficient to accomplish the discharge and final payment of the Refunded Bonds. Such funds will be held by the Escrow Agent in a special escrow account (the "Escrow Fund") and used to purchase direct obligations of the United States of America (the "Federal Securities"). Under the Escrow Agreement, the Escrow Fund is irrevocably pledged to the payment of principal of and interest on the Refunded Bonds and amounts therein will not be available to pay the Bonds. The Paying AgentlRegistrar for the Refunded Bonds will determine and certify at the time of delivery of the Bonds that the amounts deposited to the Escrow Fund will equal an amount sufficient to pay, on the scheduled redemption date, the principal of and interest on the Refunded Bonds. Investment earnings on amounts in the Escrow Fund will be paid to the City once the Refunded Bonds are paid in full. By deposit of the Federal Securities and cash, if necessary, with the Escrow Agent pursuant to the Escrow Agreement, the City will have effected the defeasance of all of the Refunded Bonds in accordance with Texas law. As a result of such defeasance, the Refunded Bonds will be outstanding only for the purpose of receiving payments from the Federal Securities and any cash held for such purpose by the Escrow Agent and such Refunded Bonds will not be deemed as being outstanding obligations of the City, and the obligations of the City to make payments in support of the debt service on such Refunded Bonds will be extinguished. ~ Preliminary, subj ect to change. 6 SOURCES AND USES of PROCEEDS ...The proceeds from the sale of the Bonds will be applied as follows: Sources ofFunds ParAmount of Bonds Net Original Issue Premium Accrued Interest Transfer from Prior Issue Debt Service Funds Total Sources of Funds $ - Uses of Funds Deposit to Escrow Fund $ - Deposit to Interest and Sinking Fund CostofIssuance~~~ Total Uses of Funds $ - (1) Includes Underwriters' Discount. THE BONDS DESCRIPTION of THE BONDS ...The Bonds are dated March 15, 2009, and mature, or are subject to redemption prior to maturity, on February 15 in each of the years and in the amounts shown on the cover page hereof. Interest will be computed on the basis of a 360-day year of twelve 30-day months, and will be payable on August 15 and February 15, commencing February 15, 2010. The definitive Bonds will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity and will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company, New York, New York ("DTC") pursuant to the Book-Entry-Only System described herein. No physical delivery of the Bonds will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Bonds will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds. See "The Bonds -Book-Entry-Only System" herein. AUTHORITY FOR ISSUANCE The Bonds are being issued pursuant to the Constitution and general laws of the State of Texas, particularly Chapter 1207, Texas Government Code, as amended and the Ordinance. SECURITY AND SOURCE of PAYMENT ...All taxable property within the City is subject to a direct annual ad valorem tax levied by the City sufficient to provide for the payment of principal of and interest on all Bonds which tax must be levied within the limits prescribed by law. TAx RAH LIMITATION ...All taxable property within the City is subject to the assessment, levy and collection by the City of a continuing, direct annual ad valorem tax sufficient to provide for the payment of principal of and interest on all ad valorem tax debt within the limits prescribed by law. Article XI, Section 5, of the Texas Constitution is applicable to the City, and limits its maximum ad valorem tax rate to $2.50 per $100 Taxable Assessed Valuation for all City purposes. The Home Rule Charter of the City adopts the constitutionally authorized maximum tax rate of $2.50 per $100 Taxable Assessed Valuation. OPTIONAi, REDEMPTION ...The Bonds are not subject to redemption prior to maturity. DEFEASANCE ...The Ordinance provides that any Bond and the interest thereon shall be deemed to be paid, retired, and no longer outstanding (a "Defeased Bond") within the meaning of such Ordinance when payment of the principal of such Bond, plus interest thereon to the due date either (i) shall have been made or caused to be made in accordance with the terms thereof, or (ii) shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying Agent/Registrar for such payment (1) lawful money of the United States of America sufficient to make such payment or (2) Government Obligations which mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money to provide for such payment, and when proper arrangements have been made by the City with the Paying Agent/RegistrarfOr the payment of its services until all Defeased Bonds shall have become due and payable. At such time as an Bond shall be deemed to be a Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, the ad valorem taxes herein levied and pledged as provided in the Ordinance, and such principal and interest shall be payable solely from such money or Government Obligations. Any moneys so deposited with the Paying Agent/Registrar may at the written direction of the City also be invested in Government Obligations, maturing in the amounts and times as hereinbefore set forth, and all income from such Government Obligations received by the Paying Agent/Registrar which is not required for the payment of the Bonds and interest thereon, with respect to which such money has been so deposited, shall be turned over to the City, or deposited as directed in writing to the City. The Ordinance provides that "Government Obligations" means (a) direct, noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America, (b) noncallable obligations of an agency or instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, and (c) noncallable obligations of a state or an agency or a county, municipality, or 7 other political subdivision of a state that have been refunded and that are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent. Upon such deposit as described above, such Defeased Bonds shall no longer be regarded to be outstanding obligations payable from ad valorem taxes levied by the City, but will be payable only from the funds and defeasance securities deposited in escrow and will not be considered debt of the City for any purpose. After firm banking and financial arrangements for the discharge and fmal payment or redemption of the Bonds have been made as described above, all rights of the City to initiate proceedings to call the Bonds for redemption or take any other action amending the terms of the Bonds are extinguished; provided, however, that the right to call the Bonds for redemption is not extinguished if the City: (i) in the proceedings providing for the firm banking and fmancial arrangements, expressly reserves the right to call the Bonds for redemption; (ii) gives notice of the reservation of that right to the owners of the Bonds immediately following the making of the firm banking and fmancial arrangements; (iii) directs that notice of the reservation be included in any redemption notices that it authorize; and (iv) at the time of the redemption, satisfies the conditions of the preceding paragraph with respect to such Bonds as though it was being defeased at the time of the exercise of the option to redeem the Bonds, after taking the redemption into account in determining the sufficiency of the provisions made for the payment of the Bonds. BOOK ENTRY ONLYSYSTEM... This section describes how ownership of the Bonds is to be transferred and how the principal of, premium, if any, and interest on the Bonds are to be paid to and credited by The Depository Trust Company ("DTC'), New York, New York, while the Bonds are registered in its nominee name. The information in this section concerning DTC and the Book- Entry-Only System has been provided by DTC for use in disclosure documents such as this Official Statement. The City believes the source of such information to be reliable, but takes no responsibility for the accuracy or completeness thereof. The City cannot and does not give any assurance that (1) DTC will distribute payments of debt service on the Bonds, or redemption or other notices, to DTC Participants, (2) DTC Participants or others will distribute debt service payments paid to DTC or its nominee (as the registered owner of the Bonds), or redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis, or (3) DTC will serve and act in the manner described in this Official Statement. The current rules applicable to DTC are on file with the Securities and Exchange Commission, and the current procedures of DTC to be followed in dealing with DTC Participants are on file with DTC. DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world's largest depository, is alimited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-U.S. equity, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.or~. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. 8 Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payment of redemption proceeds and principal and interest payments on the Bonds will be made to Cede & Co., or such other nominee as maybe requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the City or Paying AgentlRegistrar, on the payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC nor its nominee, Paying Agent/Registrar, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds and principal, and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or Paying AgentlRegistrar, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the City or Paying AgentlRegistrar. Under such circumstances, in the event that a successor depository is not obtained, certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, certificates will be printed and delivered. Use of Certain Terms in Other Sections of this Official Statement. In reading this Official Statement it should be understood that while the Bonds are in the Book-Entry-Only System, references in other sections of this Official Statement to registered owners should be read to include the person for which the Participant acquires an interest in the Bonds, but (i) all rights of ownership must be exercised through DTC and the Book-Entry-Only System, and (ii) except as described above, notices that are to be given to registered owners under the Ordinance will be given only to DTC. Information concerning DTC and the Book-Entry-Only System has been obtained from DTC and is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by the City or the Initial Purchaser. Effect of Termination of Book-Entry-Only System. In the event the Book-Entry-Only System with respect to the Bonds is discontinued by DTC, or the use of the Book-Entry-Only System with respect to the Bonds is discontinued by the City, printed certificates will be issued to the respective holders of the Bonds, as the case may be, and the respective Bonds will be subject to transfer, exchange, and registration provisions as set forth in the Ordinance, summarized under "The Bonds and Notes -Transfer, Exchange, and Registration" below. PAYING AGENT/REGISTRAR ...The initial Paying Agent/Registrar is The Bank of New York Mellon Trust Company, N.A., Dallas, Texas. In the Ordinance the City retains the right to replace the Paying Agent/Registrar. The City covenants to maintain and provide a Paying AgentlRegistrar at all times until the Bonds are duly paid and any successor Paying Agent/Registrar shall be a commercial bank or trust company organized under the laws of the State of Texas or other entity duly qualified and legally authorized to serve as and perform the duties and services of Paying Agent/Registrar for the Bonds. Upon any change in the Paying AgentlRegistrar for the Bonds, the City agrees to promptly cause a written notice thereof to be sent to each registered owner of the Bonds by United States mail, first class, postage prepaid, which notice shall also give the address of the new Paying Agent/Registrar. Principal of the Bonds is payable to the registered holder appearing on the registration books of the Paying AgentlRegistrar (the "Registered Owner") at the designated corporate trust office of the Paying Agent/Registrar upon surrender of the Bonds for payment. Interest on the Bonds is payable to the Register Owners appearing on the registration books of the Paying Agent/Registrar at the close of business on the Record Date (identified below) and such interest shall be paid by the Paying Agent/Registrar by check mailed, first class postage prepaid, to the Register Owner or by such other arrangement, acceptable to the Paying AgentlRegistrar, requested by and at the risk and expense of the Registered Owner. If the date for the payment of the principal of or interest on the Bonds shall be a Saturday, Sunday, a legal holiday, or a day when banking institutions in the city where the designated corporate office of the Paying AgentlRegistrar is located is authorized by law or executive order to close, 9 then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day when banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. TRANSFER, EXCHANGE A~ REGISTRATION In the event the Book-Entry-Only System should be discontinued, printed Bonds will be delivered to the registered owners and thereafter the Bonds maybe transferred and exchanged on the registration books of the Paying Agent/Registrar only upon presentation and surrender of such printed Bonds to the Paying AgentlRegistrar and such transfer or exchange shall be without expense or service charge to the registered owner, except for any tax or other governmental charges required to be paid with respect to such registration, exchange and transfer. Bonds may be assigned by the execution of an assignment form on the Bonds or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar. New Bonds will be delivered by the Paying AgentlRegistrar, in lieu of the Bonds being transferred or exchanged, at the designated office of the Paying Agent/Registrar, or sent by United States mail, first class, postage prepaid, to the new registered owner or his designee. To the extent possible, new Bonds issued in an exchange or transfer of Bonds will be delivered to the registered owner or assignee of the registered owner in not more than three business days after the receipt of the Bonds to be canceled, and the written instrument of transfer or request for exchange duly executed by the registered owner or his duly authorized agent, in form satisfactory to the Paying AgentlRegistrar. New Bonds registered and delivered in an exchange or transfer shall be in any integral multiple of $5,000 for any one maturity and for a like aggregate principal amount as the Bonds surrendered for exchange or transfer. See "The Bonds-Book-Entry-Only System" herein for a description of the system to be utilized initially in regard to ownership and transferability of the Bonds. Neither the City nor the Paying AgentlRegistrar shall be required to transfer or exchange any Bond called for redemption, in whole or in part, within 45 days of the date fixed for redemption; provided, however, such limitation of transfer shall not be applicable to an exchange by the registered owner of the uncalled balance of a Bond. RECORD DATE Fox INTEREST PAYMENT ...The record date ("Record Date") for the interest payable on the Bonds on any interest payment date means the close of business on the last business day of the month next preceding such interest payment date. In the event of anon-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying AgentlRegistrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest ("Special Payment Date", which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of a Bond appearing on the registration books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. BONDHOLDERS' REMEDIES ...The Ordinances do not specify events of default with respect to the Bonds. If the City defaults in the payment of principal, interest, or redemption price on the Bonds when due, or the City defaults in the observation or performance of any other covenants, conditions, or obligations set forth in an Ordinance, the registered owners of the Bonds, may seek a writ of mandamus to compel the City or City officials to carry out the legally imposed duties with respect to the applicable Bonds if there is no other available remedy at law to compel performance of the Bonds or the Ordinance and the City's obligations are not uncertain or disputed. The issuance of a writ of mandamus is controlled by equitable principles, so rests with the discretion of the court, but may not be arbitrarily refused. There is no acceleration of maturity of the Bonds in the event of default and, consequently, the remedy of mandamus may have to be relied upon from year to year. The Ordinance does not provide for the appointment of a trustee to represent the interest of the holders of the Bonds upon any failure of the City to perform in accordance with the terms of the Ordinance, or upon any other condition and accordingly all legal actions to enforce such remedies would have to be undertaken at the initiative of, and be financed by, the registered owners. On June 30, 2006, the Texas Supreme Court ruled in Tooke v. City of Mexia, 197 S.W.3d 325 (Tex. 2006) that a waiver of sovereign immunity in a contractual dispute must be provided for by statute in "clear and unambiguous" language. Because it is unclear whether the Texas legislature has effectively waived the City's sovereign immunity from a suit for money damages, Bondholders may not be able to bring such a suit against the City for breach of the Bonds or Ordinance covenants in the absence of City action. Chapter 1371, Texas Government Code ("Chapter 1371 which pertains to the issuance of public securities by issuers such as the City, permits the City to waive sovereign immunity in the proceedings authorizing its bonds, but in connection with the issuance of the Bonds, the City has not waived sovereign immunity and is not using the legal authority provided by Chapter 1371. Even if a judgment against the City could be obtained, it could not be enforced by direct levy and execution against the City's property. Further, the registered owners cannot themselves foreclose on property within the City or sell property within the City to enforce the tax lien on taxable property to pay the principal of and interest on the Bonds. Furthermore, the City is eligible to seek relief from its creditors under Chapter 9 of the U.S. Bankruptcy Code ("Chapter 9"). Although Chapter 9 provides for the recognition of a security interest represented by a specifically pledged source of revenues, the pledge of ad valorem taxes in support of a general obligation of a bankrupt entity is not specifically recognized as a security interest under Chapter 9. Chapter 9 also includes an automatic stay provision that would prohibit, without Bankruptcy Court approval, the prosecution of any other legal action by creditors or Bondholders of an entity which has sought protection under Chapter 9. Therefore, should the City avail itself of Chapter 9 protection from creditors, the ability to enforce would be subject to the approval of the Bankruptcy Court (which could require that the action be heard in Bankruptcy Court instead of other federal or state court); and the Bankruptcy Code provides for broad discretionary powers of a Bankruptcy Court in administering any proceeding brought before it. The opinions of Bond Counsel will note that all opinions relative to the enforceability of the Bonds are qualified with respect to the customary rights of debtors relative to their creditors. 10 TAX INFORMATION A~ VALOREM TAx LAw ...The appraisal of property within the City is the responsibility of the Denton Central Appraisal District (the "Appraisal District"). Excluding agricultural and open-space land, which may be taxed on the basis of productive capacity, the Appraisal District is required under V.T.C.A., Title I, Tax Code, as amended (the "Property Tax Code") to appraise all property within the Appraisal District on the basis of 100% of its market value and is prohibited from applying any assessment ratios. In determining market value of property, different methods of appraisal may be used, including the cost method of appraisal, the income method of appraisal and market data comparison method of appraisal, and the method considered most appropriate by the chief appraiser is to be used. State law further limits the appraised value of a residence homestead for a tax year to an amount not to exceed the lesser of (1) the market value of the property, or (2) the sum of (a)10% of the appraised value of the property for the last year in which the property was appraised for taxation times the number of years since the property was last appraised, plus (b) the appraised value of the property for the last year in which the property was appraised plus (c) the market value of all new improvements to the property. The value placed upon property within the Appraisal District is subject to review by an Appraisal Review Board, consisting of three members appointed by the Board of Directors of the Appraisal District. The Appraisal District is required to review the value of property within the Appraisal District at least every three years. The City may require annual review at its own expense, and is entitled to challenge the determination of appraised value of property within the City by petition filed with the Appraisal Review Board. Reference is made to the Property Tax Code, for identification of property subject to taxation; property exempt or which may be exempted from taxation, if claimed; the appraisal of property for ad valorem taxation purposes; and the procedures and limitations applicable to the levy and collection of ad valorem taxes. Article VIII of the State Constitution ("Article VIII") and State law provide for certain exemptions from property taxes, the valuation of agricultural and open-space lands at productivity value, and the exemption of certain personal property from ad valorem taxation. Under Section 1-b, Article VIII, and State law, the governing body of a political subdivision, at its option, may grant: (1) an exemption of not less than $3,000 of the market value of the residence homestead of persons 65 years of age or older and the disabled from all ad valorem taxes thereafter levied by the political subdivision; (2) an exemption of up to 20% of the market value of residence homesteads. The minimum exemption under this provision is $5,000. In the case of residence homestead exemptions granted under Section 1-b, Article VIII, ad valorem taxes may continue to be levied against the value of homesteads exempted where ad valorem taxes have previously been pledged for the payment of debt if cessation of the levy would impair the obligation of the contract by which the debt was created. As of January 1, 2004, under Article VIII and State law, the governing body of a county, municipality or junior college district may provide for a freeze on total amount of ad valorem levied on the residence homestead of a disabled person or persons 65 years of age or older above the amount of tax imposed in the year such residence qualified for such exemption. Also, upon receipt of a petition signed by five percent of the registered voters of the county, municipality or junior college district, an election must be held to determine by majority vote whether to establish such a limitation on taxes paid on residence homesteads of persons 65 years of age or who are disabled. Upon providing for such exemption, the total amount of taxes imposed on such homestead cannot be increased except for improvements and such freeze is transferable to a different residence homestead and to the surviving spouse living in such homestead who is disabled or is at least 55 years of age. Once established such freeze cannot be repealed or rescinded. State law and Section 2, Article VIII, mandate an additional property tax exemption for disabled veterans or the surviving spouse or children of a deceased veteran who died while on active duty in the armed forces; the exemption applies to either real or personal property with the amount of assessed valuation exempted ranging from $5,000 to a maximum of $12,000. Article VIII provides that eligible owners of both agricultural land (Section 1-d) and open-space land (Section 1-d-1), including open-space land devoted to farm or ranch purposes or open-space land devoted to timber production, may elect to have such property appraised for property taxation on the basis of its productive capacity. The same land may not be qualified under both Section 1-d and 1-d- l . Nonbusiness personal property, such as automobiles or light trucks, are exempt from ad valorem taxation unless the governing body of a political subdivision elects to tax this property. Boats owned as nonbusiness property are exempt from ad valorem taxation. Article VIII, Section 1 j, provides for "freeport property" to be exempted from ad valorem taxation. Freeport property is defined as goods detained in Texas for 175 days or less for the purpose of assembly, storage, manufacturing, processing or fabrication. Notwithstanding such exemption, counties, school districts, junior college districts and cities may tax such tangible personal property provided official action to tax the same was taken before April 1, 1990. Decisions to continue to tax maybe reversed in the future; decisions to exempt freeport property are not subject to reversal. Article VIII, Section 1-n of the Texas Constitution provides for the exemption from taxation of "goods-in-transit." "Goods-in- transit" is defined by a provision of the Tax Code, which is effective for tax years 2008 and thereafter, as personal property acquired or imported into Texas and transported to another location in the State or outside of the State within 175 days of the date the property was acquired or imported into Texas. The exemption excludes oil, natural gas, petroleum products, aircraft and special inventory, including motor vehicle, vessel and out-board motor, heavy equipment and manufactured housing inventory. The Tax Code provision permits local governmental entities, on a local option basis, to take official action by January 1 of the year preceding a tax year, after holding a public hearing, to tax "goods-in-transit" during the following tax year. A taxpayer may only receive either the freeport exemption or the "goods-in-transit" exemption for items of personal property. 11 The City or Denton County may create one or more tax increment financing districts ("TIF") within the City or Denton County, as applicable, and freeze the taxable values of property in the TIF at the value at the time of its creation. Other overlapping taxing units levying taxes in the TIF may agree to contribute all or part of future ad valorem taxes levied and collected against the value of property in the TIF in excess of the "frozen values" to pay or finance the costs of certain public improvements in the TIF. Taxes levied by the City against the values of real property in the TIF in excess of the "frozen" value are not available for general city use but are restricted to paying or financing "project costs" within the TIF. The City also may enter into tax abatement agreements to encourage economic development. Under the agreements, a property owner agrees to construct certain improvements on its property. The City in turn agrees not to levy a tax on all or part of the increased value attributable to the improvements until the expiration of the agreement. The abatement agreement could last for a period of up to 10 years. EFFECTIVE TAX RATE AND ROLLBACK TAX RATE ...Under the current Property Tax Code a governing body of a taxing unit is required to adopt its annual tax rate per $100 taxable value for the unit before the later of September 30 or the 60th day after the date the certified appraisal roll is received by the taxing unit, and a failure to adopt a tax rate by such required date will result in the tax rate for the taxing unit for the tax year to be the lower of the effective tax rate calculated for that tax year or the tax rate adopted by the taxing unit for the preceding tax year. By each September 1 or as soon thereafter as practicable, the City Council adopts a tax rate per $100 taxable value for the current year. The tax rate consists of two components: (1) a rate for funding of maintenance and operation expenditures, and (2) a rate for debt service. Under the Property Tax Code, the City must annually calculate and publicize its "effective tax rate" and "rollback tax rate". The City Council may not adopt a tax rate that exceeds the lower of the effective tax rate or the rollback tax rate until it has held two public hearings on the proposed increase following notice to the taxpayers and otherwise complied with the Property Tax Code. If the adopted tax rate exceeds the rollback tax rate the qualified voters of the City by petition may require that an election be held to determine whether or not to reduce the tax rate adopted for the current year to the rollback tax rate. "Effective tax rate" means the rate that will produce last year's total tax levy (adjusted) from this year's total taxable values (adjusted). "Adjusted" means lost values are not included in the calculation of last year's taxes and new values are not included in this year's taxable values. "Rollback tax rate" means the rate that will produce last year's maintenance and operation tax levy (adjusted) from this year's values (adjusted) multiplied by 1.08 plus a rate that will produce this year's debt service from this year's values (unadjusted) divided by the anticipated tax collection rate. The Property Tax Code provides that certain cities and counties in the State may submit a proposition to the voters to authorize an additional one-half cent sales tax on retail sales of taxable items. If the additional tax is levied, the effective tax rate and the rollback tax rate calculations are required to be offset by the revenue that will be generated by the sales tax in the current year. Reference is made to the Property Tax Code for definitive requirements for the levy and collection of ad valorem taxes and the calculation of the various defined tax rates. PROPERTY ASSESSMENT AND TAX PAYMENT ...Property within the City is generally assessed as of January 1 of each year. Business inventory may, at the option of the taxpayer, be assessed as of September 1. Oil and gas reserves are assessed on the basis of a valuation process which uses an average of the daily price of oil and gas for the prior year. Taxes become due October 1 of the same year, and become delinquent on February 1 of the following year. Taxpayers 65 years old or older are permitted by State law to pay taxes on homesteads in four installments with the first due on February 1 of each year and the final installment due on August 1. PENALTIES AND INTEREST Charges for penalty and interest on the unpaid balance of delinquent taxes are made as follows: Cumulative Cumulative Month Penalty Interest Total February 6% 1% 7% March 7 2 9 April 8 3 11 May 9 4 13 June 10 5 15 July 12 6 18 After July, penalty remains at 12%, and interest increases at the rate of 1% each month. In addition, if an account is delinquent in July, an attorney's collection fee of up to 20% may be added to the total tax penalty and interest charge. Under certain circumstances, taxes which become delinquent on the homestead of a taxpayer 65 years old or older incur a penalty of 8% per annum with no additional penalties or interest assessed. In general, property subject to the City's lien maybe sold, in whole or in parcels, pursuant to court order to collect the amounts due. Federal law does not allow for the collection of penalty and interest against an estate in bankruptcy. Federal bankruptcy law provides that an automatic stay of action by creditors and other entities, including governmental units, goes into effect with the filing of any petition in bankruptcy. The automatic stay prevents governmental units from foreclosing on property and prevents liens for post-petition taxes from attaching to property and obtaining secured creditor status unless, in either case, an order lifting the stay is obtained from the bankruptcy court. In many cases post-petition taxes are paid as an administrative expense of the estate in bankruptcy or by order of the bankruptcy court. 12 CITY APPLICATION of Tax CODE ...The City grants an exemption to the market value of the residence homestead of persons 65 years of age or older of $25,000 and those who are disabled of $10,000. The City grants an additional one-half of one percent, or a minimum of $5,000 exemption of the market value of residence homesteads. See Table 1 for a listing of the amounts of the exemptions described above. Ad valorem taxes are not levied by the City against the exempt value of residence homesteads for the payment of debt. The City does not tax nonbusiness personal property. The County began collecting taxes for the City during the fiscal year 2006-07. The City does not allow split payments, and discounts are not allowed. The City does not tax freeport property. The City collects the additional one-half cent sales tax for reduction of ad valorem taxes. The City does tax "goods-in-transit". The City has not adopted the tax freeze for citizens who are disabled or are 65 years of age or older, which became a local option and subject to local referendum on January 1, 2004. The City has adopted a tax abatement policy. Tax ABATEMENT Policy ...The City has established a tax abatement program to encourage economic development. In 1990 the City Council adopted a resolution setting guidelines and criteria for granting abatements in reinvestment zones created within the City. These guidelines specifically note that incentives are limited to companies which create new wealth and do not adversely affect existing businesses operating within the City. On July 31, 2001, the council voted to abate taxes on 100% of new valuation generated from the expansion of the Peterbilt Motors regional headquarters building in Denton for ten years. The company was required to spend a minimum of $5,000,000 on the renovation and consolidate approximately 35 jobs to the facility. On May 13, 2003, the council voted to rebate 40% of ad valorem taxes paid for a new facility and new equipment to Sally Beauty Company for 10 years, beginning in 2004, under a Chapter 380 Economic Development Program Agreement. The new property value is estimated at $23,500,000. On September 2, 2003, the council voted to abate taxes on 35% of $30,000,000 for expansion and renovations to an existing facility to Flowers Foods Bakeries Group for 5 years beginning in 2005. Flower Foods employs approximately 355 employees. The tax abatement agreement provides for the thresholds to be phased-in over three years. The agreement requires a total threshold of $30,000,000 over the 3-year period. On March 2, 2004, the council voted to abate taxes on 35% of approximately $6,000,000 for a new facility and equipment to Fastenal Company for five years, beginning in 2007. Fastenal completed a new 200,000 square foot regional headquarters/distribution center near the Denton Municipal Airport in the fall of 2008. The project will employ approximately 200 when in full operation. The tax abatement agreement requires a minimum threshold of $5,000,000 in valuation. On March 1, 2005, the council voted to grant an amount equal to 50% of the ad valorem taxes paid for new facilities within the Granite Point Business Park for ten years. Granite Properties is constructing Denton's first speculative building industrial park. When complete the park will have over 900,000 square feet under roof. Granite Point Phase I has constructed two speculative buildings for a combined 297,500 square feet of space. On August 21, 2007, the council voted to abate taxes on 100% of ad valorem taxes on approximately $50,000,000 for a new 500,000 square foot distribution center including inventory and equipment to Aldi Incorporated for seven years. The company is required to complete construction of Westcourt Road at an estimated cost of $2,500,000. The 500,000 square foot distribution facility, which broke ground in June 2008, will employ 100 people and service 25 stores located in North Texas. Two to three stores are planned in the City of Denton. Aldi anticipates completing construction by late 2009 to the early 2010. On February 19, 2008, the council voted to grant an amount equal to 75% of the ad valorem taxes paid to Jostens Incorporated for the expansion of their facility and equipment for seven years. Jostens expanded their facility by 13,000 square feet in July of 2008. The project also created 130 new jobs with an annual wage increase of approximately $4.5 Million. 13 TABLE I -VALUATION, EXEMPTIONS AND GENERAL OBLIGATION DEBT 2008/09 Market Valuation Established by Denton Central Appraisal District $6,987,434,360 Less Exemptions/Reductions at 100% Market Value: Residence Homestead Exemptions $ 81,648,837 Over 65 Exemptions 109,375,564 DisabledPersonsExempbons 3,125,290 Disabled Veterans Exemptions 4,272,745 Agricultural Land Use Productivity 253,044,883 HistoricaUOther Exemptions 5,495,191 Freeport Exemptions 189,305,597 Abatement Exemptions 12,998,382 Prorated Exempt Property 1,162,702 PollutionExemptions 27,530,388 Homestead Cap Adjustment 8,115,669 696,075,248 2008/09 Taxable Assessed Valuation (as of 8-5-08) $ 6,291,359,112 City Funded Debt Payable from Ad Valorem Taxes (as of 1-31-09)~l~ General ObligationBonds $ 76,570,000 Certificates of Obligation 65,325,000 The Bonds 11,845,000 (3) Funded Debt Payable from Ad Valorem Taxes $ 153,740,000 Less Self Supporting General Obligation Debt~4~ Solid Waste System General Obligation Debt $ 17,207,781(5) Drainage System General Obligation Debt 10,602,394 (5) 27,810,175 Net Tax Supported Debt Payable from Ad Valorem Taxes $ 125,929,825 Interest and Sinking Fund as of 1-31-09 (unaudited) $ 3,554,102 Ratio Total Funded Debt to Taxable Assessed Valuation 2.44% Ratio Net Funded Debt to Taxable Assessed Valuation ~ 2.00% 2009 Estimated Population - 120,126 Per Capita Taxable Assessed Valuation - $52,373 Per Capita Total Funded Debt - $1,280 Per Capita Net Funded Debt - $1,048 (1) The above statement of indebtedness does not include $282,200,000 Utility System Revenue Bonds as these bonds are payable solely from the net revenues of the Utility System (the "System"), as defined in the ordinances authorizing the bonds. (2) Excludes the Refunded Obligations. Preliminary, subject to change. (3) Preliminary, subject to change. (4) General Obligation debt in the amounts shown for which repayment is provided from revenues of the respective revenue systems. The amount of self supporting debt is based on the percentages of revenue support as shown in Table 9. It is the City's current policy to provide these payments from respective system revenues; this policy is subject to change in the future. (5) Includes a portion of the Bonds. Preliminary, subject to change. 14 TABLE Z -TAXABLE ASSESSED VALUATIONS BY CATEGORY (1) Taxable Appraised Value for Fiscal Year Ended September 30, 2009 2008 2007 of % of % of Category Amount Total Amount Total Amount Total Real, Residential, Single Family $3,397,880,407 48.63% $3,192,783,727 48.35% $2,927,902,799 50.15% Real, Residential, Multi-Family 638,906,357 9.14% 552,635,146 8.37% 454,710,640 7.79% Real, VacantLots/Tracts 160,766,209 2.30% 135,800,628 2.06% 131,508,053 2.25% Real, Acreage (Land Only) 330,913,400 4.74% 330,570,774 5.01% 277,588,810 4.75% Real, Farm and Ranch Improvements 32,526,580 0.47% 51,987,396 0.79% 29,732,528 0.51% Real, Commercial and Industrial 1,416,914,699 20.28% 1,326,705,553 20.09% 1,085,722,435 18.60% Real, Oil, Gas, and Other Mineral Reserves 51,531,540 0.74% 46,500,010 0.70% 57,823,640 0.99% Real and Tangible Personal, Utilities 84,395,222 1.21% 68,372,262 1.04% 62,085,822 1.06% Tangible Personal, Commercial and Industrial 778,403,096 11.14% 785,231,437 ll.89% 737,260,202 12.63% Tangible Personal, Other 20,656,852 0.30% 19,919,543 0.30% 23,654,377 0.41% Real and Special Property, Inventory 74,539,998 1.07% 92,889,789 L41% 50,263,276 0.86% Total Appraised Value Before Exemptions $ 6,987,434,360 100.00% $ 6,603,396,265 100.00% $ 5,838,252,582 100.00% Less: Total Exemptions/Reductions (696,075,248) (671,868,100) (593,625,675) Noncatagorizable Property - - 674,208 Supplements - 157,971,610 195,927,794 Taxable Assessed Value $6,291,359,112 $ 6,089,499,775 $5,441,228,909 Taxable Appraised Value for Fiscal Year Ended September 30, 2006 2005 of % of Category Amount Total Amount Total Real, Residential, Single Family $2,630,845,438 50.72% $ 2,445,993,713 51.86% Real, Residential, Multi-Family 446,271,900 8.60% 415,779,403 8.82% Real, VacantLots/Tracts 98,411,369 L90% 89,988,573 L91% Real, Acreage (Land Only) 222,710,266 4.29% 218,495,173 4.63% Real, Farm and Ranch Improvements 23,387,957 0.45% 18,670,346 0.40% Real, Commercial and Industrial 1,000,517,019 19.29% 859,873,094 18.23% Real, Oil, Gas, and OtherMineral Reserves 26,722,880 0.52% 22,681,700 0.48% Real and Tangible Personal, Utilities 61,453,659 L 18% 71,236,279 L51% Tangible Personal, Commercial and Industrial 577,041,159 11.12% 474,612,410 10.06% Tangible Personal, Other 26,019,704 0.50% 27,083,367 0.57% Real Property, Inventory 73,514,372 L42% 71,809,892 L52% Total Appraised Value Before Exemptions $ 5,186,895,723 100.00% $ 4,716,223,950 100.00% Less: Total Exemptions/Reductions (493,123,258) (445,814,852) Supplements 95,604,346 104,534,733 Taxable Assessed Value $4,789,376,811 $ 4,374,943,831 (1) Valuations shown are certified taxable assessed values reported by the Denton Central Appraisal District to the State Comptroller of Public Accounts. Certified values are subject to change throughout the year as contested values are resolved and the Appraisal District updates records. For the Fiscal Year ended 2009 the values are as of August 5, 2008. 15 TABLE 3 -VALUATION AND GENERAL OBLIGATION DEBT HISTORY Ratio Fiscal Taxable Tax Debt Tax Debt Funded Year Taxable Assessed Outstanding to Taxable Debt Ended Estimated Assessed Valuation at End Assessed Per 9/30 Population (1) Valuation Per Capita of Year Valuation Capita 2005 103,220 $ 4,374,943,831 $ 42,385 $113,800,000 2.60% $1,102 2006 108,381 4,789,376,811 44,190 121,000,000 2.53% 1,116 2007 113,800 5,441,228,909 47,814 138,995,000 2.55% 1,221 2008 115,506 6,089,499,775 52,720 153,730,000 2.52% 1,331 2009 120,126 6,291,359,112 (3) 52,373 141,840,000 (4) 2.25% (4) 1,181 (4) (1) Source: City Officials. (2) Valuations shown are certified taxable assessed values reported by the Denton Central Appraisal District to the State Comptroller of Public Accounts. Certified values are subject to change throughout the year as contested values are resolved and the Appraisal District updates records. (3) Source: Denton Central Appraisal District as of August 5, 2008. (4) Projected, includes the Bonds. Excludes the Refunded Obligations. Preliminary, subject to change. TABLE 4 -TAX RATE, LEVY AND COLLECTION HISTORY Fiscal Year Distribution Ended Tax General Interest and % Current % Total 9/30 Rate Fund Sinking Fund Tax Levy (1) Collections Collections 2005 $ 0.59815 $0.39928 $ 0.19887 $26,457,399 98.33% 99.47% 2006 0.60815 0.42928 0.17887 29,545,033 98.71% 100.22% 2007 0.62652 0.44765 0.17887 34,302,228 99.36% 100.54% 2008 0.66652 0.44765 0.21887 40,816,256 98.87% 101.08% 2009 0.66652 0.44765 0.21887 41,933,167 86.42% (2) 86.74% (1) Tax levy for the current year is based on the Certified Value. Prior years represent adjusted values. (2) Collections for part year only, through January 31, 2009. TABLE S -TEN LARGEST TAXPAYERS 2008/09 % of Total Taxable Taxable Assessed Assessed Name of Taxpayer Nature of Property Valuation Valuation TTHR Limited Partnership HospitaUProfessional Building $107,542,951 1.71% United Copper Industries Copper Wire Manufacturer 103,997,767 1.65% Anderson Merchandisers Distribution Center 81,480,284 1.30% Columbia Medical Center of Denton HospitaUProfessional Building 76,206,635 1.21% Paccar Inc. Diesel Truck Manufacturing 73,786,776 1.17% Inland Western Denton Crossing Ltd PS Real Estate Development 56,335,586 0.90% GTE Southwest Inc. DBA Verizon Telephone Utility 41,254,060 0.66% Allegiance Hillview, LP Real Estate Development 31,846,689 0.51% SCI Gateway at Denton Fund 25 LLC Commercial Lots/Real, Industrial 29,674,452 0.47% GEL Timberlinds LLCD Residentail Multifamily 28,468,471 0.45% $630,593,671 10.02% Source: Denton County Tax Office. GENERAL OBLIGATION DEBT LIMITATION No general obligation debt limitation is imposed on the City under current State law or the City's Home Rule Charter (see "The Bonds -Tax Rate Limitation"). 16 TABLE 6 -ESTIMATED OVERLAPPING DEBT Expenditures of the various taxing entities within the territory of the City are paid out of ad valorem taxes levied by such entities on properties within the City. Such entities are independent of the City and may incur borrowings to finance their expenditures. This statement of direct and estimated overlapping ad valorem tax bonds ("Tax Debt") was developed from information contained in "Texas Municipal Reports" published by the Municipal Advisory Council of Texas. Except for the amounts relating to the City, the City has not independently verified the accuracy or completeness of such information, and no person should rely upon such information as being accurate or complete. Furthermore, certain of the entities listed may have issued additional Tax Debt since the date hereof, and such entities may have programs requiring the issuance of substantial amounts of additional Tax Debt, the amount of which cannot be determined. The following table reflects the estimated share of overlapping Tax Debt of the City. 2008/09 City's Authorized Taxable 2008/09 Total Estimated Overlapping But Unissued Assessed Tax Funded % Funded Debt Debt As Of Taxing Jurisdiction Value Rate Debt Applicable As of 1-31-09 1-31-09 City ofDenton $6,291,359,112 $ 0.66652 $125,929,825 (1) 100.00% $125,929,825 $10,334,000 DentonIndependentSchoolDistrict 8,647,335,354 1.49000 641,124,535 64.64% 414,422,899 116,745,000 Denton County 52,623,713,084 0.23577 285,616,003 11.96% 34,159,674 80,195,625 Argyle Independent School District 938,163,389 1.41005 56,948,687 7.55% 4,299,626 - AubreyIndependentSchoolDistrict 516,112,083 1.48560 54,495,358 0.01% 5,450 - KrumIndependent School District 748,598,711 1.36550 48,465,303 L94% 940,227 - Pilot Point Independent School District 402,544,416 1.32122 19,269,576 0.06% 11,562 - PonderIndependent School District 920,650,681 1.32122 32,835,000 L 12% 367,752 - SangerIndependent School District 634,455,462 1.37000 30,927,685 0.11% 34,020 - Total Direct and Overlapping Funded Debt $ 580,171,035 Ratio of Direct and OverlappingFunded Debt to Taxable Assessed Valuation 9.22% Per Capita Overlapping Funded Debt $ 4,829.69 (1) Includes the Bonds, less self supporting debt. Excludes the Refunded Obligations. Preliminary, subject to change. 17 DEBT INFORMATION ~ ~ o a a o ~ ~ a~ O U N ~ ~ °o c ~ ~ ~ 00 O ~ M ~D 00 O ~ ~ ~ ~ ~n l~ ~ o ~n ~n ~ ~ N M ~ ~ ~ ~ ~ 01 M M ~ N ~ U ~ O ~n ~D \D N ~ \0 ~ oo -i N O N oo ~ ~ ~ 01 N ~n ~ M ~ o~ o ~ ~o ~ o0 0 ~ ~ o N ~ ~ o M N ~ o~ M ~ ~ ~ ~ m o m o ~ ~ ~ ~ o N o ~ o0 00 ~ N ~ o N m by ~ ~ N O M M ~ ~ `0 ~ V7 N ~ M V7 l~ V7 -i l~ l~ 01 ~(1 01 -i O V1 • ~ ~ M 01 c0 01 O a1 ~ m ~ `0 00 ~ ~ ~ LO 01 M l~ ~ cd ~ ~ ~ ~ ~ M ri ~ 0 0 o a~ oo ~ ~ ~o ~n ~ M N cv o Q ~ ~ ~ ~ O C~ U U U M M D1 O 01 M M M O O M DO 00 00 00 ~D O 00 O O ~+'a ~ ~ Q1 l~ l~ \D N l~ l~ l~ ~ `0 V7 `0 M M M ~(1 M ~ . b!) m ~D ~ ~ ~ M M O O N l~ O M l~ N ~D 00 CO V1 O O ~ O ~ ~ ~ ~ 01 ~ ~ ~ a1 N a1 -a N ~ ~ ~ 00 M N ~ l~ -i U ~ . ~ ~ M ~ oo Lo o~ M ~ oo ~ ~ M M M M M M ~ ~ ~ ~ N • ~ ~ ~ a~ 0 0 0 0 ~ ~ ~ oo ~ ~ ~ ~n ~n ~n ~n v-~ ~n ~n v-~ ~n oo ~ ~ ~ ~ -i ~ ~ ~ ~ ~ a U ~ N ~ M M N O ~n ~n o0 0o m oo ~D M ~n ~ M ~ 00 ~ ~ ' ~ ~ ~n M N ~ o~ ~ ~ ~o ~o N ~ o ~ a~ N r ~ M ~n M ~ ~ ~ m o0 01 ~n oo O a1 ~n N d1 ~ \0 l~ ~n ~n ~ 01 ~n l~ ~ ~ ~ ~ ' U~ ~ ~ ~ N o 00 M ~o ~ ~ o0 00 ~ oo ~ ~ O N ~ M N ~ ~D a O ~ ~ ~ LD Lo ~ ~ ~ ~ ~ ~ ~ ~ ~ oo ~ ~ ~ M ~ l~ oo ~ s~ ~ ~ ~ ~n N N o~ ~ m oo ~ ~ ~ ~ ~ ~o ~ ~ M M ~ oo ~ ~ ~ Q N N N N ~ -i ~ ~ ~ ~ ~ ~ ~ O c+ ~ O U 0o M ~ M ~ o, M o0 0o N o~ ~n M ~ o ~ M N ~ N ~ ~ ~ ~ ~ o, ~ ~ a, ~ ~n oo ~ N oo ~ ~n ~o 0 0, ~ 0 0 oo ~ ~ Lo M o ~ ~ ~n ~ ~ ~ M ~ ~ ~ ~ ~ ~ ~ M ~ ~ cri ~ ~ ~n oo ~ o 00 Sri oo ~ o m o ~ ~ o m ~ ~ ~ a~ ~ o ~ N ~ N N oo ~ N ~n o0 0 ~ ~ ~ ~ N ~ ~ ~ o ~ ~ Q o0 ~ ~ LD ~ M cri N ~ ~ ~ a1 DO ~ ~ ~ ~ cri cri ~ ~ + 4~ ~ ~ ~ ~ o ~ o M ~ ~ ' N O ~ O ~ O O ' ' ' ' ' ' ' ' ' ' ' ' N N O l~ ~n 01 ~D ~ ~ 00 ~n U ~ l~ O 01 l~ v~ ~ U ~ O ~ ~D O d1 d1 d1 ~C ~ ~ \0 ~ ~ ~ M M o0 W U N N N N ~ ~ b4 b4 ~ ~ ~ ~ ~ ~ ~ M ~ N ~ N O V7 M ~ ~ l~ ~n 01 ~D ~ ~ 00 ~n O c~ ~ ~ ~D l~ ~ 01 `0 ~ iri ~ S~ -0 O ~ ~ ~ ~ ~ ~ b4 b4 N ~ ~ ~ rn U N ~ ' O O O O O O O ' ' ' ' ' ' ' ' ' ' ' ' O 'd U 0 0 0 0 0 0 0 O ~ U ~ 0 0 0 0 0 0 0 O U~ • ~n O ~n O ~n O O ~n ~ ~ U oo ~ N ~ ~ oo ~ ~ • ~ ~ ~ o M ~ ~o ~n M M oo ~ ~ N N N N ~ ~ W ~ ~ ~ O ~ ~ ~ o 00 ~ ~ ~D ~ M o0 0o N 0~ ~n M ~ o ~ M N ~ O O ~ ~ 0~0 ~ N ~ 01 M a1 N ~n oo ~ N 00 ~ ~n ~D O 01 -i ~ N ~ l~ ~D `0 M \0 V7 d1 0~ ~D M ~ V1 Q1 ~D 01 `D ~D 00 N d M l~ Q1 ~ 00 ~ M N ~ 00 ~ O M O ~D ~ O M ~ ~D ~D O W ~ ~ ~ ~ O 01 ~ O N ~ ~ ~ ~ 00 -i l~ ~ l~ l~ ~ N Ste'' ~ ~ o cy, ~ ~ Lo 0 00 00 ~ ~ o ~ ~ ~ ~ cy, ~ ~ ~ o ~ cy, U ~ ~ rW 00 ~n ~ m N N N ~ a1 00 ~ ~ ~ ~ M M ~ ~ ~ ~ ~ V ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ F~ Q oo co ~ ~ M o0 0o N ~ ~ ~n M a~ o ~o M N ~ o ~ ~ ~ ~ M N \D 01 M d1 N ~ 00 ~ N ~ ~ ~ ~ \D O 01 -i a A tip ~ 00 ~ ~ l~ ~D `0 M \0 V7 d1 0~ ~D M ~ V1 Q1 ~D 01 `D ~D 00 ~ ~ • ~ ~ M l~ ~ 01 M ~ DO N M `0 O M O ~D ~ O CO M ~ U ~ Uj Z ~ ~ ~ LD \D N O ~ \0 ~ 00 O ~ O N 00 l~ ~ M M M • ~ 01 ~ N 0 ~ ~ M ~ ~ ~ ~ ~ M 01 ~ N DO ~ N ~ ~ ~ N M ~ ~D ~n ~n M M N N N N O O ~ O b4 b4 O ~ ~ a ~ ~ 4~ ~ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 U o ~ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ~ ~ a ~ o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o a~ O o o ~n ~n ~n o ~n o o vi Sri 0 0 0 0 0 0 ~n ~n ~n ~n Q`"•~ U O 00 ~ M l~ ~ V7 ~0 01 M M O \0 DO d1 01 ~ CO ~ 00 d1 ~ O ~ Q1 00 ~n ~ ~D l~ O l~ oo ~ l~ M N ~n N Q1 ~ ~n 01 M o0 U W Z • ~ ~ ~ Q1 ~ ~ ~ a1 DO DO 00 ~ ~ ~ `0 ~ ~ ~ M N ~ ~ ; ~ Cd W 0. ~ ~ ~ ~ 5~ ~ ~ ~ ~ ~ ~ ~ ~ ~ U a ~ ~ ~ p 41 0 ~ N M ~ ~n ~0 l~ 00 0~ O N M ~ ~n LD l~ 00 O ~ ~ U ~ M O~ ~ -i ~ N N N N N N N N N ~ ~ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ^nn ~ W N N N N N N N N N N N N N N N N N N N N N c+l ~ u u IS TABLE S -INTEREST AND SINKING FUND BUDGET PROJECTION Tax Supported Debt Service Requirements, Fiscal Year Ending 9/30/2009 $ 18,495,667 Interest and Sinking Fund Balance as of 9/30/08 $1,954,955 Interest and Sinking Fund Tax Levy 13,769,898 Budgeted Transfers 4,588,030 20,312,883 Estimated Balance, 9/30/09 $ 1,817,216 TABLE 9 - COMPUTATION OF SELF-SUPPORTING DEBT Net Revenue from Solid Waste System, Fiscal Year Ended 9-30-08 . $ 3,452,402 Less: Solid Waste System Revenue Bond Requirements, 2009 Fiscal Year - Balance Available for Other Purposes $ 3,452,402 Solid Waste System General Obligation Bond Requirements, 2009 Fiscal Year . 2,672,851 Balance $ 779,551 Net Revenue from Drainage System, Fiscal Year Ended 9-30-08 $ 1,894,203 Less: Drainage System Revenue Bond Requirements, 2009 Fiscal Year - Balance Available for Other Purposes $ 1,894,203 Drainage System General Obligation Bond Requirements, 2009 Fiscal Year 1,036,693 Balance $ 857,511 TABLE IO -AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS Amount Date Amount Heretofore Unissued Purpose Authorized Authorized Issued Balance Transportation 2/5/2005 $ 27,700,000 $19,955,100 $ 7,744,900 Parks 2/5/2005 10,700,000 8,110,900 2,589,100 Buildings 2/5/2005 4,000,000 4,000,000 - $ 42,400,000 $ 32,066,000 $10,334,000 ANTICIPATED ISSUANCE of GENERAL OBLIGATION DEBT ...The City does not anticipate the issuance of additional general obligation debt within the next twelve months. TABLE I I -OTHER OBLIGATIONS The City has entered into capital lease agreements. The following is a schedule of future minimum lease payments under these capital leases and the present value of the net minimum lease payments as of September 30, 2008: Year Annual Ending Lease 30-Sep Payment 2009 $1,846,603 2010 1,693,906 2011-2017 1,066,530 Total Minimum Lease Payment $ 4,607,039 Less: Amount Representing Interest 215,922 Present Value of Minimum Future Lease Payments $ 4,391,117 19 PENSION FUND ...The City provides pension benefits for all of its full-time employees (except firefighters) through the Texas Municipal Retirement System ("TNIRS"), a State-wide administered pension plan. The City makes annual contributions to the plan equal to the amounts accrued for pension expense. The City provides pension benefits for firefighters through the Denton Firemen's Relief and Retirement fund. The funding policy for the fund requires the City to make contributions equal to 12% for FY 2007-08 and 14% for FY 2008-09. (For more detailed information concerning the retirement plans, see Appendix B, "Excerpts from the City's Comprehensive Annual Financial Report".) IMPLEMENTATION OF NEW ACCOUNTING STANDARDS ...GASB released the Statement of General Accounting Standards No. 45 ("GASB 45"), Accounting by Employers for Other Post-Employment Benefits ("OPEB"), in June 2004. The City has implemented GASB 45, for the fiscal year beginning October 1, 2007. GASB 45 sets forth standards for the measurement, recognition, and display of post-employment benefits, other than pensions, such as health and life insurance for current and future retirees. Those subject to this pronouncement are required to: (i) measure the cost of benefits, and recognize other post- employment benefits expense, on the accrual basis of accounting over the working lifetime of the employees; (ii) provide information about the actuarial liabilities for promised benefits associated with past services and whether, or to what extent, the future costs of those benefits have been funded; and provide information useful in assessing potential demands on the employer's future cash flows. The employer's contributions to OPEB costs that are less than an actuarially determined annual required contribution will result in a net OPEB cost, which under GASB 45 will be required to be recorded as a liability in the employer's financial statements. In 2008, the City engaged an actuarial firm to prepare an estimate of the City's GASB 451iability as of October 1, 2007. The 2008 report provides the City with the City's OPEB requirements assuming the City plan offerings, designs, and cost share approach remain constant. The 2008 report estimates the City's accrued liability at $16.2 million for all funds which represents the present value of all future benefits to be provided by the City to current and future eligible (and electing) retirees, less future normal costs and any pre-funded amounts held in trust. Using this same information, the City's annual required contribution will be approximately $879,000 for fiscal year 2008. The City has previously set aside approximately $2.3 million for this purpose in a City controlled internal service fund, and the City is budgeting additional contributions to this reserve in the future. The GASB 45 liability and reserved assets is fully disclosed in the FY 2007-08 Comprehensive Annual Financial Report (CAFR). A discussion of the New GASB Statements is set forth in the Management Discussion and Analysis and in various notes to the City's financial statements in Appendix B. 20 FINANCIAL INFORMATION TABLE IZ - CHANGES IN NET ASSETS Fiscal Year Ended September 30, Revenues: 2008 2007 2006 2005 2004 Program Revenue: Charges for Services $ 13,917,248 $ 13,876,695 $ 13,965,099 $ 11,998,876 $ 10,224,627 Operating Grants and Contributions 3,306,325 2,99124 3,712,817 2,995,978 3,264,777 Capital Grants and Contributions 7,308,398 5,39920 5,536,786 7,426,194 14,046,071 General Revenue: Property Tax 41,499,791 34,756,356 30,000,847 26,678,783 23,149,916 Sales Tax 21,440,839 20,653,932 20,343,413 18,998,057 17,871,380 Other TaxeslFees 17,909,903 16,784,901 17,914,704 16,628,912 15,689,937 Miscellaneous 7,501,310 6,831,875 5,859,560 4,218,245 4,213,163 Total Revenue $112,883,814 S 101,29403 $ 97,333,226 $ 88,945,045 $ 88,459,871 Expenditures: General Government $ 26,408,949 $ 22,145,804 $ 22,165,661 $ 26,675,799 $ 26,411,608 Public Safety 43,426,526 42,161,674 36,626,635 33,642,445 30,508,765 Public Works 15,448,473 14,008,867 12,485,281 11,986,881 11,053,131 Parks and Recreation 12,927,020 ll,564~47 10,497,241 9,912,996 9,418,580 InterestonLongTermDebt 5,372,868 4,658,128 4,333,428 4,175,466 4,494,851 Total Expenses $103,583,836 $ 94,538,720 $ 86,108,246 $ 86,393,587 $ 81,886,935 Increase inNet Assets before Transfers $ 9,299,978 $ 6,755,483 $ 11,224,980 $ 2,551,458 $ 6,572,936 Transfers 323,038 (13,475,571) 895,106 864,493 1,410,947 Increase (Decrease) inNet Assets $ 9,623,016 $ (6,720,088) $ 12,120,086 $ 3,415,951 $ 7,983,883 Prior Period Adjustment - - - - 191,800 Net Assets at Beginning of Year 131,482,550 138,202,638 126,082,552 122,666,601 114,490,918 Net Assets at End of Year $141,105,566 $131,482,550 $138,202,638 $126,082,552 $122,666,601 21 TABLE iZA -GENERAL FUND REVENUES AND EXPENDITURE HISTORY Fiscal Year Ended September 30, Revenues: 2008 2007 2006 2005 2004 Taxes $ 49,772,244 $45,842,915 $ 41,906,626 $37,179,874 $ 32,863,098 Licenses and Permits 1,080,580 1,097,323 1,383,169 1,235,337 1,700,044 Franchise Fee 16,197,042 15,197,943 16,499,994 14,250,484 13,215,882 Fines and Forfeitures 4,969,102 4,468,692 4,639,922 3,959,476 3,338,979 Fees for Service 5,657,673 4,439,570 3,661,522 5,520,074 6,178,245 Interest Revenue 1,084,097 1,441,299 761,159 621,164 441,755 Intergovernmental 779,158 380,887 541,968 629,259 664,896 Miscellaneous 369,052 529,753 44700 382,494 1,581,327 Total Revenues $ 79,908,948 $73,398,382 $ 69,841,560 $63,778,162 $ 59,984,226 Expenditures: General Government $18,925,270 $16,142,835 $16,304,027 $18,214,630 $19,524,403 Public Safety 39,619,707 36,776,654 35,073,613 32,252,497 29,347,031 Public Works 6,553,570 5,561,166 4,950,734 5,228,666 4,465,283 Parks and Recreation 10,230,800 7,312,078 6,817,078 6,810,881 6,060,086 Capital0utlay 854,273 2,409,001 28158 341,958 160,077 Debt Service: Principal Retirement 202,003 41,301 - - - Total Expenditures $ 76,385,623 $68,243,035 $ 63,426,710 $62,848,632 $ 59,556,880 Excess (Deficiency) of Revenues Over Expenditures $ 3,523,325 $ 5,155,347 $ 6,414,850 $ 929,530 $ 427,346 Other Financing Sources (Uses): Capital Leases $ 69,897 $ 1,108,131 $ - $ - $ - Transfers In - 5,278,998 579,878 748,065 1,110,160 Sale of Capital Assets 193,375 - - - - Transfers (Out) (968,914) (4,038,781) (1,867,799) (1,365,689) (500,219) Total Other Financing Sources (Uses) $ (705,642) $ 2,348,348 $ (1,287,921) $ (617,624) $ 609,941 Net Changes in Fund Balances $ 2,817,683 $ 7,503,695 $ 5,126,929 $ 311,906 $ 1,037,287 Fund Balances at Beginrllng of Year 22,559,810 15,056,115 9,929,186 9,617,280 8,579,993 Fund Balances at End of Year $ 25,377,493 $22,559,810 $15,056,115 $ 9,929,186 $ 9,617,280 22 TABLE I3 -MUNICIPAL SALES TAX HISTORY The City has adopted the Municipal Sales and Use Tax Act, V.T.C.A., Tax Code, Chapter 321, which grants the City the power to impose and levy a 1% Local Sales and Use Tax within the City; the proceeds are credited to the General Fund and are not pledged to the payment of the Bonds or the Certificates. Collections and enforcements are effected through the offices of the Comptroller of Public Accounts, State of Texas, who remits the proceeds of the tax, after deduction of a 2% service fee, to the City monthly. In January 1994, the voters of the City approved the imposition of an additional one-half of one percent of 1%) for property tax reduction. In September 2003, the voters of the City approved the imposition of an additional one-half of one percent (1/2 of 1%) for the Denton County Transportation Authority. The implementation of this tax began January 2004, and is allocated directly to the Denton County Transportation Authority. Fiscal Year % of Equivalent of Ended 1 112% Total Ad Valorem Ad Valorem Per 9/30 Collected~l~ Tax Levy Tax Rate Capita 2005 $18,998,057 71.81% $ 0.4342 $184 2006 20,343,413 68.86% 0.4248 188 2007 20,653,934 60.21% 0.3796 181 2008 21,440,839 52.53% 0.3521 186 2009 5,560,217 13.26% 0.0884 46 (1) Source: City of Denton Annual Program of Services. (2) Collections through December 31, 2008. The sales tax breakdown for the City is as follows: Property Tax Relief 0.50¢ Denton County Transportation Authority 0.50¢ City Sales & Use Tax 1.00¢ State Sales & Use Tax 6.25¢ Total 8.25¢ FINANCIAL POLICIES Basis of Accounting ...The accounting policies of the City conform to generally accepted accounting principles of the Governmental Accounting Standards Board and program standards adopted by the Government Finance Officers Association of the United States and Canada. The GFOA has awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Denton for each of the fiscal years ended September 30, 1983 through September 30, 2007. The City's current report has been submitted to GFOA to determine its eligibility for another Certificate. The City has also received the GFOA's award for Distinguished Budget Presentation each year since 1988. The measurement focuses for the Enterprise Funds, Internal Service Funds and Nonexpendable Trust Funds are income determination and cost of service, respectively. Accordingly, the accrual basis, whereby revenues and expenses are identified in the accounting period in which they are earned and incurred and net income, is utilized for these funds. The modified accrual basis, whereby revenues are recognized when they become both measurable and available for use during the year and expenditures are recognized when the related fund liability is incurred, is used for all other funds. Budgetary Procedures As prescribed by City Charter the City Manager, and within the time period required by law, submits to the City Council a proposed budget for the fiscal year beginning the following October 1. The budget includes proposed expenditures and revenues required to fund the expenditures. Following Council considerations, amendments and refinements, a public hearing is ordered and conducted for the purpose of obtaining taxpayer comments. The budget is finally approved and adopted by passage of an ordinance by the City Council prior to the beginning of the fiscal year. The budget is adopted on a basis consistent with generally accepted accounting principles. 23 INVESTMENTS The City invests its investable funds in investments authorized by Texas law in accordance with investment policies approved by the City Council. Both Texas law and the City's investment policies are subject to change. LEGAL INVESTMENTS ...Under Texas law, the City is authorized to invest in (1) obligations, including letter of credit, of the United States or its agencies and instrumentalities, (2) direct obligations of the State of Texas or its agencies and instrumentalities; (3) collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency or instrumentality of the United States; (4) other obligations, the principal and interest of which is guaranteed or insured by or backed by the full faith and credit of, the State of Texas or the United States or their respective agencies and instrumentalities; (5) obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent; (6) bonds issued, assumed or guaranteed by the State of Israel; (7) certificates of deposit and share certificates meeting the requirements of the Texas Public Funds Investment Act (Chapter 2256, Texas Government Code, as amended) that are issued by or through an institution that either has its main office or a branch in Texas, and are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or are secured as to principal by obligations described in clauses (1) through (6) or in any other manner and amount provided by law for City deposits, (8) fully collateralized repurchase agreements that have a defined termination date, are fully secured by obligations described in clause (1), and are placed through a primary government securities dealer or a financial institution doing business in the State of Texas, (9) certain bankers' acceptances with the remaining term of 270 days or less, if the short-term obligations of the accepting bank or its parent are rated at least A-1 or P-1 or the equivalent by at least one nationally recognized credit rating agency, (10) commercial paper with a stated maturity of 270 days or less that is rated at least A-1 or P-1 or the equivalent by either (a) two nationally recognized credit rating agencies or (b) one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a U.S. or state bank, (11) no-load money market mutual funds registered with and regulated by the Securities and Exchange Commission that have a dollar weighted average stated maturity of 90 days or less and include in their investment objectives the maintenance of a stable net asset value of $1 for each share, and (12) no-load mutual funds registered with the Securities and Exchange Commission that have an average weighted maturity of less than two years, invest exclusively in obligations described in the this paragraph, and are continuously rated as to investment quality by at least one nationally recognized investment rating firm of not less than AAA or its equivalent. If specifically authorized in the authorizing document, bond proceeds may be invested in guaranteed investment contracts that have a defined termination date and are secured by obligations of the United States or its agencies and instrumentalities in an amount at least equal to the amount of bond proceeds invested under such contract, other than the prohibited obligations described in the next succeeding paragraph. The City may invest in such obligations directly or through government investment pools that invest solely in such obligations provided that the pools are rated no lower than AAA or AAA-m or an equivalent by at least one nationally recognized rating service. The City is specifically prohibited from investing in: (1) obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal; (2) obligations whose payment represents the principal stream of cash flow from the underlying mortgage-backed security and bears no interest; (3) collateralized mortgage obligations that have a stated final maturity of greater than 10 years; and (4) collateralized mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index. Governmental bodies in the State are authorized to implement securities lending programs if (i) the securities loaned under the program are 100% collateralized, aloan made under the program allows for termination at any time and a loan made under the program is either secured by (a) obligations that are described in clauses (1) through (6) of the first paragraph under this subcaption, (b) irrevocable letters of credit issued by a state or national bank that is continuously rated by a nationally recognized investment rating firm not less than "A" or its equivalent, or (c) cash invested in obligations that are described in clauses (1) through (6) and (10) through (12) of the first paragraph under this subcaption, or an authorized investment pool; (ii) securities held as collateral under a loan are pledged to the governmental body, held in the name of the governmental body and deposited at the time the investment is made with the City or a third party designated by the City; (iii) a loan made under the program is placed through either a primary government securities dealer or a financial institution doing business in the State of Texas; and (iv) the agreement to lend securities has a term of one year or less. INVESTMENT POLICIES ...Under Texas law, the City is required to invest its funds under written investment policies that primarily emphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability of investment management; and that includes a list of authorized investments for City funds, maximum allowable stated maturity of any individual investment and the maximum average dollar-weighted maturity allowed for pooled fund groups. All City funds must be invested consistent with a formally adopted "Investment Strategy Statement" that specifically addresses each funds' investment. Each Investment Strategy Statement will describe its objectives concerning. (1) suitability of investment type, (2) preservation and safety of principal, (3) liquidity, (4) marketability of each investment, (5) diversification of the portfolio, and (6) yield. 24 Under Texas law, City investments must be made "with judgment and care, under prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment, considering the probable safety of capital and the probable income to be derived." At least quarterly the investment officers of the City shall submit an investment report detailing. (1) the investment position of the City, (2) that all investment officers jointly prepared and signed the report, (3) the beginning market value, any additions and changes to market value and the ending value of each pooled fund group, (4) the book value and market value of each separately listed asset at the beginning and end of the reporting period, (5) the maturity date of each separately invested asset, (6) the account or fund or pooled fund group for which each individual investment was acquired, and (7) the compliance of the investment portfolio as it relates to: (a) adopted investment strategy statements and (b) state law. No person may invest City funds without express written authority from the City Council. ADDITIONAL PROVISIONS ...Under Texas law the City is additionally required to: (1) annually review its adopted policies and strategies; (2) require any investment officers' with personal business relationships or relatives with firms seeking to sell securities to the entity to disclose the relationship and file a statement with the Texas Ethics Commission and the City Council; (3) require the registered principal of firms seeking to sell securities to the City to: (a) receive and review the City's investment policy, (b) acknowledge that reasonable controls and procedures have been implemented to preclude imprudent investment activities, and (c) deliver a written statement attesting to these requirements; (4) perform an annual audit of the management controls on investments and adherence to the City's investment policy; (5) provide specific investment training for the Treasurer, Chief Financial Officer and investment officers; (6) restrict reverse repurchase agreements to not more than 90 days and restrict the investment of reverse repurchase agreement funds to no greater than the term of the reverse repurchase agreement; (7) restrict the investment in non-money mutual funds of any portion of bond proceeds, reserves and funds held for debt service and to no more than 15% of the entity's monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service; and (8) require local government investment pools to conform to the new disclosure, rating, net asset value, yield calculation, and advisory board requirements. TABLE I4 -CURRENT INVESTMENTS As of January 31, 2009, the City's investable funds were invested in the following categories: Market Value Book Market Description Percent Value Value U.S. Federal Agency Coupons 60.05% $198,002,641 $199,746,047 U.S. Federal Agency Callables 6.68% 22,014,806 22,233,750 U.S. Treasury Securities 8.30% 27,555,865 27,615,368 Money Market/Pool 10.54% 35,068,000 35,068,000 Certificates ofDeposit 10.52% 35,000,000 35,000,000 Commercial Paper 3.91% 12,980,067 12,994,400 100.00% $ 330,621,379 $ 332,657,565 25 TAX MATTERS OPINION On the date of initial delivery of the Bonds, McCall, Parkhurst & Horton L.L.P., Dallas, Texas, Bond Counsel, will render its opinion that, in accordance with statutes, regulations, published rulings and court decisions existing on the date thereof ("Existing Law"), (1) interest on the Bonds for federal income tax purposes will be excludable from the "gross income" of the holders thereof and (2) the Bonds will not be treated as "specified private activity bonds" the interest on which would be included as an alternative minimum tax preference item under section 57(a)(5) of the Internal Revenue Code of 1986 (the "Code"). Except as stated above, Bond Counsel will express no opinion as to any other federal, state or local tax consequences of the purchase, ownership or disposition of the Bonds. See "Appendix C --Form of Bond Counsel's Opinion". In rendering its opinion, Bond Counsel will rely upon (a) certain information and representations of the City, including information and representations contained in the City's federal tax certificate, and (b) covenants of the City contained in the Bond documents relating to certain matters, including arbitrage and the use of the proceeds of the Bonds and the Refunded Obligations and the property financed or refinanced therewith and (c) the verification report prepared by Grant Thornton L.L.P. Failure by the City to observe the aforementioned representations or covenants could cause the interest on the Bonds to become taxable retroactively to the date of issuance. The Code and the regulations promulgated thereunder contain a number of requirements that must be satisfied subsequent to the issuance of the Bonds in order for interest on the Bonds to be, and to remain, excludable from gross income for federal income tax purposes. Failure to comply with such requirements may cause interest on the Bonds to be included in gross income retroactively to the date of issuance of the Bonds. The opinion of Bond Counsel is conditioned on compliance by the City with such requirements, and Bond Counsel has not been retained to monitor compliance with these requirements subsequent to the issuance of the Bonds. Bond Counsel's opinion represents its legal judgment based upon its review of Existing Law and the reliance on the aforementioned information, representations and covenants. Bond Counsel's opinion is not a guarantee of a result. Existing Law is subject to change by the Congress and to subsequent judicial and administrative interpretation by the courts and the Department of the Treasury. There can be no assurance that Existing Law or the interpretation thereof will not be changed in a manner which would adversely affect the tax treatment of the purchase, ownership or disposition of the Bonds. A ruling was not sought from the Internal Revenue Service by the City with respect to the Bonds or the property financed or refinanced with proceeds of the Bonds or the Refunded Obligations. No assurances can be given as to whether the Internal Revenue Service will commence an audit of the Bonds. Bond Counsel's opinion is not binding on the Internal Revenue Service. If an Internal Revenue Service audit is commenced, under current procedures the Internal Revenue Service is likely to treat the City as the taxpayer and the holders of the Bonds may have no right to participate in such procedure. No additional interest will be paid upon any determination of taxability. FEDERAL INCOME TAX ACCOUNTING TREATMENT OF ORIGINAL ISSUE DISCOUNT ...The initial public offering price to be paid for one or more maturities of the Bonds may be less than the principal amount thereof or one or more periods for the payment of interest on the Bonds may not be equal to the accrual period or be in excess of one year (the "Original Issue Discount Bonds"). In such event, the difference between (i) the "stated redemption price at maturity" of each Original Issue Discount Bond, and (ii) the initial offering price to the public of such Original Issue Discount Bond would constitute original issue discount. The "stated redemption price at maturity" means the sum of all payments to be made on the Bonds less the amount of all periodic interest payments. Periodic interest payments are payments which are made during equal accrual periods (or during any unequal period if it is the initial or final period) and which are made during accrual periods which do not exceed one year. Under existing law, any owner who has purchased such Original Issue Discount Bond in the initial public offering is entitled to exclude from gross income (as defined in section 61 of the Code) an amount of income with respect to such Original Issue Discount Bond equal to that portion of the amount of such original issue discount allocable to the accrual period. For a discussion of certain collateral federal tax consequences, see discussion set forth below. In the event of the redemption, sale or other taxable disposition of such Original Issue Discount Bond prior to stated maturity, however, the amount realized by such owner in excess of the basis of such Original Issue Discount Bond in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Original Issue Discount Bond was held by such initial owner) is includable in gross income. Under existing law, the original issue discount on each Original Issue Discount Bond is accrued daily to the stated maturity thereof (in amounts calculated as described below for each six-month period ending on the date before the semiannual anniversary dates of the date of the Bonds and ratably within each such six-month period) and the accrued amount is added to an initial owner's basis for such Original Issue Discount Bond for purposes of determining the amount of gain or loss recognized by such owner upon the redemption, sale or other disposition thereof. The amount to be added to basis for each accrual period is equal to (a) the sum of the issue price and the amount of original issue discount accrued in prior periods multiplied by the yield to stated maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period) less (b) the amounts payable as current interest during such accrual period on such Original Issue Discount Bond. 26 The federal income tax consequences of the purchase, ownership, redemption, sale or other disposition of Original Issue Discount Bonds which are not purchased in the initial offering at the initial offering price may be determined according to rules which differ from those described above. All owners of Original Issue Discount Bonds should consult their own tax advisors with respect to the determination for federal, state and local income tax purposes of the treatment of interest accrued upon redemption, sale or other disposition of such Original Issue Discount Bonds and with respect to the federal, state, local and foreign tax consequences of the purchase, ownership, redemption, sale or other disposition of such Original Issue Discount Bonds. COLLATERAL FEDERAL INCOME TAX CONSEQUENCES ...The following discussion is a summary of certain collateral federal income tax consequences resulting from the purchase, ownership or disposition of the Bonds. This discussion is based on existing statutes, regulations, published rulings and court decisions, all of which are subject to change or modification, retroactively. The following discussion is applicable to investors, other than those who are subject to special provisions of the Code, such as financial institutions, property and casualty insurance companies, life insurance companies, individual recipients of Social Security or Railroad Retirement benefits, individuals allowed an earned income credit, certain S corporations with accumulated earnings and profits and excess passive investment income, foreign corporations subject to the branch profits tax and taxpayers who maybe deemed to have incurred or continued indebtedness to purchase tax-exempt obligations. THE DISCUSSION CONTAINED HEREIN MAY NOT BE EXHAUSTIVE. INVESTORS, INCLUDING THOSE WHO ARE SUBJECT TO SPECIAL PROVISIONS OF THE CODE, SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX TREATMENT WHICH MAY BE ANTICIPATED TO RESULT FROM THE PURCHASE, OWNERSHIP AND DISPOSITION OF TAX-EXEMPT OBLIGATIONS BEFORE DETERMINING WHETHER TO PURCHASE THE OBLIGATIONS. Interest on the Bonds will be includable as an adjustment for "adjusted current earnings" to calculate the alternative minimum tax imposed on corporations by section 55 of the Code. Section 55 of the Code imposes a tax equal to 20 percent for corporations, or 26 percent for noncorporate taxpayers (28 percent for taxable income exceeding $175,000), of the taxpayer's "alternative minimum taxable income," if the amount of such alternative minimum tax is greater than the taxpayer's regular income tax for the taxable year. Under section 6012 of the Code, holders of tax-exempt obligations, such as the Bonds, may be required to disclose interest received or accrued during each taxable year on their returns of federal income taxation. Section 1276 of the Code provides for ordinary income tax treatment of gain recognized upon the disposition of atax-exempt obligation, such as the Bonds, if such obligation was acquired at a "market discount" and if the fixed maturity of such obligation is equal to, or exceeds, one year from the date of issue. Such treatment applies to "market discount bonds" to the extent such gain does not exceed the accrued market discount of such bonds; although for this purpose, a de minimis amount of market discount is ignored. A "market discount bond" is one which is acquired by the holder at a purchase price which is less than the stated redemption price at maturity or, in the case of an obligation issued at an original issue discount, the "revised issue price" (i.e., the issue price plus accrued original issue discount). The "accrued market discount" is the amount which bears the same ratio to the market discount as the number of days during which the holder holds the obligation bears to the number of days between the acquisition date and the final maturity date. STATE, LOCAL AND FOREIGN TAXES ...Investors should consult their own tax advisors concerning the tax implications of the purchase, ownership or disposition of the Bonds under applicable state or local laws. Foreign investors should also consult their own tax advisors regarding the tax consequences unique to investors who are not United States persons. QUALIFIED TAX-EXEMPT OBLIGATIONS FOR FINANCIAL INSTITUTIONS ...Section 265(a) of the Code provides, in pertinent part, that interest paid or incurred by a taxpayer, including a "financial institution," on indebtedness incurred or continued to purchase or carry tax-exempt obligations is not deductible by such taxpayer in determining taxable income. Section 265(b) of the Code provides an exception to the disallowance of such deduction for any interest expense paid or incurred on indebtedness of a taxpayer which is a "financial institution" allocable to tax-exempt obligations, other than "private activity bonds," which are designated by a "qualified small issuer" as "qualified tax-exempt obligations." A "qualified small issuer" is any governmental issuer (together with any subordinate issuers) who issues no more than $10,000,000 of tax-exempt obligations during the calendar year. Section 265(b)(5) of the Code defines the term "financial institution" as referring to any corporation described in section 585(a)(2) of the Code, or any person accepting deposits from the public in the ordinary course of such person's trade or business which is subject to federal or state supervision as a financial institution. The City expects to designate the Bonds as "qualified tax-exempt obligations" within the meaning of section 265(b) of the Code. In furtherance of that designation, the City will covenant to take such action which would assure, or to refrain from such action which would adversely affect, the treatment of the Bonds as "qualified tax- obligations." Potential purchasers should be aware that if the issue price to the public exceeds $10,000,000, that there is a reasonable basis to conclude that the payment of a de minimis amount of premium in excess of $10,000,000 is disregarded, the Internal Revenue Service could take a contrary view. Were the Internal Revenue Service to conclude that the amount of such premium is not disregarded, then such obligations might fail to satisfy the $10,000,000 limitation and the obligations would not be "qualified tax-exempt obligations." 27 CONTINUING DISCLOSURE OF INFORMATION In the Ordinance the City has made the following agreement for the benefit of the holders and beneficial owners of the Bonds. The City is required to observe the agreement for so long as it remains obligated to advance funds to pay the Bonds. Under the agreement, the City will be obligated to provide certain updated fmancial information and operating data annually, and timely notice of specified material events, to certain information vendors. This information will be available to securities brokers and others who subscribe to receive the information from the vendors. ANNUAL REPORTS ...The City will provide certain updated financial information and operating data to certain information vendors annually. The information to be updated includes all quantitative fmancial information and operating data with respect to the City of the general type included in this Official Statement under Tables numbered 1 through 5 and 7 through 14 and in Appendix B. The City will update and provide this information within six months after the end of each fiscal year ending in or after 2009. The City will provide the updated information to each nationally recognized municipal securities information repository ("NRMSIR") approved by the staff of the United States Securities and Exchange Commission ("SEC") and to any state information depository ("SID") that is designated and approved by the State of Texas and by the SEC staff. The City may provide updated information in full text or may incorporate by reference certain other publicly available documents, as permitted by SEC Rule 15c2-12. The updated information will include audited financial statements, if the City commissions an audit and it is completed by the required time. If audited fmancial statements are not available by the required time, the City will provide unaudited financial information by the required time, and audited financial statements when and if such audited fmancial statements become available. Any such financial statements will be prepared in accordance with the accounting principles described in Appendix B or such other accounting principles as the City may be required to employ from time to time pursuant to state law or regulation. The City's current fiscal year end is September 30. Accordingly, it must provide updated information by March 31 in each year, unless the City changes its fiscal year. If the City changes its fiscal year, it will notify each NRMSIR and the SID of the change. The Municipal Advisory Council of Texas has been designated by the State of Texas and approved by the SEC staff as a qualified SID. The address of the Municipal Advisory Council is 600 West 8th Street, P. 0. Box 2177, Austin, Texas 78768- 2177, and its telephone number is 5121476-6947. The Municipal Advisory Council has also received SEC approval to operate, and has begun to operate, a "central post office" repository for information filings made by municipal issuers, such as the City, which repository then transmits the filed information to the NRMSIRs and the appropriate SID. This central post office can be accessed and utilized at www.DisclosureUSA.com ("DisclosureUSA"). The City may utilize DisclosureUSA for the filing of information relating to the Bonds and the Certificates. MATERIAL EvENT NOTICES ...The City will also provide timely notices of certain events to certain information vendors. The City will provide notice of any of the following events with respect to the Bonds and the Certificates, as applicable, if such event is material to a decision to purchase or sell Bonds or Certificates: (1) principal and interest payment delinquencies; (2) non- payment related defaults; (3) unscheduled draws on debt service reserves reflecting fmancial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions or events affecting the tax-exempt status of the Bonds or Certificates; (7) modifications to rights of holders of the Bonds or Certificates; (8) Bonds or Certificate calls; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds or Certificates; and (11) rating changes. Neither the Bonds or Certificates or the Ordinances make provisions for debt services reserves, or liquidity enhancement. In addition, the City will provide timely notice of any failure by the City to provide information, data, or financial statements in accordance with its agreement described above under "Annual Reports." The City will provide each notice described in this paragraph to the SID and to each NRMSIR. AVAILABILITY OF INFORMATION FROM NRMSIRS AND SID ...The City has agreed to provide the foregoing information only to NRMSIRS and the SID. The information will be available to holders of Bonds and the Certificates only if the holders comply with the procedures and pay the charges established by such information vendors or obtain the information through securities brokers who do so. LIMITATIONS AND AMENDMENTS ...The City has agreed to update information and to provide notices of material events only as described above. The City has not agreed to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects or agreed to update any information that is provided, except as described above. The City makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Bonds or Certificates at any future date. The City disclaims any contractual or tort liability for damages resulting in whole or in part from any breach of its continuing disclosure agreement or from any statement made pursuant to its agreement, although holders of Bonds or Certificates may seek a writ of mandamus to compel the City to comply with its agreement. The City may amend its continuing disclosure agreement from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the City, if (i) the agreement, as amended, would have permitted an underwriter to purchase or sell Bonds or 28 Certificates in the offering described herein incompliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the outstanding Bonds or Certificates consent to the amendment or (b) any person unaffiliated with the City (such as nationally recognized bond counsel) determines that the amendment will not materially impair the interests of the holders and beneficial owners of the Bonds or Certificates. The City may also amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provisions of the SEC Rule 15c2-12 or a court of final jurisdiction enters judgment that such provisions of the SEC Rule 15c2-12 are invalid, but only if and to the extent that the provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling Bonds or Certificates in the primary offering of the Bonds or Certificates. If the City so amends the agreement, it has agreed to include with the next financial information and operating data provided in accordance with its agreement described above under "Annual Reports" an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of financial information and operating data so provided. COMPLIANCE wlTx PRIOR UNDERTAKINGS ...During the last five years, the City has complied in all material respects with all continuing disclosure agreements made by it in accordance with SEC Rule 15c2-12. OTHER INFORMATION RATINGS The outstanding unenhanced tax supported debt of the City is rated "Aa3" by Moody's and "AA" by S&P. Applications for contract ratings on this issue have been made to Moody's and S&P. An explanation of the significance of such ratings may be obtained from the company furnishing the rating. The ratings reflect only the respective views of such organizations and the City makes no representation as to the appropriateness of the ratings. There is no assurance that such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by any or all of such rating companies, if in the judgment of any or all companies, circumstances so warrant. Any such downward revision or withdrawal of such ratings, by either of them, may have an adverse effect on the market price of the Bonds. LITIGATION It is the opinion of the City Attorney and City Staff that there is no pending litigation against the City that would have a material adverse financial impact upon the City or its operations. REGISTRATION AND QUALIFICATION OF BONDS FOR SALE The sale of the Bonds has not been registered under the Federal Securities Act of 1933, as amended, in reliance upon the exemption provided thereunder by Section 3(a)(2); and the Bonds have not been qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; nor have the Bonds been qualified under the securities acts of any jurisdiction. The City assumes no responsibility for qualification of the Bonds under the securities laws of any jurisdiction in which the Bonds may be sold, assigned, pledged, hypothecated or otherwise transferred. This disclaimer of responsibility for qualification for sale or other disposition of the Bonds shall not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration provisions. LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS Section 1201.041 of the Public Security Procedures Act (Chapter 1201, Texas Government Code) provides that the Bonds are negotiable instruments governed by Chapter 8, Texas Business and Commerce Code, and are legal and authorized investments for insurance companies, fiduciaries, and trustees, and for the sinking funds of municipalities or other political subdivisions or public agencies of the State of Texas. With respect to investment in the Bonds by municipalities or other political subdivisions or public agencies of the State of Texas, the Public Funds Investment Act, Chapter 2256, Texas Government Code, requires that the Bonds be assigned a rating of at least "A" or its equivalent as to investment quality by a national rating agency. See "Other Information -Ratings" herein. In addition, various provisions of the Texas Finance Code provide that, subject to a prudent investor standard, the Bonds are legal investments for state banks, savings banks, trust companies with at capital of one million dollars or more, and savings and loan associations. The Bonds are eligible to secure deposits of any public funds of the State, its agencies, and its political subdivisions, and are legal security for those deposits to the extent of their market value. No review by the City has been made of the laws in other states to determine whether the Bonds are legal investments for various institutions in those states. No representation is made that the Bonds will be acceptable to public entities to secure their deposits or acceptable to such institutions for investment purposes. The City made no investigation of other laws, rules, regulations or investment criteria which might apply to such institutions or entities or which might limit the suitability of the Bonds for any of the foregoing purposes or limit the authority of such institutions or entities to purchase or invest in the Bonds for such. 29 LEGAL OPINIONS The City will furnish to the Underwriters a complete transcript of proceedings had incident to the authorization and issuance of the Bonds, including the unqualified approving legal opinion of the Attorney General of Texas approving the Initial Bond and to the effect that the Bonds are valid and legally binding obligations of the City, and based upon examination of such transcript of proceedings, the approving legal opinions of Bond Counsel, to like effect and to the effect that the interest on the Bonds will be excludable from gross income for federal income tax purposes under Section 103(a) of the Code, subject to the matters described under "Tax Matters" herein, including the alternative minimum tax on corporations. Bond Counsel was not requested to participate, and did not take part, in the preparation of the Official Statement, and such firm has not assumed any responsibility with respect thereto or undertaken independently to verify any of the information contained therein, except that, in its capacity as Bond Counsel, such firm has reviewed the information under captions "Plan of Financing" (exclusive of the sub-caption "Sources and Uses of Proceeds"), "The Bonds" (exclusive of subcaptions "Book-Entry-Only System" and "Bondholders' Remedies"), "Tax Matters" and "Continuing Disclosure of Information" (exclusive of the sub-caption "Compliance with Undertakings") and the subcaptions "Legal Opinions" and "Legal Investments and Eligibility to Secure Public Funds in Texas" under the caption "Other Information" in the Official Statement and such firm is of the opinion that the information relating to the Bonds and the legal issues contained under such captions and subcaptions is an accurate and fair description of the laws and legal issues addressed therein and, with respect to the Bonds, such information conforms to the Ordinance. The legal fees to be paid to Bond Counsel for services rendered in connection with the issuance of the Bonds is contingent on the sale and delivery of the Bonds. The legal opinions will accompany the Bonds deposited with DTC or will be printed on the Bonds in the event of the discontinuance of the Book-Entry-Only System. Certain legal matters will be passed upon for the Underwriters by , Dallas, Texas, Counsel to the Underwriters. The legal opinions to be delivered concurrently with the delivery of the Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion, the attorney does not become an insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future performance of the parties to the transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. FINANCIAL ADVISOR First Southwest Company is employed as Financial Advisor to the City in connection with the issuance of the Bonds. The Financial Advisor's fee for services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery of the Bonds. First Southwest Company, in its capacity as Financial Advisor, does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Bonds, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. The Financial Advisor has agreed to sell to the City the Federal Securities for deposit into the Escrow Fund in connection with the refunding. In the normal course of business, the Financial Advisor may also from time to time sell investment securities to the City for the investment of bond proceeds or other funds of the City upon the request of the City. The Financial Advisor to the City has provided the following sentence for inclusion in this Official Statement. The Financial Advisor has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to the City and, as applicable, to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Financial Advisor does not guarantee the accuracy or completeness of such information. VERIFICATION OF ARITHMETICAL AND MATHEMATICAL COMPUTATIONS The arithmetical accuracy of certain computations included in the schedules provided by First Southwest Company on behalf of the City relating to (a) computation of forecasted receipts of principal and interest on the Federal Securities and the forecasted payments of principal and interest to redeem the Refunded Obligations and (b) computation of the yields of the Refunding Bonds and the restricted Federal Securities were verified by Grant Thornton, LLP, certified public accountants. Such computations were based solely on assumptions and information supplied by First Southwest Company on behalf of the City. Grant Thornton, LLP has restricted its procedures to verifying the arithmetical accuracy of certain computations and has not made any study or evaluation of the assumptions and information on which the computations are based and, accordingly, has not expressed an opinion on the data used, the reasonableness of the assumptions, or the achievability of the forecasted outcome. UNDERWRITING The Underwriters have agreed, subject to certain conditions, to purchase the Bonds from the City, at an underwriting discount of $ .The Underwriters will be obligated to purchase all of the Bonds if any Bonds are purchased. The Bonds to be offered to the public may be offered and sold to certain dealers (including the Underwriters and other dealers depositing Bonds into investment trusts) at prices lower than the public offering prices of such Bonds, and such public offering prices may be changed, from time to time, by the Underwriters. 30 FORWARD-LOOKING STATEMENTS DISCLAIMER The statements contained in this Official Statement, and in any other information provided by the City, that are not purely historical, are forward-looking statements, including statements regarding the City's expectations, hopes, intentions, or strategies regarding the future. Readers should not place undue reliance on forward-looking statements. All forward-looking statements included in this Official Statement are based on information available to the City on the date hereof, and the City assumes no obligation to update any such forward-looking statements. The City's actual results could differ materially from those discussed in such forward-looking statements. The forward-looking statements included herein are necessarily based on various assumptions and estimates and are inherently subject to various risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal, and regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including customers, suppliers, business partners and competitors, and legislative, judicial, and other governmental authorities and officials. Assumptions related to the foregoing involve judgments with respect to, among other things, future economic, competitive, and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the City. Any of such assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Official Statement will prove to be accurate. MISCELLANEOUS The fmancial data and other information contained herein have been obtained from the City's records, audited fmancial statements and other sources which are believed to be reliable. There is no guarantee that any of the assumptions or estimates contained herein will be realized. All of the summaries of the statutes, documents and resolutions contained in this Official Statement are made subject to all of the provisions of such statutes, documents and resolutions. These summaries do not purport to be complete statements of such provisions and reference is made to such documents for further information. Reference is made to original documents in all respects. The Pricing Certificate will approve the form and content of this Official Statement, and any addenda, supplement or amendment thereto, and authorize its further use in the reoffering of the Bonds by the Underwriters. lsl MARK BURROUGHS Mayor City of Denton, Texas ATTEST: /s/ JENNIFER K. WALTERS City Secretary 31 Schedule I SCHEDULE OF REFUNDED OBLIGATIONS* Certificates of Obligation, Series 1998 Principal Principal Original Original Interest Amount Amount Dated Date Maturity Rate Outstanding Refunded 4/1/1998 2/15/2010 4.700% $ 65,000 $ 65,000 2/15/2011 4.800% 70,000 70,000 $ 135,000 $135,000 The 1998 Certificates will be redeemed on , 2009 at a price of par plus accrued interest to the redemption date. General Obligation Bonds, Series 1998 Principal Principal Original Original Interest Amount Amount Dated Date Maturity Rate Outstanding Refunded 4/1/1998 2/15/2010 4.700% $ 485,000 $ 485,000 2/15/2011 4.800% 480,000 480,000 $ 965,000 $ 965,000 The 1998 Bond will be redeemed on , 2009 at a price of par plus accrued interest to the redemption date. Certificates of Obligations, Series 1999 Principal Principal Original Original Interest Amount Amount Dated Date Maturity Rate Outstanding Refunded 3/15/1999 2/15/2010 4.400% $ 295,000 $ 295,000 2/15/2011 4.500% 295,000 295,000 2/15/2012 4.600% 295,000 295,000 $ 885,000 $ 885,000 The 1999 Certificates will be redeemed on , 2009 at a price of par plus accrued interest to the redemption date. General Obligation Bonds, Series 1999 Principal Principal Original Original Interest Amount Amount Dated Date Maturity Rate Outstanding Refunded 3/15/1999 2/15/2010 4.450% $ 410,000 $ 410,000 2/15/2011 4.500% 410,000 410,000 2/15/2012 4.600% 410,000 410,000 $1,230,000 $1,230,000 The 1999 Bonds will be redeemed on , 2009 at a price of par plus accrued interest to the redemption date. ~ Preliminary, subject to change. General Obligation Refunding Bonds, Series 1999A Principal Principal Original Original Interest Amount Amount Dated Date Maturity Rate Outstanding Refunded 4/1/1999 2/15/2010 4.450% $ 465,000 $ 465,000 2/15/2011 4.550% 670,000 670,000 2/15/2012 4.650% 695,000 695,000 2/15/2013 4.750% 645,000 645,000 2/15/2014 4.800% 505,000 505,000 2/15/2015 4.900% 435,000 435,000 2/15/2016 5.000% 460,000 460,000 $3,875,000 $3,875,000 The 1999A Bonds will be redeemed on , 2009 at a price of par plus accrued interest to the redemption date. Certificates of Obligation, Series 2000 Principal Principal Original Original Interest Amount Amount Dated Date Maturity Rate Outstanding Refunded 5/1/2000 2/15/2010 5.250% $ 155,000 $155,000 2/15/2011 5.300% 155,000 155,000 $ 310,000 $ 310,000 The 2000 Certificates will be redeemed on , 2009 at a price of par plus accrued interest to the redemption date. General Obligation Bonds, Series 2000 Principal Principal Original Original Interest Amount Amount Dated Date Maturity Rate Outstanding Refunded 5/1/2000 2/15/2010 5.250% $ 190,000 $190,000 2/15/2011 5.300% 185,000 185,000 $ 375,000 $ 375,000 The 2000 Bonds will be redeemed on , 2009 at a price of par plus accrued interest to the redemption date. Certificates of Obligation, Series 2001 Principal Principal Original Original Interest Amount Amount Dated Date Maturity Rate Outstanding Refunded 5/1/2001 2/15/2012 4.750% $ 265,000 $ 265,000 2/15/2013 4.875% 265,000 265,000 $ 530,000 $ 530,000 The 2001 Certificates will be redeemed on February 15, 2011 at a price of par plus accrued interest to the redemption date. General Obligation Bonds, Series 2001 Principal Principal Original Original Interest Amount Amount Dated Date Maturity Rate Outstanding Refunded 5/1/2001 2/15/2012 4.750% $ 710,000 $ 710,000 2/15/2013 4.875% 715,000 715,000 $1,425,000 $1,425,000 The 2001 Bonds will be redeemed on February 15, 2011 at a price of par plus accrued interest to the redemption date. Certificates of Obligation, Series 2002 Principal Principal Original Original Interest Amount Amount Dated Date Maturity Rate Outstanding Refunded 4/1/2002 2/15/2013 4.700% $ 420,000 $ 420,000 2/15/2014 4.800% 445,000 445,000 $ 865,000 $ 865,000 The 2002 Certificates will be redeemed on February 15, 2012 at a price of par plus accrued interest to the redemption date. General Obligation Bonds, Series 2002 Principal Principal Original Original Interest Amount Amount Dated Date Maturity Rate Outstanding Refunded 4/1/2002 2/15/2013 5.000% $ 605,000 $ 605,000 2/15/2014 5.000% 635,000 635,000 $1,240,000 $1,240,000 The 2002 Bonds will be redeemed on February 15, 2012 at a price of par plus accrued interest to the redemption date. APPENDIX A GENERAL INFORMATION REGARDING THE CITY LOCATION ...The City of Denton is located in the northern portion of the Dallas/Fort Worth Consolidated Statistical Area (CSMA). The City is a part of the DallaslFort Worth Metroplex, and is situated at the apex of a triangle based by Dallas (38 miles to the southeast) and Fort Worth (36 miles to the southwest). The City has excellent access to and from all parts of the area. ECONOMIC FUTURE ...The fiscal year 2007-2008 brought exciting news in economic development. Listed below are just a few of the highlights. MAJOR EMPLOYER ~ IND USTRIAL NEWS ~ Granite Point Phase I landed two new tenants in its speculative buildings -Morrison Milling and Harness & Cable Assembly for a total of 100,000 square feet of leased space. Nearly 200,000 square feet remain available. • Aldi Foods began construction of their 500,000 square feet distribution center. The company will also improve Westcourt Road as part of their project and a condition of their tax abatement. The Denton distribution center will employ approximately 100 and will service nearly 25 Aldi grocery stores in the North Texas area. The $50 million project is scheduled to open by the end of 2009 or early 2010. • Fastenal Company completed its 200,000 square feet distribution center in November 2008. Fastenal is an industrial fastener and supply company. The Denton facility will employ approximately 200 when in full operation and will serve as the company's regional headquarters and training center. The company estimates their investment at $16 million. ~ Jostens', a local jewelry manufacturing facility, completed its 13,000 square feet expansion of the Denton plant in July 2008. The expansion was in concert with a consolidation of another manufacturing plant, bringing an additional 135 employees to Denton. The project was estimated at a $4 million valuation. • Pratt Industries began construction on their 40,000 square feet Materials Recycling Facility (MRF) at the City's landfill. The project is a partnership program with the City of Denton to provide recycling services to the community. • Tetra Point Fuels announced their decision to build an ethanol fuel plant at the City's landfill. The project will locate Tetra Point Fuels adj acent to the future Pratt Industrials recycling facility. Tetra Point Fuels will recycle all containers for their source materials. In addition, the company is working with the University of North Texas on a wetlands rehabilitation program. ~ National Truckports completed their 63,000 square feet truck storage facility in 2008. Along with other uses, the company offers lease space for independent truck drivers to store and maintain their vehicles. • Molecular Insight purchased a vacant 80,000 square foot building, formerly occupied by NeoRx. Molecular Insight is a pharmaceutical manufacturing company who will renovate the facility to begin manufacturing in Denton in 2009. DEVELOPMENT AT DENTON MUNICIPAL AIRPORT The arrival of the Denton Municipal Airport's new air traffic control tower in May of 2004 precipitated a reclassification of air space from Class G to Class D during daily operation hours of 8 a.m. and 10 p.m. and increased our corporate jet traffic. • Denton Municipal Airport opened a new $1.2 million terminal and completed realignment of a taxiway providing a secondary emergency runway in 2008. The airport's control tower supports corporate jet traffic by providing Class D airspace from 8 a.m. to 10 p.m. daily. In 2008, three of four major airport business operators plan a total of $5M in office, hanger, and maintenance facility construction totaling over 100,000 square feet. A construction grant for $1.5 M funded 90% by TxDOT and 10% by the City of Denton will open up an additional 18-20 acres for airport master plan development. TXDOT will additionally fund an $8.4 million runway expansion from 6,000 to 7,000 feet in 2010, enhancing existing business fleet operating capacity. Once approved, a pending Foreign Trade Zone application that includes the airport, surrounding businesses and the University of North Texas Discovery Park research facility will leverage additional future airport business investment. A-1 RETAIL NEWS ~ Construction of the mixed-use development known as Unicorn Lake continues. The master-planned center incorporates the urban style development of residential over retail along the lake. Construction of the Villas of Tuscan Hills, a 106 lot residential community that overlooks the lake, is currently underway with luxury homes selling from $400,000- $700,000. Dogwood Estates, an independent living community, the Brick House Gym, Cinemark, Pour House Grill, Washington Federal Savings and Loan, and Towne Center Bank represent some of the businesses that have located in the development. The Hilton Homewood Suites, additional restaurants, a 20,000 square feet retail center, and medical offices are also planned to open by year end. • The Rayzor Ranch Market Place began construction of Highway 380 in order to complete the road improvements prior to the opening of the retail center. WalMart and Sam's received their building permits and will begin construction in 2009. Site work is underway. Lowe's indicated they would likely begin construction in 2010. Allegiance Hillview Development will also construct a 30,000 square retail center on the property, and several pad sites have been purchased by local banks and restaurants. • The Rayzor Ranch Towne Center development has experienced additional medical related activity. Cook's Children's Hospital closed on a tract at the southern portion of the property where they will begin construction in 2009 for a treatment facility. Select Medical opened their 52-bed brain trauma and spinal injury hospital. The estimated project value of both the Market Place and Towne Center phases is estimated at $1 billion. • Regency Centers completed their retail center located at Teasley Lane and Hickory Creek. The center is home to a new 82,000 square feet Kroger Signature store, 28,000 square feet of retail, and two banks -Chase Bank and Wachovia. HEALTHCARE INDENTON In 2005 both of Denton's hospitals completed or began expansion plans that confirm Denton's status as a regional center for quality medical services. The hospitals spent approximately $150 million on these facility expansions. Medical facilities continue to expand and locate in Denton. • Denton Regional Medical Center expanded adding 27,431 square feet of medical office space. Located adjacent to North Texas Hospital, the Mayhill Hospital (40,000 square feet), Caring for Women (13,402 square feet), and the Texas Back Institute (10,076 square feet) have a combined valuation of $8,506,863. • Integrity Transitional Hospital, a 38,000 square foot, $16 million long term acute-care specialty hospital opened in 2007. Two healthcare facilities have joined the Rayzor Ranch development: construction began on Select Medical, a $20 million rehabilitation hospital specializing in spinal injuries and brain trauma and StoneGate Senior Health Continuing Care announced plans to construct a 128 resident continuing care retirement facility providing skilled nursing, Alzheimer's care and assisted living apartments. OTHER DEVELOPMENTS ~ Other major commercial investments include several banks that built new facilities in Denton in 2007/2008: Chase Bank, Access lit Capital Bank, and Wachovia Bank. Hotels under construction are Hilton Garden Inn, Hilton Homewood Suites, and The Courtyard by Marriott. • LA Fitness began construction of their 45,000 square feet fitness center. Other retail and a bank are planned at the site, located at Spencer Road and Loop 288. A-2 INDUSTRY AND BUSINESS Major Employers Approximate Number of Employer Description Employees University of North Texas Higher Education 7,764 Denton Independent School District Education 3,113 Texas Department of Transportation Government-State Agency 3,113 Denton State School Mental Healthcare 1,586 Denton County Government 1,523 City ofDenton Government 1,500 Peterbilt Motors -Headquarters and Plant Diesel Trucks 1,500 Texas Woman's University Higher Education 1,300 FEMA Federal Government Regional HQ & Call Center 300 up to 1,100 Denton Regional Medical Center Hospital/Healthcare 800 Presbyterian Hospital of Denton Hospital/Healthcare 750 Jostens Class Ring Manufacturer 600 Sally Beauty Company Intemational Headquarters Beauty Supply Distributor 600 Thermadyne Industries-Victor Equipment/Tweco Welding Equipment 512 Flowers Baking Company Bakery 355 Anderson Merchandisers Distribution 332 Texas Department of Mental Health and Mental Retardation Government-State Agency 302 Tetra Pack Aseptic Packaging 300 James Wood Auto Park Car/Truck SaleslService 287 Vacation Tour & Travel Call Center 268 United Copper Industries Copper Wire 264 Progressive Industries MHMR Product Fulfillment Services 240 CBS Mechanical Mechanical Contractor 230 Mayday Manufacturing Aerospace Machined Parts 200 Acme Brick Brick Manufacturing 190 NuconSteel Steel Manufacturing 180 Business Air/Jetworks Air Center FBO & Aircraft Sales, Paint & Interiors 170 Keller Williams Real Estate 170 DeCrane Aerospace Precision Pattern Interiors Jet Interior Manufacturing 165 General Telemarketing International Call Center 165 Denton Rehabilitation and Nursing Center RetirementlRehabilitation 160 Wells Fargo Financial Institution 160 The Vintage RetirementlNursing Home 150 Miller of Denton Distributor 145 Russell Newman Ltd Textiles 145 Senior Care Health and Rehabilitation Center RetirementlRehabilitation 145 Morrison Milling Flour Grain Mill 131 Mayhill Hospital Hospital/Healthcare 130 Denton Good Samaritan Village Retirement Center 126 Lake Forest Good Samaritan Village Retirement Center 125 North Texas Hospital Hospital/Healthcare 120 Jim McNatt Toyota-Dodge Car/Truck Sales/Service 119 Bill Utter F ord Car/Truck S aleslS ervice 107 Hulcher Services Railroad Emergency Response 100 Integrated Alliance, LP Call Center 100 University Behavioral Health ofDenton Hospital/Healthcare 100 Source: City ofDenton and Denton Chamber of Commerce Economic Development Offices Denton is proud to be home to nearly 48 companies and institutions that employ 100 or more people, several of them representing corporate, regional and international headquarters. A-3 Well over 100 companies that produce, manufacture, and distribute goods all over the world call Denton home. More than 4,000 companies choose to do business in Denton. With small, medium, and large businesses operating in a variety of industries, diversity is strength in Denton. Statistics show most of these workers are skilled and receive their training right here in Denton. ECONOMIC A~ POPULATION GAINS ...Historical population totals from U.S. Census depict Denton's consistent population increases commensurate with Denton's steady economic growth. 1940 Census -11,192 1950 Census - 21,345 1960 Census - 26,844 1970 Census - 39,874 1980 Census - 49,079 1990 Census - 66,270 2000 Census - 80,537 estimated 2009 Population is 125,465 (1) estimated 2009 Population is 120,126 (1) City ofDenton Planning Department Forecast from Denton Plan (2) U.S. Census Bureau forecast. The City's ascension toward a top economic position in Texas is attributable to the steady influence of governmental activity that include the annual expansion of the two state-supported universities, and due to several desirable environmental factors. Denton is located in a rich agricultural, oil and gas production region; is part of the Dallas/Fort Worth Metroplex; has proximity to three of Texas' largest reservoirs (Lake Texoma is only 40 miles from Denton); a mild climate; and the influential aspects of social, cultural and educational advantages have prompted professional workers to select Denton as their residence. ECONOMIC RANII~NNG ...The following data were taken from the U.S. Census Bureau's 2007 American Community Survey. Of Population Whose Age is: 0-19 29.2% 20-34 34.8% 35-54 22.1% 55-64 7.0% 65 and over 6.9% Number ofHouseholds 38,692 City ofDenton Average Household Income $ 42,915 City of Denton Household Income $250,000 + 2.6% $100,000 - $249,999 12.7% $ 50,000 - $ 99,999 26.4% $ 35,000 - $ 49,999 15.8% $ 25,000- $ 34,999 14.0% Less than or equal to 24,999 28.5% City ofDenton Population by Occupation: Agriculture, forestry, fishing and hunting, and mining 0.5% Construction 8.8% Manufacturing 7.0% Wholesale trade 3.6% Retail trade 11.0% Transportation and warehousing, and utilities 4.2% Information 3.7% Finance and insurance, and real estate and rental and lea sing 4.00% Professional, scientific, and management, and administrative and waste management services 11.40% Educational services, and health care and social assistance 25.70% Arts, entertainment, and recreation, and accommodation, and food services 12.70% Other services, except public administration 4.40% Public administration 3.20% Source: U. S. Census Bureau, American Community Survey. A-4 EMPLOYMENTILABOR FORCE ...According to the Texas Workforce Commission, the 2008 annual available workforce in Denton is 58,587. Additionally Denton is fortunate to draw workers from the Dallas and Fort Worth MSA's representing 5.1 million people, as well as north to southern Oklahoma. EDUCATION Denton is home to the University of North Texas, founded in 1890, and Texas Woman's University, founded in 1901. North Central Texas College, established in 1924, built an extension campus just outside Denton's extraterritorial jurisdiction (ETJ) in adjacent city, Corinth. The two universities and community college have a combined enrollment of more than 49,531 students and approximately 9,705 full and part time staff members. With an enrollment of over 34,674, the University of North Texas exceeds the combined enrollment of Southern Methodist University in Dallas, Texas Christian University in Fort Worth and Rice University in Houston. Texas Woman's University has an approximate enrollment of 9,618 in Denton with an additiona12,223 students attending in Dallas and Houston. The University of North Texas (UNT) campus comprises a land area of more than 425 acres valued in excess of $167 million. The University encompasses nine colleges and schools of study and offers Bachelor's degrees in 99 fields, Master's degrees in 104 areas and Doctoral programs in 49 disciplines. UNT maintains a low 20:1 student-faculty ratio more prevalent among private rather than public institutions. UNT is listed in both America's 100 Best College Buys and America's 100 Most Wired Colleges. Texas Woman's University (TWU), a major state-supported teaching and research institution, it's the nation's largest public university attended primarily by women, who comprise 91% of attending students. Eighty percent of Physical Therapy faculty members at TWU hold a Doctoral Degree or other appropriate degrees in their fields. Through its seven schools and colleges, TWU offers 58 programs leading to a Bachelor's degree, 66 Master's degree fields, and Doctoral degrees in 23 specialization areas. TWU experienced a 23 percent growth in enrollment from 2003-2008. In 2001, TWU's Doctoral health studies program tied with Harvard University for second place nationally in a study of recommended practices by the National Association of Graduate-Professional studies. According to the Center for Measuring University Performance, TWU is ranked in the top 120 public universities nationwide in the number of doctoral degrees awarded. North Central Texas College (NCTC), established in 1924, offers Associate Degrees in a number of fields and core college requirements for students transferring to UNT and TWU to complete their Bachelor's degrees. The student population of NCTC's campus in the adjacent city of Corinth is just over 5,000. The administration anticipates the student population to increase to 12,000 in the next few years. NCTC serves the citizens of Denton with quality education by offering a broad scope of educational choices and offers the local business community educational options as well. The competitive need to keep employees current with modern technology and methodology is easier due to NCTC's customized training which teaches curriculum developed closely with business management to ensure individual company needs are met. In 2007 the college collaborated with regional gas drilling production companies experiencing a critical shortage in trained professionals to develop and launch NCTC's newest Associates Degree program in Gas Energy Production Management. Denton Independent School District (DISD) encompasses almost 180 square miles and continues to be one of north Texas' fastest-growing school districts. Over 20,000 students enrolled for the 2008-2009 school year in the district's 33 schools that include 20 elementary schools (grades K-5), six middle schools (6-8), three high schools (9-12), one advanced technology complex (ll-12), one early childhood center, and two alternative schools. Voters approved a November 2007 bond package for $282M to fund two new elementary schools, one new middle school, design plans fora 4th comprehensive high school, additional science labs and prep rooms, and safety and security technology enhancements in all district schools. The district's "student centered" approach supports strong individualized instruction and smaller school size. DISD offers classes at each school for students who experience learning disabilities or handicaps. Counselors, speech and language specialists, psychologists and reading and diagnostic consultants are available for all grade levels. DISD offers a number of advanced placement credit classes and dual high schooUcollege credit classes and its students routinely place among top recipients in state and national academic, fine arts, career technology, and athletic competitive events. The district's LaGrone Advanced Technology Complex offers state-of the-art facilities and training in nine advanced disciplines and serves as a model for the region and surrounding states. Denton State School is one of the country's most modern and progressive educational institutions for mentally-disabled Texas residents. This state supported facility is located on a 200-acre site paid for by Denton citizens. Present facilities include residences that accommodate 623 students, more than 20 buildings for physically handicapped individuals, and a 32 bed acute hospital with supporting facilities such as X-ray, laboratory, dental, and pharmaceutical. Additional buildings include a modern administration building, an academic building, laundry facility, chapel, maintenance shop and a warehouse. The school has a staff of 1,500 with an annual budget of over $44M. A-5 Denton Universities Expand ...Texas Woman's University (TWU) has grown dramatically. Student enrollment at the University's home campus in Denton increased 58% from 2002-2008 to just under 10,000 students. Similar growth at the University's Dallas and Houston satellite nursing campuses necessitated recent construction projects. A $40M TWU Institute of Health Sciences-Houston facility opened in August 2006 and a $56M TWU Institute of Health Sciences-Dallas facility will break ground in 2009. TWU leads as a provider of critically needed health care professionals, boasting the nation's fifth largest College of Nursing, and largest nursing doctoral program. TWU is proud of its diversity; minority students comprise 44% of students, and 55% of the most recent semester's graduates were first generation college graduates. Almost half of TWU students (40%) are graduate students. University of North Texas (UNT) -Named one of America's 100 Best College Buys for 13 consecutive years, and among the nation's top 50 schools for Hispanic and African American students, UNT has the largest residential campus in the North Texas Region and is the largest provider of online credit courses among Texas public universities. UNT's Discovery Park, a 285-acre, 553,000 square foot facility is home to UNT's Engineering School and Center for Advanced Research and Technology (CART), one of the nation's premier materials science and engineering research facilities. CART has been the recipient of almost $16 million in defense funding the past four years and provides researchers with a unique grouping of microscopes for nanotechnology research and for other critical advancement fields. Bachelor and Master degree programs in Mechanical and Energy Engineering were added in 2007 to UNT's existing College of Engineering programs in electrical engineering, materials science, computer science, and engineering technology. Over 228,000 of new construction completed in 2007 include Honor's Hall residence for UNT's Honors College students and Chestnut Hall, housing UNT's expanded student health center and career center. Work began in 2008 on two new buildings: the Life Sciences Building will feature open research laboratories that promote collaborative and interdisciplinary research and the $60 million Business Leadership Complex, focused on global economic and business disciplines. The university has recently announced initial plans for a new stadium and ancillary facilities. AGRICULTURE ...Northwestern Denton County is one of the more diversified agricultural areas in Texas. With soil types ranging from rich black to sandy loam, and good, soft artesian water, it is ideal for diversified farming and livestock. Principal crops are corn, wheat, oats, hay, grain sorghums and peanuts. Beef cattle, sheep, chickens and turkeys contribute a substantial and steady income annually to the farmers and ranchers of the County. Avery significant concentration of valuable world champion horse farms east of the City's corporate boundaries provide a prosperous economic resource for the area. Products significant to the economy are horses, beef, eggs, wheat, grain sorghums, hay, and nursery crops. TRANSPORTATION ...Denton is located only 20 miles northeast of the Dallas-Fort Worth International Airport which began operations in January 1974. In addition, Dallas' Love Field Airport and Fort Worth's Meacham International Airport are inclose proximity to Denton. Alliance Airport, located about 20 miles southwest of Denton, is the only purely industrial airport in the world. Accompanying the Alliance Airport are five business parks. Together, Alliance's access to highway, rail and air transportation offers an excellent opportunity for future industrial growth. The Kansas City Southern Railroad and the Union Pacific Railroad provide daily service to Denton. Full switching is available, providing direct access to all major markets across the nation. GreyhoundlTrailways serves Denton through Dallas and Oklahoma City. Motor freight in Denton is included in the D/FW commercial trade zone and is served by major freight carriers. BANI~NNG ...There are 18 banks in Denton: Access First Capital, Bank of America, N.A., Chase, Compass Bank, Wells Fargo Bank, N.A., Farmers and Merchants State Bank, First Convenience, First State Bank, Provident Bank, Point Bank, Inwood National Bank, Synergy, Washington Mutual, Denton's only locally-owned bank, Northstar Bank, Washington Federal Savings, Wachovia, Towne Center Bank, DATCU Credit Union, and First United Bank with Denton's first "Banco" branch specializing in serving Denton's Hispanic community. GROWTH INDICES City State Fiscal Building Values (millions) (1) Water Sewer Electric Unemployment Unemployment Year Commercial Residential Total Customers Customers Customers Rates Rates (2) 2004 $114 $240 $ 354 26,416 24,453 39,507 N/A 6.03% 2005 69 260 329 27,584 25,695 41,846 3.83% 5.39% 2006 61 214 275 28,805 26,951 42,186 3.97% 4.94% 2007 64 219 283 29,783 28,020 43,607 3.84% 4.35% 2008 131 157 288 29,679 28,019 44,375 4.03% 4.84% (1) New Construction Only. (2) Source: Texas Workforce Commission. A-6 MEDICAL ...Denton has become a regional medical destination serving north Texas and southern Oklahoma. Denton Regional Medical Center is a 184-bed community hospital that serves the growing population of Denton, Wise, Cooke, and Montague Counties. The hospital offers afull-spectrum of healthcare including advanced open-heart surgery and neurosurgery programs. Denton Regional is the only facility in Denton County to earn the prestigious Level II Chest Pain Center accreditation by the international non-profit Society of Chest Pain Centers and is pursuing the Level III Trauma Center designation in 2009. Since 2005, the hospital has opened a new $7 million, 13,500 square-foot day surgery center and a new hospital floor housing a 29- bed, $19M progressive care unit. Denton Regional's Center for Cancer and Blood Disorders, a comprehensive cancer diagnostic and treatment center integrating education, nutrition, and rehabilitation services opened in 2008. Presbyterian Hospital of Denton (formerly Denton Community Hospital) celebrated the grand opening of its 272,538 square- foot, 161-bed facility and an 80,000 square-foot medical office building in 2005. The hospital expanded its Women's Center services in 2006 with the opening of a Level III Neonatal Intensive Care Unit serving Denton and its surrounding communities. North Texas Hospital opened a 60,000 square foot specialty hospital featuring eight surgical suites and 16 inpatient beds in 2005. In 2007, North Texas Hospital became one of only four hospitals in the Dallas-Fort Worth region to offer patients improved surgical outcomes by utilizing the $1M, state-of the-art DaVinci robotic surgical suite. Other new hospitals gaining Denton its reputation as a regional medical destination include Mayhill Hospital, a 40,000 square-foot facility featuring physical rehabilitation and a behavioral health services hospital that opened in 2005 and Integrity Transitional Hospital, a 38,500 square foot, $16 million dollar long-term acute care hospital that opened in 2007. Denton's rapid medical growth continued in 2008, adding more than 123,000 square feet of new medical offices and treatment facilities; most notably the new 44,000 square foot, $20 million Select Medical Rehabilitation Hospital, modeled after the renowned Kessler institute for Rehabilitation. RECREATION ...Lake Ray Roberts, located approximately 8 miles northeast of the City's corporate boundary on the Elm Fork of the Trinity River, is a major water conservation and flood control facility of more than 799,600 acre-feet of storage that allows for an abundance of parks and other water and outdoor related recreational facilities. The nine mile Greenbelt HikeBikelEquestrian Trail, located between Lake Ray Roberts and Lake Lewisville, is a cooperative project made possible by the Army Corps of Engineers and the Cities of Denton and Dallas. Nearby Lake Lewisville, one of North Texas' largest lakes is one of Texas' most popular recreation areas. Lake Lewisville has a shoreline of 183 miles located entirely in Denton County. Lake Lewisville attracts over 3,000,000 visitors to its shores annually. The upper reaches of the lake are only about 3 miles east of the Denton City Limits, while the dam is 15 miles from downtown Denton. Grapevine Lake, another large body of water created by the U.S. Army Corps of Engineers, is located in Denton and Tarrant Counties. The dam is 23 miles from Denton. Parks and recreational areas abound on the shores of Lake Ray Roberts, Lake Lewisville, and Grapevine Lake. Boating fishing, hunting, swimming and all water sports are the favorite recreational pastimes, which, because of this area's favorable climate, are in use the year round. The City of Denton Parks and Recreation Department and the Denton Independent School District have created a partnership to produce a signature water recreation attraction. The $12.16 million Waterworks Park opened in 2003 and features four water slides, a children's play pool, a 600 ft. long continuous flow tubing river, outdoor amphitheater, pavilions, a sand volleyball court and two indoor pools. A-7 APPENDIX B EXCERPTS FROM THE CITY OF DENTON, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended September 30, 2008 The information contained in this Appendix consists of excerpts from the City of Denton, Texas Comprehensive Annual Financial Report for the Year Ended September 30, 2008, and is not intended to be a complete statement of the City's financial condition. Reference is made to the complete Report for further information. APPENDIX C FORM OF BOND COUNSEL'S OPINION AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 DEPARTMENT: City Manager's Office CM/DCM/ACM: George C. Campbell, City Manager ~ SUBJECT: Consider adoption of an ordinance of the City of Denton, Texas creating a new Chapter 17 "Property Maintenance" in the Code of Ordinances of the City of Denton; repealing Chapter 20 "Nuisances" of the Code of Ordinances; repealing Sections 21-51, 21-55, and 21-56 of Chapter 21 "Offenses" of the Code of Ordinances; repealing a portion of Section 35-76 of Chapter 35 "Zoning" of the Code of Ordinances; Providing a severability clause; and providing for an effective date. BACKGROUND: The current city codes that address property maintenance issues are located in various Chapters of the city's Code of Ordinances. Thus, it can be confusing for anyone who is trying to research information related to the City's property maintenance codes. Also, the current property maintenance code language is deficient in some areas, contradicts itself in other areas, and does not address some of the complaints being filed by residents. As a result, there are numerous instances where staff is not able to address valid complaints by citizens. In 2005, when the City attempted to address the revision of the property maintenance code language, that attempt was met with resistance from certain sections of the community. In April, 2006, the Denton City Council asked the Denton Chamber of Commerce to conduct an assessment of the City's property maintenance issues. The Chamber asked the 2006-07 Leadership Denton Class to adopt this issue as their class project, and the class conducted a non- scientific survey of the community's thoughts on this issue. Their study was based on data collected in the city from November 2006 through January 2007. In April 2007, the Leadership Denton Class presented the results of their survey to the Denton City Council. The general conclusions of their study were: • Almost two-thirds of the citizens who responded to the survey felt that the City of Denton has adequate property maintenance codes (65%), but seventy-two percent (72%) felt that the codes were not being adequately enforced. • The property maintenance issues that were of the most concern for the city were: zoning, trash and debris, substandard housing, junk vehicles, signage, parking and rental property issues and grass and weeds. • The property maintenance issues that were of the most concern for the neighborhoods were: number of vehicles on property, noise, grass and weeds, fencing, occupancy levels and rental property issues. ADA/EOE/AREA www.cityofdenton.com (TDD 800-735-2989) 2/20/09 Denton Property Maintenance Code -Articles I-XII Page 2 of 3 The Leadership Denton Class survey did have some limitations including: • The sample was small and non-representative and therefore the findings cannot be generalized to a larger population. • The findings were based solely on the experiences of 450 citizens who participated in the survey. • The sample primarily reflects the experience of white homeowners; other categories were represented but not reflective of the community. • Many respondents skipped questions or did not answer them. In October 2007, a City Council Committee was appointed by the Mayor to address the property maintenance code issues. Council members Charlye Heggins, Chris Watts and Joe Mulroy were appointed to this committee and they held their first meeting in November 2007. This committee set as their mission, "to improve the quality of life and standard of living for all citizens, and set to accomplish its mission through a collaborative process whereby city staff, Council and citizens of our community would evaluate our existing codes to determine the need for modification and/or adoption of new codes relating to property maintenance issues." In an effort accomplish this mission, the Council Committee appointed a nine member Citizens Committee to work with staff and the Council Committee on addressing these issue. The Citizens Committee held its first meeting in March 2008. Citizens were given opportunities during each of the thirty (30) meetings that these two committees have held thus far on this issue. The agendas, minutes, draft documents and other pertinent material have all been posted on the City's website on a page created just for property maintenance issues. This document, know as the Denton Property Maintenance Code (DPMC) - Articles I XII, is a result of the discussions and collaboration that have taken place in these meetings. The DPMC accomplishes the goals of placing all property maintenance related information into one document; adding language that will allow staff to address certain complaints from residents; and format the document so that it is easier for the average citizen to read and understand. The provisions of the DPMC shall apply to all existing structures and premises within Denton's city limits. The DPMC establishes minimum maintenance and sanitary standards for all premises and existing structures so as to protect against blight, neighborhood decline, and depreciation of property. It also ensures the health, safety and general welfare of the citizens of the City of Denton. RECOMMENDATION Adopt the Denton Property Maintenance Code - Articles I-XII PRIOR ACTION/REVIEW (Council, Boards, Commission): The Citizens Property Maintenance Code Committee and the Council Property Maintenance Code Committee recommend approval. City Council Work Session on February 17, 2009. FISCAL INFORMATION: None. ADA/EOE/AREA www.cityofdenton.com (TDD 800-735-2989) 2/20/09 Denton Property Maintenance Code -Articles I-XII Page 3 of 3 Respectfully submitted: John Cabrales Public InformationlIntergovernmental Relations Officer Attachment: Denton Property Maintenance Code -Articles I-XII ADA/EOE/AREA www.cityofdenton.com (TDD 800-735-2989) S:ICur Documentsl0rdina~ees'~9~raperty Maintenance Code-Articles I-K1I -Final.dac ilJJ11y I71 M ~l~ ~LJ. A ~~Dn~ANE ~F THE QTY F DB1~T~N, TEA RBAT~~ A l~Ew CHAPTER 17 "PROPERTY A~NTE~A~E" IN THE CEDE ~F ~RDII~ANE ~P THE YTS' DE~TON; REPEAL~~ HAPT~ "NU~ANE" ~F TIC ODE ~F ~~D~NANE; PAL T~o~r ~ i ~ ~ A~rD ~ ~ ~F CHAPTER ~ ~ «~~~~s~#~ of T~~ ODE F ~R~INAI~CE; REPLALIN A P~RTI~N ~F ET~~ 5-76 ~F ~APTER 5 t{~~~I" DF THE ~F ~RDINAN~ES; PR~v1DYN A EVERAB~~TY LADE; AID PROVIDING FAR A~ ~F~~~T~v~ DATE. wI-IEREA, the pity council of the pity of Denton finds it in the best interest of citizens and property owners to amass all property maintenance regulations into one chapter of the bode of ordinances; THEREF~PE, THE ~~LJIL ~F THE ~T~ OP DP;NT~~ HP~REBY ~RDAIN~: ~ . ETION The Code of Ordinances of the pity of Denton is hereby amended by . creating chapter ~ ~ "Property 1Vlaintenance" to read as follows: Ohapter 17 PROPERTY ~VIAII~T~NAl1~~ A~TI~L~ ~N ~E~~ ec.17-1. P~rpase and intent. ~a} The regulations within this chapter shall be known as the Denton Property 1Vta117tena~lce bode ~44DP~"~. The proVisiQrls Qf the DP sha~~ apply to all exl~t~n truetres and premises within Denton's czty limits. ~ The purpose of the DP is to establish the minimum maintenance ~.nd sanitary standards for all premises and existing structures sa as to protect against blight, neighborhood decline, and depreciation of property. It is also the intent of the DPI to ensure the health, safety and general welfare of the citizens of the City of Denton. fie} Existing structures and premises that do not comply w1th these provis~ans shall be altered, andlor repaired to meet the minimum requirements stated herein. All repairs, new additions, or alterations of existing structures that require a building perr~,xt shall comply with the adopted edition of the International Building fade currently in e~`fect at the tine of the repair, new addition, or alteration. The DP1Vi~ shall not govern the use or development of land, but shall defer to the Denton Ueve~oprnent bode ~"DD's} an these matters, ~d} when regulations imposed by the DDS impose greater restrictions than are required by the DP, the provisions of the DD sha~~ control. Page 1 of . . . r r ~ . ti•s~' • . ..u. r.....r...,: c4.w.. -i. .:r.. - - Y.i~ekSlc~/a~4:1~ vet--'1.. =2 :1::.: ~t: =~r~~^^ r~------~~~GW~idr..,. ~......z~:._•„ew~~ ~ :•.4~r..rtiwa.~:~ -w~.r~.ti3~.a~;c%b'•' ~r~:: ~c<~. S'i-,';; ::k%; - - .~'.iL:s;wi.: S;Ibur I7acumentsl0rdinanccs~091ProF~' Mainteaence Cad~Articles I-7CII -Fiua~.doc ~7~C, ~ ])~~llll~l~~5. The following wards, terms and phrases, when used in this chapte~rx shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning: ~fp~rave so~c~d ~~ve~ ~ne~~ means an instrument sensitive to pressure fluctuations that provides a digital decibel reading indicating the level of sound based on a reference of zero db ll~icro ~ar~. The xnstru~ent n~u~t also be capable of taking measurements on the A~ weighted scale and an a slow respoa~s: ~4-~v~i~~~d so~~d press~~ ~ev~~ means the sound pressure level s .easured on an approved sound-level meter uszng the A-weighting network. 'a~~ion means the dead, putrefying flesh of any anima, fowl, or fish. C`~~a~~y a~c~~b~ means any sound far which. the information content of that sound i unambiguously communicated to the listener, such as, but not limited to, understandable spoken speech which need not be wholly discernable, or comprehension of whether a voice is raised or normal, bass reverberation, or comprehensible musical rhythms. ~ayti~n~ means from 7; ~0 a.n~. to 1 p.m. Desin~~s~ means ~xty employee or employees designated by the city manager to perform activities related to noti~.cation and abatement of graf.ti. ~s~~a~~is~ea~ p~ri~ne~e~ means the established perimeter of an event will be the permanent or temporary fencing in place for the event, or the natural boundaries of a specific location or address, ~i~~~ means any matter xn a putrescent state. Carba~ means any kitchen refuse, foodstuffs, or related materials, including all decayabie waste, ~t~ m.ea~as visual blight or any unauthorised farm of painting, scratching, writing, or inscription including initials, slogans, cymbals or drawings, regardless of the content or nature of the material #hat has been app~~ed to any wall, building, fence, window, sign or other structure or surface and is visible from a~ay public property or r~ght~o~ way or is visible from the private property of another person. "ra.F.t~" does not include any of the foregoing used far advertising purposes placed an any property in compliance with any applicable pity ordinance, state or . Federal law. ~a~~ ~~e~ne~t means an aerosol paint container, paint stick or graffiti stick, etching. equipment, brush ar any other device capable of scarring or leaving a visible nark on any natural yr man-made surface. gage ~ of ~S .i~dkA1.\":~•.••-'•• "fix' Vt'k, "~Y'\~-.~i °lYrw'Si.7i~w',a14~r#~a ~.++FS~ii-i•"1i^a"1i`!i?~Elp~}.~,'l."LlalLl1x4i2. -~-^-~}•L`_ i S:Ipur bocutttentsl0rdinances1491Pmperty Ma~t~auice Code-Articles I-XII -Final.doe ~~nproved parking s~~ face ~nea~ a paring area. ca~ructed in comp~ia~nce with the Benton Develorrient Cade and the Transpartativn Criteria Manual ~Park~.n Lot Design- Iaterials and Pavements ection~. I~a~u~ or ~~a~vholesoe ~na~~e~ means any putrescible or nanputrescible condition, object or matter which tends, nay, or could cause injury, death or disease to human beings. ~opera~~~ n~o~o~ v~~i~~ means a motor vehicle that is not in operating condition because it is wrecked, dismantled, partially dismantled, dilapidated ar has one ar mare flat tires. I~opera~~e v~~~c~~ means a vehicle without a rr~atar, including but not limited to trailers, campers, camper shells, and wheeled towing frames, that is not in operating condition because it is wrecl~ed, dismantled, partially dismantled, dilapidated or has ane or more flat tires. ~lun]~ means all worn aut, worthless, or discarded material; including, but not 1in~ited to, adds and ends, old iron or other metal, glass, and woad. J~~ak vei~~e means a vehicle that is self propelled and: ~ 1 } does not have 1af~lly attached to it: a. .a. unexpired license plate; and b. A valid motor vehicle inspection certificate; and ~2~ a. Wrecked, dismantled or partially dismantled, yr discarded; ar b. Inoperable and has remained inoperable foar mare than: seventy-two consecutive haurs, ifthe vehicle is on public property; or Thin consecutive days, ifthe vehicle is an priaate property; as defined in Tex. Transp. Cade ~b~.071. i at~er~ means that of which any physical abj ect is canaposed. ~ ~Vlino~ means an erson under 17 ears of a e. yp y g ~~o~cyc~~ means a motor vehicle designed to pxopel itself with not more than three wheels in contact with the ground. The term does not include tractor or any other self-propelled arm equipment. . ~lo~o~ veic~~ far the purposes of this article shall any xr~clude passenger cars, picl~up trucks and motorcycles. i~~~i~ne means from 1 ~:~4 p.~n. to 7:0~ a.m. ~i~e means any sound which is unwanted or w~.ch causes, ar tends to cause, an adverse psycholagical yr physiological effect on human beings. Page 3 offs s-~f~S.:~:arl;~",. .tii~"k:~w~'~A?5aw:~s~wa ~-rwaaxS-..:~~~~i1'.,Sc~.~G^':s^~~t~k'a2~.'<ap.;i-a:r:.~w::.~.T'=~ '>nC~~ _~~:i)di='i+F'~";~yy~~..~ T a^;r~:?:::~~~^..',,,~i~%~~=~-'.::s;'Gxi:.ii, °s` 5;14ur ~oCUr~entsl0rdinauces1091Pr4perty M~iatenauce Cad~Articlcs I-XI[ -Fi~a~.doc u~sauc~ means w~hatsaever is dangerous or detrirr~er~tal tv human life or health; whatsoever renders the ground, the water, the air, or the foal a hazard or injurious to human fife or heath; whatsoever is offensive to the senses; or whatsoever is detrir.~ental to the public health or welfare. . O~too~ music fes~iv~~ means any fora. of musical enterta~nixnent provided by live performances if: ~ ~ ~ 1V~ore than 0~ persons are in attea~dance at any one performance, or ~2} The event requires paid admission, and. Any of the pexfor~ners ar perfor.a~nce are not within a permanent, enclose structure, and Any of the performance involves the use of amplified sound. ~u~sidc display means the displaying of objects, items, products, or other merchandise outside an enclosed building that is intended and available far immediate sale, rental, or special order. ~sid~ s~~~a~ means the storage of any obi ects, items, products, or materials outside an enclosed building that are not intended far immediate sale, rental, ar special arder. w~e~ means any person or entity sham s the property owner on the latest property tai assessment rally or any person having or claiming to have any legal or equitable interest in the property, including any agent who is responsible far managing, leasing ar operating the property and including any tenant. P~~~~ means a person who is a natural parent or adaptive parent of a minor A.s used herein, „parent" shall also include court-appointed guardian ar other person. ~l years of age or alder, authorized by the parent, by a caur~ order, or by the court appointed guardian tv have the care and custody of the aminor. ~asseuc~ cap means a self propelled vehicle designed or used primarily far the transportation of persons upon streets anal does not Include trucl~~tractars, trailers, campers, recreationaX vehicles, travel trailers or farm tractors. ~'erir~c~cr feucc means an enclosure used as a boundary or means ofprovidin protection, confinement, or privacy and is located along the limits of the developed area and is adjacent to an alley, utility easement, or right-of ivy, Properly means all privately awned occupied or unoccupied property, including vacant land, andlar a building designed or used for residential, commercial, business, indus~ria~ or relxg~ous purposes. The term "property" shall also include a yard, ground, wall, driveway, fence, porch, steps ar other structure appurtenant to the property. Page 4 of ~8 1,... . ~.,.~~v-~.t..t.aor ,,.~sa3.+L.gs a,"~~r.~tk3frm~.Ac~..~,uxd... ~..4.~:dk y;..;: . ~ ~ - ~ - - - . ~n...Yr; wa...x.,..,. ~~~'~:t^fs~.LLasz~a ' :r ~ s. t:: -.,1~C~ii.,'~s~tiL~rr2n':_, Y,'~s''.«.e:.~.~..~3.ia9zG,=::~'.,:.........,, ~.-tip.. 3~r _ _ ~~EwiYkldi~i~fhiveiPcK'E,~"~-'~4i ~ ny~'~~.ae:.-.r S:IOur I~oeu~eutsl0rdmances1091Property Mair~ta»cc Cod~Articl~s I-7CII -Final.doc .~efus~ n~a~.n~ a heterae~eous accumulation of morn-out, used, brv~en, re~eate~ ar . worthless materials including, but not limited ta, garbage, paper or litter, and other decayable or nondecayable matter. ~'o~nd a~p~~fyi~ eq~z~~ne~~ means any machine or device for the sound amplification of the human voice, music, musical equipment, or any other sound. "found ar.~plifying equipment" shall not include warning devices on authorised emergency vehicles or barns or other warning devices on any vehicles used only for traffic safety purposes. ~'~r~e~ means the width between the boundary lines of a publicly ar privately maintained way, any part ofwh~ch is open to the public for vehicular travel. ~'~n~,~orary ca~po~t or ~u~o s~aade ov~~ means a structure that is easily moveable which supports flexible membrane canopy used far the purpose of prodding shade andlor weather protection for automobiles, trucks, recreational vehicles, boats, aid similax vehicles. ~'~as~~ aid ~~bris~ means all manner of refuse including, but not limited to junk, carrion, filth, garbage, impure or unwholesome matter, grass and geed clippings, paper trash, useless fragments of building material, rubble, useless household items, items of salvage such sorap metal and wood, old barrels, .old tires, oh j ects that Nord v~~ter far an extended time, tree and brush trinuning, and other miscellaneous wastes or rj ected matter. T'c~ frac~or means a ruotor~driven vehicle designed and used primarily for drawing another vehicle and not constructed to carry a load other than a part of the weight of the vehicle and load to be drawn. ~Jna~~o~~~~ means without the consent of the owner or without authority of law, regulation or ordinance Unless the owner proves otherwise, lack of consent will be presumed render circumstances fending to sho~r ~ t ~ the absence of eddence of specific authorisation by the . owner, that e visual blight ~s lncansrstent wx the design and the use of the subject property, or ~~}that the person causing the dsual blight was unl~nown tv the owner. . U~de~s~o v~e~~~~o~ means any shrubs, trees including saplings}, brush, bushes, wildflowers, native grasses, or vines that make up the ecosystem surrounding trees in wooded areas. Understory vegetation does not include weeds. ~~ac~e n~.eans a device in or by which a person or property is or nay be transported or drawn ~ on a public highway, or on any waterway and shall include all motor vehicles, trailers, campers, camper shells, wheeled towing frames, recreational vehicles, truck-tractors, travel trailers, self propelled farm equipment, motor-boats or boat trailers For the purposes of this article, "vehicles" shall not include non,n~atori~ed bicycles, skateboards, roller skates, ar any other non-n~otori~ed toy vehicle. Yib~~~ia~z ~b~ss ~~ve~ber~ion~ means ~ a temporal and spatial oscillation of displacement, velocity, ar acceleration in solid rr~aterial created by the use ar operation of a stationary loudspeaker, amplifier, musical instrument, or any other sound amplifying equipment. Any Page 5 af~8 ~o- a'w.w Ww~crv - - - ~'1 tz4V..~iIE' _ ?a.~.1rk':~s.._.z'ac~~a{ a ..sarmE~~.~~..,~~.~..~~:^~.:: ~..:.sib;'s~..:,.b:~'r;~_~4.~oi~.~~.:a:~}'tai:,:;s~~.-w .uao-.~-,s:,:~.c.€=:.~_'..iS;>.ry:i~'£~~s.Li~cv-,~ac~r ~:~_.~„~y''~"4F'~I~,:: x:ia~fa'~iC~s~aa~`~~Ak b]if~t~i~A`M.,cmuee~5~'Fer_1,rz1 S:lO~~r Doeumattsl0rdinanccs1~91Prapcrty Maintenance Cade-Articles i-KII -Final.dac welfare: It i the express intent of the pity council to control the level of noise in a manner that pran~otes commerce; protects the sleep and repose of citi~~n; promotes the use, value, and end vyn~ent of property; and preserves tha quality of the environment. ~b~ So~~a~ ~nas~~e~nen~ ~ra~ria. Far purposes of this ordinance, sound n~easuren~ents will be ro.ade using the A-weighting scale on are approved sauna-level meter, based on the reference sound pressure dba}.Measurement times will be na less than two minutes in length, and violations will be determined based an the highest registered reading in that measure.ent period. All rr~easuren~ent levels will be inclusive of any ambient noise ~ that e~sts at the time of the measurement, . ~c} C~n~~~~ ~o~se ~iola~i~~s. . ~ ~ } It shall be unlawful for person to make ar cause any unreasonably loud, disturbing, ar unnecessary noise, which causes material distress, discomfort ar injury to persons of ordinary snib1lit~es rn the 1~nmed~ate v~clnlty thereof. ~t shall be unlawful far any person to make or cause any noise of such character, intensity and continued duration as to substantially interfere with the comfortable enjoy~ner~t of private hona.es by persons of ordinary sens~b~llties. ~3~ The fallowing acts, among others, are declared to b raise nuisances in violation of . this fade, but such enumeration shall not be deemed to be exclusive: a, The playing of any phonograph, television, rd~a, ar any musical instrument . such manner ar with such volume, so as to be clearly audible to a person in their residence, and 1. During the daytin~~e, measure more than ~ dba on the A-weighting scale on an approved sound-level meter at more than 5 ~ feet frorrz the source; ar During the nighttime, measure mare than 5 dba on the ~~weightin scale an an. approved sound-level meter t more than ~ ~ feet franc the source; ar During the daytime, in a n~ulti~family dwelling, measure mare than dba an the ~.~weiglating scale on an approved sound-level meter in and add acent un1t; ar 4. wring the nighttime, in amulti-family dwelling, be clearly audible within any unit that is not the source of the sound. b. The use of any stationary loudspeaker, arnplif~er, musical instrument, or sound amplifying equipment in such a manner ar with such volume so as to be dearly . audible to a person in their residence, and Page 7 of S ~ _ . ..~-u..,.y, ,w1. _t✓ws>..._...-.e..~:i.:~.~w,wl-~..rn}- .W ~:y .w ~:.ar- .tiY . ...]~k~` F1Bi:FC~ ~ "1.S:~.ti.'4,P.:c<?ri.~:3d'C;:;.., ~.wio~4~t'. i~a.:~oc+n~rii5 RrP4..-__~w, f -wi.i,..._ ~~'t..r~.+.rr ~ S:1~ur 17ocwncntsl0rdinat►ces1U91gmperty Ma~tenanee dodo-Articles I-XII -Final.dac 1, 1Ju~ng the daytime, be of such intensity and volume o a to measure .ore than ~5 dba on the A-weighting scale on a sound-level measuring device at more than 5 ~ feet from the source; or 2. ~ua~n the nighttime, be of such intensity and volrur~e so as to measure more thaa~ dba on the A-weighting scale on, sound-level rr~eau~ing device at more than Sa feet franl the source; or 3, wring the da~ti~r~e, in a .ulti-family dwelling, n~eaure more than 50 dba on the A-weighting scale on an approved sound~level meter any ad j scent unit; or 4. Dunn the rllghttnrie, In a multi-family dwelling, be clearly audible within . any unit that is not the source of the pound; or 5. At any time on Sunday; . provided; however, that the xty council may make exceptions upon ~ . application for sound levels or hours of operation when the public interest will be served thereby. c. The creation of vibration or bass reverberations at any time that i perceptible inside a complaining person's residence, through the sense of touch, or through visual observation of moving objects, or through the sense of hearing, d. The use of any radio, stereo., an~plificr, sound an~plif~rin equipment, or other musical device installed or contained in a motor vehicle at a volute such that it is clearly audible to any person from more than 3 feet from the vehicle. e. The blowing of any seam whistle attached to any stationary boiler or the blowing of any other loud or far-reaching steam whistle within the city lin~,xts, except to give notice ofthe time to begin or stop work or as a warning ofdanger; f. The erection, excavation, demolition, alteration, or repair work on any building at anytime other than between. the hours of G:O~ .m. and 5:~0 p.m. Monday through ~`riday from June 1 to September 3~; between 7:a~ a.rn. and 8:34 p,., Monday through Friday from October ~ to May 1; between 5:~~ a.n~. and 8:~ p,m. on Saturday; and between I p.m. and :~0 p.m. an Sunday; provided, however, that the pity council nay issue special permits for such work at ather hours in. case of urgent necessity and in the interest of public safety ar~d convenience; The creation of any loud and excessive noise in connection with the loading ar unloading of any vehicle or the opening or destr«ctian of bales, boxes, crates or . containers; h. The use of any drum, loudspeaker, or other instrument or device for the purpose of attracting attention by the creation of noises to any perfonnance, show, theater, gage ~ Of~~ '~A: _..-cL.~~WY~GYIAtiF.i WJC WP... ~'-maw✓,+'+. "h. ' ~ 5:10ur I}ocwuentsll~diuancesl091Praperry Maintenance Code-Articles I-XII -Finai,doc motion picture house, sale of n~erchan.dise, or display which causes crowds or people to block or congregate upon the sidewalks or t~eets near ar adj scent thereto. ~u~doo~ music fes~iv~~s. .At any outdoor music festival, it shall be unlawful for and person or group sponsoring the event to make, cause, allow, or permit any noise that: ~ . Exceeds '7~ dba vn an approved sound-level meter when measured at the established perimeter of the event. Z. Prov7ided, the pity council nay mare exceptions upon application for sound lever or hours off` operation when the public interest will be served thereby. fie} '~i~aina~ ~e~a~ty. ~ 1 } A person commits an offense if he violates yr attempts to violate a provision of this chapter applicable to hin~. A culpable mental state is not rewired for the commission of an offense under this chapter unless the prvvisia~a defining the conduct e~pre~ssly requires a culpable mental state. ~ separate offense is canunitted each day in which an offense occurs. An offense committed under this chapter is punishabie by a xr~e of not more than five hundred dollars ~2} Prosecution for an offense under subsection ~a} does not prevent the use of other enforcement remedies or procedures applicable to the person charged with or the conduct involved in the offense. ec,17~~~.. odors. ~a} It shall be unlawful fur any person. to create or cause any unreasonably noxious, unpleasant or strong odor which causes material distress, discomfort or injury to persons of ordinary sensibilities in the immediate vicinity thereof. fib} It shall be unlawful for any person. to create ar cause any velar, stench yr smell of such character, strength or continued duration s to substantially Interfere with the con~fvrtable end oyn~ent of private homes by persons of ordinary sensrbllit~es. ~c~ 'fhe fallowing acts or conditions, among others, are declared tv be velar nuisances in vielatian of this bode, but such enumeration shall not be deemed to be exclusive: ~ 1 } offensive odors from cow tats, hog pens, fowl coops and other similar places where animals are kept ar fed which disturb the comfort and repose of persons of ordinary sensibilities; ~2} offensive odors franc privies and other similar places? offensive odors from the use yr possession of chemicals or from industrial processes or activities which disturb the comfort and repose of persons of ordinary sens~bi~it~es; Page 9 of28 11-1~ '}.1 ~T ,,.V..~~: A. ,~.~'w.v:~til~~i/r~=:.:i ~.'E ir.WnYrioi ...Yw'v `~cit+{`.i+.~fa.~i - .~.14Ll.iL. G{JL~ditfa.~72~.~wi~1( Ml1EC.wY~:h~A_.~L.41~+~ ~4~~r ~-+~y._=. ~'w- '1_._.:.~..ri.~;.'•. ~wiRfrbr~.uZ_SG.. altii6~:~.S:.S1l~(`J.~ ~itiltl~?'~= S:IOur Docnmentsl0rdsn~tces1091Property Maia~anae Cade-Articlas I-7CI[ -Fin;~.dOc ~4} offensive odors from smoke from the burning of trash, rubbish, rubber, chemicals ar other things or substances; ~f~`ensive odors from stagnant pools allayed to remain on any premises ar from rotting garbage, refine, offal or dead animals an any premises. ARTII~L~ III. IN~P~~LE ADD JUNE CHILE Sec, I7-3~. Aut~irity to tike pasessia~ of abandoned motor vehicles. . The police department nay take into custody an abandoned motor vehicle found an public or private property. fib} The police departn~.ent may employ its own personnel, equipment and facilities or hire persons, equipment and facilities to remove, preserve and store an abandoned motor vehicle it takes into custody. eo.17~~1. Natifi~~tion of owner end lienholders of abandoned vehicle. ~a} when an abandoned orator vehicle is taken into custody, the police department shall notify not later than the tenth day after taking the motor vehicle into custody, by certified mail, the last known registered owner of the rnotar vehicle and all lienholders of record pursuant to the certificate of Title Act, Tex. Transp. fade ch. Sal or Tex. Parrs and wildlife fade ~~l.~~l, e~ seq., that the vehicle has been taken into custody. The notice shall describe the year, make, model and vehicle identxfieatian number of the abandoned motor vehicle, set forth the location of the facility where the motor vehicle 1s being held, infarn~ the owner and any lienhalders af~their right to reclaim the motor vehicle not later than the twentieth day after the date of the notice, on payrn,ent of all towing, preservation and storage charges resulting from placing the vehicle in custody, ar garagekeeper's charges if notice i~ under Tex. Transp. bode ~~8.~32. The notice shah also state that the failure of the owner or lienholders to exercise their right to reclaim the vehicle within the tine provided constitutes a waiver by the owner and lienhalders of all right, title and interest in the vehicle and. their consent to the gale of the abandoned motor vehicle at a . lc auCt~~n, fib} ~f the identity of the last registered owner cannot be determined, if the rcgistrat~an contains no address for the owner ar if it is impossible to determine with reasonable certainty the identity and addresses of all lienhvlders, notice by one publ~cat~an 1n the official newspaper of the pity is sufficient notice under this Article. The notice by piblication may contain multiple listings of abandoned vehicles, shall be published within the time requirements prescrlb~ed for notice by certi~.ed mail and shall have the same contents required for a notice by certified nail in this section, ~c} The consequences and effect of failure to reclaim an abandoned motor vehicle are as set forth in a valid notice given under this section. Page l ~ of 2$ ~~,YS~3w.x'w~v-.'~``"',.~JS~r~n.~.r~4E~~-,q~.°~'~b~~w'1:.~.s~adC, 9FCe4....~J1,.~x .,..?+t7 tit._x. ...L~~.i:iP:;,~:. <::~a,~s':_.ar. ~.ro ~u :~a.~.~:c. ~:.~,~~_a:.<2:: -nai..:,:~c~ .i~. ::-nom ~:,:c,:.Afo:~i.i.!~.~:~•L-+~R~~;ivy;}5~-.~:Coif?'~^sK'$~,.~''.'~~'~~„M,::: ='~"~,w`,:~.~[.L'.ni~f'~^~ S:lO~tr Daeumentsl~r~nanceslQ9l~ropetty Msmt~ance Cade-Articles i-Xli -F~al.dac ~d} The police department or an agent of the police department ~vho takes custody of an abandoned motor vehicle 1s entitled to reasonable storage fees for: ~ l } period of not more than 1 ~ days beginning an the day the police department tales custody and continuing through the day the department n~aiis notice as provided by this section; and ~2~ A period beginning an the day a#~er the day the police department mails native and continuing through the day any accrued charges are paid and the vehicle is removed. dec. ~'~-3~. Police departr~e~t u.se of certain ~bndoned motor vehicles. ~a} if an abandoned motor vehicle has not been reclaimed as Provided by section I7-l, the police department nay use that vehicle far police departna.ent purposes as prodded by this section. fib} The police department nay use the abandoned motor vehicle for police department Purposes as long as the deparrt~rient considers 1t cost~effective. If the police departrrient discontinues use of the abandoned motor vehicle, the department shall auction the vehicle as prodded by section 17-33. ~c~ This section does not apply to an abandoned motor vehicle -ith a araekeeper's lien. ec.17-33. Auction o abndnned motor vehicles . If an abandoned motor vehicle has not been reclaimed as provided by section 17-31, the police department may use the abandoned motor vehicle far police department purposes as provided by section 17-~~ or sell the vehicle at a public auction. Proper notice of the public auction. shall be given, and in the case of a gamekeeper's lien, the garagel~eeper shall be notified of the time and place of e auction. The purchaser of the motor vehicle takes title to the orator vehicle free and clear of all liens and claims of a~nership, shall receive ~ sales receipt from the police department and is entitled to register the purchased vehicle and receive a certificate of title. ~'ro the proceeds of the gale of an abandoned motor vehicle, the pity shall reimburse itself far the expenses of the auction; the costs of ta~vxng, preserving and storing the vehicle that resulted from placing the abandoned orator vehicle in custody; and all native and publication costs incurred under section 1731. Any remainder from the proceeds of a sale shall be held for the owner of the vehicle ar entitled lienholder far 90 days and then shall be deposited in a special fund that shall remain available far the payment of auction, ta~d.ng, preserving, storage anal all notice and publication casts that result from placing another abandoned vehicle in custody, if the proceeds from a sale of another abandoned orator vehicle are insufficient to meet these expenses and costs. fee. ~7-~4. Dispasai of abandoned vehicle by demolitia~. if an abandoned motor vehicle is not reclax~ned in accordance ~dth section 17-31, the State department o H1ghras and ~ubl~c Transportation, on notification of that fact by the page 11 of28 w~..~,s a_,.,~wua~~irxaba°ne'~Y~r~~a~-.r~~~i~..~..~~-- Je~laia~r~~,ea`, ~ f..~ .~ti...~~..t ks!.:.3:~~;r.ti^fevfCC~R:-,~.~ws:;~.1 k~~:~,'Le.r:_+,.r.u„~~:... yv:~.~..:~.,:.~n. =:kw:= :~ei.~3z:«`wY:::c~7ro~4.+~.iae:'+~~h+~~is;'v' .r~r."1'ink`"~..Y~~'~its.`~-.._....-v~s~$...Y: } 5:10ur Doct~~entsl0rdinances1091Praperry Maintc~auoe Code-Articles I-III -Final.dac applicant, shall issue the applicant ~ certificate of authority to sell the motor vehicle to a demolisher far derrialitian, wrecking ar disrrintling. ~ dcrriolisher shall accept the certificate in lieu of the certificate of title to the motor vehicle. fib} The state Department of Highways and Public Transportation nay issue the a~p~icant certificate of authority to dispose of the motor vehicle to demolisher without following the notification procedures of section 17- 1 if the n~ator vehicle is mare than eight years old and has no engine or is otherwise totally inoperable. ~c} A person in possession of an abandoned vehicle that was authorized to be towed in by the police department and that is more than eight years old and has no engine or is otherwise totally inoperable may, an affidavit of that fact and approval of the police department, apply to the state Department of Highways and Public Transportation far a certificate of authority to dispose ofthe vehicle to a demolisher far de~nolitian, wrecking or dismantling only. cc.17-~~, Inoperable vehicles, inoperable motor veh~ci~es, junked vehicles declared pub~~c nuisance; n~aintai~in public ~ulsnce prohibited. . ~a~ inoperable vehicle, inoperable motor vehicle, ar junked veicle that is visible from ar~y right-of =way ar adjacent property andlor is considered detrimental to the safety and welfare af` the general public, tends to reduce the value of private property, invites vandalism, creates a fire hazard, is an attractive nuisance creating hazard to the health and safety of minors, produces urban blight adverse to the maintenance and continuing development of the city, is declared to be a public nuisance. fib} It shall be unlawful for any person, owner, agent, occupant or anyone having supervision or control of any real property within the city to maintain a public nuisance as determined under this section. ~c} it shall be unlawful for any person, owner, agent, occupant or anyone having supervision or control of any areal property within the city to have mare than one inoperable vehicle, inoperable inator vehicle, or junked vehicle upon their property. This subsection shall not apply to auto sales lots, vehicle repair br~sinesses, at~d salvage yards s long as all inoperable and dunk vehlcles on these properties shall be kept ~n cainpliance with subsections ~d}, ~e~, ~f~, and ~g}• ~d~ Any inoperable vehicle, inoperable motor vehicle, or junked vehicle ~ shall be screened from anyright-of way ar adj agent property by means of a solid opaque fence or shall be enclosed within a building. In no case shall any cover placed aver an inoperable vehicle, inoperable motor vehicle, or junked vehicle constitute adequate screening. fie} vehicle repair businesses may have up to five vehicles legally paned on the business property which are not screened from public view regardless of whether the vehicles are currently registered and inspected, provided that the vehicles are not wrecked, dismantled, partially dismantled, dilapidated, have broken window glass, or have one ar mare flat tires. Page l~ of2S w... ~ y._.k- i.Sia~,a&s.s.a i5 ,.r,1~CJpo. ~x~~st7h~~:Nrv.;r_u. ~.._k '<~'~-:r'..:'~Cf% F]Y>.~%s~,~.L~s~ ..,.;w~i_2'~~di:i:~iS~~~~~ mr- ----~,x',- ~i~$ -2K" S:lOur Daeumentsl0rdiuanc~1491Pra~y Maintenance Cade-~ticles I-XII -FinaLdae Auto sales lots are exeri~pt frorr~ subsectian~ ~d~ when operating 1n compliance with all State laws and any other pity ordinances regulating auto sales, and which are not displaying vehicles that are wrecked, dismantled, partially dismantled, dilapidated, have broken window glass, or have one or more flat tires. Vehicle repair businesses may not maintain inoperable ur junk vehicles on their property . excess of f 2~ consecutive days. The vehicles on the property must be on the property for the purpose of repair. Additionally, a current,valid work artier must be maintained for every vehicle. A current, valid ~rork artier is a work order that is 12~ days old or less. . ~h} It shall be construed that a vehicle that i~ not demonstrated to be operable upon request ofthe designated City official is an inoperable vehicle. ~i~ An inoperable motor vehicle that re~.azns inoperable far mare than 34 consecutive dais becanaes a junked vehicle, } At na time shall a tarp or any saver not designed to cover a motor vehicle or vehicle be used as a saver for an operable motor vehicle ar operable vehicle. See, Procedures for abating nuisance; exception. ~a} The City may abate and remove a junked vehicle or a part of a junked vehicle as a public nuisance from private property, public property ar public rights-vf way as provided in this section. ~ Far such nuisance on private property, the City shall give not less than l ~ days' notice stating the nature of the public nuisance on private property, that it must be rerrlaved and abated within 1 ~ days and that a request for a hearing must be made before expiration of the ten- day period. The notice shall be mailed, by certified .ail with afive-day return requested, to the last known registered owner of the junked motor vehicle, any lienholder of record and the owner or occupant of the private premises on which the public nuisance exists. ~f any notice is returned u~ade~ivered by the United .Mates host office, official action to abate the nuisance shall be continued to a date not less than f ~ days aver the date of the return. ~c} For such nuisance on public property, the City shall give not less than 10 days' notice, Mating the nature of the public nuisance on public property or on. ~ public right~af way, that the nuisance must be removed and abated w~thxn 1 ~ days and that request for a hearing must be made before expiration of the ten-day period, The notice shall be mailed, by certified mail with a five-day return requested, to the last knowrx registered owner of the junked n~otar vehicle, any lienhalder of record and the owner or occupant of the public premises or to the owner ar occupant of the premises adjacent tv the public right-of=way on which the public nuisance exists. rf the notice is returned undelivered by the United States post office, official action to abate the nuisance shall be continued to a date not less than l ~ days after the date of the return. ~d~ public hearing shall be held 'before the removal of the vehicle or vehicle part as a public nuisance. The hearing shall be held before the City Council or official as designated by . gage l 3 of Z8 . ::~~i'.A~.y~-:;,ed.Ar:~~'-•.v.._.~.--..-.=„-.--a......_-«doU==.r ^...-:~-.-r~-~~~dcv..~".~&r~.c,.,,~xi~~._....~~~..r.~,waadsis&.o15W..r»,~ :_t~~SR:a"r~-:.i~i.i:~:~~'ic~k ~4K'<'::~sri;.:_.,G:.~ -saG»r;~.:`o:-,.,~,,.J.ti.o~d-"'tiC'.iaRa~,~iaxTi•r' ~ 'a~51f&tr;9ifLto..y..M:~~1~~: S:Ibur Dacurr~eatsl0rdznances1Q91Property Main#enauce Cade-Artcles I-7~II -FiuaI.dac the its council, if a hearing is requested by the owner ar occupant of the pubic or private premises or by the owner ar occupant of the premises add acent to the public right-of-way on which the vehicle is located, wlth~n 1 ~ days aver service of notice to abate the nuisance. A resolution ar order requiring the removal of a vehicle or vehicle part must include a description of the vehicle and the correct identification number and license number of the vehicle if the information is available at the site. fie} Notice shall be given to the state Department of Highways and public Transportation not later than the h#~h day aher the date of removal. The native shall identify the vehicle ar vehicle part. The dep~ent shall irnediatelycancel the certificate of title to the vehicle pursuant to the certificate ofTitle Act, Tex. Transp, bode ch. 5~~. ~l] The procedures in this section shall not apply to a vehicle or vehicle part that is completely enclosed within a building in a lawful manner where it is not visible frarn the street or other public ar private property, a vehicle ar vehicle part that is stored or paxl~ed in a lawful manner on private property in connection with the business of licensed vehicle dealer or junkyard ar an unlicensed, operable or inoperable antique or special interest vehicle stored by collector on. the collector's property, if the vehicle and the outdoor storage area are maintained in a manner so that they' a not constitute a health hazard and axe screened from ordinary public view by means of a fence, rapidly growing trees, shrubbery ar other appropriate means. dec. ~ 7-~7. Disposal of junked vehicles. ~ junked vehicle .or vehicle part may be disposed of by removal to a scrapyard, demolisher or any suitable site operated by the C1ty far processing as scrap ar salvage. The process of disposal must comply with the provisions of section 1'7-3~, The pity may transfer the vehicle or vehicle parts to a disposal site if the disposal is only as scrap or salvage, ~C. ~n~D~'C~~rietlt. The person authari~ed by the pity council to administer the procedures authorized by this division ra.ay enter private property as authorized by law far the purposes specified in the procedures to examine a vehicle or vchxcle part, obtain information as to the identity of the vehicle a~ad remove or cause the removal of a vehicle or vehicle part that constitutes a nuisance. A person nay be authorized by law to enter private property in the follaw~n~g circumstances: 1} with consent of the owner ar person in control of the property; 2} with a valid warrant issued magistrate; ar 3} when the private property is open to the public. A.TI~L~ Iv, GRA ANI~ w~LI~ dec. ~7-44. ~~ass and v~eeds in excess o~ t~ve~ve inches r~ height deci~red nuisance end prahYbited. ~a} It shall be unlawful far any person owning, claiming, occupying ar having supervision ar control of y real property, occupied or unoccupied, wrth~n the corporate l~n~its of the pity to fail to remove any weeds and grass graving in excess of 12 inches in height an said real property, including easements and rights-af way. Right-Qf way maintenance is frarn gage 14 of ~S ~'~'b~ ~ ° o-'F,rka: s~d.-•-a..•- LmD~i~S4~Ifr1Ym S:1~nr Docurnc~tsl0r~inarxces1091Propeny Maintcnancc Codo-Ar~c~a i-Xii -Fnial.doc the property line to the curb or, if na curb exists, fra~n the property line to the street. ~t is a viola#ian of #his section if the tall grass and weeds are visible from aright-of way or an adjacent property. It shall be unlawful far any owner ar occupant of any property within the city to fail . to remove understory vegetation growing within one foot of #~.e street or alley adj scent to that private property. It shall be a defense to prosecution if the understory vegetation does not obstruct the view of any operators ofn~otor vehicles on any streets, driveways or alleys:. ~c} It shall be unlawful for any owner or occupant of any property witla~n the city to fail to remove limbs e~is#ing lower than I . ~ vertical feet above a street, ~ feet above a sidewalk, or 12 feet above an alley. ~awever, i~t shall be defense to prosecution under this subsection if the trees do not abstract the safe passage of vehicles; including fire and emergency vehicles, sanitation vehicles, recrea~.on vehicles, or buses. ~d} It shall be unlawful far any owner or occupant of any property within the pity to fail to remove any weeds and grass growing upon the surface of an improved right-off way. r ~e~ The provisions of this section shall a~ot apply to any area greater than ~~0 feet from any open street or thoroughfare, as measured from the night~af way line of such street or thoroughfare, and greater than 1 ~0 feet from any adjacent property under different ownership and on which any building is located or an which any improvement ~~its, as rriesured from the property line for lots, tracts, or parcels of land of five or mare acres. ~l} Property designated as an Environmentally ensitlve Area ~"~A"} per subchapter 17 of the Den#an Development bode andlar required by an ordinance #o be main#ained in a natural state are exempt franc these provisions. fig} Property included as part of a conservation easement shall be exempt front these provlstons. ~h~ Undeveloped fats with understory vegetation shall be exempt from #hse pravi.sions. ec,17-41, ~]efenses ~a~d responsibili~ies. It shall be a defense to prosecution under article 7v that the vegetation is any of the fo llawing: ~ 1 } Agricultural craps, except grass and hay, unless subsection ~2} stated below applies; day that is grown within its designated growing season for the specific purpose of cultivation and is a part of a predominantly homogeneous plant population maybe grown to any Pagel of ~S • / • i • ~ - ; • : ti: ~:T 4.~... ~ * it t ~F1r:,kY ...fyt n,A.'•K'~'~~-owi ..s......._ti~'Pihs ~'ya.ir ~...4„5Ey X52:: ~'~F~C.;,_ -::a?'ss - -.~;.isS:sa - -~5sifi~ QG~aaar.S ~ . u :<..,,ua "sG.}i~'>. =:~Sii.°a..u'~L`.kr~^.9!~=:~.~. ~:;:a'1..,~s='"f• r , '~r~~:;~e: - =~c~~.: ~tiLi:'r':sr~.~ ',fv„'` Af'',}"y-~•'.:.. •~$~~Sb+ r 5:lpur Docp~eu#sl0rdinances1D91Propcrly Maintenance Code-Articles I-III -Fiatal.d~c height provided it is located no closer than 2~ feet to an adjacent pra ert under different ~ y ownership and ors which any building or irnprove~nent exists; Cultivated trees; ~4} Cultivated shrubs; {5} Understory vegetation; {G} Flowers ar other decorative ornamental plants and grasses under cultivation; ~7} wildflowers, but only until such time as seeds have matured following the final blooming of the rnj ority of the plants; ar ~S} Native gasses, but only until such time a the majority of a species have gone dormant. dec. ~7-42~. Addi~iana~ a~utharity ~o abate dangerous brass nr weeds. ~a~ The City .ay o upon property and do or cause to be done the worl~ necessary to obtain. compliance with this article without native when: ~ 1 } Crass or weeds have grown higher than 48 inches; and Are an ~mm ediate danger to the health, life, or safety of any person, ~b~ No later than. the tenth day aver the date the City causes the worl~ to be done under this section, the City sha11 give notice to the property owner in the manner rewired by Article of this code. ~c} The notice shall contain: ~ 1 } An identifcatian, v~hich is not required to be a legal description, of the property; A description of the vialatiens of the article that occurred on the property} ~3} A statement that the City abated the weeds; ~4} An itei~ed statement of the charges incr~rred by the City in doing ar in having such worl~ done as necessary to bring the real property into compliance with this article; and An explanation of the property owner's right to request an admxr~.strative hearing about the City's abatement of the weeds. ~d} Appeal of costs unposed. withi,u. l ~ days of the date the statement of casts is mailed to the owner of the premises, the owner nay appeal the reasonableness of the charges billed far abating the canditian to the City Council by filzng wrrtten statement with the C1ty Councl~, Page t~ of28 lr.i[-~Se:u..w.-m cFn~..a~t~G.F£'~L~%'r~"~aor5~v,Paz'.f;.~~ass~wb~?w4.^Gr%~~x~,~:see.~....~._.,.,,s.w..r2S.s:ah,m,rr~,vt~..~~.c.-..n.Y,',•,.r:ti,.,.,..~-.....s..,_.~, y~.S.':..:ti•~ai: - ::~s-:- .:n`4:dr'.~o-7s ',ai„~ ;,:o;ih ...o'Sd:a~ox !:~:5n'<r~;r~flaiC~~ _..~...._gao';~-t4.:':_....~....a9:i`~:*'•-"~~~ai _.rs?i.`,i;~~.. S:IOurDacusoent5lQrdiua~ce51091PrapertyMa~ntc~tanceC~dc-Articles i-Xli-Fina].doC stating why the charges are unreasonable. The appeal shall be subn~xtted to the pity council far review within a reasonable time #~r filing, If the pity council finds the charges u~axeasonable, it shall assess the costs as it deems reasonable. The administrative charge shall not be appealable: fie} The pity may assess expenses and create liens under this section s it assesses expenses and creates liens as provided in this article. Sec. I7-4. Tree preervatron and maintenance; ~ndsca~e maintenance. See Subchapter 1 ~ "Site Design Standards" of the Denton Development bode. ARTICLE V. TRAII ANI~ DEBRIS Sec.17~0. Trash and debris declared a nuisance and prohibited. It is unlawful and declared a nuisance for any persan awning, elain~ing, occupying ar k~avin supervision or control of any real property, occupied or unoccupied, within the corporate xin~it of the pity, to fail to remove any refuse, trash, debris, filth, carrion, dunk, or garbage from any such real property, including casements and rights-af way. ~t is a vlolat~vn of~ tins section ~f the refuse, trash, debris, filth, carrion, junk, ar garbage is ~.sible from aright-off way or an adj acent property. fib} ~t is unlawful to maintain premises in a manner that creates unsanitary conditions that attract or harbor mosquitoes, rodents, vermin, ordisease-carrying pets. .~.RT~LE ~I. OUTSIDE ST~RA.E ANl] OUTSIDE DISELAY Sec. 17-~~. ~u~ts~de storage. fn addition to complying with EP1~ regulations, the International Fire bode, and all other applicable rules and regulations, outside storage shall comply with the fallowing: ~a} Shall be located in the side ar rear yard only and shall be opaquely screened from public view at all times in conformance with Section 3~.1~. ofthe Denton. Development bode, ~ t . children's play equipment, smokers, barbeque grills, and fu~.~itnre or appliances designated for outdoor use within a residential caning district shall b e~e~.pted from the screening requirements of these regulations. outdoor furniture may be nlaintalned in the front yard. Said furniture shall be maintained in gaol repair. ~b~ Shall be maintained so as not to become a nuisance to the public ar to any ad~aining property. It shall be a defense to prosecution that a washer andlar dryer is maintained outdoors on res~dentia~ properties at which the only washer andlor dryer cannect~an is outdoors, Page 17 of ~S ~or.~~ a' ~4r~....... . _..s~ s C ~t~ 3 f.~.as.syz~~h_. " ~~_:r':: . ~„-r.d~w.~:w:F , - - ~,.,.~i~.,,n.'_ ,...._...a-.. ~_~,.a~•:_,.-..,,.:..:.....;:t;:.:; ':b~': ~zn:r S~40ur ~ocumcntslOrdi~antts1094Prnperty M~t~ance Cado-ArEiclcs I-XiI -Fiuai.dac ec.17-61. outside display. outside displays shall can~p~y with the following criteria. {a~ Shall b arranged in an orderly manner and is part -of an authorized retail business that is located in coning districts that allow retail sale. ~ Shall not be displayed in a n~at~ner that creates ~an unsafe condition or obscures any sight risibility line or sight visibility triangles. ~c} Shall not be located an any pubic property; within an easement; within a designated f re ~ lane; within any required parking spaces; or located o a to obstruct safe vehicular or pedestrian passage, ingress ar egress. ~d} Shall be maintained so as to nit become a nuisance to the public or any adjoining property. ee.17'-~~. ~o~Yd waste co~.tiner ~u~ai~te~auce. fee chapter ~4 "Solid waste" of the bode of~rdinances of the pity ofDenton. ARTICLE VII. E~VIRDNI4~E~TAL NT~IAE dec. ~7-7~. ta~~nt water, a It shall be unlawful and considered a public nuisance far any person owning, leasing or occupying real property, wlth~n the limits of the xty of Denton, to fail to renxove the accu~nulat~on or pQnd~n of standing, stagnant, or non-maintained water thereon ar permit the same to ren~.ain, which nay harbor or be a breeding ground far n~asquitaes, flips, or other pests, or which may cause a foul odor, or adversely ~rnpact the public health and safety by any means. Accumulations ar ponding of water shall nit exceed aforty-eight-hour period under normal rainfall conditions as described by the U.S. Department of aerce, ~atianal oceanic and Atn~.aspher~c Administratlon ~atlonal weather Service ~N~AA~. ~b~ ~ finding by a code enforce~.ent officer or heath inspector of the pity of Denton shall canstitate prima-facie evidence that standing, stagnant, or non-maintained water rs conducive to the breeding or harboring of mosquitoes or other insects. Potential tools to mare this finding may include measures of water turbidity, the presence of excessive organic matter in the water, the presence of foul odors, visually apparent algal growth, or the presence of mosquitoes, flies, or other pests. The presence of mosquito lama i not required for standing, stagnant, or non~n~aantained water to be classified as a public nuisance. ~c} It shall be unlawful for any person, owner, agent, occupant or anyone having supervision or control of any real property within the city to maintain a public nuisance as determined under this section. Page l S of ~ .n :x7fr.~:::;:3xC:scr.. try - - .....:~h.. r.. .:cA~i$;~.:e:Ari~3~i~= - H.S. b,.,~,'5.,::x,~•~.:.4b^~:.~:w}n.:~~ ~~..r_: `~,-x-LC...;,R:L,.i~.~„sw:ti _ _ - ~:~K~'e~ ~ •;ti~.i~~::!..i~': ,~c~,: _,:4Y~5~x.a ~~t4~?' '.s~. a....~,,_. :...~w'~~x i:.ti~.~„]:.L,. ::.::r,:av:~f[+:~~r':,;,. i S;IOnr Documentsl0rdiuances1091Progerty Mainte~lanCe C~od~Arlicle5 Y-XII -Fiu~f.dac , i ~d} It shall be the duty of said persons to abate nuisances described in this article by: { 1 ~ Draining, filling ar re~ grading any lots, ground, or yards which have standing ar stagnant water thereon; or treating the area with material, either natural or man-made that will eliminate any offensive odor and render the area harm~es to the public health and elirnlnate the potential breeding ground far mosquitoes, flies, oar other pests. {e} It shall be the duty of said persons to maintain. item that are capable of collecting water, including but not limited to birdbaths, fountains, reflecting pools ar ponds, private or serrx~~pr~vate swimming pools or other items sa that they cannot harbor ar be a breeding ground far n~asquitaes, flies, ar other pests or which may adversely Impact the public health and safety or create an odor nuisance. AR'~ICL~ vITI. dec. I7-8~, intenance o~ perimeter fences. {a} An owner shall malnta~n all per~~neter fences in sound structural cand.it~an. {b} All perimeter fences, including those existing prior to the adoption of this chapter, shall be maintained at all times in a state of good repair wig no broken, loose, damaged, removed ar missing parts, and in safe and secure condition with all braces, bolts, nails, supporting fran~.e and fastenings free from deterioration, termite infestation, rot, rust ar loosening, and able to withstand the wind pressure far which they were designed. {c~ Perimeter fe~aces shall not lean at an angle from the vertical plane any greater than f ~~e degrees, ~d} Perimeter fence repairs shall be made using the sa~.e ~naterial~ or a very similar material with comparable co~nposltlon, color, sire, shape, and quality of the original fence to which the repa.~r rs be1ng made. {e~ If shy percent {5~°Io~ or mare of the length of one side of a perimeter fence that i made of non-permitted material{s} is broken, damaged, removed, or missing parts, the entire length of said side of the fence shall be replaced in accordance with the requirements of the Denton Development bode, However, it is a defense to prosecution if the perimeter fence to be replaced is barbed wire, rear wire, or electrified wire, if the fence is assaclated with a legally permitted agricultural or industrial use. however, it is defense to prosecution if the peri.eter fence to be replaced is of chain 11nk construGtlon. Page l~ afZS ..rvB~Ottrw. S;10ur I~acumentsl0rdin~ces1U91Properky ivlaintp1anGC Cado-ArFic~es 1-X[I -Fiaai.doc ~f~ All areas between the fence o wall and the back of the curb, the edge of the street, or any adjacent property sha11 be maintained in a manner that is clear of trash and debris and high. grass and weeds at all tines. fig} It is a defense to prosecution ender subsection ~a~, if an owner completely removes a fence which was in disrepair, provided that the owner is not required to keep a fence pursuant to any other law or regulation, ec.17-S1. A,pplicabilit~ of ot~ex laws regarding fences. Nothing in this article shah li~.it any other requirements regarding fencing, including but not l~n~rted to requirements established by the following: ~a} ~Iomeowner's Associations; ~ The Denton Development Code; ~c} Regulations relating to businesses where alcohol is sold; ~ ~d} Regulations regarding swimming pool fences; . ~e~ 2an~ng requirements; and {f} Any other aplxcab~e local, state, or federal law regarding fencing requirements. AT~~L TEI~P~RAY CA.R~RT A~T~ SHADE I~R ec.17-90. Ten~porar~ ca~~orts andlar auto shade covers prol~i~ited. The use of teporar~r carports andlor auto shade covers are expressly forbidden in both residential and commercial districts in the City with exceptions for licensed car dealerships whose structures are incompliance with other City ordinances and laws. AI~TILE ET~IN ~PARI~~ ~~JL~.TI~N ec.1~'-1~~, vehicles for sale. ~a~ ~Vo vehicle for safe nay be parked or stared on any right-af way or easement except thane lawfully parked upon a city street. ~ No vehicle for sale may be parked or stored within 2~~ feet of the right-of way or easement on vacant lots or an coro.rnercial properties that do not have a Certi~ cote of occupancy to operate as ~ new or used ear dealership. i Page 2a ofd . . s.'_i'-~'~:5~'..::.:. -^wiRwx:xc~ xti,.:. •S~.rxf;6:..' t~~ru:'i9~.Fx~.">' . . , .._...~a„~.,. _ . °~k,^ ~ - ~::nc'.. w~fY+2~t?.ass~4F~.' .rX.r,w:2;R ~ ray" } t .:~.#ors,G~ti.:itawwb..<wY.!<..xJ~EC,.Ux..~ ~..w-~<.J.,~~~CS ~ .:~~'t - ~.:~s~"'- 7piS~:73ltiP,r~:~ 8:1Dur ]loeurn~ntslQrdivaa~ces~Q91~'sngert~r Mamtes~ance Code-Articles I-III -Fin~l.doc ~9~ It shall be unlawful far any person to park any vehicle or store any goods In or upon any rl~~lt~a~-~~y. ~1 This section shall not apply to a vehicle legally parl~ed an a public street or hig~u~ay. For the purposes ofthis section, a right-off ivy shall include. ~a} the entire width of all public streets and highways including any shoulders ofthese roadways; . ~ the entire width of any alleys; and all other public easements, xnclu.ng any easernents running adjacent to any . public road rays and alleys. ~t shall be unlav~~ul far any person to park ar store or allow another to parr or stare a vehicle oh any surface on any unimproved lot, ea~sernent, or right-of v~ay. ~ 1 ~t shall be unlawful to use a vehicle for living or sleeping quarters, or for the storage oftrash, debr}. ar personal property not nar~na.ly associated with the vehicle. X13} Residential properties with homesteads that exceed two acres may have a total of ~~ve pieces of operable agricultural equipment, t~vo of which nay be trailers, parl~ed on an unirnpraved surface. The surface must be located l 5 0 feet from the street and adjacent properties and behind the front bulld~ng line. Additionally, the ag~iculturai equipment may not be parked an any easement or right-af ~vay. Agricultural equipment is equipment used far farming operations that is not required to be registered by the State of Texas. fib} ainte~a~ce o i~n~ro~d a~ir~ suace~. ~t shall be unlawful for any person to fall to n~a~nta~n all improved parking surfaces 1n good and safe cond~t~on, and fine of any defects affecting the use, safety, and drainage of the surface or of the adjoining property. Al~TI~LE A~ATEIVIENT P~~EDURE F~~ AND ~~DS; TRASH AND DEBRIS; ~UTID~ ST~~AE AND ~UTS~D~ DISPLAY; ENVIRON~VIPNTAL N~1~Al~T~S; ~`EN~S; TiVIF~RAR~ CARP~~T; AND ERTA~1~ PARKIN REULATI~N~ Sec. 17-lla. Fai~u~re of owner to coxnp~y with article provisions; issna~ce of notie~. If any person offing, claiming, occupying or having supervision or control of any real property, occupied or unoccupied, v~th~n the corporate limits of the pity, fails to comply v~ith the provisions of dais article, it sha11 be the duty of the city manager or his duly appointed representative to give a n~inzmu~n of l0 days' written notice to such person violating the terms of this article. gage 22 of 28 Y~~.:. „ a ~ ..-~..,...,..,.,,,a~,.-rSFasa--:~'O,Q.~ yW'~~~cu~~..l..~ ,r:.x.~..~,k•.~.nc.:..,..h,.::.,,-.~.:.c~,,..,r:_Y'JLs~~,rs~,.~c~~~__.~'s.'-. ~..:..,.::~.:-w~s~C;r~ - a _ ti,3r S;l~ur i)oc~i~eotsl0rdinauceslQ9lProperky M~intmance Cod~~lrticles 1-7~iI -Finkl.c#oc dec. ~ 7-111. erv~ce of na~~ce. notice of the violation maybe delivered to the owner ar occupant in person; by notice ieft at the location, nailed to the occupant's address, or n~axled to the a~ner's address as recorded the appraisal d~str~ct records of the appraisal d~stnct ~n which the property 1s located, and delivered by United states marl. Rental property nati~ications shall be sent to both the owner and occupant. The property will be reinspected no loaner than after 10 days of the date on the notice. ff the property is not in co.pliance at this tine, citations nay be issued. ec.17-112. onte~ts o~ uotYCe. ~n a notice provided under this article, if the av~ner or occupant commits another violation of the Barrie kind or nature that poses a danger to public health, safety, ar welfare on or before the first anniversary of the date of the notice, the City without further notice, tnay correct the v~olat~vn at the owner's expense and assess the expense against the property. ec.17-~.~. arty may correct violation. ~a} ~~ace~~e. If at least ~ ~ days hay expired aver notice has been given in accordance with section ~ 7-11 ~ and the ov~ner has failed to correct the violation, the City may enter upon the property and do the work, or pay for the v~ork to be done, as necessary to correct the violation. ~f the owner comrri~ts another violation of the carne kind or nature on or before the first anniversary of the. date of a notice of a violation as required in section 17-1~~ and the City has not received mitten notification by the owner of an ownership change, the ~ City v~ithout further notice may correct the violation. at the av~n.er's expense and assess the expenses against the property as provided by this section. v~e~ ass~s~s~ costs. A statement of the costs incurred by the City in correcting a violation shall be mailed to the property av~mer. The costs shall include an administrative fee established by the City Council and on file in the office of the city secretary. The pay~.ent shall be due within ~ 0 days of the date of mailing. ~c~ lien to seu~e costs. the statement is not timely paid, the City may l"ile a statement with the county clerk of the costs incurred, including administrative costs. Upon filing the statement, the City shall have a privileged lien on the land upon which the casts were incurred, second only to tai liens and liens for street irnproven~ents. The amount of the lien shall include ~ 0 percent an the deli~.quent amount from the date payment vas made by the City. The statement of expenses or a certified copy of the statement is prima facie proof of the expenses incutTed by the City. To collect the costs, suit may be instituted and recovery and foreclosure had in the name of the Cxty, ~d} ~~pca~ of f costs ~~sed. 1th1n l 5 days of the date the statement of costs 1s mailed to the omer of the premises, the owner nay appeal the reasonableness of .e charges billed for abating the condition to the Cxty Council, ar its designee, by filing a vitten statement with the City Council, or its designee, stating ~vhy the charges are unreasonable. The appeal shall be Page 2 of 2H ~J:~s,~2r=":~~Ka:~a:: _~o:.;~~»,.w~%da,:i~i.:.j,:.,..vsm.rn4^it-r3.; '^~.l.:irs~~ _ :.i~+.%i:.~-:F~r-~-~-~ _ - S'lpur I]oc+~meat5lQrdinanceslU4lProperiy i~ai~~teatance Code-ArEicles I-X~I -Fiua~.doc submitted to the City Council, or its designee, for review within a reasonable time after f~ling.lf the City Council, ar its designee, Ends the charges unreasonable, it shall assess the costs as it deems reasonable. The administrative charge shall not be appealable. A~T~LE l~A~`~TI ec.17-~~, Declaratiat~ of publYC nuisance. graffiti is declared to be a public nuisance. whenever the existence of rff ~ti on a~i~ property within the city shall come to the attention of a designee, the designee shall cause a written notice as provided in this artrcle ~dentify~n the graffiti and direct Its removal. In add~tlon to the penalty provided in this d~vrs~on, the City shall have all remedies available at law and equity to abate such nuisance. Sec, 17-121. owner respon~ib~lity, . An owner of property commits an offense if, after notification by the City, the owner fails to paint over or remove alb graffiti from the owner's property that is visible from. any public property or right~of-way or from any private property other than the property on which the graffiti e~~sts. ~b~ The property will be reinspected no sooner than 14 days after the date on the notice. If the property is not in coaa~pliance at that time, citation nay be issued. The notice shall contain: ~ 1 ~ The date and nature of the violation; ~2} Physical location afthe violation by street address ~3 } Name o f owner; and ~4} If the condition is not corrected within 14 days of receipt of such notice or the owner fails to file an appeal within 14 days of receipt of notice to the designee, the City rrlay, without further notice, enter upon the property by its went or its contractors, remove the graffiti and charge the costs incurred to the owner. If the graffiti is removed by the City, e cost nay be charged to the property owner and a lien nay be filed against the property. ~c} Notxcc of the violation may be delivered to the owner or occupant in person or by notice left at the location. Notice of the violation shall be rnax~ed to the owner's address as recorded in the appraisal district records of the appraisal district in which the property ~s located, and delivered by United states mail. If the owner cannot be found or the notice i returned by the United states Postal service as undeliverable, then the owner .ay bo notified by: ~ I } Publication at least twice within 1 ~ consecutive days; Page ~4 of ~S _ - . _ _ ~:'s~ - ~~~isac,~4'Lfn~~L't~ptitilE~s~`-;"~""==n"'~a,°~Sr-S 8:7nw'~.:Y: M~ ::>~xo-~~cduth:.~:a..:,~:.,~a„L, -.,f~~__....-,r.4.•3gp;y, di:YSaL.3~t'ts's:.:...._ ~,a`'~w~~.i~:c~:~~.~.L~~xe2Y.x:~~v% - - - µ.:,,5... ~v~ S:lOur 17ncumcntsl0rdmances1~91Properry MaintenanceCod~Articles I-III -Final.~pc ~Z} Posting notice of the violation on or near the firont door of each building an the property in violation; ar ~3} If the property contains na buildings, pasting the notice of a violation on a placard attached to a stake given rota the ground on the property. . ~d} An owner rnaintains a public nuisance if he fails to re.ove graffiti or refuses to allow graffiti to be removed franc his property after having been notified by the City or in the evert of appeal, upon order by the designee. Sec. ~7-1~~. ~mpasitio~ of civil pe~.alty for applying, peritti~ng, or allowing ra~f~ti. The City Council finds and determes that graffiti applied to any natural ar n~an~ made surface on public or private property creates an objectionable, or unsightly condition that damages the surrounding homes and businesses in the cornxnunity, ~ Any person who applies ar creates graffiti, or any parent who knawinl~ permits or by insufficient ,control allows their minor child to apply graffiti to any ~.atural or man-made sface or any public property is liable for a civil penalty. ~c~ The civil penalty far which the person ar parent is liable is the fees and cast inc~u~red far removing the graffiti, plus 1 ~5.~~ fine for the first ~en~oval, provided that for a third or subsequent offense ~n any twelve-month period, the amount of the penalty fine shall be a rrYinirnu~n of $200.00 but gill not exceed $500.0. ~d} The civil penalties collected wi11 be placed in reserve ar used exclusively in .City initiated abatement proceedings. fie} Civil enforcement; procedures. ~1} The designee 1s responsible for the enfarcen~ent and ad~ninlstratlan afthls article. In order to impose a civil penalty under this section of the article, the designee shall send a notice of violation to the person ar parent liable far the civil penalty not later than the Oth day after the date the graffiti is alleged to have been removed. A notice issued under this section of this article shall be sent ta: a. The last known address of the person or parent of the accused n~.nor; or b. hand-delivered in person to the person ar parent of the accused minor alleged to be responsible fox the civil penalty. ~ notice ofviolatian issued under this article sh11 contain the fallowing: a. A description of the violation alleged; b. The location where the vzolatxan occurred; Page 25 of 2~ .5~'ti~e::^'~ :sk i::: ~.a, t. ~ ..:.'~~';5r':% - _ -~1o;ltisc:'_~'o~,a ti.s~tS~:~esiti_. .".~.9G~G6G:K Vk,:$+i%u:.r:~~.~_i'~..a '.~1.SFH- ~ t.. k . . v ~~e,~~uht:r.~AC~K~^~1,.tt•'~-ao..~'^`xeeie~cyr~3:3~k,.: X~x ....:r. r:,~;~,co, x, `..~.:.'~.._r~'.iY€f~':v..,-. ~J°~tx.nr~r. ~4.~?Veav+r5u-=aY.~, } ~ ~ i. s5zSiE.sK ~i~i^~e~.M2j._r_wi~`x ~.°.vr~•r s~'~r~'';Ml~'^~e S;lOur Dacumentsl0rdinances1U91Property Maintenance Cade-Articles I-XII -Finai.due c. The date and time of the violation ar when e violation was discovered; . The name anal address of the owner of the propel involved in the violation; e, A copy of a recorded Image ofthe graffiti involved in the violation; f. The amount of the civil penalty to be imposed for the violation, including the fees and costs for removal ofthe graffiti; ~ ~ i . + I The date by which the civil penalty must be paid; h. A statement that a recorded image is evidence in a proceeding far the xn~position of a civil penalty; and i. Information that infar~ns the person ar parent named in the notice of violation: ~i} ~f the persanrs or parent's right to contest the Imposition of the c~v~l penal# against the person in an administrative adjudication; iii} ~f the manner and time in which in~positxan ofthe civil penalty nay be contested; viii} That failure to pay the civil penalty Or to contest liability 1n a timely manner is an admission of liability and that failure to appear at an administrative adjudication hearing after having requested a hearing is an admission of liability; and ~iv~ That failure to pay the civil penalty within the tune allowed shall result 1n the ~mpos~tlan of ~ late-payment fee of 5 ~~4} notice of violation under this article is presumed to have been received either on the fifth day aver the date the notice of violation is mailed Or an the date personal delivery is made to the person or parent of the accused minor alleged to be responsible for the civil penalty. ~5~ In lieu of issuing a notice of violation, the Department nay mail warning notice to the owner that, in addition to any other infarrr~ation contained in the war.~g notice, must contain the inforrna~.on required by subsection ~c}. ~f} Adinistrative adjudication hearing. ~1} ~ person who receives a notice of violation under this article may contest the imposition of the civil penalty by requesting in writing an administrative adjudication. of the civil penalty within the tznae provided in the notice Which pe.od shall not be less than I4 days following the nailing of the notice}, upon receipt of the req~e~t, the director shall notify the person of the date and t~~ne of the hearing on the administrative Page 2~ of Z8 ti>'f. ti..Cti 1S'Y.3Pka~Ri . sa .:s. .r: • 'Y'r .'..14~..'A~:_=~.x.::4c~`.'~J'>S.a.'' ~{'tia: ,./..~:F.`c ..K:;:r.•~....r .isYI~Nl~L:ti.;~^.~•.41YY~~b~Vd~L::1 ~~1.".~'~X~'v~:FVbq~ ~4-~~Y'.~'W.~'4 iJ,•.-0::~i~t}~4"~iY.aL'il°ci'JY'_16~.o'. +J.RV.: 4Cti~~:#~ - $;lpur Doeumcnt510rdisianccs109'~Propeny Maintssance Cado-Art~clcs 1-~Cll -i~inaLdoe adjudication. The administrative adjudication hearing shall be held before one or more hearing aff~cers appointed by the city .an.ger. failure to pay ~ civil penalty oar to contest liability in a timely manner is an admission of liability in the full an~aunt of the civil penalty assessed in the notice of v~olatlon and const~t~tes a waiver of the right to appeal under this section, failure to appear at an administrative adjudication hearing after having requested a hearing is an admission of lability for the full amount of the civil penalty assessed in the nvttce of viola#ion and constitutes a waiver of the right to appeal under this section. ~4} ~ person or parent who fails to pay a civil penalty within the time allowed by this article shall be additionally liable for alate-payment penalty in the amount of ~~.~0. ~5} The civil penalty shall not be assessed if after a hearing, the hearing off~cer~s} enter~s~ a finding of no liability. ~ . A person ax parent who is found liable after an administrative adjudication hearing ar who requests an adr~.initrative adjudication hearing anc~ thereafter fails to appear at the tine and place of the hearing is liable far administrative hating costs in the amount of a.0~ in addition to the amount of the civil penalty assessed far the violation. A person or parent who is found liable for a civil penalty after an adn~.inistrative adjudication hearing shall pay the civil penalty and costs within days ofthe hearing. ~7} In an administrative adjudication hearing, the issues must he proven at the hearing by a preponderance of the evidence. A person or parent who is found liable after an administrative adjudication hearing 1na~ appeal that finding of liab1l~ty to the uniclpal court filing a notice of appeal with the clerk of the Municipal court. ~'he notice of appeal must he filed not later than the 1 st day aver the date on which the adrinitrative adjudication hearing officer entered the finding of liability and shall be accompanied by the payment of an appellate ling fee of 5 ~.a0. Unless the person, on or before the filing of the notice of appeal, pasts a hand in the amount of the civil penalty and any late fees, an appeal does not stay the enforcement of the civil penalty. An appeal shall be determined by the ~Vlunicipal court by trial de nova. Any affidavits submitted under this section shall be ad.itted by the municipal judge in the trial de nova, and the issues must be proven by a preponderance of the evidence. ~g~ effect Qf liability; exclusion of civil remedy; enforcement. The imposition of a civil penalty under this section is not a conviction and may not be considered a conviction far any purpose. The city attorney is authorized to file suit to enforce collection of a civil penalty assessed under this article. Page 27 of 2 , . ~ ,..s•. ~ 'y-; n - - '~a5°~ ~ OSie'Lren:..c~?s:4~ *.i Win:;: ~;s:r`'~~4 w-s~#A~'-+ ~ ,:;k:r.~+l. •`L. I'd.,~,.r,=',fi1cU,r14~i~,'a~.'~'~~a.F,.~1YS~~ ~,IShc=~i~bw~_~.'.,arN•:stt~~:~.L... 2~wn- ~ s ..~.5. .,,a.., _;~~3..: - _ wo;a';c~;s~~ -''0':.r _ _ _ _ _ ~,.w"rr4,7''.Y S;kOur I)ocument5lprdinance~1D41Property Mainkentt~tcc C~pdaAnicles I-7CII -Final.doe ETON . ha~pter 2~ "nuisances" ofthe fade of Ordinances i hereby repealed in its entirety. E~T~ON 4. Ohapter 2I "Offenses" of the bode of Ordinances is hereby amended by repealing sections 1- 1, ~ 1-5 5, and ~ 1-5 G. ~TION 5. chapter ~5 "honing" al' the fade of Ordinances is hereby amended by repealing the definition of"Occasional dales" xn section ~5-'~~ "De.nitions and explanation." ~TiOl~ If any section, subsection, paragraph, sentence, clause, phrase, ar word in this ordinance, or application thereof to any person or circumstances is held invalid by any court of competent ~urisdictian, such balding sha11 not affect the validity of the remaining portions of this ordinance, and the ~xty Council of the pity of Denton, Texas hereby declares it mould have enacted such remaining portions despite any invalidity. EOT~O 7. Save and except as amended hereby, all the provisions, sections, subsections, paragraphs, sentences, clauses, and phrases of the Code of Ordinances shall remain in full force and effect. ETION S. This ordinance providing for a penalty shall become effective I4 days ~rorn the date of its passage, and the pity secretary is hereby directed to cause the caption of this ordinance to be published tv~ice in the ~~n~o~ ~ecard-'ro~c~, the af~1cial ne~vspape~ of the City of Denton, Texas, within 10 days ofthe date oflts passage. PASSED ANA APPROVED this the day of , MARK ~U,~.ROUC~IS, 1~YOR ATTEST: JENNIFER ALTER, CITY EITAR.~ APPROVED AS TO LEGAL POR.NI; A~ITA BU~E ITS ATTORNEY ~Y: ~ Page ~S of~~ - _ J1:'it~:r~ f'.'h.~:'.:Jt' .S'Ll'.iL C. 'R~~Yai:tiiT - ~.si ..w ~.~v.. i.. . . rr.,'..,.441 ..i •ta...~.. ~xi...~.c t,._~..t.. n. ~ i LK s__...:. v.~.L. n,.ar~ Vie: :.~s.~_..-.~~. ~ r9%y ~ w~{s.4~ .saa,t, :,y.:.,s~. } This page left blank intentionally. AGENDA INFORMATION SHEET AGENDA DATE: March 3, 2009 DEPARTMENT: City Manager's Office CM: George Campbell, City Manager SUBJECT Consider nominations/appointments to the City's Boards and Commissions. BACKGROUND The following boards/commissions require nominations: Historic Landmark Commission -Jim Kirkpatrick has resigned. This is a nomination for Council Member Moreno. Human Services Advisory Committee -Vanessa Sims has resigned. This is a nomination for Council Member Heggins. Charter Review Committee -Council Member Moreno has appointments to announce for the Committee. If you require any further information, please let me know. Respectfully submitted: Jennifer Walters City Secretary 11CODAD1DenartmentslCity SecretarvlBoards & CommlA~enda Info Sheet for Vacancies 3-3-09.doc IL L7