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Minutes October 17, 1989214 CITY OF DENTON CITY COUNCIL MINUTES OCTOBER 17, 1989 The Council convened into the Work Session at 5:30 p.m. in the Civil Defense Room. PRESENT: Mayor Stephens; Mayor Pro Tem Ayer; Council Members Alexander, Boyd, Gorton, and McAdams. ABSENT: Council Member Hopkins 1. The Council received a report on the NLC Human Services Steering Committee Meeting. Council Member McAdams presented a report on the NLC meeting she had attended. The meeting centered on a drug testing policy recommendation from the NLC Human Services Steering Committee. Also discussed at the meeting was AIDS, gun control and the JTPA Employment Program. Concerns of the committee were that there were not enough treatment facilities for people who could not afford treatment, a matching funds proposal would not be welcome as there were already too many matching fund commitments that the states had to participate in, adequate housing for the poor as it was difficult to deal with a drug problem when these people had no place to live, and employment for the youth. 2. The Council held Entranceway Plan outline and regulations. a discussion concerning the the development of entranceway Frank Robbins, Executive Director for Planning, stated that several activities were being undertaken at the same time which included re-writing the zoning ordinance, cleaning up PD's, preparing for City initiated rezoning so Denton's zoning would more closely match the Denton Development Plan's Concept Map, reviewing zoning cases, developing an Entranceway Plan, and Sign Ordinance amendment suggestions. He stated that entranceways to the City had such problems as being cluttered, existing uglies, inadequate landscaping, a mixture of uses, inadequate setbacks, and congestion. Suggestions for entranceway regulatory approaches included conditional zoning; overlay zones; a menu of standards; eliminate some uses from the "C" district: increase standards of landscaping, setbacks, minimum lot sizes, building materials: new ways to measure development and bonus incentives. Council Member Alexander asked if there would be more control with Planned Development zoning than straight commercial zoning for future development. Robbins stated yes that a planned development had a timetable and development standards. Consensus of the Council was to proceed with the process necessary for planned developments along city entranceways. City of Denton City Council Minutes October 17, 1989 Page 2 3. The Council held a discussion concerning Eagle Point Subdivision and street closing area. Jerry Clark, City Engineer, presented background information on the area and the problem with the street closing. Staff was concerned that Locust and Myrtle could not handle the additional traffic generated from short cutters, delivery trucks, and others. This would result in major improvements being needed in those areas plus extensive signalization on Eagle. Staff felt the best solution was to close a portion of S. Locust and Myrtle with adequate access at Collins. The Planning and Zoning Commission and the Citizens Traffic Safety Support Commission suggested only closing Myrtle. That would be a viable solution if substantial improvements were done in the future. CIP funds could be used to improve the area and perhaps have only right in and right out movements at Locust, Mayor Stephens suggested a public hearing in order to obtain citizen input. Consensus of the Council was to schedule a public hearing on the issue in the near future. 4. The Council held a discussion concerning contracts with hotel/motel tax recipients. Lloyd Harrell, City Manager, stated that new state statutes plus Council concerns and suggestions from the tax recipients required amending current contracts with those entities receiving funds, The State statutes included (1) the city must approve in writing in advance the annual program budget of each party, (2) the tax revenues spent for operations and administrative costs must be those costs "incurred directly" in carrying out a purpose for which the tax is authorized to be spent, (3) if the entity also administers other programs for which hotel tax revenues cannot be used, the administrative costs for the authorized activities may not exceed the actual costs incurred in conducting the authorized activities, (4) the tax revenues may not be spent for travel expenses of a person for activities not related to the person's performance of an authorized hotel tax activity, and (5) if the entity makes a "subgrant" to another person or organization, the subgrant shall be by contract and the subgrantee must at least annually report to the council the expenditures made and make its financial records available for inspection. The two other suggestions were a request from the Historical Museum for a separate contract and a Council suggestion of a cap on the allocations. Concerns indicated by Council Members were that the cap level be above the amount of revenues generated so that the recipients would not feel the cap for several years and not hurt their budget process and that sunset clauses perhaps be incorporated into the contracts so that they could be renegotiated in a definite time period. 215 216 City of Denton City Council Minutes October 17, 1989 Page 3 Mayor Stephens suggested a Council subcommittee to work with the recipients and the City Attorney for proposed wording of the contracts. He suggested Council Members Gorton and Alexander represent the Council on the committee. Consensus of the Council was to proceed with the subcommittee to format contracts incorporating the language now needed by state statutes. 5. The Council was to held a discussion concerning a request from the City of Argyle for sanitary sewer service. This item was not discussed during the Work Session. 6. The Council did not meet in Executive Session during the Work Session. The Council then convened in the Regular Session at 7:00 p.m. in the Council Chambers. PRESENT: Mayor Stephens; Mayor Pro Tem Ayer; Council Members Alexander, Boyd, Gorton, and McAdams. ABSENT: Council Member Hopkins 1. The Council received a donation for the victims of Hurricane Hugo from Denton High School students. Crystal Smith and Delane¥ Gracey of the Student Council presented a check for $263.35 to the Mayor which was a result of student donations of change to the project. Presentation of "Yard of the Month" awards for October. Mayor Stephens presented the awards to the following winners: Mr. and Mrs. Brian Scolls Mr. Jack Starling Mr. and Mrs. W. A. Barker Harpool'Farm and Garden Center Mr. and Mrs. Gene Allen o Public Hearings A. The Council held a public hearing concerning the recommendation of the Solid Waste Alternatives Committee that the City of Denton Solid Waste Division become the exclusive commercial and industrial solid waste collection service provider. City of Denton City Council Minutes October 17, 1989 Page 4 The Mayor opened the public hearing. George Gilkeson, Chair-Solid Waste Alternatives Committee, stated that the Committee had two charges (1) to examine the roll, if any, the City of Denton should play in the solid waste business, and (2) what to do when the present landfill was full, approximately 5 years. The Committee read numerous articles and reports about solid waste, listened to speakers regarding various aspects of solid waste disposal and why it should be done one way or another, and was assisted by the City staff with cost estimates of various waste disposal. They studied current situations in other cities and interviewed two private waste collectors, Texas Waste Management and Browning Ferris Industries. They looked into recycling and cogeneration of power. The Committee concluded that Denton was unique in that it currently was in the solid waste business, had its own landfill, personnel to collect the waste, personnel to take care of the bookkeeping, and had already made the capital investment in the equipment. It was the unanimous recommendation of the Committee that the City of Denton become the exclusive solid waste server for the City of Denton. It was also unanimously recommended by the Committee that the City of Denton immediately take steps to locate and acquire new land for a landfill. John Gustafson, General Manager-Texas Waste Management, spoke in opposition. He stated that they had not had a lot of time to study the Committee's recommendation as they had lust picked it up when they came to the Council meeting and what they had read in the newspaper. One of the points brought out in the report and in the newspaper was that the Committee felt that a number of private collectors would not enable the City to recover substantial return on the investment it had in the equipment to perform the job.. He estimated that Texas Waste Management served about 50% of the commercial accounts within the city limits of the City of Denton. They were more than satisfied with their return on investment that they were getting. They were providing an essential service and were happy with the situation as it existed at that point. They had not come to the Council or the Committee and asked for any changes to be made. He surmised that one of the aspects that the recommendation was inferring was that were the City to have all of the collection, it would improve its return on investment. He didn't see how that could happen. It was also his understanding that the recommendation of the Committee was based in large part, upon a comparison of commercial rates .charged by Texas Waste Management and other contractors in other areas. It was their feeling that this comparison was taken out of context and not fairly applied as it would apply to the City of Denton. Texas Waste Management had a user fee that they paid to the City of Lewisville. In his opinion, to 217 218 City of Denton City Council Minutes October 17, 1989 Page 5 get a rate that was comparable to what was being charged in the City of Denton, a number of things had to be done. A commercial franchise, user fee, etc. was occurring in the area that was being compared with what was happening in Denton where there was no user fee and other competitive haulers. Taking out the 10% in residential, would realize a revenue of $6.57 per month for twice a week pick-up which was similar to what was happening in Denton. In terms of per capita revenues, the sources may be different but the results were the same. Texas Waste Management could help extend the life of the landfill by diverting more loads to Lewisville. Council Member Alexander asked if the user fee was the franchise fee that they were paying to the City of Lewisville. Gustafson replied yes. Council Member McAdams asked if the user fee were taken out, was Mr. Gustafson saying that their rates were comparable to Denton rates. Gustafson replied that if the user fee were backed out, Denton residential would be $3.00 higher than Lewisville residential. The source may be different but the results were the same in terms of per capita revenues. Council Member McAdams stated that part of what the Committee found was that Texas Waste Management pricing varied under different circumstances. She asked Mr. Gustafson if their rates changed based on whether there was a another competitor available. Gustafson replied that competition dictated rates by supply and demand. In a competitive situation, rates could be adjusted accordingly. Council Member McAdams asked of the commercial hauling Texas Waste Management was doing in the City of Denton, how much went to the City of Denton's landfill and how much went out of the City. Gustafson replied that 7,000-8,000 yards hauled out of Denton went to the DFW Landfill in Lewisville, 5,000-6,000 yards went to the city o£ Denton landfill. Mayor Pro Tem Ayer expressed concern about the access of the Committee's report to the public. He wondered when the report was submitted to Council and whether that report had been available to those who asked for it. City of Denton City Council Minutes October 17, 1989 Page 6 Charlie Watkins, Superintendent of Solid Waste, stated that the report had been available since about July. Council 'Member Boyd asked if there was an implication that in the City of Denton, the residential customer was subsidizing the commercial customer. Gustafson replied no that he had stated that if rates were going to be compared, then they should be done fairly. The revenues generated per capita by the garbage department in either area would be essentially even, regardless of the source of the revenue. Joe Bendzick spoke in opposition to the City of Denton taking on the task of being the sole provider of solid waste. It would give citizens no choice at all. It removed competition. He was a previous City of Denton customer from 1972-1979 and was not satisfied with the service. When he took on a private carrier, he took on a choice. A choice that he still had if he did not like the service provided from a private carrier. The bulk of any waste hauled now goes to another landfill which would add life to the City of Denton landfill. Most of all, he did not want the element of choice taken away. Joan Hullberg stated that when the City of Denton had exclusive right to pick up trash, there would be no choice. She had used the City of Denton for a long time but within the last three months, she had switched service. This was because the City did not provide the service. The City did not come on every required day and when they did, trash would spill all over when the dumpsters were emptied. It was not fair not to have a freedom of choice. Council Member Alexander asked Mr. Bendzick if he would like to see the City of Denton out of the solid waste business. Bendzick replied not without keeping the process open, not only for Texas Waste but also for other private carriers. He did not feel it would be a good move to give any carrier an exclusive franchise. Council Member McAdams asked Mr. Bendzick dissatisfaction was with the City service. what his Bendzick replied irregular times and quality of service. Mary Bendzick spoke against the proposal. She felt that customers would receive the best service with competition. She stated that with the City service they had no regular basis for pick-Up and problems with the driver. 219 220 City of Denton City Council Minutes October 17, 1989 Page 7 Eddie Hardin stated that he was a previous City Of Denton customer with similar experiences as had been stated. He believed that the City of Denton should stay out of any business that it could not handle and it was not doing that good of job with electricity, water, sewage and police. The City should not add anything else because it could not handle it. Private haulers were more competitive. Monte Miller stated that competition motivated business to do a superior job and that freedom of choice reflected a form of checks and balances. He felt the proposal would be counterproductive for the business community and expensive ultimately for the consumer. He encouraged the Council to carefully consider any anti-competition ordinance as a precedent as a policy of anti-business for the City of Denton. Gayla Brown presented a letter from Jimmy Brown, a local realtor, who was in opposition to the proposal. The letter stated opposition to the proposal for the following reasons: . (1) poor City of Denton service, (2) courteous service from the private hauler, (3) Texas Waste Management had a disposal area. which would last more than forty years before filling up as opposed to the City of Denton's which would fill up in approximately five years, and (4) competition in the solid waste collection service maintained stable rates without large increases and improved service from both the City and Texas Waste. Bill Holman stated that with his background of commercial finance for refuse and garbage companies, he had dealings with several of the companies named in the report. He stated that the residential rate charged by a private firm with a franchise was lower than the City of Denton. To permit a landfill today, assuming the land could be found, was extremely costly. The liability for a landfill was going to be great, with new legislation that was passed. He highly opposed the lack of competition. He suggested advertising properly for a franchise, control the rates, and get out of the solid waste business. It was too costly for the City of Denton to continue. Mayor Stephens asked how long a contract would be that Mr. Holman was suggesting. granted an increase. Kenneth Stout, a commercial user with Texas Waste Management, felt that anytime people dealt with a taxing entity, expenses went sky high and that competition controlled expenses'. City of Denton City Council Minutes October 17, 1989 Page 8 Rich Edyvean stated that at first a majority of the Committee felt that competition could provide a better service than anything the City could provide. But after examining the existing system that the City had in place that worked reasonably well and realizing that the City had a substantial capital expense invested in the operation, that the City of Denton should be in the solid waste business. Council Member Boyd asked if the City of Denton should be the exclusive hauler. Edyvean replied that in the long run the commercial customers would pay substantially higher rates. The Committee felt that they would pay less rates if the City stayed in the business. If the City stayed in the business, the Committee felt that the City could not meet competitive rates because its rates were on a cost recovery basis. Bonnie Muff stated that competition was the spice of life and was needed. The City of Denton could not handle the solid waste collection. She had called for service on two occasions from the City and was told she would have to wait three weeks for a dumpster. When she called a private hauler, she had a dumpster the same day. Bob Custer, Regional Marketing Director-Texas Waste Management, stated that the Management was asking to be able to compete in that market place. It was not asking the City to get out of the business as they welcomed open competition. Why would the City go out of business if it allowed competition in the solid waste department. He stated that pricing was different among the ~arious customers due to different levels of service provided and proximity to landfills. Sue Fickey stated that she felt threatened by the possible cutting out of a free enterprise market and urged the Council to allow free enterprise to continue. Jeane Morrison, representing the Beautification Committee, stated that the Committee supported the recommendation of Solid Waste Alternatives Committee. They had received reports from the Solid Waste Alternatives Committee and from staff. They had investigated complaints with Texas Waste Management and with the City of Denton. She did not think that any Waste Management people lived in Denton and thus their salaries were going somewhere else and that money needed to stay in the City. 221 222 City of Denton City Council Minutes October 17, 1989 Page 9 Ben Perry stated that in his experience a commercial hauler had always been best and was in favor of keeping competition. Pamela Cagle stated that she was an employee of Texas Waste Management who lived in the City of Denton and knew of at least nine other employees who lived in Denton. She believed in free enterprise and the freedom of choice. Denia E1-Rakabawy, a customer of Texas Waste Management, stated that Texas Waste Management continued to pick up the trash at Ridgecrest Apartments even though bills had not been paid for two months after the apartment manager had had a serious car accident. She asked if it were possible that the City wanted all of the solid waste business in order to obtain money to buy a new landfill. Ann Gillespie relayed information regarding her dealings with Texas Waste Management. She stated that her costs would be much higher with the City of Denton. Jeannie Vardeman asked if the City would pick up their trash at Colorado Courts Apartments as Texas Waste Management did as they did not have dumpsters but individual cans at each apartment. Bob Dunlap, a recycling hauler, stated that they were concerned that whatever the decision was that it might be made with the exclusion of recycling. They hoped the flexibility would continue to allow recycling. C. C. Sexton, a Texas Waste Management customer, stated that she did not have any problems with service and response. She had not used the City but was not willing to change service unless her rates were lower, and was guaranteed at least the same sort of service and response she had been getting. She encouraged more recycling to help save area at the landfill. Bob Hooper stated that he was a former City of Denton customer but dropped the 'service due to poor service. For a while he took his trash tO the landfill himself. He currently was a Texas Waste Management customer and had good service. He felt that City service was better now because of competition. Glen Carlton stated that the City service was poor and the dumpsters were in poor condition. He felt that Texas Waste Management provided better service. Larry Smith, a business owner, was a former City user and experienced poor service. He had to go out after his business and stated that the City had to go out after business in order to improve. City of Denton City Council Minutes October 17. 1989 Page 10 The Mayor closed the public hearing, Charlie Watkins, Superintendent of Solid Waste, stated that the survey originally started looking at residential waste. He reviewed the survey results from 19 cities relating to times of pick-up, whether trash bags were given, rates, and services provided. He explained the commercial survey results and presented a comparison of rates between Texas Waste Management and the City of Denton. Figures for expenditures for roll-off, front load and side load operations were presented along with the financial impact of those operations. If the commercial division were ended. Watkins stated that there would still have residential service and landfill expenses. A franchise fee would help finance the debt service if that avenue were taken. Watkins presented various overheads from the results of the survey. Council Member Gorton asked if a new disposal facility and a rate increase would be required for the residential customers just to cover debt service if the City were no longer in the commercial service. Watkins replied yes if the private hauler were directed to haul to the City facility. The calculation was how much money was needed divided by the volume coming into the disposal facility. The landfill fee would be raised to get revenue from the private hauler and also raise the residential fee so that they paid their share of the waste they were contributing to the landfill. Council Member Gorton asked if under that scenario, could the debt service on the current landfill be retired with the current rates. Watkins replied that that would be their estimate based on the value of the system. If the system were sold, they could probably get enough money for it to retire the debt on the existing facility when it closed in approximately five years. If the operation' were sold and the hauler were directed to not take the waste to the Denton landfill, there would be ten to twelve years additional life from now. That however, would result in an increase for residential customers of approximately $3.00. From a financial standpoint, long term expenses for everyone whether commercial or residential, acquiring all the services would be best. Lloyd Harrell. City Manager. stated that staff felt that the long range benefit of the citizens of the community both residential and commercial was that the current situation was one that the City could least afford to continue over the long haul. That situation was providing exclusive residential service and competing in the commercial area with several other 223 224 City of Denton City Council Minutes October 17, 1989 Page 11 commercial haulers. Staff felt that a more viable sys~e{m would be either for the City to take over the commercial business as recommended by the Committee or the City to get out' of the business and leave it to the private haulers with some type of franchise arrangement. Reasons being in the current situation, the City was not competing on the same level with the private haulers. The City was competing with much larger companies which could offset revenues from Denton with revenues from other communities. If the City continued in the same framework, one of two things might happen. Either the burden would have to be shifted to the residential solid waste customer to finance the commercial operation on a competitive basis or if commercial had to pay its own way, it would result in higher rates and customers would go elsewhere. For the long range good of the City, some kind of change needed to be made from the status quo either to move the City out of the commercial business or have the City assume that service. Council Member Boyd stated that currently the city rates were the lowest in the area and if the City were not in the business, what would happen to the commercial rates. Harrell replied that the Solid Waste Alternatives Committee felt the City should assume exclusive provision of the service because if the City left the rates would increase substantially. After discussion by the Council centering on the debt retirement, recycling and the cost of landfills, Mayor Stephens suggested a work session in the near future to further study the problem and receive answers to the questions raised during the public hearing. Consensus of'the Council was to schedule the item for a study session in the near future. Consent Agenda Gorton motioned, McAdams seconded to approve the Consent Agenda as presented. MOtion carried unanimously. A. Bids and Purchase Orders: 1. Bid ~1014 - Janitorial Service Bid #1019 - Playground Equipment City of Denton City Council Minutes October 17, 1989 Page 12 5. Ordinances A. The Council considered adoption of an ordinance accepting competitive bids and providing for the award of contracts for the purchase of materials, equipment, supplies or services. The following ordinance was considered: NO. 89-141 AN ORDINANCE ACCEPTING COMPETITIVE BIDS AND PROVIDING FOR THE AWARD OF CONTRACTS FOR PUBLIC WORKS OR IMPROVEMENTS; PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING FOR AN EFFECTIVE DATE. McAdams motioned, Gorton seconded to adopt the ordinance. On roll vote, McAdams "aye," Alexander "aye," Gorton "aye," Ayer "aye," Boyd "aye," and Mayor Stephens "aye." Motion carried unanimously. B. The Council considered adoption of an ordinance of the City of Denton amending Chapter 13 1/2 (Mechanical Code) of the Code of Ordinances of the City of Denton, Texas adopting the 1985 Uniform Mechanical Code with certain amendments, deletions, and additions. (The Plumbing and Mechanical Code Board recommended approval). The following ordinance was considered: NO.89-142 AN ORDINANCE OF THE CITY OF DENTON AMENDING CHAPTER 13 1/2 (MECHANICAL CODE) OF THE CODE OF ORDINANCES OF THE CITY OF DENTON, TEXAS; ADOPT1NG THE 1985 UNIFORM MECHANICAL CODE WITH CERTAIN AMENDMENTS, 'DELETIONS, AND ADDITIONS THERETO; PROVIDING FOR A SEVERABILITY CLAUSE AND REPEALING CLAUSE; PROVIDING A PENALTY NOT TO EXCEED FIVE HUNDRED DOLLARS; PROVIDING FOR AN EFFECTIVE DATE. Council Member McAdams questioned why the 1985 code was just now being adopted and when the Council could expect the 1988 code to be presented. Why was it taking so long to review and recommend adoption of these codes. Rick Svehla, Deputy City Manager, stated that the Board was very meticulous and had also had the responsibility to review and recommend the plumbing code issues. 225 226 City of Denton City Council Minutes October 17, 1989 Page 13 McAdams motioned, Gorton seconded to adopt the ordinance. On roll vote, McAdams "aye," Alexander "aye," Gorton "aye," Ayer "aye," Boyd "aye," and Mayor Stephens "aye." Motion carried unanimously. C. The Council considered adoption of an ordinance of the City of Denton, Texas. prohibiting the parking of vehicles on the south side of Cordell Street between Crescent and Fulton Streets. (The Citizens Traffic Safety Support Committee recommended approval). Rick Svehla, Deputy City Manager, stated that this was a request of the neighborhood. Staff recommended that parking be removed on the south side. There was concern about the narrowness of the street and parking on both sides of the street resulting in hazardous driving conditions. Council Member Boyd pointed out that minutes from the Safety Commission recommended prohibiting the parking from 7:00 a.m. and the ordinance stated 8:00 a.m. as did the Council back- up. Council Member McAdams pointed out that parking would be prohibited during the week even though the high school might not be in session as during national holidays. If a holiday fell during the week, the churches in the area could not park on the street. She suggested allowing parking during holidays. Alexander motioned, Gorton seconded to postpone the ordinance until the first meeting in November. On roll vote, McAdams "aye," Alexander "aye," Gorton "aye," Ayer "aye," Boyd "aye," and Mayor Stephens "aye." Motion carried unanimously. D. The Council considered adoption of an ordinance designating and establishing speed zones on Woodrow Lane from McKinney Street to a point 100 feet north of Spencer Road. The following ordinance was considered: NO. 89-143 AN ORDINANCE DESIGNATING AND ESTABLISHING SPEED ZONES ON WOODROW LANE FROM MCKINNEY STREET TO A POINT 100 FEET NORTH OF SPENCER ROAD: PROVIDING FOR A PENALTY OF A FINE NOT EXCEEDING TWO HUNDRED DOLLARS ($200.00): PROVIDING A SEVERABILITY CLAUSE; AND DECLARING AN EFFECTIVE DATE. City of Denton City Council Minutes October 17, 1989 Page 14 227 McAdams motioned, Alexander seconded to adopt the Ordinance. On roll vote, McAdams "aye," Alexander "aye," Gorton "aye," Ayer "aye," Boyd "aye," and Mayor Stephens "aye." Motion carried unanimously. E. The Council considered adoption of an ordinance awarding a contract to Sanus Texas Health Plans, Inc./New York Life Insurance Company to provide health insurance coverage for employees and dependents. Council Member Gorton left the meeting with a potential conflict of interest. Mayor Stephens stated that he had received a phone call from a pharmacist in town regarding the prescription benefits with the Sanus program. The pharmacist was associated with five other pharmacists and they felt that New York Life had not been cooperative with them and that the proposition they gave the local pharmacists was not the same contract that was extended to Eckard's. They felt that New York Life was wanting to limit the pharmaceutical services offered to the City of Denton employees. Tom Klinck, Director of Personnel, stated that the issue of prescription drugs had been studied by the Employee Insurance Committee and they chose not to include it in the HMO coverage. The reason was that the additional cost of the premium would have added $8.00 on the employee coverage and $20.00 on the family coverage. Lloyd Harrell, City Manager, stated that when staff found out that there was some concern being expressed on the part of some pharmacies in the area about participation in the Sanus/Sanus Plus program, Klinck was asked to arrange a meeting between the pharmacist and the Sanus representatives to talk about that concern and to talk about the possibility of bringing other companies and other firms into the relationship with Sanus. Klinck stated that staff had met with Bill Neu and James Garner who had been inquiring about the program. The two proposals were discussed and the various rate increases that would have affected employees. A Sanus representative talked through the Sanus program, what the discount was, what the various kinds of criteria were that Sanus had established internally in order to enter into an agreement. One of those was a certain discount, certain capability for computerized billing and things of that nature. One of the criteria was that if an individual had to drive over 20 minutes to a pharmacy, an additional pharmacy would be considered for access. Because there were two Eckard's in Denton, there was not that problem. In a good faith effort, Sanus stated they would add one independent pharmacy and when there were 20,000 additional members from other firms locally, 228 City of Denton City Council Minutes October 17, 1989 Page 15 another independent pharmacy would be added. Klinck felt that the pharmacists had left with the feeling that the Sanus program would not be cost beneficial to them personally in their ability to operate their business because they could not generate the business that an Eckard's could. Mayor Stephens asked how that one independent pharmacy would be picked. Klinck replied that he assumed it would be if the independent would be willing to follow the Sanus agreement. Mayor stephens asked why just one independent. Why not anyone who was willing to follow the Sanus criteria. Mayor Pro Tem Ayer expressed concerns regarding the number and distribution of the doctors and the very limited access to a pharmacy. He had talked to some of the pharmacists in the group of 5 independent pharmacists who had been serving the needs of the City for a number of years. They were willing to accept a contract as a group. They had a single billing agency. He felt it was strange that something could not be worked out that would be beneficial to the local business people and also very beneficial to the City employees.- To expect them to all use one pharmacy was unreasonable. Council Member McAdams had spoken to two other pharmacists and central to what they were saying was the fact that while Sanus stated that they could take on one pharmacy, they were in effect, one pharmacy in the way they bill and in the way they were paid. Newspaper accounts two - three weeks ago stated that Eckard's was refusing to accept Blue Cross-Blue Shield coverage because the reimbursement on the prescriptions was too low. She was told that the proposal that was made to the independent pharmacists was the same that allegedly Blue Cross-Blue Shield had, She too felt that it was a little strange that if Eckard's was not going to accept that kind of reimbursement for Blue Cross-Blue Shield, why were they going to do it in this 'particular instance. Council Member Boyd stated that he had been told by one of the pharmacists that the reason for the discrepancy was that the same deal was not offered to the independents as was offered to ~¢kaKd'~. Th~ doal offored the independents, if he remembered correctly, was that they would be reimbursed 85% of the actual cost of the drugs plus $1.85. Whereas Eckard's was being offered 85% plus approximately $3.00. He stated that there might be a justification why the difference, but it did raise a question. He also felt that the number of doctors was extremely limited. He wondered if the situation could arise where employees had such a narrow range of doctors if they did not take the Sanus Plus, that they were, in effect, being offered no coverage. City of Denton City Council Minutes October 17, 1989 Page 16 Council Member Alexander stated that he would like to hear from the Sanus representatives an assurance, a stronger assurance than what was heard a couple of weeks ago, about clear expectations to bring other doctors on line into the program. He needed to hear that kind of information before he could be comfortable voting for the particular program. Klinck replied that as of the meeting, there were a total of nine doctors in the Denton/Lewisville/Sanger area. Council Member McAdams asked who the doctors were and if they were in Denton all week because she had been told that one of the doctor~ only comes in a certain number of days each week. Klinck stated that Dr. Norris in Lewisville was an M.D., an internal medicine doctor which would be open around the first of November. Dr. Cudd, a D.O. in Denton, was a family practice doctor: Dr. Lemmons, was an M.D. in Denton, Dr. Cummings was an M.D. in Denton; Dr. Jackson in Lewisvilte was an M.D.; Dr. Ballslee was an OB/GYN M.D. in Denton; Dr. Bittle in Sanger was an M.D.: Dr. Ranp01di was a family practice M.D. in Denton; and Dr. Yankee was an M.D. in pediatrics. In addition, there was an extensive network of very specific doctors for special needs in the Dallas/Fort Worth area. Council Member McAdams asked if of the people named, were all of them in Denton on a regular basis, every day of the.week or were some of them here some times and other places other times. Klinck replied that he did not have that information but someone was there who could answer that question. He s.tated that the Coopers & Lybrand consultant had stated that' a family practice doctor used by people only on the HMO, could handle 1500 patients a year and the program had three-four family .practice doctore in the Denton area for the employees. Klinck stated that the prescription drug program had worked very well this last year and money had been saved with that program. But when looking at the total scope of the claim dollars being spent, the 4% that the prescription benefit presented was not too significant. Ken DiBella. Sanus. stated the prices quoted to the independent pharmacists were the prices that Eckard's currently had contracted with them. Mayor Pro Tem Ayer asked what the prices were. 2,29 230 City of Denton City Council Minutes October 17, 1989 Page 17 DiBella replied 85% of the wholesale price plus $1.85 per prescription minus the co-pay. Managed care organizations operated on doing certain of their items on a volume basis. The people from Tom Thumb, Town and Country and Eckard's had chosen to do business with Sanus because they believed at those investment levels, they could make money. Sanus had extended to the local pharmacists as a show of good faith, to open one physical plant location and that was because Sanus did have agreements with Eckard's, Tom Thumb and Town and Country. Sanus would not want to extend too far beyond what the membership capacity was in any given geographical area. In Denton, there were not a tremendous amount of members so that the amount that Eckard's could reap as profit margin in this area was not relative to other areas where there was a large membership. Independent pharmacies were considered as the membership increased. Council Member Alexander asked for a ratio of new patients before the number of pharmacies' could be increased. DiBella stated that for every 20,000 members one additional pharmacy could be added. One additional pharmacy was offered now, one physical plant location, and then for every 20,000 members gained, another physical plant would be added. Council Member McAdams asked if he was aware that Eckard's had dropped the Blue Cross-Blue Shield and how that contract compared to the contract they were doing for Sanus. DiBella replied that he did not know the exact prices on the Blue Cross-Blue Shield but he suggested that Eckard's might have wanted to drop Blue Cross-Blue Shield and not Sanus because Blue Cross-Blue Shield did not encourage their members into Eckard's or into any other pharmacy. If Eckard's felt that they were not getting enough volume of business at those levels from Blue Cross-Blue Shield membership, it may not be financially feasible for them to accept those levels. Whereas, all of the City people would be going to an Eckard's, Tom Thumb or Town and Country. Mayor Stephens asked how Sanus would select another pharmacy after another 20,000 members were added. Would the group of 5 pharmacists with one billing process be considered as one additional pharmacy. DiBella replied that it would have to be physical plant locations. They could not combine the five because that would be five different plant locations and then the amount of volume that any one of them could get would be diluted. Mayor Stephens asked what if it were extended to them and they had the opportunity to sign such a contract. City of Denton City Council Minutes October 17, 1989 Page 18 231 DiBella replied that he could not speak as to whether they would offer that. Mayor Stephens stated that they could let it be their decision not Sanus whether they could make money or not. DiBella replied that Sanus had contractual obligations to Eckard's that could prevent Sanus from allowing it to be the pharmacists decision. Eckard's might say that Sanus had agreed that there would be so many members per plant location so that they could make a dollar on the agreement. If Sanus went beyond that, Eckard's might have some concern about that. Lloyd Harrell, City Manager, stated that from staff standpoint it would benefit employees if additional doctors and pharmacists could be signed up for the program. He assured Council that as they talked to all of the employee reprssentatives, they were very upfront with the employees explaining the various benefits on the various alternatives. If the employees felt that it was in their best interest to go the Sanus/Sanus Plus, that there were the doctors that were signed up and firmly committed from the City of Denton and there were the pharmacies that would be available under Sanus Plus. Some inconvenience would be experienced for the lower price in coverage. Mayor Pro Tem Ayer stated that Council had been told that all of the employees had been informed about the plan and had been polled and they had by a significant majority, endorsed the proposed plan. He asked how the employees were polled. Klinck replied that there were 25 two hour meetings with approximately 92% of the work force. After that and throughout the process, in meeting with the Employee Insurance Committee, those Committee members would go back and actually talk with and take materials back and talk with employees in their areas. In addition to that, a memorandum was prepared to all City employees that outlined the two alternatives under consideration. Mayor Pro Tem Ayer stated that it was his impression that at some point, all of the employees were asked to fill out some kind of a form saying yes or no or rating the program. Klinck stated that they completed a survey on what they felt their needs were. Mayor Pro Tem Ayer replied that it was not a poll. 232 City of Denton City Council Minutes October 17, 1989 Page 19 Klinck stated that it was an informal poll where the representatives went back and talked with the various groups and in some cases, they may have passed around a form to the various divisions to let them check off yes or no on whatever plan they wanted. Mayor Pro Tem Ayer stated that he had misunderstood that there had been a formal poll so that staff could tell him how many employees had voted for the different plans. City Manager Harrell stated that the Committee had spent many hours looking at the issues and they were given the charge to go back to their work unit and make sure it was fully discussed and get a feeling from the work unit. Some groups did go to the point of actually passing some things out and taking survey counts. Mayor Pro Tem Ayer stated that he was hearing a bit of a contradiction because he thought the Council had been told that these people had been thoroughly educated on the plans. City Manger Harrell replied that the fourteen members on the Employee Insurance Committee had been thoroughly educated on the ins and outs of the programs and the various aspects. Mayor Pro Tem Ayer stated that he was frustrated on the whole matter of health care in general and specifically in the City of Denton given such facts as certain corporate organizations had driven our public hospital out of business and HMO's had come, failed and gone. He felt that the whole system of health care was in a shambles and was in a terrible condition and hoped that it was in a state of flux and would eventually work itself out. A large percentage of our people could not afford health care and could not afford insurance to provide it. Klinck stated that he agreed and felt that the Sanus programs addressed that specific issue. If the employee chose the HMO, and they would communicate up front that there would be some inconvenience with respect to an HMO only, that they could take home more money and could now cover family members that they previously had dropped. Council Member McAdams stated that a real tragedy was that the city had a relatively good program for the employees and she feared that what they were offering them now was an awful lot less than what they were meant to believe it was on the surface. She was troubled that she did not know any of the doctors on the list. She was further concerned that in the information that the Council had been given about what was available, the number of doctors and so on, that that was clearly misleading. Because there was a suggestion that there were a number of people who were not in fact under contract to City of Denton City Council Minutes October 17, 1989 Page 20 233 Sanus at the time what the number of doctors was. The program may be the very best that the City could do iR the financial constraints that it had right now and given that something needed to be put in place, but it seemed clear to her that the City needed to look further for ways to provide for employees. The prescription package was not good. She would like to look at some kind of a program that would keep the current prescription program. She did not feel confident and good about the program presented. The following ordinance was considered: NO. 89-144 AN ORDINANCE ACCEPTING THE PROPOSAL OF SANUS TEXAS HEALTH PLAN, INC. FOR MEDICAL INSURANCE COVERAGE FOR CITY EMPLOYEES; AUTHORIZING THE EXPENDITURE OF FUNDS THEREFORE: AND DECLARING AN EFFECTIVE DATE. Alexander motioned to adopt the ordinance, McAdams seconded but only because the' City desperately needed a program but asked the staff to during the course of the year, be looking carefully for a different alternative because she did not feel this was an acceptable one. On roll vote, McAdams "aye," Alexander "aye," Ayer "aye," Boyd "aye," and Mayor Stephens "aye." Motion carried unanimously. Council Member Gorton returned to the meeting. F. The Council considered adoption of an ordinance awarding a contract to August International, Inc. to provide claims processing services for "run-off" claims of City's self-insurance fund. Tom Klinck stated that this would take care of the final disposition of the City insurance for claims on or before November 30 when the new program went into effect. This would allow for a smooth transition to end the current insurance fund. The following ordinance was considered: NO. 89-145 AN ORDINANCE ACCEPTING THE PROPOSAL OF AUGUST INTERNATIONAL CORPORATION TO PROVIDE THIRD PARTY ADMINISTRATIVE SERVICES FOR THE CITY'S EMPLOYEE HEALTH INSURANCE PROGRAM; AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT FOR SAID SERVICES; AUTHORIZING THE EXPENDITURE OF FUNDS THEREFORE: AND PROVIDING AN EFFECTIVE DATE. 234 City of Denton City Council Minutes October 17, 1989 Page 21 McAdams motioned, Ayer seconded to adopt the ordinance. On roll vote, McAdams "aye," Alexander "aye," Gorton "nay," Ayer "aye," Boyd "aye," and Mayor Stephens "aye." Motion carried with a 5-1 vote. G. The Council considered adoption of an ordinance approving a funding agreement between the City of Denton and Fred Moore Child Care Center. The following ordinance was considered: NO. 89-146 AN ORDINANCE APPROVING A FUNDING AGREEMENT BETWEEN THE CITY OF DENTON AND FRED MOORE CHILD CARE CENTER; AUTHORIZING THE MAYOR TO EXECUTE THE AGREEMENT; APPROVING THE EXPENDITURE OF FUNDS THEREFORE; AND PROVIDING FOR AN EFFECTIVE DATE. McAdams motioned, Alexander seconded to adopt the ordinance. On roll vote, McAdams "aye," Alexander "aye," Gorton "aye," Ayer "aye," Boyd "aye," and Mayor Stephens "aye." Motion carried unanimously. 6. Resolutions A. The Council considered approval of a resolution authorizing the City Manager to execute an agreement between the City of Denton and the State of Texas for the blanket coverage of various projects relating to the installation and maintenance of certain highway traffic illumination systems. The following ordinance was considered: RESOLUTION NO. R89-070 A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT BETWEEN THE CITY OF DENTON AND THE STATE OF TEXAS FOR THE BLANKET COVERAGE OF VARIOUS PROJECTS RELATING TO THE INSTALLATION AND MAINTENANCE OF CERTAIN HIGHWAY TRAFFIC ILLUMINATION SYSTEMS AND PROVIDING FOR AN EFFECTIVE DATE. McAdams motioned, Ayer seconded to approve the resolution. On roll vote, McAdams "aye," Alexander "aye," Gorton "aye," Ayer "aye," Boyd "aye," and Mayor Stephens "aye." Motion carried unanimously. The Council then returned to Item fi5 from the Work Session. 5. The Council held a discussion concerning a request from the City of Argyle for sanitary sewer service. City of Denton City Council Minutes October 17, 1989 Page 22 Bob Nelson, Executive Director for Utilities, stated that it was staff's recommendation that Argyle contract for such sewer service via the Upper Trinity Regional Water District. Denton would still transport and treat Argyle's wastewater, but via a contract with the UTRWD. Consensus of the Council was to proceed with staff recommendation. Miscellaneous matters from the City Manager Lloyd Harrell, City Manager, presented the following items: A. The September budget recap was presented in the backup material. 8. There was no Executive Session held during the Work Session. 9. New Business The following items of new business were suggested by Council Members for future agendas: A. Council Member Boyd requested a study be done on what the City would have to do to have bike lanes in the City, where they could be located now and where they could be done inexpensively in the future. 10. The Council did not meet in Executive Session during the Regular Session. With no further business, the meeting was adjourned. 235 CITY OF DENTON, TEXAS 3199C