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Minutes February 25, 1992106 CITY OF DENTON CITY COUNCIL MINUTES FEBRUARY 25, 1992 The Council convened into the Special Call Session at 6:00 p.m. in the Civil Defense Room. PRESENT: ABSENT: Mayor Castleberry; Mayor Pro Tem Hopkins; Council Members Chew, Perry, Smith and Trent. Council Member Alexander 1. The Council convened into the Executive Session to discuss legal matters, real estate (considered leases with Cooke County College and Morrison Milling Company), and personnel/board appointments. Council Member Alexander arrived during the Executive Session discussion. 2. The Council received a report and held a discussion regarding Section 9 Federal Transit Administration Financial Assistance. Catherine Tuck, Administrative Assistant, stated that in order to insure that SPAN did not have a gap in funding during the transition from Section 18 to Section 9 funds, an application needed to be received by the FTA by April 1, 1992. In order to receive Section 9 FTA funds, the NCTCOG's 1992 Transportation Improvement Program needed to be amended to include Denton's program for 1992-93. In the next few months, a five year comprehensive plan would be presented to Council. In Section 9 there was more money available for allocation. The City was requesting $363,318 for a 12 month period as well as an additional pro-rated amount for the thirteenth month. The funding request included three new lift-equipped, 12-passenger vans for elderly and handicapped transit and new, larger signs for the public trolley system. A fifth trolley route will be started. Elderly persons and persons with disabilities would also be eligible for half price fares on the trolley system. SPAN and the City would also be looking at a pass system on the public routes, with possible reduced rates for frequent riders. SPAN also expected to receive a bus and a trolley from an earlier Section 18 grant. New maps would be printed and distributed during the 1992-93 fiscal year. SPAN was predicting a ridership increase of 25% with the new route, a 10% increase for handicap riders, and a 10% increase in elderly ridership. Letters had been sent to the private transportation providers such as the taxi companies to insure they had a clear understanding of what was being proposed. A public hearing would be held on March 5 to receive public input on the plan. The best aspect of the funding was that there would be an increase in the funding without an increase in the City's contribution. 3. The Council received a report and held a discussion regarding an update on the Upper Trinity Regional Water District contracts and gave staff direction. City of Denton City Council Minutes February 25, 1992 Page 2 107 Bob Nelson, Executive Director for Utilities, introduced two members of the Board of Directors for the Upper Trinity Regional Water District, A1 Utesch representing unincorporated county areas and Tom Harpool representing the City of Aubrey. Nelson was asking for Council direction to separate three aspects of the proposed contracts. There was the raw water contract which proposed selling water on an interim temporary basis out of the Ray Roberts and Lewisville water rights. That water would be sold when it was available as the District needed it. It would be sold for 80% of the market price which was Dallas' wholesale raw water cost. The contract for the treated water service had been divided into two contracts - an interim time frame from now until the next plant was built and from that time beyond. A document had been sent to the UTRWD offering them an interim contract from now until the Ray Roberts Water Plant was built with average production cost pricing. Future options were for specific blocks of water with the price at average price of production system with return of investment. The UTRWD countered with a more generic contract which included an interim phase from now until when the water plant was built with options for additional capacity once the plant was built out of the average system. Pricing was still an area for negotiation. The long term portion of the contract consisted of options for future blocks of water treatment capacity but with a guaranteed opportunity to exercise future options. Staff had some concerns about the long term phase of the contracts, especially the obligations and the pricing concepts. Staff was suggesting completing the raw water contract and the interim water contract. The two entities then could continue to work on the long-term water contract. Lloyd Harrell, City Manager, stated that as the negotiating team went through the process, there was a conclusion that the long term contract was very complicated and that the two sides were far apart on the arrangement. The short term option, where the City had some excess capacity which could be made available to the District, was close to agreement. It might be necessary with the long term contract on whether the UTRWD became a wholesale customer, to present the proposal to the UTRWD and have the UTRWD judge if they wanted to become involved. Mayor Pro Tem Hopkins was in agreement with the track staff was on and wanted to see the contracts go back to the Public Utilities Board for discussion and wanted to review those discussions before she made too many comments. She was comfortable with the short term contract. Mayor Castleberry suggested the discussion center on the interim contract. 108 City of Denton City Council Minutes February 25, 1992 Page 3 Nelson indicated that the raw water contract was not necessarily short term. It would be raw water for whatever the City had for a length of time. The District could buy it or not for $.80. One area which staff would like tied to the contract was right of first refusal. The District would buy the water from Denton before they would buy it from anyone else. Utesch stated that the District currently had a contract with the City of Dallas for raw water. The contract took care of the District's needs through 2010-2020. He felt that the District was going to built its own plant and that the interim period to the District was the period between now and the time their new plant was completed. Mayor Pro Tem Hopkins indicated it would be a more defined time rather than one which would be on-going. Utesch replied yes. Mayor Castleberry asked about the 80%. Nelson replied that Dallas presently charged $.47 per thousand gallons for raw water. Eighty percent was a discount from that figure. The idea was that the City would not be guaranteeing any firm supply. The City would not go out and obtain new raw supplies to be sure that there would always be water for that purpose. The District needed to make other arrangements for their long term needs. The City was merely selling surplus water. The City did not want the arrangement to become a permanent situation and that was why the price was discounted. Council Member Trent questioned the rates. Nelson replied that there were three components of the prices - the raw water, the capacity cost and the variable costs. Capacity costs were the fixed costs such as capital costs, personnel and transmission costs. The UTRWD was suggesting a price of $.55 and the City was suggesting a cost of $1.00 for this cost. The variable costs included chemicals, electricity for pumping and was approximately $.35 - $.40. Mayor Castleberry asked if a large industry would locate in Denton, could the City pull back from the contract. Nelson replied the City would be able to pull back within the next year. The District already had a contract with the City of Dallas. Council Member Trent asked for the downside of the contract. 109' City of Denton City Council Minutes February 25, 1992 Page 4 Nelson replied the only downside he could see was that the City would not be receiving full price for the water. Mayor Castleberry asked how the raw water contract would affect the City of Denton customers. Nelson replied it would save them approximately 2-4%. Consensus of the Council was to proceed with the raw water contract. The Council then discussed the treated short term contract. Nelson stated that the contract would be a five or six year initial period with a firm option for twelve months, a guaranteed minimum. Pricing was the main concern as to whether to use a surplus capacity or not. Mayor Castleberry stated that if the water were sold a half price, it would go to the Denton rate payers. Nelson replied that it was not quite half, probably a little more than half. Mayor Castleberry asked if the price charged to the UTRWD would be less than what was charged Denton citizens. Nelson replied no that the capital costs would be substantial. The District would be buying production costs from Denton and would have to get their own transmission system and distribution. Mayor Castleberry stated that he did not want to see some other city in the District paying a lower rate than Denton residents. Utesch stated that there would be additional costs to the District in pipeline needed to be built to customers and wholesale to the customers. Council Member Perry stated that the surplus was an amount which the City would not be able to sell to its customers. Nelson replied yes that the City did not have enough customers at present to sell all of its water. Council continued discussion regarding growth potential, the present contracts with Corinth and Lake Cities Municipal District, a possible pipeline up I35 to Sanger. 110 City of Denton City Council Minutes February 25, 1992 Page 5 Mayor Castleberry stated that the consensus of the Council seemed to be that the Council was interested in the raw water and treated water contract with the possibility of exploring a pipeline up I35 towards Sanger. 4. The Council considered an appointment to the Cable T.V. Advisory Board. Perry motioned, Alexander seconded to appoint Richard Rodean to the Board. On roll vote, Trent "aye", Alexander "aye", Hopkins "aye", Smith "aye", Chew "aye", Perry "aye", and Mayor Castleberry "aye" Motion carried unanimously. ' 5. Miscellaneous matters from the City Manager. Lloyd Harrell, City Manager, stated that he had one item which was a reminder for the Council to turn in their budget questionnaires. 6. The Council convened into the Executive Session to discuss personnel/board appointments (considered appointments to the Building Code Board and the Plumbing and Mechanical Code Board, and consulted with the City Manager, City Attorney, and Municipal Judge regarding goals and objectives for 1992 for the Municipal Court). 7. The Council convened in open session and took the following action on Executive Session items: A. Perry motioned, Alexander seconded to change the appointment of Terry Schertz from an alternate member of the Electrical Code Board to a regular member. On roll vote, Trent "aye", Alexander "aye", Hopkins "aye", Smith "aye", Chew "aye", Perry "aye", and Mayor Castleberry "aye". Motion carried unanimously. With no further business, the meeting was adjourned. NNIF~R WALTERS TY S~RETARY CITY OF DENTON, TEXAS BOB CAST~EBERRY, MA~O~ CITY OF DENTON, ~S ~ ACC0004A