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Minutes May 16, 1995019a CITY OF DENTON CITY COUNCIL MINUTES May 16, 1995 The Council convened into a Closed Meeting on Tuesday, May 16, 1995 at 5:15 p.m. in the civil Defense Room of city Hall. PRESENT: Mayor Castleberry; Council Members Biles, Chew, Cott, Krueger, and Miller. ABSENT: Mayor Pro Tem Brock. 1. The following items were considered in Closed Meeting: A. Legal Matters -- Under TEX. GOV'T CODE Sec. 551.071 1. Discussed responsibility of Council Members ~nd staff to keep information discussed in closed Session confidential. B. Real Estate -- Under TEX. GOV'T CODE Sec. 551.072 1. Discussed the acquisition of property for expansion of the City's landfill. C. Personnel/Board Appointments -- Under TEX. GOV'T CODE Sec. 551.074 The Council convened into the Work Session on Tuesday, May 16, 1995 at 6:00 p.m. in the City Council Chambers of City Hall. PRESENT: Mayor Castleberry; Council Members Biles, Chew, Cott, Krueger, and Miller. ABSENT: Mayor Pro Tem Brock 1. The Council received a report, held a discussion and gave staff direction regarding amendments to the current I~'estment Policy. Harlan Jefferson, Director for Fiscal Operations, stated that this item 'was the agenda in order to apply for the Investment Policy Certification of Excellence offered by the Municipal Treasurers Association. He reviewed the changes to the policy which were included in the agenda back-up materials. He asked Council to approve the amendments in order to submit the application for certification by June 1, 1995. Council Member Biles asked if the reporting period under Item 5D was a monthly reporting period. Jefferson stated that 5D dealt with quarterly reports to the City Council. Item 5C addressed the monthly reports and Item 5A dealt with the monthly review provided by the Internal Auditor. council Member Biles asked why there was not a concern with the procedure to increase the portfolio from one broker from 20% - 40%. Jefferson stated that the city was required to obtain competitive bids when securities were obtained. A problem with this procedure was that many brokers were more successful than others with certain 019b city of Denton City Council Minutes May 16, 1995 Page 2 types of ~ecurities. Currently once the 25% was reached, the Ctty had to stop calling that broker or ztop accepting a bid from that broker. Council Member Bi]es stated that one of the net effects of the change would be a cost savings to the City due to more competitive bids. Jefferson stated that it would provide more interest income. Cott motioned, Chew seconded to proceed with the amendments. On roll vote, Cott "aye", Miller "aye", Krueger "aye", Chew "aye", Biles "aye", and Mayor Caatleberry #aye".~ Motion carried unanimously. 2. The Council received a report and held a discussion regarding the Quarterly Financial Reports. Kathy DuBose, Executive Director for Finance, stated that the six month comparisons were in the agenda packets. Council received such reports at 6 months, 9 months and an annual financial report and audit. The comparisons were actual revenues and expenditures year to date compared to budget and to the prior year for the same period. The utility reports were presented to the Public Utilities Board on a monthly basis. The current year of ad valorem taxes reflected the 25% reduction in property taxes based on implementation of the half cent sales tax to reduce property taxes effective October 1, 1994. Council Member Cott stated that there was $2,700,000 worth of sales tax reduction in the ad valorem tax but that that percentage would not hold. DuBose stated that the amount was $3,224,000 over all which was estimated what the half cent represented. The sales tax was divided into two sections - the one cent base and the half cent for property tax reduction. Overall there was a 44% increase over the prior year. Collections began in October and were not received until December. Council Member Biles stated that the 31.91% of the sales tax collected was a timing situation and what was the timing from the State. City Manager Harrell stated that it was received monthly with a 2% collectign Gha~ge and a two month lag time. Council Member Bile7 stated that with that lag time considered, the City would not be behind on that projection. DuBose replied correct. Council Member Miller asked what the six month figure would be for the sales tax based on the budget. 019¢ City of Denton City Council Minutes May 16, 1995 Page 3 DuSose stated that it would be close to what was projected. Council Member Rrueger stated that it would be helpful tc have a sales tax projection versus what was collected. DuBose stated that that was given to Council on a monthly basis and had been done for several years. Council Member Krueger asked for the same information regarding ad valorem taxes. DuBose stated that that report was also presented to Council on a monthly basis plus a report regarding the percentage of collections. Regarding the franchise taxes, Lone Star Gas wes down due to a mild winter, CTE had a reduction in revenues and Sammons had increased slightly. The Texas Utilities Electric payment was an annual payment scheduled to be paid in August. The hotel occupancy tax had increased.over the prior year. The increase in the bingo tax was due to the increase in the percentage from 1% to I 1/4%, The recreational fees were seasonal and would increase during spring and summer. The annual service fees had increased over the prior year. Fines and fees for municipal court reflected the implementation of the Court of Record. UNT police fines and fire fines were increased due to the full staffing of those departments. Licenses and permits were down,as building was down in the last 6 months. Miscellaneous revenues for electric and plumbing inspection were now included in the building permit fees, The interest incone reflected an investment in a higher beginning fund balance and increases for the current year than over this time in the last fiscal year. The total revenue was within 2% of the prior yea~ at this same point in time. With 50% of the year gone, the figures were almost 60% of revenue collected. Council Member Curt stated that the State collected the sales tax and charged a fee for that collection. He asked if anyone else charged such a fee. DuBose replied no. Council Member curt asked if there was any way to reduce the State fee. DuBose stated that she had served on a committee which had been meeting with the State Comptrollers Office. The State had asked for suggestions to enhance their customer service and that was one of the items considered. DuBosa then reviewed the individual accounts in the expenditures of revenue which were on target for the budget allotments. Council Member Miller asked why it appeared that the expenditures were behind thus far. DuBose stated that there were several vacant positions which resulted in a reduction plus some one time capital expenditures O19d City of Denton City Council Minutes May 16, 1995 Page 4 which had not been made at this time. Overall it should come in under budget for expenditures. In the Electric Utility area, the mild winter resulted in lower revenue than what was projected. Dubose reviewed the total budget percent remaini,~g for the various accounts. There was §6% of the budget remaining in regard to expenditures. Council Member Biles stated that the operating loss was coming from the winter months and should reverse during the eummer months. PuBose replied co~rect. Last year, during the same time period, there was a $550,000 loss but ended with a positive figure. The water operating fund reflected a slight increase in revenues and expenditures. The revenues should increase during the summer months. Council Member Cott asked about the Corps of Engineering costs. DuBose replied that those figures were reflected in the non- operating revenues and expenses category and were annualized during the year. At this point in time, 42% of the annual budget had been expended at 50% of the year and was within budget. In the wastewater fund, the revenues had increased substantially as well as operating income. There was also an increase in retained earnings. Council Member Cott asked if funds were being set aside for new above ground water tanks which might be needed. DuBose stated that amounts had been set aside during the last few fiscal years. city Manager Harrell stated that the reserve amounts were for repairing and maintenance of the tanks. Bob Nelson, Executive Director for Utilities, stated that the funds were for the operation and maintenance of the current tanks and that the funds for new tanks would come from bond funds. DuBose stated that 38% of the annual budget for the wastewater fund had been expended and should be under budget. In the sanitation fund, the operating revenues and expenditures were increased slightly over the last year. Compared to the budget, 42% of budget had l~en expended for the current year. city ~,,nager Harrell stated that the budget should be over in revenue and under in expenditures for the fie ~1 year. There was a concert, for the water area and it would be closely watched. 3. The C,~uncil discussed and consJ, dered issues for the council annual planning session including facilitator, place a~]d date and gave staff direction. Due to a time constraint, this item was discussed during 019e City of Denton City Council Minutes May 16, 1995 Page 5 Miscellaneous Matters from the City Manager during the Regular Session. 4. The Council received a report, held a discussion and gave staff direction regardinq a proposed amendment to the TMPA Power Sales Contract. Due to a time constraint, this item was discussed during Miscellaneous Matters from the City Manager during the Regular Session. 5. The Council received a report, held a discussion and gave staff direction regarding a timeline for board/commission appointments. City Manager Harrall presented the tentative time line for appointments which was included in the agenda back-up materials. The time line tracked what was done last year for board/commission appointments. Staff needed direction regarding the date of May 30 for the informational meeting. Consensus of the Council was to proceed with the schedule and the meeting date of May 30, 1995. Tho Council convened into the Regular Meeting on Tuesday, May 16, 1995 at 7:00 p.m. in the Council Chambers. PRESENT: Mayor Castleberry; Council Members Biles, Chew, Cott, Krueger, and Miller. ABSENT: Mayor Pro Tam Brock l. Pledge of Allegiance The Council and members of the audience recited the Pledge of Allegiance. Mayor Castleberry presented a proclamation for Safe Boating Week. 2. The Council considered approval of the minutes of March March 18, March 25, and May 5, 1995. Miller motioned, Chew seconded to approve the minutes as presented. On roll vote, Cott "aye", Miller "aye", Chew "aye", and Mayor Castleberr,' "aye". Motion carried unanimously. Council Members Biles and Krueger did not vote as they were not on Council at the time of the meetings. 3. The Council considered approval of a resolution of appreciation for Harold Perry. The following resolution was considered: 019f City of Denton City Council Minutes May 16, 1995 Page 6 NO. RA95-013 RESOLUTION OF APPRECIATION FOR I{AROLD T. PERRY Chew motioned, Bi]es seconded to approve the resolution. On roll votg, Cot~ "aye", Miller "aye", Krueger "aye", Chew "aye", Biles "aye", and Mayor Camtleberry "aye". Motion carried unanimously. 4. Citizen Report A. The Council received a presentation on a "Kid's Guide to North Lakes Park" completed by Strlckland Middle School Team 8-3. Zen Austin, Strickland Middle School, stated that the Guide was written by students from strickiand Middle School for use by children at the North Lakes Park. The project had received second place in State competition for Junior/middle schools. 5. Citizen Requests A. The Council considered an extension to the noise ordinance exception granted to Brown and Root to conduct construction work to occur at Teasiey Lane and 135E until 12:00 midnight from May 30, 1995 - December 31, 1995. Veronica Rolen, Admittistrative Assistant, stated that on October 4, 1994 the City Council approved a special permit to Brown and Root for construction activity which included the pouring and sawing of concrete in conjunction with the Teasle¥ Lane construction project. The permit expel'ed on May. 30, 1995 and the work was not completed. Brown and Root was requesting an extension of the permit until the end of the year. Krueger motioned, Chew seconded to approve the extension. On roll vote, cott "aye", Miller "aye", Krueger "aye", Chew "aye", Biles "aye", and Mayor Castleberry "aye". Motion carried unanimously. B. The Council considered an exception to the noise ordinance on June 16th and 17th until 12:00 mSdnight for the Juneteenth celebration at Fred Moore Park. Veronica Rolen, Administrative Assistant, stated that the Juneteenth Celebration Committee had requested the exception. In recent years the festivities had been successful. The staff at the MLK Center had worked with the Committee and anticipated another successful celebration. Events were scheduled until 11:00 p.m. but the Committee was requesting the exception until midnight to remove equipment and supplies. The Parks Department had extended the park hours until midnight to accommodate the activities. Chew motioned, Biles seconded to approve tbs exception. On roll vote, Cott "aye", Miller "aye", Krueger "aye", Chew "aye", Biles "aye", and Mayor Castleberry "aye". Motion carried unanimously. 0199 City of Denton City Council Minutes May 16, 1995 Page 7 6. Public Hearings A. The Council held a public hearing end considered adoption of an ordinance to rezone 3.753 acres from the Single Family 7 (SF-?) zoning district to the Commercial (C) zoning district on property located on the south side of [-35E, approximately 250 feet south of Llndse¥ Street. (The Planninq and Zoning Commission did not recommend approval with a 2-3 vote on a motion to approve.) Frank Robbine, Director for Planning and Development, stated that this was a request to rezone the property from Single Family-7 to Commercial. Council had received a written request from the applicant to postpone consideration in order to amend the petition and consult the neighborhood with those amendments. Chew motioned, Biles seconded to postpone consideration. Biles indicated that his second included the fact that the full Council was not present to hear the case plus consideration of the request of the applicant. Council Member Cott felt that this was another in a long list of attempts by the applicant to get his way to put a building in a location where it did not belong. This neighborhood had not been treated fairly. There was inconsistent record keeping with this zoning from the early 1960's. Council Member Miller stated that delays were often frustrating. It had been the Council's practice to honor requests of postponement from petitioners. This vas done to hear all the facts before a decision was mad~ on a difficult zoning case. The request for postponement was asked in order to have more discussion with the neighborhood. He felt the request was appropriate and was in favor of the request. On roll vote to postpone consideration, Cott "nay", Miller "aye", Krueger "aye", Chew "aye", Biles "aye", and Mayor Castleberry "aye". Motion carried with a 5-1 vote. B. The Council held a public hearing and considered adoption of an ordinance to rezone 4.508 acres from the Single Family 7 (SF- 7) zoning district to the Multi-Family 1 Conditiohed (MF-%(C)) zon2ng district on property located on the east side of Ruddell Street, approximately 1,000 feet south of University Drive East. (The Planning and Zoning Commission recommended approval 5-0). Frank Robbins, Director for Planning and Development, stated that the zoninc was ~or .multifamlly - 1 in which there was existing apartments built on it. The applicant had proposed to build a buildings. One condition of the proposed zoning was that the total number of units south of the existing buildings would not house more than 24 multifamily units. The Mayor opened the public hearing. 019h city of Denton City Council Minutes May 16, 1995 Page 8 No one spoke in favor. No one spoke in opposition. The Mayor clo~ed the public hearing. Council Member Biles asked about the proposed parking lot. Robbins stated that the first development south of the existing complex would be a parking lot for the existing complsx. At a later dat~, additional apartments would be constructed. The following ordinance wa~ considered: NO. 95-100 "' XN ORDINANCE OF THE cITY OF DENTON, TEXAS, PROVIDING YOR A cHANGE FRON THE SINGLE FAHIL¥ (SF-7) ZONING C~SSIFICATION ~D USE OESIGNATION TO THE ~ULTI-F~ILY CONDITIONED (MF-I(C)) Z~NING DISTRI~ C~SIFICATION ~D USE DESIGNATION FOR 4.508 A~ OF ~ND ~CAT~ ON ~Z ~ST OF RUDDELL ~E~, APPROXX~TELY 1,000 FE~ ~O~ OF UNXV~SXTY DRIVE ~S'F, ~D MORE p~I~RLY DESCRIBED IN EXHIBIT 1, A~A~ED MER~O AND XNCOR~TED BY REF~ENCE HEREIN; PROVIDING FOR A p~ALTY IN ~E ~I~ ~OUNT OF $2,000.00 FOR VIO~TIONS ~EOF; AND PROVIDING FOR EFFE~!VE DATE. Miller motioned, Biles seconded to adopt the Ordinance. On roll vote, Cott "aye", Miller "aye", K~eger "aye", ~ew "aye", Biles "aye", and Mayor Castle~rry "aye". Motion carried unanimously. C. The Council held a public hearing to consider rezo~lnq 4.272! acres from the Agricultural (A) zoninq district to the Llqht Industrial Conditional (LX(C)) zoning district on property l~ated on the south side of 1-35E, approximately 3,200 feet north of State School Road. (The Planning and Zoning Co~iSsion recc~nded approval 5-0). Mayor Castle~rry stated that the applicant requested that this item ~ pulled from consideration. This ~ould apply to Item 6C., 6Cl. and 6C2. 1. ~e Council considered approval of a resolution amending Appendix A of the Dento~ Development Pla~ by cham~l~ the boundaries for Intensity Areas 77 and 78 defined therei~ conformity with the map attached hereto and incorporated herel~ Exhibit 1, by extending the ~ndary of intensity area 78 along the south side of X-35E to State School Road, and reducinq Intensity Area 77 correspondingly to acco~ate the expansion; a~d amending the concept map of the ~nton Development Plan to confo~ there~ith. (The Planninq and Zoning Co~ission approval 5-0). 019i city of Denton City Council Minutes May 16, 1995 Page 9 This item was not considered as the applicant requested that it be pulled from consideration. 2. The Council considered adoption of an ordinance rezoning 4.2721 acres from the Agricultural (A) zoning district to the Light Industrial Conditional (LI(C)) zoning district on property located on the south side of 1-35E, appro, imately 3,200 feet north of State School Road. This item was not considered as the applicant requested that it be pulled from consideration. 7. Tax Refunds City Manager Marrell stated that these items were normally on the Consent Agenda but as there were no bids to consider, they were placed as a regular agenda item. Item 7A was a refund of a double payment and Item 7B was a refund based on a lower assessed value established by the Appraisal District. A. The Council considered app£oval of a tax refund to Texas Commerce Bank for $1,792.95. B. The Council considered approval of a tax refund to IBM Credit Corporation for $649.54. Cott motioned, Krueger seconded to approve Items 7A and 7B. On roll vote, Cott "aye", Miller "aye", Krueger "aye", Chew "aye", Biles "aye", and Mayor Castleberry "aye". Motion carried unanimously. 8. Ordinances A. The Council considered adoption of an ordinance authorizing the City Manage:: to execute all documents and agreements, as required, to obtain funding for the 1995 Summer Food Service Program. Janet Simpson, Superintendent of Leisure Services, stated that this would be the fourth year for this program. This program was an extension of the free lunch program which was offered through the DISD. Council Member Biles asked if there were to be funding cuts in the program, would the City be responsible for funding any part of the program. simpson replied no that the program had been approved for this current year and the funds were available. The following ordinance was considered: 019j city ¢'f Denton City Council Minutes May 16, 1995 Page 10 NO. 95-101 AN ORDINANCE OF THE CITY OF DENTON, TEXAS, AUTHORIZING THE CITY MANAGER TO EXECUTE ALL DOCUMENTS AND AGREEMENTS, AS REQUIRED, TO OBTAIN FUNDING FOR THE 1995 SUMMER FOOD SERVICE PROGRAM; AUTHORIZING THE EXPENDITURE OF FUNDS TO ADMINISTER THE PROGRAM; AND PROVIDING AN EFFECTIVE DATE. Chew motioned, Krueger seconded to adopt the ordinance. On roll vote, Cott "aye", Miller "aye", Krueger "aye", Chew "aye", Biles "aye", and Mayor Castleberry "aye". Motion carried unanimously. B. The Council considered adoption of an ordinance authorizing the Mayor to execute Amendment Number Two to the agreement with the City of Denton and HDR Engineering, Inc. for professional engineering services for the sanitary landfill initial site development. (The Public Utilities Board recommended approval.) Howard Martin, Director for Environmental Services, stated that on June 15, 1993 the city entered into an agreement with MDR for engineering services for Subtitle D modifications and for design and engineering of the new landfill site. The original contract was scheduled for six phases with only Phase Two and Three identified with funding. Since that time, Phases One and Two were completed and Phase Three was in progress. The Subtitle D modifications had been completed and in doing so, there were a number of activities which were required per regulatory review which were outside the original scope of services. In addition to that, the solid waste master plan was completed. As a result of those activities, there was an additional $12,000 in Phase One which was not originally in the HDR scope of services. In Phase Two, there was $8,185 over the original contract estimates for the various services and tasks identified and $32,485 for services outside the scope of the original contract. In Phase Three, $27,500 worth of geotechnical services was moved to a consultant for Emcon Baker-Shiflett and out of the MDR contract. The original contract was for 12.months of services for Phase Three. Another $19,150 was n~ede~' for project administration and management. The total amendment was for $44,320 which would increase the contract to $628,345. city Manager Martell stated that in dealing with the permitting process for the new landfill, city governments were traditionally very involved with State regulators. The State had asked for additional information as it went through the permitting process and was a factor which the City had to comply with. If the City wanted to received the permit, it had to provide the additional information. Martin stated that another complicating factor was that this project was started prior to the implementation of the Subtitle D regulations. It was not known at that time exactly how the Subtitle D regulations would be interpreted. There were extensive 019k city of Denton City Council Minutes May 16, 1995 Page 11 requirements which the City was forced to comply with. As the City continued to work through the process, he would expect to see additional services required by the regulatory agency. The City Council had approved the submission of an application and staff was working though issues with TNRCC regarding thg.boring plan. Once those were worked out, the permit would be submitted. Mike Bucek stated that the ordinance indicated the contract figure would be $~.32/695 but the staff report indicated $628,345. Martin replied that there was an error in figures in the ordinance and that the figure should be $628,345. Council Member Cott felt that on~ of the keys to the situation was to market some of the refuse such as paper and plastic. Martin replied that as it related to the Master Plan in this contract, the purpose of the $12,000 expenditure was to develop costs associated with the various alternatives which the Committee looked at. Council Member Cott asked if the City was at a point where it could interphase sales and marketing in order to receive the money from the general public rather than from the citizens. If the City was going to market cardboard, it probably needed an expert in that area to market those products. He recommended that the city look externally for such expertise. Council Member Krueger asked if the City was overloading the contract for HDR or did the contractor make a bad deal. Was the amount of increase due to items the City asked HDR to do which were not in the original contract. Martin replied that they were items which the City asked HDR to do for the City based on the input from the TNRCC. The TNRCC continued to request more and more information regarding the permit. The regulatory agency needed more information and the City had to ask the consultant to do the work for that information. Council Member Krueger asked if that were true for each phase. This was work which was not part of the original contract. Martin replied correct. The only part of the amendment which was a cost overrun of tasks identified in the contract was $8,185. Council Member Krueger stated that the $8,000 was not in the original contract. Martin replied that the cost of man hours to provid~ thos~ activities were not accurately identified in the original contract. Council Member Krueger asked who incorrectly identified those hours. 0191 City of Denton City Council Minutes May 16, 1995 Page 12 Martin replied that this was a contract which was bid by several engineering firms and was awarded to HDR. The man hours for each task was negotiated with the firm but were underestimated. council Member Krueger stated that staff estimated that there would be "x" number of man hours for the project and in reality it took "x+" man hours. The Company bid on "x" hours. Martin stated that staff recognized in the contract that these were estimated man hours and could be more or less depending on the requirements of the regulatory agency. Council Member Krueger stated that this was a bid project in which the company bid "x" man hours. They went over that amount of hours. If the company had gone under the estimate, would the city have received any money back. Martin stated that if the City had been forced to bid under those circumstances, the contract would have been much larger. The intent was to minimize the cost but if tho company had been forced to bid on a project with no clear scope on the parameters of the project, the City would pay a penalty in the end for those services. The contract was negotiated from the standpoint of estimated hours. Council Member Krueger asked if that was worded such in the contract. If not, it needed to be so in the future. He asked if HRD was the low bid for the project. Martin stated that a professional services contract was not bid by cost. A company was chosen on qualifications for professional services and then the price for the various activities was negotiated. city Manager Harrell stated that in regards to professional services, State law indicated that the City had to solicit expressions of interest from firms for a task. Based on the qualifications for d¢ing the work, a tentative decision was made on which firm to recommend. Once that decision was made, discussion centered on the fee for services described. If during those negotiations,' a fair fee schedule was negotiated, the contract would be awarded. If the negotiations did not work out, the City would then proceed to the second most qualified firm. Martin stated that the original contract categories and fees were preliminary estimates and the contract was clearly negotiated that this was an estimate of costs and fees. Council Member Biles asked if the scope of work was not clearly defined because the City did not go far enough in determining the scope or was this an after the fact occurrence resulting from the TNRCC needing more information. 019m City of Denton City Council Minutes May 16, 1995 Page 13 Martin replied that it was a result of the TNRCC needing more information. The contract was negotiated before Subtitle D rules and regu%ation were in place. The City had to start on the proposal and after almost a year, the regulations were presented. The final regulations, in some cases, did not resemble the proposed regulations. There was also the issue of how the regulations would be interpreted by the State agency. All of those situations affected the scope of work. The following ordinance was considered: NO. 95-102 AN ORDINANCE AUTHORIZING THE MAYOR TO EXECUTE AMENDMENT NUMBER TWO TO THE AGREEMENT WITH TME CITY OF DENTON AND HDR ENGINEERING, INC. FOR PROFESSIONAL ENGINEERING SERVICES FOR THE SANITARY LANDFILL INITIAL SITE DEVELOPMENT; AND PROVIDING FOR AN EFFECTIVE DATE. Miller motioned, Biles seconded to adopt the ordinance with the corrected figures. On roll vote, Cott "aye", Miller "aye", Kruegcr "aye", Chew "aye", Biles "aye", and Mayor Castleberry "aye". Motion carried unanimously. 9. Vision Update No report was given. 10. Miscellaneous matters from the City Manager. The Council returned to the Work Session Items, ' 3. The Council discussed and considered issues for the council annual planning session including facilitator, place and date and gave staff direction. City Manager Harrell stated that this meeting usually took place on a Friday and Saturday during early June. Because of the runoff election, the session this year would have to wait until mid-June. In order for staff to make arrangements for a location and a facilitator, staff needed suggestions from the Council. Each year the Council decided to hold the event outside the City to limit the number of interruptions during the meeting. This was an opportunity for Council to get better acquainted and form a working group which would be needed to conduct City business. The Friday session generally had staff presenting major issues which might need general direction. The Saturday session worked with an outside facilitator who worked with the Council, City Manager, and City Attorney to discuss Council goals and priorities and a basic direction for the next year. After discussion, the consensus of the Council was to hold the sessions on July 21-22. 019n City of Denton City Council Minutes May 16, 1995 Page 14 Mayor Castleberry asked about Council preference for a location. Council Member Chew suggested a location outside the City. Council Member Biles stated that he would prefer to spend the dollars in the City and to include a night at a local hotel. Mayor Castleberry indicated that staff would explore all hotels for dates including room rates for the next agenda. City Manager Harrell indicated that the city had used Bob Saunders in the past as a facilitator. Consensus of the Council was to proceed with Bob Saunders. 4. The Council received a report, held a discussion and gave staff direction regarding a proposed amendment to the TMPA Power Sales Contract. City Manager Harrell stated that the City was a member of the Texas Municipal Power Authority which was an Authority formed by Denton, Garland, Bryan and Greenville. The Authority was to provide power for each of those four cities. The context in which the Agency was formed was set in the early 1980's with Federal regulations indicating that no additional power could be produced by using natural gas. All four cities were relying on natural gas and were thus faced with having to go with an alternative fuel. The cities Joined together to build a power plant using lignite coal on the site. TMPA was formed, debt issued and a lignite power plant built near Bryan. It came on line.in 1986 and generated 65% of Denton's power. In that arrangement, a power sales contact was negotiated and entered into among the four cities. That contract stated the obligations of the four parties to the contract and gave assurance to the bond buyers that the four cities stood behind the bonds. One provision in the contract which was to gain favorable review of bond rating agencies dealt with a full requirements provision. In its present form, the power sales contract, with very limited exceptions, required the four cities to look to TMPA to provide any additional power needs and were prevented from taking any independent action to provide for additional power. The only place to go for additional power was through TMPA. In order for the cities to be released from that provision TMPA had to offer a project and the cities decline the ~roJect. Once the cities declined a project, they would be fre~ to look for other options. Since. 1986, no project had been offered. The four cities talked with TMPA regarding an amendment to the contract to allow flexibility for the cities to take action which would be in their best interest. The Agency was not responsive to such a proposal. A yea~ ago, the TMPA cities listed major expectations for TMPA including major decline in product, on costs which would result in a move away from lignite and toward~ western coal. Another demand was to amend the contract to allow flexibility for the cities. The TMPA staff, bond counsel and the cit) managers went to the bond rating agencies and insurance companies to explain what the cities 019o city of Denton City Council Minutes May 16, 1995 Page 15 were planning to do. One problem area from that meeting dealt with two specific articles of the power sales contract. Article 7 was the procedure used in setting the yearly costs the cities had to pay to retire the debt and pay the operations from the power plant. Article 9 provided if something happened to the plant, the four cities were still responsible to pay off the debt in accordance with a net energy for load formula. Article 9 could not De amended while Article 7 was set by Board action and over the years had been adjusted from time to time. The bond holders indicated that the cities had to indicate how Gibbons Creek One would be paid for. The cities had been trying to determine a percentage to put in the contract. The Planning and Operating Committee recommended to the Board and the Board adopted a percentage of allocation of costs for each city. Greenville - 9%, Bryan - 22%, Denton - 22% and Garland - 47%. At the time that was done, Greenville.was in a difficult financial situation. This figure was adopted knowing that the figure could be reviewed each year and changed each year if needed. The bond holder~, i~dicated that the cities had to lock into a percentage an~ not change the percentage until the bonds were paid off. If the net energy for load formula was used, Greenville would pay 11.05%, Bryan would pay 20.74%, Denton would pay 21.22%, and Garland would pay 46.99%. On two occasions it was thought that a compromise had been worked out with Greenville. Following the first compromise agreement, there was a decision by Greenville not to accept the agreement which was a compromise between the current percentage and the net energy for load formula and required Greenville to pay 9.9%. At that point, the other cities indicated that if Greenville insisted not coming up from 9.5%, the cities would be forced to have the Planning and Operating Committee recommend to the TMPA Board at the next meeting that the annual percentage for the cities be amended to reflect the net energy for load formula. Greenville would then be paying 11.05%. The Planning and Operating Committee voted 3-1 to recommend to the Board to go to the net energy to load formula. At that point, the Mayor of Greenville wanted another meeting with the other cities regarding the percentage. The cities negotiated another agreement but within the last few days Greenville expressed concerns about the amendment. Specifically Greenville felt that the city managers should not be selecting the outside consulting firm but that it should be done by TMPA. At the June 8th TMPA Board meeting, the Planning and Operating Committee would present the recommendation that Article 7 be amended to the net energy for load formula. There was a provision in the power sales contract that if any city felt that this was an unfair allocation, an outside third party would review the recommended rates before final action. Greenville had indicated that they would do that option. That meant the issue of flexibility of the power sales agreement would have to wait until this issue was resolved. The difference to Denton in the formula meant approximately $1.5 million per year. The three other cities were together with Greenville standing alone in its proposal. Council Member Cott asked if an investment banker had looked at the business. O19p City of Denton City Council Minutes May 16, 1995 Page 16 City Manager Narrell stated that a number of investment bankers such as First Southwest were involved in the process. Council Member Cott asked if more cities could be brought into the process. City Manager Merrell stated that State law would have to be amended to do that and no one would buy into the project as it would not make sense. Council Member Biles stated that Greenville was looking at million plus in costs. City Manager Harrell replied correct. There had been much sympathy for Greenville's situation and was a reason why the other cities were willing to make compromises along the way. Greenville had forced the other cities to press ahead due to their position on the issue. If the four city utility directors were asked what was a fair allocation, they would indicate a net energy to load formula. Council Member Biles asked for a timetable for these events. City Manger Harrell stated that at the June TMPA Board meeting, it was expected that Greenville would object to the allocation. There would be nothing done for another six months. 11. There was no official action taken on Closed Meeting items discussed during the Work Session Closed Meeting. 12. New Business The following items of New Business were suggested by Council Members for future agendas: A. Council Member Miller requested a summary regarding the road and highway projects in the area which would be funded by Texas and the Federal government. B. Council Member Miller stated that the new road signs on Corbin Road were very good. C. Council Member Miller asked for the Airport to be included in the planning session discussions. D. Council Member Biles asked for information regarding the Lalor tax and contracts with the various organizations. 13. The Council did not meet in closed Meeting during the Regular Session. With no further business, the meeting was adjourned 8~55 p.m. 'fl ~LTERS S~CRETARY OF BENTON ACC0027A