Minutes April 23, 1996CITY OF DENTON CITY COUNCIL MINUTES
April 23, 1996
339
The Council attended a dedicationceremony on Tuesday, April 23,
1996 at 4:00 p.m. at the South Lakes Park located at 401 Hobson
Lane, Denton, Texas.
The Council convened into a Work Session on Tuesday, April 23, 1996
at 5:15 p.m. in the City Council Chambers of city Hall.
PRESENT: Mayor Castleberry; Council Members Brock, Miller and
Young.
ABSENT: Mayor Pro Tem Biles; Council Members Cott and Krueger
1. The Council received a report, held a discussion and gave
staff direction on the development of a Redbud Tree Trail and a
program to encourage the planting of trees.
John Cooper, Chair-Tree Board, stated that the Tree Board was
requesting that the Council adopt a formal policy to recommend
trees which are adapted to Denton and in particular the redbud tree
as Denton had been designated as the "Redbud Capital of Texas".
Mayor Pro Tem Biles joined the meeting.
Cooper stated that Council would be asked to approve a coverage
map, approve a Releaf Denton Program which would feature redbuds
and accept a recommendation which would encourage developers to
incorporate redbuds in landscaping either as a requirement or a
volunteer program.
Council Members Krueger and Cott joined the meeting.
Cooper continued that a map had been prepared to determine the best
places to plant redbuds. The Tree Board would like to make contact
with the owners of these properties to see if they would be willing
to plant redbuds and to take care of the trees. It was felt that
this would enhance Denton as the Redbud capital of Texas. Redbuds
had a long life and were quite attractive in landscaping.
Council Member Young stated that he was in favor of the program but
that there not many streets in his district. He named a list of
streets which might be considered in his district.
Council Member Brock stated that these trees would not be provided
by the Tree Board but would be a program for private owners to
plant these trees.
Cooper replied correct that this would be an on-going coverage map
due to the limited resources for some of the public sites.
Mayor Pro Tem Biles asked about the impact of this program on the
budget.
Cooper replied that there would be no impact on the City's budget.
He would be willing to provide his time to keep the project moving.
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April 23, 1996
Page 2
Mayor Pro Tem Biles asked how the trees for public areas would be
funded.
Cooper stated that the Tree Board was notasking for funds from the
City to plant these trees. The residents would only plant the
trees as they could afford the purchasing of the trees. There would
be volunteers to help with the planting. It was hoped to receive
private donations from the property owners.
Council Member Miller asked about the size of the trees, where the
trees could be purchased and the cost of the trees.
Cooper stated that the residents could purchase the trees from any
local nursery. There was no particular location to purchase the
trees. The market would set the price and size of the trees.
Acting city Manager Svehla stated that Keep Denton Beautiful and
the Tree Board would sponsor the program. The city would only be
involved in the maintenance on public grounds and certain
maintenance areas already receiving such care.
Young motioned, Brock seconded to approve the program. On roll
vote, Miller "aye", Young "aye", Cott "aye", Krueger "aye", Brock
"aye", Biles "aye", and Mayor Castleberry "aye". Motion carried
unanimously.
2. The Council received a briefing on the status of the city Hall
Renovation Project.
Betty McKean, Executive Director for Municipal Services/Economic
Development, stated that an inventory and assessment had been
completed on the City Hall building as well as a completion of the
program and concept part of the project and were ready to begin the
design detail part of the project. Council authorized staff to
move ahead during the budget process. Objectives for the renovation
were to bring the building up to compliance with ADA, safety
accessibility and City codes. Another objective was to improve
public access to elected officials and to preserve the integrity of
design.
Brent Byers, Corrigan and Associates, reviewed the proposed basic
plan~ fo~ the location of offices in City Hall. One of the more
significant changes was the relocation of Council offices frcm the
lower level to the ground level.
Council Member Young expressed a desire to have the subcontractors
be from Denton and Denton County with minority contractors working
on th~ project aB much as possible.
Council Member Cott asked how long the renovated building would
work.
City of Denton City Council Minutes
April 23, 1996
Page 3
Byers stated that in the future most public functions would be
moved out of the building. This would make City Hall an internal
building with very little public use. It was estimated that the
space would be adequate through the year 2000. Beyond 2010 it
would be difficult to predict as the size of the administration of
the city would not be known. For example, the size of the Council
could change and then the Council Chambers would not be adequate.
3. The Council received a report and held a discussion regarding
the status of the electric industry in Texas.
Bob Nelson, Executive Director for Utilities, stated that the
consultant wanted to present this item to Council several weeks
ago, but became ill and could not be present. The consultant was
present tonight to give the Council an update.
Rick Covenington, Resource Management International, Inc., stated
that the electric industry was changing due to several pieces of
legislation. Those changes included the deregulation of the
electric industry (P.U.R.A. 1995); Project 14045 which dealt with
transmission access and pricing; Project 15000 which dealt with
electric industry restricting; Project 15001 which dealt with a
stranded cost report; Project 15002 which dealt with the scope of
a competition report; plus the fact that transmission was opening
the door to the competitive market with wholesale and retail
customers shopping for power. Other changes included new
technology and low gas prices which combined to form competitive
alternatives; combined cycle with installed costs of $400-$450 per
kW; heat rates which improved to under 8000 BTU per kWh for a
combined cycle; and average cost for electricity at approximately
$.03 per kWh (excluding transmission). Stranded costs were those
costs incurred by utilities under the regulatory framework which
would be left stranded as customers moved to lower cost sources of
power. Regulators wanted to allow these low cost alternatives to
drive down prices while protecting the financial stability of
utilities. Historically the electric industry had a regulatory
obligation to serve and was built to serve a load with the
expectation of recovering prudent costsPlus earn a reasonable rate
of return. The process dealing with stranded costs included the
filing of a report by the Public Utilities Commission on stranded
costs with the 1997 legislature and the Commission estimating
stranded costs for that report which would progress to the
technical details of quantifying and recovery of stranded costs for
implementation. There were three basic positions dealing with the
issue of stranded costs which included those who wanted to maximize
stranded costs and thus protect utilities; those who acknowledged
stranded costs, but who wanted to mitigate the impact, not stifle
competition; and those who ~laim~d there were no stranded cos%s and
which should be allowed only in emergencies. The Commission
acknowledged that there were stranded costs, wanted to mitigate the
problem, but also wanted to protect utilities. Four approaches
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April 23, 1996
Page 4
were viewed in quantifying stranded costs. The first was the lost
revenue approach which was originally meant to be applied as an
exit charge and was based on net revenues of existing customers
over time. The second was the asset by asset approach in which a
charge to all customers would bring the generation costs to market
level. This approach would also compare market value to net book
value of assets but determining market value was a problem with
comparable sales, spin off of assets, and income approach. The
third used a discounted cash flow approach and lost revenue
approach which were the same if it included all assets and if they
included all customers. The fourth proposed approach by Houston
Power and Light was to take the total cost of service and back out
wire costs to get the generation related embedded cost per kwh,
compare this to the market price per kwh, and then the lost
revenues would equal the net costs per kwh sales. Issues with
stranded costs included (1) including all generation related assets
such as fuel contracts, regulatory assets, decommissioning costs,
and purchased power; (2) including all assets both economic and
uneconomic; (3) estimating market price under competition which
would include the short run Houston Power and Light for $.02 in
which reliability and stability would not be a factor in the spot
market, using existing contracts and in the long run, a tendency
towards a replacement cost of $.03 to $.035 cents; (4) including
the growth of the system to meet the load; (5) escalating rates;
(5) mitigating factors which included increased value of
transmission and distribution and increased productivity; (6)
setting the rate of return for discounted cash flow which was set
by staff at 10% and which the cities were attempting to lower; and
(7) the biggest assumption was that all customers could leave the
driving costs for all ratepayers to market based costs. There were
several issues associated with stranded costs and TMPA cities. The
interests for TMPA and the cities were one and the same as the TMPA
debt was the debt for the cities. Each $.02 of uneconomic
production cost could equal approximately $26 million per year in
lost revenues. This would result in an uneconomic asset estimate
of $500 million to $1 billion. The annual TMPA debt service
increased by 1.7 cents per kWh over the payback period and TMPA
rates were expected to increase from 5.1 cents to 7.8 cents by the
year 2004. There might be additional stranded costs associated
with each cities own generation. When dealing with protecting
TMPA, a question was which customers could leave. The primary
cities had revenues pledged to the TMPA bonds, and %he whole~ale
cities of Bowie, Farmersville and Bridgeport would have to examine
what their contracts said with respect to termination. As
competition decreased the cost of services, it would be necessary
for TMPA to stay competitive but rates would go up because the TMPA
debt was heavy ended. The debt payments were higher near the end
of the schedule and thus it was not possible to decrease payments.
Possible strategies associated with stranded costs included (1)
including all generation related assets in the stranded costs; (2)
charging customers an exit fee; (3) the higher the stranded costs,
City of Denton city Council Minutes
April 23, 1996
Page 5
the more incentive for customers to stay; (4) possible backfire of
strategy if electric costs were too high and industry was forced to
relocate or shift production to areas where plants were able to
purchase at market costs; (5) not making~a general assessment to
all system ratepayers as it would increase rates and make rates
even more uncompetitive; (6) accelerated depreciation of assets
could force a decrease in general fund transfers; (7) losing load
would hinder economic development, and (8) although TMPA could be
protected through stranded cost recovery, a city tax base could be
affected if electric rates were too high, causing a loss of
customers. A possible strategy involved planning ahead by
reviewing the fuel contract in view of coal versus gas costs which
could make TMPA more competitive if gas prices increased relative
to coal. Cities could reduce costs in other areas to survive an
adjustment period to market pricing. The sale of TMPA assets might
be another option to consider. There was a need to consider the
effects of stranded costs on city budgets as there would be
pressure to reduce general fund transfers. Suggested actions on
statewide issues included (1) an additional analysis to estimate
the full stranded costs for cities such as the estimate of
competition, market clearing prices, and the forecast of generation
costs for each city; (2) evaluate systemwide vs. Statewide costs;
(3) stay involved at the Public Utilities Commission and seek to
protect the City's interest even though the Public Utilities
Commission did not have jurisdiction, it would impact the cities
and therefore must be a player; (4) get involved at the legislative
level as that was where the decisions were made and the retail
competition would be the next hot issue. Actions to consider on
the local utility level were to reduce operating costs by
reengineering operations and aggressive fuel procurement; control
capital expenditures by solid benefit/cost analysis and evaluating
the financing structure; improving customer services by knowing
customer needs and tailoring services to specific customers; and
adopting a competitive business culture by introducing new
attitudes and removing attitudes that would not change.
4. The Council received a report, held a discussion and gave
staff direction regarding a proposed change in the ordinance
dealing with the hotel occupancy tax to address the 1995 State
legislative updates and City collection procedure changes.
Susan Croff, Internal Auditor, stated that the Audit Committee had
recommended a proposal for Council consideration to change the
hotel/motel occupancy ordinance. Section 10-101, the definition
section, was updated to reflect what was in the State regulations.
In 1993 monthly payments to the State were required and in 1995,
tax exempt individuals were no longer exempted bythe hotels/motels
but would be refunded by the lo~al gov~nm~nt~. ~h~ r~porting and
payment period changed from quarterly to monthly and provided
criteria to allow smaller hotels/motels to continue to report on a
quarterly basis. Section 10-102 had an added section which
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Page 6
included banquet halls in what could be taxed through the
hotel/motel tax. Section B was changed to reflect that the only
exempt individuals were permanent residents or those with an exempt
card. Section 10-103 deleted the one percent administrative fee as
the hotels/motels had never taken this one percent. Section 10-104
redefined the payment period to monthly payments instead of
quarterly payments. Section 10-109 added that the revenue from the
tax had to be expended according to Chapter 351. Section 4 added
language that in the case where there might be a conflict between
the State law and the city ordinance, State law would prevail.
Council Member Brock asked if there was an anticipation of extra
staff work with the refunding to exempt individuals.
Croff stated that it would be difficult to say at this point in
time. There would be additional work as the Comptroller indicated
that the agencies of the State would have to ask for refunds on a
quarterly basis. The city would have to go through those refunds,
determine whether they were proper after the information was
submitted on whether or not to pay the refund.
Consensus of the Council was to return with an ordinance for formal
consideration.
5. The Council received a report, held a discussion and gave
staff direction regarding the adoption of a resolution creating an
at-will employment policy for the City of Denton.
city Attorney Prouty stated that staff had been working for a
number of months on a policy which would change the City from a
for-cause city to an at-will city. An outside attorney had been
used for consultation. Texas was an at-will state with exceptions
to at-will being civil Service employees and collective bargaining
employees. Some city charters, ordinances or personnel rules might
require that employees may be terminated only for cause. Denton's
charter did not require that. In 1988, the personnel policy was
changed to more of a for-cause policy. The personnel policy
created a for-cause employment with the current disciplinary causes
being very broad. They were categorized under two broad areas.
One was improper performance of duties and the other was personal
conduct. Although there were specific causes which were listed
under those two broad areas, there were also some very general
clauses such as insubordination, engaging in unbecoming conduc~ and
a number of others for which an employee could be removed. The
current policy included a progressive discipline policy in which an
employee was worked through a series of discipline steps. There was
an elaborate notice and hearing process in the current policy.
There was also a Charter process which indicated that if the city
Manager removed any officer or head of a department, after six
months service, the employee had the right to receive notice in
writing of the reasons why the City Manager was removing him and
City of Denton City Council Minutes
April 23, 1996
Page 7
also could demand a public hearing before the City Council. It did
not mean that the city Council could overturn the city Manager's
decision as another section of the Charter indicated that the City
Manager would have complete control over the appointment of
officers and employees under him and their removal. The Council
could not interfere with that. Under the law, cities retained the
right to change personnel policies without any time limit.
Personnel policies, under the law, were defined as changeable. One
way to transition to at-will would be through disclaimers. These
were notifications to employees that nothing in the personnel
policy would create a contractual relationship or a for-cause
relationship. Under the new at-will policy, the City Manager would
be directed to modify all personnel policies to implement an at-
will policy within six months of the effective date of the
resolution. The policy would cover all employees except civil
Service employees and employees under contract such as the City
Manager, the City Attorney and the Municipal Judge. The policy
would be effective immediately as to new employees and would be
effective within six months for current employees. Within that six
moth period, the city Manager could terminate any employee without
cause. The City Manger still had the right to terminate any
employee for cause and the causes, under the current personnel
policy and the new at-will policy, were very broad. The City
Manager could offer employees terminated without cause the option
to remain in the position for a period not to exceed six months or,
at the employee's option, offer a severance package not to exceed
180 days of salary. The City Manager may offer incumbents and new
hires, at the director level and above, written contracts. It was
not felt that the at-will policy varied much from the current
policy. There would be a disclaimer declaring that Denton was an
at-will city. The supervisors were encouraged to continue to
discipline employees for the causes listed which were basically the
same causes as before. The only difference was that the causes
were not exclusive and the supervisor was not limited to those
causes. The supervisor could discipline an employee for any other
cause or without cause. The progressive disciplinary policy was
preserved but the supervisor was not prevented from taking
appropriate action and skipping over some of the steps when
severity warranted which was already in the current policy. The
progressive disciplinary policy was a guideline and was not
exhaustive or exclusive. The notice and hearing process was
preserved. The main step which was eliminated was the right of
cross examination. This made the process less confrontational and
allowed the process to work more smoothly and quickly. Department
heads and officers had the option to use the notice and hearing
process under at-will or could use the Charter provision. There
were exceptions to at-will which would still be in place and
included a~ discrimination, the Americans with Disabilities Act,
Civil Rights Act of 1991, the Family Medical Leave Act, the Fair
Labor Standards Act, the Equal Pay Act, and the Whistleblowers Act.
The intention was to operate not much differently under the new
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April 23, 1996
Page 8
policy. There would be a transition from for-cause to at-will but
there would not be a dramatic change.
Acting city Manager Svehla stated that the city employees were the
city's business. The City provided service and thus it was
imperative to treat the employees fairly. That was the goal in
writing this policy. Much of the existing procedure was included
in these draft policies for Council consideration. The procedure
mirrored a great deal the current procedure as the city had a good
success rate with the current procedures. Council had been looking
at this for quite some time.
Council Member Miller stated that the new City Manager did not have
a contract but also was at-will. He had ~eceived calls about this
policy and there appeared to be a perception that the policy was
going to be greatly changed. Because of the news coverage the
perception was that considerable changes were being made but that
was not the case. There was a commitment from the management of
the city that it would continue to treat employees with respect and
would continue to follow due process. He understood that going
from the present system with-cause to at-will was indicating that
employees did not have contracts. If an employee did a job he
could expect to continue to be employed. There' were a few
employees who felt that they could do what they wanted because of
due cause. As a Council Member, he was adamant that as an employer
of people in Denton, people should be treated fairly if they did a
good job and if action were going to take place, due process would
be followed. He did have a problem in offering contracts or
employment agreements to certain segments of the employee
population. He wanted more information as to why the city would
offer contracts to some employees and not to others. He also felt
that the real issue of at-will or for-cause was not with most
employees but was with those employees who were in responsible
positions. He felt that the real change should be for those
employees who were highly paid and who were responsible for the
work of many other employees. Firing at-will was not the intent of
the policy. He felt there was a need to have an open discussion
and an agreement on what the policy meant and the impact on
employees.
Council Member Brock stated that she also knew that there were
concerns among employees regarding this proposal. In making this
shift, the City was indicating that a City job was not an
entitlement. It was not a position automatically due to the
employee. There would be similar safeguards and due process which
was currently in place and she felt it was unfortunate that there
was some perception that this was being done to give the new City
Manager a tool to terminate employees. She felt it was important
that the Council knew what was going to be adopted, that the public
and particularly the employees understood the policy.
City of Denton City Council Minutes
April 23, 1996
Page 9
Mayor Pro Tem Biles stated that this proposal would provide fine
tuning and accountability to the current policy. This was
something which the Council had been considering for almost a year.
He felt it was inappropriate and almoS~ misleading the way the
newspaper article placed this not only from the start of the
headline but also the slant of the article. This was not about a
method to get rid of employees. Periodic fine tuning was done to
personnel policies and the newspaper article was grossly blown out
of proportion. At-will provided strong protection to all employees
at all levels and would be a uniform policy for all employees.
Council determined that when the new City Manager was hired, they
would not give any special protection to him and did not give him
a contract. The integrity of the policy remained in place. Council
was trying to make the policies more accountable to the taxpayers.
This proposal created a more efficient personnel policy.
Young motioned, Biles seconded to create an at-will employment
policy for the City of Denton.
Mayor Castleberry stated that the Council had had two discussions
regarding the level of employee this would effect - director and up
or all employees.
Council Member Young stated that his motion was for all employees
which was what Mayor Pro Tem Biles agreed to with his second.
Mayor Castleberry stated that this change was not at the request of
the new City Manager. This was a Council decision which they had
had discussions on this issue for many months.
Council Member Miller asked if the motion was to recommend the
policy as presented.
Council Member Young stated that his motion was to bring back the
resolution in the agenda materials at the next meeting.
Council Member Miller questioned whether Section 3 should stay in
the resolution or be removed.
Mayor Pro Tem Biles felt that the entire resolution as prepared by
the City Attorney should be adopted without change. Section 3 was
an aid in dealing with retention and attracting key directors. The
City Manager should have that discretion to manage that particular
personnel issue. Section 3 was an important section for the policy.
Council Member Brock asked for a detail about offering contracts to
employees.
City Attorney Prouty stated that the Section dealt with severance
packages with provisions similar to the other employees appointed
by City Council. The city Manager could not make more favorable
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April 23, 1996
Page 10
terms in an employment agreement than Council could. Section 1
indicated that the policies attached to the resolution would be
fine tuned again because the City ~anager had just been given an
instruction to use those rules as a model to return with an at-will
policy. The City Manager retained the discretion to make
additional changes within the broad framework of that policy.
Within that six month period, the City Manager would be fine tuning
the policy within the guidelines attached to the resolution.
Council Member Brock stated that Section 3 indicated that the City
Manager was authorized to offer to incumbents and new hires
classified in key positions at the director level and above,
employment agreements providing for severance packages with
provisions similar to the agreements the City had with employees
directly employed by the City Council. Did employment agreement
imply a contract.
City Attorney Prouty stated that it was the same thing. The key
idea was that the City Manager had this authority but that
authority could not offer better terms than what the Council would
offer to the people it hired. The only concept was that the City
Manager would be given some authority to enter into an agreement
that provided a severance package to key employees.
Brock motioned, Miller seconded to propose an amendment to the
motion to eliminate Section 3.
Mayor Pro Tem Biles stated that by deleting Section 3, the Council
would take away from the City Manager the opportunity to attract
key employees. He was opposed to deleting Section 3.
Council Member Krueger stated that deleting Section 3 would take
money away from economic development. It would take away the
ability to promote and retain key employees. This would send the
wrong signal. Section 3 sent the message that the City wanted to
retain its directors and wanted to recruit for key positions within
the organization.
Council Member Miller stated that wording indicated was
"involuntarily terminated without cause." If an individual were
terminated with cause, the City would not have to pay him six
months pay. He did not know why the City should be different than
other organizations with at-will. Many cities attract key
employees at these levels without this type of employment
agreement. This tended to set up classes of employees. There was
a need to do at-will throughout the organization. Within that
frame work there would still be the ability to provide severance
pay.
Mayor Pro Tem Biles stated that Section 3 did not have anything to
do with the at-will employment policy. The City Manager could
City of Denton City Council Minutes
April 23, 1996
Page 11
349
offer to an employee a contract and at the end of the term of the
contract, not renew the contract. By not renewing the contract,
the employee was being told that this was the end of his
employment.
Council Member Miller felt that it had everything to do with at-
will. If the Council was not doing at-will, would it be a stand
alone policy. The city had been recruiting individuals for many
years and not have that type of policy.
On roll vote on the amendment, Miller "aye", Young "nay", Cott
"nay", Krueger "nay", Brock "aye", Biles "nay", and Mayor
Castleberry "nay". Motion failed with a 2-5 vote.
Council Member Miller asked for a summary explanation from either
the City Manager or the Director of Human Resources as to what was
the current policy and what the change would do.
Acting City Manager Svehla stated that the City would be going from
a set of rules and procedures which indicated that certain things
had to be done in a certain order to accomplish discipline. The
change would be that that could be done at- will. It was suggested
that the way to do that was to use the procedures that basically
had always been used. That was progressive discipline as a
guideline, to have procedures where an employee could present his
side of the issue, to have an appeal process and to provide a fair
and equitable basis for employees.
On roll vote of the original motion, Miller "aye", Young "aye",
Cott "aye", Krueger "aye", Brock "aye", Biles "aye", and Mayor
Castleberry "aye". Motion carried unanimously.
With no further business, the meeting was adjourned at 8:30 p.m.
J~N~IFE~WALTERS
C~Y SECRETARY
CITY OF DENTON, TEXAS
ACC00305
BOB CASTLEBERRY, MAYO~
CITY OF DENTON, TE~ ~