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Minutes August 27, 1996CITY OF DENTON CITY COUNCIL MINUTES AUgUSt 27, 1996 The Council convened into a Closed Meeting on Tuesday, AugUst 27, 1996 at 5:45 p.m. in the Civil Defense Room of City Hall. PRESENT: Mayor Miller; Mayor Pro Tem Brock; Council Members Beasley, Biles, Cott, Krueger, and Young. ABSENT: None The Council considered the following in Closed Meeting: A. Legal Matters -- Under TEX. GOV'T CODE Sec. 551.071 1. Consulted with attorney regarding status and strategies of RPS/Weber and Barnes V. City and considered mediation or settlement. 2. Considered settlement of the claim of William Cox v. City. B. Real Estate -- Under TEX. GOV'T CODE Sec. 551.072 C. Personnel/Board Appointments -- Under TEX. GOV'T CODE Sec. 551.074 The Council convened into a Special Called Meeting on Tuesday, AugUst 27, 1996 in the Council Chambers of City Hall. PRESENT: Mayor Miller; Mayor Pro Tem Brock; Council Members Beasley, Biles, Cott, Krueger, and Young. ABSENT: None 1. The Council held a public hearing regarding the adoption of the proposed 1996-97 City of Denton Annual Budget. Tom Harpool, Chair - Sales Tax AdvisoryTask Force, stated that the Advisory Committee was organized by Council in 1993 to study the possibility of a % cent sales tax increase to reduce the ad valorem tax by a corresponding amount. That was recommended to Council, Council called an election and the citizens voted in favor of the increased sales tax. The Committee had met each year to review the budget and to review of amount of reduction as provided byboth law and the wishes of the Council. The sales tax generated enough money in 1994-95 to reduce the rate by 22.2%. The Council then added 2 3/10ths%'to make the reduction 24% and rounded it to a 25% reduction. The next year there was only a 1.8% sales tax generated to reduce the tax rate. The Council reducGd the tax to 3.6% to bring the ad valorem tax rate to $.5409 which was the current rate. The sales tax revenues this year were very low and there was no reason to reduce the tax this year as far as generation of the sales tax. The Council had proposed a 1.8% reduction for this year which lowered the tax rate to $.5309. The Committee felt as though the Council was staying within the promise of the act, legislation and wishes of the citizens. 65 City of Denton City Council Minutes August 27, 1996 Page 2 Don Carney stated that he had lived in Denton for six years. He was interested in the fire fighters and police department and supported them on the budget. He used the parks and was in support of dollars for maintenance for the parks. He lived off Mills Road and felt that Mills was still too narrow for traffic. He was in favor of improved streets, drainage, parks, police and fire fighters. Bob Powell stated that as utility receipts, appraisals and the tax base was lower, so should taxes be. People were looking for smaller and less government. Don White stated that the great American dream was fading. The situation in Denton was indicating to the elderly that they could not live in Denton on a fixed income. There were many fees in the City and utility revenue was way up. The street rental fee for the second year in a row was 1% of the gross receipts for the Electric Department. The Electric Department transferred $603,000 to the General Fund as part of the street rental fee. Another $2 million was transferred for return on investment. The street rental fee was not part of the City Charter. It was a way to get more money for the Utility Department and should be kept at the current rate. Any overage in profits should be placed in a sinking fund to pay off the TMPA debt. If the taxpayers in Denton owned most of the utilities in Denton, they should enjoy some of the rewards of that ownership through lower property taxes. This was the first year that the City had the opportunity to lower not only the tax rate but also the tax that the average homeowner paid. Young motioned, Krueger motioned to allow Mr. White five additional minutes to speak. On roll vote, Beasley "nay", Brock "nay", Cott "nay", Krueger "aye", Young "aye", Biles "aye", and Mayor Miller "nay". Motion failed with a 3-4 vote. Mayor Miller allowed Mr. White an additional minute to complete. White suggested a freeze on hiring, not building a bridge at the Civic Center Park, not remodeling City Hall, and not doing the Master Plan study. That money could be used for roads and drainage. Emilio Lopez Gonzalez stated that the proposed budget had his full support. The City's population was growing greatly and he felt that those who prepared the budget had planned well for anticipated growth. He felt that the growth of the City and the economy of the City would be affected by the growth in the Hispanic population. E~en though the Hispanic community was a growing pre~ence in the economy of the City, many were receiving disappropriate services. He recommended funding Projecto Amistad as indicated in the proposed budget. This would help ensure that Hispanic residents would be incorporated into the mainstream social and economic life of the City. He felt that before the project was implemented that appropriate officials should meet with the Latino Task Force and LULAC to refine the plan. City of Denton City Council Minutes August 27, 1996 Page 3 67 Alton Donsbach stated that he was interested in the tax policy for the upcoming year. On one hand there was an indication of a tax cut and on the other hand, the voters were being asked to approve an increase in the sales tax. The first fund would be used by the Council for all citizens. The second would be for a development corporation and would be used only on certain projects. He was unsure about turning over millions of dollars to an organization which was appointed but not directly accountable to the citizens of Denton and Denton County. If more money was needed, the Council needed to do it rather than a corporation which was not accountable to the City. Ken Gold stated that the fire fighters were looking at the General Fund dollars. He presented the Council with a telephone survey done by the Fire Fighters Association which indicated that Denton, with the exception of Dallas, was the lowest paid Fire Department in the County. The fire fighters needed a pay increase to keep even with the County. He suggested the Council combine the incentive pay award program with the lump sum .funding to further increase the salary adjustment. The civilian transfer ambulance service, as proposed, conflicted with the Civil Service law. The same was true for the Incentive Pay reward program. If those programs could not be revised to comply with State law, they supported the elimination of them altogether. He supported incorporating it into the Fire Department with professional fire fighters. Council Member Young stated that the proposal was to use civilians in the program which might possibly increase the n~mher of minorities in the Department. Gold stated that adding more civilian positions would not guarantee minorities in the Department. Council Member Young asked that if this would not work, what would. Gold felt that removing the requirement of being certified prior to taking the test. Another local obstacle was the requirement of twelve college hours for consideration. Chris Coil addressed the priorities of the budget. Later in the meeting the Council would be considering a half cent sales tax election. The money received would be turned over to an organization which was not accountable to the Council or to the citizens. He was curious why the Council was supporting the increase in taxes and on other hand saying no to police, fire and parks departments. Why was the Council not supporting the essentials before supporting corporate welfare. He felt this was a serious lack of priorities. That organization was also being funded out of utility funds. He resented any money coming from that fund to this corporation. If the organization had to be funded it should come from another area of the budget. city of Denton City Council Minutes August 27, 1996 Page 4 Council Member Krueger stated that no one denied fire protection, police protection and parks in this budget. Coil replied that essential services could be better supported rather than turn money over to a body which was unaccountable to citizens. Council Member Cott stated that in Council's best judgement, the formation of the corporation was an attempt to bring more people in Denton to lower the cost of taxes in Denton. Council Member Young stated that no one was talking about cutting city services. He wanted to slow down city government and one way to do that was to put a freeze on hiring. He felt it was better to. give the employees a 3% raise on base pay than a one time increase. The cuts were not for each department but were for slowing down the increase in government and mostly dealt with new hires. Coil felt that citizens would be better served by looking at how the city was using money and that essential services should come first. Bill Stoneburner stated that he was speaking about the proposed across the board cut and in particular the cuts to the police department. He was not in favor of cutting the COPS program and store fronts for the police department in the Fry Street area. The Fry Street area was working with the Police Department to improve crime in the area Rosemary Rodriguez stated that she support of the proposed budget and in particular the ProjectoAmistad program. She felt there was a critical need for this program in the community and requested the Council approve the program. Rudy Rodriquez stated that he endorsed the budget. He felt it had been carefully thought out and in particular for the Hispanic community. He was in favor of the Projecto Amistad. Mayor Miller indicated that he had received comment cards from Fred Bowles who indicated he was in opposition to the civilian ambulance transfer proposal and desired a different type of pay increase; Eddie Woodruff indicated that he was in opposition to the civilian non-emergency transfer service and supported a pay increase instead of a one time bonus; Thomas Webb indicated he was in opposition to the city ambulance transfer service and supported a pay increase instead of a one time bonus; Jeff Dixon indicated that he was opposed to a civilian ambulance service and supported a pay increase; Mark Mason opposed a civillan ambulance service and supported a better pay increase. Sid Rogers stated that he was a small business man in Denton. His appraisal for his property had increased this year. He supported the budget and looked forward to further reductions in future years. He took exception to those who indicated they were not City of Denton City Council Minutes August 27, 1996 Page 5 ~'~ .... receiving a large enough salary. He was one of the individuals paying that salary. He was a small business with increasing costs. Ken Stout stated that he wanted Council to consider what other Council's had done. The City needed to control traffic in the area near Ryan High School. The City needed to not increase staff but to work on roads and traffic. The City needed effective management and trim every where possible. The Planning and Zoning Commission created a problem when it allowed the high school to be built in the area. Martha Guerrea supported the decision for a .social worker within the Police Department. That Department needed someone who was bilingual as many people in the community did not speak English. Currently she was teaching Spanish at the Police Department. They could not communicate with Hispanics in community. That individual would help everyone in the community. Mayor Pro Tem Brock stated that the decision to put Ryan at the present location was made by the School District and not by City. The City could not prevent the DISD from placing schools in locations. Mayor closed the public hearing. Mayor Pro Tem Brock stated that there were Council Members who wanted staff to reduce the budget by 5% across the board and she felt that was taking too much time. Government was services and slowing the growth of government was slowing services. There had been a growth of government in the past years withthe reopening of Central Fire Department, twelve new fire fighters added, a branch library added, the COPS program started, a new park added .to the City, and the City even took on more of the burden of transportation. Even though the tax rate had been reduced because of the half cent sales tax, the ad valorem tax rate was reduced 30% in the Past three years. Government was growing in the sense of all of these new services. If the City wanted to maintain these services, it could not ask for a 5% across the board reduction. That could be done by opening the swimming pool later and closing it earlier, reducing the number of hours the libraries were open;. reducing one fire fighter, or reducing one police officer. Council Member Krueger stated that he had only asked to look at a 5% cut and that he had indicated that he was not referring to reduction in force, in salaries or numbers. There was a misunderstanding on what he had requested. There were ways to lower taxes in the current budget. Council Member Young stated that in the last three years there had been a growth of approximately 35%. No one was talking about cutting services. He wanted to slow down the growth of government and felt that the City could go to a 2 cent tax reduction. ?0 City of Denton City Council Minutes August 27, 1996 Page 6 Council Member Cott stated that part of the problem was the way the system worked. Councils started programs and then committed the next Council to finish them. This Council needed to continue to look for reductions but also needed to continue to add services. He felt there were pieces to look hard at in the budget. City Manager Benavides stated that the proposed budget used approximately $1.5 million of one-time money to pay for reoccurring costs. Some of those costs did not fully impact this year. Some of those costs were salary and some were fire fighters. The bill was due on October 1st. That was 7.5 cents on the tax rate. That rate had been accommodated in the proposed budget plus included a one cent reduction. The figures in the budget were rolling forward for the pay increases and the fire fighters. The only items added in this budget were new packages for the fire and police department. Council indicated that they wanted police, fire and streets to be a priority. The proposed budget was fiscally responsible. To say that the budget could be cut but not salaries, pencils and paper, and people, did not work. He needed clear direction from Council on how to achieve such substantial cuts without impacting service level. Council Member Biles stated that citizens had indicated not to cut taxes if it meant a reduction in services. At thispoint in time he favored the budget presented by the City Manager but he still had an open mind on how to process the budget. It was time for the Council to listen to the citizens on the budget. The Mayor closed public hearing. Following the completion of the Special Called Session, the Council convened into a Work Session. PRESENT: Mayor Miller; Mayor Pro Tem Brock; Council Members Beasley, Biles, Cott, Krueger, and Young. ABSENT: None 1. The Council received information and/or answered any questions in Tab 7 of the agenda back-up materials in the 1996-97 proposed budget book and give staff direction. (Further budget discussion to take place on SePtember 3rd and 10th.) Kathy DuBose, Executive Director for Finance, stated that staff had responded to a request by Council Member Young for an estimate on the extension of Scott Street. Any recommendation as far as streets were concerned would be forwarded to the '96 Oversight Committee for their review and recommendation. Council Member Young stated that the recommendation for the money to purchase the right-of-way for the extension of Scott Street was put in the budget for consideration. City of Denton City Council Minutes August 27, 1996 Page 7 71 DuBose replied that any request for street improvements would be forwarded to the '95 Bond Oversight Committee for consideration and recommendation. Council Member Young asked if the committee would be able to supply a recommendation before this budget process was over. DuBose replied that if the Council allocated money for streets, staff would take any recommendation from that committee on how to spend that money. The Committee would be meeting on September 30th and if Council set money aside for streets, it was requested that the committee review the request and make a recommendation on how to spend the money. Council Member Young stated that it would not be in this budget. DuBose stated that there were two sources of funding for streets. One was in the Capital Improvement Program in which money was set aside for streets on an annual basis. That Committee made recommendations on how to spend that money. Council Member Young stated that the Council could not ask for this to be put in this budget. He wanted this put in this budget for consideration. Council Member Beasley stated that monies were set aside in the CIP for street extension and repair with no particular streets named. She would support having the project go to the CIP Oversight Committee as the Council did set aside a certain amount of money for that issue. It would be appropriate for the Council to indicate that this was a priority if that was the wish of the Council. Money was available in the bond package but not available in the General Fund budget. Council Member Young asked if the Oversight committee would be making a recommendation on the $100,000 for the bridge. This project was important for his district. The new street would increase emergency protection and reduce gang problems. Mayor Pro Tem Brock stated that she respected the opinions of the Council Members who wanted to cut the tax rate further but the City Manager had originally recommended no reduction in the tax rate itself. Last year there was $1.5 million of one-time funds which were spent on on-going matters such as the fire issue. Now that had to be folded into the regular budget. Some Council Members indicated that they wanted a cut in the tax rate and the City Manager did much figuring for a one cent reduction. That would place Denton below the median in this area. She felt that the City Manager and his staff did responsibly reduce the budget as much as possible and still responded to the wishes of the citizens. She suggested that those Council Members who desired more of a reduction of the budget propose specific cuts rather than asking staff to make a 5% across the board cut. She requested that this be shifted from a staff effort to a Council effort on where to make City of Denton City Council Minutes August 27, 1996 Page 8 such cuts. Council Member Krueger withdrew his request for the 5% reduction. He asked what one penny generated for the budget. DuBose replied that one penny generated approximately $200,000. Council Member Krueger asked if last year's budget was based on a 10%. fund balance. DuBose replied correct. Council Member Krueger stated that last year the budget came in $1.5 million over that 10%. DuBose replied correct and that was the one time expenditures which were budgeted to use in the current year. Council Member Krueger asked if the budget would begin at the 10% level or be built up to 10% during the fiscal year. DuBose replied that any amount over 10% would be used for one-time expenditures. It was recommended to bring the balance down to 10% by using the excess for one-time expenditures. Council Member Krueger stated that on September 30th there would be a fund balance of approximately $3 million. DuBose replied correct. Council Member Krueger stated that next year there should be the same amount. DuBose replied yes that that was what was budgeted and estimated. Council Member Cott stated that the 10% reserve had never been used. The City could go half of that and 5% might work. There would still be reserves and money available. Mayor Miller stated that that would be the first issue discussed next week when budget discussions began. Council Member Cott requested Council consider funding the seeding of South Lakes Park.in the budget discussions. Council Member' Young stated that when the 5% reduction was proposed, it was to reduce the proposed budget, not current services. One way to do that was place a freeze on hiring and not have the incentive pay but give a 3% raise in base pay. Another area of consideration was the non-emergency transfer service. Those were ways he was considering reductions rather than affecting services or decreasing employee salary. No one was talking about cutting each department 4-5%. He wanted to slow the growth of government through reduction of new hires and non-civil service City of Denton City Council Minutes August 27, 1996 Page 9 transfer service. Mayor Miller stated that Council directed the City Manager to take 5% out of this budget. That meant staff had to decide where to do that which required staff reductions, etc. That request had been withdrawn and the Council would now work on the proposed budget. Council Member Beasley stated that she would like to know the cost figures of a 3% raise for employees. Council Member Cott suggested not speaking in pUblic on wages until the Council knew where it was going on the issue. 2. The Council received a report, held a discussion and gave staff direction regarding the Public Utilities Board's recommendation to proceed in 1997 with the City Charter required Ten Year Management Study of the Utility with emphasis on analyzing the competitiveness of the water, wastewater and electric utilities. Bob Nelson, Executive Director for Utilities, stated that the City Charter required a management study be done in ten year intervals. The last study wasdone in October of 1986. The Public Utilities Board looked at some of the issues involved and was proposing to proceed with the study in 1997 with a focus on competitiveness. There were many changes taking place in the electric industry. There had been some private firms which had inquired about the possibility of operating the water and wastewater plant on a private basis. Because of the major implications that such a proposal would have on the City's operations, the Public Utilities Board recommended that that be included in the management study. It was felt that such a study could be started in several months and completed by June of next year. Council Member Young asked if the study would include electric, water and wastewater at same time. Nelson replied correct that the Charter required ten year intervals of the utilities which included all of those areas. Council Member Young asked if three separate studies could be done which would allow for a shorter time frame than doing all three together. Nelson replied that there were many competitive issues involved which would space across the entire span of utility issues. He felt it should be done as one study as many of those issues were interrelated. Council Member Young felt that there was a need to do the study but that his recommendation was to have separate studies in order to save time and money. city of Denton City Council Minutes August 27, 1996 Page 10 Mayor Miller asked what was the recommendation of the Public Utilities Board. Nelson replied that the Board recommended that a comprehensive management study be done with a focus on all three issues. Council Member Krueger asked if one firm could do the entire study. Nelson stated that different firms might have to be considered. One major management company would look at the issue on a comprehensive basis and that firm would use smaller units for the individual studies. Council Member Krueger stated that the study would indicate how to manage and operate the system in a more efficient manner. Nelson replied correct. Council Member Cott felt that there were three issues. One was the TMPA bonds which had nothing to do with the operating business. There was nothing known about the status of those bonds and he would like some information on those bonds at a future time. He suggested having the firms interested in performing the study make presentations to Council. Mayor Miller asked if a request for proposal would meet the Charter provision. City Attorney Prouty stated that the Charter stated that there would be a general management study of all utilities in ten year periods. If those were to be done separate, they would have to be done at the same time. Mayor Miller stated that there were companies who wanted to privatize the utilities and asked if that would satisfy the Charter provision for a management study. City Attorney Prouty indicated no as the Charter specifically mentioned that the study had to be done. The Charter stated that the study had to be done by a consulting firm or an industrial. enqineering firm. Council Member Beasley stated that the last study was done in 1986 and felt it was time for another due to the deregulation of the electric industry. She felt there was a possibility for a request for proposal but wanted to see a study done first as it would give a good indication of the entire utility system. She was in favor of having a management stud~ and then look at the possibility of privatization. Mayor Pro Tem Brock asked if the procedure would be to have a request for proposal from management consultants or engineering firms which would satisfy the criteria of the Charter. City of Denton City Council Minutes August 27, 1996 Page 11 Nelson replied correct that they would receive proposals from a number of different management engineering firms. Mayor Pro Tem Brock stated that the second stage would be to consider privatization. The firm hired for the management study might want to supervise and evaluate the requests for proposal which would go out to firms which might want to manage part of the City's utility system. Council Member Biles stated that the City had a new City Manager, a new Municipal Judge and a new City Attorney all who were directly appointed by Council. He felt Council should be interested in a management study of the entire organization. There had been discussion on whether the City was being efficient as a government, whether it was being competitive with area cities and whether there might be too many people doing the job of City government. Mayor Miller stated that looking at the total organization made sense but not in the same study as the utility management study. Council Member Biles replied correct that he was not suggesting this be an integrated process. Mayor Pro Tem Brock stated that the City had, to a certain extent, a management study each year with the audit report. This study would be very costly. She agreed with the suggestion to proceed with the mandated study and then do something similar for the general government area later but not in the same budget process. City Manager Benavides suggested that Council take action on this study and then have staff return with figures for a study for the entire organization. Mayor Miller suggested proceeding with the Public Utilities Board's recommendation and return to Council on the process. Biles motioned, Beasley seconded to proceed with a proposal for the total utilities management study with a second issue for a management study of the general government as a budget issue. On roll vote, Beasley "aye", Brock "aye", Cott "nay", Krueger "aye", Young "aye", Biles "aye", and Mayor Miller "aye". Motion carried with a 6-1 vote.' 3. The Council received a report regarding the Texas Annotated Civil Statute, Article 5190.6, Title 83, Section 4A/4B, "Industrial Development Sales and Use Tax", and the proposed legislative changes; an overview of a survey of 4A/4B cities; and the uses of sales tax. Betty McKean, Executive Director for Economic Development/Municipal Services, provided Council with a briefing on the enabling legislation surrounding the passage of a 4A/4B sales tax initiative. To be eligible for a 4A sales tax, a city had to be in a county with a populatlon under 500,000 which Denton was. A 4A City of Denton city Council Minutes August 27, 1996 Page 12 economic development corporation had a five member board of directors who were not required to be residents of the city, were not required to be property owners, who served a maximum of a 6 year term and served at the pleasure of the city council. The City Council Members were ex-officio members of Denton's EDC. Major categories of expenditures included business airports, manufacturing and industrial facilities, recycling facilities, distribution centers, small warehouse facilities, enterprise zone projects and related facilities. Some Texas cities were using 4A sales tax revenues for economic development in the areas of the development of a finance program, small business development center, retention/expansion of local businesses, Christmas light program, incubator operations, golf course project, Main Street program, operation/equipment for local hospital and industry appreciation program. The most focus of the 4A legislation was on industrial development. In particular the purchase of land and development of industrial parks and spec buildings. This also depended on the demands of a particular community. Some Texas cities were using 4A sales tax revenues for economic development in the area of land purchase, infrastructure, access upgrade or placement, existing building expansion and upgrade and renovation. of vacaht retail stores. The wording for a 4A ballot was very specific and indicated that the election would be for the adoption of a sales and use tax for the promotion and development of new and expanded business enterprises at a given rate. Once a 4A tax was approved by the voters, a city could not ask the voters to later reimpose or extend the 4A tax. One city in Texas had included a time limit for a 4A tax in its ballot wording. In order for a city to meet eligibility for a 4B sales tax, it had to pass one of four criteria. One of the criteria which applied to Denton was a city would be eligible for 4B if it was eligible to adopt a 4A sales tax. A 4B economic development corporation consisted of a seven member board of directors who must be residents of the city. No more than four members could be city officials or city employees who served a maximum of a two year term. Those members served at the pleasure of the city council. Eligible expenditures were more focused on tourism and entertainment, public improvements, and public facilities. The wording for a 4B ballot was very general with no provision to later broaden the eligible uses of the tax revenues beyond what was listed on the ballot. A city needed to specify each type of project authorized under 4B that might be of interest to the City presently and in the future. The election timeline did not vary for either 4A or 4B. If successful, the tax became effective after one full calendar quarter had passed. The tax was imposed the following quarter and the city received the first revenues from the Comptroller's Office the following month. There were special provisions involved with 4A and 4B. Under 4A an election was allowed to change the rate of the tax but not under 4B. Under 4A there were provisions to abolish the tax but not under 4B. There was a 10% limitation on promotional expenses under 4A but not under 4B. Both 4A and 4B were non-profit, non-member, non-stock corporations and both were subject to open meetings and open records acts. Under 4B, projects owned by the corporation were exempt from property taxation. 4A holdings such as buildings City of Denton City Council Minutes August 27, 1996 Page 13 or land would be taxable. In order to have a success, the citizens needed to understand how the funds would ultimately do three things - expand the industrial tax base to continue to have a stable tax rate, create job opportunities and create community enhancement which improved the citizen's quality of life. Council Member Beasley asked about the possible changes in the legislation in the next Legislative session. McKean stated that it was her understanding that the Legislature would be looking at eliminating the confusion between 4A and 4B. 4. The Council received a report, held a discussion and gave staff direction regarding the Economic Development Corporation's recommendations: A® Composition of a sales tax referendum dedicated solely to 4A initiatives. Process and timing for calling an election for January 18, 1997 under Section 4A/4B of the Texas Annotated Civil Statute, Article 5190.6, Title'83. C® Formation of a sales tax citizen task force mad. up of 47 members. D. Appointment of ex officio members to the Economic Development Corporation of Denton, Inc. Harry Hall, Chairman-Economic Development Corporation, stated that the charge to the EDTC was to study all possibilities of promoting economic development in the city. That charge was completed with a specific recommendation to have an election for a one half cent for a 4A corporation. It was found that 4A offered more flexibility than 4B. It was felt that a 4B corporation lent itself to more of a tourism activity and the Committee felt that that was not the main focus for Denton. It was felt that there was a need to increase the tax base as opposed to tourism. There was a need to continue to provide jobs to residents. The recommendation to the Council would be to allow the voters to take this into their hands in January. There were many misconceptions on how to use that money which would create the need for good public relations for the issue. Mayor Miller asked if the recommendation from the EDC was to establish a task force. Hall stated =~at t~e EDC was recommending a tas~ force of 47 members which included the selection of five members by each Council Member. A large number of me~bers was needed to present the issue to the citizens. Mayor Miller stated that the recommendation would be for a 4A election to be held in January for a one half cent sales tax. 78 City of Denton City Council Minutes August 27, 1996 Page 14 Mayor Pro Tem Brock asked if the EDC had a recommendation for funding the publicity for the campaign. Hall replied that it would be from private donations. Young motioned, Krueger seconded to follow the recommendations of the EDC to compose a sales tax referendum dedicated solely to 4A initiatives, to process and time the calling of an election for January 18, 1997, and to form and create a charge for a sales tax citizen task force of 47 members. Council Member Beasley stated that the Council would be approving the calling of an election for a sales tax for January 18th and to form a citizens task force to study the issue and promote the election. Mayor Pro Tem Brock stated that the charge of the task force would be to sell the 4A election. Hall stated that the issue of 4A or 4B and the amount of the tax had been studied over the last 10 months. There was no need to restudy those points. The purpose of the task force would be to promote the sales tax election. Mayor Pro Tem Brock stated that the task force would be appointed for the specific function of persuading the community to vote for a sales tax in an amount of a % cent. Council Member Beasley stated that she was concerned about that point. She was concerned that if the committee was charged with only that very narrow perspective that they might not b e convinced to do that. She would prefer to open the charge to the task force to make a recommendation on the issue. The task force would have robe convinced in order to sell it to the public. The task force might not be effective if it was not in favor of the sales tax. Hall stated that the EDC recommendation was for a 4A with a ½ cent sales tax. The Council could alter that recommendation in any manner. Council Member Beasley stated that her point was that the task force would be asked to go out in the public to sell the concept of the tax and if they had not looked at the options and what to use the money for, they could not sell that issue. She preferred to expand the charge to the sales task force to look at all options and make a recommendation to the Council. Council Member Cott asked why this task force had different people and a different charge. Many people had already studied this issue and now different people would be looking at it. Hall replied that one of the EDC board members recommended using this group in the same manner as the group used on the half cent reduction for the previous election. The EDC could have City of Denton City Council Minutes August 27, 1996 Page 15 -i recommended people already in favor of this issue but asked Council for suggestions. Council Member Young stated that the CIP committee was large and what made it work was the quality of the people. If the charge to the task force was to make recommendations, it could disrupt the EDC five member board. He felt the job of the task force was to help pass the sales tax. Mayor Miller stated that he agreed with the need to expand the tax base. There were two segments of economic development in his opinion. One was doing the economic development and getting the work done and the other was the funding issue. The Council had appointed an EDC'and the EDC should be going out and promoting the City. He was concerned that if the Council indicated that they had already decided that the issue would be 4A and % cent done in January, it would be very difficult for the task force. That was different from other task forces. He felt the Council should proceed with the whole issue of looking at the sales tax referendum with a 27 member committee. The committee should review the information and work with the EDC on 4A but also explore if that was the appropriate way to go. The task force could do that job and remove some of the concerns the citizens now had. People had asked why the rate would have to be one-half cent and specifically how the dollars would be spent. That should be part of the study and part of the recommendations. He hoped that the task force would recommend a referendum to be done in January but it might also be found that there should be a different election date or amount of tax. Hall stated that part of the problem was the original charge to the EDTC and to the EDC. They had assumed that that was what their original charge was. He was concerned by the statement that the people in the EDTC were not a cross sampling of the community. The Council appointed the EDC to do a certain task. Council Member Krueger stated that the Fantus study suggested a 4A half-cent sales tax and the Vision group had the same conclusion. He did not believe a 47 committee was too large. He felt there was a need to move on with the process and to let the voters speak in. January. Council Member Biles stated that the Business Group of the Vision process incorporated the findings and recommendations of the Fantus study along with some ideas from others. The process was continued by eliminating the former method of appointments to the Economic Development Committee and the Economic Development Transition committee was formed to further the process. Over the last several months he had been upset at all of the issues concerning the EDC and its membership. As a member of the City Council he represented the entire city and he had to think about what would be the appropriate process for the City. This process should belong to the peoDle as it would effect the people's taxes. He felt there was a need to fo~m a sales tax task force with a cha~ge to evaluate 80 City of Denton City Council Minutes August 27, 1996 Page 16 4A and 4B. If the citizens were going to support the election, they had to support the process. They had to support either a 4A or 4B and the amount of the tax. It would be a major process to educate the citizens on the issue. The task force needed the flexibility to work through the process. Hall asked if this was a work session or was Council taking action. Mayor Miller stated that Council was able to give staff direction and the motion was on giving staff direction. No final action would be taken but Council would direct staff on what to prepare. Mayor Pro Tem Brock stated that even though the Council appointed the Economic Development Transition Committee and the Corporation Board, the responsibility was Council's. Council Member Krueger was not able to attend the recent Council workshop at which time a decision was made. If the Council voted for the motion, they would be back in a rubber stamp mode. The Fantus study did indicate that a major source of funding would be a half cent sales tax but it also made other recommendations which were not now considered such as a brand image. If a committee was formed just as a marketing team with a very narrow proposal, she was concerned that it would have very little credibility with the voters. She would be more comfortable with the recommendation if a larger committee also looked at the issues. She was also concerned about several aspects of what the marketing team would be marketing. One concern was the amount as there was a possibility of using one-eighth to one-half cent. There were major land owners in the area who could help develop those sites. She felt Denton had too much to offer to need $4 million per.year for incentives. Denton was the kind of community which had a good location, transportation, .etc. The cities which had spent these large amounts of money on economic development were cities which were isolated and which had a lot of minuses. Denton did not have those minuses to overcome. She did not like the all or nothing approach. There was a need to go to the voters with something acceptable to the community. Council Member Young stated that the EDC was something the people wanted in order to develop industrial parks and put people to work. Some Council Members were not for economic development and would do anything to hold up the process and the EDC. This came from the fact that some Council Members did not like some of the members of the EDC. EDC should be doing EDC things and the task force should be the one to sell the sales tax. People in his district wanted jobs and this was needed. Council Member Cott stated that 10-12 months ago the Council decided about economic development with the Fantus study and with a Chamber study for developing financing and marketing plans. There appeared to now be a loss of control. He felt the process should start as the marketing was complete. He felt the EDC should be given a chance to proceed. City of Denton City CounSi~ M~i~tes' ~ August 27, 1996 Page 17 81 Council Member Beasley stated that she had been on the bond committee and knew that that committee was charged to look at projects to be in the bond issue. There was great discussion and much information gathered. When she asked Mr. Hall about the committee he was proposing, she originally felt the charge was too narrow. If the task force did not look at issues and support those issues, they would not be able to convince the voters to vote for it. An election could still be held in January but the charge should not be narrowed down to.only a 4A corporation. There was a need for a good recommendation for Council to consider and a task force to get behind that recommendation. Hall stated that the difference between the EDC and the bond committee was that the Council had already embraced the fact to sell the bonds. He asked if the Council had already endorsed the fact that there was a need for a % sales tax. Mayor Miller stated that he was on the Council when the half cent sales tax was passed to reduce ad valorem taxes. Council did not tell them to do it. They suggested a study and requested the committee return with a recommendation. When the committee was. formed, 'the outcome was not known. It was after receiving the recommendation from the committee that the Council was behind the process. Everyone on the Council was in favor of economic development but it was a question of what would succeed. He could not support the recommendation as described by the EDC. Hall stated that the Council had a decision to make. The EDC made a recommendation to the Council. The problem was that by law the Council could not have a % cent unless it was directed through an EDC. The Council could and should not act on each issue that came before it like that. Mayor Miller stated that he was not saying that. If the corporation was a 4A or 4B or a combination, the funds would go to that corporation. Hall felt that the EDC had done a job and had presented a recommendation to the Council. Mayor Mitler stated that the EDC replaced the advisory board with the Chamber.' Ail of those tasks still needed to be done and the EDC should be out selling the City which was an important role. The Council was being asked to fund $200,000 for the EDC for the upcoming year without a sales tax. There was a fundamental difference on how to go about funding the process of economic development. council Member Cott felt that the problem was the Council's managing of the process from the beginning. Council Member Young asked if the EDC would have to be changed from a 4A under the State charter. 82 City of Denton city Council Minutes August 27, 1996 Page 18 city Attorney Prouty stated that if the recommendation was for a 4B and there was a 4B election, a 4B corporation would have to be formed. Council Member Biles called the question. Mayor Miller stated that the motion was to provide information for Council for a composition of a sales tax referendum dedicated solely to 4A initiatives for one-half cent sales tax, to call an election on January 18, 1997 and to form a sales tax citizens task force made of 47 members whose purpose would be to promote the referendum. On roll vote, Beasley "nay", Brock "nay", Cott "aye", "aye", Young "aye", Biles "nay", and Mayor Miller "nay". failed with a 3-4 vote. Krueger Motion Biles motioned, Beasley seconded to direct staff to prepare appropriate resolutions to form a committee. The committee would be charged with considering all of the information provided by the Economic Development Corporation Board of Directors. The committee would study the 4A and 4B sales tax. options; would make a recommendation on the rate of tax whether an eighth, a quarter, three-eights, or a half; and would prepare and submit a written report to City Council no later than Tuesday, October 29th. That was nine weeks which allowed for two weeks after that for Council action and City Attorney action- in order to meet the 60 day preclearance from the Justice Department for a mid-January election. The committee would be composed of 33 me~bers. One of the original thirteen members on the committee did not care to serve. The original twelve members would be automatically appointed and each Council Member would then make 3 appointments. If any of the original 12 did not want to serve, they would be appointed by Council as a whole. Harry Hall would chair the committee. Council Member Krueger asked why a specific date for the election was included. Council Member Biles stated that there was not specific election date but rather a time to submit a written report. On roll vote, Beasley "aye", Brock "aye", Cott "aye", "aye", Young "nay",.Biles "aye", and Mayor Miller "aye". carried with a 6-1 vote. Krueger Motion Mayor Miller indicated that appointments to the task force would be made at the next meeting by council. D. Appointment of ex officio members to the Economic Development Corporation of Denton, Inc. Mayor Miller indicated that there was a recommendation from the EDC to appoint Ted Benavides, Chuck Carpenter, Fred Gossett, and Bill City of Denton City counC'~lMinutes ~ August 27, 1996 Page 19 Patterson as ex-officio members. Biles motioned, Beasley seconded to roll vote, Beasley "aye", Cott "aye", Biles "aye", and Mayor Miller "aye". approve the nominations. On Krueger "aye", Young "aye", Motion carried unanimously. 5. The Council received a report and held a discussion regarding a performance report from the Economic Development Corporation of Denton, Inc. This item was not considered. 6. The Council received a report, held a discussion and gave staff direction regarding the Economic Development Corporation of. Denton, Inc.'s proposed FY 96/97 budget. Mayor Miller indicated that the City was going to fund the Economic Development Corporation for the next fiscal year regardless of what happened with the sales tax. The EDC had prepared a proposed budget. This item would be presented, by the EDC and the Council would consider it with the rest of the budget deliberations. Harry Hall stated that the administration fees would be used by the EDC for education and regular supplies to run the company during the next year. The remainder would be contracted services for basic functions to continue to promote Denton. Council Member Beasley questioned the amount allocated for two prospect development visits and felt it was a large amount of money. Hall stated that those would be corporate headquarter visits and included business retention meetings with local businesses. Mayor Miller indicated that the request was for $197,000 which would be an item included in the budget discussions. Hall stated that the beginning balance would be a carryover balance of $35,000 which would probably be reduced by consulting fees in the next month. The EDC would be asking for a more precise figure than that. 7. The following action was taken on Closed Meeting Items: Biles motioned, Young seconded to direct the City Attorney to take action with regard to the Cox case as discussed in Executive Session. On roll vote, Beasley "aye", Brock "aye", Cott "aye", Krueger "aye", Young "aye", Biles "aye", and Mayor Miller "aye". Motion carried unanimously. With no further business, the meeting was adjourned 11=20 p.m. city of Denton ,City Council Minutes August 27, 1996 Page 20 ACC00338