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Minutes August 9, 1996CITY OF DENTON CITY COUNCIL MINUTES AUGUST 9, 1996 The Council convened into a Work Session at 9:00 a.m. at the Radisson Hotel (Trustees Room), 2211 I35-E North. PRESENT: Mayor Miller; Mayor Pro Tem Brock; Council Members Beasley, Cott, and Young. ABSENT: Council Members Biles and Krueger 1. The Council received staff presentations of the proposed 1996- 97 budget for the City of Denton. Mayor Miller stated that Council would be receiving answers to any questions which they might have concerning the budget. Council would not be asking detailed questions nor receiving details regarding the budget at this point in time. City Manager Benavides stated that this was a policy-oriented budget with a focus on issues for policy rather than specifics. This budget was a self-supporting budget for reoccurring costs, balanced on-going expenses with reoccurring revenues, addressed the need to pay for increases in the operating expenses associated with the hiring of 12 additional fire fighters, the 1995-96 pay program and a bond rating upgrade. 1. General Fund Reserve Level Council had adopted a policy of having a 10% fund balance which was key in bond rating analysis. Due to the amount in the General Fund Reserve Level, there were opportunities for one time expenses for building needs, vehicles, a pay merit award, an incentive program, street buttons and miscellaneous one time needs such as a utility attorney, office furniture and equipment for that attorney. Council Member Biles arrived at the meeting. 2. Revenues A. Sales Tax - ½ cent to reduce property taxes - this formula was based on the last 12 months actual figures from the State Comptroller's office which did not allow for projections or forecasts on how the sales tax would rise or fall. It was estimated that there would be a $4,300 decrease in sales tax which did not generate a property tax decrease based on the State's required formula. Council Member Cott stated that he could accept a pay merit award but did not accept how it was done. A memorandum had been sent out to all employees and it was now anticipated that this was a done deal. City Manager Benavides stated that a memorandum was given to employees as pay and benefits were important. The memorandum indicated that this was a proposal with an explanation that the Council would still be evaluating that proposal. City of Denton City Council Minutes August 9,1996 Page 2 Mayor Miller stated that this was done to better communicate with the employees regarding this situation. B. Sales Tax - one percent general purpose tax - the proposed budget projected a 4.5% growth for 1996-97 over the current year estimate. Currently the City was experiencing a 3.25% growth over the prior year. C. Property Tax - the proposed property tax rate was $.5309/$100 valuation which represented a 1.85% reduction in the tax rate. The proposed rate represented the fourth consecutive year the .rate had been set below the effective tax rate and the seventh straight year the rate had been set at or below the effective rate. D. Swimming Pool Fee - the current fee was established in 1984 at $1.00. The new Parks strategy was to review fees every three years and recommend adjustments as required to offset costs and market positions. The proposed $1.25 fee generated an additional $13,775 in additional revenues. 3. Pay Plan Adjustments Tom Klinck, Director for Human Resources, stated that this would be a 3% one time lump sum award effective October 1st and paid on October 4th. This would be for Civil Service and non-Civil Service employees and regular full-time and part-time employees. Civil Service would continue to receive step increases. Probationary employees, employees on disciplinary status or performance improvement plans would receive the award if they successfully completed the plans. The cost to the General fund was $690,000 with a total cost of $1,070,865. Another proposed program was the Incentive Plus Program which would provide monetary and non- monetary awards to employees in the amount of $25-$250. Department heads would develop the selection system with awards being given any time of the year. Awards could be given for innovative ideas or suggestions; for an employee's high level of professionalism; for an action which saved health, life or property; and unique and beyond usual customary activities. Approximately $81,000 was budgeted for this proposed program. 4. Benefits Adjustments A. Health Insurance - it was suggested to continue with Harris Methodist with a 4.1% rate reduction for HMO only selection effective January 1, 1997 with a related reduction in premiums for retirees. B. Retirement (TMRS)- the City was currently at a 6% two to one match program with Denton being only one of two cities not at a 7% two to one match in a metroplex survey. The cost of a 7% two City of Denton city council Minutes August 9,1996 Page 3 to one match was $176,992 for on-going costs· There was no proposed change in the 1996-97 benefit. · sit - it was recommended by. the C. Work Force D~er _~ ' tee to have additional Employee's W~k ~orc~= ~v%rj~l~orC~el~rain_the-tra~ner progra~ recruitment ~fzorts anu.u~ ~ _..=~.. In,tit and sponsor a for the National coalition Du~u~..~ ...... ute - diversity community luncheon. 5. Public Safety A. Police . deral Grants - the city was apply~n~ for 1. State and Fe _ . - ~ ..... ,{1,1 omestic vlo£ence o ~lre a ju~ .... .d a fiv~ year state grant t - ~ -~ ~--stice ~rant of $106,500 investigator and a one year Depar~men~ o~ ~ to purchase mobile date computers with a city match of $9,682. Pro4ecto Amistad - this was a.proposed full-time · - . ' s coordinator who would be bilingual/bicultural community service responsible for the initiation, facilitation, and promotion of available services to the Hispanic community· The position would be assigned to both the East and West community offices, recreation centers, and the Central Police Station. The position could also leverage future grants. The cost would be $45,000 to the budget for a social worker in the Family Services unit of the Police Department· council Member Young stated that he had a problem with this position. Having someone who only spoke Spanish would not help someone who could not speak English. He also had a problem with the expense of this item. 'tions - a civilian property technician and two 3. -~w~ were DroDosed in the upcoming budget. The civilian duty ~ Police Department maintained the management and control of approximately 18,000 pieces of property· Currently a full-time detective spent 70% of his time managing this property. It was proposed that a civilian property technician would replace that o ositions would be the addition of two fficer. The other tw ? ...... ~,e~n ion of a program o ' ' w~ ~ ...... uat tatted 4-5 years ago. ~= =~- = · s ..... =e and also allowed an Increase in the fill9 wh~re they snouxu ~ diversification of the Police Department. eous - proposed expenditures in this 4. Miscellan ...... ~,d with the new Public category wQ~ld be office supplies as~uu Safety Computer System and an additional $4,000 ~or an area coordinator for the COPS program. City of Denton City Council Minutes August 9,1996 Page 4 37 B. Fire 1. Dispatchers - it was proposed to add three additional dispatchers to the proposed budget to help meet the minimum staffing requirements for quality control for emergency response. 2. EMS non-emergency transfer service - this program was the non-emergency transportation of patients between hospital to hospital, extended care facilities, a patient's home, health care facilities and specialty clinics. The program would add six full-time civilian transfer attendants at a cost of $124,000 and would generate $214,000 in additional revenues. The net revenue would be used to fund reoccurring public safety packages. 3. Miscellaneous - truck diagnostic eguipment for an in-house mechanic, breathing apparatus, fire rescue equipment, a fire internship position, and the reclassification of 3 drivers to battalion chiefs were recommended in the proposed budget. Council Member Young stated that the increase of pay for the drivers to battalion chiefs was too great an increase. There was a need for more minorities in the Fire Department. 6. Fire Reserve Fund - this fund was created to phase in the fiscal impact of opening new fire stations. As of October i the balance of the fund would be $84,000 and was included in the 1996- 97 proposed budget. The fund would be closed out at this point in time. 7. Other Agency Contributions - The Human Services Committee had recommended Community Development Block Grant contributions of $186,000 and the Human Services Committee recommended General Fund contributions of $163,868 with a total contribution to Human Services agencies of $349,868. 8. Tax Exemption for persons over 65 - the goal of the Council in 1988 was to increase exemptions from $16,000 to $25,000 over the years. The current exemption was $23,000 and the proposed budget included an increase of the exception of $1,000 to $24,000. 9. Vehicles - the 1996-97 proposed budget included $345,894 to purchase and replace 44 General Fund vehicles. There was a one- time expense of $171,442 with an on-going expense of $174,452. 10. Long Range Technology plan - the first phase of the Long Range Technology Plan provided PC's for employees who needed them, but currently did not have one. It also replaced PC's that were five years old or older. It upgraded current equipment (memory/storage) and connected all PC's to the local area network and mainframe and standardized software. Two new positions were proposed in the 38 City of Denton City Council Minutes August 9,1996 Page 5 budget for a network manager and a computer system trainer. 11. City Hall in the Mall - 12.5% of the counter utility payments were made at the Mall. The current hours were 11:00 a.m. - 8:00 p.m. Monday through Friday. Proposed hours were 10:00 a.m. - 9:00 p.m. Monday through Saturday and 12:00 noon - 6:00 p.m. on Sunday. The office would be staffed with three part-time customer service representatives and one part-time computer operator. Council Member Beasley asked about transferring current employees to the City Hall in the Mall rather than hiring three new employees. Harlan Jefferson, Director of Fiscal Operations, stated that although the number of actual customers in City Hall was down, the department was moving from working with customers in person to working with the customers on the phone. 12. Main Street - it was proposed in the budget to use Lalor funds to pay for an Assistant Main Street Manager's position at a cost of $29,209. 13. Facilities - there was a backlog of building needs and $568,456 worth of one-time expenditures. The expenditures would include ADA compliance, safety hazards, replacing heating and air conditioning units, maintenance and repair and renovations. 14. SPAN - it was anticipated that there would be a 43% reduction of Federal funding thus necessitating a need to redesign the existing route system. The City would be asking SPAN to consider eliminating fixed routes and demand services during certain times of the day. The budget contained a proposed transfer of funds from a previous Federal grant to meet 1996-97 needs on a one-time only basis. 15. Other Services A. Legal - it was proposed to hire a Utility Attorney for in-house representation of suits filed against the City. There had been an increase from 20% to 60% in these types of suits. A large portion of the current suits and legal issues were related to utility matters. B. General Government - due to the growing demand for special projects/increased size and frequency of agendas, a request was being made for a part-time Clerk III in the City Manager's office. This position would report to the City Secretary. 16. Recreation Fund - proposed expenses in the 1996-97 budget included computer registration as a one-time expense, sound and recreation equipment for a one-time expense, gymnastic equipment City of Denton City Council Minutes August 9,1996 Page 6 39 for a one-time expense, fitness equipment for a one-time expense, a pool feasibility study for a one-time expense and a swim team expansion which would be an on-going expense. Mayor Miller stated that he had received a memorandum on April 19th from the Finance Department which called for a 1% reduction in the ad valorem tax. That was not generated by the sales tax for property tax reduction because the calculations by the Comptroller's office did not support that. The budget proposal still called for that reduction. Based on either decisions made last year or the dynamics of on-going programs, $1.5 million was needed this year just to fund on-going programs. If that did not have to be done, a 7 cent reduction in ad valorem taxes might have been possible. 18. Other funds - internal service funds - This category included the warehouse, motor pool, Tourism & Convention, Emily Fowler Library, police confiscation, and debt service. The warehouse category included .a shed enclosure, a conference work room, a desktop color copier and a laminator. The motor pool had no changes from the current year. The Emily Fowler Library fund included supplies and maintenance. This was the first time this was included in the budget document. Police confiscation fund included seizures of vehicles, property, and cash. 19. Designation of fund balance - in 1983 $518,000 of the General Fund balance was designated for future needs. A comprehensive search did not reveal a specific purpose for this money. The Finance Department's option was to use for part of this money for streets with additional money for Council consideration. 17. Major Issues - Utilities A. Electric - there was a $77,296,209 revenue projection with a projected $75,225,883 expenditure budget request. The KWH sales projection was 3.2% above the 1996 estimate. Major budget/program changes included $1 million for a CIS/computer system upgrade and administration; $1 million for power supply options in production; $1.9 million increase in ROI/street rental transfers in administration; $2.2 million decrease in purchased power/fuel cost in production; the elimination the demand management division with the transfer of functions to administration; a new Service Center which was included in the CIP for dispatch operations; and proforma included $2.6 million for TMPA debt retirement fund. New positions for Electric included a new utility service worker in metering, a new secretary in distribution, a new half-time safety specialist in administration, a new temporary/~ea~onal employee in dispatch operation~, a new 1/4 office clerical position in communications. It was proposed to have no change in the base rates and a proposed energy cost adjustment increase on October 1st from 1.90 cents to 2.00 cents 40 City of Denton Cfty Council Minutes August 9,1996 Page 7 with another change projected on January 1st. The average ECA for a full year was projected to be 2.08 cents. In order to meet the Charter requirement to not transfer more than a 6% return on asset, 3.6% needed to be on revenues and 4% on street rental. The Pubic Utility Board indicated that as that was a 4% street rental fee it should be listed on the utility bill. If that were done, the electric rate would have to be decreased bythat amount. The total number would be the same. Council Member Biles asked if that was a rate issue or a disclosure lssue. Neison indicated that it would be a disclosure issue. The Public Utilities Board felt that it should be noted on the utility bills. Council Member Biles indicated that as it did not alter the amount of the utility bill, he was not in favor of changing the billing system. Consensus of the Council to keep the billing system as it current was sent out to customers. B. Water - there was a $15,624,309 revenue projection and a $15,021,382 expenditure budget associated with the Water Department. The $4.752 billion gallon sales projection would be close to 1996 estimate. Major budget/program changes included increased costs by $740,000 due to refinancing the Ray Roberts debt which would provide significant long term savings; $350,00 of the $450,000 reserve would be used for water tank painting; and a $331,500 decrease in ROI transfers (5.6% of rate revenue). New positions included a new Director of Water/Wastewater Field Services with Engineering and Drainage Department sharing 40% of the funding. There would be no rate changes in the Denton rates but the wholesale rate to the Upper Trinity Regional Water District would be increased by 1.56%. C. Wastewater - wastewater projected $11,032,551 in revenues with $10,343,596 projected in expenditures which was below 1996. Major budget/program changes included $1 million budgeted for electric debt repayment; a $606,100 decrease in ROI transfer (5.6% of rate revenue); and a $108,800 increase in debt service for $2.?50 bond sale in 1996. New positions included a new Director of Water/Wastewater Field Services with Engineering and Drainage funding 40% of the position; a new Administrative Assistant I in treatment; a transfer of a welder/fabricator from the Machine Shop; and a new temporary Environmental Monitoring Technician in pretreatment which was grant funded. There would be no change in Denton rates but the wholesale rate to Corinth/UTRWD would be increased by 3.2%. City of Denton City Council Minutes August 9,1996 Page 8 41 D. Solid Waste - $6,712,672 revenue was projected with a $7,100,938 expenditure budget! request. Major budget/program changes included completion of!the landfill expansion in 1997 for $3.2 million; the operating 'portion of the budget would be essentially unchanged from 1996; the recycling program would be held to the 1996 funding level;:a $462,800 increase in debt service for a $5 million bond sale in 1996; $75,000 of $150,000 for container purchases to come from reserves in the commercial area. New positions included two new positions. A transfer would be made from the Machine Shop (welder/fabricator and maintenance mechanic), a new light equipment operator in recycling, and the elimination of a Maintenance Worker I position in Residential. There would be no change in residential rates with a 13% increase in commercial rate revenue, a 16.7% dumpster increase (average), an 8.1% open top increase (average), and a 5.7% compactor increase (average). The proposal would continue to restructure rates to encourage larger containers with fewer pickups. The landfill rate would be increased from $7.00 to $8.20 per cubic yard, the landfill rate for outside the City customers would be increased from $16.00 to $16.75 per cubic yard. E. Fleet Services - there was a $2,428,122 revenue projection with a $2,440,622 expenditure budget request. Major budget/program changes included a new fleet services garage budgeted in 1997; a $1 million loan from Electric reserves; the elimination of the machine shop division with functions being transferred to the Electric/Wastewater/Solid Waste Divisions. New positions included the transfer of 3 machine shop positions to the Wastewater and Solid Waste divisions. Rate changes included increasing the garage rate from $40 to $42 which was 85% of competition rates and increasing gas/diesel revenue cost margin by 6 cents (estimated gas price of~ $1.05 per gallon) 20. Economic Development Corporation City Manager Benavides stated that the Economic Development Corporation (EDC) Board needed to submit a budget to the City Manager to be presented to the Council for consideration and approval. Staff had been assisting the EDC staff to develop a budget. The EDC was developing performance measures which indicated what the EDC would accomplish with the money asked for. Originally the EDC had asked for a $365,000 transition budget. Some money given would be rollover money ($40,000), the EDC would continue to received $85,000 from the Utility Department and the General Fund would have to find $72,000 to reach the EDC's new budget amount of $97,000. Council Me~er Biles stated that the private sector money was not included. Herb Prouty, City Attorney, replied correct. 42 City of Denton City Council Minutes August 9,1996 Page 9 City Manager Benavides stated that the EDC indicated that they would be spending the money faster than first assumed so that the rollover amount might be less and additional funding would have to be found to make up the difference. The money would be used for supplies and services rendered to the EDC. Quite a bit of money was a transfer to the Chamber to do work for the EDC. That figure did not include time spent byhimself, the city Attorney, the Executive Director for Finance, and other staff on the project. Council Member Biles stated that there was an absence of administrative transfers. City Manager Benavides replied correct. City Manager Benavides stated that the Chamber was receiving money for work from the EDC but City employees were not being reimbursed. Council Member Beasley asked if the EDC was just funding what the Chamber was already doing. Council Member Biles stated that previously the City and the private sector were putting money into an economic development fund. Out of that account, salaries were paid for economic development and supplies. In the beginning of the formation of the corporation, it was indicated that it had to contract with the Chamber and would have to continue until the sales tax election. Mayor Pro Tem Brock stated that in the past, those activities were funded half from public funds and half from private funds. The proposal was to fund all with public money. City Manager Benavides presented outstanding issues associated with the EDC - (1) Would the transitional budget be funded with General fund dollars?; (2) Would the entire year be funded?; (3) Would the funding only be supplied until the election?; (4) Should the election fail, what would be the next step?; (6) If the Council decided to providing the funds, would one-time funding sources be used? Council Member Biles stated that what the EDC proposed would be entirely from public dollars - no matter where they came from either general fund or utilities. The private sector money would stay at the Chamber for some of their current projects which were not in the realm of the EDC. council Member Cott stated that if this was public money, then goals and objectives needed to be set for them for the next six to twelve months. If tho~ goals and obj~ctiv~ were not met, then discontinue the funding. City Manager Benavides stated that that was one of the requirements City of Denton City Council Minutes August 9,1996 Page 10 43 of the ordinance. The EDC had to provide productivity/performance measures tied to the dollars provided by the City. City Attorney Prouty stated that the usual process was to have a sales tax election and then form the EDC. City Manager Benavides stated that there might have to be an interim budget based on the passed sales tax. City Attorney Prouty stated that there might be the need for a contingent budget as part of promoting the election to make it successful. This would develop and communicate to voters what was going to be done with the money. Council Member Young stated that there was a need to start work on selling the idea of the sales tax as people were having problems with the idea of the EDC buying land. It was felt that this was government competing with private enterprise. Council Member Beasley stated that as the process was done in reverse with the formation of the corporation before the approval of the additional sales tax and as the EDC had contracted with the Chamber to pay for services the Chamber previously provided, she felt it was best to ask the EDC to continue those traditional activities with the Chamber which were now in the EDC and funded with utilities money. After the sales tax election other activities could be started. Council Member Biles stated that the City and the EDC could not spend money to promote the economic development sales tax. There was a plan to use the private sector $40,000 by the Chamber to promote advertising for the sales tax election. Council Member Biles stated that right now the City was putting money in the EDC and the EDC was giving money to the Chamber of Commerce. He had made the observation to the Chamber of Commerce Board of Directors and the Executive Committee, that if Council did not provide the Chamber funding by moving Ken Burdick to the EDC immediately, the Chamber would financially fail at that point in time because they had signed leases for equipment and that was why he had pushed to have the EDC contract with the Chamber for a transitional period of time. His suggestion, at this point in time, was that the EDC was a City board. Therefore, the City had an obligation to fund the EDC through the entire City fiscal year which took funding to September 30, 1997. However, he suggested that the Council adopt a resolution that stopped that obligation of the EDC contract with the Chamber effective March 31, 1997 which was the Chamber's fiscal year. If that was done in this budget with that resolution, it would provide the Chamber time, from March 31st, to develop their own budget without the EDC funding. If the EDC wanted to have Ken Burdick as an employee doing economic City of Denton city Council Minutes August 9,1996 Page 11 development, then the EDC, after April 1st, would have him working for them. The City would then assume 100% of the fiscal responsibility for its board and would remove the job of economic development from the Chamber. Mayor Miller asked for Council response to Council Member Biles' proposal. Council Member Young stated that he was 100% behind the proposal. Mayor Pro Tem Brock felt that the City's formation of the EDC was based on the idea that there would be a new source of funding. That was the only reason for the formation of the EDC. She felt that a mistake was made in appointing the Board before the sales tax election. Council Member Biles asked if the economic development sales tax did not pass, was Mayor Pro Tem Brock recommending that the EDC be dissolved. Mayor Pro Tem Brock indicated that that was one of the issues which still remained. She was concerned about using General Fund dollars to increase the funding to the Chamber. Mayor Miller stated that Council Member Biles' suggestion was to set a deadline to continue to contract with the Chamber and then discontinue funding after that date. Mayor Pro Tem Brock stated that over the last several months she had lost confidence in the EDC Board. She felt that Council Member Biles had a good point in that there needed to be a decision on the issue. City Manager Benavides stated that the City would meet the Chamber's commitment until March 31st. The City would treat it as any other board, support them with staff and incur the cost involved in economic development until the election. After that point in time, they would have their own money to hire their own staff. Mayor Pro Tem Brock felt that the City would have to give the Chamber considerable staff support until after the sales tax election. Council Member Biles felt that the Chamber had not been effective in delivering the product for which the City had been giving them money for over the years. It was time for a policy decision to be made and time to move forward. Mayor Pro Tem Brock stated that several years ago, the city entered into a contractual relationship with the Chamber. The city was City of Denton City Council Minutes August 9,1996 Page 12 45 going to share the cost of an economic development operation which would be based in the Chamber. At the same time, the city would have an economic development office in the City government. If the Council followed Council Member Biles' suggestion, it would be saying that it felt the Chamber had not done a good job and therefore would be ending that contractual relationship. There was another body in place which had a contract with the Chamber. There was a charter for that body and Council Member Biles' suggestion was to give that body more direction. But the charter of that body was changed drastically from the State direction. Every bit of Council control, which was not absolutely required by State law, was removed. The EDC would not have to follow the city's control except by the annual review of the program and budget. Mayor Miller stated that a positive view of the proposal was that since the EDC had been formed, which was set up at the request of the Chamber and others, a wayto provide economic development was to make the board accountable and responsible as a City board. There would be an obligation to continue to contract with the Chamber until March 31st. Currently the EDC had been spending most of their time worrying about the funding issue of the sales tax election instead of getting on with economic development. As per an earlier discussion, the EDC would begin to function as an economic development corporation and that the responsibility for determining the sales tax election and associated factors would no longer be their responsibility. That would be the responsibility of a task force established by the City Council. The Council appointed the members of the EDC and the law clearly stated that those members served at the will of the Council. If one or more of those members did not do what the Council needed to be done in terms of economic development, the Council needed to replace those members. Mayor Pro Tem Brock stated that this might be perceived that the City was blaming the Chamber for economic conditions. Council Member Young felt that the Council was not indicating that the system did not work for the past 10 years, it was indicating that things could work better. Mayor Pro Tem Brock stated that she had heard that the Chamber planned to house the EDC in conjunction with their building expansion. The Council was proposing to spend the public's money to support this function. It would be divorced from the Chamber. How did that differ from the public perception that the City was setting up a government entity which would be funded 100% by the public and would be housed in the Chamber of Commerce. It was a function which had been directed by the Chamber and half funded by the public. Council Member Biles stated that if the EDC received $3-3.5 million city of Denton City Council Minutes August 9,1996 Page 13 a year, he doubted if they would want to be in the Chamber building. Mayor Pro Tem Brock stated that the Chamber felt that they would be there. Council Member Cott stated that too much effort had been spent on the way how to get the sales tax and no effort on economic development. Council Member Beasley felt that it was not possible to have three economic development operations. The previous City Council decided to proceed with an economic development corporation which was now in place. The corporation had been formed and had no funding. It was suppose to be funded with a sales tax election which had not yet been held. She felt that it should be separated from the Chamber and should be a city function. She had a problem with funding the EDC to the amount they were requesting when she was unsure of what they were asking for, what would be done with the money and what the plans were for the year. Until the sales tax passed or failed, they should be on a small budget and the city should not put a lot of money into it. Council Member Biles stated that the $197,000 was less than what was expended last year to do the same thing. Mayor Pro Tem Brock asked where the money came from last year. Council Member Biles replied from the City and the Chamber. Council Member Young felt that the Council was in favor of severing ties with the Chamber in March and that a task force would be formed. Mayor Miller stated that the task force would be accountable to the City Council and not to the EDC. He felt that each Council Member would appoint two people to the task force plus the original 13 members. A chair would be selected from the task force. These would be appointments and not nominations. The charge for the task force would include evaluating 4A and 4B, the amount of the sales tax and possible uses of the money. Council Member Young felt that the task force would be responsible for promoting the passage of the sales tax increase. Mayor Miller felt that there were two issues - economic development and funding. The EDC was a corporation set up by the City Council to carry out economic development. The job of the EDC was to promote the city and establish goals and objectives and criteria for what was necessary to succeed. At some level, still to be determined, that would be funded. The Council had directed the EDC City of Denton City Council Minutes August 9,1996 Page 14 47 to subcontract the services with the Chamber of Commerce. The resolution indicated that this would end as of March 31st. It would be funded for the next year but the funding would be for the balance of the fiscal year. Council Member Beasley asked if the charge for the task force would include deciding what amount of sales tax to ask for, what the money would be spent on and whether to form a 4A or 4B corporation. Mayor Miller replied correct. The task force would study the issue and would recommend what would be best for the community and then promote that issue. Council Member Biles on whether to form formed a corporation would be formed. was not sure that the task force should decide a 4A or 4B because the Council had already on the premise of the recommendation that a 4A Mayor Miller felt that the task force should have the option to study 4A or 4B. Council Member Biles felt that the course had already been set for 4A for economic development. Mayor Miller felt that the way to allow the task force to determine a recommendation which would most saleable to the citizens would be to give them more leeway. City Attorney Prouty stated that the City had formed a corporation under 4A of the Economic Development Act. It was set up before the sales tax election was held. A 4A and 4B could be held in the same election. Mayor Pro Tem Brock stated that the task force could possibly recommend a 4A and provisions for a 4B but could not have a 4B election in lieu of a 4A election. City Attorney Prouty stated that there was an economic development corporation formed under Section 4A. If the task force recommended 4B it could recommend a sales tax election under 4B and then convert the 4A to 4B or dispense with the 4A and create a new 4B corporation after the sales tax election. Council Member Biles felt that he could not go in that direction as the Council had already made a policy determination of which path would be pursued. He was unwilling to return to having to make a decision between 4A and 4B. Mayor Miller stated that he was concerned about the passage of the sales tax increase. He felt that the task force should have the opportunity to study the options of 4A and 4B. By limiting the 48 City of Denton City Council Minutes August 9,1996 Page 15 study to 4A, the probability of success of passing the tax would be limited. Betty McKean, Executive Director for Economic Development and Municipal Services, stated that 4B's original intent was to be project specific. As the program had evolved, it could be an ongoing list in which the 4B sales tax revenue would not have to be retired. Other projects could go on as there was an active board. A list of projects was needed but it could be an ongoing list. With 4A, strategic efforts would be listed on the ballot and with 4B specific projects would be listed. The 4B board could be overlapped with what was in place currently, there could be two separate boards or the Council could be the 4B corporation. Mayor Pro Tem Brock stated that Euless had passed a 4B corporation 'with some projects which were economic development projects. They also had an eighth of a cent which was allocated in general for economic development. Euless was able to sell the sales tax to its citizens because one eight of a cent was for economic development and three eighths were for projects which the citizens could see would benefit the community. City Attorney Prouty stated that there was more flexibility under 4B than 4A. Under 4B, the projects were more likely to be tax exempt and the feeling when the EDC was formed, was to create projects which were taxable in order to increase the tax base. Under both types of corporations, economic development could be done and there were more specific municipal/public works type projects in 4B. One election could probably be held for both a 4A and 4B sales tax and split between the two. One reason for going with a 4A corporation was that the board did not want to have a public hearing before ea=h specific project was done. Council Member Young stated that the concept was started with a 4A project and he would continue to support a 4A corporation. Mayor Miller asked for the City Manager's comments on the issue. City Manager Benavides wished that the EDC would allow the discussion on the 4B. He was afraid that the EDC was locking all other options out and that the election would fail. City Attorney Prouty stated that if the Council went with a 4A and 4B there would be a need for two separate entities as the requirements for the boards were very different. A corporation would prefer to have a 4B as the 4B would own the existing site as it then would be tax exempt. The 4B would then lease the site to the corporation. Mayor Miller asked if the Council was in agreement to have the staff prepare a work session discussion on the sales tax task force City of Denton city Council Minutes August 9,1996 Page 16 with the understanding that a resolution would be prepared to be considered on September 3rd to appoint the members, etc. The Council would then discuss the charge for the task force. Consensus of Council was to proceed with that discussion. Mayor Miller asked if Council was in agreement that as of March 31st, the City would no longer be subcontracting with the Chamber so that budget preparations could be made at this time. Council discussed the proposed budget of the EDC and the amount of funding which the City would provide. DuBose indicated that the City was already committed to $125,000 for funding. Mayor Miller asked how this would come back to Council and how it would be communicated to the EDC and the Chamber. city Manager Benavides stated that the EDC would meet on August 21st and the Council could consider this on August 27th. Consensus of the Council was to proceed with the proposal to discontinue services as of March 31st. With no further business, the meeting was adjourned. 49 ~]~NNI~ ~ALTERS ~ITY SECRETARY CITY OF DENTON, TEXAS ~S ACC0032E