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Minutes February 11, 1997344 CITY OF DENTON CITY COUNCIL MINUTES February 11, 1997 The Council convened into a Closed Meeting on Tuesday, February 11, 1997 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, Durrance, and Young. ABSENT: None 1. The Council considered the following in Closed Meeting: A. Legal Matters -- Under TEX. GOV'T CODE Sec. 551.071 Received attorney-client privileged legal advice on legality of provisions within the proposed ordinance rewriting the Zoning Chapter of the City Code relating to appropriate zoning district classifications within which parochial schools should be located and the specific use permit process. B. Real Estate -- Under TEX. GOV'T CODE Sec. 551.072 Personnel/Board Appointments -- Under TEX. GOV'T CODE Sec. 551.074 The Council convened into a Special Called Meeting on Tuesday, February 11, 1997 at 7:00 p.m. in the City Council Chambers. PRESENT: Mayor Miller; Mayor Pro Tem Brock; Council Members Beasley, Biles, Cott, Durrance, and Young. ABSENT: None 1. The Council considered approval of an ordinance of the City of Denton authorizing the Mayor to execute on behalf of the City of Denton a memorandum of understanding with N.W. Realty, Inc. and Terrano Realty, Inc. relating to economic development program incentives for International Isotopes, Inc. (AIPC) to effectuate an expansion of operations and an increase in employment levels of AIPC in Denton by locating facilities in 475 acre North Texas Research Center. Linda Ratliff, Director of Economic Development, stated that this ordinance would authorize the execution of a memorandum of understanding for the purpose of constructing a 2,332 foot road. Although the road was not proposed on the CIP program at this point in time, it had always been on the long range thoroughfare plan. The property owners had asked to expedite the construction of that road for the purpose of locating a medical isotope company on that DroDerty. The company was very interested in Denton and had had a relationship with the University of North Texas for several years. The location of the company could ultimately greatly benefit the University. The cost of the road was estimated at $606,000 with engineering and design costs of another $103,000. The property had two options related to the construction of the road. If the City constructed and designed the road, the total cost of the project would be $709,000 with an 18 month term once the City received city of Denton city Council Minutes February 11, 1997 Page 2 345 written notice from the property owners to proceed. If the property owners provided the City with the design plans, the cost of the project would be $606,000 and take 12 months to complete from written notice to proceed. In consideration of the road, the property owners would dedicate the right-of-way and guarantee that two buildings would be built with a total value of $4.75 million. The structures would be equipped with personal property valued at approximately $7.5 million. They would also guarantee that a payroll of $4 million would be obtained by the end of the fourth quarter of 1999. The property owners would execute a promissory note in the amount of the construction, design and engineering costs, if included. A deed of trust for the property would be provided as collateral for the purpose of reimbursing the City should the improvements or personal property values not be met. Since it was anticipated that this location would generate more development in the area, the contract would allow the property owners to sell or develop other pieces of land. Depending on the total amount of the note, the property owners would transfer $1,500 for a $606,000 note or $1,700 for a $709,000 note into an escrow account to reduce the principle of the note. All sales of any property in that tract would be approved bythe City of Denton. If at the end of a three year term of the note, the combined total of the improved value of the new structures and equipment was $12,250,000 or greater or the payroll generated at the North Texas Research Center was $4 million or greater, the responsibilities of the property owners would be considered met and the note would expire. If at the end of the three year term, the improved value or the payroll thresholds were not met, the property owners would reimburse the City for the amount of the note. Consideration would be given for any improvements made over the three years. The contract provided a formula of the amount of the promissory note less an increase in City of Denton annual property tax revenues times ten years. Mayor Pro Tem Brock asked if the amount of repayment would increase annual taxes based on the actual tax figures. That would not be known until a new appraisal was done after the improvements. Ratliff replied correct. chris Coil stated that he had some major concerns regarding this facility. He had a concern when such a large facility would be producing radioactive materials. He questioned if an environmental impact study had been done on what would happen with this facility in place. He had a concern dealing with fact that Denton just had a lopsided election dealing with the recent EDC vote and whether to use sales tax money for private entities in order to promote growth. The public decided that that was not a proper use of tax dollars. He did not think it would be proper following the results of that election to spend taxpayers money to build this road. Other roads in the city were a priority. He was curious if traffic studies had been done in the area. He did not see any kind of traffic flow into that area. 346 City of Denton City Council Minutes February 11, 1997 Page 3 Dorothy Damico stated that she had three points regarding this issue. She had been gathering information regarding the proposal and felt that it would be an excellent company for Denton. It was high tech/high salary and good for the community. She supported the company in Denton. Because she was involved in the group that educated voters who ultimately voted against the recent sales tax, she wanted to assure Council that many who voted against that package were not opposed to economic development activities. There were a number of people who were opposed to the idea of having tax dollars spent to directly benefit private developers for private businesses. This appeared to be such a case. If so, there were many questions she would need answered before she could completely support the proposal. Such a question would be if there was a real need for the road in order to have the company. Could the developers do part of the project. She did not support 100% the City's participation in the project. Council Member Cott asked what would happen if the petitioner indicated that he would not come to Denton without the road. Damico replied that the tax payers in the City of Denton were people she knew. She would have to consider whether or not to ask them to support this project. Mayor Pro Tem Brock stated that she would like to deal with some of the questions raised by Mr. Coil. The Council was aware of the magnitude of the recent election. One of the things said by many of the leaders of those who were working against the sales tax was that a special designated tax was not needed. There was no need for a separate group to make decisions without open discussion or without the recall that elections provided. They indicated that projects such as this could be created within the structure of the City Council in full view of the public with citizens able to express their opinions. Even though some felt that the timing was very unfortunate, Council felt that the timing might be good as it would show that the system in place still worked. She initially had some concerns about safety and environmental issues. The City did not deal directly with issues of this type. This was a very highly regulated matter on the federal level and the manufacturer had to receive permits from federal agencies. The city did not have the expertise or authority to regulate those environmental decisions. The fundamental answer as to whether to spend taxpayers mOney for such a project was would the project create new taxes. There would be a payback for this development. This was a unique project and did something that many wanted which was to bring very high tech jobs to Denton. It would bring jobs related to the assets which the community had. She saw this as creating other jobs and developments which would be similar in nature. She felt it was appropriate for Denton to have a research oriented development of this kind and it would be valuable as it would be the first of this sort. Council Member Young stated that the road was going to be built anyway. Money would be saved in the long term as the company City of Denton City Council Minutes February 11, 1997 Page 4 347 would be paying for the road. This project did not have anything to do with the sales tax. The people who voted against the sales tax were not against economic development. He felt this was economic development at its best. It would bring good high paying jobs to Denton and eventually be a research center for north Texas. Mayor Miller stated that the safety aspect of the project was regulated by several governmental agencies both in terms of creation and utilization. He was delighted that the company would consider Denton for this proposal. The City had an opportunity to develop not just one proposal but over 400 acres of a research park. The Vision project for Denton worked on what the community would look like 20 years from now. One aspect of the Work Group was a research park to bring in high tech - high paying jobs to broaden the tax base. He felt it was appropriate to spend tax dollars to leverage this aspect of the vision project. Council Member Beasley stated that there had been questions about the project but felt that they had been answered to everyone's satisfaction. The consensus of feeling from the citizens was that this was a good project. She was sorry it was coming at this particular time when the City was trying to continue with economic development. She felt good about the project and knew that there would be some continued questions about the project. She felt that by putting the road in the City would recoup the tax money very quickly. The following ordinance was considered: NO. 97-040 AN ORDINANCE OF THE CITY OF DENTON AUTHORIZING THE MAYOR TO EXECUTE ON BEHALF OF THE CITY OF DENTON A MEMORANDUM OF UNDERSTANDING WITH N.W. REALTY, INC. AND TERRANO REALTY, INC. RELATING TO ECONOMIC DEVELOPMENT PROGRAM INCENTIVES FOR INTERNATIONAL ISOTOPES, INC. (AIPC) TO EFFECTUATE ANEXPANSION OF OPERATIONS AND AN INCREASE IN EMPLOYMENT LEVELS OF AIPC IN DENTON BY LOCATING FACILITIES IN THE 454 ACRE NORTH TEXAS RESEARCH CENTER AND DECLARING AN EFFECTIVE DATE. Young motioned, Cott seconded to adopt the ordinance. Mayor Pro Tem Brock stated that no city money would be spent and no city activity would be initiated until all promissory notes and other legal papers were signed and in place. On roll vote, Beasley "aye", Brock "aye", Cott "aye", "aye", Young "aye", Biles "aye" and Mayor Miller "aye". carried unanimously. Durrance Motion Following completion of the convened into a Work Session considered: Special Called Session the Council at which the following items were 348 city of Denton City Council Minutes February 11, 1997 Page 5 1. The Council received a report, held a discussion staff direction regarding the final recommendations Diversity Task Force. and gave of the Mary Ann Fulgium, Acting Director for Human Resources, stated that on November 12, 1996 Dr. Richard Lewis, a diversity consultant, presented a report of findings and recommendations to Council. On December 28, 1996 Dr. Lewis sent additional recommendations which were included in the back-up. These recommendations would effect the organization internally and the community externally. Staff was recommending that some of the recommendations be taken into consideration. The first would be to implement a diversity management panel. This panel would be chaired by the Director of Human Resources and would consist of other management who would be designated by the Director of Human Resources. This panel would ensure the implementation of the recommendations which were approved bythe Council. It would be given a sunset review date in order to complete the recommendations. The City's Work Force Diversity Committee would continue to serve as an advisory group to the Director of Human Resources. Other recommendations would be to expa~dthe current internship program; establish mobility positions which would give internal employees the opportunity to cross train and move upward in the organization; training for the unemployed and underemployed which would expand on such programs as the summer youth program; create an employee recruitment plan; consider off- site Civil Service examinations; update the compensation plan; and investigate considerations for disadvantaged business. Staff was asking direction on implementing these recommendations. Mayor Miller asked if staff had any recommendation for a sunset date. Fulgium suggested waiting until all recommendations were completed and then decide a date at that time. Mayor Pro Tem Brock asked about the funding for the mobility positions. Would these be new positions. City Manager Benavides indicated that these would be new positions. Mayor Pro Tem Brock asked if they would be similar to internships. City Manager Benavides stated that the positions would be like internships and the individuals would probably spend time in other departments to learn how the City worked. Mayor Miller assumed that the diversity management panel would take up each of the recommendations and after discussions with the City Manager and staff, return them to the City Council. Budgetary needs would be handled at that time. Council Member Beasley stated that most of the recommendations of the task force had been put in a manageable way to address those issues. City of Denton City Council Minutes February 11, 1997 Page 6 349 Consensus of Council was to proceed with the recommendations. 2. The Council received a report, held a discussion and gave staff direction regarding the Texas Department of Transportation's Routine Airport Maintenance Program (RAMP). Linda Ratliff, Director for Economic Development, stated that the Texas Department of Transportation had development a new project for routine maintenance at airports. Staff had visited with TxDot individuals who inspected the Airport and who identified maintenance projects for a 50-50 grant. TxDot was asking that the City enter into a contract with them and each year they would inspect the Airport to identify projects. The State would participate in a grant up to $10,000. The City would have the opportunity to decline participating in any year. Once the projects were identified, TxDot combined all of the airports in the region and sent all of those projects to bid for lower costs of the projects. The City would not have to bid or manage the project. The first proposed project was for erosion control in which there would be some reseeding and reshaping of the drainage channel. Another project was to paint the south access road to the t- hangers yellow. Herbicide and vegetation control would also be done. The total cost of the projects would be $19,426 with the City paying $9,713. Staff recommended that the City enter into the contract and participate in the program for this year. Staff was also requesting to take $9,000 from excess funds left over when the Economic Development Corporation was terminated. Council Member Cott asked if any tenants at the Airport were late on payments to the City. Mayor Miller stated that that was not listed on the agenda for discussion. Council Member Cott suggested having the Airport Board create a relative marketing concept of all area airports and see why the City should stay in this business. Mayor Miller felt that this was a whole different issue to be taken up at a future time. Staff was seeking a recommendation for specific funding. Mayor Pro Tem Brock asked what was spent annually on maintenance. Ratliff stated that she was not sure at this point in time. Most of the maintenance was done by the Parks Department. Council Member Young asked if the Airport was making money. Ratliff stated that the revenues from the Airport were put directly into the operating account. The Airport did not operate off revenue. city Manager Benavldes stated that it probably was in the red. 35O City of Denton City Council Minutes February 11, 1997 Page 7 Council Member Young felt that a tower was needed at the Airport especially with added traffic from the speedway. Mayor Miller stated that that was not a point for discussion. Council Member Beasley felt that this was another economic development project. She felt that the Airport would be beneficial to the City if it could be put into the kind of .shape needed to attract people to use it. Mayor Miller asked if the proposal had been reviewed by the Airport Advisory Board. Ratliff stated no but it would be discussed the next day at their meeting. Consensus of the Council was to proceed with the proposal. Council Member Cott felt that a marketing plan was needed. Mayor Miller suggested that Council Member Cott include that suggestion at the end of a Regular Session and put it on an agenda to see if Council was interested in doing such a study. 3. The Council received a report, held a discussion and gave staff direction regarding 1997-98 Airport Improvement Plan projects and the funding thereof. Linda Ratliff, Economic Development Director, stated that this year money from the FAA would be received through the Texas Department of Transportation. Staff had visited with FAA and TxDot for possible funding for projects on the Airport Master Plan. Two projects were proposed. One was a reconstruction of the terminal apron at a cost of $1 million. Because the FAA did not have funding this year, that project would not be considered. Only safety related projects would be considered. The second project was safety related but it had a moderate rating. The City would have about a 50-50 chance for money this year from FAA through TxDot. The City's 10% share would be $10,000. TxDot had requested a resolution from the Council stating that the City was interested in the project and would reserve $10,000 to apply towards the project should funding be received. If desired by Council a resolution would be presented at the next meeting. Money for the project would be used from the excess from EDC funds. Council Member Beasley stated that this project would be an enhancement to the Airport. This was a safety issue and would make the Airport safer in the future. Consensus of Council was to proceed with preparing a resolution for consideration. City of Denton City Council Minutes February 11, 1997 Page 8 .... ~ ...... 351 4. The Council received a report on the schedule for City Hall renovation. Bruce Hennington, Facilities Manager, discussed the reconstruction phases of the project as detailed in the agenda back-up materials. Rick Svehla, Deputy City Manager, stated that City Council meetings would be held in the Jury Selection Room which was a large room with good visuals and acoustics. That room had seating for 100 citizens with the ability to do sound and television. It also had space for Executive Sessions. The Council would have to pass an ordinance indicating the change in meetings rooms. Mayor Miller asked when the move would take place for the Council meetings. Rick Svehla, Deputy city Manager, stated that the first meeting in July would be in held in the Jury Room. Mayor Pro Tem Brock stated as compared with other cities, the Council Chambers had about the same amount of seating. Money was going to be spent to bring the building up to code with sprinklers and ADA requirements. Electrical work, heating and fire exits would also be improved. Consensus of the Council was to proceed with the ordinance to accept the bids. 5. The Council received a report, held a discussion and gave staff direction on the Emergency Management Plan. Ross Chadwick, Fire Chief, stated that the plan was based on four basic principles. Mitigate emergencies from happening in the first place, prepare for those emergencies, respond to those emergencies and recover from those emergencies. The basic plan set the foundation for all responses. The State guidelines and format were used but was made specific to Denton. The keys for effective emergency management were to have a disaster plan in place and ready to be implemented. Good standard operating procedures should be in place with adequate checklists, adequate training and exercises, use of a standard emergency management system, an effective emergency operations center and community integrated emergency management system. A goal was to complete all of the above projects so as to be ready for any emergency which might happen. Consensus of the Council was to proceed with the Droject. 6. The Council received a report, held a discussion and gave staff direction regarding the Bolivar Water Supply Corporation Service Area issues. Bob Nelson, Executive Director for Utilities, stated that this service area was north of the City. The area was in Denton's 352 City of Denton City Council Minutes February 11, 1997 Page 9 extraterritorial jurisdiction (ETJ) in 1976 when the PUC established the certified area when the various utilities could operate. At that time the City made application to cover its ETJ. Shortly thereafter, several individuals wanted water and the Bolivar Water Supply Corporation began extending lines into that area even though they did not have certification to do so. In 1992 Bolivar was in need for funding to expand their system and went to the Federal Government for a loan. One of the provisions of that loan was that the District needed a certificate to serve in the area and could not lose that territority and thus be unable to pay back the loan. The City asked the TNRCC to make the area dual certified similar to Argyle but because of the loan criteria, the TNRCC granted a single certification to Bolivar. The only concern about the transfer was that in the event that an urban development was proposed in the area, a large amount of paper work was required to have the CCN back in Denton's name. The current service policy was to allow the individuals in the area to drill a well or have the normal extension policy from the nearest line. There were several options to consider with this proposal. One option was that Denton continue it's present position which was to allow individual properties which had requested a transfer from Denton' s single CCN to the Bolivar Water Supply Corporation, to do so without contesting such a transfer. Option two would be to grant a blanket transfer of the CCN to the Bolivar Water Supply Corporation for all properties adjoining the present service. Staff's recommendation was to proceed with the second option. Possible conditions for Option 2 included that Denton would purchase the water lines at net book value, the city would not be obligated to pay any fee to Bolivar for lost revenue of existing or future potential customers; Denton would pay Bolivar for a period of five years or until they had enough growth in the area to equal the area that would have been taken. Council Member Cott stated that Denton had been asked by Austin to stay away from the area. He suggested waiting until the citizens requested the service. Nelson stated that the residents had asked for Denton water. This area was not seen as a market share or market profit. Denton only wanted to serve what the customers wanted. If that area sometime in the future became urban and wanted urban type densities, there would be a need for some type of fire protection in the area. Council Member Beasley asked that if option two were adopted and in the future someone outside the area who was now within 200 feet of Bolivar's water line wanted water, would the process start again. Nelson replied that that might be a case by case basis. Mayor Miller stated that part of the issue was political. They had had visits with State Representatives and there were a number of people in the area who did not like option 1. If no other type of solution was suggested, legislation would probably be introduced which would put the TNRCC in charge and not Denton. If something City of Denton City Council Minutes February 11, 1997 Page 10 353 were not done, it would be done for Denton. Council Member Biles stated that when the TNRCC prepared the certificate of transfer order, they would insert an agreed upon valuation methodology and thus conditions would be put into the order to transfer from Denton to Bolivar. That would bind the legal relationships between the two parties. Nelson replied correct. Council Member Biles asked if that were to happen, would Bolivar have the. opportunity to protest a transfer in the future or were they bound by the transfer order. Nelson stated that the implied issue was that Bolivar would not protest. Council Member Biles suggested including another condition in which Bolivar could not protest a transfer back to Denton. He asked if this was a contract matter from a regulatory point of vie~. City Attorney Prouty stated that it could be a contract with Bolivar with all items indicated under the circumstances when Denton would give up its CCN and the circumstances under which Bolivar would retransfer to Denton. That contract could be incorporated as part of the order from TNRCC. Council Member Biles stated that he had seen correspondence from 1996 indicating that Denton would not oppose individual transfers from Denton to Bolivar. He requested wording as suggested for a transfer back from Bolivar to Denton. He requested that the city Attorney advise Council as to whether a contract could be incorporated between the two entities and put into the TNRCC order. Council Member Durrance asked if future expansion with regards to Lake Ray Robert was within growth guidelines as far as inclusion in the area. Nelson replied correct. Biles motioned, Young seconded to proceed with Option 2 but to further advise Council on a contract between the two entities. The subject matter would be Option 2 and to amend Option 2 to include an item that Bolivar would not oppose a retransfer of any subject area back to the City of Denton. Mayor Miller asked if his motion included having staff discuss the item with Bolivar. Council Member Biles replied correct. On roll vote, Beasley "aye", Brock "aye", Cott "aye", "aye", Young "aye", Biles "aye" and Mayor Miller "aye". carried unanimously. Durrance Motion 354 City of Denton City Council Minutes February 11, 1997 Page 11 With no further business, the meeting was adjourned at 8:55 p.m. TNI'FE~rWALTERS Y SECRETARY CITY OF DENTON, TEXAS ACC00366