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HomeMy WebLinkAbout01/22/1990 City Council 00347,. MINUTES OF THE CITY COUNCIL MEETING HELD ON JANUARY 22, 1990 The Regular Session of the City Council of the City of' The Colony, Texas was called to order at 7:00 p.m. on the 22nd day of January, 1990 at City Hall with the following Council roll call: Don Amick, Mayor Absent Rick Harris, Mayor Pro-tem Present Steve Withers, Councilman Present Mike Alianell, Councilman Present Steve Glazener, Councilman Present Dick Weaver, Councilman Present Joel Marks, Councilman Present and with six present, a quorum was established and the following items were addressed: 1. CLOSED DOOR SESSION AS AUTHORIZED BY ARTICLE 6251-17, V.A.C.S., SECTION 2G, REGARDING PERSONNEL, TO-WIT: A. INTERVIEW APPLICANTS FOR BOARD OF ADJUSTMENT AND APPEALS B. MUNICIPAL COURT JUDGE Upon reconvening in open session the following items were addressed: 2. PLEDGE OF ALLEGIANCE Mayor Pro-rem Harris led the council and the audience in the Pledge of Allegiance to the flag of the United States of America. 3. CONSIDERATION OF APPOINTMENTS TO THE BOARD OF ADJUSTMENT AND APPEALS Councilman Alianel] moved to re-appoint Michael Leddy to serve on the Board of Adjustment and Appeals, Councilman Weaver seconded the motion which carried with a unanimous roll call vote. WORK SESSION 4. DISCUSSION AND REVIEW OF THE WATER AND SEWER RATE STUDY Mayor Pro-rem Harris stated this is a work session and there will be no Citizen Input. Councilman Weaver suggested that citizen input be allowed and the Mayor Pro-rem said no, this is only for Council to review and suggested there be a public hearing on this matter on February 5, 1990 agenda. Councilman Weaver moved to open the meeting to citizen input and Councilman Marks seconded the motion which failed with the following vote: Withers - No, Alianell - No, G]azener - No, Weaver - Aye, Marks - Aye, Harris - No Bill Hall said there seems to be a misconception as to what the Water and Wastewater Rate Study was, noting Mr. Langford had been asked to study the facilities to see if they are adequate and to determine if the fund balance is sufficient to handle capital expenditures and to cover increases from the City of Dallas for the Dallas water. Mr. Langford addressed the Council, stating he had tried to determine needs and to protect those who can't afford to pay high water bills, and that he thinks the study accomplished that by suggesting a user based system. Mayor Pro-rem Harris asked why a measured system and Mr. Langford said those who use pay, noting that 4 of 33 cities are on a flat rate system, going on to say there is no way to defend a flat rate. Councilman Weaver said we are already on a measured system. Mr. Hall explained that we are not, stating the water is measured but the wastewater is not. Mr. Langford went on to say the fairest and acceptable method is by water consumption and said the only other way would be to increase to a larger flat rate, again stating that the people who use the least will feel the increase the least. Boyd London with First Southwest was present and said the method currently used for billing was prevalent lfi~20 years ago, but now the EPA says they want a measured system so the user can pay for what he actually uses. Mr. London said financially there will be no great: difference, but that most cities across the nation are on a measured, user based system (sewer too). Mr. London said State Grant Applications require user based systems to encourage conservation. Councilman Marks asked about the draft ordinance and what the monthly water rates are. Mr. Langford said it is based on what goes through the meter. Councilman Marks asked how we can charge for consumption on sewer rates if we are not measuring the water going into the sewer. There followed a discussion, after which Councilman Marks stated that he felt basically the study was based on the fact that the city needs to raise 1.1 million dollars in revenue and this is the best way found to meet that need. Mr. Langford said he tried to propose the fairest and best method to increase revenue. Councilman Marks asked Mr. Langford if he was asked to raise the rates enough to raise the 1.1 million dollars. Mr. Langford said he asked Mr. England what it would take. Mayor Pro-rem Harris said if the water and wastewater needs 1.1 million dollars for expansion this is one way to raise that money, but it is not the only way. Councilman Alianell noted that at the current rate, the city will be losing money but if we raise 1.1 million dollars we (the city will be covered for expansion, going on to say that the rates should reflect the real cost of the system. Mayor Pro-rem Harris asked Mr. Hall to clarify the transfer of funds from the Utility Fund to the General Fund. Mr. Hall explained that each year in the budget transfers are made from the Utility Fund to the General Fund to cover administrative costs. Mr, Hall went on stating that after the City/MUD merger 00347o certain personnel previously employed either by the City or the MUD were suddenly doing work for both entities. These administrative costs were taken from the General Fund and then reimbursed by the Utility Fund for work performed for that entity. Mr. Hall said that many functions are dual and could be handled monthly with time cards by the General Fund employees filling in the time they spend on Utility Fund projects, but that is not the best way to handle this matter, stating that the way we handle this is a standard approach. Mr. Hall said this is done annually at the beginning of each budget year the amount is approximated and the transfer from the Utility Fund to the General Fund is budgeted for that amount, stating this year the amount is $600,000.00. Mr. Hall went on to way that 15% of the annual budget is acceptable to transfer and our transfer is 12%, which is not excessive. Mayor Pro-rem Harris asked Bob Scott with the city's auditing firm, Deloitte/Touche to express his opinion regarding this subject. Mr. Scott said he audits several cities in the are and this practice is very common, although there are different approaches taken to arrive at. the amount, of transfer, noting that 12% is not out of line, going on to say that 10-15% is average. Councilman Weaver said he felt things mentioned in a letter from Mr. Hall with respect to justification for the transfer were not valid and that he felt $600,000.00 is excessive. Councilman Marks asked Mr. Scott what the budget is for the other cities he audits. Mr. Scott said he could not answer that. Councilman Marks asked how The Colony compares to the other cities and Mr. Scott said there are several factors to look at, ie, maturity of the city, the system, growth, land area, etc. and without a study it would be impossible to determine the exact amount. Mayor Pro-tem Harris said that everyone on the Council voted for the transfer and that it has been a part of the budget process for the last 3 years. Councilman Weaver noted that he did not vote for the budget this past year and that he feels $600,000.00 is too much for the amount of work done for the Utility Fund. Bill Hall said the study was done for several reasons and that a dollar figure was not given to Mr. Langford as a goal for the rate increase. Mayor Pro-rem Harris ask Mr. Hall when it was decided to do a study and who approved the study. Mr. Hall advised the decision was made about a year and ago and was approved by the Council. Mr. Hall went on to say the last time a utility rate adjustment was made was in 1986 and the base rate was dropped by $.50 and that the water rates had'not been adjusted since 1982 except when the Dallas water was tied in. Mr. Hall said the last time there was a sewer rate study was in 1983 and that was an internal study as was the 1986 water rate study, noting that since that time the cost of Dallas water has gone up. Councilman Weaver asked what we do pay for that water and Mr. Hall said .2829 per 1000 gallons plus the up front charge. Councilman Weaver said he wants to know what we pay Dallas per 1000 gallons for water and Mr. Hall said he just addressed that. There followed a discussion regarding the cost, demand charges, etc. Mr. Hall said with the demand charge, the total cost is about 57- 60 cents per gallon. Councilman Weaver asked what we charge the people, noting it is $1.50 per 1000 gallons and we pay about $.54 cents per gallon so we are making a profit, going on to say that in fact the amount of water that we pay for from the wells is much less than this. Mayor Pro-rem Harris said there are charges above the cost of pumping the water, We, electrical power, maintenance, etc. Bill Hall said that in 1988 we were paying 24 cents per 1000 gallons on a demand charge and the rate of flow control cost was $90,000, making a 16.5% increase from 1988 through 1990. Mr. Hall said the cost of electricity to pump the water has gone up 14% for a total increase of approximately 30.5%, which is the direct cost to pump water. Mr. Hall asked, "Do we absorb this or pass it on to the customer?", stating this is part of the reason for the study. Mr. Hall addressed the depreciation factor, stating now this has to be accounted for and it did not have to be while under the M.U.D. Mr. Hall said staff asked, is the system self-sustaining, do we have enough money to account for the depreciation, are we covering our costs which have been passed on to us. Staff felt ,we were, not..adequate~and..-we gave this information to Mr. Langford. Mr. Hall said Mr. Langford conducted a study and has made a recommendation based on that study and that information has been passed on to Council for a decision. Councilman Glazener clarified, under the M.U.D. no depreciation was considered, but now under the City government, depreciation has to be considered, and went on to ask if this problem is a lack of long range planning or is it just time to re-evaluate. Mr. Hall said we have had 3 years history to develop a depreciation factor which is required for a system of our size, again noting that prior to the merger this was not necessary, going on to say the Utility District only had to maintain 2 months operating budget. Boyd London again addressed the Council, stating that the M.U.D. sold bonds backed by an unlimited tax levying ability and that cities have very limited taxing ability and most cities cannot finance all their systems by taxes. Mr. London said that the fund needs to split out into a self-supporting system which is what the City is trying to do with the water and wastewater systems. Councilman Weaver said that money collected for the Enterprise should stay in the Enterprise. Mr. London stated that it is a common practice to assess cost out to various funds. Councilman Weaver asked if the money could be used elsewhere for anything. Mr. London stated that Texas Law says that excess money in any fund can be used elsewhere for anything but that most cities leave in it the fund, except for transfers such as our city makes, Mayor Pro-rem Harris noted that this Council may decide to use the money for one thing and future council could change that decision. Councilman Marks asked if City Hall measures the water used 0O347,, and if they pay a water bill. Mr. Hall said the water is metered, but no bill is paid. Councilman Withers asked if surplus funds could be used to retire debt and again Mayor Pro-tem Harris said this council could make that decision but future councils could change it. Councilman Weaver asked why the total cost of the tax office is charged to the Enterprise. Mr. Hall explained that the tax office was in the M.U.D. before the merger and operates out of the Utility Department now. Councilman Weaver said we(MUD) used to charge the city and now we don~t charge the city anything for that operation, going on to say it costs the Utility Fund $111,310 to operate the tax office. Mayor Pro-tem Harris said when a charge back is based on a percentage, it' would'b-e difficult to pick a particular department and determine exactly what should be charged back, noting this is done for simpli, city~s sake. The Mayor Pro-tem said you can make it look any way you want on paper, and it is all on paper~ we are all the same city. Councilman Weaver said we are doing the same with the Vehicle Maintenance Department, stating the cost to run is $213,000 and only $80,000.00 is budgeted to be paid into that department and the balance of $133,000 comes from the Enterprise. Mr. Hall said that all General Fund Departments with vehicles budget for fuel, maintenance, etc. and that money is paid into the Vehicle Maintenance Department. Councilman Weaver said all that is shown is $80,000, asking if that is all that comes from the General Fund Departments. Mr. Hall said the balance comes from the departments in the Utility Fund, We, Water and Wastewater, but that there is no line item in their budget showing vehicle maintenance. Mr. Hall said that department is an enterprise department and the tax office is not. Councilman Weaver went on to say that his point is that we (the city) is not telling people where money is spent, we just want to raise the water rates. Mayor Pro-rem Harris said that is not true, stating first that he is not prepared to raise the rates yet and second that the facts indicate that maybe a raise is necessary, going on to say that costs of services have gone up. Councilman Weaver said that in 1988/89 the tax for the utility department was $.31 and if we thought we were losing money how could we lower it this year to $.28. Mayor Pr~-~'em Harris said that taxes go for debt retirement the monthly rates are for operation and maintenance of the system. Councilman Marks asked if there would be a 1.1 million dollar shortfall in the Utility Department and Mr. Hall said there will be a shortfall in the total budget, but that he had no idea how much money it would be. Councilman Weaver asked why the budget was passed as balanced. Mr. Hall said that for the last 3 years, expenditures have been as tight as possible and the revenues are based on very conservative estimates, going on to say that staff did not propose a budget with a one million dollar shortfall. Councilman Marks asked if there are other areas of revenue, cuts in services or can it only be done through the water rates. Mr. Hall said no that the Fees Corr~nittee had looked at some upward adjustments because our fees are not adequate to cover the cost 00347° of services. Councilman Marks said that since the Fees Corrraittee was disbanded by the Mayor he thought the Council would work together in a Work Session to determine if the remainder of the fees need to be changed and asked why those fees cannot help cover the shortfall. Mayor Pro-rem Harris said that has been addressed in a Work Session a couple of months ago. Councilman Marks said then we can tell the citizens of The Colony we're really not looking at this type of increase in the water rates and that this was just done on the basis that we are going to be 1.1 million dollars short and this is a way to raise it. Mr. Hall said we looked for a recommendation from an outside consultant because we do need to adjust our rates upward. Mayor Pro-rem Harris said there needs to be a public hearing so the Council can hear from the citizens, and went on to say that he does not think anyone on Council wants to pass a 40-60% increase, noting we (Council) do not get a cut and we pay water bill's too. Mayor Pro-rem Harris said there will be a public hearing on this issue on the February $, agenda unless that agenda is too full and if so the hearing will be on February 12. Councilman Withers said he wanted numbers on staff time charged to the Utility Fund. Mayor Pro-rem Harris said that will take longer than 2 weeks and that those are two separate issues. Councilman Glazener asked if we are attempting to raise money to cover the depreciation cost which was not forese~ or to cover a general shortfall. Mayor Pro-tem Harris said we know we will have a shortfall, however there is not enough money to cover expansion and long term maintenance. Mr. Hall said funds are needed to cover unforeseen problems. Councilman Weaver said there is 3 million dollars in uncommitted funds that would take care of any unforeseen problems. Mayor Pro-rem Harris said if that money is spent then the City loses the interest earned from that money. Councilman Weaver said that would be one way of handling the unusual situations that Mr. Hall had referred to. Mr. Langford said 97% of the customers are residential, noting that business customers pay $10.50 minimum and on a user based system they would pay $1.50 per 1000, noting this is a fair rate. 5. DISCUSSION OF ESTABLISHING A POLICY REGARDING DISBURSEMENT OF DONATED FUNDS Mayor Pro-rem Harris said this on the agenda due to come confusion when Wal-Mart recently donated $1000.00 to the City. Councilman Weaver suggested that if the donated funds are designated for a specific use, then the money should go for that use. Councilman Marks agreed. Mayor Pro-rem asked what to do if the use is not stipulated. Councilman Weaver said the money would go into the General Fund. Mayor Pro-rem Harris said he does not want staff to be put on the spot by suggesting a cause and went on to say that maybe a list of worthy causes could be made available to donors. There 003470 followed a general discussion regarding the manner in which to suggest uses for undesignated funds, after which the City Secretary was directed to place this item on the February 5, 1990 agenda for action. 6. OTHER ITEMS OF INTEREST Bill Hall advised Council that the drainage problems on Paige Road may be solved through an agreement with Centex, reminding the Council of Ordinance #357, in which Centex is required to build an east-west roadway in the undeveloped property along State Hwy 121, going on to say that the Council had previously agreed that the road is not needed at this time. Mr. Hall went on to say the drainage problem needs to be addressed i~iis~ediately, that the city should not incur any costs and felt that a work session would be beneficial to address this. Councilman Alianell asked if the problem is a design problem and Mr. Hall said no, that there are 2-48~t pipes under Paige and 60~* pipes under Blair Oaks. Councilman marks asked about drainage from the abandoned portion of 423, stating that water comes from that area onto the new 423 and causes traffic problems. A work session was set for January 29, 1990 to discuss the drainage problems with Centex. With no further business to address, Councilman Alianell moved to adjourn, Councilman Glazener seconded the motion which carried with all members voting Aye and Mayor Pro-tem Harris adjourned the meeting at 9:55 p.m. APPROVED: Don ATTEST:  A, Hicks, City Secretary ~.- ,.x~. ~