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2022 08 16 WS Minutes, Budget MINUTES OF THE BUDGET WORK SESSION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN August 16, 2022 The City Council of the City of Baytown, Texas, met in a Budget Work Session on Thursday, August 16, 2022, at 5:04 P.M. in the Council Chamber of the Baytown City Hall, 2401 Market Street, Baytown, Texas with the following in attendance: Laura Alvarado Council Member Chris Presley Council Member Charles Johnson Mayor Pro Tern Heather Betancourth Council Member Jacob Powell Council Member Mike Lester Council Member Brandon Capetillo Mayor Rick Davis City Manager Scott Lemond City Attorney Angela Jackson City Clerk Mayor Capetillo convened the August 16, 2022, City Council Budget Work Session with a quorum present at 5:04 P.M., and with all members present. 1. DISCUSSIONS a. Discuss the City of Baytown Fiscal Year 2022-23 Proposed Budget. City Manager Rick Davis opened the discussion by giving the following summary of the proposal: • Inflation Impact: General Inflation 9%; Gas Inflation: Unleaded 60% and Diesel 75% • Senior and Disabled Property Tax Exemption Raised to $80,000($20,000 increase) • Property Tax Rate Reduced from 78.50 to 780 • No Rate Increase in Sanitation nor Stormwater Fees - Eliminated General Fund Transfer to Sanitation by$250,000 • No Rate Increase in Water and Sewer for Low Volume Users • Target: 91 Days of Operating Reserves • General Fund Debt Issuance of$45 Million to fund the Capital Program - Architectural and Engineering Committee continued to work on a revised number The budget also carried forty and a half new full-time employee(FTE)positions.Mr. Davis noted most were field-force oriented positions within Public Works and Parks and Recreation. The City proposed a 5% salary increase to all non-civil service as the City would honor civil service through their contracts. Mr.Davis added there would be an employee health insurance premium holiday and the City was able to keep costs for employees on health insurance stable. Overall, the budget was capital project-oriented. Staff continued to pursue an aggressive schedule over the next five years to target more than a billion dollars in capital improvements of which, $800 million capital projects were currently under design or construction. Mr. Davis noted the Capital Improvement Plan(CIP) assumed City Council Budget Work Session Minutes August 16,2022 Page 2 of 8 a $45 million in debt issuance which would continue to be discussed with the Architectural and Engineering Committee. Furthermore, staff had ideas for Council on how to further reduce the property tax burden for citizens. To describe those options, Mr. Davis deferred to Finance Director Victor Brownlees. Mr. Brownlees explained the options were predicated upon a reduction of debt issuance. While he did not want to prejudge the outcome of the deliberations of the Architectural and Engineering Committee, Mr. Brownlees assumed they would reduce the debt issuance up to $15 million. If they were able to reduce debt issuance as he assumed, Mr. Brownlees gave the following options: • Option 1: Reduce rate to 77.50 with a neutral effect on the General Fund balance • Option 2: Reduce rate to 770 and reduce General Fund contingency by$350,000 • Option 3: Reduce rate to 76.50 and reduce General Fund contingency by$1 million Mr. Brownlees reminded Council the City had $3.25 million in the General Fund by way of contingency in the proposed budget. He reiterated that was predicated on a reduction in the overall level of debt, but he had wanted to give Council those options to consider as they go through their deliberation on the budget. On Options 2 and 3, Council Member Alvarado inquired what that would bring their contingency down to in terms of days as they normally strived for ninety to a hundred days. Mr. Brownlees replied that did not affect the General Fund balance, so they would still have ninety days. It was additional contingency over and above what was in the fund balance. Mr. Davis then took a moment to list important dates for Council • Budget Work Sessions: August 16th, August 18th, August 23`d, and August 25th (if needed) • Budget Public Hearing: August 25th • Budget Adoption: August 25th, September 8th, and September 22°d (final day) • Set Tax Rate: September 22'd Contingency and Reserve Funds Discussion Mayor Pro Tem Johnson questioned when was the last time they dipped in to that contingency fund and for what reason. Mr. Brownlees replied, in the last year, the City used about a$1.5 million of the contingency for the acquisition of a large piece of equipment for the Fire Department. The decision was made on staff's part to avoid the risk of entering in to a lease for the vehicle.Mr.Brownlees viewed, that was a reasonable way to fund the acquisition which would be repaid by the Fire Control, Prevention, and Emergency Medical Services District (FCPEMSD) over the next couple of years. During the course of the year, there were also other lesser issues that arose that the contingency had been used for. However, the City did not utilize much of it in a normal year. Mr. Brownlees suggested, going in to the next year, Council would have some latitude to use that contingency fund for other purposes. Mayor Pro Tem Johnson requested the numbers on those other things the City used the contingency for in the last five to ten years. Mr. Brownlees answered staff could provide that.Until about two years ago,the City had a small contingency fund of about$250,000. The charter allowed up to 3% of the City's operating budget by way of contingency. In the previous year, the City went up to about 2%, but Council did have some latitude. On another note, Council Member Presley understood the contingency was separate from the reserves and inquired where the City was at on that.Mr.Brownlees replied the proposed budged assumed reserves of ninety days which City Council Budget Work Session Minutes August 16,2022 Page 3 of 8 was the industry standard and recommended by the Government Finance Officers Association (GFOA). In previous years, Baytown outperformed that substantially as they closed the last year with around 180 days. Council Member Lester stated he had believed the GFOA recommended sixty days which Mr. Brownlees confirmed it was sixty to ninety days. In addition to the contingency request, Council Member Lester asked to know from the last three to five years where they had ended up with their reserves. To his knowledge,the City always ended with more than their target. Therefore, if they were to target less than ninety days, he believed they would be solid. Even in the years where they had major catastrophes, Baytown ended with good reserves. With that,Council Member Lester wished to see that go down from ninety and closer to sixty knowing that they would end up somewhere around ninety to a hundred days anyways. It was money that just sat there that he believed the City could utilize on other things. Restating his request, Council Member Lester explained that would help him determine if they needed to target ninety days. In regards to the 180 days of the previous year, Council Member Lester questioned how much money was that worth. Mr. Brownlees replied that was about$330,000 a day. Council Member Alvarado wished to know why they ended up with 180 days and cautioned against the mindset of choosing sixty days because they believed they would end up with ninety. They may not have those ninety days as they had in the past because Baytown was a growing city. She would hate to use history in the wrong way. Mr. Brownlees replied one of the main causes for those 180 days had been because of staffing vacancies. The upside of that was the City did not spend that money, so it went in to the fund balance. The downside, however, was that the City did not have the staff to get jobs done. Another large reason was due to the upturn in sales tax. Council Member Lester requested clarification on how much those 180 days were worth, and was responded with$54 million. He believed that was a lot of money they could not ignore. Knowing they were always over, Council Member Lester suggested to trim that down and put money back on the table for projects. Council Member Alvarado agreed 180 days was a lot, but preferred a happy median of about seventy or seventy-five days. She, again, cautioned against using up their contingency and reserves. Council Member Lester repeated his request to see where the City had been over the last three to five years as they almost doubled their reserve capacity every year. He recommended to trim that down so they could put money back on the table to get projects done. Mayor Capetillo suggested staff look at five years in budgeted reserves versus their actual endings. In consideration of the City being short-staffed and if Council would lower their reserves or contingency, Mayor Pro Tern Johnson recommended finding ways to help fill those vacancies in the Fire and Police Departments. Council Member Lester agreed yet noted, in taking off fifteen or twenty days, that was a lot of money that could be put towards projects. Council Member Alvarado added there were needs in the Planning Department as well. The City could not do projects if it did not have the manpower. Council Member Presley concurred there was room to reduce their reserves, but the City had dipped in to the reserves for hurricanes during his tenure on Council. Thus, he preferred to stay closer to ninety days. In the options provided, Council Member Presley favored Options 2 and 3 because the contingency was not so paramount because of the great shape of their reserves. He also appreciated the continuation of shaving off the tax rate. Mayor Capetillo agreed having money in the reserves did not service the needs for capital projects, but having so many capital projects that could not be completed would also back them up. He further spoke on that note and expressed his hope to provide a tax rate reduction. Moreover, Mayor Capetillo thought they could reduce debt issuance with cash funding as Council Member Lester suggested. City Council Budget Work Session Minutes August 16,2022 Page 4 of 8 New Positions and Personnel Discussion Council Member Lester wished to touch on positions and the number of those they were discussing. He was aware they had moved personnel from the Crime Control Prevention District (CCPD) funds which he supported and was not concerned about. He referenced a page in their budget binder that listed the new position titles, but further requested the exact numbers of staff that would be brought on. In Economic Development, Council Member Lester recollected the Municipal Development District(MDD)requested incremental growth. Two positions had been requested originally, yet those two were still in the budget. He believed that was not incremental. Council Member Presley explained the MDD budgeted a portion of the salary for two positions based on the fact that there would be an evaluation of the first position in March of the following year before the second position would be brought on. Council Member Presley further asked over the percentages as he believed the positions had a share from the City's and the MDD's budget. In response, Mr. Davis explained the MDD did not cover Chambers County as it was a Harris County initiative. Thus, part of the money for the two positions had to come from the General fund and the MDD. Mr. Brownlees further explained the decision of the MDD was to set the budgeting for both positions, fill one position now, and decide later in the year whether to fill the second. Both positions were budgeted,but it was not approved to actually appoint the two. The percentages of the funding for those positions were 75% from the MDD and 25% from the General Fund. Council Member Powell noted $144,000 was the total for the two positions, and that their budget binder listed all the position titles on a single line and plural. He requested a table of each position so Council could get a feel for how many staff would be added. The positions listed were also not transferred from the City's special districts, FCPEMSD and CCPD, but were completely new. Mayor Capetillo wondered how many open positions there were for patrol officers. Police Chief John Stringer answered there were fifteen.In past budgets,Mayor Capetillo relayed the City added positions to try to keep up, but now they could not fill those positions. Thus, adding more positions would not do anything but tie money up. The police positions proposed were in preparation for the new Public Safety Administration Building, so he believed that was a good proposal for personnel.The City would not propose new patrol officers because of those open positions and a recently approved contract to help with recruitment. Mr. Davis added the budget also proposed hiring civilian personnel to take the place of positions utilized by sworn officers. Therefore, acquiring those civilians would put officers back on the street. Council Member Alvarado wondered with the fifteen open positions, did the Baytown Police Department (BPD) have adequate admin support for that? Chief Stringer confirmed they did and BPD would only add a few records clerks. As Council discussed positions, Mayor Capetillo commented he wished to see clean medians, thoroughfares,and intersections in Baytown. Litter lined up against medians made the Mayor unhappy because he knew the City had personnel dedicated to that. He requested staff to focus in on that. Council Member Presley recalled when Council approved the drainage fee, one rationale given was that the City could use that money to do more drainage work in-house and have an additional dedicated drainage team.He asked if the budget accounted for that.Public Works and Engineering Director Frank Simoneaux replied the drainage team had been added in the previous year. Council Member Presley additionally inquired about the Tourism Technician. Public Affairs Director Thomas Reeves replied that part-time position would be paid fully by the Hotel/Motel (HOT) Fund and designated to the Brunson Theater as the marketing and front desk person. General Budget Concerns Discussion City Council Budget Work Session Minutes August 16,2022 Page 5 of 8 Council Member Alvarado shared being part of the Architectural and Engineering Committee answered many of her questions on the budget. However, she did send staff her questions mainly dealing with the$200,000 in vacant lot cleanings. One question was if the vacant lots were city-owned or substandard properties, and she was told they could include both. The City had about sixty plus lots and staff was working on ways to get those back on the lease roll. Council Member Alvarado believed the $200,000 could be rolled over to something else if they find a way to take it off the budget. Nonetheless, she was happy with the response she received and hoped that number would continue to reduce as Council moved forward in future budgets. In addition, Council Member Alvarado brought to Council's attention the $500,000 in demolition of structures both city-owned and substandard. She understood the City got a good rate clumping those together,but she wondered how much of that would the City get back from substandard. How long did those stay on substandard, and could they tackle a different way to handle those that would be demolished by the City? She noted liens could last forever and if the property owner never sells, the demolition would be on the City's dime. She hoped there were ideas to deter that. Planning and Development Director Martin Scribner clarified the $500,000 was a substandard program, and he did not know if that would include anything the City had another contract for. Nonetheless, the City did save by bulking demolitions together over the course of the year. In terms of how long liens sat, Mr. Scribner confirmed they could sit for years. Comparing how many structures the City demolished in the last five years and how many of those had been rebuilt, Mr. Scribner relayed there had not been many and the City had taken out about 200 lots at that point. Mr. Scribner informed Council there was $500,000 in the budget for the current fiscal year, and the City was on course to go through with all those demolitions. Staff's preference was not to tear the buildings down,but it was sometimes necessary. Council Member Alvarado understood and reiterated her concerns about those properties sitting forever and the empty lots. Mr. Scribner shared once a property went on the substandard list, staff exhausted all other options as they went through great lengths to get them under compliance. While staff preferred the properties redone and rehabbed,it was sometimes not possible. There was further discussions as to why properties could sit for extended periods of time. Council Member Alvarado wished for a way to incentivize such properties to be developed. Mr. Davis additionally noted, with the $500,000, staff counted on demolishing single- family residences and hoped not to come across large commercial buildings. Council Member Alvarado agreed and expressed she would hate to demolish another church. Lastly, Council Member Alvarado had a question over the HOT funds. Their budget binder had an entry for "historical" and she wondered what that was and who would receive that 2%. What did historical mean?Mr. Reeves replied those were the grants the City gave out every year to recipients in the community. The grants were divided in to historical and non-historical so they could go to the appropriate events the City had in town. Unlike the Community Development Block Grant (CDBG), the grants were more akin to the neighborhood grants through community engagement. With those, residents applied for the grants and every year the City would give them out. Council Member Lester wished to revisit the$200,000 in vacant lot cleanings. A significant portion of that was under Public Health, Title 42 United States Code Section 7231. Council Member Lester observed the budget for chemical supplies doubled. The average had been around $190,000 in expenditures, and the following year's budget had$349,000. Considering the rain event Baytown had, Council Member Lester did not mind if that went to mosquito control.Nevertheless,he was curious as to why there was a significant jump. Health Director Tony Gray answered that included the chemicals City Council Budget Work Session Minutes August 16,2022 Page 6 of 8 for the shelter under the Public Health part for cleaning and chemical supplies in conjunction with mosquito control chemicals. Council Member Lester jested to have that pushed towards mosquito control which Mr. Gray assured they could adjust as needed. Council Member Presley called Council's attention to the image campaign and marketing study, and requested a description of that along with the cost. Mr. Reeves responded $150,000 was to bring in a consultant to perform research throughout the community. He shared the demographics and questions that would be given to the interviewees. Mr. Reeves explained that would build a foundation for a marketing strategy for Baytown's image and brand.With that,Council Member Presley took a moment to recognize Mr. Davis's legacy with the strategic planning process. However, he cautioned the City to be vigilant in spending money on studies and image campaigns. Furthermore,Council Member Presley stated he disagreed with Council Member Alvarado with regard to demolitions.In District 2,demolitions were healthy,so he was a proponent of that as needed.Council Member Presley also recalled Council had discussed graffiti abatement and wondered if there was a line item in the budget for that. On liens, the City needed folks to want to acquire those properties. Without that, it would be a challenge. Vacant lot cleanup, median cleanup, grant programs, and releasing demolition liens so the properties could be put back on the tax rolls was what Council Member Presley believed Baytown needed. He did not believe the City needed another image campaign and marketing study as the City performed endless studies. Council Member Presley was not against it, but hoped staff would be diligent and strategic. Council Member Lester, likewise, addressed liens. A lot of the $200,000 was spent on cleanup for perpetual and vacant lots. Council Member Lester shared he had pushed to put those up for auction onsite. With the lots owned, he listed the following benefits: the lots would be maintained, it would be taken off the expenditure list,and taxes would be paid. Council Member Lester requested they be more aggressive with that as a City. He then spoke generally of the budget as the finalized discussions of the Architectural and Engineering Committee would be the next day. Council Member Lester believed there were a lot of funds that could be rearranged, such as the contingency. Mayor Capetillo commented his support to invest in neighborhoods with the improvement grant. He also recognized the improvements to Alexander Drive. When there were improvements,whether it was a roadway or whatever the case may be, Mayor Capetillo stated that spread positively to other areas of that community. Thus, he wished to continue to parley some of those things. He then queried on the neighborhood improvement grant and how much they budgeted for that in the last year. Library Director Jamie Eustace replied that year would be the City's third cycle of that program. In the first year, it had been for$35,000.The second had been$40,000, and it was now$45,000. Mayor Capetillo believed that was an area Council could increase, and further spoke on the topic of the beautification of the City. Everything he had sought did have allocated resources, so Mayor Capetillo only wanted to make sure the City was doing that. Council Member Alvarado clarified,per Council Member Presley's comment,that she was not against the demolition of substandard. In fact, she credited Code Enforcement and BPD for tackling several businesses within her district. The City even created a special task force for a neighborhood that had continued issues. Council Member Alvarado was okay with the process and was only concerned about the properties that just sat there and that the City had to maintain. City Council Budget Work Session Minutes August 16,2022 Page 7 of 8 Capital Improvement Projects Discussion Next, Mayor Capetillo requested for any comments on the capital improvement projects or any individual item. Council Member Betancourth stated she would hold her comments until she heard the Architectural and Engineering Committee's recommendations. Council Member Alvarado relayed the Committee would move to finalize their comments that Thursday. Likewise, Council Member Presley hoped there would be a joint recommendation from staff and their Committee. Mayor Pro Tem Johnson conveyed he had spoken with Mr. Davis about the Bayway Drive redevelopment project. It was said there was something in the budget for that project in the previous year and not in the current. He requested that to be addressed. Mr. Simoneaux replied$700,000 was in Fiscal Year(FY) 2023 for a full design. Mayor Pro Tem Johnson was happy to see that move forward incrementally. Mr. Davis added Bayway Drive's challenge was the waterline replacement was very expensive as well as the street reconstruction. The City hoped to take advantage of a grant similar to the one they received for Market Street. He explained County participation would allow them to push that project up. A survey indicated those costs would be a lot more than the City anticipated, so they would probably need that County participation. Mr. Davis relayed staff believed Bayway was a prime candidate for such participation. In addition, Mayor Pro Tem Johnson inquired over Lantern Park street reconstruction. Mr. Simoneaux knew they had selected an engineer, so the City should be ready with a contract soon. Public Works and Engineering Assistant Director Andrea Brinkley reported staff had not finalized negotiations, but were happy with what had been presented so far. Public Works and Engineering would work with the Community Engagement staff to engage residents as part of the contract. The project would be the entryway in to that subdivision with the south circle included in case there were other areas Council wished to look at as well. Mayor Pro Tern Johnson wished for residents to know that had been on the City's radar and it was inching closer to where they would be able to see the work. Mr. Simoneaux agreed noting all streets in that subdivision needed improvements. Mayor Pro Tem Johnson looked forward to discuss that in the next Council Meetings. Mayor Capetillo expressed he had reservations on the American Little League Park improvement. He explained he wanted to get a better idea of what little league baseball would look like in Baytown. What was the direction of baseball?Mayor Capetillo would rather utilize the$1.5 million to work with the leagues to try to develop either at Russel Park or a select-team type of complex. What was the$1.5 million earmarked for? He knew the City made improvements to the concessions, but he did not want to continue to invest if they were going to have a bigger complex at some point.Ms. Brinkley informed Council staff had sat down with the Little League to outline their wish list and also what staff thought was important. The facility was outdated and not utilized to the capacity staff would like with regard to sports tourism. The building, itself, had a press box that was not Americans with Disabilities Act (ADA) accessible. Thus, staff was working on having that accessibility. The restrooms were similarly not ADA accessible and needed to be refurbished like the concessions.The last inclusion Ms. Brinkley mentioned was a small child playground. Moreover, Parks and Recreation Director Clifford Hatch noted there would be an umpire break room. The Little League Baseball programs were parent ran organizations. Thus, staff was adamant to meet with the Little League so they could be represented throughout the process. Mayor Capetillo appreciated that, yet wished staff to be mindful of the possibility for a larger park at some point. He reiterated not wanting to expend funds and then build a whole new park later. The funding Mayor City Council Budget Work Session Minutes August 16,2022 Page 8 of 8 Capetillo referred to Mr. Hatch explained was out of the MDD and went to scoreboards, fencing, etc. The project captured bigger ticket items that those funds did not cover. Council Member Lester recalled the Little League was one of the contention issues Council had discussed. As previously mentioned, he agreed with the opportunity for a bigger facility and that Russell Park would be an excellent spot. However, Council Member Lester had consternation about spending $1.5 million on that park because it did not belong to the City. If they were to spend that money, he preferred to spend it at Russell Park. Mayor Capetillo hoped they could get a clarification to address that concern of the ownership. He supported a Little League Field complex of four or five fields at Russell Park. Or,there would be other opportunities for sports as the original design had many options. Mayor Capetillo spoke with Mr. Russell who was willing to fund a study for a site plan since the property had changed. Council Member Lester echoed his want to spend that type of money on property the City owned and also initiate something on one of their largest park. Mayor Capetillo further commented a few baseball organizations he spoke with had resources to build a ball field there, but the City needed the drainage work done first. Finally, Mayor Capetillo requested for any other comments on any budget items. As Council awaited the Architectural and Engineering Committee's recommendation, Mayor Capetillo reminded Council August 25th was the public hearing on the proposed budget. He suggested Council not adopt the budget that same evening as the public hearing, but instead on September 22"d. Mr. Davis informed Council their next Budget Work Session would be that Thursday and would be primarily focused on enterprise funds as well as anything Council wished to discuss. 2. ADJOURN With there being no further business to discuss, Mayor Capetillo adjourned the August 16, 2022, City Council Budget Work Session at 6:18'P.M. efTOW�6tlR H9.BA C'y 1 fl� . BseY Angela Jacksox} City C irk , u' City Byt of a owl; "