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2023 06 08 WS Minutes MINUTES OF THE REGULAR WORK SESSION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN June 8, 2023 The City Council of the City of Baytown, Texas, met in a Regular Work Session on Thursday, June 8,2023, at 5:34 P.M.in the Council Chamber of the Baytown City Hall at 2401 Market Street, Baytown, Texas, with the following in attendance: Laura Alvarado Council Member Sarah Graham Council Member Kenrick Griffith Council Member Heather Betancourth Council Member Jacob Powell Mayor Pro Tem Brandon Capetillo Mayor Jason Reynolds City Manager Scott Lemond City Attorney Angela Jackson City Clerk Mayor Capetillo convened the June 8, 2023, City Council Regular Work Session with a quorum present at 5:34 P.M. All members were present with the exception of the absence of Council Member Mike Lester. 1. DISCUSSIONS a. Discuss the Fire Department EMS ambulance fees and billing. Fire Chief Kenneth Dobson introduced the item to Council. The purpose of the item was to review current ambulance transport rates and compare those to regional and state providers. After that, Staff wanted to talk about outsourcing ambulance billing. Their intention was to get to a point where they could adjust the rates to the current market level and provide more efficient billing through outsourcing. Chief Dobson then turned the floor over to Assistant Fire Chief Dana Dalbey. Chief Dalbey first exhibited their ambulance billing and health condition procedure codes(HCPC). CODE FEE Basic Life Support(BLS) $500 Advanced Life Support(ALS) $600 Advanced Life Support Level 2(ALS-2) $700 Mileage(per mile) $10 Treat No Transport(TNT) $150 Disposables $0 i I � With regard to Medicare and Medicaid transport patients, the Centers for Medicare/Medicaid Ser- vices (CMS) set the rates that ambulance providers could bill them. Thus, the City of Baytown could not charge above those rates for those patients. The CMS allowable were listed as follows: City Council Regular Work Session Minutes June 8,2023 Page 2of11 CODE CMS ALLOWABLE BAYTOWN RATES Basic Life Support(BLS) $404 $500 Advanced Life Support(ALS) $532 $600 Advanced Life Support Level 2(ALS-2) $694 $700 Mileage(per mile) $9 $10 Chief Dalbey informed Council that the City's rates were set in 2006. CMS increased their rates over the years while the City of Baytown had not.Chief Dalbey provided the following information regarding a typical CMS patient charge and their adjustments for 2022. The adjustments were noted to be the City's uncollectible funds due to those federal and state programs. TYPICAL CMS PATIENT CHARGE I CMS BLS Charge $404 Mileage Charge(6 miles) $54 2022 ADJUSTMENTS Total Charge $458 Write-Off Insurance $692,909 Write-Off Timely Filing $12,024 80%paid by CMS $366 COVID-19 CARES Act $6,906 20%owed by Patient $92 Deceased Patients $5,548 Total -$717,388 Baytown Fire Department Charge $560 Uncollectable Adjustment $105 Furthermore, Chief Dalbey provided the following data regarding their payor mix from 2022. PAYOR INVOICE COLLECTED % COLLECTED %REVENUE Medicare $681,610 $440,987 67% 25% Medicare HMO $1,278,810 $680,690 53% 39% Medicaid $657,302 $254,180 39% 14% Private Insurance $610,390 $345,530 57% 20% Uninsured/Private Pay $865,570 $29,138 3% 2% Auto Insurance $12,700 $5,987 47% 0.4% Total Billed vs Collected $4,085,382 $1,759,513 44% 100% Chief Dalbey noted there were areas where they could do better on collections, such as the areas where they were undercharging people. Taking in to account their total uncollectible funds, Chief Dalbey presented their adjusted collection rate as well as cash per transport for 2022 as follows: COLLECTION RATE CASH PER TRANSPORT Adjusted Invoiced $3,367,994 Total Calls 12,957 Collected $1,759,513 Total Transports 6,290 Adjusted Collection Rate 52.24% Cash per Transport $280 To clmpare the City of Baytown's rates to the surroundingli region, Chief Dalbey exhibited the table below. He did note that the City of Baytown did not charge for any disposables,neither BLS nor ALS. Chief Dalbey summarized that,overall,the City of Baytown was vastly below each level. City Council Regular Work Session Minutes June 8,2023 Page 3 of 11 CITY BLS ALS ALS-2 MILEAGE ALS DISPOSABLES Baytown $500 $600 $700 $10 N/A Pearland $787 $1,055 $1,100 $15 $300 League City $800 $900 $1,100 $21 Itemized Lake Jackson $850 $1,250 $1,650 $18 N/A Katy $1,000 $1,000 $1,000 $10 Itemized Angleton EMS $1,050 $1,950 $2,890 $25 $160 Sugarland $1,150 $1,881 $1,996 $26 $319 Mont Belvieu $1,200 $1,600 $1,800 $23 $400 Seabrook $1,300 $1,500 $1,800 $24 $400 Humble $1,375 $1,596 $1,900 $20 $375 Chambers $1,400 $1,600 $1,800 $24 $450 Bellaire $1,411 $1,601 $1,712 $23 $361 Hardin $1,489 $1,998 $2,098 $24 $400 Dickinson $1,500 $1,600 $1,700 $24 $400 Santa Fe $1,800 _ $1,800 $1,800 $15 $450 _ Houston $1,962 $1,962 $1,962 $15 N/A Median $1,250 $1,600 $1,800 $22 $398 The next table presented was over the Texas State Average Rates collected from a 2020 survey. LOCATION_ BLS ALS PER MILEAGE CHARGE Statewide $1,004 $1,232 $18 Panhandle $927 $1,124 $18 North TX $1,069 $1,269 $19 East TX $1,052 $1,357 $20 South TX $1,038 $1,098 $19 Central TX $938 $1,167 $18 West TX $901 $1,098 $17 Staffs intention and goal was to adjust their rates to current market levels as follows: CODE CURRENT MEDIAN PROPOSED BLS $500 $1,250 $1,000 ALS $600 $1,600 $1,400 ALS-2 $700 $1,800 $1,600 Mileage $10 $22 $22 TNT $150 $195 $175 Oxygen N/A $125 $120 Disposables-BLS N/A $250 $200 _ Disposables-ALS N/A $368 $400 When Staff surveyed the surrounding communities in the area, it was di covered that every single entity outsource1i their billing. A majority of them used a company calld Emergicon. Chief Dal- bey spoke a bit about the company and their automated approach to billing.The company averaged a thirty percent (30%) increase in their collection rates for the companies they took over. With the data Chief Dalbey shared with them, Emergicon recommended the following: City Council Regular Work Session Minutes June 8,2023 Page 4 of 11 CODE CURRENT PROPOSED BLS $500 $1,000 ALS $600 $1,400 ALS-2 $700 $1,600 Mileage $10 $24 TNT $150 $175 Oxygen N/A $120 Disposables—BLS N/A $200 Disposables—ALS N/A $400 Emergicon's proposed revenue projections for Baytown were presented as follows: CASH PER TRANSPORT TOTAL CASH COLLECTIONS Current $280 $1,759,513 Proposed $422 $2,754,600 PROPOSED REVENUE PROJECTIONS Projected Revenue Increase 34% Additional Revenue $986,087 Total Revenue $2,745,600 Emergicon Fee(8%) $219,648 Total Projected Revenue $819,121 With this proposal, the City of Baytown's annual saving costs would be as follows: VENDOR DESCRIPTION COST ESO Billing Billing Software Module $10,995 Ability Weblink—Billing Claims $3,377 Nsure Billing Insurance Verification $24,000 Pitney Bowes Inserter and Postage Mail System $3,040 Postage Postage for Mailing $7,000 Envelopes Billing Envelopes $1,320 Training CAC Biller Continuing EDU $2,450 Supplies Paper,Postage Ink, Sealing $500 Total Annual Savings $52,682 Chief Dalbey then presented a table of Emergicon's average client increase which averaged around thirty-one percent(31%). The advantages of having a third-party billing company was as follows: • Quicker billing turnaround; • Extensive payer research and knowledge of payers and their nuances; • Client Success Tear dedicated to understanding the City of Baytown's agency and their com- munity to offer the fight mix of recommendations to increase revenue; • Compliance and Documentation Review; • Documentation and Audit Training; • Annual Compliance Training; • Medicare and Medicaid revalidation and Renewals. City Council Regular Work Session Minutes June 8,2023 Page 5of11 Chief Dalbey stated their next steps would be for Staff to propose a rate increase to Council in the near future. Then, they would work with City Management, Legal, Finance, and Purchasing to consider a Request for Proposal(RFP)or an interlocal agreement for a third-party billing company. Before sharing their opinions, the Council Members first questioned matters concerning their cur- rent billing process and on what had been presented.With that settled,Mayor Capetillo commented that increased rates meant increased revenue. However, increasing revenue would not solve the issue overall. Nevertheless, Mayor Capetillo agreed that going to a third party was necessary. He stated there were areas of the City's operations and services, billing being one of those, where it was best to have a third party. On the rate change, Mayor Capetillo did note that he did not want Baytown to be at the very top either. He requested that they further look at what that should be. Chief Dalbey responded that Staff's goal was to be somewhere in the median and referenced the chart that compared Baytown to neighboring cities. Mayor Capetillo was sure that they would get a number and had no further reservations on that. b. Present and discuss fmdings of the Housing Needs Assessment Report. Planning and Development Director Martin Scribner presented the item to Council. A few months back, there was reservations from Staff about Council's recommendations and on the data they had moving forward with multifamily rezones and the entire housing needs for the City in the coming years. Council had approved a moratorium until July 1st to allow Staff the time to go through a housing needs assessment study. Mr. Scribner shared that study had been performed by Atria Planning and they now had the initial findings. Staff would not ask Council to adopt anything that night but, in preparation for that request, Staff wanted to have a discussion about that. Atria Planning Consultant Rebecca Rothenberg was present at the meeting and provided a presen- tation on their initial findings from the housing needs assessment. The assessment focused on: 1) Demand for new rental units and homeownership opportunities; 2) Description of housing affordability challenges with existing residents experience; 3) Analysis of socio-economic indicators that influence housing demand; 4) Market dynamics locally and regionally(pricing, construction activity, vacancy); 5) Housing demand model; and 6) General recommendations based on current conditions and best practices. Ms. Rothenberg prefaced that the forecasts were based on historic trends as she did not have a lot of faith in recent forecasts. The City of Houston, for example, has experienced a boom during COVID which was expected to continue for the next three to five (3-5) years. With that in mind, Ms.Rothenberg had worked on their forecast with third-party sources along with Texas population forecasts. First and foremost, the City of Baytown was a suburban job center and therefore always had a significant renter population. However, in the past decade, the City shifted more towards single-family. While Baytown's growth was strong, it was not as strong as the County and Stite. Apartment vacancies in Baytown were around ten percent(10%) which was the same as the entire region. Ms. Rothenberg noted that was a bit higher than it was six (6) months ago where it was around five to eight percent(5-8%). The increase was due to a huge supply of apartments coming online as COVID stopped being a hindrance to development. Market analysts and economic City Council Regular Work Session Minutes June 8,2023 Page 6of11 groups believed that would be absorbed by the third quarter of the current year and would go back down to healthy rates. Nevertheless, historically, it has been a relatively healthy vacancy rate. Baytown was not showing an oversupply. However, functional obsolescence was a big issue. Functional obsolescence was when there was a lot of housing stock of dated multifamily. The cost to bring that up to be competitive with newer properties would be cost prohibitive. Ms. Rothenberg noted that Baytown had a lot of housing stock that fit in to that category and could not compete with new product. The demand for new product was high while the demand for the old was low which would not change. Ms. Rothenberg relayed that Baytown has not had a lot of development of multifamily in the past twenty (20) years. While they could see very large developments in Baytown,compared to the entire region,they were not at the same level for multifamily and overall development.The City had a glut of properties that were older and relatively fewer newer product. The assessment also looked at the housing needs for Baytown's existing population. Ms. Rothen- berg summarized that it was a pretty affordable market. The City had a lot of retail, food service, and lower wage workers that still struggled with the affordable rates. So, were there too many rental units? Ms. Rothenberg answered no because the vacancy rate was reasonable and on par with the region. The Houston Metro was expected to grow significantly and Baytown's permit activity was still leaning towards single-family with few newer products. On that note, was there a shortage in rental housing? Ms. Rothenberg relayed the answer was both yes and no. If the City of Baytown was trying to accommodate existing renters,then they did not have a short- age. But, again, they were talking about older apartments compared to newer apartments and the fact that there would be significant growth. The forecasts indicated there would be one hundred and twenty thousand (120,000) new households in the County over the next decade. On the other hand, the population forecast for Baytown showed very little growth based on what the City had been building. If they wanted to capture that growth, the City would have to add new product. Ms. Rothenberg provided the following chart to show the City's employed residents by industry. Public Administration �.".. Other Services Arts,Entertainment,Recreation,Accommodation and Food Service Professional/Scientific/Management Finance/Insurance/Real Estate Information Transportation,Warehousing,Utilities Retail Trade • Wholesale Trade Manufacturing Mining Construction Agric/Forestry/Fishing/Hunting/Mining 00% ii 50% 100% 150% 200% 250% •Texas Houston MSA •Harris County Baytown Ms. Rothenberg noted that Baytown had a strong blue-collar workforce,but a significantly higher- income renter population which was unusual. This put Baytown around the area's median income (AMI) which was further broken down in the chart below. City Council Regular Work Session Minutes June 8,2023 Page 7of11 HUD INCOME INDIVIDUAL AFFORDABLE FAMILY OF 4 AFFORDABLE RANGE INCOME RENT/ INCOME RANGE RENT/ RANGE MORTGAGE MORTGAGE <30%AMI <$19,000 <$465 <$26,000 <$664 30-50%AMI $19,000-$31,000 <$776 $26,000-$44,000 <$1,101 50-80%AMI $31,000-$50,000 <$1,242 $44,000-$71,000 <$1,772 The Department of Housing and Urban Development(HUD)also published the information below on the percentage of households experiencing housing challenges by income and tenure. HUD INCOME RANGE RENTER OWNER_ <30%AMI 78.1% 72.1% 30-50%AMI 80.0% 46.3% 50-80%AMI 40.9% 37.9% 80- 100%AMI 12.5% 14.0% >100%AMI 5.6% 5.5% On that information, Ms. Rothenberg noted Baytown's housing needs were significant for popu- lations earning less than thirty percent(30%)AMI.The report provided to Council had much more details on that. In comparison to other areas, Baytown was much more affordable than the County, State, and the entire United States. While the numbers looked alarming, Ms. Rothenberg stated it was worse in other places. The renter and owner distribution by income was as follows: HUD INCOME RANGE OWNER RENTER ALL <30%AMI 9.3% 24.3% 15.8% 30-50%AMI 11.3% 16.8% 13.7% 50-80%AMI 16.2% 21.6% 18.5% 80- 100%AMI 13.7% 9.8% 12.0% >100% AMI 49.5% 27.5% 40.0% ALL 56.8% 43.2% The City of Baytown's different housing types were depicted by the chart below: 70.0% 650% 604% 600% 57.5% 500% 40.0% 30.0% 30.0%I ii 105X 10.0% 9.5 10.0% 6.5 53% 4.5X 52Y• 59% 00% _ .� ■ ■■ III ■ _■ Single Family Townhome 2 to 4 units 5-19 units 20+units Mobile Home •Baytown ■Harris Co ■Texas City Council Regular Work Session Minutes June 8,2023 Page 8of11 Ms. Rothenberg noted Baytown had massive developments that were built pre-1990. The chart below further exhibited the age of the housing that was shown in the table above. 20 0% 18 0% 17 2% 17.4% 160% 14 6% 14 0% 120% 11.1% 11.3% 103% 10 0% 8 0% 7 6% 7 0% 6 0% 4 0% 3 5% O i% 00% Built 2020 or Built 2010 to Built 2000 to Built 1990 to Built 1980 to Built 1970 to Built 1960 to Built 1950 to Built 1940 to Built 1939 or later 2019 2009 1999 1989 1979 1969 1959 1949 earlier Baytown had significant construction from 1972 to the 1990s. Ms. Rothenberg commented those were the properties that Council was concerned over as they needed substantial rehabilitation. Re- garding Baytown's real estate market for homeowners, Ms. Rothenberg presented two (2) points: 1) Like the rest of the country,there was a spike in demand during the Pandemic which was now slowing down with increased interest rates and slower absorption. - Prices down-5%in the last year. - Median days on the market doubled in the last year(72 compared to 38 days). - Sales volume went down 42% in the last year. 2) Nevertheless, it was still a healthy market and Baytown was also strong. - Sale to list price was at 97%. - 18% of homes were sold above their list price. - Affordable for moderate- and middle-income families. The trends of typical single-family home values were presented as follows: $aoo,000 $350,000 $300,000 $250,000 EE ooq $50,000 .i N N M t+1 a a to M tD tD r- N Oi m Q1 Ol O 0 ei tM N N M ri 8 8 8 •i ei 8 8 8 8 8 8 8 8 8 N N N N N N "'o 0 0 0 0 0 o bi o 0 o b' b" o 0 0 0 0 o b' o 0 0 0 0 0 ti N .i N N n v.4 N .-I N ei N e4 n .-I n .i n .-I ts .-� r .\-1 Baytown -Highlands -Deer Park La Porte -Houston -Houston MSA -United States City Council Regular Work Session Minutes June 8,2023 Page 9 of 11 The City of Baytown, along with Highlands, followed national trends which took a sharp jump around COVID. Nevertheless, compared to other places, Baytown was still affordable. As already mentioned for Baytown's real estate market for rentals, the vacancy rate was healthy three to six (3-6) months ago. Recent reports showed that rate jumping because of the new supply. Neverthe- less, overall, it has been a healthy rental market in Baytown and the entire region. Ms. Rothenberg relayed there was a huge construction boom in the region that State and private forecasts captured which she confirmed would continue. She also reiterated that while there has been a lot of con- struction in Baytown, it was not as much as the entire region. While Council may be alarmed of the rapid construction, that has been happing regionally and throughout the State of Texas. New rental properties rent at fifty to seventy percent (50-70%) higher than older properties and catered to higher income tenants. Ms. Rothenberg noted that newer and older apartment buildings would not necessarily compete with one another. What may happen is that they usually lower prices between five to ten percent(5-10%)amongst their own class,but it would not trickle down. The City of Baytown's forecast did have a big shift in income categories.They were losing roughly six to seven thousand(6,000-7,000)households earning less than fifty thousand dollars($50,000). The City was also earning roughly that same amount on those that earned more than seventy-five thousand ($75,000) and there was also a bid jump in households earning more than one hundred thousand ($100,000). Therefore, the demand for housing was changing for higher priced housing. Next, Ms. Rothenberg showed the table below indicating the average observed rent. $2,000 $1,800 $1,600 � ,. $1,200 $1,000 O,y(o O�(o O,� Off'\ O,� O,% O,° O,yO 0.10 O,LO O,L1 O•tiy O�t'L O,11" O•t'', \ti\ti \ti\ti \ti\ti c)\ti\. \ti c5\ti\ti \ti\' �\ti\", \''ti c5\ti\ti �\" 0)\ti n)\ti\ti e)\' 4ti\' Baytown -Houston City -Houston MSA ----US As on trend, Class B and C properties (lower income properties) were going down while Class A properties (higher income properties) were going up. Thus, those renters wanted a different prod- City Council Regular Work Session Minutes June 8,2023 Page 10 of 11 uct which Baytown had a low supply of. Various examples were displayed on what Class A thor- ough D properties looked like. To conclude, Atria Planning recommended the following: 1) Support new development for workforce and market rate housing(rental and ownership); 2) Substantial rehabilitation of functionally obsolete rental properties using existing subsidy pro- grams; 3) Rental registration, inspections, and strong code enforcement to deter "slumlord" negligence and mitigate potential blight of older rental properties; 4) Combine flood mitigation programs with strategic neighborhood investments(e.g. green trails, water features); 5) Invest in historic"West End"housing to attract moderate income/younger households; and 6) Diversify housing types for homeownership to attract first-time homebuyers and retirees (e.g. townhomes, condos, cluster cottages). With that ending the presentation, Council Member Alvarado commented over there being push back from current residents who did not want to see any more apartments. She wondered what would be a good balance. Based on their demand analysis, Ms. Rothenberg replied a middle sce- nario would be four hundred and fifty to eight hundred and fifty(450-850)rental units and fifteen hundred to three thousand(1,500-3,000)homeownership units. She stated that was a conservative number because of what has happen in the past few years in Baytown in comparison to the County. Council Member Graham also commented over the push back on multifamily units. As a whole, Baytown did not want to look like the rest of the County. Moving forward, she wanted to look at what to do with their dilapidated properties first before adding more multifamily. Mr. Scribner noted that as new apartment complexes came in,that was where the demand would be in the future. They expected older apartments would get to the point where they cost too much for owners to rehab and would therefore go away. Mr. Scribner could not say how long that would take,but they anticipated when the demand went down, then those building would no longer be relevant. Council Member Graham still advised caution on adding new properties and to make sure that they had a diverse collection of properties while also getting rid of older properties. Mr. Scribner as- sured her that Staff would ask Council to adopt the report as something they could use as a refer- ence going forward at least for the next two to three (2-3) years. This was only the beginning. Staff would also look at a housing plan over the next year or so to give more details. City Manager Jason Reynolds asked a few questions over the data presented. He noted they had a conundrum as Baytown had a large population that needed more multifamily rentals below seven hundred dollars ($700) a month. Yet, at the same time, if Baytown wanted a fair share of the growth coming in to the region over the next five(5) years, they were looking for Class A spaces. Mr. Reynolds believed they would need to debate on the need of the people already here or to have Class A to bring in the new growth. They would be competing against each other at the same time. To the City Manager's point, Ms. Rothenberg relayed that was not exactly the case. The h9using challenges of existing residents argil more catered to how the City would invest their Comriunity Development Block Grant (CDBG) money or in vouchers to alleviate their cost of burden, for example. The housing demands revolved around how many units could or should the City build to meet that demand. Those two things were related, but different. Mr. Reynolds thought, on the sai City Council Regular Work Session Minutes June 8,2023 Page 11 of 11 vouchers, that those could be used along with other incentives to get those Class A spaces, espe- cially with tax credits. Ms. Rothenberg confirmed so, especially if it were project-based vouchers. Mayor Capetillo also touched on the fact that, based on the data, there was a misperception that the City of Baytown had too much multifamily. He stated that was his first takeaway from the report which may be due to various reasons. Council began a moratorium on tax credited, low- income housing around 2009 and also put distance requirements between multifamily complexes as well as size requirements. He questioned what Atria Planning saw in areas of Class B, C, and D to get them to a Class A or at least better than what they currently were. As people were looking for what they could afford, how could they balance that while also elevating their housing stock? Mayor Capetillo stated that multifamily was a component of housing for the community, period. While people made comments on not needing anymore multifamily, if that were the case, why would every time one was built it was immediately at capacity? He wanted to make data-driven decisions as well as decision based on what philosophy they wanted to take moving forward.They had to make sure there was affordable housing in whatever form or fashion for Baytown families. Thus, they had to find a philosophical approach on how to handle that. His main take away from the presentation, however, was that the data proved Baytown was not overrun with multifamily. 2. ADJOURN With there being no further business to discuss, Mayor Capetillo adjourned the June 8, 2023, City Council Regular Work Session at 6:23 P.M. ,4 4k gam,. a i,„: ,, „,,,_.„,,,__ :, , , Angela lkson, Ci k° .° co 0 I City of Baytown ` _' �ChT.....*Q'',\ `: aF ,: I 1I