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2003 02 13 WS MinutesMINUTES OF THE WORK SESSION ` OF THE CITY COUNCIL OF THE CITY OF BAYTOWN February 13, 2003 The City Council of the City of Baytown, Texas, met in work session on February 13, 2003, at 4:50 p.m. in the Council Chamber of Baytown City Hall, 2401 Market Street, Baytown, Texas, with the following in attendance: Coleman Godwin Calvin Mundinger Don Murray Mercedes Renteria III Scott Sheley Ronnie Anderson Gary M. Jackson Ignacio Ramirez, Sr. Gary W. Smith Absent: Pete C. Alfaro Council Member Council Member Council Member Council Member Council Member Mayor Pro Tempore City Manager City Attorney City Clerk Mayor The meeting was opened with a quorum present after which the following business was conducted: Discuss wastewater infrastructure issues. City Manager Gary Jackson explained that there were two major components to the wastewater system. One component, treatment, would not be discussed at the meeting. The other component, the collection system, was the topic for discussion. The collection system gathers the waste from its various sources and delivers it to the treatment plants. Fred Pack, Director of Public Works, stated twenty-five to fifty years ago the collection system was installed with concrete pipes. The life expectancy of concrete pipe is twenty to thirty years. The concrete pipes fail due to the gasses in the wastewater mixing with the moisture in the system. This forms acid that eats away at the concrete. Another problem with the collection system is erosion at the manholes. Our location on a coastal plain makes the failures more progressive. Of the 400 miles of collection system, one -half is concrete pipe. Some of the concrete pipe is slip - lined, but it will require replacement in the future, due to the reduction in the size of the pipe by the slip - lining. The system fills with rainwater during rain events. This increases the flow to the treatment plants up to ten times. Back -up or exfiltration occurs. Treatment costs are increased. Half of the problem is due to defective collection lines. The other half of the problem arises from private lines. This issue must also be addressed. A video of infiltration into a wastewater collection system was shown and included video of the former collection system in School Courts. Page 2 of 4 Minutes of the Work Session — February 13, 2003 Mr. Jackson concluded the presentation by informing Council that the technologies to resolve the collection system problems and cost comparisons will be provided at a future meeting. A multi- year aggressive effort is necessary to address the worst problems. The costs have not been determined, but it will require a large commitment. Discuss healthcare costs. Mr. Jackson stated that the review presented during the meeting will be the first coverage of the healthcare issue. The effort is to present factual information about healthcare and the rising costs associated therewith. Alison Smith, Director of Human Resources, explained some of the reasons for the increase in healthcare costs, including, mergers in the industry, demands of consumers, new technologies, and pharmaceuticals. Texas has experienced a healthcare cost increase of 25 %, while the national increase is 15 %. The State of Texas has considered controlling healthcare costs by delaying healthcare for new employees, increasing costs to the employees, decreasing coverage for part -time employees, and increasing the co -pay. The five of the last six years, the risk management fund has experienced greater claims than income. It is projected that the claims will exceed the revenues for the funds again this budget year. The risk management fund receives revenue from the various funds that employ city personnel and from City employees. The City pays approximately 90% of the revenue into the risk management fund, with employees contributing approximately 10 %. The problems are not unique to self - funded programs. A self-funded program may provide better management control. Retiree coverage has yielded deficits since 1998. Active employee contributions have supplemented the retiree coverage. In 1993 Council discontinued City payments for retiree coverage for employees hired after October 1, 1993. Sixty -two percent of all employees have been hired after that date. The City may make any change to the plan on 30 -days' notice to the employees. No employee has been affected by the decision at this time. The impact may be felt after October 1, 2003. There was no administrative follow -up to the 1993 action. Discuss 20 -year retirement. Mr. Jackson noted that 44% of the cities participating in the Texas Municipal Retirement System have opted for 20 -year retirement. The rate charged the City each year is based on the plan elected. The funding for retirement contributions in the current fiscal year is sufficient to cover the rate for a 20 -year retirement plan. Generally, a 25 -year plan has a lower rate. It is anticipated that a 20 -year plan would have a higher rate than a 25 -year plan. The advantages to the 20 -year plan include employee interest in the plan, recruitment incentive, flexibility in career planning, and options in staffing levels. A disadvantage may be the addition of more retirees on the retiree health plan. There appear to be Page 3 of 4 Minutes of the Work Session — February 13, 2003 more advantages than disadvantages. No recommendation is being made at this time. No cost estimate has been developed. In response to an inquiry, Mr. Jackson reported that, under the 25 -year plan, the employee receives a greater retirement payment. Discuss Bayland Island options. Mr. Jackson reviewed the acquisition of the property known as Bayland Park and Bayland Island. Two tracts are dedicated park land. In order to transfer park land, an election must be held. Marsh creation areas exist. Parks & Wildlife funds were used to create the marsh lands and these areas are dedicated to the public as open space, in perpetuity. A dredge spoil disposal site is located on the island. It has been capped and encapsulated. It may contain heavy metals. The marina construction was funded by the 1992 General Obligation bonds. The debt is $3,000,000. Property subject to the bonded indebtedness may not be sold. $823,000 is owed on the restaurant building. When added to the debt on the Ship's Store, the total outstanding debt is $1.1 million. The Ship's Store currently under lease. Although the buildings could be sold, the purchaser must honor the lease. From discussions with the Southwest Bank of Texas, the creditor on the buildings, it appears that a significant payment on the debt and dedication of any sales proceed to payment of the debt would obtain a security release on the buildings. The interest rate was structured to protect the City and the Bank, with a floor of 7.25% and a ceiling of 8 %. The interest rate has been 7.25% for several years. The Bank may renegotiate the loan structure. The lease on the Ship's Store is for three years, with three five -year renewals. The lease provides for a CPI adjustment and a percentage of gross sales. The tenant is current on his lease payments. Owner financing of the sale of the buildings is not permitted. Repairs to both buildings are needed. The furnishings and fixtures in the restaurant could be sold at auction. If the restaurant building is sold, the new owner will be required to certify the wind load capacity of the building in order to obtain a certificate of occupancy. Rental of the building is not an attractive option due to the repair issues. The debt could be reduced, the building demolished and a ground lease negotiated. To repair and again lease the building is complicated by the limited funds. The lawsuit settlement provided $720,000. An architect would be required to evaluate the building and determine the estimated cost of repairs. All costs must come from the settlement proceeds. An expert used during the litigation indicated that the cost of repairs would exceed $1,000,000. The debt limits the options. The building must be leased to pay the debt, or the projected revenue shortfall increases. Council Member Mundinger expressed his preference to keep the building and entering into a ground lease. Council Members Murray and Godwin stated a preference that no further funding go into the restaurant building, fix the Ship's Store and pay down the debt. Mayor Pro Tempore Anderson stated his preference for the City to be out of the restaurant business. Page 4 of 4 Minutes of the Work Session — February 13, 2003 Tim Hazelwood reported on problems with the Ship's Store building. Discuss appointments. Council Member Sheley stated that he would move the appointment of Randall B. Strong to the Emergency Medical Services Advisory Committee. Council Member Mundinger stated that he would move the appointment of Council Member Godwin to the Baytown/West Chambers County Economic Development Foundation. Adjourn. There being no further business, Council Member Mundinger moved adjournment. Council Member Sheley seconded the motion. The vote follows: Aye: Council Members Godwin, Mundinger, Murray, Renteria, and Sheley Mayor Pro Tempore Anderson. Nay: None. The motion carried and the meeting adjourned at 6:27 p.m. Gaily W. ith City Cler t r