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2003 04 10 WS MinutesMINUTES OF THE WORK SESSION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN April 10, 2003 The City Council of the City of Baytown, Texas, met in work session on April 10, 2003, at 5:15 p.m. in the Council Chamber of Baytown City Hall, 2401 Market Street, Baytown, Texas, with the following in attendance: Coleman Godwin Council Member Calvin Mundinger Council Member Don Murray Council Member Scott Sheley Council Member Pete C. Alfaro Mayor Gary M. Jackson City Manager Ignacio Ramirez, Sr. City Attorney Gary W. Smith City Clerk Absent: Mercedes Renteria III Council Member The meeting was opened with a quorum present after which the following business was conducted: Discuss wireless network infrastructure. Asim Khan, Director of Information Technology Services, stated that the bonds approved in 2001 included funding for technological improvements. Since approval of the bonds, there have been changes in technology and the new technology provides for future growth and compatibility for the City's information system. The proposed fiber and wireless technology aids the growth of the system. The project proposed for approval is the second phase. The third phase is being planned now. A hybrid network of wireless and fiber optic network connections will best serve the long -term needs of the City. Fiber optic cable installation is expensive and it is not cost effective to run fiber to all sites. Fiber is being used at the high use sites. The wireless system will connect the other locations throughout the City. The current maximum bandwidth is 1.5 MB. The planned wireless bandwidth will vary from 10 MB to 56 MB. Emergency services will have access via a wireless link. This is planned to be expanded to all city vehicles. In the current program eleven sites have been selected for antennas. This will provide unbroken coverage for mobile services. The proposed vendor is reputable and has provided services to several governmental agencies. The cost of technology has decreased. Phase I cost $330,000. Phase H, if approved, will cost $370,000. The bond program provided $1,300,000. The program is well within funding limits. Page 2 of 4 Minutes of the Work Session — April 10, 2003 Receive and discuss an update from the Ad Hoc Industrial District Agreement (IDA) Committee on the background and history of the IDA policy and agreement and proposed goals and timeline for new policy and agreements. City Clerk Gary Smith announced that four members of the City Council had filed conflict of interest affidavits relating to ExxonMobil. City Attorney Ignacio Ramirez, Sr. opined that because a majority of the members of City Council had filed the affidavits of a conflict of interest, the statute allows all members of the Council to participate in the discussion. Council Member Mundinger, chair of the Committee, thanked the committee members for their service on the Committee and recognized Gary Jackson, City Manager, Bob Leiper, Assistant City Manager, Donna Sams, Finance Director, Rhonda Young, Treasurer, Ignacio Ramirez, City Attorney, and Fritz Lanham. Gary Jackson, City Manager, reviewed the history of the industrial district agreements in Baytown. The adoption of the annexation law in 1963 was the impetus for creating the industrial districts. The intention was to make arrangements for and treat all industries the same through a mechanism to calculate and receive payments. The purpose was to encourage the establishment of responsible industries near the city. The policy of the initial agreement was to recognize that the property within the industrial districts would not be subject to the same regulations as property within the City; to set a mechanism in place to provide a payment in lieu of taxes; and to recognize that the City would not provide services within the industrial districts. The first industrial district agreement was signed in 1967 with Humble Oil & Refining Company. It has been referred to as the standard or model form. Today there are twenty -seven agreements with industries in three industrial districts. The vision for the future of the City has been established in the RUDAT study in 1990 and the 2020 Plan adopted in the 2000 Comprehensive Plan. There is a demand for quality of life services, neighborhood protection, litter abatement, bond financed capital projects, and increased service levels. There has been a demand for a personnel system that encourages employee retention and enables recruitment of qualified employees. Economic development initiatives for industry remain important today. Response has been made to these demands and vision. General fund expenditures reflect the response with the largest and fastest growing area of expenditures being in public safety. Bond programs have been approved since 1991 and financed with only one tax increase. The debt service requirements have increased forty-two percent. The City faces revenue challenges. The tax rate has been unchanged since 1993. The revenue to the City has increased due to increased valuations and the increased revenues have been expended for capital improvements and infrastructure, public safety, enhances services, employee retention and recruitment, technology and debt service requirements. The projection of revenues and expenditures was reviewed, with the forecasts revealing a revenue shortfall in the future. The industrial district agreements are one component of the City's fiscal strategy. The City must be resourceful in finding alternate solutions to fiscal needs, i.e. Crime Control & Prevention District, Municipal Development District, and Tax Increment Reinvestment Zone. The area is a regional market center with untapped potential. We must maintain the existing infrastructure while expanding, i.e. the wastewater system. The non - renewal of CCPD ($3,000,000 per year) and the fire staffing charter amendment ($1,100,000 in 2002 -2003 and $700,000 year each thereafter) had Page 3 of 4 Minutes of the Work Session – April 10, 2003 an adverse fiscal impact. The focus must be on long -term financial solvency. Recurring expenses must be matched with recurring revenues streams. The City has committed to financial strategic planning. We must accommodate growth while maintaining the existing infrastructure. The City is confronted with revenue limitations. The average home value has increased to $70,825, but it is still lower than comparable communities. The per capita sales tax collections are lower than comparable cities. Sales tax receipts are lower this fiscal year than last. Franchise tax payments are reduced. Contingency plans have been implemented, with at least twenty positions being held. The circumstances are not unique. Council has undertaken a comprehensive review of city services. The budget guidelines are for departments to submit zero growth budgets with alternatives for reductions of three, six and nine percent reductions. The IDA Committee's goals were as follows: • Create a fair and equitable rate in the agreement that is competitive with other cities, • The IDA payments are only one component of the City's fiscal strategy, • Provide a predictable and enhanced payment formula that encourages capital investment, • Provide language to clarify the City's right to participate in regulatory hearings and proceedings, and • Provide greater clarity in the language relating to the assignability of the agreements. Comparisons to the industrial district agreement payments for other Gulf Coast industrial cities were provided. The payment rate of an industry within the City and in an industrial district was provided. In Harris County, an industry in the City paid at combined rate of $3.286 per $100 valuation, while an industry in an industrial district paid $2.917. In Chambers County, the combined rate within the City is $3.174 and is $2.806 in an industrial district. Council Member Anderson arrived at 6:17 p.m. Under the existing agreements, payments were tiered as follows: • Year 1--45% • Year 2-48% • Years 3- 7 -50 %. For new construction (more than $20,000,000), payments were tiered as follows: • Years 1 -2 -0% • Year 3 -20% • Year 4-30% • Year 5-40% • Years 6- 7 -50 %. New concepts being considered for the new agreements include ideas from other cities' agreements, new assignablility language and new language relating to the City's participation in regulatory hearings and proceedings, and a new rate structure. With depreciation at industrial sites, even with increased rates, less income is received. Values are established through an appraisal process. Only a few of the industries did not depreciate in value during the last agreement period. Page 4 of 4 Minutes of the Work Session — April 10, 2003 Additional work sessions will be scheduled for Thursday, April 17, 2003 and Thursday, April 24, 2003, for further discussion. An item to allow Council to consider adoption of the new agreement may be on the April 24, 2003 Council agenda. Discuss appointments. Council did not discuss the appointment to the Emergency Medical Services Advisory Committee. Adjourn. There being no further business, meeting adjourned at 6:29 p.m. G&ty W mith City Clerk