1978 07 20 CC Minutes, Special80720 - -1
MINUTES OF THE SPECIAL MEETING
OF THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS
July 20, 1978
The City Council of the City of Baytown, Texas, met in special
session Thursday, July 20, 1978, at 5:30 p.m. in the Council Chamber
of the Baytown City Hall. The following members were in attendance:
Jody Lander
Jimmy Johnson
Ted Kloesel
Mary E. Wilbanks
Eileen Caffey
Allen Cannon
Emmett O. Hutto
Fritz Lanham
Dan Savage
Scott Bounds
Eileen P. Hall
Councilman
Councilman
Councilman
Councilwoman
Councilwoman
Councilman
Mayor
City Manager
Assistant City Manager
City Attorney
City Clerk
Mayor Hutto called the special meeting to order.
Consider Request of Houston Lighting and Power Company for a General
Rate Increase
Mr. Lanham explained that Scott Bounds, City Attorney, has
determined that if any city decides to intervene before the Public
Utilities Commission on the rate increase which Houston Lighting
and Power has submitted to the Utilities Commission for those areas
outside cities, this must be made known to the Public Utilities Com-
mission no later than Monday, July 23, 1978. For this reason, the
Administration felt it necessary to hold a special meeting to give
Council the opportunity to determine whether to adopt a resolution
indicating the City of Baytown's desire to keep that option open.
Mr. Bounds explained that Houston Lighting and Power filed a
proposal for a rate increase on July 14, 1978. This request was
filed simultaneously with the City of Baytown, and other cities in
Houston Lighting and Power coastal region, and the Public Utilities
Commission. This request was filed with the cities because cities
determine rates to be charged within their boundaries, and the Public
Utilities Commission determines rates to be charged in rural areas.
Since the Public Utilities Commission is going to be looking at the
same material as the cities in trying to determine the rural rates,
while the cities are trying to determine rates within their bound-
aries, it may be to the interest of the City to participate in the
Public Utilities Commission's determination of the rural rates. Mr.
Bounds explained that the cities would not want the Public Utilities
Commission to prejudge any one issue that would have some affect on
the cities appeal to the Public Utilities Commission since the com-
mission has appellate jurisdiction over the rates established by the
cities. The interventions are required to be on file with the Com-
mission no later than the 10th day from the date the request for
rate increase was filed; therefore, the City of Baytown would need
to have their intervention in Austin by Monday.
Mr. Bounds asked that the City Council pass a resolution that
would authorize the City Attorney to file an intervention for the
City of Baytown and its citizens with regard to Houston Lighting
and Power's request for a rate increase.
Mayor Hutto inquired as to the legal posture of the City of
Baytown if this petition to intervene is filed with the Public
Utilities Commission. Mr. Bounds explained that the City of Baytown
would be filing as an interested party.
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Minutes of the Special Meeting - July 20, 1978
Mr. Bounds pointed out that the Public Utilities Commission
will necessarily be looking at all the rates in their system -wide
determination. This is one of the reasons Mr. bounds felt that
the City of Baytown should intervene. At the rural level, the
Public Utilities Commission will be more or less in the role of
judge and adversary against Houston Lighting and Power, and in that
role certain issues will be decided which would affect the ultimate
rate to be charged rural areas. Therefore, it could be to the City's
interest to present its views and those issues to help the Public
Utilities Commission understand the City's ultimate rate increase
mination.
Councilman Lander inquired if the City of Baytown could ask
the Public Utilities Commission to intervene in its behalf or if
the City could ask for assistance in our particular rate case.
Mr. Bounds stated that he had spoken with members of the Public
Utilities Commission on an informal basis in the matter of the
Entex gas rate, and the Commission was reluctant to intervene
because of their ultimate appellate position.
In response to a question from Council, Mr. Bounds explained
that the ultimate rate determination by the Public Utilities Com-
mission is going to be made by considering Houston Lighting and
Power's values on a system -wide basis. Mr. Bounds pointed out
that Baytown will not be able to break Houston Lighting and Power
Company plant facilities for the Baytown area out and make a rate
determination. Since the City of Baytown's rates will be based in
part upon a system -wide determination of the value of Houston
Lighting and Power's facilities and that is a matter which the Pub-
lic Utilities Commission is going to be considering any determina-
tion the Public Utilities Commission makes would affect their posture
if the City of Baytown makes a decision that is appealed to the Com-
mission.
In response to a question from Council, Mr. Bounds explained
that the City of Baytown will be conducting hearings where a rate
determination for Baytown will be made. Afterwhich, depending upon
whether Houston Lighting and Power or the city is satisfied, the
rates will become effective or an appeal will be made to the Public
Utilities Commission.
Councilman Lander commented that the advantage of the city
participating in the intervention is that if the City is dissat-
isfied with the Public Utilities Commission's final determination,
by having participated, the City would have more standing to appeal
an adverse Public Utilities Commission decision in court.
Mr. Bounds explained that the City of Baytown might advocate
a different methodology for establishing certain values than that
which Houston Lighting and Power Company is using to base their
rate structure on. If the Public Utilities Commission rejects that
methodology and that poses a problem for the cities, the City of
Baytown would have the right to appeal which would be a possible
advantage.
In response to a question from Councilman Kloesel, Mr. Bounds
explained that the ultimate rate established in a rural area is not
the major reason for the city to intervene. The manner in which this
rate is determined for the rural areas is what will be of importance
to the cities. Mr. Lanham explained that the same information that
was submitted to the City of Baytown has been submitted to the Pub-
lic Utilities Commission in justification of Houston Lighting and
Power Company's request for an increase in rural rates. Therefore,
the Public Utilities Commission will be analyzing the same information
as the cities.
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Minutes of the Special Meeting - July 20, 1978
Councilman Cannon commented that the rates are uniform through-
out the company at the present time. Then he asked if the Public
Utilities Commission would review whether the rural areas are carrying
their fair share of the load? Too much of the load? Or would the
Public Utilities Commission review the rates and areas as a whole?
Mr. Bounds responded that he believed the tendency will be toward
looking at everything together which is one of the reasons the cities
should intervene.
In response to a question from Councilman Cannon, Mr. Bounds
explained that the City of Houston passed a resolution authorizing
their City Attorney to intervene. They also passed an ordinance
suspending the rates of Houston Lighting and Power for the 120 days
which is the action that will be presented to City Council for con-
sideration at the next Council meeting.
Quin McWhirter, District Manager of Iiouston Lighting and Power,
explained that there is a possibility of suspension of the rates for
approximately 185 days after the filing date.
Mayor Hutto commented that due to the magnetitude of this
request for rate increase, it is time for the City Council to obtain
professional assistance. Mr. Lanham said that the Administration
will have information as to what other cities will be doing in that
regard at the next regular Council meeting.
Councilman Lander suggested that this would be a good topic for
the Harris County Mayors and Councilmen's meeting.
Councilman Johnson felt that the citizens of Baytown expected
the City Council to fight this rate increase.
Councilman Kloesel commented that this resolution which would
authorize the City Attorney to take all appropriate legal action to
represent the City of Baytown concering the Houston Lighting and
Power Company rate increase application is too broad. Council-
man Kloesel felt that a resolution should be adopted authorizing the
Mayor to coordinate efforts on the City's behalf. He felt that the
Council should retain more direct authority.
Mayor Hutto stated that he felt the City Attorney needed the
authorization requested in order to represent the City's best interest
in this matter and that he was confident Mr. Bounds would come back to
Council before taking any final action.
In response to a question from Councilwoman Wilbanks, Mr. Bounds
explained that the Public Utilities Commission has before them the
application for increase in rates for unincorporated areas only, and
this resolution would allow the City Attorney to intervene in that
proceeding as it affects the City of Baytown and its citizens. For
instance, some issues decided by the Public Utilities Commission in
their evaluation of Houston Lighting and Power's rate structure could
affect the City's position if it were appealed to the Public Utilities
Commission. Mr. Bounds went on to say that the scope of this resolution
is just to authorize the City Attorney to file an intervention on behalf
of the City before the Public Utilities Commission on the proposed rate
increase for the unincorporated areas.
Mayor Hutto commented that he personally would like to see that
petition of intervention supported by the strongest resolution that
the Council could give to the City Staff and Administration.
Councilman Lander moved for adoption of the resolution; Council-
man Johnson seconded the motion.
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Minutes of the Special Meeting - July 20, 1978
Councilman Cannon inquired if the reason for the rate increase
is because the cost of service adjustment is not working. Mr.
McWhirter explained that the cost of service adjustment is working
very well. The cost of service adjustment has dealt only with less
than 50 percent of the total operating costs and was never designed
to replace any permanent general rate increase. It has only acted
to slow down the rate of deterioration. The last rate increase was
in December of 1975, and rate increase prior to that was approximately
1973.
Councilman Kloesel said that he still felt that Section 3 of the
Resolution should state that the coordination should be done by the
Mayor and the Council. Councilman Kloesel felt that greater partic-
ipation by the Council would reinforce the City's position and give
Council greater knowledge.
Mayor Hutto suggested that Council should find out what other
cities are doing in this regard, but spectulated that the time has
come for the part -time mayors and councilmen to take a backseat when
negotiating with professionals. Mayor Hutto commented that he is
willing to expend some of the taxpayers' money to obtain a qualified
person that could argue or negotiate -with Houston Lighting and Power's
rate expert. He also said that he would like the negotiating team to
know that they have the full backing of the City Council and the
citizens of Baytown to follow this thing through.
Councilman Kloesel explained that he felt the Council should
use the staff to the fullest degree, along with considering the hiring
of a rate expert, but he would like for the Council to be fully
apprised and become involved in the coordination efforts.
Councilman Lander commented that it has been his experience that
anytime the City has had a rate increase, Council had been fully in-
formed and all policy decisions have been made by Council.
Councilman Kloesel felt that City Council should retain more
decision making, powers, and suggested that the wording of Section
3 of the resolution should be amended to state that the Mayor be
authorized to coordinate Baytown's efforts with the assistance of
the City Administration.
Mayor Hutto commented that he would like the City Attorney to
do the coordinating because he is on first name basis with the city
attorneys of the surrounding areas and then the City Attorney can
come back to Council.
Councilman Kloesel moved to amend the wording to state that
the City Attorney be authorized to coordinate Baytown efforts with
other cities under the direction of the Mayor of the City of Baytown.
Councilwoman Wilbanks commented that presently Section 3 of
the Resolution addresses only coordination which means gathering
information, considering alternatives, compiling statistical data,
contact with other staff and that this particular section does not
address decision making or policy statement which is going to be
City Council's task. "
For lack of a second, Councilman Kloesel withdrew his motion.
The vote follows:
Ayes: Council members Lander, Johnson, Kloesel, Wilbanks,
Caffey and Cannon
Mayor Hutto
Nays: None
80720 -5
Minutes of the Special Meeting - July 20, 1978
RESOLUTION NO. 631
A RESOLUTION AUTHORIZING THE CITY ATTORNEY TO TAKE ALL
APPROPRIATE LEGAL ACTION TO REPRESENT THE CITY OF BAYTOWN
AND ITS CITIZENS CONCERNING THE HOUSTON LIGHTING AND POWER
COMPANY RATE INCREASE APPLICATION BEFORE THE PUBLIC UTILITY
COMMISSION OF TEXAS.
BAWA Bond Rating
Mr. Lanham explained that he, Mayor Hutto, Bob Gillette, and
Tom Masterson went to New York to meet with representatives of both
Moody's and Standard and Poor's Bond Rating Agencies regarding the
upcoming Baytown Area Water Authority Bond Sale. Mr. Lanham explained
that the prople who they met with are very well informed about Baytown.
Some of them have visited Baytown and others have not, but are familiar
with Baytown because of research. The bond rating agencies received
a draft of a notice that Underwood, Neuhaus, financial advisors for
BAWA, had prepared and reviewed that and had many questions regarding
the information that was presented. One of the things that the repre-
sentatives of the companies were interested in talking about was the
financing of these bonds. Mr. Lanham commented that he showed them
copies of brochures which indicated that before the contract between
the Baytown Area Water Authority and the City of Baytown was voted
on in January, that people were told many times that in order to
convert to surface water and build a water treatment plant, it would
be necessary to raise water rates by two to three times. The City of
Baytown has obligated itself to pay to the Baytown Area Water Authority
sufficient funds to pay the principle and interest on the bonds. One
of the things that was discussed was the possibility of making these
25 year bonds opposed to 20 year bonds. The rating agencies indicated
that issuing bonds for 25 years would not affect the City's bond rating,
but would result in the City having to pay less on an annual basis.
*Councilman Cannon absent.
The fact that the City of Baytown has by contract agreed to pay
the principle and interest on the bonds, there is no limitation, there-
fore bids may be taken on 25 year bonds. Final approval to the 25 year
bonds was given by the Baytown Area Water Authority Board at its meeting
Thursday morning. Bids will be received at 5:00 p.m. on August 10, 1978.
Mayor Hutto commented that it might be a benefit to the City of
Baytown if the Administration would keep the rating agencies current
as to what is happening in the City of Baytown. Keeping their files
current would give the analyst a better prospective towards the City
of Baytown.
Mr. Lanham commented that in the past, he had taken a brochure
along with newspaper clippings, but felt that if the Administration
did this quarterly, it would give the agencies more time for review.
Council had no objections.
Unfinished Business
Councilman Johnson commented that he received a call from a
gentleman that lives in Whispering Pines with a complaint that the
Gifford Hill concrete trucks are pouring concrete at 5:30 in the
morning which is disturbing the neighborhood. Councilman Johnson
concurred that this is early in the morning to be pouring concrete
and asked if there was a provision in the Code that might prohibit
this sort of practice.
Councilman Kloesel commented that there is an anti -noise
ordinance.
80720 -6
Minutes of the Special Meeting - July 20, 1978
Adjourn
With no further business to be transacted, Councilman Kloesel
moved for adjournment; Councilman Johnson seconded the motion. The
vote follows:
Ayes: Council members Lander, Johnson, Kloesel, Wilbanks,
and Caffey
Mayor Hutto
Nays: None
Karen Petru, Deputy City Clerk
APPROVED:
a
Eileen P. Hall, City Clerk