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1980 01 16 CC Minutes, Special00116 -1 MINUTES OF THE SPECIAL MEETING OF THE CITY COUNCIL OF THE CITY OF BAYTOWN January 16, 1980 THE STATE OF TEXAS 4 COUNTIES OF HARRIS AND CHAMBERS 0 CITY OF BAYTOWN 0 The City Council of the City of Baytown, Texas, convened in special meeting, open to the public, on the 16th day of January, 1980, at the City Hall, and the roll was called of the duly con- (Ph, stituted officers and members of the City Council and the City Clerk of the City, to -wit: Emmett 0. Hutto Allen Cannon Ted Kloesel Jimmy Johnson Mary E. Wilbanks Eileen Caffey Fred T. Philips Eileen P. Hall Mayor Councilman Councilman Councilman Councilwoman Councilwoman Councilman City Clerk and all of said persons were present., except the following ab- sentees: Councilman Ted Kloesel, thus constituting a quorum. Whereupon, among other business, the following was transacted at said meeting; a written resolution entitled: RESOLUTION CANVASSING RETURNS AND DECLARING RESULTS OF ELECTION (the "Resolution ") was duly introduced for the consideration of the City Council and reviewed in full. It was then duly moved by Councilman Johnson and seconded by Councilman Philips that the Resolution be passed; and, after due discussion, the motion, carrying with it the passage of the Resolution, prevailed and carried by the following vote: AYES: All members of the City Council shown present above voted "Aye." NOES: NONE The Mayor thereupon announced that the Resolution had been duly and lawfully adopted. The Resolution thus adopted follows: 00116 -2 Minutes of the Special Meeting - January 16, 1980 RESOLUTION NO. 718 RESOLUTION CANVASSING RETURNS AND DECLARING RESULTS OF ELECTION THE STATE OF TEXAS 0 COUNTY OF HARRIS 0 CITY OF BAYTOWN 4 WHEREAS, an election was held in the CITY OF BAYTOWN, TEXAS (the "City "), on January 8, 1980, at which a proposition AML up relating to the issuance of bonds of the City and the levy of taxes to pay said bonds, respectively, was submitted in accordance with law; and WHEREAS, all resident, qualified electors of the City were entitled to vote on the proposition; and WHEREAS, 4,967 votes were cast in said election as follows: and PROPOSITION FOR THE ISSUANCE OF $7,600,000 PARK BONDS (PARK LAND TO BE ACQUIRED FROM THE UNITED STATES OF AMERICA PURSUANT TO THE "CORPS OF ENGINEERS OF THE U. S. BAYTOWN, TEXAS PROJECT ") 2,142 votes AGAINST THE ISSUANCE OF $7,600,000 PARK BONDS (PARK LAND TO BE ACQUIRED FROM THE UNITED STATES OF AMERICA PURSUANT TO THE "CORPS OF ENGINEERS OF THE U. S. BAYTOWN, TEXAS PROJECT ") 2,817 votes WHEREAS, the above totals are shown -in the official election returns heretofore submitted to the City Council and filed with the City Clerk; and WHEREAS, the election was called and held in all respects under and in strict conformity with the Constitution and laws of the State of Texas and of the United States of America; THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF BAYTONN, THAT: Section 1: The matters and facts recited in the above preamble of this resolution are found to be true and correct. 00116 -3 Minutes of the Special Meeting - January 16, 1980 Section 2: The election held in the City on the 8th day of January, 1980, and which is more fully described in the preamble of this resolution, was called and notice thereof given in accordance with law; the election was held in all respects in conformity with law; only resident, qualified electors of the City voted at the election; returns of the election have been lawfully made by the proper officers; the election has resulted unfavorably to the issuance of the bonds described in the proposition submitted at the election and the levy and collection of the tax in payment thereof; and less than the necessary majority of the qualified voters voting at the election have voted in favor thereof. Section 3: The City Council of the City is not authorized to issue the bonds described in the aforesaid proposition nor to levy and collect taxes in payment thereof. Section 4: This resolution shall take effect from and after its passage. INTRODUCED, READ, and PASSED by the affirmative vote of the City Council on this 16th day of January, 1980. . IeI77 EMMETT 0. HUTTO, Mayor ATTEST: EILE&N. P. HALL, City Clerk APPRO D: 77� SCOTT BOUNDS, City Attorney t s -2- 00116 -4 Minutes of the Special Meeting - January 16, 1980 It was noted that due to machine malfunction, eight votes were not registered. Ordinance - Establishing Rates for Electric Service Provided by Houston Lighting and Power Company Scott Bounds, City Attorney, explained that in Council's agenda packet, there was a copy of the proposed rate ordinance, memorandum, and attachment. Mr. Bounds explained that Council needs to adopt a rate ordinance which would establish the total amount of revenue Houston Lighting and Power Company (HL&P) needs and how that revenue is to be collected among the various rate classes. The Public Utilities Commission of Texas has rendered a final order in the rural rate case concerning HL&P's request for a rate increase. The final Public Utilities Commission's (PUC) order granted HL&P a total revenue increase of approxi- mately eighty -two million dollars. The allocation of that revenue increase was as shown on the attachment that was provided in the agenda packet. Because of the effect of this rate in- crease on residential municipal users, Mr. Bounds recommended that the City Council grant a lower rate increase and that be distributed as a pro rata increase based upon the rate schedule or the tariff schedule that is currently in effect. In response to a question from Councilwoman Wilbanks, Mr. Bounds explained that by him saying currently in effect, he means not those rates under bond but the rates that were in effect prior to the current filing by HL&P. In response to a question from Council, Mr. Bounds explained that in particular, that portion of the PUC order that results in municipal rate payers pay more than rural rate payers would be subject to attack as not based upon any reasonable evidence. There was no evidence presented at the hearing that would show that it would cost more to serve those users in municipal areas. Mr. Bounds further commented that he would hope that that portion of the rate order adopted by the PUC would be overturned. Councilman Cannon commented that the least the City might hope for is the total dollars might stay but the levy might be changed. Mr. Bounds explained that as a particular matter, as soon as the City adopts the rate ordinance, he imagined that HL&P will appeal to the PUC and get an internal rate order from the PUC allowing them to charge the rates that they are currently charg- ing. Councilman Cannon inquired if the City prevails, there would be a refund to the customers rather than a retro- active collection. Mr. Bounds commented that the prior HL&P rate ordinance is still under appeal and that is pending before a District Court Judge in Travis County at the present time. What the City is arguing there is that during the course of the last rate pro- ceeding, the Congress changed the income tax rate and as a result, HL&P actually collects approximately $10,000,000 more revenue than they would if otherwise collected under the old tax. rate. The PUC refuses to acknowledge that tax decrease based their decision on rates in effect prior to this current rate proposal. The City is asking that HL &P refund to its customers the amount of money that is over collected. Councilman Cannon inquired if the new case is built upon the new income tax structure. Mr. Bounds responded that was correct. Councilman Philips inquired as to what is the City's expo- sure here, as a city, in the event that the City gets involved in litigation. What kind of costs would be involved? Mr. Bounds commented that if HL&P simply appeals to the PUC, there would be no cost other than the staff's time spent in preparing the appeal. If at a later date, the City would decide to appeal that decision to district court, there would be the possibility of court costs associated with preparing a record for appeal. That 00116 -5 Minutes of the Special Meeting - January 16, 1980 would depend upon the number of parties involved in the appeal and various other factors. Mr. Bounds commented that it is a limited exposure to the extent that the cities are being pena- lized for participating in the PUC proceedings. That already has been done through the rate structure that has been imposed where municipal rate payers are paying more than rural rate payers. Councilman Philips commented that the only step that the City would be taking at this time is going to the PUC. Mr. Bounds said that that is correct. The Council would be passing an ordinance and HL &P would probably appeal that to the PUC. Mr. Lanham explained that the City of Houston's rate ordi- nance has already been appealed to the PUC. The PUC will already be hearing an appeal from one or more cities whether the City of Baytown is part of it or not. Councilman Cannon commented that the rate structure that the City has here would permit higher rates than those of Houston. Mr. Bounds explained that it is a higher revenue recommendation than the City of Houston. Houston is at $48.9 million and Bay- town is at $60 million. Mr. Bounds explained that the way he had derived that figure was by the fact that at least one commis- sioner recognized that the revenues being collected represented an excess by at least $22 million. Therefore, there is evidence that the City can argue that the revenue is excessive by $22 million. In response to Council, Jim Schaefer, District Manager of HL &P, explained that currently, the rural and city rates are identical; however, HL &P is designing rates to implement the impact of the 4% franchise payment to the municipality which the PUC disallowed when considering the rate structure for residen- tial. Councilman Philips inquired if Mr. Schaefer anticipates that that will be a line item charge. Mr. Schaefer explained that it will be a line item charge and shown as a separate amount on the bill. Councilman Cannon stated that in effect, that will put HL&P in a two - tiered pricing structure. Mr. Schaefer stated that is correct. He further explained that prior to a year or year and half ago, HL &P had a 80¢ differential between the rates of municipalities and rural rate customers in the base step. It was 800 more if you lived outside an incorporated city. The reason- ing for that is that HL &P felt that their cost was greater in a rural area to provide service and meter reading because the customers were scattered, but the PUC has overruled this reasoning. Councilman Philips inquired if that cost would be a percen- tage of the total bill or would that be related back to the base rate. Mr. Schaefer commented that he guessed it will be a per- centage of the total bill. The Administration recommended approval of the ordinance. Councilman Philips moved for adoption of the ordinance; Councilman Cannon seconded the motion. Councilman Cannon pointed out that should the City of Houston prevail in their rate structure and the City of Baytown prevails, Houston will be at a lesser residential rate than Baytown. If the Council adopts this ordinance what does the City have to lose if the City goes with the $4A million and part of Mr. Bounds' justification for this reduction is one commis- sioner's comment. Mr. Bounds explained that he could imagine the PUC, in making their final decision, would either consolidate the cities as one unit or whatever decision rendered would result in uniform rate as much as possible. Councilman Cannon stated that is an assumption but suppose that assumption is wrong? What does the City have to lose with going with the $48 million rather than the $60 million. Mr. Bounds responded there is nothing to lose. Councilman Cannon 00116 -6 Minutes of the Special Meeting - January 16, 1980 stated that anything under the $80 million is going to be based on additional evidence. Mr. Bounds responded that is correct. Councilman Cannon stated that the City has a rate differential of $12 million to gain and nothing to lose. Mr. Bounds explained that the possibility of that coming into play is small. Mr. Lanham inquired if the PUC decided on a rate for Baytown that would be less than the proposed ordinance, then what? Mr. Bounds explained that the PUC, could on their own, order a lower rate despite what rate ordinance the City adopted. The PUC would have the authority to properly allocate the amount of evidence regardless of what rate ordinance was being appealed. Mr. Lanham commented that the PUC would not be making decisions strictly on the basis of what each city asked for. Councilman Cannon inquired if this is an assumption? Mr. Bounds responded that that is an assumption on his part because there is no particular decision that is similar which has come up. Councilman Cannon commented if the PUC sets uniform rates for the cities, the City of Baytown will be alright. He further commented that he wants to be convinced that Baytown can get the lowest possible rates available if it is something less than $80 million granted by the PUC. Mr. Bounds explained that the $80 million doesn't relate just to the revenue produced within the city limits. Due to the way that the PUC treats cases, as a practical matter, there is no chance that the City is going to come up with a different rate ordinance from the PUC and that granted to the City of Houston. Councilman Philips inquired if the City of Baytown has the same rate as the City of Houston at the present time. Mr. Schaefer responded that Baytown does have the same rate. Councilman Philips commented that Council is not quarreling with the percent increase here because Council recognizes that fuel costs are going up and that HL &P's cost of doing business is increasing. Council is quarreling with the distribution. Mr. Bounds pointed out that the increase granted does not include any fuel cost increases. The fuel costs are all automatically adjusted or increased through an adjustment clause. The vote follows: Ayes: Council members Philips, Johnson, Wilbanks, Caffey and Cannon Mayor Hutto Nays: None ORDINANCE NO. 2807 AN ORDINANCE ESTABLISHING RATES TO BE CHARGED BY HOUSTON LIGHTING & POWER COMPANY IN THE CITY OF BAYTOWN, TEXAS; PROVIDING FOR AN EFFECTIVE DATE FOR SUCH RATE SCHEDULES; PROVIDING CONDITIONS UNDER WHICH SUCH RATE SCHEDULES MAY BE CHANGED, MODIFIED, AMENDED OR WITHDRAWN; CONTAINING FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; REPEALING ANY OTHER ORDINANCE OR PART OR PARTS THEREOF WHICH MAY BE IN CONFLICT HEREWITH; AND DECLARING AN EMERGENCY. Recess and Reconvene Mayor Hutto recessed the open meeting into executive session to discuss pending litigation, Bayshore Constructors versus City of Baytown. When the open meeting reconvened, Councilman Philips moved that the Administration be authorized to negotiate with Bayshore Constructors; Councilwoman Caffey seconded the motion. The vote follows: Ayes: Council members Philips, Johnson, Wilbanks, Caffey and Cannon Mavor Hutto 00116 -7 Minutes of the Special Meeting - January 16, 1980 Nays: None Adj ourn With no further business to be transacted, mayor Hutto adjourned the meeting. "-K0Q:-U ff R t n-u-, Karen Petru, Deputy City Clerk APPROVED: el.,- C) P wr, , —, � P — Eileen P. Hall, City Clerk