1992 03 04 CC Minutes, SpecialMINUTES OF THE SPECIAL SESSION
OF THE CITY COUNCIL OF THE CITY OF BAYTOWN
March 4, 1992
The City Council of the City of Baytown, Texas, met in
special session on Wednesday, March 4, 1992, at 8:00 a.m. in the
Council Chamber of the Baytown City Hall with the following in
attendance:
Mario Delgado
Don M. Hullum
Ray Swofford
Pete C. Alfaro
Bobby J. Credille
Rolland J. Pruett
Emmett O. Hutto
Bobby Rountree
Norman Dykes
Ron McLemore
Eileen P. Hall
Councilman
Councilman
Councilman
Councilman
Councilman
Councilman
Mayor
City Manager
Assistant City Manager
Assistant City Attorney
City Clerk
The meeting was called to order with a quorum present, after
which the following business was conducted:
Consider Proposed Resolution No. 1142, Authorizing the City
Manager to Sign and Submit an Application to the Economic
Development Administration for a Public Works Grant
Previously, the city had made application for a grant for
the amount of $1.3 million, but recently, Enichem Synthesis has
indicated the possibility that that company might locate at the
present Enichem site. Therefore, we would like to amend the
grant to request $1.5 million in funding from EDA, which is the
largest amount that can be requested.
The city manager noted that the EDA grant specified that the
effluent would be taken to the San Jacinto River. The grant
application must be amended if the effluent goes to Spring Gully.
The project could be delayed or even stopped if there is public
opposition, and there has already been opposition by several
residents in Lakewood. Mr. Rountree recommended that we proceed
as originally planned and take the effluent to the San Jacinto
River. Mr. Rountree also stated that he has asked Kent Laza,
City Engineer, to look at oversizing the discharge line. The
administration recommended approval of the resolution.
920304 -2
Minutes of the Special Session - March 4, 1992
Councilman Alfaro moved for adoption of the resolution.
Councilman Credille seconded the motion. The vote follows:
Ayes: Council members Delgado, Hullum, Swofford,
Alfaro, Credille and Pruett
Mayor Hutto
Nays: None
Resolution No. 1142
A RESOLUTION AUTHORIZING THE CITY MANAGER TO SIGN AND SUBMIT AN
APPLICATION TO THE ECONOMIC DEVELOPMENT ADMINISTRATION FOR A
PUBLIC WORKS GRANT; TO ACCEPT OR AFFIRM ANY GRANT AWARD THAT MAY
RESULT THEREFROM; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF.
Consider Proposed Resolution No. 1143, Appointing Don M. Hullum
as Alternate to the Galveston Bay National Estuary Program
Resolution No. 1143 names Councilman Delgado as the
representative and Councilman Hullum as the alternate to the
Galveston Bay National Estuary Program. The administration
recommended approval.
Councilman Swofford moved for adoption of the resolution.
Councilman Credille seconded the motion. The vote follows:
Ayes: Council members Delgado, Hullum, Swofford,
Alfaro, Credille and Pruett
Mayor Hutto
Nays: None
Resolution No. 1143
A RESOLUTION APPOINTING MARIO DELGADO AS REPRESENTATIVE OF THE
CITY OF BAYTOWN TO THE LOCAL GOVERNMENT ADVISORY COMMITTEE OF THE
GALVESTON BAY NATIONAL ESTUARY PROGRAM FOR THE YEAR 1992 AND DON
M. HULLUM AS ALTERNATE SHOULD MARIO DELGADO BECOME INELIGIBLE OR
RESIGN.
920304 -3
Minutes of the Special Session - March 4, 1992
City Manager's Report
Flood Insurance Reduction - The administration has received
notification of a loo reduction in flood insurance effective
October 1, 1992. This reduction is due to the efforts of the
Planning and Traffic, Inspection, Emergency Management, Public
Works, Engineering and other city departments. Continued efforts
in this area could result in 25 - 30% reduction in flood
insurance premiums for residents of the city.
Officers Retiring - officers Dale Schimming and Glen Rosier
will be retiring Friday, March 6. A retirement reception is
scheduled at the Gray Sports Complex from 7:00 to 10:00 p.m.
Bush Terrace - The administration is scheduled to
report on Busch Terrace Improvements on March 12. The
administration will contact Mr. Joe Neito to determine the best
time to hold the meeting.
Audit Process - The city manager stated that after the last
council meeting he had met with the auditors and the staff to
develop information for council. Jim Gerace, with the firm of
Gerace, Andrews & McQueen, P.C., explained fee charges beginning
with 1987. In 1987 the audit costs equaled $77,500. With 1988
budget the cost increased to $127,000. Extra fees were due to
city requiring extra internal control work and also a change in
the computer system.
As of September 30, 1989, the audit fee equaled $168,000.
This fee included general accounting office compliance standards
and new standards of the American Institute of Auditors. During
that year no bank reconciliations were made and the City of
Baytown hired an outside contractor to perform bank
reconciliations. Also, it was necessary to devote more time in
order to have the audit performed for a timely bond sale.
In 1990 the charges were $222,000, due to a change in
accounting on cash basis, and no bank reconciliations for
eighteen months. The auditors are still dealing with the
standards along with the fact that Organized Crime Grant and the
city's self- insurance program must be audited. He pointed out
that last year when the appointment was made, three firms were
considered. All three firms submitted open -ended contracts. The
$65,000 figure included auditing the city's accounts. That means
having all the papers in order with a trail balance to audit.
Any of the three firms would have had the same problem. Council
selected the firm of Gerace, Andrews & McQueen because they were
familiar with the system.
920304 -4
Minutes of the Special Session - March 4, 1992
Mr. Gerace emphasized that Ken Mitchell and his staff had
done a good job, but he feels that the city is understaffed in
the Accounting Department. He mentioned that he had performed an
audit for another municipality which has eight degreed
accountants and a grant coordinator. He acknowledged that the
city had added more staff and that catch -up was in process. It
will not happen this year but perhaps by next year, the process
will begin to level out. Mr. Gerace stated that the current
audit is 80% complete and should be about 30 days ahead of last
year's schedule.
Councilman Hullum stated that he had a problem with the
company auditing the accounts and also doing bookkeeping. Mr.
Gerace's response to that was the employees performing the
bookkeeping work do not participate in the auditing process.
Therefore, it is an independent audit.
Councilman Pruett, Chairman of the Audit Committee, was
recognized and read the following statement:
"As Chairman of the Audit Selection Committee, I would like
to respond to some of Councilman Hullum's concerns about the
audit procedure. I am both angry and concerned that this council
has been made to appear inept as well as insensitive to the
taxpayers of Baytown over circumstances beyond its' control, and
feel important facts need to be brought out.
Few governmental contracts are without amendable features,
whether for professional service or for construction contracts.
This makes possible the continuation of additional work beyond
the scope of a basic professional services agreement, or for
unseen, unpredictable events in construction projects which are
rectified by change orders. At the same meeting which the vote
for auditor was taken, council okayed a 40% increase in an
engineering contract by a unanimous vote. What bothers me in the
case of the audit over run is that council was not kept informed
of the additional costs and the extenuating circumstances behind
them. In fact, when I checked with the city finance director as
to whether or not there would be a problem with proposing Gerace,
Andrews & McQueen for the city audit, the fact that they were
having to take on extra work which the city could not handle was
not mentioned.
920304 -5
Minutes of the Special Session - March 4, 1992
Councilman Hullum, I personally take issue with your
statement in the Baytown Sun inferring that city council acted
imprudently in spending taxpayers monies in the audit award.
This council has been diligent in giving faithful stewardship
over the administration of tax monies. Also, I personally resent
your statement (if you were quoted correctly) "If they expected
me to be a rubber -stamp councilman, they were wrong." I, and I'm
sure all other council members, respect your right to vote your
convictions on any issue and you have no valid basis to feel
otherwise.
I am curious as to how and where you obtained figures which
the Finance Director could not readily supply to council when you
brought them up, and your timing in presenting them. I wonder if
you were influenced or motivated by an outside source, and so
have some questions of my own.
Councilman Hullum, are you a relative of Edgar Hullum,
partner in Hullum, Start & Company, a firm which previous to
Gerace, Andrews & McQueen had the auditing contract with the City
of Baytown?
I want the public to know that whether the council decides
to budget more monies to adequately staff the Finance Department
or continue paying whoever has the audit contract to catch up on
work the city can't handle, their tax dollars are paying for
services rendered and are not being wasted.
If the present staff of the city financial department cannot
handle the increased bookkeeping load, then we must budget
additional monies for adequate staffing, or continue to pay
whoever is awarded the city audit contract to do that work which
the city cannot handle. I want the public to know that either
way, their tax dollars are paying for services rendered and are
not being wasted."
Councilman Hullum explained the process that he had gone
through in order to obtain information concerning the appointment
of the auditor and the audit process. He further emphasized that
his only intention was to gather information and requested that
council establish guidelines for the auditing process.
The city manager stated that he too was concerned with the
cost of the audit and in the future both the city manager and
city council will be aware of the costs of the audit on a regular
basis. However, he emphasized that the staff does not give
direction to the auditor. The staff has been meeting with the
auditors on a regular basis for several months in an effort to
keep abreast of the progress. However, the staff does not set
the auditor's agenda and he suggested that the Audit Committee
have a more active role in dealing with the auditors.
920304 -6
Minutes of the Special Session - March 4, 1992
Councilman Alfaro suggested that council focus on what could
be done to avoid this situation. He suggested that council ask
the administration to take a hard look at the staffing in the
Finance Department to obtain the goal of presenting the auditors
with trial balance and proper papers to audit the City of
Baytown's financial statements. He emphasized that the
accounting and auditing process should be separate functions and
while Gerace, Andrews & McQueen are performing both functions the
cost should be separated. He requested that the firm submit a
breakdown of the costs for 1991 audit at the March 12 council
meeting.
Council discussed the possibility of the auditors coming
before council prior to beginning any accounting procedure.
However, Mr. Gerace pointed out that once an audit begins you
cannot stop in the middle. Therefore, council agreed that the
auditors should contact the city manager and let him know of any
unusual expenditure, the amount of time the job will take, and
the costs.
The city manager assured council that the administration
would take a look at the staffing in the Finance Department and
come back to council with a recommendation in this regard. He
also reminded council that the City of Baytown would be selling
bonds soon and encouraged the auditing firm to continue their
work to complete the audit prior to the bond sale.
Adjourn
There being no further business to be transacted, the
meeting was adjourned.
Eileen P. Hall
City Clerk
3.3.10