2004 08 09 WS MinutesMINUTES OF THE WORK SESSION
OF THE CITY COUNCIL OF THE CITY OF BAYTOWN
August 9, 2004
The City Council of the City of Baytown, Texas, met in work session on August 9, 2004, at 5:00
p.m. in the Hullum Conference Room, Baytown, Texas, with the following in attendance:
Ronnie Anderson
Sammy Mahan
Don Murray
Mercedes Renteria III
Scott Sheley
Calvin Mundinger
Gary M. Jackson
Bob Leiper
Ignacio Ramirez, Sr.
Gary W. Smith
Council Member
Council Member
Council Member
Council Member
Council Member
Mayor
City Manager
Assistant City Manager
City Attorney
City Clerk
The meeting was opened with a quorum present after which the following business was
conducted:
Discuss the 2004 -2005 fiscal year budget.
Gary Jackson, City Manager, continued his presentation of the Water and Sewer Fund budget.
He reminded Council that it is an enterprise fund. The main component of the rate increase is
the increased debt service, primarily due to improvements in the wastewater system. The design
of the West District Wastewater Treatment Plant is included in the budget. Due to the heavier
than usual rainfall, the revenue is projected to be $330,000 less than anticipated in the current
year budget. Houston has adopted an increase in the raw water rate. This increase will be passed
along by BAWA in the 2006 fiscal year.
The Maximus rate study covered nine years. Mr. Jackson reviewed the assumptions involved in
the rate study. He related that the model must be updated annually to test the assumptions with
the facts that become known during the year. The projected debt issuance layers the debt. While
old debt is paid off, new debt is being added. The proposed increased rates are necessary to
cover the Operations and Maintenance, debt service, and transfers to the general fund for
administrative services. Mr. Jackson reviewed the table of water and sewer rate increases.
The Council discussed the rate for the volume user, inflow and infiltration issues, possible
legislative changes relating to the expenditure of public funds to correct private laterals, and
options through the general fund for private lateral repairs. The discussion included the increase
in the fund balance for Water and Sewer due to delay in the TWDB financing and the possible
use of a portion of the fund balance to make repairs to the system, as well as the safe number of
working days capital to maintain.
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Minutes of the Work Session — August 9, 2004
The Capital Improvement Program includes $5,060,000 in new debt. This includes $4,000,000
for streets, $900,000 for drainage, $85,000 for the design of a new fire station, and $75,000 for
issuance costs. The Utility Capital Program has been expanded. The debt service will be
$6,774,129 of new and existing debt. The program has grown from $29,000,000 to $67,000,000,
including the portion to be paid by the Municipal Development District. $4,000,000 in debt
previously intended for the convention center and $1,000,000 in interest will be transferred to
water and sewer projects. There will be $13,795,000 in new debt of which MDD will fund
$3,200,000 and $1,080,000 is interest from the convention center debt, leaving $15,195,000 to be
paid from rates. Council Member Sheley raised the question of whether the design of the fire
station could be paid from fund balance.
Mr. Jackson reviewed the chart of rehabilitation projects. New projects include $100,000 for
design of a new elevated water storage tank, the Northeast Wastewater Treatment Plant, and the
second BAWA supply line for a total of $67,230,000 in projects, with MDD paying for
$13,000,000, leaving $54,430,000 to be paid from rates.
Mr. Jackson reviewed the Storm Water budget. The $1 administrative fee is continued, subject
to Council adopting a new rate structure. Maximus has been asked to prepare a new schedule
with more classes of rates, with each class having a smaller range. The Council discussed the
service levels and impact each service level would have on consumers and the general fund.
Mr. Jackson reviewed the budget for Bayland Island. The existing building debt is proposed to
be paid in full during the budget year. The general obligation bonds for the marina and island
will be paid according to the bond schedule. The operating budget is reduced. This budget
covers maintenance and utilities. The Council discussed the proposed payment in full of the debt
on the Ships Store.
Mr. Jackson reviewed the Hotel Occupancy Tax budget. The revenues are projected to be down
slightly to $462,484. Expenditures are reduced due to the transfer of the convention center debt.
The Council engaged in a discussion of the revenue projections for the Hotel Occupancy Tax
(HOT). Mr. Jackson reviewed the permitted categories of expenditures — promotions, arts,
historical preservation, and bay communities. Each category is restricted in use and limited in
the percentage of expenditures allowed. Mr. Jackson reviewed the projects in the HOT budget.
The new projects are the canoe festival, proposed for Goose Creek, and the birding festival,
proposed for the Nature Center. The Council posed questions about sponsorship of the events
and funding for projects. Council was asked to consider developing criteria for funding new
projects that are proposed by private entities. The budget will support tourism on the new web
page.
Mr. Jackson explained that allowable expenses include costs for a convention center, assistance
in registering convention visitors, tourism advertising and promotion, tourism targeted to the arts
or historic preservation or restoration. At least 1 /7th of the income must be spent on advertising
and general promotion. Not more than 15% of the income may be spent on the arts. Not more
than 50% of the income may be spent on historical purposes, unless a convention center is
funded. Not more than 10% of the income may be spent on parks and facilities.
The Council then discussed the summer concert series and the 4th of July celebration. It was
suggested that corporate sponsorship of the 4th of July be sought.
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Minutes of the Work Session — August 9, 2004
The meeting recessed at 7:09 p.m.
The meeting reconvened at 7:25 p.m.
The Council then discussed specific projects in the HOT budget. The discussion included the
reduction, elimination, or modification of the summer concert series, or rescheduling concerts to
a different time of year. The Council discussed whether consideration of individual projects was
appropriate for Council. Staff was instructed to revise the budget to reduce the expenditures for
the summer concert series and the 4" of July celebration.
Mr. Jackson reviewed the budget for Miscellaneous Issues/Projects. This budget includes
televising Council meetings, replacing the Council Chamber sound system, painting the Council
Chamber, expansion of the computer server room, and background checks for all new hires. Mr.
Jackson also informed Council that the IDA revenue projections had been updated and they are
expected to increase by $163,464, for a total of $16,698,165.
Council discussed whether the items in this area could be held for future debate and approval by
Council. Mr. Jackson explained that, after adoption of the budget, moving money from the fund
balance to a specific purpose is a budget amendment. However, moving money from a
contingency account to a specific purpose is a budget change. A budget amendment requires an
emergency. If Council wants to spend money from the fund balance, they must act before
adoption of the budget to include it in the expenditure portion of the budget.
The Council discussed the proper range for the fund balance and concurred that the fund balance
should be maintained around 80 days of working capital. Mr. Jackson stated that Baytown is
located in an area that poses threats from hurricanes and terrorists. The fund balance policy
should recognize these risks and the possible expenses associated therewith. Mr. Jackson urged
Council to have the Risk Management fund balance stand on its own. It is unique and a high
fund balance must be maintained. If Council reduces the fund balance, projects requiring one-
time expenditures should be found for the use of the money. The funding for the new assistant
city manager can come from the additional revenue from the IDA. Mr. Leiper suggested that the
funding from the reduction of the fund balance be placed in a Council capital or contingency
account.
Adjourn.
There being no further business, Council Member Anderson moved that the meeting adjourn.
Council Member Murray seconded the motion. The vote follows:
Ayes: Council Members Anderson, Mahan, Murray, Renteria, and Sheley
Mayor Mundinger
Nays: None.
The motion carried and the meeting adjourned at 8:34 p.m.
GaryW Smith, City Clerk