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2005 08 02 WS MinutesMINUTES OF THE WORK SESSION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN August 2, 2005 The City Council of the City of Baytown, Texas, met in work session on August 2, 2005, at 9:00 a.m. in the Hullum Conference Room, Baytown City Hall, 2401 Market Street, Baytown, Texas, with the following in attendance: Brandon Capetillo Sammy Mahan Don Murray Mercedes Renteria III Scott Sheley Calvin Mundinger Gary M. Jackson Bob Leiper Kelvin Knauf Ignacio Ramirez, Sr. Gary W. Smith Council Member Council Member Council Member Council Member Council Member Mayor City Manager Deputy 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 proposed 2005 -2006 fiscal year budget. Gary Jackson, City Manager, stated that the work session would review the Enterprise Funds. These funds are financed by user fees, not property taxes. The Water and Sewer Fund includes Water and Sewer Overhead, Utility Billing, Utility Operations, and Utility Construction with 101 employees. The budget is proposed to be increased by $768,000 or 3.4 %. The increase is largely due to increased debt service. The increased debt service is largely attributable to the Northeast Wastewater Treatment Plant. The Water and Sewer Fund will pay for 40% of the design of the West District Wastewater Plant expansion. A 7.5% increase is proposed for water and sewer rates. Council Member Ronnie Anderson arrived at 9:12 a.m. The revenues of the fund are down $71,918 due to a wet spring. The personnel costs are increased by $17,512. The City of Houston has increased its raw water rate by 3.5% and additional increases are expected. This increase is borne by BAWA, but an increase in the treated water rate is projected for 2007. Maintenance programs and the meter replacement program are increased by $69,257. The water line rehabilitation program continues at $175,000. The Council discussed the raw water rates, the distribution of treated water from BAWA, and the rate for large volume users. The proposed water rates were reviewed. Water Utilities includes 14 employees, not including the BAWA employees. They work in water Page 2 of 4 Minutes of the Work Session – August 2, 2005 treatment and distribution. Wastewater Utilities includes 41 employees in collection, treatment, and pollution control. Utility Construction has 13 employees in tapping and construction. Construction includes maintenance and waterline rehabilitation. Council engaged in a discussion of recent water bill concerns received from citizens. The Utility Capital Improvement Program has been expanded from an original amount of $29 million to $67.23 million over the first five years. Council then discussed the failure, in the past, to fix problems resulting in significant expenditures now. The capital program has been authorized to expand to cover an additional five years. The issues that the capital program is to address include customer service, regulatory compliance, and the need for additional capacity to accommodate growth and development. The expanded capital program will include the following projects: Miscellaneous rehabilitation and emergency $5 million Pruett Addition sewer $500,000 added West Baytown sewer phase 1 $1.3 million West Baytown sewer phase 2 $1 million West District expansion design $1 million added West District construction $16 million Needlepoint water tower $1.33 million Goose Creek trunk line $4 million Northeast District plant $5.5 million added Water tower north of I -10 $1.8 million Collection system rehabilitation $25.2 million and Lift stations $2 million Craigmont Woodlawn Raccoon and Gulf Coast. The Council discussed the projected growth and the services needed to serve that growth and the areas currently within the City that are not served with utilities or where utility capacity is limited. Mr. Jackson explained that the City has approximately 400 miles of sewer collection lines. Approximately 200 miles of lines are in need of repair. Over the past five years 66 miles of lines have been repaired. The larger lines will cost more and the total linear footage repaired will slow. The additional five years on the capital program will not solve the inflow and infiltration problems. Continuous efforts and maintenance are required to repair the lines and prevent inflow and infiltration. The new wastewater treatment plant and the expansion of the West District plant will assist with the capacity problems at the East District and Central District plants. The proposed growth models are slow (.5 %), moderate (1.25 %) (the basis for the expanded capital improvement plan), and fast (3 %) (suggested by school demographer —not all of school district is within the City). Debt issuance based on the growth models was reviewed. If the slow model is chosen, then the Page 3 of 4 Minutes of the Work Session — August 2, 2005 West District expansion will not be included. The West District expansion is included in 2007- 2008 in the moderate growth model. The inflation factors assumed were reviewed (wages, health coverage, salary savings, electricity, machinery, equipment, vehicles, operational expenses, and transfers). The projected rate increases based on the growth models were reviewed. The proposed rates were compared to the rates resulting from the Maximus rate study. The projected rates provide funding for the projects, while the Maximus rates result in a deficit. The capital program is $130 million with $117 million expended on wastewater projects, not including private lines. Council was asked to consider a pilot project for the private sewer lateral line repair or replacement, utilizing $220,000 from the current year budget. Inflow and infiltration is from both public and private lines. It is assumed that one -half of the inflow and infiltration is from private lines. The current ordinance requires the owner to repair his/her lines within 180 days of notice. The City may mandate repair of the lines or develop a complex program to provide public funding and repayment of the expenses. The statutory requirements were reviewed. The question of how to deal with a person who will not participate in the program or who will not repay the lien was discussed. EPA mandates a resolution. If no action is taken, the I &I problem continues, the capacity problems continue, and enforcement actions could follow. It is mandated that the inflow problem be corrected. It is estimated that it will take $20 million to repair the private lines. Three scenarios for the issuance of private activity revenue bonds were presented. The debt service on each option was presented. The funds for repair of the private lines could be used for other projects. The issues involved in collecting the funds were discussed. The rates for repayment of the revenue bonds based on the growth rate and the issuance choice were reviewed. The law does allow the use of public funding for repairs to private lines without repayment. However, no debt can be issued. The funding must come from current year revenue. This method would require a significant increase in rates. The Council discussed extending the repair period in the existing ordinance and voluntary compliance and the benefit from voluntary compliance. No increase is proposed in the Sanitation fee. A new contract has been authorized with Waste Management for residential waste collection. Residential waste is collected two times each week. The Sanitation Fund provides for curbside brush pickup and the recycling/drop -off center. There are eleven employees. A rate increase is projected for 2006 -2007. The Storm Water Utility Fund is mandated by the federal Clean Water Act. The revenue is $134,730 more than last year. The staff and program is unchanged. The review of the storm water management plan is underway. The fund will provide a $276,734 transfer to the general fund. The topics to be discussed during the work session on August 3, 2005, are the hotel occupancy tax fund, central services and miscellaneous funds, and the remaining 1/4% sales tax. Page 4 of 4 Minutes of the Work Session — August 2, 2005 Adjourn. Council Member Murray moved that the meeting adjourn. Council Member Mahan seconded the motion. The vote follows: Ayes: Council Members Anderson, Capetillo, Mahan, Murray, Renteria, and Sheley Mayor Mundinger. Nays: None. The motion carried. There being no further business, the meeting adjourned at 11:12 a.m. Gary .Smith -� oAYTo� City Clerky h