2021 05 13 WS MinutesMINUTES OF THE REGULAR WORK SESSION OF THE
CITY COUNCIL OF THE CITY OF BAYTOWN
May 13, 2021
The City Council of the City of Baytown, Texas met in a Regular Work Session on
Thursday, May 13, 2021, at 5:03 P.M., in the Council Chamber of the Baytown City Hall, 2401
Market Street, Baytown, Texas with the following in attendance:
Laura Alvarado
Jacob Powell
Charles Johnson
Mike Lester
Chris Presley
Heather Betancourth
Brandon Capetillo
Rick Davis
Karen Horner
Raquel Martinez
Council Member
Council Member
Council Member
Council Member
Council Member
Mayor Pro Tem
Mayor
City Manager
City Attorney
Acting Deputy City Clerk
Mayor Capetillo convened the May 13, 2021, City Council Regular Work Session with a quorum
present at 5:03 P.M., all members were present, with the exception of Council Member Chris
Presley who arrived at 5:09 P.M., and Council Member Charles Johnson who arrived at 5:39
P.M.
1. DISCUSSIONS
a. Discuss the City of Baytown Utility Rate Study and Impact Fee Study.
Assistant City Manager Nick Woolery provided a brief overview on the background and purpose
for the utility rate study and impact fee study that are being conducted by Carollo Engineers, Inc.
He stated that Council will not see proposed rates tonight and that is due to a couple of really
critical reasons. One reason being that they are going to be talking about impact fees and
depending on where the Council wants to go on impact fees, if those are lowered, for instance,
that would correlate in higher rates to the ratepayers. There is also a lot of other work going on
behind the scenes, with who the City charges the revenue increases to. He stated that throughout
the presentation, they will see that there are some proposed projects in the works that need to
factored in and that is why Council is not going to see actual rates proposed tonight. They
wanted to present the background info to Council, get their feedback, and then staff will come
back some time over the next month with an actual proposed rate structure, which they are
actually changing the total structure this next fiscal year.
Mr. Woolery then introduced the staff of Carollo Engineers, Inc., that were present and would be
participating in the presentation to Council.
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May 13, 2021
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Mr. Cody Berg, Associate Vice President, stated that Ms. Jennifer Ivey would be talking to
Council on the impact fee study and they would then move on to discuss the utility rate study.
Ms. Jennifer Ivey, Vice President and Financial Management Group Lead, stated that before they
get into the actual details of the impact fee calculation, she was going to talk a little bit about the
different revenue sources that the utility has, and why it is so important to consider the impact
fee revenue, at the same time as the rate study. She stated that what they recommend for the
impact fees and what gets adopted, feeds into their estimated revenue from those, which then
feeds into that rate study, that is why it is critical to consider them together. Ms. Ivey stated that
the impact fees in the State of Texas are governed by the Texas Local Government Code Chapter
395, which tells them that every five years, you have to look at your land use assumptions and
update that plan. The land use assumptions are where they look at projected growth and estimate
how many new connections or new service units are expected to come online in the next 10
years. Ms. Ivey then proceeded to explain the process, surveys, and studies they conducted to
determine the recommended impact fees.
Mr. Woolery expressed that the Baytown Area Water Authority ("BAWA") had approved for
Carollo Engineers to do a BAWA Impact Fee Study and showed a chart regarding a survey of
water and wastewater impact fees, which indicated why they felt it was necessary to do the
study. He stated that the Capital Improvement Portion ("CIP") for the water side does not count
anything on the BAWA side. The City made a $60 million plus investment for the BAWA East
Project, and none of that is being captured in any impact fee now from new development, as it is
all paid by ratepayers. Mr. Woolery stated that Mr. Berg can provide a brief overview on where
they believe the BAWA impact fees will estimate, however, even with that additional fee, it
would still be significantly below three other very fast-growing cities in the region. Mr. Berg
then came up and stated that they are estimating the BAWA fee to be approximately $500, which
when added to the water fee it comes to a total of $1,3 57, for a total in water and wastewater fee
of approximately $4,600-$4,700.
Mr. Cody Berg stated that now that they had addressed the impact fee portion of the presentation,
they were going to start talking about the first couple portions of the rate study component and
will focus on the revenue requirements, then they will move into the cost of service. He
proceeded to explain the step-by-step approach they take in developing sound and defensible
rates: 1) Policy, Contracts, & Rate Structure Review, 2) Revenue Requirement Analysis, 3)
Demand Analysis, 4) Cost of Service Analysis, 5) Rate Design Analysis, and 6) Public Outreach
and Messaging to customers. Mr. Berg then explained the projected financial forecast and
reserve fund balances in regards to the Water Utility Fund as well as the Wastewater Utility
Enterprise Fund.
Mr. Berg proceeded to discuss the cost of service principles by which they are guided by, in
order to help conduct this type of study: 1) They want to make sure that they are recovering costs
adequately so that the utility maintains its financial viability because at the end of the day, they
want to be able to build what we need to build, operate it, maintain and reinvest in it, 2) They
want to make our rate structure is simple and easily understood, while also meeting our
objectives, 3) They want to make sure that they have fair and equitable rates, 4) Avoidance of
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May 13, 2021
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want to make our rate structure is simple and easily understood, while also meeting our
objectives, 3) They want to make sure that they have fair and equitable rates, 4) Avoidance of
undue discrimination, or subsidies, within the rates, and 5) They want a legal and defendable
(rational cost nexus), meaning you are paying what it costs for the City to serve you. On the cost
of service analysis graph, he explained how they have to separate the costs into different
components, which tell them how the customers are using the costs that are incurred for those
particular services, such as customer service billing and administrative fees, capacity usage,
standard base supply and peak supply needs. Mr. Berg then provided the water and wastewater
utility cost of service results through charts. In total from the water utility, he stated that the City
needs to get revenues up four and a half percent based on the cost of service results. However,
the rate design will tell them how they get there and who needs to pay what as far as usage is
concerned, but that will be discussed at a later date.
Mayor Brandon Capetillo stepped out of the work session at 5:48 P.M., and Mayor Pro Tern
Heather Betancourth took over as the presiding officer.
The council members proceeded to comment and ask questions based on the reports provided by
Ms. Ivey and Mr. Berg, and inquired on how the City can offset the burden on the existing
homeowners and residents regarding the increase in rates. Mr. Woolery assured the council
members that although increases will be needed, staff does have some strategies to mitigate, as
much as possible.
® b. Discuss any or all of the agenda items on the City Council Regular Meeting Agenda
for May 13, 2021.
City Manager Rick Davis requested that the Director of Public Works and Engineering Frank
Simoneaux address the red -line copy at the dais related to agenda item 7.d., and answer any
questions Council may have.
2. ADJOURN
With there being no further business to discuss, Mayor Pro Tern Heather Betancourth adjourned
the May 13, 2021, City Council Regular Work Session at 5:56 P.M.
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