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HomeMy WebLinkAboutMIN SEP 08 1998 M I N U T E S d CITY OF BEA UMONT Lulu L.Smith DAVID W. MOORE, MAYOR Bobbie J. Patterson, Mayor Pro Tem Guy N.Goodson CITY COUNCIL MEETING Andrew P.Cokinos John K.Davis SEPTEMBER 8, 1998 Becky Ames Lane Nichols,City Attorney Ray A. Riley,City Manager City Clerk The City Council of the City of Beaumont, Texas, met in a regular session on September 8, 1998, at the City Hall Council Chambers, 801 Main Street, Beaumont, Texas, at 1:30 p.m. to consider the following: OPENING * Invocation Pledge of Allegiance Roll Call * Presentations and Recognition * Public Comment: Persons may speak on scheduled agenda items Mayor Moore called the meeting to order at 1:30 p.m. City Attorney Lane Nichols gave the invocation. Officer David Henry led the pledge of allegiance. Present at the meeting were: Mayor Moore, Mayor Pro Tem Patterson, Councilmembers Smith, Goodson, Cokinos, Ames, and Davis. Also present were Ray A Riley, City Manager; Lane Nichols, City Attorney; and Barbara Liming, Deputy City Clerk. Mayor Moore extended congratulations to Councilmember Ames for celebrating her fortieth birthday yesterday. *Presentations and Recognitions 1) A Proclamation was issued: "Join the United Way Family Day," September 11, 1998. 2) Mayor Moore said it is a joy to be part of a youth program that is a partnership between the Police Department, Police Athletic League, young people and neighborhoods and asked Officer David Henry to bring four young men to the podium and speak about some of their activities. Officer Henry said it is an honor to be in Council today and expressed appreciation for Council support. He said the Police Activities League, a juvenile crime prevention program started to give young people an alternative to negative influences, has been in existence for five years. Officer Henry said these young men have made them very proud with their accomplishments. Part of the program includes football, cheerleading, basketball, soccer, tennis, gymnastics, and the most recent program started is boxing. The program started with the assistance of Mr. Jimmy Baker and Mr. Lee Wheeler, the boxing coach. In a short time these young men have received national recognition. Two of these young men have won silver glove national titles, two have won golden glove titles and one who won a gold medal in the 19 and under age group at the United States Boxing Championship. Officer Henry invited Mr. Jimmy Baker and Mr. Lee to make comments. Mr. Baker announced that the Southeast Texas Boxing Association in conjunction with Lone Star Security and the Palace will present "Night of the Champions" on Saturday, September 12th, at 8:00 p.m. at the Palace to showcase the achievements of these young men. Mr. Baker said they believe if they can help kids get off the streets and away from negative influences, they are assisting in finding a cure for juvenile delinquency. He commended the Beaumont Police Activities League for bringing national, and soon to be international, recognition to Beaumont through their boxing program. Mr. Baker said that they have won five national championships in the past eight months and thanked Beaumont for the PAL program and the directorship of Officer David Henry. Mayor Moore presented a proclamation to each of the young men: Chris Henry age 17, won the gold medal at the United States National Boxing Championship in the Light Heavyweight Division in Colorado Springs, Colorado, which placed him on the United States National Team to represent the United States in the World Championship as a Light Heavyweight in Beunos Aires, Argentina in November. Quinton Sells, age 13, won the 1998 National Silver Gloves Championship in the 119-pound weight class Intermediate Division, ages 12-13, in Kansas city Kansas; Cymone Kearney, age 11, won the 1998 National Silver Gloves and National Junior Golden Gloves Championship in the 95-pound weight class, Junior Division, ages 10-11, in Kansas City, Kansas, and K'Lon Spencer, age 14, won the 1998 National Junior Golden Gloves Championship in Cincinnati, Ohio, and to the Beaumont Police Activity League Bonin; Team. Officer Henry shared that Chris Henry's fight will be televised on ESPN on September 17th. This is the second time Chris has appeared on ESPN. Also, Officer Henry reported that the Southeast Texas Boxing Association is an effort of Mr. Jimmy Baker, and the proceeds generated through the event Saturday evening will be used to start the Southeast Texas Boxing Association, purchase a boxing ring, and recruit participation of other cities to join in a local association of boxing to provide local competition. 3) Ms. Jessie Haynes of Haynes Associates announced that "some of the hottest football action" is the U. S. Is about to take place in Beaumont. Two teams from the Southwest Athletic Conference, Prairie View A&M University and Southern University from Louisiana, will be on the footfall field at 7:00 p.m. at the Lamar University stadium on Saturday, September 17. Ms. Haynes introduced Prairie View Alumnus George Hudspeth and Assistant Athletic Director Clifton R. Gilliard. She also introduced Mr. Terrence Holmes, a local attorney, and Mr. Luther Martin, an engineer for Entergy, as representatives from Southern University. Minutes;9/08/98;Page 2 Representative from both universities thanked Council for the opportunity to participate in a football game on the Lamar campus. In addition to the game, Coach Gilliard announced that both bands will be featured, and said they are two of the best in the Country. Representatives from both schools proclaimed the talent of their bands and guaranteed a fantastic half time presentation. Convention and Tourism Director Jef Russell said he is encouraged and thrilled that college football will be back in Beaumont next weekend. On behalf of the City of Beaumont, the Mayor and City Council, Mr. Russell presented a gift pack of local products to Mr. Gilliard of Prairie View and to Mr. Luther Martin representing Southern University as a token of appreciation for bringing this football game to Beaumont. Mr. Russell extended greetings of hospitality to both university teams during their time in Beaumont. 4) Community Services Director Maurine Gray announced that an exciting educational and historic weekend will begin on Thursday with six Navy mine hunters arriving at the Port of Beaumont. She said this is the largest Navy contingency that has ever been in Beaumont. It will be open for tours to the public on Saturday from 9:00 to 5:00 p.m. and on Sunday from 1:00 to 5:00 p.m. Ms. Gray encouraged the public to make the Navy welcome. She said there will over 300 sailors here for the weekend. Ms. Gray presented tee-shirts to Council listing the six ships that will be arriving and the insignia of the squadron. She said it will be a fun week and encouraged Council participation. 5) Mr. Jeffery York and Ms. Jody Domingue were invited to make an announcement. Mr. York said that on January 1, 1901, a momentous event happened outside of Beaumont with the discovery of oil at Spindletop and changed the course of history for Beaumont, Texas and for the world. He said that 2001 will be the anniversary of Spindletop, and Governor Bush has formed a commission to develop celebration events. Today, Mr. York said he is here to speak about an event that will take place this year and in 1999. He said the Art Museum of Southeast Texas has put together an exhibition that chronicles the history of the discovery of oil and its impact on our society and the world in an exhibition called Oil Patch Dreams. This will be images of the petroleum industry in American art. The exhibition was developed by the Art Museum of Southeast Texas and will travel to four other cities in Texas—Austin, El Paso, Wichita Falls and Midland. Mr. York invited everyone to visit the exhibition from September 12 through December 20, 1998, at the Art Museum. There will be about 65 works of art by such notable artists as Norman Rockwell, Thomas Hart Benton, Andy Warhol and many others. He said a number of educational programs and packages have been developed for the schools, and this exhibition was put together with the citizenry in mind. Ms. Jody Domingue presented Council with small cardboard oil derricks titled "Texas Oil Drops" and filled with black licorice jelly beans. Ms. Domingue said there wilt be lots of oil derricks and memorabilia to purchase. Ms. Debbie Bando will open the "Oil Patch" emporium during the exhibition. She expressed appreciation to sponsors from all areas of Texas, said there will be Minutes;9A8198;Page 3 many coming in to view the exhibition. She pointed out that there are articles about the exhibition in the Oil and Gas Journal, Texas Monthly, Southern Accents, Southwest Art, and American Art Review. She added her invitation to attend the exhibition and thanked all the local media for the gift of media exposure. *Public Comment: Citizens were invited to comment on the Consent Agenda and Main Agenda Items 1 -3 and 5-6. Mrs. Get Williams, 4495 Fortune Lane, said she is representing senior citizens of Beaumont in addressing Agenda Item 3. Mrs. Williams said she is strongly opposed to a tax increase for street repairs and drainage projects because of her concern for the elderly and disabled on fixed incomes. She quoted statistics regarding the elderly residing in Beaumont and the street user fee they pay each month. She stated that one-third of the elderly do not drive or use public transportation, and that they are the last to be considered for CDBG funds for home repairs. Mrs. Williams said she is in favor of progress, but is opposed to a property tax increase. She suggested taxing those who work in Beaumont and lessening taxes for those working outside the city. *Consent Agenda The following consent agenda items were considered: Approval of the minutes of the regular meeting held September 1, 1998; Confirmation of committee appointments - Resolution No. 98-236 Greg Dykeman appointed Vice Chairman of the Planning Commission for a term expiring September 7, 2000.) A) Authorize a contract with the International Brotherhood of Electrical Workers - Local Union 479 to provide emergency medical and fire protection services (to their facility at 1430 Spindletop Road for a two-year period for payment of$3,345 per year) - Resolution No. 98-237 B) Approve a six-month contract for the purchase of lubricants for use in the Fleet Management Division (with Fuller Oil Company for an estimated total expenditure of $25,151.47 for the six-month period) - Resolution No. 98-238 C) Approve an annual contract for the towing of City fleet vehicles and seized vehicles by the Police Department (with TNT Wrecker Service of Beaumont, $25 per tow for light duty towing and $60 for heavy duty vehicles for City fleet vehicles; seized vehicles, $25 for light Minutes;9A6M;Page 4 duty towing and $75 for heavy duty towing; for estimated annual expenditure of$20,250 - Resolution No. 98-239 D) Approve a contract for the purchase and installation of carpet and vinyl flooring for four City buildings (in the Fire Headquarters Building at 400 Walnut Street, the Health Service 1 and Health Department Administration Buildings at 950 Washington, and the former Police Department Special Services Division Building at 780 South Fourth Street, with Orange County Building Materials, Inc. in the amount of $17,980) - Resolution No. 98-240 E) Approve the purpose of properties for the Concord Road Improvement Project (Parcel 29: .028 acre out of Lot 3, Block 1, Bullock Addition, 2865 Concord, for compensation of$600, from Dennis M. Levine; and Parcel 30: .044 acre out of Lot 4, Block 1, Bullock Addition, 2885 Concord Road, for compensation of $1,100 from Dennis and Ina Marie Levine) - Resolution No. 98-241 F) Approve the settlement of a claim (Shanna Bond in the amount of$2,900) - Resolution No. 98-242 Councilmember Ames moved to approve the Consent Agenda. Councilmember Smith seconded the motion. MOTION PASSED. Ayes: Mayor Moore, Mayor Pro Tem Patterson, Councilmembers Smith, Goodson, Cokinos, Ames and Davis Noes: None GENERAL BUSINESS Before proceeding into the General Business portion of City Council, Councilmember Cokinos asked to present a solution to avoid an increased property tax rate. Councilmember Cokinos reviewed discussions at the last Council meeting that included capital projects, planning and design phases of projects, debt service, reserves, ending and beginning balances, estimated revenue and expenditures. Councilmember Goodson said information indicates that $.025 would generate approximately $900,000. To meet the needed request, Councilmember Cokinos proposed his plan. He said the City of Beaumont for FY1998/99 will have taxable value of $3,660,562,963. To increase the tax rate by one-cent would generate $366,056. To increase the tax rate by $.025 would generate $915,132, the amount the City Manager needs. Therefore, he recommended to Council that the tax rate remain the same, but reduce the starting balance by $.025. He said all capital improvement programs could continue without raising the tax rate and enough money being put in place to not abandon any project. Minutes;9=/95;Page 5 Council asked for further explanation about the starting balance, discussion arose about the $.025 covering current projects and additional funding required for planned projects, and a request for the City Manager to recount the amount being drawn down from the balance with the proposed increase to meet debt service. Mr. Riley explained that with the $.025 added to the debt service, the balance would be reduced by$535,000. He said the debt service this year will be $11,185,000. The proposed new revenues from a tax increase would be about $915,000 and added to current revenues. The amount available for debt service would still require $535,000 to be added. If there is not tax increase, a total of almost$1.8 million would be required against the debt service. He said there is sufficient revenues in the balance for a transfer. The debt service will step up and increase this year at $1.9 million over last year. With the anticipated bond issue next spring, it will step up to about $12.2 million in FY2000. Further Council discussion related to completing projects, increased debt service obligation, concern that tax increases have been discussed for a year and subsequent meetings since that date, employee benefits, diminishing reserves, improving the infrastructure and the quality of life, citizen desire for projects to be completed, the number of projects partially funded, but not finished, amount of budget that ad valorem tax covers, and invasion of capital balances. Mayor Moore asked the City Manager to proceed with the agenda and further comments be made when the item is addressed. 1. Consider adopting the FY 1999 Capital Program Mr. Riley introduced the five-year Capital Program projections and said that under General Improvements, there are current projects in the design or construction phase, scheduled projects that have approved, but still in a planning phase with no funds expended, and proposed program additions that are included this year. These improvements total about $11 million. In the Public Works Improvements categories for current projects, scheduled projects and proposed programs, the total is $39,040,000, for a total cost of both funds at a little over$50 million with funding from federal and state grants, Community Development Block Grant monies and support from general obligation taxes. For the proposed program additions to be included, the Council is required to approve the Capital Program for fiscal year 1999. Councilmember Davis verified that Concord Road from IH-10 to Lucas is in the design phase and asked for the anticipated construction date. Mr. Riley reported that bids will be received for the project about the middle of October and construction will begin the second week in November. Councilmember Davis asked the City Manager to address the Prince Minutes;9/78/96;Page 6 Street Outfall and its affect on the city. Mr. Riley said the Prince Street Outfall is all the water associated with that area, and with the construction of Concord Road, the water will be accelerated in that water shed. He said that the Prince Street Outfall has always been a drainage project, but becomes more important that it be completed with the Concord Road Project to avoid an accelerated amount of storm water going through a neighborhood that already suffers from storm drainage control. Councilmember Davis reviewed past visits and concerns for that area and asked when Concord Road was first considered as a project. Mr. Riley said it was approved for inclusion in about 1982, and in response to further query said that the Prince Street Outfall has been part of the program for at least five years. Councilmember Davis commented that the area described has more elderly residents than any other in the north end of Beaumont, and that an effort of the Capital Program is to improve the streets and drainage for elderly residents. Councilmember Davis asked what the final tax increase result would be for a home valued at $30,000, which would probably be higher than many in Ward III. At $.025 per $100 assessed value, the City Manager explained that would equate to $.25 per thousand or 30 times $.25 for a final figure. Councilmember Davis questioned when the Neches Hike and Bike Trail would begin, and was told that we are in the engineering phase now and construction will begin by the middle of next year, Councilmember Davis stated that the FY1999 Capital Program represents the greatest amount of funds for projects in Ward III during his tenure of five years. He said he does not like tax increases, but that "at some point we must pay for what we get," and that is the only reason he is entertaining the thought of a tax increase. He said it is extremely important to complete these projects, and this Council is the one keeping promises made years before any of the present members were on Council. Mayor Moore asked Councilmember Davis for the results of the meeting Friday evening with Ward III constituents. Councilmember Davis reported that he met with 16 residents and discussed the reason he might possibly entertain a tax increase and reviewed projects that have been realized in Ward Ill: the Elmo Williard Library, Sterling Pruitt Activity Center, Collier's Ferry, 75 homes constructed in revitalization of the Charlton-Pollard area, College Street reconstruction and many other street repairs. He said that residents do not want a tax increase, but did not leave the meeting angry. Councilmember Cokinos questioned the amount of increased tax a homeowner could expect on a $100,000 or a '/ million dollar home. Mr. Riley explained that the $.025 proposed increase on a $100,000 would equal $25.00. Councilmember Cokinos reiterated that he would like Council to consider his proposal regarding beginning and ending balances. Mr. Riley said the balance in reference is in the General Fund that is used for operation of the Minutes;9108/98;Page 7 City, and there is $ 6 million that could be used. All of the proposed $.025 increase would be put into debt service. Councilmember Ames clarified for members of the audience that$.025 would equal $.25 per thousand or $25 additional per year for a $100,000 home. Councilmember Davis moved to approve Resolution No. 98-243 accepting the Capital Program (General Improvements: Currents Projects, $6,100,000; Scheduled and Proposed Program Additions, $4,890,000; Public Works Improvements: Current Projects, $23,540,000; and Scheduled and Proposed Program Additions, $15,500,000) Councilmember Ames seconded the motion. MOTION PASSED. Ayes: Mayor Moore, Mayor Pro Tem Patterson, Councilmembers Smith, Goodson, Ames, and Davis Noes: Cokinos 2. Consider adopting the FY 1999 Operating Budget Mr. Riley reported that the total amount of expenditures is $127, 595,200 in addition to an appropriation for $1.5 million contingency in the General Fund and the appropriation for reserves in the General Liability Fund of $1.2 million. The total of all the funds is $130,295,200. He explained that the contingency in the General Fund requires Council approval for emergency purposes, and the amount in the General Liability Fund is a reserve against claims and ultimately requires Council approval for disbursement. Mayor Moore commented about the City being self-insured and asked the City Manager to address the present status, last year's activity and balance in that fund. Mr. Riley responded that the General Liability Fund has been in place since about 1986, and previously the City purchased insurance. Mayor Moore interjected that during that time many cities declared bankruptcy. During the initial years, Mr. Riley said the General Liability Fund was funded from the General Fund at about $700,000 per year until about 1992 when a reserve of about$3 million was built up. About $600,000 per year was being paid out in actual claims. The Legal Department became responsible for managing that fund. Through the years that fund has declined because there have been no other funds deposited. In 1997, a little less than $500,000 was paid out, and in !998, over $2 million was paid out in claims, which reduced the current balance to a little less than $1,300,000. Next year, it is proposed to begin deposits to strengthen reserves against future claims. A transfer of $400,000 would come from the General Fund, $100,000 from the Water Utility Fund, and $100,000 from the Solid Waste Fund for a total of $600,000 for anticipated Minutes;9108198;Page 8 claims. The $1.2 million in reserve for unpaid claims are those which have been experienced and waiting for settlement. Mayor Moore confirmed that no rate increases would result from taking monies from the Water Utilities and Solid Waste Funds. Councilmember Davis commended staff for all the hard work and hours spent in preparing these items. He questioned if Item 3 authorizing a tax increase should be considered before Item 4, and said if the budget is approved, it will establish operation patterns without having assessed new or existing money. The City Manager told Councilmember Davis that he felt the same way, but was informed that State law says a tax rate can only be considered after adoption of the budget. Councilmember Davis questioned prudence of him voting for the budget, if he might have concerns with the proposed tax rate. The City Manager remarked that as has been stated previously, the tax rate will provide for an amount to be put into debt service, and there are sufficient reserves this year to make that payment, if Council does not vote for a tax increase. Next year, the differential will have to be considered without substantial reserves. In response to other questions, the City Manager said the $.025 would yield about $900,000. The increase in debt service this year is over $1.8 million, only half of the increase will be funded., If there is no tax increase, next year $1.8 million will have to be funded into debt service, then a four or five cent increase would be needed. The $.025 cent increase this year will carry through next year and leave the tax rate at $.64. An increase of $.04 next year will not yield $1.8 million with a higher tax rate of$.655. The longer the deferment, the higher the rate will be ultimately. Councilmember Goodson addressed amounts received from property taxes, sales tax, industrial payments and over $5 million from gross receipt tax. He said we need to be cognizant that much is going on. He pointed out that if utility companies have their way and try to make inroads to eliminate some of cities' ability to control rights-of-way and franchise payments and do away with some present conditions, there can be no guarantee of finances for next year. He said this Council has much to do in representing this city through the Texas Municipal League and other associations to make sure that no more erosion of the ability of cities to control their own destiny happens in Austin. He spoke of bills being filed to decrease the ability of the city to base franchise payments. No tax rate increase next year depends on the fact that funds remain the same. He spoke of annexation and in-lieu of tax industrial payments. Councilmember Goodson said this could impact 21% of the budget that individuals are trying to make significant inroads into next spring. He said we have much to do and be concerned about. Councilmember Goodson said that Council is trying to make sure improvements are put in city-wide so that all wards benefit. He referred to Concord Road needing to be completed, spoke about the proposed tax increase and it's impact, and said that we need to be watchful and careful because the whole of municipalities conducting business could change in the next legislative sessions. Minutes;9A)SM;Page 9 Councilmember Smith warned that attention should also be given to legislation enacted by Congress. She said they are trying to abolish franchise fees, and Council needs to look at both areas, because cities are under siege. Councilmember Smith said we need to move forward with capital projects, and when we view all the accomplishments of the past seven or eight years, all areas of the city have benefited. She voiced support for moving forward and said if we start using savings to pay present bills, we will be in trouble. Councilmember Smith moved to aoorove Ordinance No. 98-56 ENTITLED AN ORDINANCE REFERRED TO AS THE"ANNUAL APPROPRIATION ORDINANCE"ADOPTING A BUDGET FOR THE FISCnL PERIOD BEGINNING OCTOBER 1, 1998 AND ENDING SEPTEMBER 30, 1999 IN ACCORDANCE WITH THE CHARTER OF THE CITY OF BEAUMONT;APPORTIONING THE FUNDS OF THE CITY OF BEAUMONT: REPEAUNG ALL ORDINANCES OR PARTS OF ORDINANCES IN CONFLICT HEREWITH AND PROVIDING FOR SEVERABILITY. Councilmember Goodson seconded the motion. MOTION PASSED. Ayes: Mayor Moore, Mayor Pro Tem Patterson, Councilmembers Smith, Goodson, Ames, and Davis Noes: Cokinos Mayor Moore extended an invitation to the Beaumont Housing Authority to defer their presentation for one week because of the length of today's meeting. They chose to remain for the meeting. 3. Consider approving the property tax assessment roll for the 1998 tax year and adopting a tax rate of$0.64 per $100 assessed valuation The City Manager said the property tax rate has received the most conversation today. He said the increase in assessed valuations of property has been very good, and there has been an excellent growth rate in comparison to past years with a 4.32% increase that will generate over $900,000 in property tax. This revenue has been distributed between the General Fund and Debt Service Fund. The revenue received in FY1998 was $21,750,000 and anticipates another$900,000 if the tax rate remains the same. The proposed $.025 is all related to debt service. Debt service requirements will increase to $11,200,000 this coming year compared to about $9.2 million. All revenues generated from the $.025 will be dedicated totally to payment of principle and interest of outstanding debt. The tax rate will give $.36 to the General Fund and $.28 to the Debt Service Fund. A total of $23,575,000 will be generated through property taxes. Councilmember Davis said that in looking through the budget he does not want to be hypocritical. He expressed concerns with what could happen to franchise agreements, debt service, amount of rate case returns from public utilities, annexation, and fulfillment of the Concord Road Project. He said these are the reasons he thought he might even entertain Minutes;9108198;Page 10 consideration of a tax rate increase. Councilmember Davis said the assessed property has a net increase of$934,000 new money from last year, the sales tax increases by $950,000 of new money, the Hotel Occupancy Tax is $85,000 in new money, and a $.005 would generate approximately $180,000 and $.01 approximately $360,000. Councilmember Davis said he finds most interesting our use in the fund balances. He said that in the General Fund as of 10/1198, we are projected to have an ending balance of $6,169,000; in Debt Service Fund, a projected ending balance of approximately $4,000,000; in the Water Utilities Fund, a balance of $3,226,000; and in the Solid Waste Fund, a balance of $3,318,000. Councilmember Davis questioned the Other Special Revenues, and Mr. Riley said this a composite of a large number of funds reserved for very special use that includes confiscated goods, fire training grounds, tax increment financing fund, municipal airport, Municipal Court security fee, state health grants, law enforcement grants, Julie Rogers Theatre special reserve fund, Tyrrell Historical Library fund, expendable trust, library trust, library endowment, and the Historical Fire Museum. These are revenues designated for each of these funds and cannot be used for any other purpose. Councilmember Davis said there is approximately $23,322,650 in all different fund balances. He said three funds: the Employee Benefits Fund, the General Liability Fund, and Debt Service Fund should not be touched. He said it is important to illustrate that the proposed tax increase would raise approximately $1.3 million dollars of new money this year: $920,000 would come from property tax, and $375,000 from the new assessed value in industrial payments. Councilmember Davis stated the problems he has concern the mistake that everyone made in the MAS case that cost $500,000 and over the years an accumulation of approximately $2 million dollars in engineering plans that were never used. Also, he expressed his request two weeks ago for cutbacks or some way to show we are at a bare bones budget before increasing taxes without a response, and said he does understand some of the reasons it was not presented. Councilmember Davis said he believes the recommended tax increase to raise $925,000 would have a negative consequence on our overall economy, and said the cumulative effect on all entities as the process to raise taxes begins does a disservice to the city. Councilmember Davis said that the $23,322,000 in our reserve account, excluding $7,900,000 for the Employee Benefits Fund, the General Liability Fund, and the Debt Service Fund, there would leave a fund balance of$15,400,000. If an assessment of 10% would be made to the remaining funds, .$1,5%+1,000 would be generated. With all the new money generated by the new tax increase and industrial payments, there would be approximately $1.3 million. Councilmember Davis said he subtracted 10% from the fund balances he mentioned, and there would be approximately $1.5 million of reprogrammed money and approximately $1.2 million in new money. He proposed taking the 10%, move it over to the Debt Service Fund, and have $1.275 million in the fund. He said that leaves $266,694 remaining from the $1.5 million. Minutes;9AB/98;Page 11 He proposed using $90,000 for the Employee Benefit Fund, $90,000 for the General Liability Fund, and $90,000 in the Debt Service Fund. He stated that it is important to City staff to put a little more money in those funds. Councilmember Davis said it is important to demonstrate to citizens that Council has done everything to avoid a tax increase. He said the key point he wants to make is that we have $935,000 of new dollars from assessed property values, $950,000 because our economy is better, and $85,000 from hotel occupancy taxes which should improve next year. Councilmember Davis discussed bond ratings and reported that Mr. Frank Ildebrando, our bond counsel, recommended that to maintain an A-bond rating, we cannot dip below a 15% threshold of total debt. Presently, we are above 25%, and there is room for consideration. Councilmember Davis said he cannot support the proposed tax increase because of the unused engineering design plan, no other proposed cutbacks and because we need to keep taxes affordable to compete with other cities for economic development. He proposed supporting a $.005 increase to be used for debt service in view of all the improvements seen in Ward III. Councilmember Cokinos again expressed his view of not assessing any tax rate increase and his proposal. Further lengthy discussion included the total amount of the MAS lawsuit settlement, legislative action, possibility of future significant tax increases, completing and paying for capital improvements, debt service payments over the next eight years, stop gap measures, supporting capital improvements and debt service, reemphasis by Councilmember Davis of his proposal, unused engineering services in the 1980's requiring updated engineering plans, the Enterprise Fund, the number of full and part-time City employees, number of vacant positions, amount transferred from the Water Utilities Fund to the General Fund, expected claim expenses for next year, costs incurred by broken sewer pipes resulting from the drought, the Transit Fund, projections of debt service without a tax increase. Mayor Moore claimed that all of Council is guilty of progress and have been more visible than probably any other Council in Beaumont's history. He spoke of the $50 million of projects on the wish list, and said he is not in support of a full $.025 increase, but feels that something has to be done to continue to progress. Because of a windfall and refinancing, a tax increase was avoided a few years ago. Mayor Moore acknowledged strong points made by Councilmember Davis, but said he has some concerns. He discussed the progress that has taken place throughout the city, said there is still much to do, and addressed stability of the City, better efficiency, and health care issues of City employees. Mayor Moore said he supports a $.02 tax increase with extended bus service to meet the need of working people and positioning the City in a competitive mode for economic development by establishing an Economic Development Fund to attract industry. He addressed the number of vacant Police Department positions, need for prevention of crime, infrastructure improvements and paying for progress. Mayor Moore reiterated he supports $.02 tax Minutes;WOW;Page 12 increase, promoting an Economic Development Fund, increased bus routes and a push for additional Police Department employees. Mayor Moore moved to approve and amend Ordinance No. 98-57 ENTITLED AN ORDINANCE ACCEPTING THE TAX ROLL FOR THE CITY OF BEAUMONT; ESTABLISHING A TAX RATE; PROVIDING FOR LEVYING, ASSESSING AND COLLECTING OF AD VALOREM TAXES FOR THE TAX YEAR 1998; PROVIDING FOR SEVERABILITY AND PROVIDING FOR REPEAL by decreasing the proposed tax rate increase to $.02. Councilmember Ames seconded the motion. MOTION PASSED. Ayes: Mayor Moore, Councilmembers Smith, Goodson, and Ames Noes: Councilmembers Cokinos and Davis and Mayor Pro Tem Patterson 4. Consider a Section 108 loan request for the Dixie Street Redevelopment Project Before continuing with Agenda Item 4, Mayor Moore recessed the City Council meeting at 4:15 p.m. and reconvened at 4:30 p.m. with all members present. Mr. Tom Flanagan referred to previous materials presented to Council regarding redevelopment of Crockett Street structures into a combination of entertainment, eating and drinking establishments. Mr. Flanagan said it has been inspiring to see what has been done in other cities around the Country in downtown areas. Mr. Flanagan said he has had a vision for downtown Beaumont for several years and has been active in historic preservation for about ten years in the community. His hopes are that the development along Crockett Street will become a focal point for the community. Mr. Flanagan discussed cities spreading out geographically and interior areas beginning to decay. He said in recent years people have begun to mature in their thinking about downtown areas. Mr. Flanagan commented about the progress in Beaumont brought about the City, private developers, Main Street and other organizations, and said he feels the time is right for a development that will bring thousands of people here on a regular basis. He expressed a desire to make Crockett Street a magical place. He said the buildings have been vacant since 1962, and said he hopes to bring them back to life and solicited the support of Council in this effort. Councilmember Davis asked about the starting date for the project and questione obvious activity in some buildings. Mr. Flanagan said some demolition work has begun because of the poor condition of buildings. In some of the buildings, renovation has consisted of removing siding that covered embellishments and architectural design and by removing mezzanines to show off the high ceilings. Mr. Flanagan his hopes are to break ground by the first quarter of 1999. Councilmember Davis commented hearing some objection to the name of the project, and Mr. Flanagan responded that he has been rethinking the original Minutes;910M;Page 13 idea. He said he had wanted something that reflected one of the buildings and the entire South. However, he has concluded that the "best thing is name yourself is what you are." Right now, Mr. Flanagan said he is working with Crockett Street. He said it is a good strong name, and said he kind of likes the "racy ring" that Crockett Street memories activate. Mayor Moore told Mr. Flanagan that he admires his courage and stick-to-it-ness on this project, and said this Council is ready to move with the progress. He said it will be a great addition to our downtown area, and he looks forward to finalizing Council action and progress beginning. PUBLIC HEARING: Dixie Street Redevelopment Project —The public hearing was opened at 4:37 p.m. Mr. Joe Pearl spoke in support of the project. As a native Beaumonter, Mr. Pearl said he is familiar with the project and thinks this will be a highlight for downtown Beaumont. Mr. Pearl said when this project becomes a reality, it will mean for downtown Beaumont what Spindletop was to Beaumont. He spoke of similar projects in other major cities and repeated a statement in a speech he made regarding bringing the Art Museum to downtown Beaumont that he said is meaningful today: "A city without a downtown is like a person without a soul." There being no one else to speak, the public hearing was closed at 4:39 p.m. Councilmember Ames inquired about the City's participation in the project besides applying for the Section 108 loan. Mr. Riley said there would be improvements that include sidewalks, street reconstruction and parking surrounding the development that would cost between $750,000 to $800,000 and funded from the Tax Increment Fund. Councilmember Smith moved to approve Resolution No. 98-244 authorizing the City Manager to take all steps necessary to request a Section 108 loan from the Department of Housing and Urban Development to redevelop a commercial block on Crockett Street at Main in downtown Beaumont. Councilmember Ames seconded the motion. MOTION PASSED. Ayes: Mayor Moore, Mayor Pro Tem Patterson, Councilmembers Smith, Goodson, Cokinos, Ames, and Davis Noes: None 5. Consider approving a contract with the Southeast Texas Community Development Corporation relating to the 1998 HOME Grant Program Minutes;910OM;Page 14 Prior to moving forward with Item 5, Councilmember Davis requested that Items 5 and 6 be deferred for one week. Before taking action on these items, Councilmember Davis said he would like opportunity to meet with the City Manager, Councilmember Patterson and the CHDO to get answers before the conclusion of the Charlton-Pollard project. Councilmember Smith questioned necessity of a work session. Councilmember Davis said he is especially concerned about warranties and the responsible party. He wants a meeting to establish a plan that guarantees citizens will receive a response by making one call. Council concurred with the request of Councilmember Davis to defer Items 5 and 6 for one week. OTHER BUSINESS * Receive report from the Beaumont Housing Authority Mr. Ernest Wilson, on behalf of the Board of Commissioners for the Beaumont Housing Authority, addressed Council to present a report and to read a letter dated July 10, 1998, they received from the Department of Housing and Urban Development. The letter recognized the "Beaumont Housing Authority for its outstanding contribution toward providing decent, safe and sanitary housing for low income families. Not only does the Housing Authority provide housing opportunity for families within the community of Beaumont, but the staff has also shown that they believe in ensuring housing opportunities for all, regardless of location. Recently the Beaumont Housing Authority responded without hesitation to HUD's request for assistance by providing staff support and technical assistance In two neighboring Housing Authorities. The response exemplifies the meaning of partnership. The Authority's positive attitude and dedication to the commission of HUD is an inspiration to all." Mr. Wilson said that a copy of the Housing Authority's PHMAP rating from HUD is attached to the letter he presented to Council regarding their fiscal responsibility. Mr. Wilson said the Beaumont Housing Authority received a score of 100 percent, and read a statement from a letter that said, "A Housing Authority which achieves a total weighted PHMAP of 90 percent or more with no individual indicator grade less than C shall be designated as a high performer." Mr. Wilson presented to the City of Beaumont a plaque recogniz Beaumont's Housing Authority to be one of the highest in the Country. Mr. Wilson spoke about preparation to work with the City in building 48 units in the Charlton- Pollard area—a $3.1 million construction endeavor. Mr. Wilson reported the Housing Minutes;9f0 M;Page 15 Authority jointly applied for a grant with the Police Department and has been notified that the $250,000 grant has been approved. These funds will probably be utilized for Police Department staff. He thanked Council for their inspiration, guidance, support and assistance. Mr. Wilson said they are very proud to have taken a troubled Housing Authority and give back, in less than three years, one of the highest performing Housing Authorities in America. Also, Mr. Wilson shared photographs taken at the basketball benefit in which Council participated and won for the Housing Authority's Child Development Center. Councilmember Davis suggested that consideration be given to establishing a task force to meet with the Housing Authority. He would serve as liaison for Council along with three resident leaders to share ideas and information about Charlton-Pollard. * Receive presentation from Beaumont Power & Light Mr. George Hudspeth addressed Council for the purpose of requesting Council grant a franchise to Beaumont Power and Light. Mr. Hudspeth said this is not an attack on Entergy, but an effort to bring competition in the delivery of electric power to Beaumont. He said there are no hidden purposes, but a desire to bring competition to the end users of electric power at a 10 to 20% lower cost. Mr. Hudspeth confirmed that this is an entrepreneurial window of opportunity for some, but also an opportunity for former GSU employees to possible secure jobs and for others to return to the community. Mr. Hudspeth said this is one of the greatest economic opportunities Council could act upon and from which everybody could benefit. Mr. Hudspeth said that former Governor Mark White and Attorney Bob Webb will be addressing Council later. He said that funding will be provided Capital Corporation owned by Mr. Terry Garth, who specializes in providing venture capital and bridge financing, and said that he and Mr. Josh Allen are equity owners. Former Governor Mark White introduced Attorney Bob Webb, who he said is one of the best utility lawyers in the Country. He said that Mr. Webb has represented Baker Utilities in Texas for many years and now operates his law firm in Austin and represents Beaumont Power and Light in this case through Power Choice. Attorney Bob Webb informed Council that in recent weeks hard data has been accumulated to indicate what competition can really do for Texas rate payers. He explained there has been competition in the electric industry for as long as it has been in existence. Until 1975 anyone could be in the electric business. In 1975, a Certificate of Convenience and Necessity license was established at the Public Utilities Commssion. These certificates are non-exclusive as are franchises. Mr. Webb stated that 20% of Texas is already dually Minutes;9/08M;Page 16 certificated by having two or more utility companies to serve rate payers. In 1995, the Texas Legislature elected to institute competition opposed to regulation at the generation level. That deregulation provided competition and was accompanied by two things: 1) it allowed anyone to enter the electric production business and produce it for sale and 2) created a right all those who would resell the power to transmit it over the facilities of other utilities. Since 1995, the PUC has been enacting regulations for making this significant change. For the first time, he said the long-range of this is beingseen. Mr. Webb showed slides depicting the savings of a competitive company for rate payers that indicated a 37% decrease for small residential users of 500 kw; 40% decrease for residential users of 1,000 kw; 39% decrease for small commercial users of 750 kw; 33% decrease for commercial users of 5,000 kw; 48% decrease for industrial users of 500 kw; 37% decrease of industrial users of 720 kw, 49% decrease for industrial users of 2,500 kw; and 40% decrease for industrial users of 2,900 kw. Mr. Webb contended that these kind of savings would encourage economic development as well as help the present rate payers. Mr. Webb showed other slides to illustrate lower costs and spoke to Council about initiating the transition to electric competition. He addressed the procedures necessary to come to the point of Beaumont Power and Light receiving a franchise and obtaining a Certificate of Convenience and Necessity. He further discussed rate schedules, consumer choice and Council's role at this point. Mr. White thanked Council for this opportunity to present their request, and said Mr. Terry Garth, Mr. Josh Allen and Mr. George Hudspeth have spend countless hours working through this project in order to bring it to Council with all necessary information. Mr. White claimed that the difference between competitive and non-competitive rates is dramatic. He added lengthy, persuasive comments regarding his belief that this is an opportunity for the community to benefit. In response to Councilmember Davis' question about the legal possibility of Council issuing a franchise at this time, the City Attorney responded that it is legal. Councilmember Davis also spoke of cost savings, guarantees and locking in rates. The City Attorney responded that once tariffs are set, they remain in effect until the company comes back to Council with a request for an increase. If there can be no agreement, they have the right to appeal to the PUC. The City Attomey verified that after getting a franchise and certificate, Beaumont Power and Light would return to the City with a rate case, and asked if that case would include tariffs this Council would also set to be paid to GSU for the use of their wires. Mr. Webb said that rates would have to initially be set by this City government. Mr. Nichols told Mr. Webb that he must recognize that "we could not agree to that unilaterally, or bilaterally, with you, without the electric utility company agreeing to it." Mr. Webb said the City of Beaumont Minutes;9108/96;Page 17 could not establish a rate that GSU would get from Beaumont Power and Light for service provided to them. He said that process would go to the Public Utility Commission in a process called unbundling. He spoke of a past GSU unbundling case and information and figures they have regarding distribution and transmission. Mr. Nichols asked Mr. Webb if he is convinced that there is no other legislation required for retail competition to take place within the scenario he has outlined. Mr. Webb said the only competition is that between two utilities. Mr. Nichols questioned responsibility of service on lines, and Mr. Webb said that the owner of the lines would be responsible. Further questions and lengthy discussion included the schedule on bill comparison between Entergy and Texas Wholesale, quality of service, a business plan, what jobs will be filled locally or lost, where will billing be processed, benefits for the community, and possibility of competitive bids. Before excusing himself at 5:46 p.m. to attend a 6:00 p.m. meeting, Councilmember Davis complimented the relationship between Entergy Corporation and Ward III, and said he would like to hear from Entergy before a vote is taken. Councilmember Davis said competition is important, but would like opportunity for information from Entergy. Councilmember Goodson addressed questions regarding legislative deregulation statewide and the affect on existing franchises, rate charges and tariffs, local control, the appellate procedure, defense costs, and reimbursements of rate cases. Other Council comments included questions about the Corpus franchise, number of local jobs, and a local service center. Mr. Webb referred to Council's questions and concerns and asked for an opportunity to give a local investor a franchise to bring a competitive electric energy company to Beaumont. The City Attorney stated that his advice remains that if Council action would be challenged to the PUC, it would be the responsibility of his office to defend a case, and said there can be more than two interested parties in a case brought to appeal. Mr. Hudspeth identified the difference between the request in Corpus Christi and the one presented to Beaumont. He said they are only asking for a franchise from Beaumont and said there would be a service center in Beaumont. Mr. White summarized the presentation for Beaumont Power and Light by stating that if we wait for others to take care of Beaumont, Beaumont will never be taken care of. He complimented Beaumont's resources of water and a local university as marketing tools for economic development. Mr. White admonished Council to take charge and control Beaumont's destiny, open the door of competition, and let the magic of the free enterprise Minutes;9,08/98;Page 18 system work. Mr. White concluded his comments by thanking Council for the opportunity to make the presentation today. COMMENTS * Councilmembers comment on various matters *Public Comment (Persons are limited to 3 minutes) Mr. Lynn DeMary, 430 East Elgie, said he would like further information about service implementation and service problems. He thanked Council for supporting the Capital Improvement budget, and said his personal calculations indicate that a growth rate of 4-5%, without further tax increases, would limit spending every two years to about $8 to 10 million, rather than $19 million. Mr. Luther Martin, 6955 Broadleaf Drive, addressed technical issues related to deregulation such as mega watts used at time of generation and the issue of stability. He spoke of related complex issues, shift of rates from commercial to residential customers, and encouraged Council to allow the state or federal government to initiate the process. EXECUTIVE SESSION *Executive Session in accordance with Section 551.071 of the Government Code to discuss contemplated or pending litigation: Heath Vaughn Enterprises v. City of Beaumont Zoning violation at IH-10 North and 3355 Gladys Executive Session was deferred because of the length of the Council meeting and lateness of hour. There being no further business, the meeting adjourned at 6:10 p.m. CCU Mayor David W. Moore Barbara Liming, Deputy ity, lerk Minutes;WNW;Page 19