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HomeMy WebLinkAboutMinutes City Council - 02/09/1993I HEREBY CERTIFY that the foregoing is a true and correct copy of the Minutes of the Regular Council Meeting of the City of Corpus Christi of February 9, 1993, which were approved by the City Council on February 16, 1993. WITNESSETH MY HAND AND SEAL, this the 25th day of February, 1993. SEAL Armando Chapa City Secretary MINUTES CITY OF CORPUS CHRISTI, TEXAS Regular Council Meeting February 9, 1993 2 p.m. PRESENT Mayor Mary Rhodes Mayor Pro Tem Edward Martin Council Members: Cezar Galindo Joe McComb Dr. David McNichols Betty Jean Longoria Clif Moss Mary Pat Slavik City Manager Juan Garza City Attorney James R. Bray, Jr. Assistant City Secretary Saundra K. Koenning Mayor Rhodes called the meeting to order in the Council Chamber of City Hall. The invocation was delivered by Council Member Galindo, following which the Pledge of Allegiance to the Flag of the United States was led by Council Member Moss. Assistant City Secretary Koenning called the roll and verified that the necessary quorum of the Council and the required charter officers were present to conduct the meeting. Mayor Rhodes called for approval of the Minutes of the Regular Council Meeting of February 2, 1993, and there being no corrections, she proclaimed them approved as presented. Mayor Rhodes made a motion that, due to the need for Council Members to attend the trial of the voting rights case this afternoon, the day's Regular Council Meeting would be recessed until 5:30 p.m., or as soon thereafter as the court schedule permits, and continue the meeting at that time. The motion was seconded and passed unanimously. Mayor Rhodes reconvened the Regular Council Meeting at 6:20 p.m. •11- Minutes Regular Co .dl Meeting February 9, 1993 Page 2 Mayor Rhodes announced that the scheduled presentation by Mr. James Dodson, Regional Water Director, on the recent Edwards Aquifer Ruling would be postponed. Mayor Rhodes called for consideration of consent motions, resolutions, ordinances and ordinances from previous meetings on Items 2 through 11, and Council Members requested that Item 4 be withheld for discussion. Assistant City Secretary Koenning polled the Council for their votes and the following were passed: 2. M93-039 Motion approving a supply agreement for approximately 6,400 tubes of a testing reagent, (colilert), in accordance with Bid Invitation No. BI -0090-93 with Environetics, Inc., Branford, CT based on sole source for an estimated annual expenditure of $17,920. The term of the agreement shall be for twelve months with an option to extend for up to an additional twelve months subject to the approval of the supplier and the City Manager or his designee. Funds have been budgeted in FY 92-93 by the Health and Water Departments. The foregoing motion passed by the following vote: Rhodes, Galindo, Longoria, Martin, McComb, McNichols, Moss, and Slavik voting "Aye? 3. M93-040 Motion approving a supply agreement for approximately 1,360 tons of pebble calcium oxide in accordance with Bid Invitation No. BI -0081-93 with APG Lime Corp., New Braunfels, Texas based on low bid of $80,280.80. The term of the contract will be twelve months with option to extend for up to an additional twelve months subject to the approval of the supplier and the City Manager or his designee. Funds have been budgeted in FY 92-93 by the Water Department. The foregoing motion passed by the following vote: Rhodes, Galindo, Longoria, Martin, McComb, McNichols, Moss, and Slavik voting "Aye." 5. M93-042 Motion approving employment of the law firm of Edwards & Terry (1) in City of Corpus Christi v. U.S. West Communications Services, Inc., et al, No. 92-4804-E, 148th District Court, and (2) in legal proceedings to be brought against any responsible party to recover for defects in the City Hall building, on a contingent fee of one-third of the recovery. Minutes Regular Co 211 Meeting February 9, 1993 Page 3 The foregoing motion passed by the following vote: Rhodes, Galindo, Longoria, Martin, McComb, McNichols, Moss, and Slavik voting "Aye." 6. FIRST READING ORDINANCE Closing and abandoning a 60 -foot wide utility easement previously retained from the right-of-way of Hughes Street between Sam Rankin Street and Tancahua Street, subject to replatting the property within 180 days, and meeting specified conditions. The foregoing ordinance passed on first reading by the following vote: Rhodes, Galindo, Longoria, Martin, McComb, McNichols, Moss, and Slavik voting "Aye." 7. FIRST READING ORDINANCE Authorizing the City Manager to execute a five-year renewal of the Ackerley Airport Advertising, Inc. Lease at Corpus Christi International Airport. The foregoing ordinance passed on first reading by the following vote: Rhodes, Galindo, Longoria, Martin, McComb, McNichols, Moss, and Slavik voting "Aye." 8. FIRST READING ORDINANCE Authorizing the City Manager or his designee to execute a five year lease agreement with the United States Department of the Army Corps of Engineers for the lease of Slip L-10 on the Lawrence Street T -Head at the City Marina, for a monthly fee of $164.75 plus electricity costs in excess of $19.00 per month. The foregoing ordinance passed on first reading by the following vote: Rhodes, Galindo, Longoria, Martin, McComb, McNichols, Moss, and Slavik voting "Aye." 9. FIRST READING ORDINANCE Authorizing the City Manager or his designee to execute a five year lease with the American Little League for the use of 6.66 acres at Botsford Park for youth baseball programs for $1 and maintenance of the facility and premises. The foregoing ordinance passed on first reading by the following vote: Rhodes, Galindo, Longoria, Martin, McComb, McNichols, Moss, and Slavik voting "Aye." 10a. SECOND READING ORDINANCE Authorizing the City Manager to execute a one-year lease agreement with two one- year renewal options with The Executive Wet Set for rental of slip space for the operation of water toy concessions on the northside of the Peoples Street T -Head stem. Minutes Regular Co it Meeting February 9, 1993 Page 4 The foregoing ordinance passed on second reading by the following vote: Rhodes, Galindo, Longoria, Martin, McComb, McNichols, Moss, and Slavik voting "Aye." 10b. SECOND READING ORDINANCE Authorizing the City Manager to execute a one-year lease with two one-year renewal options with Beach Rentals, Inc. for rental of slip space for the operation of water toy concessions on the northside of the Peoples Street T -Head stem. The foregoing ordinance passed on second reading by the following vote: Rhodes, Galindo, Longoria, Martin, McComb, McNichols, Moss, and Slavik voting "Aye." 11. SECOND READING ORDINANCE Authorizing the City Manager to execute an amendment to License (Lease) No. DOT-FA78SW-1073 with the U.S. Department of Transportation, Federal Aviation Administration, adding 400 feet by 1600 feet at the end of Runway 31 for the installation, operation, and maintenance of the medium intensity approach lighting system/runway alignment indicator light. The foregoing ordinance passed on second reading by the following vote: Rhodes, Galindo, Longoria, Martin, McComb, McNichols, Moss, and Slavik voting "Aye." Mayor Rhodes opened the discussion on Item 4, approving a supply agreement for police uniforms with B. J.'s Work Clothes for an estimated annual expenditure of $40,857.90. Council Member Galindo inquired about the number of bidders, and City Manager Garza stated that two individuals bid on the contract. Council Member McNichols referred to past uniform costs, and commented that he was pleased with the cost reduction. Responding to Council Member McComb, City Manager Garza stated that the relative zoning was B-4 and was appropriate for this type of business. Responding further, Mr. Garza stated that the contract price included uniform alterations. Mayor Rhodes called for comments from the audience. Ms. Annie R. Werner, owner of Werner Uniforms, commented on her company's past service to the City in regards to providing uniforms to the Police Department. Ms. Werner also discussed difficulties encountered from the selected bidder. City Manager Garza explained the difference in the two proposed bids and stated that the law required the City to select the low bid. Further, Mr. Garza commended Ms. Werner on her past performance of the contract. Minutes Regular Cc . i1 Meeting February 9, 1993 Page 5 Council Member McComb inquired whether present bid specifications were different from past specifications. Further, he inquired whether the selected company was new to the area. Mr. Billy Jack Noles, owner of B. J.'s Work Clothes, reviewed his credentials and capabilities to perform the specifications in the bid. Responding to Council Member Moss' inquiry, Mr. Noles briefly addressed his company's ability to fulfill potential uniform alterations and performance of the contract. Assistant City Secretary Koenning polled the Council for their votes as follows: 4. M93-041 Motion approving a supply agreement for police uniforms in accordance with Bid Invitation No. BI -0085-93 with B.J.'s Work Clothes, Corpus Christi, Texas based on low bid, for an estimated annual expenditure of $40,857.90. The term of the agreement shall be for twelve months with an option to extend for up to an additional twelve months subject to the approval of the supplier and the City Manager or his designee. Funds have been budgeted in FY 92-93 by the Police Department. The foregoing motion passed by the following vote: Rhodes, Galindo, Longoria, Martin, McComb, McNichols, Moss, and Slavik voting "Aye." Mayor Rhodes called for consideration from the Regular Agenda. Mayor Rhodes opened the discussion on Item 12, motion regarding the City's golf course contracts with Phoenix Group Holdings, Inc. (PGH). City Manager Garza referred to a recent letter from Royal Oil & Gas Corporation stating that they would not provide the City of Corpus Christi with a commitment to guarantee the obligations of PGH under either the Management Contract of the City's existing golf courses or the lease between PGH and the City for the construction of the new golf course. Council Member McComb made a motion to (1) terminate the City's golf course contracts with Phoenix Group Holdings, Inc., and (2) proceed with legal action for a breach of the contract, including the recovery of legal fees and City costs incurred. This motion was seconded by Council Member Galindo. (No vote was taken on this motion). Council Member McComb stated his support of a new golf course in the City and outlined the events leading to a possible breach of contract. Minutes Regular Co. _. i1 Meeting February 9, 1993 Page 6 Responding to Council Member Moss about a recent newspaper article on the matter, City Manager Garza stated that Royal Oil & Gas Corporation did not previously offer to co-sign for the $300,000, but previously offered to seek such an arrangement. Responding further, City Manager Garza stated that he had presented Royal Oil & Gas Corporation's offer to the Council, but this offer did not materialize. Council Member Martin inquired whether Royal Oil & Gas Corporation offered some type of letter of credit. Mr. Tom Utter, Director of Development Services, stated that, in a December 11, 1992 letter, Royal Oil & Gas Corporation stated that they would look at the possibility of securing a $4.1 million letter of credit, and requested an extension through December 23, 1992. Mr. Utter further explained that on December 14, 1992, the City forwarded a Trust Agreement form to them. Mr. Utter also explained the discussions involving their request for an additional cure period, in which City staff announced that the requested additional time would require Council action. Mr. Utter further stated that in the discussions the staff informed Royal Oil & Gas Corporation that the City would accept a letter of credit or a posting of security. Next, Council Member Martin reviewed the circumstances which lead to the assumption that full faith and credit would be offered by Royal Oil & Gas Corporation. Further discussion ensued, and City Manager Garza briefly discussed other related correspondence. Mayor Rhodes requested copies of all correspondence related to the issue. Responding to Council Member Longoria, City Manager Garza stated that PGH had not firmly indicated that they would not provide the $300,000. Council Member McNichols agreed with Mr. Martin's comments and stressed the importance of the fulfillment of the agreement. Dr. McNichols expressed concern that PGH had not provided the necessary $300,000 or backing from the parent company. City Manager Garza recommended that this item be withdrawn from consideration until the next meeting. He stated that this would allow time for the Council to review the related documents. A brief discussion ensued, and Mayor Rhodes announced that this item was withdrawn from consideration on the days agenda. 12. WITHDRAWN Minutes Regular Co :il Meeting February 9, 1993 Page 7 Mayor Rhodes opened the discussion on Items 13a and 13b, motion approving funding for youth sports organizations, and motion authorizing the City Manager to execute a contract with the Northwest Little Miss Kickball League for capital improvements. Responding to Council Member Galindo, City Manager Garza explained the required conditions facilitating the funding. A discussion ensued, and Mr. Malcolm Matthews, Director of Park and Recreation, reviewed the remaining bond funds and proposed improvements. Assistant City Secretary Koenning polled the Council for their votes as follows: 13a. M93-043 Motion approving funding to thirteen (13) youth sports organizations, using $46,000 from the Park Bond Fund as set out below. (1) American Little League $ 6,900 (2) Central Park Little League $ 992 (3) C.C. Youth Football League $ 4,729 (4) Flour Bluff/NAS Youth Soccer $ 2,302 (5) Great Western Soccer Club $ 2,423 (6) Northwest Little Miss Kickball $12,000 (7) Oso Little Miss Kickball $ 1,167 (8) Oso Pony Baseball $ 4,526 (9) Oso Youth Soccer $ 1,073 (10) Padre Youth Soccer $ 4,028 (11) Southside Youth Sports Complex $ 2,427 (12) Southside Little Miss Kickball $ 1,625 (13) Westside Pony/Colt League $ 1,808 The foregoing motion passed by the following vote: Rhodes, Galindo, Longoria, Martin, McComb, McNichols, Moss, and Slavik voting "Aye." 13.b. M93-044 Motion authorizing the City Manager or his designee to execute a contract for $12,000 with the Northwest Little Miss Kickball League for capital improvements as part of the FY 92-93 Youth Sports Assistance Program. The foregoing motion passed by the following vote: Rhodes, Galindo, Longoria, Martin, McComb, McNichols, Moss, and Slavik voting "Aye? Mayor Rhodes opened the discussion on Item 14, the execution of an Outside City Limits (OCL) Water Service Contract and an Agricultural Water Use Covenant with Dan W. Hill. Minutes Regular Co .:il Meeting February 9, 1993 Page 8 Council Member Martin inquired whether the staff determined that agricultural water use outside the city limits was permitted without platting the property. City Manager Garza replied in the affirmative. Mr. Martin further inquired whether the use was permitted by an ordinance or past practices. City Attorney Bray stated that there is some ambiguity concerning agricultural OCL water use contracts based on language of the OCL water service ordinance and the platting ordinance, and under the circumstances staffs long term construction that platting was not required for water service for an agricultural -only use was not unreasonable and should be continued. Mr. Martin next inquired whether staff considered changes in the platting ordinance relative to the trust funds. Mr. Bray stated that passage of the reimbursement ordinance did not change prior existing law. He also stated that the agricultural exemption is limited and that the requirement to plat and pay the fees would materialize when and if the property were developed in the future. Mr. Martin inquired whether this type of water use contract would be available to future applicants. Mr. Bray stated that it would. Responding to an inquiry from Council Member Galindo, City Manager Garza discussed City Code requirements. Council Member McNichols stated that the proposed water use contract presently before the Council and the establishment of a policy limiting the sale of water outside of the city limits, referenced in the agenda material, were two separate issues. Further, that the Council did not intend to establish a policy through the authorization of the present contract. Dr. McNichols also briefly referred to water conservation and providing adequate water for users. Assistant City Secretary polled the Council for their votes as follows: 14. FIRST READING ORDINANCE Authorizing the City Manager or his designee to execute an Outside City Limits (OCL) Water Service Contract and an Agricultural Water Use Covenant with Dan W. Hill on 40 acres of land out of Section A, Laureles Farm Tract. The foregoing ordinance passed on first reading by the following vote: Rhodes, Galindo, Longoria, Martin, McComb, McNichols, Moss, and Slavik voting "Aye." Mayor Rhodes opened the discussion on Item 15a, motion amending the ordinance authorizing a Joint Use Parking Agreement for a public parking area in Lindale Park with the All Saints' Episcopal Church. Minutes Regular Co ail Meeting February 9, 1993 Page 9 Responding to Mayor Rhodes, City Manager Garza stated that the City would have the right, if necessary, to discontinue the agreement at the end of the first twenty years. Council Member Martin recommended approval of the motion reducing the initial contract term. Assistant City Secretary Koenning polled the Council for their votes as follows: 15a. M93-045 Motion to amend ordinance authorizing a Joint Use Parking Agreement with All Saints' Episcopal Church to change the term from "not to exceed sixty years" to "for twenty years with four ten-year options to renew subject to the request by All Saints' Episcopal Church, at least sixty days prior to the end of the current term, to renew and City's approval, pursuant to the same terms and conditions as the original Joint Use Parking Agreement. The foregoing motion passed by the following vote: Rhodes, Galindo, Longoria, Martin, McComb, McNichols, Moss, and Slavik voting "Aye." Mayor Rhodes opened the discussion on Item 15b, ordinance authorizing the Joint Use Parking Agreement with All Saints' Episcopal Church. Assistant City Secretary Koenning polled the Council for their votes as follows: 15b. SECOND READING ORDINANCE Authorizing a Joint Use Parking Agreement, for twenty years, with four ten-year options to renew, for a public parking area in Lindale Park located at the corner of McClendon and South Staples Street with All Saints' Episcopal Church. The foregoing ordinance passed on second reading as amended by the following vote: Rhodes, Galindo, Longoria, Martin, McComb, McNichols, Moss, and Slavik voting "Aye." Mayor Rhodes opened the public hearing on the following zoning case: 16. Case No. 193-1. Braselton Land Ventures: A change of zoning from "A-2" Apartment House District to "R -1B" One -family Dwelling District on 17.513 acre tract of land out of Lots 1, 2, and 15, Section 6, Flour Bluff and Encinal Farm and Garden Tracts, located on the east side of Everhart Road, approximately 820 feet north of Yorktown Boulevard. Mayor Rhodes stated that both the Planning Commission and staff recommended approval of the application. Minutes Regular Co, , it Meeting February 9, 1993 Page 10 Council Member Martin announced that he had filed a Disclosure of Interest Affidavit on Item 16, and would abstain from voting or discussing the item. No one opposed the zoning change. Council Member Slavik moved to close the public hearing; seconded by Council Member Moss and passed unanimously by those present and voting. Assistant City Secretary Koenning polled the Council for their votes and the following ordinance was passed: 16. ORDINANCE NO. 021563 Ordinance amending the Zoning Ordinance upon application by Braselton Land Ventures by changing the Zoning Map in reference to a 17.513 acre tract of land out of Lots 1, 2, and 15, Section 6, Flour Bluff and Encinal Farm and Garden Tracts, from "A-2" Apartment House District to "R -1B" One -family Dwelling District. An emergency was declared and the foregoing ordinance passed by the following vote: Rhodes, Galindo, Longoria, McComb, McNichols, Moss, and Slavik voting "Aye;" Martin abstaining. Responding to Council Member McComb, Mr. Brandol Harvey, Director of Planning, commented that the Planning Commission approved a preliminary plat on the referenced property. He further discussed plans to construct a pedestrian pathway and bridge across the drainage ditch creating pedestrian access to the Luther Jones School site. Lastly, he stated that providing vehicular thoroughfare was not advisable. Mayor Rhodes opened the public hearing on the following zoning case: 17. Case No. 193-2, Dr. Harley Moody. D.V.M.: A change of zoning from "B-1" Neighborhood Business District to "B-4" General Business District on Lot 1-A, Block A, Baldwin Park, located at the south corner of Baldwin Boulevard and the Crosstown Freeway. Mayor Rhodes stated that both the Planning Commission and staff recommended denial of the "B-4" District, and in lieu thereof, approval of a "B-3" Business District. Mayor Rhodes inquired whether the applicant was in agreement, and Mr. Utter replied that the applicant was in agreement. Council Member Galindo inquired about the extent of the proposed used auto sales office referenced in the agenda material. Mr. Harvey replied that the proposed B-3 zoning would allow the applicant to perform auto repair work inside a building. Responding further, Mr. Harvey stated that salvaging vehicles would not be allowed. Council Member Martin commented favorably on the use of B-3 zoning. Minutes Regular Ca, :il Meeting February 9, 1993 Page 11 Council Member McNichols inquired whether the applicant presently had a veterinary clinic located across the street from the proposed rezoning site. Dr. McNichols then commented that transporting animals across Baldwin Boulevard could create a traffic hazard. No one opposed the zoning change. Council Member Longoria moved to close the public hearing; seconded by Council Member Galindo and passed unanimously by those present and voting. Assistant City Secretary Koenning polled the Council for their votes and the following ordinance was passed: 17. ORDINANCE NO. 021564 Ordinance amending the Zoning Ordinance upon application by Dr. Harley Moody, D.V.M. by changing the Zoning Map in reference to Lot 1-A, Block A, Baldwin Park, from "B-1" Neighborhood Business District to "B-3" Business District. An emergency was declared and the foregoing ordinance passed by the following vote: Rhodes, Galindo, Longoria, Martin, McComb, McNichols, Moss, and Slavik voting "Aye." Mayor Rhodes opened the public hearing on the following zoning case: 18. Case No. 193-3, Victor Ramos: A change of zoning from "B-1" Neighborhood Business District to "F -R" Farm -Rural District on the North portion of Lot 17, Section 51, Flour Bluff and Encinal Farm and Garden Tracts, located at the south corner of Flour Bluff Drive and Yorktown Boulevard. Mayor Rhodes stated that both the Planning Commission and staff recommended approval of the application. No one opposed the zoning change. Council Member Moss moved to close the public hearing; seconded by Council Member Slavik and passed unanimously by those present and voting. Assistant City Secretary Koenning polled the Council for their votes and the following ordinance was passed: 18. ORDINANCE NO. 021565 Ordinance amending the Zoning Ordinance upon application by Victor Ramos by changing the Zoning Map in reference to North portion of Lot 17, Section 51, Flour Bluff and Encinal Farm and Garden Tracts, from "B-1" Neighborhood Business District to "F -R" Farm -Rural District. Minutes Regular Co. ;i1 Meeting February 9, 1993 Page 12 An emergency was declared and the foregoing ordinance passed by the following vote: Rhodes, Galindo, Longoria, Martin, McComb, McNichols, Moss, and Slavik voting "Aye." Responding to Council Member Martin, Mr. Utter explained that the referenced property was presently utilized as pasture land and did not contain a proper access road. Mr. Utter further commented that the applicant might be replatting to lower the property's tax value. Y* t i t k i#••** t Mayor Rhodes opened the discussion on the consideration of the sale of the City's natural gas distribution system. Mr. John Moore, Resource Management International (RMI) representative, presented a detailed summary and comparative assessment of the proposed contracts from Southern Union Gas Company (SU) and National Utility Investors Corporation (NUI). Mr. Moore stated that the summary provided both economic and non -economic considerations of each proposal. He stated the economic considerations involved information on the purchase price, five year rate program, and service policies and charges. He further stated that the non -economic considerations involved policies toward the current gas department staff and franchise language. Pursuant to NUI's proposal, Mr. Moore stated that the proposed purchase price was $38 million, and offered alternative rate programs. He stated that NUI proposed cost of service (or base rate) increases the first three years with no increases during the last two years, and that the cost of gas would be directly passed through to customers. Additionally, he stated that NUI proposed dividing the revenues between different customer classes. Further, Mr. Moore stated that NUI also planned to perform a cost of service study the first year. Next, Mr. Moore discussed NUI's first plan, Alternative A, which provides an asset purchase price of $26 million and a prepaid franchise fee of $12 million. Responding to Council Member Moss, Mr. Moore explained that $38 million would be provided to the City up front and that the proposed prepaid franchise fee would be repaid from the additional 2.25 percent franchise fee on a quarterly basis over a twenty year period. Further, Mr. Moore stated that the total franchise fee to customers would total 7.25 percent. A brief discussion ensued, and it was determined that there were no encumbrances on the initial $38 million payment to the City and that the prepaid franchise fee would be dependent on the company's levels of revenue. Mr. Moore stated that the additional franchise fee would best be characterized as a surcharge from which the prepaid franchise fee would be repaid. Mr. Moore next discussed NUI's second plan, Alternative B. He stated that this alternative provided the same level of funding at closing and contained an $8 million Minutes Regular Co. . i1 Meeting February 9, 1993 Page 13 prepaid franchise fee, along with $4 million being provided for a gas energy savings program (gas appliance conversion programs). Mr. Moore further discussed each alternative's proposed base rate increases for the five year period. Responding to Council Member Slavik, Mr. Moore stated that Alternative B provided actual funds of $38 million at closing, but the $4 million must be utilized for gas appliance conversion programs over a three year period. Council Member Martin expressed concern about the $4 million allocated in Alternative B for the gas appliance conversion programs. Further, Mr. Moore discussed service policies and charges proposed by NUI which were equivalent to the City's present policies and charges. He next commented that NUI proposed to pay $1.3 million per year to utilize the City's meter reading/billing for three years. He also stated that NUI proposed to locate a headquarters in the City providing additional local employment, and create a local advisory board. He further discussed the company's commitment fee of $150,000 in the event the Council approves and places their proposal on the election ballot. He stated that the commitment fee would not be contingent upon voter approval, and would be a part of the company's $300,000 fee allocated for process expense. Mr. Moore next discussed NUI's proposal for the treatment of the City's current gas employees. He stated that this proposal contained a two year employment commitment, allows carry forward of accrued vacation and sick leave, and recognition of City tenure. Lastly, Mr. Moore discussed NUI's operating experience, financial strength, and comprehensive gas supply strategy. Responding to Council Member McNichols, Mr. Moore further explained the requirements for the proposed $150,000 commitment fee. A brief discussion ensued, and it was determined that strong Council support of the selected contract would enhance voter approval. Mr. Moore next discussed the proposal from Southern Union. He stated that the purchase price was $37.059 million and contained no change to the City's base rate. He next discussed the proposed franchise fee and gross receipt fee which allowed Southern Union to participate in the cost of gas savings anticipated from the expiration of the City's existing gas contract. Further, he stated that Southern Union proposed to retain 50 percent of the difference between the City's recent cost of gas ($3.60 Mcf) and what Southern Union actually pays for gas. A discussion developed, and Council Member McComb expressed concern about the public's perception of this concept. He stated that he could not support this concept because gas consumers would not realize a savings equal to a reduction in the cost of gas. Mr. Moore agreed, and stated that there would be additional revenues realized by Southern Minutes Regular Cc . i1 Meeting February 9, 1993 Page 14 Union. Mr. McComb further stated that NUI's proposal contained a cost of gas pass through to the consumer, and Mr. Moore agreed. Council Member McNichols inquired about the request of Southern Union to adjust rates if cumulative capital additions exceed certain limits. Mr. Moore stated that, because the company has committed to not raising the base rates over a five year period, the proposal contains a rate adjustment compensating for major repairs occurring outside normal operations. Responding to Council Member McNichols, City Manager Garza stated that, under the City's present method, such major repairs would qualify as an emergency and would require City Council consideration, Council Member McNichols stated that he felt the company should absorb these costs without involving the gas consumer. Mr. Moore commented that this type of emergency would involve only uninsured losses, and would be a consideration of the City Council. Mr. Moore further discussed various types of relative losses. Responding to Council Member Galindo, Mr. Moore briefly discussed the insurance provided by each company. Council Member McNichols inquired about language in the service policies and charges concerning main line extension allowances to new businesses. Mr. Moore explained. Mr. Moore next discussed the "rate assurance clause," which assured that no gas consumer bill would be higher than present bills through the end of 1995 even if the cost of gas increased. Council Member Martin agreed with Council Member McComb's previous concern about the intricacies of the proposed base rate structure and suggested the development of a simpler approach which could be more easily explained. Mr. Moore next stated that Southern Union is proposing funds of $1 1 million per year to utilize city meter reading/billing for three years, and locating the Gulf Coast Regional Vice President in the City which would generate additional jobs. Responding to Council Member Slavik, Mr. Moore stated that their office would perform functions similar to the City's administrative operations. Responding to Council Member Slavik, Mr. Moore discussed the proposed $150,000 commitment fee. Council Member McComb inquired whether gas would be provided to City -owned facilities free of charge by either party, and Mr. Moore stated that this provision was not in either offer. A brief discussion developed, and it was determined that City -owned facilities consumed approximately $325,000 worth of gas per year. Council Member Martin expressed concern about the City's present accounting procedures regarding gas consumed by City - owned facilities. Minutes Regular CG til Meeting February 9, 1993 Page 15 Responding to Council Member Martin's concerns, Mr. Moore referred to a chart and discussed the proposed treatment of existing gas employees. A discussion developed, and Council Member Martin inquired if RMI felt the proposals were equivalent to the City's current program. Mr. Moore replied in the affirmative taking into consideration the review period. Council Member Martin inquired, if the Council presently selected a proposal, what type of financial security would be available to insure the bidder's proposal. Mr. Moore stated that both companies had provided financial statements based on current conditions. Through the use of a chart, Mr. Moore next compared the five year rate program proposed by each company. Responding to Council Member Slavik, Mr. Moore explained that the referenced costs in the chart represented cost paid by the ratepayer over a five year period. Mr. Moore then referred to the chart depicting approximate bill estimates proposed and compared these estimates to current City bills. A brief discussion ensued. Responding to Council Member McComb's concern, Mr. Moore explained referenced late payment charges to residential and non-residential customers. Next, Mr. Moore explained the sixty day period for the review of service policies and the repurchase provisions in the proposals. Council Member Galindo inquired about the proposed depreciation schedules, and Mr. Moore explained. Council Member Martin inquired about the proposed rate setting procedures. A broad discussion ensued regarding possible citizen appeals. Mr. Moore then suggested that the City adopt a rate ordinance outlining the selected rate program allowing time for possible appeals to be made prior to the closing date in the event the Council chose NUI. He stated that this would not be necessary if Southern Union were selected because they were not requesting a rate increase. Responding further, Mr. Moore stated that it was his understanding that rate payers could not appeal an existing rate as being unreasonable. Mr. Moore next discussed the effects of each proposal on the ratepayers. A discussion developed outlining the different effects. Responding to Council Member McNichols, Mr. Gene Dubay, Senior Vice President of Mergers and Acquisitions of Southern Union Gas Company, commented on properties and ventures owned by Souther Union in the State. He stated that acquiring the City's gas system would enhance their other properties. Responding to Council Member McNichols, Mr. Moore reviewed recent changes in the contracts through the negotiation process. erir Minutes Regular Co . it Meeting February 9, 1993 Page 16 In response to Council Member Slavik, Mr. Moore stated that rates beyond the five year period had not been addressed because of potential influencing factors. He discussed these factors. Mr. Moore further commented that each company would be responsible for a marketing plan to expand the base and increase the revenues. A discussion developed regarding potential future rates. Mr. Moore explained that the Council would still retain the ability to control the gas rates in the City. Further, that the City has original jurisdiction, but appeals can be made to the Texas Railroad Commission. Council Member McComb commended and expressed appreciation to RMI for their work in the project. Mr. McComb then referred to a recent newspaper article concerning the sale. Responding, Mr. Moore commented that each company should address required contract adjustments in the event a later election date were chosen for the sale. Lastly, Mr. Moore expressed appreciation to City staff, NUI, and Southern Union. Mr. John Bell, attorney for NUI, briefly explained NUI's prepaid franchise fee. Mr. Bell then introduced Mr. Michael Behan, NUI representative. Mr. Behan briefly discussed credentials and the portfolio of NUI as well as benefits to the City in their proposal. Council Member Martin compared the two proposals and expressed concern that NUI's proposal would cost the ratepayers $13 million over a five year period in exchange for an additional $1 million initially. Mr. Behan stated that NUI's bid reflected conventional ratemaking principles and a complete investment recovery. Council Member Galindo expressed concern about gas rates after the initial five year period. A discussion developed. Mr. Behan responded to several questions posed by Council Member Slavik regarding the NUI Corporation. Council Member McComb inquired about necessary changes in the event the election date were in August instead of April. City Manager Garza briefly discussed these changes. Mr. Garza then briefly discussed the need to renegotiate or extend the City's gas contract which expires on January 1, 1994. Mr. Behan stated that an election date change would not require renegotiations in the NUI contract. Next, Mr. John Brooke, attorney for Southern Union, distributed three letters of recommendation, and briefly discussed each letter. He further stated that a change in the election date would not affect Southern Union's contract. Mr. Brooke next discussed the upcoming renegotiation of the City's gas contract. Lastly, Mr. Brooke recognized the representatives of Southern Union present at the day's meeting as well as Mr. Gene Dubay. Minutes Regular Cc it Meeting February 9, 1993 Page 17 Mr. Dubay briefly discussed Southern Union's proposal. He stated that Southern Union offered $37 million for the gas system, and that Southern Union would need to realize an addition $8 million in revenues and proposes to do so with a cost of gas sharing arrangement. He stated that his company felt this approach was best for presentation to the public. He next stated that, if the Council felt the additional cost would best be characterized as a cost of service increase instead, his company would be willing to work with the Council. He next discussed other gas systems owned by Southern Union. Responding to Council Member Moss, Mr. Dubay and Mr. Behan both stated that their company would be willing to work with the City and prepare for either election date. They further commented that the selection of an election date would be more appropriately addressed by the City Council. Council Member Slavik inquired whether the August election would hinder either company's purchase of gas in January 1, 1994, and Mr. Dubay replied in the negative. Responding further, Mr. Dubay commented that his company purchased the City of El Paso's gas system in 1940. Council Member Martin agreed with Mr. Moss' suggestion for the chosen company to address the voter education process. Mr. Martin then suggested that the sale be placed before the voters in August which would allow ample time for the public to make inquiries about the selected company. Mr. Martin suggested that, if the City chose Southern Union, a cost of service adjustment be implemented rather than using a gas cost sharing arrangement. Mr. Martin further stated that he supported the concept of free gas provided by the purchaser for municipal operations, and suggested a complete examination of the franchise agreement and base rate information. Further, Mr. Martin stated that the funds from the sale should be utilized for the expansion of the City's water and wastewater resources. Then, Mr. Martin made a motion to authorize the City Manager to finalize the negotiations for the sale of the City's natural gas distribution system with Southern Union Gas Company subject to voter approval, seconded by Council Member McNichols (M93- 045). Discussion by the Council indicated that negotiations should include free gas for the City, a conventional rate plan rather than the proposed gas savings plan, and payment by the Company of all City expenses prior to the election. Council Member Moss suggested further definition of specific projects on the ballot. Mr. Moss then commented that the sale would produce funds for the City's capital projects free of interest and stressed the importance of this concept. Council Member Galindo briefly compared the costs of the two proposals to current City costs. He commented favorably on the City retaining the system. Further, Council Member Galindo also commented favorably on the election being held in April in order to provide a larger voter turn -out. Responding to Council Member Longoria, City Attorney Bray stated that other election dates were November of 1993 and January or May of 1994. Mr. Bray stated that a 1993 May election was questionable at this time. Mayor Rhodes commented unfavorably Minutes Regular Cc cil Meeting February 9, 1993 Page 18 on an election in May of this year. Council Member Longoria stated her support of holding the election for the sale in April of 1993. Council Member Martin agreed with Mr. Moss' suggestion to outline specific capital projects on the ballot and discussed the importance of educating the public. Then, Council Member Martin restated his motion. Mayor Rhodes commented that the use of funds and the selection of an election date could be addressed separately. Assistant City Secretary Koenning polled the Council for their votes and the motion passed as follows: Rhodes, Longoria, Martin, McComb, McNichols, Moss, and Slavik voting "Aye;" Galindo voting "No." 19. WITHDRAWN Then, Council Member McNichols made a motion selecting August 1993 as the date for a referendum on the sale of the City's natural gas distribution system, seconded by Council Member McComb (M93-046). Council Member McNichols stated that the purpose approving the August date would be to allow a more effective negotiation process and to clarify the use of funds received in the sale. Mayor Rhodes called for comments, and Mr. Dubay commented that Southern Union would support an August election and felt this date would work well for the community. Mayor Rhodes called for a hand vote on the motion and the motion passed as follows: Rhodes, Martin, McComb, McNichols, Moss, and Slavik voting "Aye;" Galindo and Longoria voting "No." Mayor Rhodes announced that the scheduled closed session pursuant to Article 6252- 17, Sec. 2(e), V.A.C.S. regarding Abel Alonzo v. City of Corpus Christi et al, No. C-91-218, U.S. Dist. Ct., Southern Dist. of Texas, Corpus Christi Division was canceled. Mayor Rhodes called for the City Manager's report. City Manager Garza stated that he would provide the Council with copies of all correspondence concerning the City's golf courses. Mayor Rhodes called for Council concerns and reports. Minutes Regular Cc cil Meeting February 9, 1993 Page 19 Responding to Council Member Martin, Mayor Rhodes requested the City Manager to locate an appropriate City facility which could be named after Juan Prieto, the Police Officer that recently lost his life in the line of duty. Council Member Martin then referred to his previous request for an examination of City retirees' insurance premium increases. Mayor Rhodes called for petitions from the audience, and there were none. There being no further business to come before the Council, Mayor Rhodes declared the Council Meeting adjourned at 11:08 p.m. on February 9, 1993.