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HomeMy WebLinkAboutMinutes City Council - 07/01/1997 - WorkshopI HEREBY CERTIFY that the foregoing is a true and correct copy of the minutes of the Budget Workshop of the City of Corpus Christi of July 1, 1997, which were approved by the City Council on July 8, 1997. WITNESSETH MY HAND AND SEAL, this 8th day of July, 1997 an'o Chapa City Secretary SEAL MINUTES CITY OF CORPUS CHRISTI, TEXAS Council Workshop July 1, 1997 9 a.m. PRESENT Mayor Loyd Neal Mayor Pro Tem Betty Jean Longoria Council Members: Jaime L. Capelo Jr. Melody Cooper* Arnold Gonzales* John Longoria Dr. David McNichols* Edward Martin ABSENT Alex L. Garcia Jr. City Staff: City Manager Bill Hennings City Attorney James R. Bray Jr. City Secretary Armando Chapa Mayor Neal called the workshop to order in the Council Chambers of City Hall. City Secretary Chapa called the roll and verified that the necessary quorum of the Council and the required charter officers were present to conduct the meeting. City Manager Hennings said the proposed budget that was submitted to the Council at the end of May needs to be changed. He noted that the Council had an all -day workshop to discuss the FY 1997-98 city budget on June 3, 1997, as well as some other discussions since then. Mr. Hennings said the Council has given him direction in several areas of the budget, the most important being the reaffirmation of the financial policy adopted last January. He said he would need to submit budget revisions to conform with the Council's directions. *Council Member Gonzales arrived at 9:10 a.m. Mr. Hennings said decisions needed to be made about the debt service fund, the self- insurance fund, Police Department budget and possibility of a crime control and prevention district, as well as other issues. The City Manager then referred to a memo from Mr. Joe Montez, Director of Management and Budget, regarding the starting point for the financial policies. He pointed out that there are three key factors in the financial policies, the first of which is a target for the ending balance in the General Fund of 4% of the total expenditures over a five-year period. Mr. Hennings discussed four schedules illustrating the five-year revenues and expenditures proforma. He said he is recommending the Council consider Schedule 4, which has a closing fund balance of $2,248,153 for FY 1997-98. He Minutes Council Workshop July 1, 1997 Page 2 noted that the closing balance in the adopted budget for FY 1996-97 is $1,798,522, and the closing fund balance in Schedule 4 represents a 25% increase in the fund balance. Council Member Martin pointed out that Schedule 4 includes additional funding required in the amount of $827,825. He stated that the financial policy allows for growth in the fund balance to occur over six years, and he suggested that this year be considered as the first year of the policy, rather than last year. Mr. Martin questioned other aspects of the financial schedules presented, which Mr. Hennings discussed. Mr. Hennings then stated that the Council was directing him to do the following: use the figure of $1,613,134 that is in the financial policy resolution adopted by the Council in January 1997 as the beginning balance for FY 1997-98; and the target of 4% of total expenditures would occur in the sixth year, which would be FY 2002-03. He said staff would draft a new resolution clarifying those points after the Council adopts the budget so they can take the resolution to the bond rating agencies. * * * * * * * * * * * * * Mr. Hennings said the next issue to be addressed is the financial policy to maintain a reasonable reserve in the General Obligation Debt Service Fund, which is the fund in which part of the property tax assessment is received, and the debt is paid on the city's general obligation bonds and certain other debt. He said historically the city has maintained a cash reserve in that fund equal to 75% of the following year's debt service requirement. He said the purpose for doing that was to provide some extra assurance to bond buyers so that the rating agencies would favorably consider the city's bond rating. In addition, it represented the largest cash reserve the city had from tax revenues. The City Manager said that in the preliminary budget, he had proposed to use that cash reserve for other purposes and replace it by purchasing insurance. He said that during the budget workshop on June 3rd, the Council suggested that the city continue to maintain a substantial cash reserve --which is called for in the financial policy --and in addition to possibly pay next year's lease/ purchase payment in the General Fund out of the G.O. Debt Service Fund. Mr. Hennings then discussed a financial comparison of funding only the lease/purchase payment due in FY 1997-98 versus paying off the entire lease/purchase debt. Mr. Hennings pointed out that the city is required to budget enough money in the G.O. Debt Service Fund to pay the debt that is due during the year, in addition to a minimum fund balance in excess of that amount, or 2% of the original debt ($3.5 million). He said the bond rating agencies have told city officials that maintaining a reserve over that amount means very little to the bond buyers and the bond ratings. Minutes Council Workshop July 1, 1997 Page 3 Mr. Hennings said the next change he was recommending had to do with the Reinvestment Zone, which is not going to be able to pay all of its required debt service next year. He explained that the Reinvestment Zone was formed in the downtown area and Corpus Christi Beach in order to help finance the construction of the Texas State Aquarium. It is a tax -increment financing zone which the city is allowed by state law to establish so that taxes on the increase in assessed value can be dedicated to an economic development project. He said it affects the city, Nueces County, and Corpus Christi Independent School District. The City Manger explained that in the preliminary budget, staff had proposed that the shortfall in the debt payment for the Reinvestment Zone be paid out of the General Fund, but since it is a debt on bonds, he is now proposing it be paid from the G.O. Debt Service Fund. Mr. Martin asked about some of the provisions addressed by Mr. Hennings, and he asked if it was Mr. Hennings' general impression that if the city's General Fund fund balance was higher (and it was protected), that would satisfy the bond rating agencies. Mr. Hennings said that is what the agencies have indicated. Mayor Neal asked if the deficit of $233,613 for debt requirements in the Reinvestment Zone could be paid from the Tourist and Convention Fund. Mr. Hennings said he thought it could, if the monies were available in that fund. Council Member Gonzales asked if that deficit could be paid from Texas State Aquarium revenues. Mr. Hennings said staff could ask them to pay it, but they had no obligation to pay any debt service. Council Member John Longoria suggested staff provide background material to the Council on this issue. In summary, Mr. Hennings said staffs recommendation will be that the G.O. Debt Service Fund will only pay next year's lease/purchase debt payment, plus the $233,613 shortfall in the Reinvestment Zone. ************ Mr. Hennings said the next item would be the Police Department budget and the crime control and prevention district. *Council Member Cooper arrived at the workshop at 10:10 a.m. Mr. Hennings said the Texas Legislature has enacted legislation amending the law regarding crime control and prevention districts so that Corpus Christi is now eligible to establish such a district, which he explained. Minutes Council Workshop July 1, 1997 Page 4 Responding to Council Member Betty Jean Longoria, Mr. Hennings said the district would have a five-year life, unless reauthorized by the voters, and he emphasized that the district did not pertain to fire protection, only to police and court issues. The Mayor pointed out that the Council would be discussing this issue in more detail in the near future. Mrs. Cooper asked the earliest date this issue could be voted on, and Mr. Hennings said during the November 4, 1997 election. In response to questions from Mrs. Cooper and Mrs. Longoria, Mr. Hennings explained the implementation of the crime control district if it was approved by the voters, and options to consider if it was not approved. He added that a one-eighth percent increase would generate about $3.5 million a year. Other Council members commented on various aspects of the crime control district. In response to a question from Mayor Neal, City Attorney Bray said that the state legislature also amended the law to allow a 4A Corporation, which had been established primarily for industrial projects, to also do the same projects as a 4B Corporation, which has a much broader base and includes commercial and community projects. * * * * * * * * * * * * * The Street Services Department's budget was the next item in the budget workshop. Mr. Ogilvie Gericke, Director of Street Services, used a computer presentation to discuss several aspects of his budget: preventive maintenance, seal coating, overlay, reconstruction of streets, etc. He also referred to a map indicating the condition of streets in the city limits. Responding to Mayor Neal, Mr. Gericke said the residents of a gated community are responsible for the maintenance of the streets within that community. He added that the Texas Department of Transportation (TXDOT) is responsible for maintaining the farm -to -market roads and the state highways, and the county is responsible for the county roads. A brief discussion ensued, and Mr. Carl Crull, Assistant City Manager for Public Works and Utilities, commented on the city's agreement with TXDOT. Council members discussed the importance of knowing the amount of money needed for different levels of street maintenance. Mr. Martin suggested that a Council committee could be formed to meet with officials at the Regional Transportation Authority with a specific request for funds for additional street work. Mr. Hennings also addressed the issue of the county road/bridge fee which Nueces County collects but which the City of Corpus Christi does not receive any funding for street maintenance, even though the large majority of people who pay that fee live within the city limits. He commented on other sources of funding for streets. Minutes Council Workshop July 1, 1997 Page 5 As a related issue, Mr. Hennings referred to a memo comparing revenues received from Southwestern Bell (SWB) in different Texas cities. He said the information is the basis for his view that the telephone company is not paying fair market value for the use of the street right-of-way. He said that justifies staffs proposal to increase SWB's franchise fee payment. The City Manager also discussed a comparison of 9-1-1 fees around the state. Responding to Mayor Neal, Mr. Hennings said that the Public Utility Commission allows SWB to pass the franchise fees to their customers. The Mayor pointed out that every time the city increases SWB's franchise fee, it results in an increase in customers' bills. In reply to other questions, Mr. Hennings said there is an ongoing debate in this country about telecommunications legislation, which he briefly explained. A discussion ensued on that issue. * * * * * * * * * * * * * Mr. Hennings then addressed the Solid Waste Services budget. He noted that the new compaction equipment that the Council authorized is increasing the life expectancy of the Elliott landfill, and he is expecting to propose an amendment that will delay the schedule for the sale of bonds for the new landfill. In addition, there is a methane gas -recovery project underway at the existing landfill, and a feasibility report is optimistic about the possibility of using that gas to produce electricity at the landfill. The City Manager said there is also the possibility that the cost for construction of the clay liner may be postponed beyond the fiscal year. He also commented on the increase in the recycling program workload and the need for additional equipment to address it. In response to Council members' questions, Mr. Andy Leal, Director of Solid Waste Services, further discussed the recycling program and the existing trash pick-up schedule, as well as proposed changes to that schedule which had been discussed by a previous Council. Mr. Tom Utter, Assistant City Manager for Development Services, and Mr. Hennings discussed debt service issues and certain costs in the Solid Waste Services budget. ************ * Mr. Hennings said that one of the issues to be addressed in the Self -Insurance Fund pertains to the several large claims against the city this fiscal year. He said staff is proposing that claims in excess of $250,000 be recovered in four equal increments over a four-year period. Mr. Hennings added that the outside auditor has agreed with that proposal. The City Manager said the fund balance in the Self -Insurance Fund also needs to be rebuilt to about $5.5 million. In order to do that, staff is proposing to borrow $4.25 million from the Minutes Council Workshop July 1, 1997 Page 6 unreserved fund balance of the Combined Utilities Fund for four years at 5.5% interest. Mr. Hennings said staff is budgeting the anticipated level of claims based on past experience, with the exception of last year, and the cost of that is being recovered through assessments to the customer departments. Responding to questions from the Council members, Mr. John Shepherd, of Collier, Johnson & Woods, the city's outside auditors, explained that $5.5 million is the level that the Self -Insurance Fund has been at in the past, which will fund one year's worth of expenditures. In the audited financial statements, the insurance liability is about $11 million. He said there are workmen's compensation claims, for instance, that are already on a pay -out schedule. Mr. Shepherd said it is his understanding that an actuarial study of liabilities will be undertaken. A brief discussion ensued. * * * * * * * * * * * * * Mayor Neal announced the closed session, pursuant to Texas Government Code Section 551.071, regarding the contract for operation of the H.E.B. Tennis Center. The Council went into closed session. (*Council Member McNichols arrived at the workshop during the closed session.) The Council returned from closed session. * * * * * * * * * * * * * Mayor Neal called for petitions from the audience. Ms. Nancy Stevens, Director of the Asian Cultures Museum and Educational Center, said the museum is now located at 1809 Chaparral in the Bayfront Arts and Sciences Park. She noted that there are only five Asian museums in the United States, and only one in Texas. She described some of the museum's expenses, and she urged the Council to not deny the museum's request for $15,000 in funding from the city. Mr. Lee Gwozdz, Executive Director of the Corpus Christi Symphony, commented on the symphony's efforts to overcome financial difficulties it experienced last year, and he emphasized that the symphony and the Municipal Arts Commission need the city's financial assistance. Mr. J.E. O'Brien, 4130 Pompano, addressed several issues: the shortfall in the Reinvestment Zone, the proposal to transfer debt service funds to the General Fund, and the bulge that has been detected in the Wesley Seale Dam. He referred to a memo dated October 17, 1996, regarding a consent agenda item during the October 22nd Council meeting that referred to the heave or bulge in the dam's north spillway. He urged the Council to let the citizens vote on the Garwood water Minutes Council Workshop July 1, 1997 Page 7 contract. Mr. Phil Rosenstein said that public safety should be considered the number one priority in the city budget. He also commented on the increasing numbers of senior citizens and their associated needs. Mr. Neal Trolinger, 337 Stages Dr., said he was representing the Corpus Christi Taxpayers Association. He read a resolution that was approved by that group's members which asked the Mayor and Council to reconsider the appointment of the committee to study the situation with regard to the Wesley Seale Dam. Mr. John Hartley, 3925 Sandy Hollow, said more funding was needed to clean up the city's parks in order to better serve the citizens, particularly the youth. Mr. John Torrey, of Professional Refuse Service, distributed information to the Council about his business, a solid waste company which is certified as a minority business enterprise. He proposed a voluntary subscription service for a roll-out semi -automated garbage can known as "Herbie the Curbie," which he described. Mr. R.F. Hasker commented negatively on the Wesley Seale Dam heave and he questioned when the Council members became aware of that situation. ************* Before returning to the budget workshop discussion, Mr. Crull updated the Council on the levels of the combined reservoir system, which was 51.1% at that time. A discussion ensued about how that affects the mandated water releases and conditions of the water conservation and drought contingency plan. Dr. McNichols suggested that the Water Conservation Advisory Committee further discuss this issue. The next budget issue had to do with a proposed change in the Engineering Department, as discussed by Mr. R.H. Shackelford, Director of Engineering Services. He said the department is requesting eight additional personnel for the next fiscal year: seven are in direct support of staff's continuing effort to accelerate implementation of the capital improvement budget and programs; the other position is required to assist in the tremendous increase in development in the city. He went on to discuss the Major Projects Activity, followed by comments from Council members. Ms. Bonnie Allin, Director of Aviation, explained that the Aviation Fund is an enterprise fund within the city that is charged with being totally self-sufficient for the safe, secure and efficient operation of the airport, including its maintenance and capital development. She said the operating budget is funded from revenues derived solely from activities at the airport, and the Aviation Minutes Council Workshop July 1, 1997 Page 8 Department reimburses other city funds for the services they receive on a full cost -recovery basis. She explained the airport's revenues and expenditures in more detail. Mr. Malcolm Matthews, Director of Park and Recreation, discussed the Marina Fund and the Golf Fund. Mr. Matthews noted that staff is recommending an increase in the marina's slip rental rates, which has not been increased since 1991. He said some proposed marina maintenance projects are a new bait stand, restrooms and shower facilities, and improving the maintenance and haul -out facility. Responding to Council members' questions, Mr. Matthews discussed revenues that would be generated by the increase in slip rental fees, security at the marina, and the idea of marketing the marina to encourage more development. With regard to the Golf Fund, Mr, Matthews said it is an enterprise fund and, over the last 10 years, the city has been able to reverse a negative fund balance by incrementally raising the fees. He said staff receives input from the Greens Committee and the Park and Recreation Advisory Committee. He said a proposed change is a new golf course surcharge that would replace the cart path surcharge, which he explained. He also described the proposal for a cyclical golf cart replacement program. Several Council members discussed options for a new golf course as well as expenses related to that. Responding to a question from Mayor Neal, Mr. Hennings said the Fire Department budget is basically remaining the same, although there are a few capital outlay items, including roof repair, and an assessment center. The Mayor requested a breakdown of drag -up costs in the Fire Department. Mr. Martin raised specific questions about the Fire Department budget, for which Mr. Hennings said he would provide information, Mr. Longoria also raised questions concerning unmet needs in the Health Department; a proposed position in the Park and Recreation Department to work with the Commission on Children and Youth; arts funding; and funding to prepare for the year 2000 problem. Dr. Gonzales also questioned the position to assist the Commission on Children and Youth. Mayor Neal requested guidance from Mr. Hennings and staff to determine options that may be available to make up the budget shortfall. There being no further business to come before the Council, Mayor Neal declared the Council workshop adjourned at 3:20 p.m. on July 1, 1997. * * * * * * * * * * * * *