HomeMy WebLinkAboutMinutes City Council - 02/15/2000I 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 15, 2000, which were approved
by the City Council on February 22, 2000.
WITNESSETH MY HAND AND SEAL, this 22nd day of February, 2000.
Armando Chapa
City Secretary
SEAL
PRESENT
Mayor Samuel L. Neal Jr.
Mayor Pro Tem Mark Scott
Council Members:
Javier D. Colmenero
Melody Cooper
Henry Garrett
Rex A. Kinnison
Betty Jean Longoria
John Longoria
ABSENT
Dr. Arnold Gonzales
MINUTES
CITY OF CORPUS CHRISTI, TEXAS
Regular Council Meeting
February 15, 2000
12:00 p.m.
City Staff:
City Manager David R. Garcia
Deputy City Manager George Noe
City Attorney James R. Bray Jr.
City Secretary Armando Chapa
Recording Secretary Rachelle P. Ramon
Mayor Neal called the meeting to order in the Council Chambers of City Hall.
The invocation was delivered by Father Mark Haas, Holy Trinity Orthodox Christian Church,
following which the Pledge of Allegiance to the United States flag was led by Council Member John
Longoria.
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. Mayor Neal called for approval
of the minutes of the regular Council meeting of February 8, 2000. A motion was made and passed
to approve the minutes as presented.
* * * * * * * * * * * * *
Mayor Neal announced the following executive sessions:
pursuant to Texas Government Code Section 551.071 regarding City of Corpus Christi v.
Manhattan Construction Company et al, No. 94-6459-A, 28th District Court, Nueces County,
Texas;
pursuant to Texas Government Code Sections 551.071 and 551.072 regarding purchase,
exchange, lease, or value of the Frost Bank Building on Leopard or other real property for
a city emergency operations center and other city operations, with possible discussion and
action in open session;
pursuant to Texas Government Code Sections 551.071 and 551.072 regarding City of Corpus
Christi, Condemnor v. Leona Estes, No. 99-61770-4, County Court at Law No. 4, Nueces
County, Texas with possible discussion and action in open session;
pursuant to Texas Government Code Section 551.071 regarding City of San Benito et al v.
PG&E Gas Transmission, Texas Corporation et al, No. 96-12-7404-A, 107th District Court,
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Regular Council Meeting
February 15, 2000
Page 2
Cameron County, Texas, with possible discussion and action related thereto in open session.
The Council went into executive session. The Council returned from executive session.
* * * * * * * * * * * * *
Mayor Neal read the proclamations and then he called for petitions from the audience.
Ms. Gail Hoffman, 3442 Paradise Dr., said she is executive director of Associated General
Contractors. She commended the Council and staff for their efforts to streamline the budget, adding
that she heartily endorses any efforts to encourage economic development in Corpus Christi.
Mr. R.F. Hasker, 1813 Wallace, questioned whether staff had provided a report to the
Council on statutory limitations on the use of sales tax monies for economic development. City
Attorney Bray replied that he furnished that report to the Council on October 12, 1999. Mr. Hasker
added that while the Council members received new chairs, the city cannot afford to finish a
playground. He questioned the idea behind building a playground on a median between the
northbound and southbound lanes of Shoreline Boulevard.
Mr. J.E. O'Brien, 4130 Pompano, said a fact that was left out of the support material for Item
12 on the day's agenda was that the Corpus Christi Taxpayers Association was one of the main
reasons for the formation of the industrial district. Mr. O'Brien also discussed delays that have
occurred in producing the Comprehensive Annual Financial Report (CAFR). He said that under the
law the city was supposed to have the CAFR published by about November 29, 1999. He questioned
what is happening in the Finance Department and whether the Council will take any actions to
correct the situation.
Mr. Leon Perez, 904 Buford, said Central Power and Light is going to make the ratepayers
pay for their mistakes, and he criticized Brown & Root Company.
Mr. Foster Edwards, 118 Alta Plaza, CEO of the Corpus Christi Association of Realtors, said
they recognize that the upcoming city budget process will be difficult. However, their organization
wishes to support the Council, particularly in their efforts to promote economic development.
Mr. Abel Alonzo, 1701 Thames, said the city is not growing because it is not willing to pay
the price for growth. He said the Council needs to be united --not divided --in its efforts.
*************
Mayor Neal called for consideration of the consent agenda (Items 2-9). Council members and
audience members requested that Items 4 and 7 be withheld for discussion. City Secretary Chapa
polled the Council for their votes and the following were passed:
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Regular Council Meeting
February 15, 2000
Page 3
2. M2000-043
Motion approving the purchase of thirty-eight computers from Compaq Computer
Corporation, Houston, Texas to be used by the Central Library in accordance with the State
of Texas Cooperative Purchasing Program for a total of $53,960. Funds are available through
a Telecommunication Infrastructure Fund (TIF) grant.
The foregoing motion passed by the following vote: Neal, Colmenero, Cooper, Garrett,
Kinnison, B. Longoria, J. Longoria, and Scott voting "Aye"; Gonzales absent.
3. M2000-044
Motion approving a supply agreement with Calgon Corporation, Pittsburgh, PA, for
approximately 180 tons of liquid cationic polymer solution in accordance with Bid Invitation
No. BI -0046-00 based on low bid, for an estimated annual expenditure of $142,200. The
term of the supply agreement will be for twelve months with an option to extend for up to
two additional twelve month periods subject to the approval of the supplier and the City
Manager or his designee. The Water Department will use the chemical for water supply
treatment. Funds have been budgeted for FY99-00.
The foregoing motion passed by the following vote: Neal, Colmenero, Cooper, Garrett,
Kinnison, B. Longoria, J. Longoria, and Scott voting "Aye"; Gonzales absent.
5.a. RESOLUTION NO. 023941
Resolution authorizing the City Manager or his designee to execute a supplemental
environmental project agreement with the Texas Natural Resource Conservation
Commission, which will provide a contribution of $350,000 from Koch Industries Inc., for
the purchase of an "Emergency 1" hazardous material response vehicle.
The foregoing resolution passed by the following vote: Neal, Colmenero, Cooper, Garrett,
Kinnison, B. Longoria, J. Longoria, and Scott voting "Aye"; Gonzales absent.
5.b. ORDINANCE NO. 023942
Ordinance appropriating $350,000 received from Koch Industries Inc. in Account No. 1050-
00000-20-806091, TNRCC-SEP Account, to purchase an "Emergency 1" hazardous material
response vehicle.
An emergency was declared and the foregoing ordinance passed by the following vote: Neal,
Colmenero, Cooper, Garrett, Kinnison, B. Longoria, J. Longoria, and Scott voting "Aye";
Gonzales absent.
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Regular Council Meeting
February 15, 2000
Page 4
5.c. M2000-046
Motion approving the purchase of a hazardous materials response vehicle from the Houston -
Galveston Area Council of Governments (HGAC), for the total amount of $350,419.50. The
award is based on the cooperative purchasing agreement with HGAC. The hazardous
materials response vehicle will be used by the Fire Department. Funds are available through
a Texas Natural Resource Conservation Commission grant.
The foregoing motion passed by the following vote: Neal, Colmenero, Cooper, Garrett,
Kinnison, B. Longoria, J. Longoria, and Scott voting "Aye"; Gonzales absent.
6.a. RESOLUTION NO. 023943
Resolution authorizing the City's Fire Chief to execute an amendment to an existing
supplemental environmental project agreement with the Texas Natural Resource
Conservation Commission that will provide an additional $150,000 to be contributed by
Koch Industries Inc. to purchase site-specific alerting device systems for at -risk areas in and
around chemical industries in the Corpus Christi/Nueces County area.
The foregoing resolution passed by the following vote: Neal, Colmenero, Cooper, Garrett,
Kinnison, B. Longoria, J. Longoria, and Scott voting "Aye"; Gonzales absent.
6.b. ORDINANCE NO. 023944
Ordinance appropriating $150,000 received from Koch Industries Inc. and $304.07 of interest
in Account No. 1050-00000-806090, TNRCC-SEP account, to purchase site-specific alerting
device systems for at -risk areas in and around chemical industries in the Corpus
Christi/Nueces County area under the Corpus Christi/Nueces County Local Emergency
Planning Committee's emergency response and communications during hazardous material
incidents program.
An emergency was declared and the foregoing ordinance passed by the following vote: Neal,
Colmenero, Cooper, Garrett, Kinnison, B. Longoria, J. Longoria, and Scott voting "Aye";
Gonzales absent.
8. M2000-048
Motion authorizing the City Manager or his designee to execute an engineering services
agreement with Urban Engineering for a total fee not to exceed $161,780 for the odor control
improvements at various lift stations (Wooldridge Road, Williams Drive, Everhart
Road/Staples Street, Country Club Area): the Laguna Madre Wastewater Treatment Plant;
and the Allison Wastewater Treatment Plant; and for the rehabilitation improvements at the
Allison Wastewater Treatment Plant.
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Regular Council Meeting
February 15, 2000
Page 5
The foregoing motion passed by the following vote: Neal, Colmenero, Cooper, Garrett,
Kinnison, B. Longoria, J. Longoria, and Scott voting "Aye"; Gonzales absent.
9.a. M2000-049
Motion authorizing the City Manager or his designee to accept a grant in the amount of
$348,509 from the U.S. Department of Justice -Bureau of Justice Assistance for funding
eligible under the FY 2000 Law Enforcement Block Grants Program and to execute related
documents.
The foregoing motion passed by the following vote: Neal, Colmenero, Cooper, Garrett,
Kinnison, B. Longoria, J. Longoria, and Scott voting "Aye"; Gonzales absent.
9.b. ORDINANCE NO. 023945
Ordinance appropriating $348,509 from the U.S. Department of Justice, Bureau of Justice
Assistance in the No. 1050 State/ Federal Grants Fund to purchase marked vehicles and law
enforcement equipment for the Police Department; authorizing the transfer of $38,723 from
the No. 6010 Law Enforcement Trust Fund and appropriating it in the No. 1050 State/Federal
Grants Fund as the grant match.
An emergency was declared and the foregoing ordinance passed by the following vote: Neal,
Colmenero, Cooper, Garrett, Kinnison, B. Longoria, J. Longoria, and Scott voting "Aye";
Gonzales absent.
* * * * * * * * * * * * *
Mayor Neal opened discussion on Item 4, purchase of technical support services.
Mr. J.E. O'Brien questioned the need for those technical support services. He said the agenda
support material on March 24, 1998, stated that the price for the contract with Arthur Andersen
includes the provision for training services for city staff to use the PeopleSoft system. He said staff
needs to have accurate financial information, particularly as they prepare for a new budget process.
Mr. Ogilvie Gericke, Acting MIS Director, replied that this contract with Oracle Corporation
is just for database management. During the one-year contract, Oracle will provide the city with 24-
hour telephone, Internet and technical support, as well as upgrades, maintenance of leases and other
electronic services. City Secretary Chapa polled the Council for their votes as follows:
4. M2000-045
Motion approving the purchase of technical support services from Oracle Corporation for a
total annual cost of $34,920. The term of services will be twelve months and includes
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Regular Council Meeting
February 15, 2000
Page 6
software license and services for Oracle database.
The foregoing motion passed by the following vote: Neal, Colmenero, Cooper, Garrett,
Kinnison, B. Longoria, J. Longoria, and Scott voting "Aye"; Gonzales absent.
* * * * * * * * * * * * *
Mayor Neal opened discussion on Item 7, Padre Island pumping plant improvements.
Responding to Council Member Garrett, Mr. Angel Escobar, Director of Engineering Services, said
that at the time of the bid opening, three of the bidders did not include an item requested in the bid
proposal and a fourth bidder also did not have a complete submittal; consequently, all four bids were
considered to be irregular. Subsequently, all bidders submitted the necessary information within the
required five days, and Bracco Construction was the low bidder. City Attorney Bray said staff
studied this issue at great length and determined that the Council has the discretion to accept the
Bracco bid. City Secretary Chapa polled the Council for their votes as follows:
7. M2000-047
Motion authorizing the City Manager or his designee to execute a construction contract in
the amount of $306,650 with Bracco Construction Inc. for Phase 1 of the Padre Island
Pumping Plant improvements: ground storage tank installation project.
The foregoing motion passed by the following vote: Neal, Colmenero, Cooper, Garrett,
Kinnison, B. Longoria, J. Longoria, and Scott voting "Aye"; Gonzales absent.
* * * * * * * * * * * * *
Mayor Neal referred to Item 10, and a motion was made, seconded and passed to open the
public hearing on the following zoning case:
10. Case No. 0100-04, King's Crossing Realty: A change of zoning from an "R-2" Multiple
Dwelling District to an "R -1C" One -family Dwelling District on King's Crossing Unit 1,
Phase 1, Block 28, Lot 1 and Block 39, Lot 1, located approximately 400 feet south of Lens
Drive and 400 feet west of Cimarron Boulevard.
City Secretary Chapa said the Planning Commission and staff recommended approval of the
"R -1C" District. No one appeared in opposition to the zoning change. Mr. Colmenero made a motion
to close the public hearing, seconded by Mr. Scott, and passed. Mr. Chapa polled the Council for
their votes as follows:
ORDINANCE NO. 023946
Amending the Zoning Ordinance upon application by King's Crossing Realty by changing
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Regular Council Meeting
February 15, 2000
Page 7
the zoning map in reference to Lot 1, Block 28, and Lot 1, Block 39, King's Crossing Unit
1, Phase 1, from "R-2" Multiple Dwelling District to "R -1C" One -family Dwelling District;
amending the Comprehensive Plan to account for any deviations from the existing
Comprehensive Plan.
An emergency was declared and the foregoing ordinance passed by the following vote: Neal,
Colmenero, Cooper, Kinnison, B. Longoria, J. Longoria, and Scott voting "Aye"; Garrett and
Gonzales absent.
* * * * * * * * * * * * *
Mayor Neal referred to the presentations on the day's agenda.
The first presentation, Item 1 1, was regarding the bond issue 2000 program and process. City
Manager Garcia explained that the proposed bond issue consists of about $100 million that will be
presented to the voters in November 2000. He noted that about half of the bonds will be sales tax
supported and the other half supported by ad valorem taxes. He said the Council has received a
presentation on the sales tax portion, which is proposed to fund a multi-purpose arena and repairs
to the seawall.
Deputy City Manager Noe utilized a computer presentation to discuss the ad valorem tax
supported bond proposal. He reviewed the history of this bond program, which consists of the
following: streets -$30.6 million; public health and safety -$9.8 million; public facilities -$1.7 million;
and park and recreation -$10.9 million, for a total of $53 million.
Mr. Noe then reviewed each of the projects in the bond program and he and other staff
members responded to Council members' questions. The projects are as follows: #1 -new fire station
at Yorktown and Rodd Field at the Cayo del Oso; #1A -a new 24-hour modular fire substation to be
constructed on Mustang Island; #2-a new animal and vector control facility at the City Service
Center on Holly Road; #3 -four police substations throughout the city; #4 -ADA and other
improvements at city fire stations; #5 -Phase 1 of a combined fire/police public safety facility; #6 -
reroofing the Health Department building; #7 -renovate existing senior and recreation centers; #8 -
development and improvements to five city-wide youth sports facilities; #9 -improvements to the
HEB public tennis center pavilion; #10 -renovation and development of 19 neighborhood parks.
Additional projects are: 411 -addition and renovation at the Northwest Branch Public Library;
# 12 -museum fire suppression system; # 13 -museum heating and air conditioning control system; 414 -
sidewalk accessibility improvements (ADA); #15 -17 -installation of 20 new traffic signals at
congested and high -accident locations, and modernization and coordination of 20 existing wood pole
signals; and #18 -21 -city participation in Texas Department of Transportation projects. Street projects
include neighborhood street reconstruction ($4.8 million); street overlays ($5.02 million); and
improvements to area streets ($10.9 million).
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Regular Council Meeting
February 15, 2000
Page 8
Mr. Noe said that additional projects that have been identified by the Council include
improvements to Cliff Maus Drive ($2.1 million); a nine -hole golf course addition at the Oso Golf
Course ($1.35 million); and improvements to Horne Road from Kostoryz to Crosstown.
Following additional comments by Council members, City Manager Garcia said that a few
months ago staff presented two options to the Council --a $40 million bond issue and a $53 million
bond issue. He said the Council directed staff to proceed with developing a $53 million package, and
staff believes that the package they are presenting meets the highest priority needs in the community
with the guidelines set by the Council for a reasonable property tax increase.
Mayor Neal said that for the most part the projects presented by staff do not commence
construction for another three to four years. He noted that the Council has heard many complaints
about the delay in completing the 1986 bond program. A discussion followed about building a
modular fire station on Yorktown Boulevard and related costs.
The Mayor then discussed specific funding amounts associated with a proposal he was
making for a three-year bond package that would result in projects being constructed by the end of
2003, which totals approximately $23 million (about $14 million in the first year and about $9
million in the second year). Mr. Garcia replied that staff will need to review the Mayor's proposal.
He referred to a chart illustrating projected tax rates for debt service for a $53 million bond issue.
Mr. Garcia noted that the city has virtually no debt capacity until 2004-05, which is part of the reason
staff backloaded the bond issue the way they did.
Council Member Kinnison said he had a philosophical problem with asking the taxpayers
to vote for something that will not be constructed until 2005, 2006, or 2007. He said he would prefer
considering a package of projects that can be completed in three years and which are affordable,
which means that the projects will have to be prioritized. Council Member Colmenero echoed Mr.
Kinnison's comments about the need for a shorter -term bond package, which affects citizens' trust
in the Council that they are able to deliver services.
Mr. Garcia said staff can bring back a list of projects that can be completed or under
substantial construction in 36 months. However, he noted, the list of projects will be substantially
smaller and will have a greater impact on the ad valorem tax increase, which he and Mr. Noe
explained. A discussion ensued.
Council Member Betty Jean Longoria commented about the importance of long-term
planning, particularly for future Councils. Council Member Cooper said she did not want the bond
package to fail because it is too ambitious, and she asked staff to explain what the effect would be
on the average taxpayer with staffs proposed program versus a scaled-down program.
Council Member John Longoria pointed out that there is an additional 1 /8th cent sales tax
that is available. Mr. Garcia urged the Council to keep in mind that the city will be obligated to
continue paying for the officers and civilian personnel that have been hired as part of the Crime
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Regular Council Meeting
February 15, 2000
Page 9
Control District. He suggested that anything they do additionally not add to that burden but go
straight into facilities and assets.
Council Member Scott said that at some point the city needs to find a way to fund economic
development endeavors, such as a 1/8th cent tax. Mr. Kinnison commented that the city also has an
ad valorem tax that is connected with operating and maintenance costs and future Councils will be
under pressure to raise tax rates to meet General Fund costs. Mr. Colmenero reiterated the need to
reevaluate and prioritize the projects so the voters can support them.
Mayor Neal called for a brief recess.
Upon reconvening, Mr. Noe reviewed staffs suggestions regarding the schedule of activities
in preparation for the bond election on November 7, 2000, including joint meetings with other
governmental jurisdictions and town hall meetings. He said that after those meetings, the Council
could in April and May finalize the general obligation bond package, the arena sales tax proposal,
and the seawall sales tax proposal. Following that, a citizen campaign committee could begin
working to promote the election. He also discussed the requirements regarding formalizing the
election and establishing the ballot language. He added that staff will provide information on a
smaller -scaled bond package in a few weeks.
* * * * * * * * * * * * *
The second presentation, Item 12, was an overview of industrial districts and their associated
contracts. Mr. Utter explained that industrial districts are an agreement between a city and an
industry not to annex that industry. He explained the history of the formation of industrial districts
in 1981-82, when the City Council and certain industries (those located along the port and in the
northwest) negotiated a master industrial district agreement.
Mr. Utter said the original industrial district contracts contained the following elements
which have remained basically constant with each renewal term: industry was protected from
annexation for seven years; no zoning, building inspection, or platting requirements were enforced
against the industry (although a plan for water, sewer, and drainage was required); the industry paid
for city utilities at outside -city -limits rates; the industry was required to make payments in lieu of
taxes to the city, which he explained; and the industry had to be a member of the Terminal Refinery
Fire Company or make an additional payment to the city for fire protection.
Mr. Utter explained that in November 1994 the Council approved a renewal of the industrial
district agreements with a number of changes as follows: the term of the existing agreement is 10
years rather than seven years; while the 100% of land value was maintained, the cap on
improvements was increased from 50% to 60%; the phase-in period was increased to 6% for years
one and two, 7% for years three and four, and 8% per year up until it reaches 58% and then 2% at
the end; and the industries are required to buy local services wherever possible. In addition, a
contamination clean-up and buffer zone provision was added, whereby an industry located in a
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Regular Council Meeting
February 15, 2000
Page 10
contaminated area monitored by the Texas Natural Resource Conservation Commission must agree
to remediate their contamination in accordance with all applicable laws. Also, the agreement
stipulates that the calculations of payments in lieu of taxes shall be made without reference to the
exemption for pollution control equipment.
The Assistant City Manager then reviewed charts comparing market and taxable values of
the industrial district from 1993-99; taxes billed from 1993-98; and the total valuation of the district,
the value subject to tax and the taxes collected from 1983-99. He added that currently there are 64
industrial district agreements with a 99.76% tax collection rate. Mr. Utter said the industrial district
agreements are mutually beneficial to both the city and industries.
Council Member John Longoria suggested that the city establish a dialogue with the port
industries to discuss issues related to the city. Mr. Utter replied that staff has discussed the possibility
of scheduling meetings with some of the larger local industries, maybe on a monthly basis. Council
Member Scott said the Council also wanted staff to initiate meetings with industries on a corporate
level to indicate the city's desire that they not only remain in Corpus Christi but that they also
expand their services.
* * * * * * * * * * * * *
The third presentation, Item 13, was an update on employee group health insurance. Mr. Pat
Alba, Director of Risk Management, explained that the city had been self-insured from the early
1980s until March 1996, when it entered into a contract with Humana Insurance for three years. Last
year the city went out for proposals and the decision was made to return to a self-insured program.
Mr. Alba said the contract that was approved (on February 9, 1999) with Spohn Health
Network included a four-year guarantee of provider fees, which is different from a fully insured
program where premiums are fixed. Mr. Alba said the number of people currently insured are 3,161
employees; 500 retirees (plus 50 retirees who are utilizing a Spohn Medicare supplement program);
and about 45 employees utilizing COBRA benefits. A total of over 8,000 people and their
dependents are covered.
Mr. Alba then reviewed changes to the city's self-insured program: development of the
"Citicare-Basic" plan for uninsured dependents; implementation of cost-containment measures for
prescription benefits; recommended premium increase for March 1, 2000; and development of a five-
year financial plan.
Mr. Alba also discussed the pros and cons of a self-insured program. The pros include a four-
year guarantee of provider fees; a four-year contract for administrative fees with Entrust; ability to
stabilize costs over the four years; city control of the design of the health program; and a delay of
the premium increase from March 1999 to August 1999. Some of the cons with a self-insured
program are that the city assumes the liability of claims costs; there is a smaller hospital network
(since the Columbia network is not included); and the nationwide Humana network is no longer
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Regular Council Meeting
February 15, 2000
Page 11
accessible. The pros of a fully insured program included premium payments only with no claims
liability; and a larger local and nationwide network. The cons were that there was only a one-year
contract available with no future commitment; and the program was administered and controlled by
the carrier.
The Risk Management Director examined the issue of rising prescription costs, which he said
probably began occurring under the fully insured plan with Humana. However, since the city was
only obligated to pay the premiums, attention was not given to every specific cost in the program.
Mr. Alba pointed out that in 1995, 60% of prescriptions utilized were generic, while that figure is
now 14%. He said the average cost for brand name prescriptions is $50 and the average cost of
generic prescriptions is $11; in addition, the number of prescriptions increased from 45,000 in 1995
to 90,000 today while the insured group only grew 15%. Mr. Alba further explained that brand name
medications are now being aggressively marketed and the number of older members of the insured
group is increasing. He added that the prescriptions are a separate cost that does not involve Spohn
or the physicians in the Spohn network.
Council Member John Longoria said the main reason for the increase in the use of brand
name prescriptions is because employees only have to pay $10 for them, while there is no charge for
generic prescriptions. He said the Council approved such a benefit -rich health insurance plan. Mr.
Alba pointed out that those co -pays have been in effect since 1994.
Council Member Garrett said the proposed change in the prescription costs --$5 for generic
and $30 or 30% for brands --will have a tremendous effect on many employees, especially retired
employees. He suggested that staff find a way to phase in that increase, and he agreed that employees
should be encouraged to talk to their physicians about the possibility of using generic medications.
City Manager Garcia commented that the city takes better care of its retirees than its active
duty employees. He explained that the cost to maintain health insurance and prescriptions for the
retirees is subsidized by the entire active duty force of the city. He said most other organizations that
have similar programs differentiate the retiree pool from the active duty pool because the heavy users
of health insurance and precription drugs are the retirees.
In response to Mr. Garrett's concern about the proposed drastic increase in prescription co -
pay amounts, Mr. Alba said that traditionally co -pays would have gradually increased from $10 to
$15 to $20 and now to $30; however, the city chose to delay that increase and now there is no choice
but to increase it. Mr. Garcia pointed out that the city is merely recovering the actual, out-of-pocket
costs and it is in a deficit situation at this time regarding health insurance costs. Mr. Alba added that
if there is a minimal difference between brand and generic prescriptions, the employees will probably
continue to use brand prescriptions.
Mr. Alba went on to say that during open enrollment last month, some employees informed
staff that they had prescriptions ranging from $700 to $1,000 per month, which is an unusual
circumstance. He said staff has worked with Entrust to establish a way for the physician to indicate
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Regular Council Meeting
February 15, 2000
Page 12
that a particular medication is the only one available. Entrust and the pharmaceutical company will
verify that information and the employee will pay a $30 co -pay versus 30% of the cost.
In his computer presentation, Mr. Alba referred to a comparative analysis of the self-insured
plan with the fully insured Humana plan. He noted that the plan year runs from March 1, 1999 to
February 29, 2000, which overlaps the city's fiscal year of August 1, 1999 to July 31, 2000. The
projected cost for the self-insured plan for the last year is $12,372,067, while the cost of the Humana
plan is estimated to have been $12,332,483. He said the self-insured plan would have done very well
if the prescription costs had not gotten out of control. For example, the prescription cost under the
self-insured plan was estimated to be $1.5 million while the actual projected cost is $2.46 million.
Council Member Cooper said she voted against the Spohn proposal last year because, under
the fully insured program, the city would not have been liable for claims. Mr. Alba noted that if
claims had increased, Humana would have increased premiums. Ms. Cooper expressed concern
about the proposed 25% increase in premiums under the self-insured program. Mr. Alba explained
how staff determined the amounts it used for comparison purposes. Ms. Cooper also said the
requirement of a doctor's letter for a brand prescription is cumbersome.
Mr. Longoria said that with either plan the city and its employees would have faced an
increase in costs. Responding to a question from Mr. Longoria, Mr. Alba explained how staff
determined that prescription costs were experiencing a rising trend. He added that some health
insurance programs utilize formularies, which is a list of medications approved for use by the
insurance company. He said the most drastic step the city could take regarding prescriptions would
be to incorporate a formulary. A brief discussion ensued.
Council Member Colmenero expressed concern about the number of employees who utilize
Medicaid, and he addressed the prescription situation. Mr. Alba stated that during open enrollment,
city staff encouraged employees to discuss their prescriptions with their physician, since a physician
can change a prescription but a pharmacist cannot. He acknowledged that 30% of medications are
not available in generic form but the city can continue to educate and encourage employees to utilize
generics whenever possible. He added that Entrust will provide weekly reports on the usage of brand
and generic medications, which staff will monitor closely.
Council Member Kinnison referred to copies of the Council meeting minutes from January
and February 1999 when the Council was considering which health insurance program to select. He
said the Council was told that by selecting the self-insured program, it will result in a $1 million fund
balance on July 31, 1999. However, according to financial statements there is a $900,000 difference,
which he said must be claims paid out by July 31 st.
Mr. Alba replied that claims are paid by most companies over a six-month period (longer in
some cases). When the contract was approved, Entrust immediately began paying claims in March
1999; they were caught up by June 1999 and have remained current. He said staff had projected that
there would be a lag in Entrust paying the claims, which would have created the fund balance
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Regular Council Meeting
February 15, 2000
Page 13
originally anticipated by staff. Mr. Kinnison said the claims would get accrued on July 31st because
they were a liability if the services had been rendered. Mr. Rudy Garza, Assistant Budget Director,
said that staff budgets on a cash basis so they would not recognize an accrual. Mr. Joe Montez,
Budget Director, commented on the difficulty in getting accurate numbers because of computer
problems. Mr. Alba added that the premium increase was deferred from March 1, 1999, to August
1, 1999, and he discussed how Entrust and Spohn validate claims.
Mr. Kinnison asked how the FY 1999-2000 budget is going to absorb the proposed increase
in premiums. Mr. Garcia referred to the Group Health Insurance Fund financial statement, saying
that staff is proposing some internal loans and fund shifts that should address both the shortfall this
year as well as FY 2000-01 without having to go outside the fund. Mr. Kinnison asked what will
happen to the General Fund and the Utility Fund. Mr. Garcia replied that there will not be an impact
on the operating budget but there is an impact on the Self -Insurance Fund. He said their proposal has
been reviewed by both the Finance Department staff and the city's outside auditors.
Responding to Mayor Neal, Mr. Alba discussed the plan's restrictions on pre -filling
prescriptions. He added that the plan also has an offset for Medicare, which he explained. He noted
that Medicare does not have a prescription drug benefit, while the city continues to offer that benefit
to its retired employees. The Mayor said that at some point they need to look at how they determine
the costs for employee and dependent care coverage beyond age 65, particularly with regard to
prescription drug utilization. Mr. Garcia said staff can determine prescription utilization by groups.
He added that he thinks the city would have been worse off this year had they stayed with the
Humana plan.
Deputy City Manager Noe discussed the current fiscal year financial statement, which
compared the adopted budget to the revised budget in terms of current revenues, rate increase impact,
expenditures (third party administration, provider network, stop loss, and claims), other benefit costs
and administration, and the resulting ending fund balance. He said staff is proposing to reallocate
$1 million from the Self -Insurance Fund to the Group Health Insurance Fund; implement
recommended plan changes regarding the prescription co -pays and the premium increases; and
consider future plan and benefits options, such as single -vendor contracts for prescriptions,
continued premium rate increases as warranted, retiree insurance options, and other cost-containment
efforts through the maintenance of accurate data
Mr. Noe added that staff has had discussions with the outside auditors about the potential of
combining the Self -Insurance Fund and the Group Health Insurance Fund. He said many
communities have their entire risk pool in one fund, as opposed to being segregated into two funds.
Mr. Noe further discussed the Group Health Insurance Fund financial statement, noting that staff is
assuming 10% annual growth in claims costs and 5% growth in administrative costs. He said that
in FY 2000-01, staff is proposing a reallocation of $827,441 from the Self -Insurance Fund to the
Group Health Insurance Fund, which will enable the city to defer any change in premiums next year.
He said if those assumptions hold true, staff is predicting that premiums will have to be
incrementally increased by 7% for three consecutive years. Mr. Garcia pointed out that those actions
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Regular Council Meeting
February 15, 2000
Page 14
will establish a fund balance of about $1 million, which should address any future anomalies.
Responding to Mr. Kinnison, Mr. Noe said that in their discussion with the auditors, they will
show on the General Fund ledger an accrual of the expenses that were incurred that are attributable
to the General Fund from the health insurance program. Mr. Kinnison said the General Fund
projected balance for July 31, 1999, has just taken another hit that they did not know about.
Mr. Scott asked if staffs five-year projections included an increase in the number of insured
lives each year. Mr. Noe replied that at this point staff had neither the time nor the data to be able
to assume changes in number of insured lives. He noted that changes in other employers' plans can
affect the number of insured lives on the city's plan.
Mayor Neal said if the Council approved staffs proposals, it would result in a 25% premium
increase effective March 1, 2000, and there would not be another premium increase until March 1,
2002, which is predicted to be 7%. He said if they did not adopt the premium or co -pay increases,
it would affect the fund balance in subsequent years. The Mayor said other options would be to
change the plan's benefits (some companies have eliminated prescription benefits) or go back to a
fully insured plan.
Mr. Colmenero said the use of a formulary would not be beneficial to the employees, and he
added that this proposal is a "band-aid" solution, which he explained. Mr. Garcia reiterated staff's
proposals, pointing out that they believe those measures will stabilize the costs.
Mr. Kinnison suggested that Mayor Neal's options be put in writing and presented to the
Council. He added that they are focusing on what the employees will have to bear with a cost
increase, but it also affects the city, since the city pays a large part of the cost. Mr. Kinnison and Mr.
Garrett commented on the many benefits the city's plan offers, and Mr. Garrett said staff needs to
continue to do what they can to fine-tune it. Mrs. Longoria said the Council members have a
responsibility to answer employees' questions and concerns about the proposed increases.
Mayor Neal asked staff to bring back the options for the Council's final approval next week.
Mr. Garcia said they will do that. He pointed out that state law requires that changes to the health
insurance plan be filed by the plan administrator, who is Mr. Garcia.
* * * * * * * * * * * * *
Mayor Neal called for the City Manager's report. Mr. Garcia said several city departments --
including the Police Department, Health Department and Building Inspections --had expressed
concern about the Good Samaritan tent encampment. He said the encampment was the result of an
increase in the number of homeless people coming to Corpus Christi to escape inclement weather.
He said Mr. Utter negotiated an agreement with a representative of the Good Samaritan Center,
whereby the center agrees to voluntarily close the encampment by March 1, 2000. He said the city
has agreed to work with the center along with the Homeless Issues Partnership over the next several
Minutes
Regular Council Meeting
February 15, 2000
Page 15
months to prepare for this situation next winter.
Mr. Garcia said staff completed the repairs on the Mary Rhodes Pipeline but they have
identified some wet areas in the same area of the leak and they are investigating the situation. He said
that next week the Council will be discussing privatization and construction at the airport, among
other items.
Responding to Mayor Neal, City Secretary Chapa said that next week the Council will make
appointments to the boards of the Economic Development Corporation, Convention and Visitors
Bureau, Airport Board, Arts and Cultural Commission, and the Intergovernmental Commission on
Drug and Alcohol Abuse.
Mayor Neal asked the Council's Administrative Analysis Committee to take on the charge
of audit oversight. The committee consists of Mrs. Longoria, Mr. Kinnison, Mr. Longoria, and Mr.
Scott.
There being no further business to come before the Council, Mayor Neal adjourned the
Council meeting at 7:07 p.m. on February 15, 2000.
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