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HomeMy WebLinkAboutMinutes City Council - 06/22/2004I HEREBY CERTIFY that the foregoing is a true and correct copy of the minutes of the Regular Meeting of the Corpus Christi City Council ofJune 22, 2004, which were approved by the City Council on June 29, 2004. WITNESSETH MY HAND AND SEAL, on this the 29th day of June 2004. Armando Chapa City Secretary SEAL MINUTES CITY OF CORPUS CHRISTI, TEXAS Regular Council Meeting June 22, 2004 - 10:02 a.m. PRESENT Mayor Samuel L. Neal Jr. (Arrived at 10:24 a.m.) Mayor Pro Tem Rex Kinnison Council Members: Brent Chesney Javier D. Colmenero Melody Cooper (Arrived at 10:20 a.m.) Henry Garrett Bill Kelly Jesse Noyola Mark Scott City Staff: City Manager George K. Noe City Attorney Mary Kay Fischer City Secretary Armando Chapa Mayor Pro Tem Kinnison called the meeting to order in the Council Chambers of City Hall. The invocation was delivered by Reverend Gloria Lear of First United Methodist Church and the Pledge of Allegiance to the United States flag was led by Council Member Garrett. 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 Pro Tem Kinnison called for approval of the minutes of the regular Council meeting of June 15, 2004. A motion was made and passed to approve the minutes as presented. ************* Mayor Pro Tem Kinnison deviated from the agenda, and called for consideration of the consent agenda (Items 3-9). Council members requested that Item 3 be discussed. There were no comments from the audience. A motion was made and passed to approve Items 4 through 9, constituting the consent agenda, except for Item 3, which was pulled for individual consideration. City Secretary Chapa polled the Council for their votes as follows: 4.a. RESOLUTION NO. 025793 Resolution authorizing the City Manager or the City Manager's designee to accept a grant from the Texas Department of Health Services in the amount of $38,061 for Family Health and Family Planning Services. The foregoing resolution was passed and approved with the following vote: Kinnison, Chesney, Colmenero, Garrett, Kelly, Noyola and Scott, voting "Aye"; Neal and Cooper were absent. Minutes - Regular Council Meeting June 22, 2004 - Page 2 4.b. ORDINANCE NO. 025794 Ordinance appropriating a grant in the amount of $38,061 in the No. 1066 Health Grant Fund from the Texas Department of Health Services for Family Health and Family Planning Services. An emergency was declared, and the foregoing ordinance was passed and approved with the following vote: Kinnison, Chesney, Colmenero, Garrett, Kelly, Noyola and Scott, voting "Aye"; Neal and Cooper were absent. 5.a. RESOLUTION NO. 025795 Resolution authorizing the City Manager or the City Manager's designee to accept an amendment to the current immunization grant from the Texas Department of Health in the amount of $34,121 for personnel, fringe benefits, travel, and supplies for an immunization program. The foregoing resolution was passed and approved with the following vote: Kinnison, Chesney, Colmenero, Garrett, Kelly, Noyola and Scott, voting "Aye"; Neal and Cooper were absent. 5.b. ORDINANCE NO. 025796 Ordinance appropriating the amended grant from the Texas Department of Health in the amount of $34,121 for personnel, fringe benefits, travel, and supplies to maintain an immunization program in the No. 1066 Health Grants Fund. An emergency was declared, and the foregoing ordinance was passed and approved with the following vote: Kinnison, Chesney, Colmenero, Garrett, Kelly, Noyola and Scott, voting "Aye"; Neal and Cooper were absent. 6. MOTION NO. 2004-227 Motion authorizing the City Manager or his designee to execute a construction contract with R. M. Wright Construction, of El Paso, Texas in the amount of $2,007,600 for the Oso Water Reclamation Plant Clarifier 2, 3, 4 Structural Improvements for Total Base Bid C. The foregoing motion was passed and approved with the following vote: Kinnison, Chesney, Colmenero, Garrett, Kelly, Noyola and Scott, voting "Aye"; Neal and Cooper were absent. Minutes - Regular Council Meeting June 22, 2004 - Page 3 7. ORDINANCE NO. 025797 Ordinance appropriating $500,000 into the Street Capital Improvement Program Fund No. 3530 from the Regional Transportation Authority (RTA) for the RTA 2004 Special Projects Program; amending FY 2003-2004 Capital Budget adopted by Ordinance 025647 to increase Fund No. 3530 appropriations by $500,000. An emergency was declared, and the foregoing ordinance was passed and approved with the following vote: Kinnison, Chesney, Colmenero, Garrett, Kelly, Noyola and Scott, voting "Aye"; Neal and Cooper were absent. 8. RESOLUTION NO. 025798 Resolution authorizing the resale of one foreclosed property located at 3942 Marlin which was foreclosed upon for failure to pay ad valorem taxes for $7,000. The foregoing resolution was passed and approved with the following vote: Kinnison, Chesney, Colmenero, Garrett, Kelly, Noyola and Scott, voting "Aye"; Neal and Cooper were absent. 9. ORDINANCE NO. 025799 Ordinance abandoning and vacating a 3,155 -square foot portion of a 20 -foot wide utility easement out of Block B -2B, Cullen Place; requiring the owner, Dr. Ronald Kuffel, Jr., to comply with the specified conditions and replat the property within 180 days at owner's expense. An emergency was declared, and the foregoing ordinance was passed and approved with the following vote: Kinnison, Chesney, Colmenero, Garrett, Kelly, Noyola and Scott, voting "Aye"; Neal and Cooper were absent. Mayor Pro Tem Kinnison opened discussion on Item 3 regarding setting the public hearing date for the proposed FY 2004-2005 operating budget during the June 29, 2004 meeting. Council Member Kelly and Council Member Scott noted that they would not be able to attend the June 29 meeting. Mr. Kelly asked if there was any flexibility in setting the date. City Manager Noe replied that staff had requested this schedule so the Council would consider the first and second readings of the budget ordinance on July 13 and July 20 respectively. He said this would give staff an extra week to prepare for the start of the new fiscal year on August 1. Assistant City Manager Mark McDaniel added that the Nueces County Tax Appraisal District had not confirmed that they would be able to provide the certified tax roll by July 20, so the second reading may have to take place on July 27. City Secretary Chapa added that the public hearing date was subject to a number of advertising requirements that were already in progress. Thus, Mr. Kelly and Mr. Scott concurred with setting the proposed budget public hearing during the June 29 meeting, but they requested videotapes of the meeting and that good notes be taken in their absence. There were no comments from the audience. City Secretary Chapa polled the Council for their votes as follows: Minutes - Regular Council Meeting June 22, 2004 - Page 4 3. MOTION NO. 2004-226 Motion setting a Public Hearing on the Proposed FY 2004-2005 Operating Budget during the Regular Council Meeting of June 29, 2004. The foregoing motion was passed and approved with the following vote: Kinnison, Chesney, Colmenero, Garrett, Kelly, Noyola and Scott, voting "Aye"; Neal and Cooper were absent. * * * * * * * * * * * * * Mayor Pro Tem Kinnison referred to the first presentation the day's agenda, a report on the Stage 1 findings and recommendations for the Padre Island desalination plant feasibility analysis and siting plan. Mr. Jonathan Heckler with Carollo Engineers first provided a recap of the work that had been authorized to date as follows: project authorization (12/02); complete Stage 1 assessment (6/03); validation of growth population; water demands, and water quality; Padre Island water modeling; approval of aquifer storage and recovery ASR (3/31/04); and approval of pump station modifications (6/8/04). Mr. Heckler then covered the conclusions from the validation study. He stated that the following conclusions were made regarding ASR: it was a viable part of the overall water supply concept; ASR costs were now better defined; there was now a more complete understanding of subsidence and how to manage it; and the storage capacity was limited to about 10 mgd in total. He provided the following conclusions regarding reverse osmosis (RO): RO source wells are viable, but production was limited to 5 mgd; and the impacts of water quality on RO costs were not known. Mr. Heckler next discussed the conclusions from the water supply alternatives study. First, he said the current method of supplying peak -hour water demands from the mainland was not cost- effective. Second, he said the "RO/ASR-only" alternative was not cost-effective at total dissolved solid (TDS, a level of salinity) levels of 15,000 mg/L. Third, the "RO/ASR/Pipeline" alternative was competitive on a capital cost basis, but operational costs increase unit costs by about 20 percent over other alternatives. Finally, he said a combination of a pipeline with ASR alternatives offered more flexibility to proportionally respond to increasing demands, and offered improved reliability of service. Mr. Heckler referred to a chart detailing the minimum cost alternatives in the water supply alternatives study. He noted that each of the alternatives were expensive, ranging from approximately $246 million to $325 million, but he stated that each was designed to provide the island's water until 2050. Mr. Colmenero asked what the cost per thousand gallons was only using the RO method. Mr. Heckler replied that the cost was approximately $3 to $4 per thousand gallons. The pipelines/ASR combination, by contrast, would cost approximately $1.47 per thousand gallons. Mr. Heckler stated that the evaluation of the water supply alternatives study was comprised of three basic categories related to improved service: pumping and distribution, storage, and supply. He referred to a chart illustrating the peak hour curve versus facility improvements. He reported that TCEQ was mandating the implementation of elevated storage on the island. Mr. Heckler discussed a number of graphs depicting the peak hour curve versus each facility Minutes - Regular Council Meeting June 22, 2004 - Page 5 improvement. He said the graphs showed that the Padre Island Pumping Station improvements, initial ASR facilities improvements, and the elevated tank and PR 22 transmission pipeline completion would eventually meet the island's peak water needs until 2016. He also showed a series of graphs depicting the maximum day demand curve versus supply. He noted that by simply creating a separate service zone for the island, the hydraulics between the mainland and the island changed to allow the existing 24 -inch pipeline to carry the additional capacity and meet today's demand. He said the next step in meeting future maximum demand would be to bring the initial ASR project on-line at the end of 2005. Finally, initiating the Laguna Madre crossing project in 2006 would meet the island's maximum day demand through 2018. An important consideration, however, would be the reliability of the system, since the 24 -inch pipeline was 30 years old with a 50 -year lifespan. Mr. Heckler stated that putting redundancy measures in place would be important to ensure the reliability of the system in case of emergency. Mr. Ed Garana, director of the water department, stated that once the Laguna Madre pipeline was activated, the water department would be able to determine the condition of the 24 -inch pipeline and rehabilitate it during the off-peak winter months without affecting the island's water service. Mr. Heckler stated that the team was recommending that the city go forward with plans for elevated storage and transmission on the island and expedite the plans for the Laguna Madre crossing. He noted that ASR was scheduled to go on-line at the end of 2005. He emphasized that these modifications bought the city some time to closely study the growth patterns, water demands, and system performance in the island area. This study would provide valuable information for the city's next milestone decision point in June 2006. Mr. Heckler reviewed a chart depicting the summary of the status for the recommended short-term improvements. He said the costs for the ASR production facility, Padre Island pump station, conversion of Padre Island to a separate service zone, southside transmission system phase 4 and 5, and the Laguna Madre crossing were all scheduled for completion before the end of 2006. He stated that those near-term improvements were needed in order to stay ahead of the water demand curve. He said about 40 to 50 percent of the total costs, approximately $79 million, were included in the FY 2004-2005 capital improvements program. Finally, Mr. Heckler addressed the plan for the RO pilot plant. He said the team recommended that the city refrain from proceeding with the RO pilot plant at this time because the quality of the water in the aquifer required more processing than anticipated, and thus was not cost- effective. He said the city could re-evaluate the need for the RO pilot plant in the future if advances in technology made the process more cost-effective. Mr. Chesney asked how much money the city had spent to determine whether a desalination plant on the island was feasible. Mr. Heckler replied that approximately $200,000 was expended to determine whether the RO process (desalination) was feasible. City Manager Noe added that the balance of the $2.3 million spent in total on the study was being applied to projects that the city would be proceeding with to address the water needs of the island. Mr. Chesney stated it was important for the city to demonstrate to the community that they had seriously considered a desalination plant, and he appreciated the consultants' honest recommendation not to go forward with a desal plant at this time. Assistant City Manager Massey pointed out that the city was still not finished evaluating the feasibility of a desal plant, noting that the city was still involved in the Governor's desal program. He also said that this desal feasibility study was focused on processing Minutes - Regular Council Meeting June 22, 2004 - Page 6 brackish groundwater, while the Governor's desal project was focusing on other water sources. Mr. Scott pointed out that the city was spending approximately $50 million to improve water service on the island, a significant investment. If one included the southside transmission system improvements, he said the figure rose to $247 million. He said he didn't know of any other area of the city that was receiving this type of commitment to water system improvements. Mr. Garrett asked if the team has identified a site for the elevated storage tank. Mr. Garaiia replied that the optimal location would be somewhere on Park Road 22 between Whitecap Boulevard and Commodore Drive. Mr. Colmenero asked how many elevated storage tanks would be needed. Mr. Heckler replied that one storage tank with a 1 million gallon capacity would address current needs, and one additional tank with a 500,000 gallon capacity could be needed in the future at another site on the island, depending on population growth. Mayor Neal thanked the consultants for their efforts. * * * * * * * * * * * * * Mayor Neal deviated from the agenda, referred to Item 2, and the following board appointments were made: Human Relations Commission Amy Rhoads Granberry (Reappointed) Dr. Stuart Elovitz (Reappointed) Betty Black (Reappointed) Marisa K. Dowling (Reappointed) Albert Santoya (Reappointed) Leah Patterson (Appointed) Robert Adler (Appointed) Lucy Reta (Appointed) Adriana Zepeda (Appointed) Oscar Hinojosa (Reappointed as Chairman) Oil and Gas Advisory Committee Clifton McMasters (Appointed) * * * * * * * * * * * * * Mayor Neal referred to Item 11, a third quarter report on the FY 2004 health benefits/risk management fund. Director of Human Resources Cynthia Garcia first reviewed a chart depicting the number of claims filed per plan for health benefits. She said the average number of claims filed in the third quarter (6,130) was higher than the average number of claims filed in the second quarter (5,340). She noted that the first quarter average was also high (6,061), but it was affected by the transition from EntrustlSpohn to Humana. Ms. Garcia stated that the good news was that a comparison of this year's third quarter numbers and last year's third quarter numbers showed that the number of claims had decreased significantly from the monthly average of 65.72. Ms. Garcia reported that the average cost per month also increased this quarter compared Minutes - Regular Council Meeting June 22, 2004 - Page 7 with the second quarter, going from an average of $1,016,000 per month to $1,224,000 per month. She pointed out that this figure was down from the first quarter monthly average of $1,392,000, and also down from last year's third quarter figure of $1,581,000. Ms. Garcia reported that the average amount per claim appeared to be stabilizing at approximately $200 per claim. She remarked that this figure was significantly down from the August average cost per claim of $387, and also down from last year's third quarter average of $242.82. Ms. Garcia then reported on the third quarter performance of the risk management fund, beginning with workers' compensation and liabilities. She referred to a graph depicting incurred costs versus paid costs for the first nine months of FY 2004, and then compared this year's performance with the first nine months of previous fiscal years. She stated that the number of claims filed this year-to-date was 802, up 29 claims from this same period last fiscal year. Of the 802 claims, the number of claims not paid on was 297, with 505 claims requiring payments of more than $1. Although the dollar amounts are greater than prior years, she said the increase was attributable not only to the increased number of claims, but also due to moving cost containment fees to the paid amount this year. She said the department has also increased case management services and added surveillance services that are believed to impact the dollar amounts in the long run. Salaries and medical inflation also impact the dollar amount. Ms. Garcia highlighted a new chart illustrating the dollars paid in the current year for previous years' claims. She said a total of $1,564,793 has been paid during the first nine months of this year on prior year claims. Ms. Garcia referred to a slide depicting the year to date claims count by department. She remarked that the solid waste, water and gas department's claims had decreased, but claims for police, fire, wastewater, streets, and the parks departments had increased from 14 percent (wastewater) to 70 percent (streets). The next slide illustrated the year-to-date incurred cost comparison by department. Not surprisingly, she said the police department had the highest incurred costs at $816,838, followed by streets ($170,829), fire ($165,062), and solid waste ($101,648). Ms. Garcia referred to a chart depicting the year-to-date claims count by type of injury. She said the "all other trauma" category, including fractures, heat prostration, and dislocation, was the most common type of injury, followed by strains, and then contusions. Regarding general liabilities, Ms. Garcia referred to a chart showing the incurred costs by department for the period ended April 30. She said the chart showed a cost increase of 13 percent compared to last year at this time. Ms. Garcia also reviewed a graph illustrating dollars paid in current year for previous years' claims as of April 30, 2004. She said the total amount spent so far this year in general liability is $1,907,610. Finally, Ms. Garcia briefly discussed a graph showing the types of claims for the period ended April 30. She commented that vehicle damage was the most common type of claim, totaling 327 claims, followed by property damage with 219 claims. Minutes - Regular Council Meeting June 22, 2004 - Page 8 Mr. Garrett said a city employee told him that his insurance rates had increased by $57 a month. He asked why rates were increasing so dramatically. Ms. Garcia replied that an actuarial study had been completed, and staff based the rates they recommended to the Council on the outcomes of the study. This year's data only included five months of data from Humana's tenure as the city's third party administrator. Thus, the actuary looked at last year's claims, which were quite high under Entrust (the city's former third party administrator), and then factored in five months of this year's claims under Humana. The actuary also considered medical inflation rates and the city's historical claims rates when making their recommendations. In addition, Ms. Garcia said the city needed a reserve fund to draw from when the city ended a contract with one third party administrator and one network, and began with another. The reserve fund would also serve as a "shock absorber" against sudden increases in medical rates. City Manager Noe added that the city's outside auditors insisted that the city continue to use an actuarial study to set insurance rates. Mayor Neal asked who oversaw the city's claims review for cost-effectiveness. Mr. Quentin Masters, health benefits administrator, stated that Humana did the claims review, and the city would probably engage an audit team to quickly review Humana's work. * * * * * * * * * * * * * Mayor Neal opened discussion on Item 14 regarding the approval of the FY 2004-2005 Crime Control and Prevention District budget. There were no comments from the audience or from the Council. City Secretary Chapa polled the Council for their votes as follows: 14. RESOLUTION NO. 025800 Resolution approving the FY 2004-2005 budget of the Corpus Christi Crime Control and Prevention District. The foregoing resolution was passed and approved with the following vote: Neal, Colmenero, Cooper, Garrett, Kelly, Kinnison, Noyola and Scott, voting "Aye"; Chesney was absent. Mayor Neal opened discussion on Item 15 regarding the food and beverages contract with Centerplate for the new arena and for the convention center. Assistant City Manager Margie Rose provided a brief history on the contract to date. She said in March 2003, staff issued a Request for Proposal for food and beverage services for the new arena and the convention center, and selected Centerplate as the best qualified firm. On August 16, 2003, she said the Council authorized the city manager to enter into negotiations with Centerplate. During the meeting, Ms. Rose said the Council directed staff to meet with the local caterers to discuss the proposed contract. In October 2003, staff met with local caterers. While discussion occurred during the meeting about general issues related to the proposed agreement, staff agreed to meet with the local caterers again at some future date. On June 17, 2004, staff again met with local caterers to discuss the proposed Centerplate contract and to also discuss policies and procedures. She commented that copies of the both the proposed agreement and proposed policies were submitted to the caterers before the meeting. Ms. Rose said the goal was to discuss the policies and answer the caterers' questions before bringing the agreement to the Council, which staff feels they have accomplished. Minutes - Regular Council Meeting June 22, 2004 - Page 9 City Manager Noe added that the agreement was similar to other agreements at the convention center where a fee is paid to the company managing operations, but the city is responsible for the expenses and receives the revenues. He said food and beverage catering remained open to local companies, and the policies and procedures reflected that agreement. Mr. Kinnison asked if the arena was going to have a food court area, and if so, were local food vendors going to be given the opportunity to participate. Mr. Michael Baker with Centerplate said his company was in the beginning stages of creating the food court. He said Centerplate would incorporate vendors from the local community, as well as national branded concepts and internal concepts. Mr. Kinnison asked when Centerplate would announce the arena food court vendors. Mr. Baker replied that if today's agreement was approved, Centerplate would expedite the process and hopefully make an announcement in about a month. Several council members commented that there appeared to be little opposition to the Centerplate agreement from local caterers, quite a turnaround from the last Council meeting when it was discussed. There were no comments from the audience. City Secretary Chapa polled the Council for their votes as follows: 15. MOTION NO. 2004-228 Motion authorizing the City Manager or the City Manager's designee to execute an agreement with Service America Corporation, doing business as Centerplate, of Spartanburg, South Carolina to operate and manage the food and beverage services at the new Multi - Purpose Arena, Convention Center and Selena Auditorium. The foregoing motion was passed and approved with the following vote: Neal, Chesney, Colmenero, Cooper, Garrett, Kelly, Kinnison, Noyola and Scott, voting "Aye". Mayor Neal called a brief recess to hold the annual meeting of the city corporations. * * * * * * * * * * * * * The Council returned from recess, and Mayor Neal called for petitions from the audience. Mr. John Nelson, 7125 Cano Lane, spoke regarding his concern that citizens were losing their homes due in part to rising property taxes. Mr. Jack Gordy, 4118 Bray Drive, and Mr. Bill Kopecky, 3609 Topeka, spoke in support of implementing Proposition 13. Mr. Andy Barboza, chairman of the firefighters retirement system, spoke regarding his concern that the city's firefighters are not receiving increases to their pension system commensurate with those being received by city employees this year. * * * * * * * * * * * * * Mayor Neal announced the executive sessions, which were listed on the agenda as follows: Minutes - Regular Council Meeting June 22, 2004 - Page 10 17. Executive session under Texas Government Code Section 551.071 regarding Gerardo Hernandez and Ana Hernandez, Individually and as Representative of the Estate of Saria Hernandez, Deceased vs. City of Corpus Christi, City of Corpus Christi Police Department and Corpus Christi Police Officer Sergio Delgado; Cause No. 03-60985-1, in the County Court at Law No. 1, Nueces County, Texas, with possible discussion and action related thereto in open session. 18. Executive session under Texas Government Code Section 551.071 regarding the use of public rights-of-way and property by pipelines, grants of rights therein, fees therefore, existing revocable easements for pipelines, and related matters, with possible discussion and action related thereto in open session. 19. Executive session under Texas Government Code Section 551.071 regarding the Nueces County - City of Corpus Christi Jail Use Agreement and the City's proposed Detention and Magistration Center, with possible discussion and action related thereto in open session. The Council went into executive session. The Council returned from executive session and the following motions were passed with the following vote: 18.a. MOTION NO. 2004-229 Motion authorizing the City Manager to execute a professional services agreement with David Williams, Pipeline Compliance America, Victoria, Texas, to identify pipelines located within City's rights-of-way, utility easements, and other City properties for use of the City's emergency management program and collection of fees for use of City's rights-of-way, utility easements, and other City properties, subject to certification of funds. The foregoing motion was passed and approved with the following vote: Neal, Chesney, Cooper, Garrett, Kelly, Kinnison, Noyola and Scott, voting "Aye"; Colmenero was absent. Minutes - Regular Council Meeting June 22, 2004 - Page 11 18.b. MOTION NO. 2004-230 Motion authorizing the City Manager and the City's attorneys to take the following actions: (1) Revoke or terminate revocable easements and use privilege agreements with pipeline companies that use or occupy City's rights-of-way, utility easements, and other City properties without adequate compensation to the City. (2) Meet with the Port Industries of Corpus Christi and pipeline industry to explain basis for City's action and the need to develop fair and equitable annual fees for use of City's rights-of-way, utility easements, and other properties. (3) Attempt to reach long term settlement agreements with the pipeline companies for prior and on-going use of City's rights-of-way, utility easements, and other properties. The foregoing motion was passed and approved with the following vote: Neal, Chesney, Cooper, Garrett, Kelly, Kinnison, Noyola and Scott, voting "Aye"; Colmenero was absent. * * * * * * * * * * * * * Mayor Neal referred to Item 12, a presentation on the preliminary recommended Bond 2004 program. City Manager Noe briefly reviewed the Council's direction on that bond issue to date. During the Council retreat on May 4, 2004, the Council discussed the general strategy of looking at a $100 million bond issue and reducing it to $90 million. Of the $90 million, $70 million would be dedicated to street projects and would not necessitate a tax increase. The $20 million balance would be dedicated to other types of improvements, and would represent an approximately two -cent tax increase. Since the May retreat, City Manager Noe said staff had been refining the Neighborhood Streets portion of the proposed street projects. In addition, Mr. Noe said the Council has introduced a number of other issues and requests for additional work. City Manager Noe stated that City Engineer Angel Escobar would review the proposed $90 million package for the Council's discussion today, and Mr. Jeff Leuschel, bond counsel, would discuss ways to structure the ballot propositions to meet the Council's objectives. Council Member Chesney interjected by saying that he was concerned about presenting any bond proposal that would require a tax increase in the current climate. He suggested a $70 million bond proposal that would include street projects as well as other projects because it would not require a tax increase. He also suggested that the Council consider delaying the bond election until April 2005 because it may provide more opportunities to inform the public. Mr. Kelly stated that he has always been in favor of a smaller bond issue that would not require a tax increase. He said he was strongly in favor of the Northwest library project, and thus could not support a $70 million bond issue that did not include other projects besides streets. Finally, he said he was not opposed to the November election date. Mr. Kinnison remarked that staff used a three percent growth assumption when estimating Minutes - Regular Council Meeting June 22, 2004 - Page 12 the size of the bond issue the city could propose without a tax increase. He said that current conditions seem to indicate that the city was growing closer to a four percent rate now. He asked how a four percent growth assumption would change staffs estimates. Assistant City Manager Mark McDaniel replied that the estimated two -cent tax increase for a $20 million bond issue would decrease to a 1.5 -cent increase at best. Or, he said the $70 million bond issue could be increased slightly to $75 million without a tax increase. Finally, Mr. Kinnison said he preferred the November election date. Mr. Kinnison asked for information on how the bond propositions could be structured. Mr. Jeff Leuschel with McCall Parkhust and Horton, bond counsel, first discussed the legalities of how to word a bond proposition. He said the law has evolved into a "singleness of purpose" doctrine. Thus, he said the wording of the proposition depended on the types of projects in the package, rather than a "tax increase" versus a "non -tax increase" package. He said, for example, that there could be a streets proposition, a park and recreation proposition, and/or a police station proposition, but a proposition co -mingling the projects was not allowed. Mr. Kinnison asked if the city could have three separate propositions requiring three separate votes that, if approved, would mean no tax increase. Mr. Leuschel answered affirmatively, saying that the City of Dallas used a similar approach in their recent bond election. He said, however, that the City of Dallas did not specify that if the voter approved Proposition "X", the result would be no tax increase. If there were several propositions on the ballot, he said there was no way the city could guarantee the end result since there was a potential to "mix and match" propositions. Mr. Kinnison also stated that he was not convinced that the current climate would not support a tax increase. He said he wanted to remain open-minded at this point until the Council narrows down the project list. He stated that he was not opposed to giving the voters the opportunity to vote on a small tax increase if he felt the proposed projects were truly needed. Mr. Scott said he was in favor of the November election date. Regarding the $70 million bond issue, he said if the Council was considering reducing the number of street projects to accommodate other projects, then he would request that none of the District 4 street projects be removed. In addition, he said he was not prepared to eliminate the tax increase option today. He was not opposed to allowing the voters to decide whether they wanted projects which may require a tax increase. Mr. Noyola spoke in favor of the November election date. He also spoke in favor of allowing the voters decide whether or not to increase taxes to pay for certain projects. Finally, Mr. Noyola said he supported the $90 million proposed bond package. Mr. Colmenero expressed his concern about how the city would educate the voters on each of the different propositions and whether a vote in favor could result in a tax increase. City Manager Noe replied that staff has been waiting for Council direction on how they would like to structure the ballots. In the past, the Council has wanted to provide the voters with multiple options, so staff has operated on that assumption. Mr. Leuschel added that other cities have offered the voters information packets with general descriptions of the projects. City Manager Noe stated that the city used a similar information packet for Bond 2000, and once the bond package was finalized, staff could produce a similar packet. Mr. Colmenero asked if the city could use a different color ballot for this election. Mr. Leuschel said staff could look into it. Finally, Mr. Colmenero thanked staff Minutes - Regular Council Meeting June 22, 2004 - Page 13 for their work, and said he was in support of the proposed package. Mr. Garrett stated that he was also in favor of the November election date. He said he did not support any proposed package that would require a tax increase, but he felt the voters should be allowed to decide. He preferred offering a $70 million package that would include street projects, the new Southside library, the Northwest library extension, and a fire station. Then, he said the voters could be offered other projects from which to choose from, with the understanding that these projects would result in a tax increase if approved. Mr. Kinnison pointed out that since the proposed $70 million bond package did not include utilities, if it was approved, it would result in a three percent utility rate increase (one percent per year over three years) to pay for utility work. Assistant City Manager McDaniel stated that this would amount to an approximately 60 -cent increase per month. Mayor Neal stated that he preferred a November election date. He also said it would be difficult to pull any projects from the $90 million package because there were large constituencies in favor of many of the projects (e.g. bayfront development and H.E.B. tennis center). He thought the community should be given the opportunity to vote on these projects. City Engineer Escobar briefed the Council on the preliminary recommended Bond 2004 program. He highlighted a number of projects that were not part of the original $100 million package, and have since been added. The street projects are as follows: Greenwood Drive Phase 1 (Gollihar to South Staples) - $2.76 million; Laguna Shores Road from Graham to Hustlin' Hornet - $3.4 million; ROW/Access Development for Padre/Mustang Islands - $1.2 million; Greenwood Dr. Phase 2 - Horne to Gollihar - $1.8 million; and Westpoint - Columbia to Greenwood - $920,000. Regarding the park and recreation projects, he said a neighborhood parks improvements project was added at an estimated cost of $500,000, and a windsports park improvements project in South Cole Park for approximately $100,000. Finally, he said a Padre Island aesthetic development participation project was added at approximately $150,000. He noted that TxDOT has offered to contribute an additional $150,000 for these improvements. City Engineer Escobar also briefed the Council on the revised neighborhood streets reconstruction project. He said the project included the following street clusters: Riverside area (behind Calallen high school) - $856,000; 2 - Nueces Bay/Buddy Lawrence area - $786,000; 3 - South Port/Greenwood Area - $2,025,000; 4 - Manshiem/Sunnybrook area - $1,473,000; 5 - Holly / Kostoryz area - $1,762,000; 6 - Alameda/Reid area - $1,881,000; and 7 - Nile area - $645,000. The total project cost was an estimated $9,428,000. He commented that clusters 4 and 6 were being recommended to optimize funding due to the Council -approved CIP drainage projects located in these areas. Mr. Kinnison asked staff to pursue extending the option to purchase the land for the police training facility. He also stated that he would consider removing the police impound lot project and the deferred maintenance project from the packages. He spoke in favor of including the new Southside library project in the $90 proposed bond package, and he asked staff to pursue this. Mr. Scott spoke in support of the Laguna Shores project, Padre Island access acquisition project, and the improvements to Billish Park. Minutes - Regular Council Meeting June 22, 2004 - Page 14 Mr. Colmenero asked staff to research funding options for the "Harbor Place" concept the Convention and Visitors Bureau had presented at a previous Council meeting to develop the Corpus Christi Beach area. Mayor Neal asked staff to look at structuring the bond packages to include an option that would result in a tax increase and one that would not result in a tax increase. Council members then asked questions about specific projects. Mr. Kinnison remarked that the November ballot would include the Bond 2004 proposal, charter amendments, and the Proposition 13 petition. He questioned the wisdom of having all these items on the ballot. He suggested that perhaps the charter amendments could be postponed to the April election. Mayor Neal said he would not be opposed to moving the charter amendments to the April election. Mayor Neal asked what the balance of the schedule was. City Manager Noe replied that the plan was to have a public hearing on July 13. Mayor Neal asked if the public hearing could be moved to July 20. City Secretary Chapa replied that the Council had until the last meeting in July to make their decision. Mayor Neal stated that he did not want to hold the public meeting until the Council had made their final decision on the proposed bond issue. He asked staff to refine the proposals and present them to the Council next week. * * * * * * * * * * * * * Mayor Neal referred to Item 13, a special budget presentation providing an overview of proposed FY 2004-2005 special revenue, internal service, and debt service funds budgets. Assistant City Manager McDaniel began by showing a chart detailing the expenditures by fund. He commented that the combined funds totaled $33.7 million, with the largest fund being the hotel occupancy tax fund at $9.2 million, or 27 percent. Mr. McDaniel discussed the hotel tax and visitors facilities funds together since they were so closely related. He commented that the majority of the revenues (89 percent) for the visitors facilities fund were taken from the hotel occupancy tax fund. In addition, he said funds were being transferred into the arena fund to cover first-year start-up costs. Regarding expenditures for the visitors facility fund, he noted $700,000 was being taken from the arena fund for start-up costs. Regarding hotel occupancy tax fund expenditures, he said the largest expenditure was for the Convention and Visitors Bureau (CVB) promotions (38 percent). He commented that a significant portion of the fund (14 percent) was spent on beach services, approximately $1 million. Mr. McDaniel covered a number of fiscal issues affecting the visitors facilities fund. He remarked that this was a year of transitions for these funds. First, he said the city would begin contracting for the first full year ofthe operation and maintenance ofthe new American Bank Center and the expanded convention center, including a separate catering contract. He said the use of hotel occupancy tax funds was expected to continue until the city knew what the costs would be from year to year. He also noted that a portion of arena funds would be used to cover initial start-up costs. Finally, Mr. McDaniel stated that the coliseum would be used in its current capacity until November Minutes - Regular Council Meeting June 22, 2004 - Page 15 Mayor Neal commented that there was a great deal of concern about the amount of funding available to promote the new arena and expanded convention center over the next two to three years. He suggested postponing the approximately $250,000 debt payment on the Columbus Ships that was currently being taken out of the CVB's allocation for three years, and then using these funds for arena and convention center promotion. Mr. Scott remarked that any additional revenue from ad valorem taxes could also be used to relieve the CVB fund from certain payments for landscaping and the maintenance of Heritage Park, for example, and reallocating those revenues for promotion. Mr. Kinnison stated that he had suggested to several members of the CVB board that they might consider adding a half -cent to one -cent increase in the hotel occupancy tax, pending approval by the legislature. The additional revenues could then be dedicated strictly for CVB marketing and promotion. He also suggested reallocating a line item for a $50,000 increase in funding to the South Texas institute of the Arts to CVB promotion and marketing efforts. Mayor Neal asked staff to provide the Council with a number of options for increasing funds for CVB marketing and promotion. Regarding the hotel occupancy tax fund receipts, Mr. McDaniel stated that staffs projections were based on the following assumptions: 4.65 percent growth on the seven percent tax for the calendar year; and 3.5 growth for FY 2004-05. He noted that the portion of the receipts earned from taxpayers in annexed areas on the island has not grown significantly since 2002, but the city's balance has grown. Mr. McDaniel discussed a number of hotel occupancy tax fund fiscal issues. He stated that the budget included a payment to the CVB per the current contract, plus an early payout of the American Bowling Conference incentive; an increase for beach maintenance funding; and the same funding level for contributions to the arts/historical venues for the promotion of tourism. The next special revenue fund was the development services fund. He said the fund was still being subsidized by the general fund (36 percent). Building permits comprised the largest source of revenue at 20 percent, and he said this fund was up by $80,000 compared to budget this year. Regarding expenditures, he said inspections comprised the largest portion of the budget at 42 percent. Fiscal issues for the development services fund included the following items: improved building permit activity; reduced general fund subsidy; and enhanced E -services and computer support. Mr. McDaniel then discussed the five funds comprising the other special revenue funds, which were primarily funded through one-eighth cent sales tax funds, as follows: Crime Control and Prevention District sales tax (22 percent); Reinvestment Zone No. 2 taxes (4 percent); seawall sales tax (25 percent); business and job development sales tax (24 percent); and the arena sales tax (25 percent). Regarding expenditures, he noted that the arena and seawall tax fund expenditures were comprised almost entirely of debt payments. In addition, he said the Crime Control and Prevention District tax fund expenditures were exceeding revenues by four percent, but the board was working on a plan to address this issue. Finally, he commented that the baseball stadium reserve fund was beginning to expend funds towards the stadium project. Fiscal issues for those funds were as follows: termination of Reinvestment Zone No. 1; debt service for Reinvestment Zone No. 2 (Packery Channel); Crime Control and Prevention District fund budgeted per Board approval; continued debt service for the arena, seawall, and stadium projects; and continued funding for the creation of jobs through business incentives and affordable housing from the 4A Board fund. Minutes - Regular Council Meeting June 22, 2004 - Page 16 The next category of funds were the internal service funds, comprised of the risk management fund and the internal services fund, which support other city operations on a cost basis. He explained that the risk management fund comprised 50 percent of this fund, or $23 million. Regarding the risk management fund, Mr. McDaniel stated that the cost/premium increases in the fund recommended through the actuary study were included in the budget. He also commented that this fund continued to see positive fiscal trends. Regarding the municipal information services (MIS) fund, he said funds were budgeted for maintenance and upgrades for enterprise systems, the AMR/WiFi initiative, and Phase II of the call center implementation. Finally, regarding the maintenance services fund, he noted that there was a decrease in capital but increases for parts and fuel. Mr. McDaniel then discussed the debt service funds, comprised of the following funds: general (41 percent); arena (5 percent); stadium (4 percent); TIF/RIZ #2 (1 percent); utility (40 percent); airport (4 percent); and seawall (5 percent). He referred to a graph depicting the city's combined general long-term debt projections from FY 2004-05 to FY 2022-23. He noted that the debt decreased substantially in FY 2008-09, and staff was working with the city's financial advisor to prevent a tax increase in the early years if Bond 2004 is voter -approved. He also referred to a graph showing the combined utility system long-term debt, saying that the system was fairly stable through FY 2009-10. Finally, he discussed pending issues/bonds in the debt service funds. First, he noted that the new COs for landfill improvements and the general obligation funding had been authorized and were pending. In addition, the commercial paper refunding and the Packery Channel final issue were scheduled for authorization on July 13. Lastly, he said the Bond 2004 was scheduled for the November election and bond issuance in March 2005. In conclusion, Mr. McDaniel reviewed the balance of the budget schedule. He said the budget public hearing was scheduled on June 29, and the first and second readings of the budget authorization ordinance were scheduled for July 13 and July 20. He stated, however, that the second reading may be delayed to July 27 if the city did not receive the certified roll by July 20. The Council then asked a number of questions. * * * * * * * * * * * * * Mayor Neal called for the City Manager's report. City Manager Noe reported that the fifth and final Neighborhood Improvement Project was scheduled to begin in the Flour Bluff area tomorrow evening at 6:00 p.m. at the Small World pre-school. He announced that the city has received a "storm -ready city" designation from the National Weather Service. In addition, he said for the next seven to ten days, sections of Airline Road would be closed for emergency utility repairs associated with the recent street cave-in. Finally, he stated that the following items were scheduled for the June 29 meeting: public hearing for the operating budget and a presentation of the Bayfront Master Plan. Mayor Neal called for Council concerns and reports. Referring to Item 19, Mr. Scott made the following motion, seconded by Mr. Garrett. City Secretary Chapa polled the Council for their votes as follows: Minutes - Regular Council Meeting June 22, 2004 - Page 17 19. MOTION NO. 2004-231 Motion authorizing the Mayor to convey to Nueces County that the City is rejecting their last offer regarding the City/County Jail Use Agreement and informing them that the City's last offer dated May 25, 2004 remains in effect through June 30, 2004. The foregoing motion was passed and approved with the following vote: Neal, Colmenero, Garrett, Kelly, Kinnison, Noyola and Scott, voting "Aye"; Chesney and Cooper were absent. Mr. Scott also mentioned a problem with a street near the catholic church on the Island. City Manager Noe replied that he would look into the matter. Mr. Kinnison announced that the next Flicks in the City event would take place on Saturday night, featuring a 50's theme. Mr. Noyola asked for an update regarding his inquiry about school -zone flashing lights on Bear Lane. City Engineer Escobar replied that he would provide an update later. Mr. Garrett asked Mr. Escobar to look into the halt on construction for the McArdle Road project from Everhart to Padre Staples Mall. There being no further business to come before the Council, Mayor Neal adjourned the Council meeting at 3:57 p.m. on June 22, 2004. * * * * * * * * * * * * *