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05/24/2007-CC-Minutes-SpecialMINUTES: CITY COUNCIL - SPECIAL CALLED MAY 249 2007 PRESENT: Mayor Joe Higgs, Councilman Muir, Councilman Mike Walker, Councilman Patton, Councilman Ervin, Councilman Garza OTHERS PRESENT: City Secretary/Assistant City Manager Rose Chavez, Administrative Secretary Tani Taber, Economic Development Director Cecile Carson, Rod Zielke, Russell Martin, Chris Hartung 1. Call Meeting to Order, Invocation, Pledge of Allegiance. Mayor Higgs called meeting to order led Invocation which was followed by Councilman Patton leading the Pledge of Allegiance. 2. Discuss and Possible Action on Service Agreement with John Baines, C.P.A. Concerning Utility Audit. City Secretary advised that Mr. John Baines met with Paula and herself on Tuesday. He also visited with Mike Prater that same day. He obtained information that he needed on the receivables, ordinances and billings from Brazos. During the meeting with Mr. Baines, they discussed the Brazos bill that had a discrepancy between what they billed the City during the December 15"' to January 15"' billing cycle, which was the month that everyone experience the high usage. The difference in what Brazos billed was over a million kwh that was unaccounted for. City Secretary also explained to the Council how the City bills customers and the formula that is used to calculate the recovery factor. Lengthy discussion concerning the discrepancy. City Secretary advised that Brazos bills the city at a rate of $0.0623570 per kwh. The city's residential rate is $0.07616356 The city's profit margin on this rate is $0.0138065. Line loss was discussed. The accuracy of the technology on the new meters was also discussed. Councilman Garza inquired if a test had been done to check the meter from Brazos. City Secretary indicated she was not aware that it had been done. Lengthy discussion concerning City buildings, if they are metered correctly, and the street lights and how those are considered in the calculations. City Secretary indicated it is her understanding that all city buildings are metered. Councilman Ervin asked if Mr. Baines could come up with a formula to determine what the percentage of line loss is based on the number of miles the city serves. Discussed was that this was out of Mr. Baines' expertise. The council discussed the different phases in his engagement letter. Councilman Ervin made motion to approve the service agreement as presented. Motion seconded by Councilman Garza. Councilman Muir indicated that it is not necessary to tell Mr. Baines to cut out some of the phases. He is suggesting that council be allowed an opportunity to put them in order. He is curious on Mr. Baines' findings on the first phases before he is authorized to proceed with the rest of the phases. Councilman Ervin and Councilman Garza both expressed that Mr. Baines has presented a contract and council is trying to change it by eliminating or taking phases out of the examination. Councilman Walker expressed that he would like the ability to stop Mr. Baines without having to go through the entire examination. Councilman Walker gave an example, that if Mike Prater could conduct his own investigation and come up with a reasonable explanation, then at that point he wants the flexibility to stop Mr. Baines from pursing further. Councilman Muir indicated that staff should report back to council on any significant findings to allow council to review the completion of the last phases. Motion was amended by Councilman Ervin and seconded by Councilman Garza that the service agreement was accepted as presented with the option to opt out at any phase. Motion carried unanimously. Staff instructed to contact Mr. Baines on the possibility of not completing all the phases of the examination based on his findings at each phase. 3. Consider and Possible Action on Waters Consulting Group -Concerning Search for New City Manager. Chris Hartung with the Waters Group was present to discuss the status of the search for the new City Manager. Mayor convened City Council into Executive Session at 7:18 p.m. Mayor reconvened City Council into regular session at 8:03 p.m. Motion was made by Councilman Muir for Mr. Hartung to continue the search for a City Manager as discussed in executive session. Motion was seconded by Councilman Patton. Motion carried unanimously. 4. Discussion on Palomino Bay Development. Item tabled for June 4, City Council meeting. 5. Meeting Adjourned.