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09/28/2006-CC-Minutes-SpecialMINUTES: CITY COUNCIL SPECIAL CALLED MEETING SEPTEMBER 28, 2006 PRESENT: Mayor Joe Higgs, Councilman Robert Patton, Councilman Andy Garza, Councilman Glenn Ervin, Councilman Mike James, Councilman Walker OTHERS PRESENT: City Manager Jack Smith, City Secretary/Assistant City Manager, Rose Chavez, Jimmy Evans and Kim Cox. 1. Mayor Higgs called meeting to order. 2. Consider and Possible Action on Ordinance #09-16-06 Adopting Tax Rate for Fiscal Year 2006/2007, City Manager addressed this item and advised that the budget reflects the tax rate of .59046 which is the rollback. Discussion followed regarding last year's tax rate. Motion made by Councilman James to adopt Ordinance #09-16-06 Adopting Tax Rate for Fiscal Year 2006/2007. Seconded by Councilman Garza. Motion carried 44. Councilman Ervin voted no. 3. Consider and Possible Action on Ordinance #0944-06 Amending Sewer Service Rates. Discussion concerning the reason this item was placed on the agenda, since it had been turned down at the last meeting. City Secretary advised that in the past, items that have failed have been brought back for consideration by the City Council. Prior to placing items on the agenda, the Mayor and two City Council members gave authorization. City Secretary continued to explain the debt of the 2006 issue. The payment this year is $599,000. The budget reflects the sewer increase to offset that debt. The increase was discussed at a workshop and comparisons were addressed. The City Secretary advised that the City is experiencing growth and growth causes improvements to be made, and that creates debt. The cost to a customer is about $60.00 a year and possibly less than that if the maximum is not reached every month. Councilman Garza asked how much reserve did the increase generate. The City Manager advised that on the test run the increase generated about $220,000100. Councilman Pattows concern was that the increase on the tax Ievy and the sewer rate does impact citizens. Councilman Ervin expressed that he felt the City is impacting the citizens with increases in every angle. He indicated that there are more roof tops and it should be an offset. He felt like the City should raise one or the other. The budget was not in balance due to the retirement benefits which were increased at the last City Council meeting and was not reflected in the budget. Councilman Ervin emphasized that it was also indicated that the expense was to come from the interest from the bond funds that were not included in the budget. City Secretary advised that the City Manager did clarify this at the last meeting. The intent was that the interest on the bonds would offset any capital improvement project on water, sewer, electric or streets in the regular budget. This month the interest earned was $32,292. This would allow amendments to the budget for the increase since these expenditures would not be made. City Secretary expressed the following concerns concerning the sewer rate increase. There is the engineering contract for one million to Carter & Burgess on the new sewer plant. There is also a capital improvement project for a sewer line that ties West of I- 35. Both these projects are to be funded from these reserves. The growth has slowed down some; however, the water and sewer capital reserves are not getting as much revenues from tap fees. She also indicated that consideration has to be given to all the debt the City has which is the 94, 2005 and 2006 Certificates of Obligation and the 96, 99, 2002 and 2006 Revenue Bond Issues. City Secretary emphasized that the debt tax rate of 0.15721 is the obligation of all the debt. In the original calculations of the tax rate, staff used $137,000 as the debt on the 2006 Bond Issue. This was a conservative figure to keep the maintenance and operation tax rate reasonable. Staff has obligated the rest of the debt from the Enterprise fund. City Manager indicated there are two or three issues to be considered. In the impact fees of $2,000, the City was to use half of the reserves on any project on sewer and water improvements. The other half was to be paid by the City. The City has never done this and has utilized all the funds for improvements. The other item is that the 2006 Bond issue was to repair, replace and improve the areas of town that citizens have paid taxes for a long time. Those areas never had any upgrades. The City has an obligation to pay debt and consideration must be utilized to offset the increase. Discussion on the tap fees utilized as impact fees for capital improvement projects. Councilman Garza expressed a concern on the revenues reflected in this year's budget for tap fees. The growth has slowed down and he feels the revenues will not be there next budget year. City Manager advised that expenses would then be cut. Discussion included that the tap fees were comparable to other cities as verified by the Impact Fee Study. Discussion concerning ambulance service and the impact on the budget. Councilman Garza expressed that he still has a concern on the fees for engineers on the new sewer plant. He indicated those fees should have been researched on whether this cost was justified. City Manager advised that before the contract was brought to the Council, he called Upper Trinity since they use contract engineers on bigger jobs. He visited with Tom Snyder, resident engineer, and asked him what is the percentage that engineers charge for projects. Mr. Snyder advised the average cost is about 12 to 14% of the total cost of the project. Carter & Burgess' calculation was 9%. Councilman Garza emphasized that he would have rather seen proposals. In the past, the City Council has been concerned in cutting expenses including janitorial service. He would have liked to have seen actual numbers on different proposals to compare costs. It could be that the fees were in line; however, there is nothing to compare. Councilman Walker made the motion to accept and pass Ordinance #09-14-06 - Amending Sewer Rates. Seconded by Councilman James. Motion carried 3-2. Voted yes -Councilman James, Councilman Walker and Councilman Garza Voted no -Councilman Patton and Councilman Ervin 4. Consider and Possible Action on Ordinance #09-15-06 Adopting Budget for Fiscal Year 2006/2007. Motion made by Councilman Ervin to adopt the budget, Ordinance #09-15-06. Seconded by Councilman James. Motion carried unanimously. S. Adjourned. ATTEST: Rose Chavez �•�1111111111'��