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07 City Council (6/09/03)MINUTES OF THE REGULAR MEETING OF THE CITY COUNCIL June 9, 2003 The City Council of the City of Paris met in regular session, Monday, June 9, 2003, 6:00 P.M. at Paris Junior College, Applied Technology Building, Room 1208, 2400 Clarksville Street, Paris, Texas. Mayor Curtis Fendley called the meeting to order with the following Council Members present: Jim Bell, Jay Guest, Francine Neeley, Willie Weekly, Jr., and Benny Plata. Also present were City Manager Michael E. Malone, City Attorney Larry W. Schenk, and City Clerk Mattie Cunningham. Invocation was given by Richard Hart with the Christian Fellowship Church. Mayor Fendley announced that the City Council had been furnished minutes of previous meetings and asked if there were any corrections or additions. There being none, a motion was made by Councilman Guest, seconded by Councilwoman Neeley, for approval of the minutes. The motion carried 6 ayes, 0 nays. Mayor Fendley stated that the next agenda item was receipt of reports from committees, boards, and commissions. The minutes from the Airport Advisory Board, Board of Commissioners of the Housing Authority of the City of Paris, Historic Preservation Commission, Main Street Advisory Board, Paris Economic Development Corporation, and the City Council Water and Sewer Subcommittee had been presented with no action being required. A motion was made by Councilman Bell, seconded by Councilman Plata, for acceptance of the minutes and reports. The motion carried 6 ayes, 0 nays. Resolution No. 2003-101, a resolution denying the request of TXU (Lone Star Gas Company) for a change of rates within the City of Paris, Texas, and joining a consortium of cities in opposing the proposed rate increase in an administrative proceeding before the Texas Railroad Commission, was presented. A motion was made by Councilman Bell, seconded by Councilman Weekly, for approval of the resolution. The motion carried 6 ayes, 0 nays. Resolution No. 2003-102, a resolution of the City Council of the City of Paris, Regular City Council Meeting June 9,2003 Page 2 Paris, Texas, approving an incentive agreement between the Paris Economic Development Corporation and C-Tech, Inc.; approving financing obtained by the Paris Economic Development Corporation to fund the Incentive Agreement, was presented. A motion was made by Councilman Guest, seconded by Councilman Plata, for approval of the resolution. The motion carried 6 ayes, 0 nays. Resolution No. 2003-103, a resolution of the City Council of the City of Paris, Paris, Texas, assigning the authority to issue Single Family Mortgage Revenue Bonds to Lamar County as a Sponsoring Political Subdivision of the Northeast Texas Housing Finance Corporation, was presented. A motion was made by Councilwoman Neeley, seconded by Councilman Guest, for approval of the resolution. The motion carried 7 ayes, 0 nays. Resolution No. 2003-104, authorizing the submission of a grant application to the Certified Local Government Division of the Texas Historical Commission to receive grant funds to partially fund the completion of an updated Historic Resource Survey of the City of Paris; authorizing and conditioning the expenditure of funds; accepting said grant award upon notice thereof; authorizing the execution of any and all documents necessary for acceptance and implementation of said grant upon notice thereof, was presented. A motion was made by Councilman Bell, seconded by Councilwoman Neeley, for approval of the resolution. The motion carried 6 ayes, 0 nays. City Manager Malone presented a resolution awarding the bid and authorizing the execution of a contract for the furnishing and delivery of labor, materials, and equipment and for performing all work required for grounds maintenance (mowing) on City of Paris parks and facilities. Councilman Bell asked if the Director of Public Works had interviewed these people. Terry Townsend, Director of Public Works, came forward telling the City Council that if Councilman Bell was talking about the winning bidder, yes, they know him very well. Councilman Bell questioned if Mr. Townsend knew their Regular City Council Meeting June 9,2003 Page 3 equipment and knew that they can perform the job. Councilman Bell said the reason for asking is because the city awarded a bid to someone who could not perform last time. Mr. Townsend said that was correct. They had checked references and did due process to hire them; they were surprised when the contractor dropped out. Councilwoman Neeley asked if this contractor had done lawn service before since their name is Good Tree Service. Mr. Townsend stated that when Jackie Good submitted the bid, that was a question they asked. They also asked for references for commercial lawn maintenance and these references were checked. Mayor Fendley pointed out that the city would still have a way out, just like there is in the previous contract, if the work is not performed. Greg Glover, second to low bidder, presented a copy of his company's resume which consisted of their commercial experience and a list of equipment. Councilman Bell asked if Mr. Good was in the audience and he was not present. Mayor Fendley called for additional questions, comments, or a motion on the resolution. A motion was made by Councilman Bell to table action on the resolution until next Monday night and to ask Mr. Good to appear and bring his references and things that were received by the other bidder. The motion was seconded by Councilwoman Neeley and carried 6 ayes, 0 nays. Resolution No. 2003-105, approving and authorizing the execution of contract change notice No. 03 (Attachment No. 05A) to the contract for Public Health Services, TDH Document No. 7560022067-2003; making other findings and provisions related to the subject, was presented. A motion was made by Councilwoman Neeley, seconded by Councilman Weekly, for approval of the resolution. The motion carried 6 ayes, 0 nays. Resolution No. 2003-106, approving the sale of tax delinquent property described as Lot 15, City Block 175-A, being number 1136 Van Zandt Street, was presented. A motion was made by Councilman Guest, seconded by Councilman Regular City Council Meeting June 9,2003 Page 4 Bell, for approval of the resolution. The motion carried 6 ayes, 0 nays. City Manager Malone presented a resolution approving the sale of tax delinquent property described as Lot 6, City Block 355, being number 2015 Loop 286 N.W. Councilman Bell stated that it was his understanding that Lamar County had turned this down again. City Manager Malone advised that he was told that they did turn it down and that Lamar County also indicated that they would donate it to the Girl Scouts Council. Councilwoman Neeley requested that she be excused from the meeting due to a conflict of interest. A motion was made by Councilman Bell, seconded by Councilman Guest, to excuse Councilwoman Neeley from the council meeting. The motion carried 6 ayes, 0 nays. H. B. Roberts, 2121 Bonham Street, appeared before the City Council, stating that he had been represented by someone else in the past regarding this property. He said that they had already talked to this Council before trying to get this passed and that the Council found the first bid was low and disapproved because of the bid. He said that they were not told why they did not get the bid or why it was not approved. His representative had gone through all of the research and procedures in order to bid on this property and he did it properly. Mr. Roberts said this property has been vacant for 20 years and he respectfully requested the City Council approve the resolution. Councilman Bell asked the City Attorney to explain what good has been done if the city approves the resolution and Lamar County has turned it down. City Attorney Schenk advised that the city had faced that circumstance before and the commissioners can always change their minds as the city councilpersons can change their minds. Until all four taxing entities approve the sale at a stated price, it will not be sold. He said the county can reconsider their position or not. Councilman McCarthy entered the council chambers and assumed his seat at the council table. Regular City Council Meeting June 9,2003 Page 5 Dr. Melissa Stansell, 635 Medalist Drive, came forward and explained that the Girl Scout Executive Director, Connie Stauter, could not be present. Dr. Stansell advised that they did not know until recently that this property was up for tax sale. She said that they have asked for the property and they have placed a bid of $1.00, but it is to be donated for use by the Girl Scout Council for activities for girls. Dr. Stansell said they feel the property is being sold or has been asked to be sold for $15,000.00. The current tax rate for all entities is about $4.00 per one hundred value, and that means $600.00 a year in taxes to be divided between the City of Paris, the two school districts, Paris Junior College, and the Lamar County. Dr. Stansell stated that is not much money to give up to support the girls of Lamar County. She said if these entities are going to do something with the property, they would like to have that opportunity. They have already, with their own money, asked an engineer to go in and look at what is going to have to be done. They will clean this property up to where it is safe for use. Dr. Stansell said the Girl Scouts had no specific plans for this land. In two years their building will be paid for. Then they can expand and provide more activities such as computer programing for the girls and their parents along with more summer activities. She stated that the Girl Scouts in the only organization nationally that really supports girls. Councilman Bell wanted to know if the city had received both bids. City Attorney Schenk asked Dr. Stansell if they had made a formal bid to the attorneys who are handling this matter. Dr. Stansell said according to Connie Stauter they have made a bid. The City Attorney advised that the city has not received the bid. After further discussion, a motion was made by Councilman Weekly to table this item and bring it back at the meeting for Monday, June 16, 2003. The motion was seconded by Councilman Bell and carried 6 ayes, with one member being absent. Councilman Bell requested that city staff research and see if there is another bid and bring that information back to the City Council for further action. Regular City Council Meeting June 9,2003 Page 6 A motion was made by Councilman Guest, seconded by Councilman Weekly, to allow Councilwoman Neeley to return to the council meeting. The motion carried 6 ayes, 0 nays, and Councilwoman Neeley entered the council chambers and assumed her seat at the council table. Mayor Fendley asked that the Council keep tabled Agenda Item No.4-I, a resolution appointing members to the Board of Adjustment, and Agenda Item 4-J, a resolution appointing members to the Paris-Lamar County Board of Health, as the city does not have appointments yet for those boards. A motion was made by Mayor Pro Tem McCarthy to bring from the table a resolution appointing a member to the Traffic Commission. The motion was seconded by Councilman Bell and carried 7 ayes, 0 nays. Resolution No. 2003-007, appointing Jon McFadden as a member of the Traffic Commission of the City of Paris for a term of three (3) years, beginning July 1, 2003, and ending June 30, 2006, was presented. A motion was made by Councilwoman Neeley, seconded by Councilman Bell, for approval of the resolution. The motion carried 7 ayes, 0 nays. Mayor Fendley called for discussion of water and sewer related matters, and at that this time, asked that Councilman Plata give a presentation for the Water & Sewer Subcommittee, which has been meeting for the past few months. Councilman Plata passed out his Proposal I. It was a work schedule for the Water Treatment Plant, Sewer Treatment Plant, and the Lift Stations. It showed the existing number of employees and Mr. Plata's recommendation as to the number of employees for each department. Councilman Plata said they have one supervisor I, one level IV operator, two level III operators, and 5 level II operators for a total 8 employees in the Water Production Division. His recommendation was to go to one supervisor, four shift operators, and one straight day operator for a total of 5 operators. He said that it works without going through all of the proposal. Councilman Plata said he was talking about shift maintenance or shift operator giving a total of four rotating shifts working Regular City Council Meeting June 9,2003 Page 7 12 hours a day. Councilman Plata summarized this proposal as follows: "MONDAY THRU FRIDAY THERE WILL BE THREE MAINTENANCE PERSONNEL AT EACH PLANT. A SUGGESTION WAS MADE THAT BOTH GROUPS COULD HELP EACH OTHER WHEN THE NEED ARISES THERE WILL BE A TOTAL OF 6 PEOPLE AT THE WATER PRODUCTION PLANT MONDAY THRU FRIDAY. THESE CONSIST OF 1 SUPERVISOR, 2 OPERATORS, & 3 MAINTENANCE WORKERS. THERE WILL BE A TOTAL OF 5 PEOPLE AT THE SEWER TREATMENT PLANT MONDAY THRU FRIDAY. THESE CONSIST OF: 1 SUPERVISOR, 1 OPERATOR & 3 MAINTENANCE. THE SHIFT PERSONNEL WOULD HAVE TO WORK 12 HOURS SHIFTS SO AS NOT TO OVERLAP" Councilman Plata said he left the Lift Stations out and they actually have three employees working there and one vacancy that the city keeps all the time. He said he would be cutting two people and move the personnel at the Lift Station Division over to Sewer Maintenance and let the lift stations be maintained by sewer maintenance employees and there will be a total of six maintenance workers. Councilman Plata gave the City Council handouts of the breakdown of the rotating shifts for the Water and Wastewater Division and how it would affect the employees. Councilman Plata told the City Council that the total cut that he is recommending is a total of 13 employees and they are listed as follows: EMPLOYEES DEPARTMENT & TITLE 2 Production Operators - Wastewater Treat. Regular City Council Meeting June 9,2003 Page 8 2 3 1 1 2 1 1 Maintenance Workers- Wastewater Treat. Production Operators - Water Treatment Lift Station Maintenance Worker Maintenance Vacancy - Maintenance Vacancies - Prod. Operator Vacancy- Maintenance Vacancy - Water Treatment Wastewater Treat. Wastewater Treat. Lift Station Councilman Plata advised that these positions would be eliminated from the budget, and going by the current budget and the savings represented that Mr. Malone talked about in the May 15th meeting, the savings are as follows' 13 positions cut from the budget ~ $25,000.00 each 20% benefits cut from budget Money saved from maintenance budget per Malone New vehicle eliminated from budget Money saved from sludge equipment per Malone $325,000. $ 65,000. $ 20,000. $ 13,000. $ 20,000. Total $ 443,000. Councilman Plata said these are recommendations to consider since the city is in a deficit. Mr. Campbell is saying that because of a new rule about back flush water which came down in January that the $40,000.00 for sludge equipment is needed in the budget. Councilman Plata said he did not hear Mr. Campbell say the city was out of compliance. That is why he questioned spending even $20,000.00 on equipment at this time when money is tight. Councilman Plata said the manpower reductions he was recommending are being brought about by comparing other cities' operations to Paris's and also by looking at the weekly work schedule for the employees. On a bi-weekly basis, there are 2 operators at the plant on three days, three operators are there for three days, and one day there are four operators at the plant. There should be a better employee schedule so as not to have personnel overlapping. Councilman Plata asked if two operators are what it takes for three days, why is there a variation Regular City Council Meeting June 9,2003 Page 9 in the other 4 days. Councilman Plata said the breakdowns that he had been provided do not justify as many maintenance personnel as are employed. The maintenance personnel are used to do a lot of mowing and grounds upkeep at both plants. It seems as if the city has two departments doing the same job. This is why the idea of moving four or so people along with the mowing equipment, except for 1 lawnmower and 1 weed eater should suffice for grounds upkeep around the buildings. He said this should enable the city to mow the water treatment fields, wastewater treatment fields, all lift station areas, and a few areas the city has trouble getting to right now. This will also enable the city to have personnel for providing upkeep for the new sports complex and the new police station when completed. This personnel addition could be accomplished by cutting some of the big line items of the budget to accommodate these few people. Councilman Plata said the manpower schedule which he recommended will give a maintenance person, along with an operator or shift, 24 hours a day. The people will have to go to a 12-hour shift, which he knows is not very appealing to some. Once people try this and get 3 or 4 days off per week, it becomes more appealing. Councilman Plata said that Councilwoman Neeley has brought up the suggestion that maintenance personnel from one plant can help out the other when the need arises. Councilman Plata said he suggested that lift station operations move over under sewer maintenance. No one had given him a good enough reason why this will not operate as efficiently as it is now, if not better. He said there are six people in sewer maintenance that can help lift station personnel when needed and lift station personnel can help out in sewer maintenance when there is a need. The lift stations have been attended to very well and the automation that has been installed at all lift stations enables personnel to be reached automatically when a problem arises. Councilman Plata stated that he knew these are not enough cuts to avoid a rate increase, but they do not have to raise it as much as the study indicated. Some Regular City Council Meeting June 9,2003 Page 10 of the citizens of Paris, along with employees of the city, seem to think that he was recommending j ob cuts and other cuts without any type of consideration for anyone. Councilman Plata said he would like for everyone to know that the utmost thoughts in his mind were the taxpayers in this community, industries, businesses, as well as homeowners who have inflated costs every year. Now is the time for municipalities as well as other services providers, to at least attempt to implement cost cutting features to benefit the consumer now and in the future. This will probably seem as if the workload is increasing on a few people, but we have asked this of the firemen and of other departments. When money is tight, the city and businesses alike should look for ways to provide services more efficiently. Councilman Plata gave the City Council a summary of his recommendation as follows: 2. 3. 4. 5. o o o ° Cut 2 production operators at the Wastewater Treatment Plant. Cut 2 maintenance employees at the Wastewater Treatment Plant. Cut 3 production operators at the Water Production Plant. Cut 1 Lift Station maintenance employee. Eliminate 5 vacancies out of Water Productions, Wastewater Treatment, and Lift Station areas in the budget. Move lift station operations out of the Water Production Plant and move it over to Sewer Maintenance. Transfer or hire at least 4 employees in the Parks Department to take care of mowing outlying fields at the Water Production, Wastewater Treatment Plant, all Lift Station areas, Sports Complex and Police Station when everything comes online. Install a 12 hour schedule for workers at both the Wastewater Treatment Plant and the Water Production Plant or at least a comparable schedule where employees do not overlap shifts. Work out specs enabling the city to put operation of the Wastewater Plant and Water Production plant out for bids from private organizations (as chair of the Water Study Committee, I would like to be involved in the spec process and also have council review specs Regular City Council Meeting June 9,2003 Page 11 before bid is let). Mayor Fendley asked if any of the other members of the Committee would like to make any comments. Councilman Weekly advised the City Council that he went out to the Water and Wastewater Plants and he was amazed at some of the things that were going on because he had not been to the plants. He stated that Councilman Plata has worked very hard on this and he has looked at all of the information and as a committee, tried to work together to do the best service for the community. Councilwoman Neeley advised that she would like feedback about privatization from regulatory agencies and other communities that had privatized before the city tries to come up with bid specs and she felt that Councilman Plata was working on gathering that information. Councilman Plata handed out a report that summarized the cities that he had contacted who had privatized their water and waste water systems. Councilman Bell made a motion to proceed with the reports and incorporate the information in the city records so they can be accessed at any future date by the City Council. The motion was seconded by Councilman Weekly and carried 7 ayes, 0 nays. Councilman Plata's reports that he distributed to the City Council are hereby attached to these minutes as Exhibit A. Councilman Bell commended the Water Rate Study Subcommittee for the exhaustive hours that they did on this work and stated that they deserved Council' s thanks. Mayor Fendley announced that the next item on the agenda is a staff report on the water and sewer issues discussed at prior meetings of the Water and Sewer Subcommittee. Regular City Council Meeting June 9,2003 Page 12 City Manager Malone said that today staff had forwarded Item 3F, minutes of the May 15, 2003, Subcommittee Meeting, to council. Since it consists of 40 pages of single space type he knew that Council Members had not had time to review them. He said that many of the recommendations were those of Councilman Plata. The subcommittee had not taken any formal action on any recommendations. These are items that Councilman Plata has brought forward on his own. City Manager Malone advised that staff would defer until the next council meeting so Council Members would have an opportunity to read these minutes. Staff would also furnish council with answers to the Mr. Plata's recommendations. The staff is unanimous in feeling that these recommendations would not be to the benefit of the citizens of Paris and they would be detrimental to the system. The City Manager said he had planned to present a preliminary budget for the water and wastewater departments tonight, but there was a problem with the computer and he asked that the City Council table this item tonight and as soon as finance can get this straightened out, they would bring it back. He said that in the preliminary budget he had recommended cutting three positions: one in the water, one in wastewater and one in lift stations. Those positions are not currently filled. It is not that he thinks the positions are not needed because in the long term he thought they would be needed. But staff is trying to make judicious cuts in the budget. They have been told by the rate consultant that whatever they do with these positions is not going to have any significant impact on the rate. City Manager Malone advised that the rate consultant will be here next week in connection with the Campbell Soup contract and he thinks these issues can be addressed item by item during that visit. He said if City Council chooses to direct these types of changes to be made they will be implemented. He would recommend that council members tour all of the facilities that are being discussed so they can have a better understanding of the responsibility that is placed on the employees. If a member would like a tour he asked them to contact his office for arrangements to be made. City Manager Malone stated that it would be a gross mistake to implement these recommendations that Councilman Plata has brought forward and he did not think Councilman Plata is qualified to make those recommendations either by Regular City Council Meeting June 9,2003 Page 13 education or by experience. He felt that Councilman Plata has had enough opportunity to visit the facilities and understand the workings of these departments and he could not support those recommendations. The City Manager said he can support the fact that Mr. Plata has put in a lot of work and he commends Mr. Plata for his effort and his purpose. City Manager Malone said he did not think that Councilman Plata has a negative point of view. Mr. Plata believes in what he is telling the Council. There are qualified people over the years that have built these departments and qualified people that are operating these departments. There have been many additional duties and much additional equipment that has been installed in these facilities to meet federal and state mandates. One of the most important things they have to be concerned with is the health and safety of our community as well as the health and safety of the employees that work in these environments. These types of cut backs would not enhance the city's position at all in those two areas; therefore he cannot support these cut backs. City Manager Malone advised that they will take what Councilman Plata has presented tonight and prepare a presentation for the City Council for next week. A motion was made by Mayor Pro Tem McCarthy to table Agenda Item 5B, staff reports on water and sewer issues discussed at prior meetings of the Water and Sewer Subcommittee, and Agenda Item No. 5C, receipt of a preliminary 2003- 2004 budget for the water and wastewater departments. The motion was seconded by Councilman Weekly and carried 6 ayes, 0 nays, with Councilwoman Neeley being out of the room. Councilman Plata stated that if the city goes out for proposals for privatization, there is nothing that says the City Council has to accept the proposal. Councilman Plata wanted to know when the City Council could act on going out for proposals. Mayor Fendley felt that there could be discussion during the meeting on Monday, June 16, 2003, since the agenda was being set up to have the water rate come forward. Councilman Guest said this is a separate corporation or entity from the city as far as the budgetary process, and he wanted to know if there was any profit or loss Regular City Council Meeting June 9,2003 Page 14 statement available for this fund such as a balance sheet. Gene Anderson, Director of Finance, said this has all the traditional financial statements that a full business would have and they are all included in the annual audit. He will bring a copy of last year's audited financial statement. Councilman Bell asked if during the presentation of the water rate analysis by Reed and Stowe they showed the fund being short $600,000.00. Mr. Anderson said water rates in Texas are set on a cash basis and there was an indication of a deficit of about that number. The city has been falling behind since the last study because the consumption that was forecasted has never been reached. Consumption has been dropping the entire time and therefore cash has been dropping. Councilman Bell questioned that if we had a shortfall of $600,000.00 and if Councilman Plata's changes were adopted and, in effect, did what he thinks the changes might do, whether we would then be at a shortfall of approximately $200,000.00. Mr. Anderson said that is talking about on any given year, and as he has reported to the City Council in the past, the operating fund of the water and sewer area has a deficit balance of about 1.2 million dollars, currently, because the city has been losing money ever since the city adopted the last rates. That was because consumption has been less than what was anticipated. Mr. Anderson said that unless the rates are increased the deficit will be more like 1.8 million dollars by the end of this fiscal year. He said it is not just a matter of cutting it to the point where it breaks even or also most breaks even, the city has to make up the deficit that they worked themselves into. Mr. Anderson said it was a two-fold problem. Councilman Bell asked that Mr. Anderson bring the Council the balance sheet that shows where this deficit is coming out of the reserve funds. Mr. Anderson advised that the city has a consolidated cash bank account where all money they can legally put in a single bank account, they do. He said that is what has allowed us to keep going because the water and sewer fund can legally be placed in the consolidated cash bank account. This may be a surprise to the new council people, but it is not a surprise to the old council members because they have discussed this problem during the last two budget Regular City Council Meeting June 9,2003 Page 15 workshops. It is a growing problem, but it is two-fold. He said that on any given year the city has to at least break even and the city has to catch up what was lost in the last three years. Mr. Anderson advised that even if you make a significant cut, how the city could avoid a reasonable increase in order to start catching back up to where the city needs to be, because the city's bond covenants on the debt issues they have done, require a certain amount of reserve? One of those requirements is that the operating fund of the water and sewer fund has to have an amount equal to one-sixth of the operating budget of that particular year. That is, if you took the total budget and backed out the capital and debt payment, one- sixth of what is left should be the cash balance in the water and sewer operating account as a minimum. Mr. Anderson said the city has to make up the deficit by getting up to that point or the city will be in violation of the bond covenant, which the city is. Mayor Fendley asked Mr. Anderson how much longer they have on the bond issues and if the issues are staggered. Mr. Anderson said they were staggered. He said for some months they have been monitoring the possibility of refunding two of the current outstanding issues. One is water and sewer related and the other is tax supported. They think they are at a point where they can have significant enough refunding savings to bring that recommendation to the City Council. Mr. Anderson introduced Dan Almond from Southwest Securities to give the City Council a brief presentation that will summarize the savings. In answer to Mr. Fendley's question, Mr. Anderson stated that most of the city's debt is level funding 20 year debt and the city has had issues as recent as the year 2000. Councilman Guest asked Councilwoman Neeley whether she and the other committee member agreed with what Councilman Bell referred to as Councilman Plata recommendations. Councilman Weekly said he agreed in a way and Councilwoman Neeley stated that she had mixed feelings. Councilwoman Neeley advised that Councilman Plata did 99% of the work. She felt there are cuts that can be made to save money, but she did not know if she would be comfortable going that far and that deep. The doubt comes from a lot of the water background that she had and she is afraid of something that the city could Regular City Council Meeting June 9,2003 Page 16 get into, such as being out of compliance. Councilwoman Neeley said she told Councilman Plata that she could never be comfortable with there being only one person at the plants because they are isolated. They talked about that when he made out his schedules and she thought he made sure that there were at least two people at any one time. Councilman Guest asked if there is as model for best practice anywhere concerning this department. Mayor Fendley said he thought there were outside professional people to do this type of study. Mr. Anderson advised that it is hard to compare one city to another. City Manager Malone told the Council that the firm, Freese and Nichols, that does the production study is qualified to do that work and they are the most prestigious firm in the State of Texas. Councilman Guest stated that he highly recommended that they look toward doing this. Herb Campbell, Director of Utilities, advised the City Council that item number nine on the scope of work for Freeze and Nichols requires them to determine the best practices. City Manager Malone pointed out that when the TCEQ people in Tyler were going to train their new inspectors, they did not take them to Tyler. They brought them to Paris to show what a good operation looks like. Councilman Plata said that is why he was asking why the city couldn't go out and let a private company bid this and there is nothing that says the city has to accept the proposal. This would give the city a good indication, if the city was in compliance, and if it comes back and the city is only a $100,000.00 more than what they say they can run the plants for, or $500,000.00 that is alright. He said he would like to go out and make a bid. City Manager Malone said it would take a tremendous amount of staff time to put together the type of information that all these firms would require to make a proposal. Prospective bidders would have questions as to how the city operates and what type equipment the city operates. The City Attorney, Engineering, Mr. Campbell's staff and the City Manager would spend all of their time putting together the information. Councilman Plata said OMI had sent the City Attorney a copy of their standard Regular City Council Meeting June 9,2003 Page 17 contract. Why could the city not go with that contract? Mayor Fendley advised that the City Council has the detailed minutes of the committee when they met, and they will bring Agenda Item 5B and 5C from the table and they will hear the staff' s comments about the Subcommittee's report. We will get the budget and the additional financial information from Mr. Anderson, and then the City Council can talk about all of those issues. Councilwoman Neeley stated that the three new council members need the notebook that has the study done by Reed and Stowe. Councilman Bell said he recalled that several years ago toward the end of the budget year they would rob the water and sewer fund to pay the general fund. At that time the amount was in the area of $300,000.00. Councilman Bell waned to know what amount is projected for this year for the Council to transfer to the City. Councilman Bell said at that time Mr. Malone explained that the amount was to reimburse his time, the attorney's time, the engineer's time. He wanted to know if a project of that amount of money had been made for this year. City Manager Malone advised that this money is for more than just these individual's time. It covers a franchise fee that is charged and paid by the Water and Sewer Fund. There is also an administrative transfer which in many cases is under the percentage that other cities transfer in to their General Fund for the same purpose. City Manager Malone said he did not have that figure handy. Mr. Anderson advised that the projected administrative transfer is $750,000.00. The franchise fee brings that up to about 1.1 million dollars. Mr. Bell stated that the city is going to take a million dollars out of the Water and Sewer Fund and put it into the General Fund for administration and franchise fees. Councilman Bell asked if it was true that if we privatize the water and sewer departments the city would collect the franchise fee but not the administrative Regular City Council Meeting June 9,2003 Page 18 Mr. Anderson said it would depend on what the work the city expected of the contractor. If the company only operates the plants then the city would still be doing the record keeping, taking bid proposals, and other administrative work. Mr. Anderson said City Council would still be responsible for setting the water and sewer rates. Even if a company operates the plants, that is a responsibility that city council does not delegate. City Attorney Schenk advised that was the point he was going to make when Mr. Plata mentioned the model contract that OMI sent to the city. He said there are two issues to consider. First, it is the vendor's contract and he has a problem with adopting whatever they might provide. Second, the city needs to know what level of services the City Council was to bid out. Do you want to bid everything from billing to representing us in front of administrative agencies? Do you want to consider seeking proposals to operate the waste water plant, operate the water plant, maintain the lines, or maintain the lift stations? The City Attorney said that city staff would need to know what City Council wants proposals on and like any other proposal they is going to be some gains and some losses. He said that even if they are going to be operating the two plants, the city is still going to have to have staff to maintain the lines, handle permits, prepare the billing and many other things. Dan Almon with Southwest Securities appeared before the City Council explaining that he is here to give them information on a couple of outstanding bond issues. Currently the Series 1993 and 1994 bond issues could be refunded because interest rates are much lower today. Mr. Almon said he was here to make Council aware of the mechanics and the potential refunding and at the conclusion of his remarks determine if the Council would like for them to go forward and affect that savings. Mr. Almon advised that when they talk about refunding bond issues, it is understood that they are a product of interest rates and the savings are volatile. Bonds are going to change subject to the rates as they change from day to day. He said it will take approximately six to eight weeks to get to market. If the city authorized them to proceed, they will try to Regular City Council Meeting June 9,2003 Page 19 meet with the Council at the regular meeting in August and bring a formal proposal, which the Council will look at in detail and decide to accept or reject the proposal. Mr. Almon advised that for the Council to feel good about Southwest Securities going forward with this endeavor, he had run out the savings report that Mr. Anderson just passed out. This will give City Council ideas to quantify where the savings are today in today' s market. Mr. Almon said this report represents the principal and interest in total of a proposed new bond issue. The proceeds of which would be adequate to pay all the cost of issuance and also pay off the principal and interest of those old bond issues, the 1993 and 1994 series up to the point that you could take them away from holders and cancel those bonds. Mr. Almon said that the 1993 bond can be taken away from holders on December 15, 2003, and the 1994 series can be taken away from holders on December 15, 2004. Mr. Almon advised that once the new refunding bonds are sold and delivered, that money is placed in escrow and invested until those bonds can be taken away from the holders and cancelled. City Attorney Schenk advised that as Agenda Item No. 5C has been tabled because of not having the full amount of information in regard to the budget. This particular presentation was structured to be part of that over all presentation of the budget and that is why they are doing this tonight. He said that since Mr. Almon is here tonight, the balance of the presentation will be done on June 16, 2003, and the council will need to include and incorporate this impact on the budget at that time. City Attorney Schenk suggested bringing that item from the table. A motion was made by Councilman Bell, seconded by Mayor Pro Tem McCarthy, to bring Agenda Item No. 5C, receipt of a preliminary 2003-2004 budget from the water and wastewater departments, from the table. The motion carried 7 ayes, 0 nays. Mr. Almon pointed out from his report that the right hand column represents a period through the year 2015, during which the City of Paris could save approximately $700,000.00 plus dollars. He said that was based on the interest rates, which is shown in the third column from the left under proposed coupon Regular City Council Meeting June 9,2003 Page 20 and that is the net of the cost to issue the bonds. Mr. Almon said they would be selling enough bonds to pay off the outstanding bonds on those two series, the 1993 and 1994, to the early call date plus pay the interest on those bonds until the early call date along with the cost of issuance relating doing the new refunding bond issue. He advised that the debt service on that amount of bonds, which this page is telling us, is still about seven hundred thousand less than the debt service on the bonds that would be refunded. Mr. Almon said when they decided to actually present it to the Council, they thought that they had better back off and put 5 or 10 basis points in the rates as they have two months between now and the time they get to market. They did not want to be unfair representing the city's expectations, but they think that this is a very reasonable representation where the market is today. Mr. Almon told the Council that the rates that he is showing in the third column, within 5 to 10 basis points are today's rates for this type obligation. They would sell their as triple A rated and it would be bank qualified and those rates are where they would be. After further discussion, a motion was made by Councilman Bell to table Agenda Item 5C. The motion was seconded by Councilman Plata and carried 7 ayes, 0 nays. Mayor Fendley announced that the next item on the agenda was a presentation of projected impact on system water rates of proposed new methodology for assessing water rates for inclusion in a new water purchase contract with Campbell Soup Corporation. City Attorney Schenk advised that the purpose of presenting this to the Council is that he wanted to give them a general description of the discussion they have had with Campbell Soup officials at the local level plus one corporate individual. They were very frank; they were positive; they felt they were above board with everyone trying to accomplish the desired goal. He said that his purpose in presenting this to the Council was to tell them about the rate methodology that is being considered. It is a two- part rate structure that would be incorporated in the contract and is different from the current rate structure. The nature of that rate structure would encourage the company to increase their volumetric use with Regular City Council Meeting June 9,2003 Page 21 regard to water for the mutual benefit of the City and Campbell Soup. City Attorney Schenk said he interpreted this council's desire that the city do something with Campbell Soup that would help them maintain a competitive position within the company to seek new product lines and also encourage the company, in the sense of their production, to use more water in the production process. He said that those were the two goals that they included in their discussion with the company. These goals were discussed with Mr. Stowe and he has used these goals to generate this new proposal. The City Attorney advised that what they are looking at is a projected impact of that methodology in a new contract, assuming that the volumetric use of the company has not increased. The company has been responsive to the city in saying that they believe that the proposal that the city has placed on the table will enable them to compete favorably within the company for new product lines. However, the impact to the city is that if the volumetric rate of taking water does not increase there will be a shortfall of $144,000.00 over what the city would currently receive under the current contract. That shortfall would have to be made up in some way in the over all rate structure, either by passing that rate increase along to other rate payers, or in other ways. This proposal would include an annual adjustment. It will be looked at every year and both parties are in favor of that arrangement. The City Attorney said his purpose of presenting this to Council was to see if this is the correct direction that Council wanted the city staff to take. A motion was made by Councilwoman Neeley, seconded by Councilman Weekly, for city staff to continue with the negotiation with Campbell Soup. The motion carried 7 ayes, 0 nays. There being no further business, the meeting was adjourned. CURTIS FENDLEY, MAYOR ATTEST: Regular City Council Meeting June 9,2003 Page 22 MATTIE CUNNINGHAM, CITY CLERK