HomeMy WebLinkAboutMIN 06.08.2010 CC-WThe City Council of the City of Georgetown, Texas, met in Regular Session on the above date with Mayor
George Garver presiding.
Council Present:
All Members Present.
Staff Present:
Paul Brandenburg, Micki Rundell, Jim Briggs, Mark Sokolow, Rachel Saucier, Tom Benz, Elizabeth
Cook, Eric Lashley, Laurie Brewer, Ed Polasek, Mark Thomas, Kevin Russell, Glen Dishong, Robert Fite
A. Workshop presentation and discussion on revisions to the Fiscal and Budgetary Policy for the 2010/11 budget
cycle -- Micki Rundell, Chief Financial Officer
Garver introduced the workshop session of the meeting and noted that Sansing and Berryman were absent from the
dais.
Rundell began the presentation on the fiscal and budgetary policy workshop item noting that the presentation is
attached. She added that she will review the presentation and noted that this presentation is reviewed annually and
this particular presentation was reviewed by the General Government and Finance Subcommittee in May 2010.
She offered a historical overview of the policy, policy compliance, policy areas, proposed revisions such as the
administrative clarifications and the recommended changes. Rundell began with the historical overview. She
identified that it was first adopted in 2001/2002 to revise all financial polices within the City based on recommended
best practices created by the Government Finance Officers Association, and additionally a plan was introduced to
eliminate the WTTB (what it takes to balance transfer).
This policy came to be in 2001 and she noted the history of Scenario H. In late 1980s to the early 1990s the first
downturn in valuations occurred due to the savings and loan crisis. The council at that time lowered the rate and
borrowed money from the utility fund to balance the budget. Over time the WTTB grew because it was easy to
borrow from utility funds and in 2000-2001 the borrowing continued. The rating agencies gave pushback, so
Scenario H was developed out of the various options given to council to eliminate the WTTB / the 3.1 million dollars
previously borrowed. The 3.1 million deficit was eliminated in 3 years with revenue increases and budget cuts. The
general fund was adjusted with revenue increases and budget cuts.
Policy compliance is one of the elements that makes up this policy and it includes sustainable funding sources to
fund ongoing expenses. This amendment was approved by city council on November 24, 2009. This entails
coverage ratios and this is a requirement, from our bond covenant, that we have 1.5 times coverage ratio for funds
with debt service requirements.
Berryman arrived on the dias at 3:08 PM.
Policy purpose provides fiscal discipline, long range stable and positive financial condition. In Section II the
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operating budget is linked to the comprehensive plan and is required by the city charter. This year's revised
balanced budget includes sustainable funding sources. The city manager must sign off on certain elements of the
plan and transfers of money require city council approval. Most recently, the city donated $5,000 to the mission of
mercy.
111. Revenue Management offers a conservative revenue projection and defines sustainable revenue as consistently
available revenue from year to year. Property taxes are budgeted as M & O rate plus the needed I & S rate. User
based fees are reviewed every three years as well as utility rates. These are required in the policy. Administrative
allocations are reviewed by city's external auditors and are documented. Return on investments - ROI - water -
wastewater - electric - storm water - Georgetown citizens benefit from ownership of the utilities since a portion of the
money is returned to the general fund. The City charges internally a 2% franchise fee and to change the fee from
7% to 3% would reflect similarities between other utilities. Also, as the legislative session grows closer, there will be
utility and franchise issues to watch.
IV. Expenditure Policies. Division directors are responsible for their departments. The city manager approves
transfers between departments. Transfers require council authorization. Personal costs budgeted at 100% and the
department level there is a vacancy factor. Reduce vacancy factor so it is not double counted.
Ross noted that the vacancy factor is at 34% and Rundell confirmed that this is very conservative.
Gonzalez asked about salary fluctuation throughout the year and if someone is hired how we handle the rate of pay.
Rundell noted that the beginning of the year is where the adjustments are added and there is funding available for
pay raises within the year. Social service funding has been set at $5/capita. These levels can be adjusted for
inflation. The funding level increases are achieved through growth, and the City can cap funding if the budget
requires it.
Public Art Funding was amended in 2009.
Budget constraints made the
funds
available on a "as needed basis" and
all expenditures are recommended
by the
Arts & Culture Board and then
voted
on by council.
Bad debt limitations are handled by writing debt over 360 days as uncollectible. This policy follows state law and
provides for a 5% local vendor preference. Anything greater than $25,000 must go through council, but
Georgetown's financial policy requires anything over $15,000.
Gonzalez asked about the write-off debt and Rundell noted that we write it off but the debt is sent to a collection
agency with a recovery rate is around 30-40%.
Garver asked about prompt payment polices and Rundell noted that as a general rule most municipalities do not
give prompt payment discounts.
Retirement Benefits Policies - This requires that any changes to the benefit plan must be presented in a certain ways
such as full disclosure regarding the pension liability, 72 hours for consideration, and each change must be voted on
individually.
V. Budget Contingency Plan
Implemented in 2002, this plan establishes guidelines on managing revenue shortfalls. The city manager makes
reports to council when this policy is being used. We outline contingency reserves and service level reductions
addressed by council. City Council must approve layoffs prior to any action.
VI. CIP
This includes all elements from operational impacts, annexation, & economic development. The Georgetown Utility
System reviews the electric CIP. The Georgetown Transportation Advisory Board reviews the CIP for streets and
storm water drainage. All contracts over $50,000 are vetted by the city boards and council is then able to approve
the purchases.
VI1. Capital Maintenance
Deferred maintenance increases future capital costs. PMIS - pavement management index/ information system is
used to calculate improvements. GASB34 is where all funds are put in city wide financial document. All city streets
are to be maintained at a certain level and this is reviewed every 3 years for quality. The policy says 85% is
acceptable but city is maintained at over 90%.
Internal Service Funds enables the City to lease equipment back to individual departments and each department
recognizes lease payment from service fund. There are also established technology reserves for major system
replacement, and the City is preparing to replace some technology and this reserve.
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VIII. Accounting and Financial Reporting
This established the General Government and Financial Advisory Subcommittee (GGAF) for added oversight and to
assist council in reviewing the financial elements of proposed projects. This board is accountable to city council and
there is a recommendation by GGAF to limit the number of years an audit firm can serve to every 3 years ensuring a
fresh set of eyes to review the city's financial status.
CAFER will be completed to the GFOA standard which is a criteria about disclosure of public financial information.
IX. Asset Management
This added public trust as investment objective, confirmation of all legal requirements, and quarterly reports are
made to council regarding investment activity. Fixed assets capitalization criteria is at $5,000.
X. Debt Management
Sansing joins dias at 3:30PM.
Changes recommended to this years plan allows for debt greater than 20 years to enable major expansion projects.
For example, the water plant has 30-40 years of use, and we may want the option to issue 25 year debt in order to
reduce payment expenses for the current users/taxpayers - this is only an option and offers flexibility.
Debt Structuring - debt coverage ratio - cost benefit analysis must be done to adjust the average life of the bonds.
Bond Reimbursement Resolutions are used as efficiently as possible and issued only once per year. State law
allows the City to issue bond reimbursement for all the capital including any project proposed to be capital.
The City has a cash contingency reserve to allow flexibility. Furthermore, the City will issue COs - bonds must be
issued in May prior to an election and council must approve the bonds because it affects taxes. Revenue bonds for
approved capital projects are within legislative requirements.
XI. Other Funding Alternatives
This provides guidelines on alternative funding for new projects. Grants and grant applications are coming to council
so the long term conditions are made available. The use of reserve funds for debt management, developer
contributions, leases have CAFFER disclosure implications and impact fees. State law requires a 5 year review of
impact fees, but the City reviews performs a review every 3 years. The committee is currently meeting to review the
impact fees.
XII. Financial Conditions, Reserves, Stability Ratios
The City will maintain a 1-1 operating coverage. The Contingency Reserve - not the same as excess funds - is to
help with with catastrophic events or to help with bond issuance.
Tourism Fund, General Fund
Ross asked about the 90 days on the general fund. Rundell responded about the volatile revenue based on property
tax and utilities here in the city - for example sales tax, development fees. She continued that some cities prefer
different dates but most AA cities have 90 days. Ross asked about $70,000 dollars based on the 90 days. Rundell
noted the contingency fund and added that this is a target date given from bond rating agencies. The hope is that
we never have to use the money. This is more for cash management than revenue uses and sometimes projects
are funded prior to bond issuance.
Ross continued by inquiring about other cities such as Round Rock and San Marcos. Some cities use 60 days, and
many cities have the date term set.
Berryman asked how many AA plus cities exist and Rundell noted about 15 other cities for a comparison but Round
Rock is not a good comparison based on their special industries such as Dell and the Outlet Mall. Gonzalez asked
about different days - airport fund - self supporting? rundell noted that there are people/staff and this allows to
spread the pot - airport funds are specifically airport funds.
Sattler
asked about the
electric utility fund - total amount is
14.5
million,
and certain parts of utilities - water services
has 90
day contingency.
electric is mostly power in power
out
-
low risk
versus other
more volatile
funds.
Sansing agreed with Berryman that the City should look at other AA rated cities and he noted that he is not in favor
of anything that would lower the City's bond rating. Sansing commended Rundell and finance for reaching the good
bond rating.
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Gonzalez asked about what the City is making off this money - purchase CDs. as markets changed, rate of return
continues to drop, .25 TXPOOL. Rundell commented that the city is limited in the types of investments and there is
currently a staggered CD option. Gonzalez asked how often we are reviewing what we can invest in and Rundell
responded that every quarter an investment report is submitted to council. She noted a recent investment of $2
million at a rate of 2% return.
Ratios and trend analysis - track and compare trends - information is included in budget.
XIII. Internal Controls
Rundell noted the auditing standards have shifted focus to maintaining, reviewing, and updating controls. Internal
audit program is looking for potential fraud and theft, anticipating problems, audits and results are reported to council
and the city manager.
XIV. Staffing
Rundell informed council that adequate staffing for efficient operations and cost of living adjustments are approved
by the city manager and city council in addition to pay for performance and one time incentive bonuses.
Rundell shared with council that more discussion needs to occur regarding changing the ROI franchise fees for utility
funds. She indicated the next steps are to draft an action item for consent agenda regarding the budget and then to
formally adopt policy rates.
Garver asked about the
action to approve tonight to
implement
the recommendations from this presentation. Garver
asked about if we need
to review the contingency reserves
and
Rundell responded that this will not affect the way we
report the budget. The
finance committee reviewed
the policy in
May.
Ross, Chairman of the finance committee, commented on the 75% funding of pensions as a duty to make sure that
retirees have funds when they retire. Rundell noted that our unfunded liability could have been upwards of 69-72%.
Discussion regarding GGAF meeting requirements. Garver clarified that the agenda item may be pulled if council
wishes and Rundell noted changes will be added to final budget.
B. Presentation and discussion on the City's proposed 2010/2011 Capital Improvement Program for both utilities
and general capital improvements -- Paul Brandenburg, City Manager
Brandenburg mentioned that the Capital Improvement booklet was passed out with each project, the dollar amount,
and the debt service. He noted that the review is a summary of projects with CIP and they have already been
reviewed by the Georgetown Utility System Board and the Georgetown Transportation Advisory Board in a joint
meeting where they received public input. The budget has general fund items, CIP items, & salary items.
During the public process, the City hosted public house/open hearing, posted information on the City's web page for
comment with 54 views. The most popular hits on the website were street over lay. CIP starts in January with staff
directed to identify projects, then host division meetings, city council presentations, then adoption in September. CIP
Utilities have revenue sources from operating revenues, street maintenance sales tax, general funds, and impact
fees for water and waste water. The program cost is totaling around $12.9 million.
In the water services area, the CIP addresses superior water, wastewater, irrigation and is determined by factors
such as annexations and service areas. Water services utilize cash, debt finance, capitol recovery fees, and the
impact fees are being reviewed. Water line upgrades are around $126,000 including streets and locations. In 2006
annexations cost $4 million for upgrades and master plans.
Waste Water and the Edwards Aquifer Recharge Zone compliance costs around $1.2 million with the water line
upgrades. He noted wastewater upgrades and pump system upgrades with the details outlined in the handout.
Transportation Services include the cost to maintain roads, the 5 year plan, general funds and street maintenance
sales tax (to be authorized in November 2010). Customer Service Satisfaction - increased on street maintenance
sales tax which is necessary to improve roads and has been realized by residents in response to the survey. Garver
asked about the sales tax expiration and Brandenburg noted March 2011 is the end of term, but it will be renewed in
November 2010. He added that the five year plan is funded by general fund and street maintenance sales tax. The
road map shows how every neighborhood benefits from sales tax to benefit all taxpayers. PCI rate is at 93, goal is
90 so we're above the goal. Street maintenance 2011 is around $1.466 million, rejuvenator, hot in place repair,
surface treatment, overlay, and projects will be completed at locations listed in the handout such as Church Street,
16th timber, and North Church projects.
Brandenburg noted the storm water services as a CIP utility, the city manages the infrastructure and meets federal
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regulations on municipalities. Funding comes from debt financing and the 2010 goals are to manage water flow with
curb and gutter replacements. He concluded with the next steps of reviewing salary, benefits, scrubbing internal
budget, and the CIP as recommended by staff.
C. Workshop presentation, discussion and possible direction to staff on General Government budget issues --
Laurie Brewer, Assistant Finance Director, Micki Rundell, Chief Financial Officer, and Paul Brandenburg, City
Manager
Rundell presented this item by noting that these details have been shared over a variety of presentations to council.
She noted the overview of an one time expenditures such as safety related, or something that has met it's useful life
such as future cost savings projects. She noted the 2008 road bonds, parks bonds, historical debt, tax rate, and the
impacts for 2010-201.
Rundell
noted a safety
related, 1
time expenditure, recommended by staff, to replace the access card security
system
at $245,000.00
since the
system is 12 years old, not supported by maintenance, there is a virus/bug in the
system.
The vendor is
willing to
try to fix the system for $100,000, but there is no guarantee. Additionally, more
security
cameras are needed
in the recreation center with a cost of $35,000 for more cameras in the parking lot and
this
and
will
a
balance
address
be
safety
included
issues.
Desktop virtualization technology will cost around $376,000 to replace the old Gateway systems. IT Director Mike
Peters recommends the virtualization because it saves money and helps with tech support from remote locations.
This will impact 300-400 desktops, and ensures a standardized system configuration to allow automated updates
and repairs with less staff maintenance. This is a cheaper process in the long run and has a better longevity for the
equipment and service. Gonzalez asked that about using a mainframe and Rundell noted that the city is on fiber
optic so we will use our wires. She added that this desktop virtualization will help manage the applications.
Rundell noted that certain public safety vehicles need to be replaced at a cost of around $980,000 and include patrol
car replacement, one wrecked vehicle, and one animal service vehicle due for replacement. She added that an
Apparatus for Fire Station 5 must be purchased for the upcoming station. She noted that the City is in negotiations
with the Emergency Service District and an agreement could reduce costs.
Rundell introduced the concept of Video Recording and Web Streaming at a cost of $48,000 to put the council
meetings live on internet, links the council video to minutes, provides better communication with public, and is a step
in the right direction to automate this process. There could be future expenses, but the current estimate is under
$50,000.00
She noted the Telestaff Software at a cost of $68,000.00 to assist the police department in manages public safety
overtime. It is a cost effective staffing tool, address public safety non-standard pay periods, and helps with cost
savings down the road.
She informed council of the City's commitments down the road that include fire station 5 at around $1.6 million
construction cost and scheduled tol be built on DB Wood Road, improvements to ESD services, grant funding has
been secured for initial staffing costs during the first two years, and the negotiation of the apparatus purchase with
the ESD as an ESD owned vehicle.
Land to be
purchased includes an item on
the agenda for
20 acres
from the
Mueller development. She noted the
previously
issued
$1
million
in
bonds,
and
a
balance
to
be
included
in 2011
CO
bond issue.
Transportation road bonds have been approved in 2008 for $46 million, and to date only around $2.5 million has
been used from the $46 million originally issued.
When the bonds were issued, the taxpayers were assured no more than 8 cents would be applied to their taxes and
currently the tax impact is at .00615 cents. The cost of funds encourages moving forward does change.
Construction costs are low now, but air quality controls are changing.
Rundell noted the proposed 2008 road bonds, and these include a $5.25 million construction of Maple to SE1 to be
issued and Briggs is getting ready to bid project, $1.25 million southwest bypass along with the routing
study/preliminary engineering for Leander Rd to IH35, a $500,000 FM 971, a $2.5 million FM 1460 for the ROW
purchases while the land is affordable, and the total bonds are $9.5 million with an estimated tax impact of .022.
Rundell introduced the 2008 Parks Bonds to include the November 2008 approval of $35.5 million. She noted that
none of this has been issued yet, but parks recommends issuance of $2.5 million or the amphitheater design and the
river trails grant match. The impact of this is slightly more than half a cent at .00855. A secured matching fund must
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be in place prior to application for funds.
Rundell researched the Historical Tax Components with a fairly consistent tax rate. The range has been 8.5 cents to
10-11.5 cent as the typical debt portion of the cost rate. The taxpayers vote for the remaining rate in the bond
elections of 2004 & 2006. Rundell offered a chart indicating revenue going to the general fund, general
business/operating city bonds, 2004 bonds, and 2008 bonds
She offered an overview of the mpacts for 2011 and beyond and noted the total proposed authorized general
obligation bonds at $12 million with an estimated total tax impact for this issue at .02812 which is below .03
maximum increase per year in line with the taxpayer agreement. She noted that the full impact will be seen in the
2011/2012 budget
She noted the 2011 certificates of obligation with the standard operating bonds at 3.2% with $1.5 million estimated
for the fire station, $1 million for the vehicle replacement, and the $600,000 safety technology debt and these will be
paid back as soon as possible within around 5 years. She offered the estimated tax impact .0107 full impact in
2011/12.
Sattler asked about the 1 cent in the $500,000.
Rundell noted the 2010-2011 estimated tax rate at .38328, and the fact that Citicorp will not get their full abatement
has impacted the funds. She noted that this fully funds debt service on existing debt while assuming no increase on
O & M general fund. She added that these figures will all change with the final assessed valuations since it is like a
moving target with new updates weekly from appraisal district.
She added that the 2011 -2012 -estimated rate will be .40 cents or more, and assumes issuance of $12 million in
bonds, assumes the 2011 CO issue of $3.2 million, with no increase in O & M general funds, and finally this estimate
assumes minimal in assessed valuation. Garver asked about if tax base grows, and Rundell noted that this is a very
conservative dark forecast.
Gonzalez asked if we can refinance at lower rates and Rundell noted that all bonds have a 5 year call because the
investment market is so small. Sansing asked about the debt maturing this coming year and Rundell said it is
accounted for. Rundell noted that we are above where we were. Sansing noted this is due to growth and Rundell
noted this is due partly to annexations, Citicorp didn't reach their 100% abatement, and the fact that Citicorp will not
expand until market conditions increase.
She noted that the 2011 bonds must be funded, questioned how the City will fund the land and fire station 5, and
asked if council want to move froward with GO bonds. Rundell asked for direction on the GO bonds and if they
should this be included in the budget. This evening posting is for discussion and direction, and there could be an
earlier GGAF meeting to review the budget. Staff felt it was important to have the entire council meet to review the
budget.
Sansing noted that the whole council should be able to comment on the budget proposals. Rundell noted that GTAB
is meeting Friday to recommend moving forward on the eagle field demolition, and staff can add an item at the next
meeting.
Garver noted that this budget could be vetted in GGAF in addition to having the entire council involved in a budget
meeting. Ross stated that the budget should be presented before the entire body. Rundell noted that the next
council meeting will have an action item for further discussion. Eason agreed with Sansing and Ross.
Gamer asked and Brandenburg responded that there are executive session items for discussion.
Recessed to Executive Session under Sections 551.071, 551.0727 551.086, 551.087 -- 4:39 p.m.
Meeting reopened and adjourned -- 5:57 p.m.
The meeting was adjourned at 05:57 PM.
Approved : Attest:
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Assistant
City Council Meeting Minutes/
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RAt, A I& U.�r
City Secretary Rachel Saucier,