HomeMy WebLinkAboutMIN 10.26.1999 CC-W&RThe City Council of the City of Georgetown, Texas, met in Regular Session on the
above date with Mayor MaryEllen Kersch presiding.
Council Present: 'Council Absent:
Charles "Ross" Burson, Charlie Barton, All Council present
Ferd Tonn, Lee Bain, Shorty Valdez,
Susan Hoyt, Clark Lyda
Staff Present:
Bob Hart, City Manager; George Russell, Assistant City Manager; Marianne Banks,
City Attorney; Sandra Lee, City Secretary; Jim Briggs, Director of Community Owned
Utilities; Ed Barry, Director of Development Services; Verna Browning, Director of
Community Services; Susan Morgan, Director of Finance and Administration; Larry
Hesser, Police Chief; Pablo Holguin, Director of Employee and Organizational
Services; Murray Blackman, Assistant to the City Manager; Clyde von Rosenberg Chief'
Long -Term Planner; Dave Hall, Building Official; Tom Bolt, Building Plan Reviewer;
Wendy Walsh, Development Planner; Chris Stewart, Development Planner; Carla
Benton, Development Technician; Debbie Charbonneau, Main Street Manager; Laurie
Brewer, Senior Accountant
Called to order at 5:30 p.m.
A Discussion of the suspended Manufactured Housing regulations -- Clyde von Rosenberg and Ed Barry
von Rosenberg distributed to the Council copies of the Council Statement on Manufactured Housing from
the January 12, 1999 Council Workshop. He asked Council for their direction to the Housing Working
Group.
B Discussion of the expansion of the downtown historic district -- Tom Bolt
Bolt displayed the difference in area between the currently designated Historic District and the National
Historic Registered District. With a video of the current downtown district, he showed the Council the
various aspects of parking, build -to -lot lines, sidewalks, antique street lighting, awnings, and architectural
styles. He noted that the Historic Preservation Commission would like to extend the Historic District to 2nd
Street on the north, University Boulevard on the south, Scenic Drive on the west, and College Street on the
east, speaking only to the commercial properties, not to include residential properties. He demonstrated a
smaller area where Council may wish to incorporate design restrictions to include commercial and
residential. A third area was demonstrated as possible location for fire districts, saying the location of the
fire district might govern the type of building material that could be used on structures in the area. Hart
City Council Meeting Minutes/October 26, 1999
Page 1 of 7 Pages
explained that fire districts would allow different standards and a better ISO rating for the City overall. Bolt
told Council that staff is asking for their recommendation for the types of design standards, definition of the
specific area, and any special requirements. He noted once standards are decided, options for
implementation need to be established.
Called to order at 6:30 p.m.
Recessed for Executive Session at 6:32 p.m.
C Sec.551.071 consultation with attorney
D Sec.551.072 deliberation on real property
E Sec.551.086 competitive matters (electric utility)
Reconvened and recessed at 7:05 p.m.
Reconvened at 7:20 p.m.
Kersch called upon Judge Higginbotham to address Council.
Higginbotham delivered to Council a letter of resignation from his position as Municipal Judge. He noted
that he was selected to serve as the Judge of the County Court of Law, District 3.
E Action from Executive Session
Motion by Hoyt, second by Tonn to put an item on the next agenda to consider assignment of a contract
from Main Street Baptist Church. Approved 7-0.
Kersch noted that she had received 26 requests for citizens to speak regarding Items P and Q and asked for
Council's direction.
Motion by Lyda, second by Tonn to defer Items P and Q to the next Council Meeting on November 9. Approved 7-0
Kersch advised the proposed speakers that they could speak at this meeting or wait until the November 9 Meeting.
The following citizens addressed the Council regarding Items P and Q.
Dana Irby, 1510 Barcus Drive, expressed concern about rules changing, telling Council she believes that
once a rule is established it should stay.
Maria West, 1508 Barcus Drive, told Council she also is very concerned about breaking existing rules.
Barbara Burkhalter, 122 Finch Lane, said she is concerned about multi -family housing coming into the area
She asked to know all the details of "what is going on."
Linda Turner, 111 Vivion Lane, said she is also concerned about developments in University Park. She
suggested that the developer sell the lots in question to a residential home builder. She expressed concern
about devaluing the existing property in the neighborhood by allowing multi -family rental housing. She
asked that Council deny the request for rezoning.
Charles Foreman, 1514 Barcus, said he has an issue with the fact that this item has been dealt with
previously and should be final. He said if it is to be dealt with again, the developer should be there to take
part in the discussion and not ask that it be deferred.
Robert Kreidler, 114 Finch Lane, asked for a promise that if the item is deferred, Mr. Stanton would meet
with the property owners to show them what is planned. He said he has a problem with the fact that the
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property was not rezoned when it was replatted.
Jim Arnold, 108 Vivion Lane, asked for everyone in the audience from University Park to stand. He noted
that he feels he can't trust the decision-making process of the City. He asked the Council to safeguard the
entrance to University Hills Subdivision,
Pat Lysek, 1516 Barcus Drive, asked if the neighborhood would have been able to overturn the decision if
the vote had gone the other way. She said she thinks Council's decision should stand.
Patrick Walsh, 2001 E. 18th Street, told Council that he feels the only gain that could be derived from
bringing this item before the Council again would be a possible financial gain for the developer.
Linda Connors, 1501 Barcus Drive, said she agrees with everything that her neighbors have said.
While everyone was still in the audience, Kersch called upon Director of Parks and Recreation, Randy Morrow, and
Parks Board Chairman Ben White who displayed the Gold Medal Award recently won for First Place in the Nation
from the National Recreation and Park Association and the Spots Foundation for excellence in recreation and parks
management. Chairman White and former Parks Board Chairman Tom Swift commended Morrow and his staff and
thanked the Council for allowing the means to accomplish the level of excellence that enabled the winning of the
award.
Y Consideration of appointment of an Economic Development Task Force to: (1) review current roles of the
Convention and Visitors Bureau (CVB) and Georgetown Industrial Foundation (GIF); (2) review approaches
of other municipalities to providing economic development functions; (3) consider alternatives to current
roles of CVB and GIF, including privatization and/or consolidation of these functions; and (4) make written
recommendations to Council concerning same -- Councilmember Clark Lyda
Lyda noted that the vacancies in each of the economic development agencies give the City an opportunity
to study further options. When asked to comment, Gordon Baker responded that the Chamber of
Commerce Board of Directors is in agreement with the suggested method to study the options. Nancy
Knight said the Convention and Visitors Bureau Executive Board is in agreement with the suggested study.
She expressed concern that the position is vacant during the busy holiday season, and there is undue
pressure being put on the Main Street Advisory Board Director during the absence of a Director for the
Convention and Visitors Bureau. Mark Dixon, President of the Georgetown Industrial Foundation (GIF),
said the GIF was also in agreement to work with the others, but noted that it would take time. He also
asked that the City Manager and other staff be included as participants in the study. Barton said he agreed
that the staff should be involved. Hoyt suggested allowing two weeks for the boards to be able to think
about how the Task Force should be compiled.
Motion by Lyda, second by Bain to approve the Task Force and request that the Convention and Visitors
Bureau, the Chamber of Commerce, and the Georgetown Industrial Foundation bring back their proposed
members to the next Council Meeting. Approved 6-1. (Valdez opposed)
Dixon was asked if the GIF Board has been notified about this and he responded that they will not meet
until next month. Hoyt asked for more time for GIF to appoint their representatives. Knight noted that Main
Street Advisory Board Director Debbie Charbonneau and Director of Community Services Verna Browning
are stepping in to fill the vacancy at this time, but both have many other duties.
F Mayor, Council, City Manager, and staff comments and reports
-Information on upcoming workshops/scheduling, Qoint with Planning and Zoning Commission,
Parks and Recreation Advisory Board, Airport Advisory Board; governance continuation, with
possible discussion -- Mayor Kersch
Kersch asked and it was agreed that Council would meet with the Airport Board in December
instead of the Parks and Recreation Board.
-Setting date for Governance Workshop -- Mayor Kersch
Kersch suggested Tuesday, January 18 for the next Governance Workshop
-Proposed ground water district -- Councilmember Lyda (deferred by Lyda due to time constraints)
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-Airport issues -- Councilmember Lyda (deferred by Lyda due to time constraints)
G Citizens wishing to address the Council
Will Moore, Pine Street, said he wanted to clarify what was reported in the newspaper about the results of
the Urban Design Task Force proposed standards. He said what is going on at the Race Trac gas station is
an enforcement problem, not anything to be corrected by new standards. He said enforcement is one of
the five priorities that the Urban Design Task Force wants addressed. He said he feels many
establishments in town are violating the sign ordinance. He asked why the City is not enforcing the current
ordinances.
Penny Burt, 3803 Roble Grande Circle, said she lives outside the City Limits in the Extra Territorial
Jurisdiction, in the general area of the Airport. She distributed information regarding how noise affects
health and safety.
H Consideration of approval of the minutes for the Regular Council Meeting on October 12, 1999 -- Shirley J.
Rinn
Lyda asked if, in the interest of time, he could to furnish the City Secretary's office with a list of corrections
to the minutes. It was suggested that the corrections to the minutes be brought back to the next Council
Meeting.
I Consideration of an award of bid for all lines of property liability and workers' compensation insurance for
FY 1999/2000 in the estimated amount of $279,357 -- Ben Stafford
Hart asked for Stafford to clarify. Stafford noted that there would need to be an additional amount of
approximately $7,000 at the end of the year that has been included in the budget.
J Consideration of Change Order Number 1 to the T -Hangar contract with Troy Bonnet Construction, Inc. in
the amount of $45,000 for the installation of a four-hour rated firewall in each of the three T -hangar
buildings -- Travis McLain and Verna Browning
Lyda asked about the timing of the building permits. McLain responded that the building permits for the
hangars have not yet been issued. Lyda asked why the budget called for a force main. McLain responded
that it was discovered that it is an uphill area. Barton noted that the option to a force *wastewater main
would be 7 to 10 septic systems. Lyda asked and was told by Susan Morgan that the funds would come
from uncommitted bond issue money from last May, saying $145,000 out of the $5 or $6 million could be
spent on the force main. (*as corrected by Lyda at the 11-09-99 Council Meeting)
K Consideration of approval of an amendment to the Texas Department of Transportation, Aviation Division
Project Participation Agreement for the Runway Rehab/New Taxiway Project to include a wastewater line
from the Airport Terminal building to the Sun City wastewater line parallel to Airport Road in the amount not
to exceed $200,000 -- Travis McLain and Verna Browning
L Consideration of a contract for Batting Cages in San Gabriel Park -- Randy Morrow (pulled by Kersch --
see Regular Agenda that follows)
M Consideration and possible action on a Public Review Final Plat of 52.4628 acres of land out of the
Frederick Foy Survey, to be known as Woodland Park, Section 1A, located northeast of the intersection of
FM2338 and FM3405, with Variances to the Subdivision Regulations -- Chris Stewart and Ed Barry
Lyda- *Bain asked for clarification on the width of the streets and asked if a precedence were being set.
Stewart noted that 60 -feet of right of way is required in the standard, but in some cases the 50 -foot right of
way is allowed, in this case if the County also agrees. (*as corrected by Bain at the 11-9-99 Council
Meeting)
N Consideration and possible action on a Public Review Final Plat of 21.67 acres in the William Roberts
Survey, to be known as The Woods at Berry Creek, Sections Two and Three, located north of Brentwood
Drive and Meadow Green Drive, with Variances to the Subdivision Regulations -- Chris Stewart and Ed
Barry
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Motion by Hoyt, second by Lyda to approve the Consent Agenda with the exception of the minutes which will be
considered on the November 9 Agenda and Item L being pulled for the Regular Agenda. Approved 7-0.
Consideration of a contract for Batting Cages in San Gabriel Park -- Randy Morrow (pulled by Kersch)
Morrow explained that these batting cages have been approved by the Parks and Recreation Board. He
shared a drawing with the Council that indicated the location for the proposed batting cages.
Debbie and Mark Walker, 3704A Buffalo Springs, told Council they own a golf driving range on Williams
Drive and had planned to add batting cages in mid-February 2000. Walker said he doesn't believe private
business should be allowed in a public park. He noted that batting cages would create high liability for the
City. Ms. Walker said $400 per month is not fair market value for the City to charge as rent. She said she
and her husband will still build batting cages and asked that the Council not allow private business on public
parkland.
When asked, Banks replied that there is an indemnity clause in the lease that any liability would pass to the
lessee. Bain asked to hear from the proposed lessee, Gene Lawhon. Lawhon noted that he had brought
this idea to Council 18 months ago. He said he would be happy to comply with whatever liability amounts
were requested by the City. He noted that the youth who need the batting facilities are currently going to
Round Rock. He also noted that there is a provision in the lease for him to allow time for use by Parks and
Recreation. He also noted that the location to be used, between the two baseball fields, would not be
usable for many other recreation activities. He noted that there is a provision in the lease that if the
operation were to close down, a clean-up of the site, including removal of a concrete foundation, would be
necessary.
There was discussion about the procedure if future private enterprise asked to be in the park. It was
pointed out that each case would be taken on an individual basis. Lyda expressed concern that insurance
liabilities *limits be further investigated. (*as corrected by Lyda at the 11-09-99 Council Meeting)
Motion by Barton, second by Tonn to approve subject to City Attorney's final approval after consultation
with the City's insurance carrier concerning the amount of insurance. Approved 6-1. (Opposed by Lyda)
O Consideration of acceptance of the resignation of the Municipal Court Judge and setting a process for his
replacement -- Don Higginbotham and Susan Morgan
Motion by Lyda, second by Barton to accept the resignation of Don Higginbotham. Approved 7-0.
Morgan explained the process for appointing a replacement. She recommended moving forward quickly
because of the heavy docket. She asked Council to appoint some councilmembers to serve with staff as a
Select Committee to approve a profile, with the chosen candidate to be approved at the December 14
Meeting. Morgan confirmed that Higginbotham has agreed to continue working with the Teen Court through
the spring semester. Kersch asked for volunteers from the Council to serve on the Select Committee.
Kersch, Tonn, Burson and possibly Valdez will serve on the Select Committee.
Motion by Hoyt, second by Barton to approve the Council membership on the Select Committee.
Approved 7-0.
P Consideration of a motion to reconsider the application for rezoning of University Park, Section One,
Block A, Lots 2 - 15, in compliance with City Council Meeting Procedures -- Marianne Banks
This item was deferred to the November 9 Council Meeting.
Q First reading of an ordinance to rezone University Park, Section One, Block A, Lots 2 through 15, from
RS, Residential Single Family to RM -1, Multifamily or any more restrictive district, located on Bergin Court,
west of Southwestern Boulevard -- Wendy Walsh and Ed Barry
This item was deferred to the November 9 Council Meeting.
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R First Reading of an ordinance to rezone Lot 3 of the Amended Plat of Dicotec Subdivision, (located at
Williams Drive and Sequoia Spur), from A, Agricultural to C-1, Local Commercial, or any more restrictive
district -- Chris Stewart and Ed Barry
Stewart noted that the applicant is seeking C-1 zoning, the most restrictive of commercial uses. Stewart
read the ordinance. Motion by Barton, second by Burson to approve the ordinance on first reading.
Approved 7-0.
9:18 p.m. recess -- 9:37 p.m. resumed
S Consideration of a resolution directing the Century Plan Housing Plan Working Group to review the
suspended regulations for manufactured housing and to recommend appropriate revisions -- Clyde von
Rosenberg and Ed Barry
von Rosenberg noted that a change had been made to the final form of the resolution, saying that in
Section 4 the working group is asked to report back to the Council on December 14. He read the caption of
the resolution. Motion by Lyda, second by Barton to approve the resolution. Approved 7-0.
T Consideration of a resolution "opting in" and declaring the Georgetown Electric Service Area to be open to
competition for the provision of retail electric services -- Bob Hart
Hart noted that there have been several workshops on this subject. He recognized Bill Freeman of LCRA in
the audience. Hart read the resolution. He pointed out that the resolution would take effect on January 1,
2002. When asked, Hart noted the reason to "opt in" now is because the retail electric providers will begin
looking at the markets that are available. He said there would be benefits to "opting in" now due to the
dynamic metering system that the City has in place. He noted that Georgetown's is the first system in the
country to be 100% involved in that type of metering system, which provides "real-time" data. He said the
principle reason to "opt in" early is because the City participates in dual -service areas with Pedernales
Electric Cooperative and Texas Utilities, and "opting in" would allow the City to compete with other wire
providers. He said Georgetown would be the first municipally -owned utility to "opt in."
Bain asked why the City should "opt in" now. Hart responded that the City should "opt in" now because of
the way the marketing is being structured and the way the electrons are sold, saying many decisions are
being made now, and with the metering system in place we have the technology "backbone" to allow
additional services to our customers such as medical assist, smoke detection, and partnering of services
with other providers. Hart expressed that City surveys show that the customers want choice in their service.
He said the City has been working at this plan for eight years and there is still work to be done finalizing
customer information on billing systems.
Lyda said he feels it is not a question of whether, but when to "opt in." He cautioned Council not to move
too quickly, reminding them that the decision is permanent. He asked Council to focus on economics,
saying there are a number of unanswered questions. He said he thinks the City needs "informed consent"
from the ratepayers before the decision is made.
Bain asked about the ability to go before the Public Utility Commission (PUC) if we "opt in" now, and why
the City couldn't go before them now anyway. Hart responded that a large part of the rulemaking is being
done now and will continue over the next 12 months. He said research shows that typically 20% of the
electric utility customers are going to change, 20% will look at their options, and 60% will stay. He said he
feels the City's strong market potential is the metering system and negotiation strength would be better in
the beginning. He said there has been very careful consideration for deregulation by the Council and staff
for quite a few years.
Lyda reiterated that he is not disagreeing with "opting in," but rather that it is premature to "opt in" now.
Barton asked Hart if the Council should get some more education from the PUC or from someone who is
not directly involved. Hart said originally the need to make this decision was expected to be later in the
process, but after observing the activity at the PUC, he now understands that it is important to speed up the
decision. He spoke of being a member of the Electric Restructuring Consortium and said the information he
has brought to the Council has come from his experience in speaking with other groups.
Kersch asked for public comments.
Della Green, 1901 Vine Street, asked if there had been any Public Hearings on this subject. Banks replied
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that the law does not require a Public Hearing in regard to this subject.
Lyda said he feels that the ratepayers are not aware of the magnitude of the decision to be made. Banks
noted to Council that they have the option of meeting in Executive Session regarding competition involving
utilities if they so wished. Bain expressed concern about not being able to "back out" of the "opt in" vote,
and said he felt the Council should not vote if they are not sure. Barton said he isn't sure that all of the
questions can ever be answered, but feels more education is needed at this time.
It was decided to meet in an Open Meeting on Tuesday, November 30, and invite an outside consultant to
speak to the Council regarding electric deregulation and "opting in" to competition.
Motion by Lyda, second by Barton to defer the item and asked that potential speakers be submitted at the
November 9 Council Meeting for a Public Workshop to be held on November 30. Approved 7-0.
(At the request of Councilmember Lyda at the November 9 Council Meeting, a verbatim transcript of his comments
on this item is attached to these minutes)
10:55 p.m. recessed to Executive Session -- 11:05 p.m. returned to Open Session
There was no action from Executive Session.
U Discussion of, and possible action on, information received at the Open Meetings Act Forum sponsored
by the Council and presented by Scott Joslove on October 15, 1999 -- Councilmember Clark Lyda and
Mayor MaryEllen Kersch
Kersch noted that the Forum had been well attended and that several of the councilmembers who were not
able to attend have watched a tape of the meeting. Kersch reiterated some of the issues that were
expressed at the meeting. She stated and Council agreed that the procedure for placing items on the
Council agenda should be put in ordinance form. She also noted that Joslove suggested specific
information be listed on the agendas regarding Council comment and Executive Session.
V Presentation of information and materials related to the Open House on the Realignment of Country Club
Road at Williams Drive -- Don Rundell and Jim Briggs
Briggs gave Council the handouts that will be distributed at the Open House. Briggs and Rundell gave
Council a review of the information that would be presented at the Open House on November 1. He told
Council that staff will compile the information obtained from the citizens at the Open House and provide it to
the Council by the end of that week. It was suggested from the audience that copies of the handout be
available at the Library and City Hall in advance of the meeting.
W Discussion and possible action on the method for reporting the official minutes of the Georgetown City
Council Meetings -- Sandra Lee and Marianne Banks
Motion by Lyda, second by Bain to defer this item to the next Council Meeting. Approved 7-0.
X Discussion of the 2000 Boards and Commissions appointment process and creation of the Council
Selection Committee -- Murray Blackman
Kersch, Barton, Burson, Hoyt, and Lyda agreed to serve on the Council Selection Committee.
Motion by Bain to adjourn.
The meeting Was adjourned at 11:39 PM.
City Council Meeting Minutes/October 26, 1999
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Attest:
A
Mayor MaryEllen Kersch
City Council Meeting Minutes/October 26, 1999
Page 8 of 7 Pages
City Secretary Sandra Lee
Verbatim Transcript of Comments by Councilmember Clark Lyda regarding Item T from the
October 26, 1999 Council Meeting:
Lyda "I have some comments and some questions, and I guess I preface this by saying
that this is an extremely complicated topic and I have spent a lot of time on it in the past
several weeks, learning about it, and the comments that I'll make are made with all due
respect to everybody, and I ask you to please try to hear the substance of them rather
than reacting to the fact that I am delivering them.
I've visited with a number of people, both inside and outside the industry, and the
consensus seems to be that our choice is not really whether to compete or not.. Our
choice is timing. There's probably not a question of whether we'll get in and the risks
..........has become the issue ... .... as to when to "opt in" and what the proper..... market
time is.
Our staffs rationale on this "opt in" right now at the earliest possible date is, as I
understand it, that we're in a growing area and we have approximately 40% of our
service area as dual certificated with Texas Utilities, and that places us at a potential
competitive disadvantage for new customers within that area. Our staff also believes
that an early "opt in" will give us approved input into the Public Utility Commission's
rulemaking efforts which will be occurring over the next 20 something months before
deregulation. Our staff also argues that we can become a primary test site, not just in
Texas, but perhaps in the country .......... deregulation, due to our advanced metering
system and our customer service technology. Staff will tell us that because we are able
to set the distribution wheeling rate, that is the amount of money that we charge retail
providers to send electricity across our lines through our system to our customers, that
"based on our credit analysis, we'll be able to maintain our return on investment transfer
to the General Fund .... dollars approximately we take out of our Electric Fund each year
Staff also tells us that part of our City's planning is based on the City opting in to
competition on the first available date. There's a question in my mind as to whether that
means January 1, 2002, or if it means the date that we're talking about now. Staff also
notes that we have a 90% Requirements Contract with LCRA, and "opting in" will
potentially allow us to avoid buying power from LCRA. Our staff believes that we're
paying too much money for that power and in this way we can give our customers the
benefit of lower-cost power. And then in the agenda item cover sheet there's a quote
that says that "better opportunities for consumers will exist in the early stages of the
deregulation period."
The risk of an early "opt in" that the staff acknowledges is that this is an irreversible
election. Once we "opt in" we can't back away from it. It's not a test. It's a permanent
decision. This is one of the biggest decisions that we will make as a Council, that
perhaps Councils will make in years and years. This is akin to selling our utility system.
As you can ........ our charter sets a very onerous process for that sort of prospect, but
this decision will have an equally great effect on our utility system, so we need not make
it casually. We're not going to get a little bit pregnant on this deal. It's a lie.....
There are some reasons that would be inappropriate to "opt in" early, in my judgement,
and those reasons would be that we want to be the first to "opt in" because we're going
to get media coverage out of it to gratify our egos --we're going to be on the cutting edge -
Verbatim Transcript
Lyda's Remarks re. Item T on 10-26-99
Page 1 of 7 Pages
-we're going to get the attention or we're going to be prominent at the statewide level --
we're going to be able to promote a proprietary metering system or that we think we're
going to be able to further our feud with the LORA.
What I think we need to focus on are the economics of this decision. The question in my
mind is that there are a bunch of unanswered questions. I know I can't answer them,
and I don't think any of you will be able to answer them. Bob may have the answer. I
may not agree with it. But, some of those questions are: We now have a 2% franchise
fee that we charge ourselves on our gross revenues, so that ............ are we going to be
able to maintain that under the distribution wheeling rate? I don't know that we can, and
the reason that I don't have any idea is that the Public Utility Commission has not
formulated the rules that will govern this transition period. That's the risk we're taking by
"opting in" now. The PUC is going to be making rules over the next two years that
govern competition. We're essentially agreeing to play in a game without knowing what
those rules are going to be. The other economic risk is whether in fact we will be able to
maintain this return on investment transfer that we make each year to the internal fund,
of $2 million plus. We're basing that assumption on the assumption that we'll be able to
charge a distribution wheeling rate that will generate about the same revenue for our
utility system even though we won't necessarily be selling electric power on a retail
basis.
Another question that comes up, and it comes up in some of Bob's reference material, is
competition's effect on our ability to use tax-exempt financing for a distribution system.
There is some consideration at the federal level that under current federal rules city -
owned electric companies are prohibited from using tax-exempt bonds for private
purposes, allowing private electric companies to deliver, power, use, and distribution
systems built with tax-exempt bonds as a violation of those rules. Some of Bob's other
materials note that there are other activities that are currently funded through our electric
fund that might not be fundable through our distribution system wheeling rates, whether
it be economic development functions or other functions. There is the uncertainty of the
marketplace during this transition period that I believe may have a possible effect on our
economic development prospects, just exactly the opposite of what is intended by
"opting in" early.
There's the very real issue of what will happen to residential rates in a deregulated
market. Also, quoting out of actually an article that Bob wrote for Sheshunoff
Publications --I'm beginning in the middle of a paragraph --"residential rates are still
relatively high in a deregulated marketplace. It is simply more expensive to serve
residential customers. Residential rates do not benefit as much from free market forces
as other customer groups that are less expensive to serve and have more competitive
options. Generally speaking, the prescription today is then to mandate rate increases
with uniform reduction rates during a specified transitional period while hoping that the
true economics of competitive power and new technologies will soften the shock of
residential customers when the transitional period ends." (tape ended) ....would
probably be lost as a result of "opting in." Now, that's a question. You probably lose that
when you "opt in" whether it's now or later.
I talked with Mark Zion who's the Executive Director of the Texas Public Power
Association of which Georgetown is a member and Bob serves on the Board, and he
was very carefully objective on this issue as I would have expected him to be, and
basically his comments were that market will continue to develop over the entire
Verbatim Transcript
Lyda's Remarks re. Item T on 10-26-99
Page 2 of 7 Pages
transition period --and when I say transition period, I mean the time between now and
January 1, 2002, and it's a judgment call as to marketplace when to "opt in." Every
community has a different situation, a different set of circumstances, and it's really a
matter of market timing. We have to make a judgment as to when the best market will
be to "opt in." He is not aware of any other municipal entity utility at this time that is even
contemplating making these decisions right now. They are all sitting back and
assessing. He said that about 25% of the ERCOT region that we're located in is multi -
certificated with Texas Utilities and co-ops, and there may be cities with larger dual -
certificated areas than Georgetown. On the other hand, Georgetown may have a more
significant growth area that's dual -certificated, so that ...............
One of the arguments that staff makes in support of an early "opt in" is that perhaps the
Public Utility Commission will allow us to apportion the dual -certificated areas if we "opt
in" now as sort of a "pat on the back" I guess. I asked Mark Zion about that and he said
it could happen, but really the portions of the Public Utility regulations that relate to
apportionment are totally unrelated to "opt in" status, and they should be. And finally,
restating the same old thing, he said it's not really a choice not to compete --you don't
have that choice. The choice is going to be market timing, and everybody is trying to
make that same judgment call, and the reason that people aren't "opting in" now is that
they want the Public Utility Commission to make its rules and regulations for the
competition. They want to see some of that coming out before they make that
commitment to "opt in," and they also want to watch the marketplace and see what
companies are going to be offering. There are going to be giants involved in this. It's
not just going to be Reliant and Texas Utilities, but it will be ................. WalMart. The
WalMarts of the world getting into retail electric provision. This is going to be big guys
with lots of brain power, and I don't think Georgetown is a good adversary for those
folks. They have the very best and brightest, and frankly, I'd like to see some other
people ahead of us in this line.
I had a conversation with somebody at the GIF just to clarify in my own mind that there
weren't any existing, compelling industrial prospects or other potential customers in our
dual -certificated area that would make this decision for us right now. If there were
somebody out there that was on the fence as to whether or not they were going to be
served by the City of Georgetown, then that would actually sway me a little bit, and the
person I spoke with who is in a position to know, said they weren't aware of that
happening. What they did say is that ........... at the larger retail electric providers
probably won't go after customers until they "opt in" to competition, but there is no
indication that that's going to be a problem. There's still going to be plenty of people
after you, and in fact, some of the better deals in deregulation happen down the line,
they don't happen up front. The sum of that discussion was that this person, absent a
specific potential customer, that thought it would be in our interest to sit on the stands for
a while (that's their metaphor) and watch for a specific reason not to. And, my comment
on that would be that if a specific customer comes up that is sufficiently big that we're
willing to take that risk, then we can "opt in" just like Cook County did. They did that in
one day and they got that customer that was on the fence. I don't think we're going to
give up potential customers by waiting six months and letting the situation become a little
less fluid than it is now.
The American Statesman article that came out earlier this week which I was a little upset
about --I thought it sort of indicated that Georgetown had made a policy that I don't think
we've made yet. The headlines were "Georgetown Betting on Deregulation." Well, that
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scares me a little bit because I don't think any of us want that with public money. I think
we want to have informed, conservative stewardship of the public funds. I don't like for
the American Statesman ............to place that sort of bet. The consequences of making
the wrong decision now or making this decision too early are real significant. If we can't
maintain the General Fund transfer that we think we can that staff qualifies in its own
presentation, then we all know what that means. It means a great big property tax
increase or it means service cuts. Residential rate payers, while they may benefit from
competition, they may also not. The problem is we don't know the rules and we don't
know who the players are going to be in terms of retail electric providers, and we're
putting those folks at risk for rate increases and confusion and service issues when we
don't have to take that risk. We can wait a little while and see what develops.
I point out once again this is an irreversible election. Everybody needs to be real clear
on that. Once we're in, we're in, and if a rule comes down that we don't like, if the
market situation doesn't develop the way we hoped it would, it's tough, we're there. And
this is going to have a lasting and permanent effect on the City of Georgetown rate
payers from January 1, 2002, on, along with Georgetown's..............or until the legislation
is changed.
So, my question is do we really want to be a test case? Is this responsible stewardship?
Is this good leadership? I don't think so. I don't think I want to vote to be a test case.
How are other municipally -owned utilities in Texas and elsewhere acting about this
issue? The answer is "very cautiously." Quotes of the American Statesman about the
City of Austin, "we're still doing reconnaissance, we're still doing research." Most cities
are more hesitant about jumping in headlong. The PUC spokesman is saying "when
you're restructuring, you open up ......... by definition, they're less predictable. I think
everybody is doing their best to predict the future, but when you get down to it, you
can't."
The last thing is I don't think the public has adequately participated in this choice --this
decision that will effect them from now on at their pocketbook. Have we really educated
them about the risk and the possible benefits of this competitive market? And, are they
aware of the risks we are taking by making the decision to "opt in" now when we don't
know what the rules are and who the players are? I think, at a minimum, we need to
have informed consent from our ratepayers, and I'm not sure we do. I think you could go
out on the street right now and ask people what the risks and rewards of this process are
and they wouldn't have a clue. You'll hear a little bit of concern about "is this going to be
as disorganized as telecom deregulation," or "am I going to get calls?" Those are
surface issues. The real issues here are longterm economic ones, and they're probably
going to resolve in favor of competition, but let's give it time.
I'm on the opposite side of this argument. ........ ..... but this is a situation where we aren't
pressed. I can't come up with a good reason to be hurried about this decision, and I can
think of a lot of good reasons to take our time and make this decision. When we had our
first workshop about this on September 14, we asked for a presentation to come from
the Public Utility Commission, and what we got at our October 12 workshop was a
presentation from two representatives of Reliant Electric and one representative of
Texas Utilities. Well, these are folks who want to be selling to us. They're retail electric
providers. They're not the regulatory agency, and that's really who I want to talk with. I
want to know which rules and ...........and I don't. There's some of these questions that
are going to be "wrong headed" or pointless or can't be answered now, but there are a
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lot of them that can. I mean, I'm not reading you my whole list of questions, I'm reading
you a few. "
Barton: Clark, in your research, what have you found from the Public Utility Commission as to
when these rules are going to be developed or available, or whatever?
Lyda: "They're making them over the next 26 months. There's going to be a lot of
rulemaking over the next six months."
Barton: That will be the bulk of it?
Lyda: "I don't know about that. But I think we've read that it will be established. Bob
could probably answer that, but I'm not ...................... Once again, the American
Statesman —1 hate to start quoting the American Statesman, but there article called this a
giant bet by the City of Georgetown. Most mistakes we might make as a Council has
some kind of "out." This one, if we make a mistake now, we don't have an out. We don't
have an out at all. The consensus of my discussions with a bunch of objective
individuals who don't have a stake in the outcome of this other than some of them
happen to be citizens of Georgetown, is that there's no compelling reason to "opt in"
now. The odds are that benefits will accrue from whatever regulatory environment the
marketplace can ensure over the next six months and that there is plenty of time to "opt
in" prior to January 1, 2002. The notion that this can be a test, that Georgetown can be
a test market is a misnomer because this is not a pilot program. This is not something
we can back away from if it goes wrong. We should know what the rules are, we should
know who the players are before we commit the City permanently into anything, and I
would say that about any situation, but I say it particularly about this because this is one
of the few decisions we will make that we can't change.
When staff tells us that consumers will benefit more from "opting in" early, what's that
based on? Do you have any statistics from other communities? Or is that based on "our
sense" because the people I'm talking with are telling me just the opposite—that while
that might be the case, it might as easily be the case otherwise, and typically, in
deregulated markets, consumers benefit late in the process. I think you've experienced
that in your own life with long distance service that continues to get cheaper and
cheaper.
The differential in benefits between "opting in" now and later is relatively small. The
differential in potential costs between "opting in" early and "opting in" later can be equal.
I mean, if we talk about a cost benefit analysis, there it is for us. I don't think anyone can
sit here and tell us that if you don't "opt in" at the beginning of this period, you've lost the
game and we're going to lose millions of dollars for the ratepayers of Georgetown. I
don't think they can honestly think that, and the other side of that is we might cost
ourselves a huge ............. if we make a mistake now. This is not a bet that I'm willing
to place—not with my own money and certainly not with the ratepayers' money. In
words of one of my esteemed colleagues on the dais, I don't think we want to get the
cart before the horse on this issue."
In response to Hart's explanation to questions:
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Lyda: "Let me be clear about that. I think there has been visionary planning both at the
staff level and at the Council level for a deregulated market, and as I think I said
repeatedly, there's not any question in my mind that Georgetown is going to be in a
competitive situation ......... The question in my mind is whether it's now or six months
from now, and most of your responses to my questions tend to confirm what I said. I
mean, when you talk about the preliminary numbers on the wheeling rates for investor-
owned utilities bearing up our assumptions, but if those preliminary numbers change,
then that would give us cause for concern. Yeah. I think it would, and I think we need to
watch the market. Those numbers are going to change. There is no question in my
mind that this is going to be a volcanic period of time in Texas. Our retail electric
providers are going to be in a very competitive mode, and for us to assume that their
numbers are going to stay the same or go up, is not a good assumption, I don't think.
There are real questions about the benefits to be achieved by our residential ratepayers,
and I think we need to educate them, and we need to be resolved early in all our minds
about this issue before we make this sort of momentus decision to "opt in." I'm not
arguing against the notion of "opting in" and I'm not even arguing necessarily against the
notion of "opting in" soon. I'm just not sure that we want to do it now, and I don't know
that we want to be the first, and I think we all want to be prudent about it. I value Bob's
expertise on this issue. I just disagree on the timing. 1 think there are real risks here. I
have a number of unanswered questions, and I spent a lot of time on this."
In response to Barton's question of what Lyda sees in the next six months that will help the
Council make a more informed decision on this:
Lyda: "Well, I think a lot of the rulemaking will be done as Bob indicated. We'll have a
much clearer picture of the direction of the Public Utility Commission, and I think we'll
have more direction from the retail electric providers on how they're going to be
marketing and how they will address the needs of the various size markets. We talked
about what a desirable market Georgetown is, but the reality is that we have what 11 or
12,000 customers. Right now, we're a small fish. We're a rapidly -growing small fish, but
we're a small fish, and let's not delude ourselves, we're a small fish. So, time is on our
side here. We might elect to "opt in" now and we might make the deal of the century, but
the odds of that happening are pretty low. I think they're like one in a thousand. They're
better than winning the lottery, but they're a lot worse than a lot of other things. The
odds are on our side if we let the situation develop, if we get some of these questions
answered, if we don't have to make this decision based on preliminary numbers or
assumptions or our best guess on what the politics at the PUC are going to be like.
We're going to have to make a guess ultimately, when we "opt in," whenever it is, but
hopefully it will be a guess based on a lot more solid information, a lot more data. I just
think it's premature, and when I started this comment with the qualification that I respect
everybody here, I meant it. I appreciate all the work that staff has done. I appreciate all
the work that Bob has done, and I respect Bob's knowledge on this. I just see problems
with it and I think waiting a while is the smart thing for us to do."
Regarding whether someone from outside our organization should be brought in to educate the
Council and the public regarding this issue:
Lyda: "Well, how about the trade groups? How about the IPPA or TML? There are
objective folks that we could bring in. We could bring in people from other states .......
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Lyda's Remarks re. Item T on 10-26-99
Page 6 of 7 Pages
I'm interested in hearing something from more than Reliant Electric, and that's nothing
against Reliant Electric, but they have an axe to grind here."
After Hart's response that originally, he had thought the City could wait six to eight months but
after talking to people in the marketplace and in various trade groups, he now feels that the
decision needs to be made now:
Lyda: "Well, I think that's a good one to note, but the caveat that I would make here is
that I appreciate all that information, and I appreciate that you know it, but I don't know it
all yet, and I've made a real effort to know a lot of it, and I think that as a Council making
these decisions of these great ramifications, we are all responsible for being completely
knowledgeable about this topic before we make the decision, and again, the retail
electric providers, while they may be great sources of information, I don't see how you
can not say that they have a vested interest in this discussion, I mean they just do.
That's not saying that they're not good people. They have a job to do, but we have a job
to do too, and it's to make the most informed decision we can."
When Hart clarified that the City would not be making any deals with (Retail Electric Providers)
REP's, rather the REP's would make the deals with the consumers and the City would give the
consumers the option to make their own deals if they choose to:
Lyda: "I understand that. There are a lot of issues out there ranging from the tax
exempt financing issue right on down to what we're going to really be able to charge in
wheeling rate, and I don't think you can sit there, I know I can't sit there and say I have
great confidence about any of those issues. You can't sit there and tell me we're going
to be able to maintain our margin or our wheeling rate, because you don't know. You
can't, it's impossible. You can't say, based on preliminary numbers, that the ......... but
you can't know beyond that, and this is a serious, serious decision."
When asked by Barton if those unknowns were going to be any different six months from now
because nobody would be in a deregulated market:
Lyda: "I think they will be. I mean, that's why the other 72 utilities are sitting back
monitoring this situation. They're not comfortable making this decision. They're
operating under the assumption that we are going to have more information as time
goes by. Certainly, the retail electric providers are going to become active in the market.
They're going to be out visiting with Bob and managers like Bob all over the state, and
the PUC is going to be making its rules, and the situation will become clearer. It may still
be hazy, but I think we'll have a lot more than today to work on. We can't help but have,
because we don't have a lot of facts."
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