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HomeMy WebLinkAboutMIN 02.09.2010 CC-WMinutes of the Meeting of the Governing Body of the City of Georgetown, Texas Tuesday, February 9, 2010 The City Council of the City of Georgetown, Texas, met in Regular Session on the above date with Mayor George Garver presiding. Council Present: Council Absent: Keith Brainard, Gabe Sansing, Dale Ross, Ben All Council Present. Oliver, Pat Berryman, Bill Sattler, Patty Eason Staff Present: Paul E. Brandenburg, City Manager; Mark Sokolow, City Attorney; Jessica Hamilton, City Secretary; Micki Rundell, Chief Financial Officer; Jim Briggs, Assistant City Manager for Utility Operations; Mark Thomas, Economic Development Director; Chris Foster, Chief Financial/Utilities Analyst; Keith Hutchinson, Public Communications Director Minutes Policy Development/Review Workshop - Call to order at 04:02 PM A Overview of the City's current outstanding and proposed debt obligations -- Micki Rundell, Chief Financial Officer With a Powerpoint presentation, Rundell gave Council an overview of the annual debt. She spoke about types of debt and said the first type is general obligation debt which is divided into tax supported bonds and certificates of obligation. She said general obligation bonds are voter approved, unlike certificates of obligation. She said general obligation debt include amounts approved from the November 2004 and November 2008 bond elections. She spoke about certificates of obligation (CO) and said they are allowed under state law, do not require voter approval, are considered tax supported, and the majority are 20 year bonds. She said the City also issues self-supporting CO debt. She noted those are repaid through fees or rates. She said self supported CO debt is issued mainly because of the interest savings. She said the debt service is repaid through sales tax revenue and noted the storm water drainage utility is funded through user fees. She said airport is another receiver of self supporting debt. Rundell said other tax supported debts are limited tax notes and certificate of participation. She noted the City does not have any outstanding certificates of participation. She said, as of September 30, 2009, the City has $57,412,475 worth of outstanding tax supported debt and $25,692,525 self-supporting debt. She noted a majority of the self-supporting debt is related to the Georgetown Transportation Enhancement Corporation (GTEC). She showed Council a graph demonstrating the history of the City's CO debt and debt repayments. She also showed Council a graphic demonstration of the City's debt capacity. She spoke briefly about the general government tax supported debt. She showed a graph describing the tax supported and self supported debt analysis over the past 10 years. She noted the other type of debt the City issues are revenue bonds. She said revenue bonds fund the City's utility infrastructure. She described the City's bond covenant and listed the outstanding balances of revenue bonds, which are $23.2 million in the electric fund and $30.3 water/wastewater. She said the City has high utility revenue bond coverage and she showed a graph demonstrating that fact. She gave Council a chart reviewing the City's historical debt. She said the electric services portion of the revenue debt continues to grow significantly. Rundell spoke about the current City debt conditions. She spoke about bond ratings and how rating agencies City Council Meeting Minutes/ Page 1 of 3 Pages review financial and management conditions. She said the bond agencies determine "credit worthiness." She spoke about the City's current bond rating and said with Moody's, it is A2 General Obligation and Revenue and AA+ General Obligation and, with Standard and Poors, AA- Revenue. Mayor asked and Rundell described the importance of the bond ratings. She said Georgetown is one of the only AA- cities in the area. She mentioned population growth in comparison to the City's debt. She spoke about the City's total tax -guaranteed debt per capita (including self-supporting debt). In comparison, she showed Council a graph showing the total tax supported debt per capita. She noted the assessed valuation continues to be very strong and said staff anticipates that the valuation will be stagnant this year. Brainard asked and Rundell confirmed all of these statistics take into account the current frozen property in the City. She said the tax supported debt per capita continues to decline. She showed Council a graph of the total tax supported debt compared to general sales tax revenue growth. She said the total tax supported debt has been relatively flat. She showed Council the City assets net of related debt. Sattler asked and Rundell said the graph demonstrates the value of the plants. Sattler asked and Rundell said the graph has no revenues attached to it. Rundell said this demonstrates what the net value of the City would be if the City were to sell its assets. She gave Council a debt to assessed valuation comparison and said Georgetown is 2.85% this year. She also demonstrated the utility customer growth and said the City is close to 24,000 accounts today. She showed Council a graph of the outstanding utility debt per customer. She showed Council the total electric debt compared to electric assets. She noted the value of the system continues to increase and said the system is valued at well over $80 million. She showed Council the total water service debt compared to water service assets. Rundell described the 2010 debt issues and the projects the debt would go toward. She noted staff anticipates net proceeds will be in excess of $15 million. She said the general obligation debt would be $2.34 million and CO bonds will be for $250,000 to begin the planning for Fire Station 5. She noted the tax impact of the projects are less that four one -hundredths of a cent. She noted self-supporting CO bonds will total around $4 million and revenue bonds will total $10 million. She reviewed the next steps in the debt issuance process. Ross asked and Rundell said the land cost for fire station 5 is not included in this bond issue. Ross said and Rundell confirmed the numbers given in the presentation are just for the design and not for land cost. Sattler asked and Rundell said there will be a minimum of three issues for both GO and CO bonds. B Discussion and possible direction regarding outsourcing of city services -- Keith Brainard, Councilmember District 3 This item was pulled by Councilmember Brainard C Presentation and discussion regarding Project Lab -- Mark Thomas, Economic Development Director and Kerry Oliver, President of Radix Biosolutions Thomas gave Council a brief history of Radix Biosolutions. He spoke about how Radix was able to get money from the City and reviewed updates and advancements that have been made at the Texas Life Sciences Collaboration Center (TLCC). He noted there are now 20 jobs that have been created at the TLCC. He spoke about the many grants the TLCC has received and what those monies have gone toward. He spoke briefly about the success of Intralink, a subset of Orthopeutics, which is also housed at the TLCC. He noted the City hopes that a spin out of more businesses will occur as a result of the success of TLCC. Thomas introduced Dr. Oliver, co-founder of TLCC, to speak about Radix Biosolutions. Oliver said Radix has a new project going on and said they are looking at addressing a particular market in the pharmaceutical industry. He showed Council their vision and mission statement. He said they take a very high scientific approach to providing services to the pharmaceutical industry. He said their target market is the pharmaceutical drug discovery (R&D) industry. He spoke about the current market needs of the pharmaceutical world. He said increasing the efficiency of getting drugs to the market means an increase in profits. He summarized how their company is going to work at increasing the efficiency of getting a drug to market. Oliver spoke about a major inflection point that occurred with them this past summer and said, at a conference, they came across a workshop called "21 st century bioanalytical laboratory: maximizing quality and efficiency through innovation." He spoke about how that workshop changed the way Radix will approach their market. He said Radix took a number of companies that were at that conference and formed a consortium. He spoke about the different companies in that consortium and their partnerships. Oliver showed Council a graph demonstrating the employment history of Radix. He said they will be growing quickly with the addition of the new 21 st Century Laboratory. He spoke about the Radix team and who is involved. He spoke briefly about Radix Biosolutions' many business accomplishments. He said their sales channels are global distribution agreements, direct sales, indirect sales and noted a vast majority of City Council Meeting Minutes/ Page 2 of 3 Pages opportunities exist on both coasts. He provided the Council with a short list of the Radix customer base. He described their business strategies moving forward and spoke about their lab capital equipment costs as well as the Radix financial indicator. Thomas said any questions about financing will be discussed in Executive Session. D Presentation, discussion, and possible direction to staff related to the development of a Thermal Storage Distribution Energy Resource for strategic placement within the Electric System to augment the electric distribution grid, reduce ERCOT cost exposure and power consumption over peak energy demand periods -- Chris Foster, Chief Financial/Utilities Analyst and Jim Briggs, Assistant City Manager for Utility Operations With a Powerpoint presentation, Briggs spoke about the City's energy resources including ice energy and the idea of thermal energy. He gave a brief summary of how ice can be used as air conditioning during peak times and the hottest part of the day. He said they are bringing this to the Council because the Georgetown Utility System (GUS) Board saw it at their last meeting. He gave Council a high level description of how this technology works. Mayor asked and Briggs said the City will concentrate on commercial properties and whether or not they would benefit from these new units. Briggs said thermal storage reshapes the load curve and noted it will cause the energy consumption to be shifted off peak. He provided Council with product specifications and more information about the units. He introduced the representatives from Ice Bear. Speaker, Sarah Nathan, showed the City Council a video which explained how Ice Bear energy storage works. Speaker, Chris Hickman, thanked Council and described how the City would benefit from this service. He showed Council a graph demonstrating the effect on the end use customer. He spoke to Council about a smart grid solution and noted AC peak demand is the root cause of summer grid problems and is driving the increasing cost of electrical energy. He said Ice Bear is a cost effective solution to the problem. Nathan said the thermal energy storage not only benefits the utility, but it benefits many entities throughout the community. She said there are environmental benefits but noted their product also allows business to use energy more efficiently. She said their product is smart grid ready. She listed an example of this and gave specific numbers for The Georgetown Project. She noted their company does a market assessment and said they are aiming for 25% market penetration. She said the City does not pay for the units until they are commissioned. Briggs said staff is looking for some indication from Council that this is an item of interest. Mayor asked if there will be a future agenda item on this issue where Council can ask further questions. Briggs said staff could bring this item back at a subsequent meeting for more discussion. Meeting recessed to Executive Session under Sections 551.071, 551.086 and 551.087 -- 5:15 p.m. Meeting resumed and adjourned -- 6:06 p.m. App ved Cif-�---- Mayor eorge Garver Adjournment The meeting was adjourned at 06:06 PM. ttest: ity Secr air ssica Hamilton City Council Meeting Minutes/ Page 3 of 3 Pages