Loading...
Min 08/16/1994 634 Wichita Falls,Texas Memorial Auditorium Building August 16 , 1994 Items 1 & 2 The City Council of the City of Wichita Falls, Texas, met in regular session on the above date in the Council Room of the Memorial Auditorium Building at 8: 30 o'clock a.m. , with the following members present: Michael Lam - Mayor Leon Mallonee - Councilors Terrance E. Loughry - Angus Thompson - Bill Daniel - J. W. Martin - Harold Hawkins - James Berzina - City Manager Greg Humbach - City Attorney Lydia Torres - City Clerk Mayor Lam called the meeting to order. The invocation was given by Rev. Paul Goodrich, Pastor Floral Heights United Methodist Church. Mayor Lam proclaimed the week of August 15-21, 1994 as "Texas Public Employee Week" . Roby Christi, Bicycle Rider Club and Hotter 'N Hell Hundred, presented the balance of a $30,000 check to the City of Wichita Falls for their contribution to the Wichita Falls Trails Project. He expressed his appreciation for the partnership relationship with the City. He also expressed appreciation to all the Hotter 'N Hell Hundred volunteers. Item 3 RESOLUTION NO. 127-94 RESOLUTION CANVASSING THE RETURNS OF THE SPECIAL MUNICIPAL ELECTION HELD IN THE CITY OF WICHITA FALLS, TEXAS, ON AUGUST 13 , 1994 , ON A PROPOSITION ON THE QUESTION OF THE ADOPTION OF AN ADDITIONAL ONE-HALF CENT SALES AND USE TAX UNDER THE PROVISION OF SECTION 4B OF THE INDUSTRIAL DEVELOPMENT CORPORATION ACT. Moved by Councilor Thompson that Resolution No. 127-94 be passed. Motion seconded by Councilor Hawkins and carried by the following vote. Ayes: Mayor Lam. Councilors Mallonee, Loughry, Thompson, Daniel, Martin, and Hawkins. Nays: None 635 Item 4 Moved by Councilor Thompson that the minutes of the August 2, 1994 meeting be approved. Motion seconded by Councilor Martin and carried by the following vote. Ayes: Mayor Lam, Councilors Mallonee, Loughry, Thompson, Daniel, Martin, and Hawkins. Nays: None Items 5a-6i Moved by Councilor Martin that the consent agenda be approved. Motion seconded by Councilor Mallonee and carried by the following vote. Ayes: Mayor Lam, Councilors Mallonee, Loughry, Thompson, Daniel, Martin, and Hawkins Nays: None Item 5a RESOLUTION NO. 128-94 AWARD OF BID TO CHEMINOVA, INC. FOR THE 1994 ANNUAL SUPPLY OF MALATHION CONCENTRATED INSECTICIDE Item 5b RESOLUTION NO. 129-94 RESOLUTION AWARDING CONTRACT FOR PURCHASE OF FLOWERS FOR PARKS AND MEDIANS Item 6 Minutes of the meetings of the following boards and commissions were received. a. Wichita Falls Traffic Safety Commission, May 4, 1994 b. Wichita Falls Traffic Safety Commission, June 1, 1994 c. Wichita Falls Traffic Safety Commission, July 6, 1994 d. Planning and Zoning Commission, June 8, 1994 e. Planning and Zoning Commission, June 15, 1994 f. Board of Electrical Examiners, July 14, 1994 g. Civil Service Commission, July 28, 1994 h. Employee Benefits Trust, August 9, 1994 i. Commission on Human Needs, August 8, 1994 Item 7a A public hearing was held on the amendment to a previously approved Final Statement and the approval of the current year' s Final Statement of Community Development Objectives and the Proposed Use of Community Development Block Grant Entitlement Grant Funds from B-94-MC-48-0030. Mayor Lam asked Mr. Dave Clark to give an overview. Mr. Clark stated that these are Community Development Block Grant Funds for the City of Wichita Falls, which is an entitlement City. This means it receives an annual allocation of funds and this year for programmable monies the City is receiving $1,966,000. The city is receiving $1, 966,000 in new money and will be carrying over $108,000 which is coming from projects which have been put to the side. There is also a program income of $7,235 which gives a programmable amount of 636 Item 7a, cont'd. $2,081, 235 . After receiving applications for almost $4,000,000 it was necessary to look through all the applications and establish a recommendation for those things that would be recommended for funding. Mr. Clark listed the following for funding: 238,912 Public Services $ Child Care, Inc. ( $73 , 356) M.L.K. Centers ( $114,670 C.A.C. Meals-On-Wheels ( $38,386) N. T. Center for Non-Profit Management ( $2 ,500) N.T. Sr. Citizens Services Home Delivered Meals ( $10,000) Rehabilitation Projects for Non-Profits $176 ,000 Christmas in April ($70,000) Child Care, Inc. ( $6, 000 for Lamar Center bathroom renovation) N.T. Community Health Care Center ( $100,000 for partial funding for Travis School alterations) Public Facilities Accessibility Improvements $ 91,000 Comply with A.D.A. Fire Station Number Two Improvements $335. 000 Extension of Fire Station Number Two and purchase of a pumper fire truck to be stationed at Fire Station Number Two. Public Facilities $327,112 Street Improvements ( $132,939) Engineering Costs ($16,300) Water Line Replacement ($50,473 ) Park Improvements ( $92,400) Kemp/Sunnyside Lighting Improvements ( $5,000) Mr Clark noted that the Travis Street Drainage Project was culled pending additional studies ( $30,000 ) . Councilor Hawkins commented that one of the items they are recommending is that any non-profit organization seeking assistance must attend at least two training sessions held by the North Texas Center for Non-Profit Management. Secondly, they are recommending that the funding for the Community Action Corporation Meals-On-Wheels and the Senior Citizens ' home delivered meals be funded this year with the contingency and understanding that they meet together and devise, develop and explore a plan to utilize one kitchen and one program. We have two kitchens, two staffs and two programs and we can accomplish more with a one kitchen concept. Third, the funding for the North Central Texas Community Health Care Center of $100,000 is contingent upon them soliciting the additional $166,000 they need for their renovation program. This is the same type of contingency that was tied to the appropriation by the County. We feel this will be an outstanding program for our city and for North Central Texas. Mayor Lam informed that this was the final public hearing and declared the Public Hearing open. Terry Pentz, President of Maternity Cottage, stated that she was here to appeal the decision of being turned down for funding. She said that she wished they had had a contingency last year when they applied for the funds that some of the non- profits are receiving this year. They would have met that challenge and would hopefully be receiving money this year. Ours is not a very popular group in the sense that it is not politically correct. She informed that not all their clients were teenagers, one-third are married, but a lot of them are young. Because of the type of clients they have and the services provided as a shelter for homeless pregnant women some times it is difficult to raise funds in our community. There are problems in our community, two of which are teen pregnancy and homeless pregnant women. With MPEC coming in there has been 637 Item 7a, cont'd. a lot of money pledged to them and it has been very difficult for us to raise funds this year. Last year we promised we would raise the money we said we would, and we purchased our facility free and clear but we still need some more funding. You need to be aware that we are looked at as the step child of the community. We just have the bare necessities and right now we only have a place for seven residents. When we have a pregnant mother with children they have to sleep together or on pallets on the floor; that is not good conditions for someone who is pregnant. We have been approached by Child Protective Services to take some of their clients but we are not licensed for child care, therefore, Child Protective Services cannot place clients with us permanently. They have assisted the Probation Department by taking some of their people. They have a drug treatment program and have no drug babies, which in turn saves the community tax dollars by taking these women into the shelter and putting them through this drug treatment program. They have a lot of good things that have come from their facility, but they do not have funds from which to draw, only from the people in the community. This facility is a place for these women to come when they have no where else to go and without this facility, Mrs. Pentz informed, you are going to have between ten and twenty-five homeless pregnant women on the street at any one time. At this time they are paying duplicate bills until the new facility is completed and they can move in. She asked that their request be reconsidered. Misty McCreary, Executive Director for Maternity Cottage, explained that the reason they need the new facility is because the Church of Christ has donated the facility they are now in and are asking for it back by January 1995. They have been aware of that time restrain and that is why they have been working on the new facility to complete it and move in. She also informed that the reason they are not licensed is because the current facility is not handicap accessible, which will not be the case in the new facility. She stated that they would accept whatever was given to them. Hank Grieb, Volunteer Executive Director for Christmas in April, stated that last year he had asked for and received $35, 000, however, as a part of that request he had informed Council that in their program for this year they were going to be working on roof repairs. It is the most costly endeavor that Christmas in April can enter and that is based solely on the cost of materials. They began with 80 projects which have increased to 109 projects being selected, and of those 31 are roofing. Armored Roofing and Menasco Roofing have assisted in obtaining material cost estimates. Next year they are anticipating on working on over 125 homes. Mr. Grieb commented that with the availability of more dollars they may be able to work on more homes. He asked the Council for consideration for support of next year ' s funding. City Manager advised to try to develop other funding because this program is getting strained. It has been very convenient, Christmas in April fulfills a very important and a necessary part of CDBG funds in that it is in the housing area and we see that as a very strong arm of our efforts. Everything we have heard is that the amount of funds is going to be restricted and I would urge you to use part of your developing to find other funding. Councilor Hawkins added that the group they fall into has submitted funding requests of over $1,400,000 in needs, and they are unable to fund more than $176, 000. For others we might add that the Eastside Girls Club has extreme need for roofing work to their building and we have asked Christmas in April to see if they could fit that project into their schedule. This would not only help Christmas in April but also the East Side Girls Club at the same time. 638 Item 7a, cont'd. Ronnie London, 4404 Post Oak, representing Boys & Girls Club, informed that they had requested an amount of $141,000 for two separate projects for the renovation of their Club. A portion of that was replacement of the original windows installed in 1941 and the other portion was for water proofing of the building. While the window replacements would help in the conservation of energy in that building, the water proofing is more critical. This is the first time that we have asked for this type of funding and we felt we met every requirement except working with the elderly and the health area. Basically we felt we had a strong case because of the children we service. We are serving children predominantly from the east side, north side, Alamo and Sam Houston districts, from which a high percentage are from poverty level homes. A good example is the summer camp where we can identify that 76% are on poverty level and are eligible for free or reduced lunches in the schools. We are serving those same children in this building, from 300 to 500 children a day. One of the reasons we felt this was an appropriate grant request is because it is in the area of preservation. As you know this building is a city landmark and is recognized as a part of the history of Wichita Falls. It was built with WPA labor through a combined cooperative effort through the City of Wichita Falls. This is still a very viable building and the hub of our operation which serves over 5,000 children. In just the last year we have added 1200 children with the inception of girls and it continues to grow daily. That building would be preserved for children to enjoy in future years and also it would be a good investment for the City to be proud of. This building is on City property and if the organization moved that building it would revert to the City. It would be in the City' s best interest to help in the preservation of something that could revert back to them. Mr. London said that they would appreciate any help and any consideration on this funding now or throughout the year. Mayor Lam asked Councilor Daniel to give an idea of the Committee' s criteria and how they arrived where we are today. Councilor Daniel stated that this was the first year he had served on this Committee and it was an eye opener. We were met with the challenge of the fact that we had limited funds with which to operate leading to another challenge of how to equitably allocate these funds. Every group that appeared before our committee served legitimate purposes in this city and they met the criteria defined for CDBG funds. Non-funding of a given project or group does not imply a lack of worthiness. All the groups were legitimate and had worthy goals and legitimate needs. In my mind it was a good decision to allocate the funds, as limited as they are, to those agencies in which the City had a hand in creating that agency or that agency was carrying out a function which would have to be fulfilled by the City Staff. I think that after we made that decision then subsequent decisions on funding were equitable. Most of the groups you heard today were started by groups other than the City of Wichita Falls and did not receive funding. Councilor Hawkins commented that one thing he was called to task on is that the City made their request first, but everyone needs to know that the City' s request was looked at too and it was also trimmed. City Staff did not get first pick of the money; every line item on every list was looked at and there were cuts made, including in the City' s. There were twice as many projects that we wanted to fund than we had money for. I know the needs of such projects as the Maternity Cottage and the Boys and Girls Club. We did not turn you down we were just unable to fund you and we will continue to receive your reports, do our study and if we can find the funds we can make sure they get to you. Mayor thanked the Committee for the difficult task they had 639 Item 7a, cont'd. and the tough decisions which were made. No one else wished to be heard and Mayor Lam closed the Public Hearing. Item 7b A public hearing and worksession was held on Lone Star Gas rate case. Mayor Lam commented that this was in regard to some rate adjustments by Lone Star Gas and he asked City Attorney to tell us where we are. City Attorney informed that we would have the worksession first and then open for public comment. He introduced Mr. Steve Morath, representing Lone Star Gas Company, along with other corporate officials from Dallas, Texas, who will make their presentation. Also present are Mr. Jack Reed and Connie Cannedy representing Reed & Stowe Company, independent rate consultants retained by the City of Wichita Falls to evaluate the rate case filed by Lone Star Natural Gas Company. Mr. Morath will make their company' s presentation and he has requested that this worksession be held in the conference room. That is up to the Council but I think it is preferable that we have a public record of the worksession. In the event this goes any further, we will have something to rely on. Mr. Morath stated that they would prefer to have this worksession in the conference room because it is more conducive to question and answer and to their presentation. I have no problem with a public meeting, we can come back out here when we get through with the worksession. In worksessions that we have had with previous City Councils it is preferable we go to the conference room and do this. Mayor Lam responded that they would take the City Attorney' s recommendation because they would feel more comfortable doing this in open session. I am not sure that with us not posting it would fall under the terms that go under executive session. Mr. Morath said he was not suggesting an executive session, we want a public hearing on this matter. It would be nice to go into the conference room to conduct the worksession and we could always come back here and I can make any public statements as to our position in front of the cameras. We do not want an executive session, we want a public meeting and it was my understanding that I was going to get our chance to tell our side of the story. I would prefer to do it in the conference room, but we can do it here if that is Council ' s preference. Mayor asked for Council' s input. Councilor Thompson commented that he felt the public had the right to hear what they have to say. Mayor stated that he did know how many of those present were interested or would follow them into the conference room but it could get crowded and it would end up being the same situation as out here. He suggested that they just proceed out here instead of in the conference room. Mr. Morath distributed some handouts to the Council and expressed his appreciation to the Council for the opportunity to be able to tell their side of the story because there are a number of issues that are involved in their rate case. Primary issue is one of allocation which is one they want to talk about this morning. He reviewed the table of contents in the handout provided to the Council. He began with their Basic Business Formula, which is used to explain how they arrive at their revenue requirement. When they begin to look at a rate case in any city that they serve they first have to determine what their revenue requirement is and they use the Basic Business Formula for arriving at that. Next they go to the Class Cost Allocation methodology, followed by the Allocation Factors for determining the allocation of their investment here in Wichita Falls. We will make a comparison between Lone Star Gas ' s allocation and the Consultants in order for you to understand how we do it and how they do it. Finally, we will give a comparison of the rate 640 Item 7b, cont'd. information in terms of how it affects the customer which is the bottom line. The Basic Business Formula is what we use to explain our revenue requirement. The two columns are for present and proposed, and the present column shows what our revenues are under present rates. We are like any other business, we have to factor in what it costs for our product, our operation expenses, our taxes, and our return. You will notice that under both columns, present and proposed, the cost of gas and our operating expenses do not change. The reason for that is we are able to recover that each month through our gas cost adjustment. We use $4. 02/1000 Cubic Feet in determining our rate and as our rate average cost of gas fluctuates over and above that $4. 02 we are able to recover that through our gas cost adjustment that is on your bill each month. So if it falls below $4. 02 we pass that savings on to the customer if it goes above we are able to recover that. That is not a factor in our request, nevertheless, it is the biggest chunk of the pie in our revenue requirement as you can see by the percentage. Sixty-eight cents out of every dollar we get goes for the cost of gas. Operating Expenses - we are required through the Gas Utility Regulatory Act to use an historical twelve month period unlike the City who projects forward on their budget. We are required by law to go back and recapture a twelve month period. Those expenses are known and we were able to adjust them for normalized test year and that figure does not change under present and proposed, yet, between that and the cost of gas, you are looking at 87 cents out of every dollar we take in going for the cost of gas and operating expenses. The next thing is taxes and that does change when you go to the present and proposed rate because we have what we call revenue related taxes and federal income tax. The more revenue we take in the more taxes we have to pay on that. We pay the City 3 0 on a quarterly basis for street and alley rental. As we increase our revenues the City gets 30 of that on the street and alley rental. In this particular case if we were to get the full amount that we ask for that would translate to about $43 ,000 in additional revenue to the City. Under return, present rates, we have no return, we are losing money to the tune of $331,000. The Consultant said in his report that we are guaranteed a return; there is nothing in the State Law that says that a utility is guaranteed a return. We are only asking for the opportunity, and the word opportunity is in the law, to earn a fair and reasonable return. That is what we are asking for today, that opportunity. I am showing you in black and white we are losing money, have been losing money and we have to turn it around. If we were to get the full amount we are asking for that would give us the opportunity to earn $773 ,000 to $774,000 and I can tell you now with absolute confidence that we will probably never achieve that return because the test year we are using is already a year old. The regulatory lag is already eating away at the return that we are tying to achieve but that is the nature of rate making. This is what we are trying to achieve and it equates to 5 cents out of every dollar that we take in, it is the smallest piece of the pie and is the only piece that can fluctuate. Whatever the Council does will not have an effect on cost of gas or operating expenses, the effect it will have is on taxes and return. Mayor asked if their rate return is figured on the 50 of the Cost of Gas, Operating Expense, and Taxes. Mr. Morath responded that it was 50 of the Total Revenue Requirement, the $16 , 000,000 . Do not be confused at the bottom, we talked about the return on adjusted value rate base, the - 2. 83o refers back to the negative $371,000 while the 5. 890 return refers to the $773 ,000. You get that percentage by dividing the $13 ,000,000 rate base into the return to get that percentage. We are asking for a 5. 89% return on our rate base here in Wichita Falls. Let me stress that the method we use for arriving at our revenue requirement and the method we use for class cost allocation is the same in every city we serve and we serve over 500 communities in Texas. We use the same methodology in all of them, we do not change. Granted the numbers might change because of the makeup of the distribution system we may 641 Item 7b, cont'd. be filling in, but the methodology is the same. Councilor Daniel asked for an explanation on the adjusted value rate base. Mr. Morath explained that they arrived at the adjusted value rate base by taking the original cost in the system and replacement cost new, and give it a 60/40 waiting, 60% the original cost of 40% of the replacement cost new and they arrive at this adjusted value rate base. Mr. Morath informed that the law allows you to use a range from 75% to 25% waiting, they use the 60/40 because they feel it is the most appropriate waiting to give. This is not to be confused with the actual value of the system Wichita Falls, that is for rate making purposes, that' s a rate basically used. There are a number of issues involved in the rate case but the single largest one, the one that makes the biggest difference between what we are asking for and what the ,.: Consultant has recommended has to do with allocations. It is a very complicated analysis that goes into this, but I will break it down to the simplest components. When we go into a system and we say we have a deficiency, we are not earning a return, we first take our cost and try to identify where we can make a direct assignment. We try to go in and determine where those mains and transmission lines are that are serving a single customer, where that customer is only getting their gas from that source. We make a direct assignment to that customer; we remove that cost and assign to that customer. Ideally, you would like to do that for all the customers throughout the City but that would not be practical. We did the best we could to make those direct assignments to those costs. For those costs that are remaining we have to allocate it. We use the customer accounts, the number of customers we have in Wichita Falls (26, 000 residential and commercial and 22 industrial) . Under direct assignment we have been able to assign mains and transmissions to nine of those 22 industrial customers. We also allocate based on peak day demand and the reason these are used is because the customer account causes us to purchase meters and send bills; these are things that cost costs. When we are able to identify a factor that causes costs to be incurred that is a criteria for allocating the expenses. The peak day demand determines how big the lines need to be in order to move the gas through the customer' s need. Those are the two factors we use for allocation purposes. Mr. Morath handed out a map of Wichita Falls that showed the direct assignments. The red and green lines represent the mains and lines that have been directly assigned to those nine industrial customers here in Wichita Falls. These lines are like one way streets, they are a one-way feed, the gas only moves in one direction and it goes into that industrial customer' s facility. For confidentiality purposes, we have identified those customers by numbers. We have made the direct assignments to nine of those customers identified in the green and red lines. The green lines are the transmissions lines. We have transmission and distribution lines. Transmission is a different division within our company and the distribution is the part we are talking about today. This map is so compelling in that once you have accepted direct assignments then those customers are no longer involved in the allocation. We have identified the cost with serving those customers and we have removed that from the rate case. Keep this in mind because this is going to be a big difference between the way we allocate costs and determine rates and the Consultants. He referred to the handout and pointed out that the difference between the primary allocation factors between what they used and what the Consultant used. Lone Star Gas uses direct assignment, handout shows their percentage, part of the investment that is directly assigned by class, and Consultant uses number of customers and peak demand. No annual volume is factored into their methodology, but the Consultant uses annual volumes in their allocation. It shows here that 93% almost 94% of the costs are allocated toward the residential and commercial. 6. 4% is the allocation factor used for the industrial. On the Consultants methodology and the allocation 642 Item 7b, cont'd. factors they used, they have accepted the direct assignments, the red and green lines and our cost associated with that. But here is the big difference, they use their volumes that those ,nine customers use and allocate a portion of the distribution system right back to those customers although they do not receive their gas through that system. They achieve no benefit from that system; but one thing it does do it results in those nine customers picking up 62% of the total distribution in Wichita Falls. It makes no business sense at all. Once you have accepted our direct assignments those people no longer are a factor in allocation. Councilor Hawkins commented that they could identify those nine customers that their gas is bought for them and Lone Star Gas makes a profit off of it. But because you take them out and take your profit out you want to not count them because it is to your advantage. Mr. Morath responded that that was not correct. He said that those mains represent a significant investment. These mains are put in the ground and gas is moving through them to serve that customer. We have taken the investment associated with those mains, those costs, that investment, and removed it from the rate case but none of the rest of the customers in here are picking up the cost of that investment only these customers. Keep in mind we are filing a rate application for the residential and commercial customers, we are not filing a rate increase for our industrials. We are trying to remove those costs out so that we can get to the point where we can allocate that part of the distribution system that is served by the residential and commercial customers. Councilor Thompson inquired if they raise money based on the amount of gas they sell; if they sell a lot of gas they make a lot of money. Mr. Morath replied in the affirmative. Councilor Thompson commented that as Wichita Falls grows, more houses are built, and more people are buying more residential gas, does that mean the residential side is up? Mr. Morath replied that as they grow they put more lines into the ground, their costs go up and that affects operating expenses and their investment. As their investment goes up, hopefully, they will have enough sales and demand from their customers to off-set that expense and that investment. Over a period of time that is not going to happen. Councilor Thompson questioned if their rate had remained pretty steady. Mr. Morath answered that it was to the contrary, since 1983, last rate increase, they have taken their greatest loss in residential customers while commercials remain pretty much the same. Around 2000 customers have been lost since 1983 . Whenever you have a customer that is receiving their gas from a single source and you take that investment, the cost associated with that and you remove it from the rate case, it is not fair to ask that customer to pick up a portion of that distribution system when they don' t get their gas from that system. That goes against any kind of class cost allocation. We are trying to eliminate subsidization between classes of customers. Councilor Daniel referred to Mr. Morath' s initial comment that Lone Star Gas was losing money. Councilor Daniel stated that he was getting the impression that they were only looking at a part of Lone Star' s business of losing money on the residential and commercial side not the industrial side. Mr. Morath agreed. Councilor Daniel commented that was not straight forward because they were only seeing the losing side and not the profitable side of the their business. Mr. Morath responded that there is not much profit being generated through their industrial class; if it was, how did they lose 40% of their load by customer No. 8 on the map. If we were competitive that would not have happened. Independent pipeline companies are picking off their industrial customers. That is the profitable side but we are having a difficult time being competitive with the gas price situation that we are facing today. Councilor Daniel stated that he needed to be able to pick up the information Lone Star Gas is providing the Council and say that it represents everything. Mr. Morath replied that they were only applying for residential and commercial customers only. What they are faced with today in the industrial side is a very competitive 643 Item 7b, cont'd. situation. We are trying to determine what part of the system is benefiting the residential and commercial class of customers so that we can set a rate for those customers and not have subsidization. Mr. Morath proceeded to the next page of the handout and referred to the map. He stated that the Consultant had allocated $261,000 to Customer 22, which is a direct assignment, one way fee. That is 5% of the total allocation to that bigger customer. Customer 10 has been allocated $2,000,000 of the system. We have a number of customers which have been allocated $1. 2 million of our system also. The total is 62% of the total system allocated to these customers who we have already made a direct assignment and have already moved the investments associated with serving those customers out. They have been hit twice and we don' t feel that is right. It makes no business sense and we do not feel like there should be an adjustment for that. If you will remove these nine customers where we have made direct assignments and remove them from the allocation and make that adjustment to the Consultants methodology we show that there is a deficiency of $1. 1 million in the Wichita Falls system. That compares to $1. 4 - $1. 5 million that we have proposed, a $300,000 to $400,000 difference in the way we have done it and the way they would have done it, if they would have done it correctly. In their report they have already indicated that total system deficiency of $537,000 and the loss of 40% of our sales to customer No. 8 which we have provided evidence to that effect because there is now a pipeline going in there, gas isn' t moving through, and we have lost 40% of sales. We have another $280,000 on top of that of a deficiency coming to over $800,000, a total system deficiency that we have here. We have been asked for a revenue increase of about $1.4 million with Consultant' s methodology that we do not agree with. There is a $1. 1 million deficiency and they have already indicated even without the correction there is an $800,000 deficiency. There is no question that there is a deficiency, there needs to be a rate adjustment for that. You can allocate it between the customers, residential/commercial, that is another matter. We feel like it needs to be cost base. On the last page of handout, I think it is important not to forget our customers and that is foremost on our minds before we file a rate application, as how the impact is going to be to a customer. If we get the full amount that we are asking for the customer would pay an average residential bill of about $40 a month. That is an increase of about 12% from what they are paying since 1983 when the last increase went into effect. If you used Alternate Rate 1 on the right which is the rate that we calculated, if you make the correction into the Consultant' s allocation, that would be a 7. 4% increase since 1983 . Mr. Morath responded in the affirmative to the Mayor' s question of the Railroad Commission taking a stance as to distribution or allocation methods. Mayor asked if this was a method that had been approved by regulatory agencies. Mr. Morath answered that it was and that it makes good business sense. If you can directly assign our entire system to each class of customer that would be ideal, but there is no way to do that. A customer should only pay the cost of the investment associated with those lines. Mayor stated that he just wanted to know if the Railroad Commission had approved the allocation and distribution and given their seal of approval. Lone Star Gas representative stated that they have approved rates based on this method but they did not specifically state that they approved this allocation. Councilor Hawkins asked if they voted yes then would the Railroad Commission approve the results of this allocation again. Mr. Morath replied that if they voted yes there would be no need for this to go further, you have original jurisdiction. We want to resolve this thing locally. Councilor Thompson asked Mr. Morath if they were asking for the 12% residential increase, what would the commercial increase be. Mr. Morath replied he had not calculated that, but he could 544 Item 7b, cont'd. get that information. Councilor Martin asked if the cost of natural gas had gone down because of the new discoveries. Mr. Morath replied that cost of gas had gone down, but that was not a factor in our rate application because we are able to recover that through our monthly rate adjustments. We base this on $4. 02 if the price of gas goes down below that we pass that savings on each month as it fluctuates above or below the $4 . 02 . We recover that dollar for dollar. Jack Stowe, 12770 Coit Road at LBJ Freeway, Suite 1107, Dallas, Texas 75251 introduced Mrs. Constance Cannedy, Project Director with Reed-Stowe & Company. Mr. Stowe commented that Mr. Morath had stated that Lone Star Gas ' s integrity was being questioned, but that is not the case. Lone Star Gas has a situation here, but to put things into perspective, the cost of their capital has gone down but the level of commercial customers has stayed the same. The level of usage within the City for those customers has stayed the same. The request three years ago made by Lone Star Gas was for $700,000 for residential and commercial and their request today is for $1. 4 million. Keep in mind that expenses and cost of capital have gone down. A statement made during the presentation that is very key is that 400 of the through put has been lost through the industrial load which is non-regulated from the company's stand point. You do not have the right to regulate the industrial contracts. The company has entered into these contracts and they can do whatever they want with it. They can price it anyway they want to. What is happening is not about allocation factors, but I will address that later. In 1991 the Council approved a $100,000 increase nothing has changed except they have lost the industrial load. Is it competitive? Yes it is because it is a non-regulated business. I cannot tell you whether they are doing a good job of competing but they are losing load. That does not give the unbridled right to go to the core customers, residential and commercial, who don' t have the right to go to a gas well outside the city limits and buy the gas and transport it into their homes. like the industrial customers have that right. There were some comments about the allocation process and there is some confusion, this is a very complicated matter as Steve mentioned earlier. There is a little bit of confusion in the presentation. Mr. Stowe referred to the table of the Wichita Falls Distribution Comparison Distribution System of Primary Allocation Factors on page 3. Mr. Morath had mentioned that they directly identified this industrial plant, and you can see that the percentages under either one, Lone Star Gas or the Consultants, they were both the same. We did accept their direct identification of plant and separation of industrial plant, but there are some other allocation factors, those being customer and peak demand. There are mains and services that Lone Star Gas cannot identify for residential, commercial or industrial load which they have to allocate themselves. They take the demand related plant and they allocated it themselves because it has not been identified. Where they directly identified the piece of investment that was dedicated to industrial we did not challenge it we accepted it, but it is the pieces that they did not identify where we have a difference. Regarding the Railroad Commission adopting this methodology, they have not. It has not been challenged, it was presented on an appeal case but it was not addressed as far as the allocation methodology. On the system that was on appeal, it was not that great an issue. A few jurisdictions that did specifically look at the zero intercept methodology proposed by the company, said it was not acceptable. They were the Oklahoma Corporation Commission, Louisiana Public Service Commission, Arkansas Public Service Commission, New Mexico Public Service Commission, and Arizona Public Service Commission. State agencies outside of this state that have jurisdiction over local distribution rights have specifically looked at zero intercept for gas distribution companies and said no. It is a problem throughout the gas industry which is called stranded investment. Federal Energy Regulatory Commission is looking into the situation, and is proposing rulings to come out as to who should pay for stranded 645 Item 7b, cont'd. investments and what has happened when these companies have changed to alternative suppliers. If we are in a situation where that stranded investment was a regulated investment and due to its actions by its regulators that investment becomes stranded, I agree there should be a sharing perhaps of the customers that are left, a sharing of the stockholders, something has to be done. If we are dealing with a situation where a company historically takes the position that it is non- regulated that if we want to go spend $100,000 and build a line to a new plant that has come in and we sign a new contract with them and they decide they want to get their gas cheaper somewhere else we are left with a $100,000 investment. It is not right to go to the residential and commercial customers and say we need that money from you right now. That is the issue right here. At first we thought there had been a clerical mistake when we looked at the application but as we looked at it everything has stayed the same, the only thing is that expenses have gone down. Councilor Daniel asked if it was not true that a utility and a city enter into a partnership in order to have a right to provide utilities to the industrial users, since they are the largest users, then they handle the residential and commercial users. You can' t be so arbitrary as to divide them into regulated and non-regulated. The cities must assume some responsibility for those non-regulated users. Secondly, would it be fair to say that industrial users have in the past subsidized residential users. Mr. Stowe replied that this statement could be made Carte Blanche, but it is possible. Councilor Daniel asked if that were the case would it not be obligatory upon the commercial and residential users at some point to help absorb some of those losses. Mr. Stowe stated that was a decision to be made by the regulator, but the companies can come at any time to file a rate request with you, that is their option. If they want to continue losing money in a certain endeavor and not come before you for a rate increase, that is their option. For you to make the decision that they have lost money in the past, therefore, in the future we will subsidize to make up for that loss. Will the company give you the same assurance and say we are making money on the industrial side, therefore, we want to turn around and subsidize the residential customers. I am not against Lone Star Gas, but they do have a bad situation, but is it totally appropriate to ask the residential and commercial class customers to salvage this situation. I can give you the answer from purely numbers and facts, but you as the regulators will need to make that decision. Mayor Lam asked if by his statement he assumed that the industrial customer over all their lines are losing money. Mrs. Cannedy replied that it was a result of their analysis. The use of their allocation methodology, the result is that the industrial load is losing a considerable amount of money. Mayor said that then the statement that industrial has been subsidizing residential is false. Mrs. Cannedy replied that based on their allocations and methodology, it' s one of those things that depending how you use the numbers, if you use the zero intercept you may show there is a subsidization, but if you Vyyw use the Atlantic Sea Board as we do then the reverse is true. Exactly which one is absolute I can not tell you. We all have our differences of opinion. Zero intercept says there is a certain amount of pipe which has to be built for each customer. It is a dollar amount related with the size, regardless of the size of the customer it just costs so much money to hook up. You build your plan for so many customers so you have a big chunk of the pie allocated based on physical numbers just as a matter of course because you have so many more residential customers than anything else. That chunk of the pie is going to be loaded up on the residential plan. Then another piece of the pie is done on peak demand, the highest percentage of the highest demand on the system for each of those customer classes and that is something that is captured by the company and they can say that 17% or 18% was industrial related, residential 646 Item 7b, cont'd. related, etc. That is the zero intercept. The major difference is, we agree that peak is a very important factor in the design and building of the system. However, another very important factor is the through put itself, how much physical volume is being transported to the end user at the burner tip. You have to consider that factor when you build a facility distribution system. In the Atlantic Sea Board methodology we do not incorporate a hypothetical cost per customer. It looks at real peak demand and real through put. Mr. Stowe compared it to a water pipe line. If the company' s methodology is to design the pipeline for the peak day and that peak day is one mgd pipe, and here is one million gallons a day and customer only uses it for that one day. He gets assigned 100% of that fee, and then another customer uses it 364 days out of the year, 500, 000 gallons going through it a day but he does not have to pay anything. That is the difference. Ours would say we would allocate based one half to the peak demand on the system and one half goes to volume metric side of the system. Mrs. Cannedy gave an example referring to the red lines which represent the lines which have been directly assigned and essentially taken off. It is a pretty good portion of pipe and we have over $5,000,000 in mains. The amount of direct assignment, the red lines is $147, 000. It does not suggest to me that the entire amount of cost had been directly assigned related to these customers. Mrs. Cannedy stated that there was a need in this system of about $538,000. However, that need in our opinion is not from the residential and commercial customer class but from the industrial load. That is a return of 8.71%. In their handout the company was asking for 9. 91% return of the original cost. Mr. Stowe clarified that the 5. 89% is return on adjusted value rate base and that one has been ruled on by the Railroad Commission and thrown out; and it has been ruled on by the Supreme Court of Texas on Southwest Bell VS. PUC case which has been thrown out. The return on the equity contains the component for inflation which recognizes this situation and it is inappropriate to give them a book return applied to an inflation adjusted investment. The actual return when you calculate it, that the company is asking for, is a 9. 91% after tax return. The final results of the residential and commercial, we went through various accounting types of adjustments that we felt were appropriate or inappropriate for the operating income and after all that was massaged and then applying our allocation methodology, showed that the residential class is overpaid annually by approximately $153 ,000 and the commercial class over an amount of $82,000 annu ally. While the system needs $538, 000, it is our position that it should not be collected from the residential and commercial customer. City Manager referred to the statement which was made that the company is in trouble and is losing money on the industrial side. If they continue to lose on the industrial side and adjust those rates to not lose, my perception is they will lose more because they would be pirated more. City Manager asked if ultimately those fixed costs would go back to the residential user, regardless of the decisions made here today. Mr. Stowe replied that that decision is up to the regulator, how much should the stock holders bear of this. City manager stated that was the choice, either lose it on the stock and not get their rate of return or something has to change. Mr. Stowe stated that the problem in this particular instance is if the company is right and if we are truly dealing with something that is non- regulated that risk or reward should go to the stockholder. To the extent that we are dealing with core customers that you have the regulatory responsibility, the stockholders should be entitled because the obligation to serve turn a fair and reasonable rate of return on their investments for providing that service, the opportunity to provide that. We believe our answer provides that for residential and commercial. City Manager asked if every losing industrial line was shut off or gone to an alternative supplier, are their rates set in 647 Item 7b,cont'd. the residential area to carry the company. Mr. Stowe replied that it would be impossible to recover all the investment for the industrial and you would see that the rate request would go from $700,000 to $1. 4 million. If every industry switched to an alternative supplier and didn' t use their transport service here, you would see that $1.4 million go to $3 million. Mayor commented that if the company is doing everything right, but under competitive situation they keep losing their industrial base under this distribution system, at some point and time the residential and commercial are going to have to pay for it in a large way because that is all that will be left. Mr. Stowe added that it would be them or the stockholders. Mrs. Cannedy commented that they were talking about only one type of entity of Ensearch. We have different things that maybe cannot be done by Lone Star Gas Company but can be done by the other ` subsidiary companies of Ensearch to nullify some of that impact. You have to look at this in a broader perspective, and let' s just say that T.U. and H.M.P. were very successful in getting their economic development rider rates put into place and every industrial customer of Lone Star Gas switches to electricity. That does not mean that every residential and commercial rate payer of Lone Star Gas ' s gas bill was going to have to triple. That is the business they have gotten into and they are going to have to compete. About four years ago Lone Star Gas did submit an application to the Railroad Commission, an incentive rider rate to promote gas appliances and then they withdrew that application. If they are going to compete with the economic development riders that T.U. and H.M.P. are requesting, they are going to have to start competing. Councilor Hawkins asked how much the residential customer was subsidizing per year based on cost allocation. Mrs. Cannedy responded that the residential was $153 ,000 and the commercial was $82,000 for a total of $253 ,000. Councilor Martin commented that we are dealing with two methods of allocation, Lone Star is using one and Consultant is using one. With your method industry is still losing and under their method they are making money with industry. Mr. Stowe replied that he was correct. Mrs. Cannedy said that the difference between what the company is asking for and what they recommend is that the we are showing that the system is in need of over $500,000 and the company is showing that the system is in need of $1. 1 million to $1. 2 million but they are coming to you for $1.5 million in residential/commercial. Mr. Stowe informed that based on the company' s allocation methodology they show the industrial class earning about $230,000. Mayor asked if they had made similar requests within the last year to municipalities comparable in size to Wichita Falls. Mr. Stowe replied that they had and this was the first time he had seen an industrial load fall this sharply this quickly. It is probably due to the city' s proximity and the availability of gas here. Councilor Loughry commented that the operating expenses were not as high in 1991. If the City had been growing for the past year or two and a lot of lines had to be put in and had to do a lot of maintenance, and hookups, this year the company could come up with $500,000 less and they would be into the profit. They are using that same number for proposed and the gas cost is going to be the same. Mr. Stowe stated that they run a pretty tight ship and he doubted if there was much room in their operating expenses. The company is constantly looking at ways to control their operating expenses. Councilor Hawkins wanted to know if the Council told Lone Star Gas no increase, what would it cost the City if we had to go to the State. City Attorney replied that the estimated additional consulting fees and attorneys to represent us would be approximately $40,000. That cost is passed on to the 648 Item 7b, cont 'd. customers over a period of time. Councilor Hawkins asked if we had made proposals to Lone Star Gas. City Attorney answered that we had made informal element proposals to the company. Mayor suggested that those comments be reserved for Item 8b when the actual ordinance fixing and determining rates would be addressed. Councilor Thompson commented that he was concerned that Mr. Stowe had painted a dim picture of where Lone Star Gas was heading if they continued this course. What could be done to encourage them to be more competitive, especially in the industrial area. Mr. Stowe replied that the best thing that could happen for Lone Star Gas is for the stock market to go back up. Mr. Morath commented that they do not see eye to eye and they never will. The point that is being lost here when I talked about direct assignment, regardless of whether or not we lose all those industrial customers on Burkburnett Highway, we have factored out all the investment in a cost associated with serving those customers out of the rate base. They will not be passed on to the residential and commercial customers. Regardless, if we lose a customer on the southwest part of town we have factored that investment off. All the cost associated with serving that customer has been removed, residential and commercial customers will not be asked to pick that up. I believe that is what he is trying to elude to, that as we lose our industrial load residential and commercial customers will be asked to pick up the difference, that is not the case. The stranded investment, we have challenged the consultant to find out where we have our stranded investment. There is not one part of our entire distribution system that is laying there doing nothing. Gas is moving through it and it' s being used, this stranded investment does not exist. Mayor asked that with all the industrial customers we have and all the big users and being able to identify some of these numbers, why is only that direct line such a small portion of the system. Mr. Morath replied that the reason it is so low is because the customers out there have paid for the line, that is our actual cost less depreciation. We cannot put in what the customer paid us to put that line in. I agree it is a lot more than that but the customers paid for the line to be installed. It is all straight forward and I am not lying, our credibility is on the line. Councilor Hawkins referred to their zero intercept method not being tested by the Railroad Commission but being accepted as a means of computing and it appears to have been turned down in all the other states. He asked why it had not been tested here. Mr. Morath said that the method they use is designed after the National Association of Regulatory Commissioners. He said they had designed a methodology after one that has already been accepted by a nationally recognized organization. It is a method they think is most appropriate for distribution systems. Their methodology, Seaboard systems, is pretty prevalent among transmission systems where you have large volume users up and down the line, then it does make sense. I am talking about industrial customers, where you have a transmission line and you have a large pipe line or industrial customers who are being served off that transmission line and doing it on a volume effort basis, makes sense. What does not make sense to me is to go to our service center every morning and according to his methodology 62% of our time of all our people are out there maintaining that system is being spent on less than 1% of the total customer base here. Those 22 industrial customers represent less than 1% of our total customer base, and you are going to tell me that they spend 60% of their time servicing those less than 1% of our customer base. Those trucks head out to serve the residential and commercial customers, that is where our customer base is. Councilor Hawkins asked if they didn' t charge to go out there when a customer has their gas turned on. 649 Item 7b, cont'd. Mr. Morath replied that gets back to user charges, but what he is talking about is when they do reinforcements and maintenance of the line when there is a cut or a leak in the line, those are operating expenses. We spend our time servicing our residential and commercial customers not all those 22 industrial customers, and according to their allocations, 62% of everything we do is assigned to those industrial customers and that is not the case. I think the methodology we incorporate is fair to all classes of customers. We are not trying to give unusual waiting to one class over another. The fact of the matter is residential and commercial customers have not been paying their way every year for a long time including 1991 . I guess we should have appealed but we didn' t, the fact is we are here before you now and that is all that matters. I know that it is tough to ask for an increase for our residential and commercial customers and we are sensitive to that. But after 11 years and doing a good job those eleven years, I am asking you to do the right thing and pass a rate ordinance to allow us the opportunity to earn a fair reasonable return, not that we are asking them to pick up something that we lost from the industrial class, that is not the case at all. Councilor Martin commented that Council was not questioning their integrity. He explained that any time a body comes before them with a rate increase, they are going to question. We have citizens we have to represent and we want to make sure that we make decisions fair to all concerned when we get all the facts. Mr. Morath said that as the Consultants painted the picture it falls straight to the integrity of the company and I do not think that is right. We try to do what is right. Lone Star Gas is the only gas utility in the State of Texas which has an economic development staff and we are trying to bring industry here. Council recessed for ten minutes and reconvened at 11: 00 a.m. Item 8a ORDINANCE NO. 105-94 ORDINANCE WAIVING SECTION 22-1(a) (2) OF THE CODE OF ORDINANCES TO PERMIT ANIMALS ON THE GRASS IN LUCY PARK DURING FALLSFEST SEPTEMBER 30 - OCTOBER 2, 1994 Moved by Councilor Hawkins that Ordinance No. 105-94 be passed. Motion seconded by Councilor Mallonee and carried by the following vote. Ayes: Mayor Lam, Councilors Mallonee, Loughry, Thompson, Daniel, Martin, and Hawkins Nays: None Item 8b ORDINANCE NO. 106-94 ORDINANCE WAIVING SECTION 22-4 OF THE CODE OF ORDINANCES TO PERMIT ALCOHOLIC BEVERAGES DURING FALLSFEST IN LUCY PARK SEPTEMBER 30 - OCTOBER 2, 1994. Moved by Councilor Hawkins that Ordinance No. 106-94 be passed. Motion seconded by Councilor Martin and carried by the following vote. 650 Item 8b, cont'd. Ayes: Mayor Lam, Councilors Mallonee, Loughry, Thompson, Daniel, Martin, and Hawkins. Nays: None Item 8c ORDINANCE NO. 107-94 ORDINANCE WAIVING APPENDIX A, SUBDIVISION SECTION 9 (B) ( 2) (a) OF THE CODE OF ORDINANCES WITH RESPECT TO PLACING CURB AND GUTTER ON THE WEST SIDE OF SHEPPARD ACCESS ROAD, ADJACENT TO THE EAST LINE OF LOT 1-E, BLOCK 2, CITY CONCRETE, INC. ADDITION. Moved by Councilor Martin that Ordinance No. 107-94 be passed. Motion seconded by Councilor Thompson and carried by the following vote. Ayes: Mayor Lam, Councilors Mallonee, Loughry Thompson, Daniel, Martin, and Hawkins Nays: None Item 8d ORDINANCE NO. 108-94 ORDINANCE WAIVING SECTION 27-29 OF THE CODE OF ORDINANCES WITH RESPECT TO PLACING A SIDEWALK ALONG THE EAST LINE OF LOT 1-E, BLOCK 2, CITY CONCRETE, INC. ADDITION ADJACENT TO THE WEST SIDE OF SHEPPARD ACCESS ROAD. Moved by Councilor Thompson that Ordinance No. 108-94 be passed. Motion seconded by Councilor Martin and carried by the following vote. Ayes: Mayor Lam, Councilors Mallonee, Loughry Thompson, Daniel, Martin, and Hawkins Nays: None Item 8e ORDINANCE NO. 109-94 ORDINANCE WAIVING APPENDIX A, SUBDIVISION SECTION 9 (B) ( 2 ) (a) OF THE CODE OF ORDINANCES WITH RESPECT TO PLACING CURB AND GUTTER ON THE WEST SIDE OF OLD LAKE ROAD (FM 2380) , ADJACENT TO THE EAST LINE OF LOT 2-A, BLOCK 1, MOLLER ADDITION Moved by Councilor Thompson that Ordinance No. 109-94 be passed. Motion seconded by Councilor Mallonee and carried by the following vote. Ayes: Mayor Lam, Councilors Mallonee, Loughry, Thompson, Daniel, Martin, and Hawkins. Nays: None 651 Item 8f ORDINANCE NO. 110-94 ORDINANCE WAIVING SECTION 27-29 OF THE CODE OF ORDINANCES WITH RESPECT TO PLACING A SIDEWALK ALONG THE EAST LINE OF LOT 2-A, BLOCK 1, MOLLER ADDITION, ADJACENT TO THE WEST SIDE OF OLD LAKE ROAD (FM 2380) Moved by Councilor Martin that Ordinance No. 110-94 be passed. Motion seconded by Councilor Hawkins and carried by the following vote. Ayes: Mayor Lam, Councilors Mallonee, Loughry, Thompson, Daniel, Martin, and Hawkins Nays: None .M Item 8g A proposed ordinance was presented fixing and determining a general service rate to be charged for sales of natural gas to residential and commercial consumers in the City of Wichita Falls, Wichita County, Texas; providing for the manner in which such irate may be changed, adjusted, and amended; providing for the recovery of current rate case expense; providing for a schedule of service charges; and providing for a main line extension rate. Moved by Councilor Mallonee that this proposed ordinance be delayed for thirty days or the second Council meeting in September, 1994. Motion seconded by Councilor Daniel. Mr. Steve Morath requested that the City execute a letter of agreement stating that if the City does not take action within thirty days that the full amount will go into effect, the full operation of the law. City Attorney requested that the letter of agreement reflect that it will be thirty days or the second Council meeting in September, 1994, whichever is longest. Mayor instructed the City Attorney to draft the letter of agreement to that effect and to execute it on behalf of the City. Motion carried by the following vote. Ayes: Mayor Lam, Councilors Mallonee, Loughry, Thompson, Daniel, Martin, and Hawkins Nays: None Item 9a A proposed resolution was presented approving the proposed budget for the Nortex 9-1-1 Communications District for the period from October 1, 1994 through September 30, 1995 . Moved by Mayor Lam that the proposed resolution be passed. Motion seconded by Councilor Hawkins. Gary Young, Director of Nor Tex 9-1-1 Communications District, informed that this budget represents a $5,000 decrease in total expenditures from last year' s budget, and also a 3 . 420 salary increase for employees. Council requested more detailed information on the 9-1-1 Budget. Council was concerned that the majority of the funding for 9-1-1 came from the City of Wichita Falls, however, the City 652 Item 9a, cont'd. had little or no input on that board. It was suggested that more consideration be given to appointing a representative to the board from the City Council. Moved by Councilor Thompson to delay action on this proposed resolution until detailed information on Personnel Services, Travel Expenses, and Maintenance Expenses was provided to the Council. Motion seconded by Councilor Hawkins and carried by the following vote. Ayes: Mayor Lam, Councilors Mallonee, Loughry, Thompson, Daniel, Martin, and Hawkins. Nays: None Item 9b RESOLUTION NO. 130-94 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WICHITA FALLS, TEXAS, APPROVING THIRD GENERATION NON- ANNEXATION AGREEMENT WITH GENERAL MOTORS CORPORATION FOR A PERIOD OF SEVEN (7) YEARS BEGINNING JANUARY 1, 1994; FINDING AND DETERMINING THAT THE MEETING AT WHICH THIS RESOLUTION WAS DISCUSSED WAS OPEN TO THE PUBLIC AS REQUIRED BY LAW Moved by Councilor Thompson that Resolution No. 130-94 be passed. Motion seconded by Councilor Martin. Mr. Werner introduced Mr. Dennis Hefner, Director of Property Tax, A.C. Delco and Mrs. Janet Hallum, Finance Director, A.C. Delco. Mrs. Hallum informed that A.C. Delco was a new name having been changed from A.C. Rochester when they merged with Delco. She informed that the plant was opened in 1979 as A.C. Spark Plug, and a few years ago they merged with Rochester Products Division and changed the name to A.C. Rochester. July 1 of this year they merged with Delco Remy Division and now they are A.C. Delco Systems. They are still the same plant still doing the same business. Motion carried by the following vote. Ayes: Mayor Lam, Councilors Mallonee, Loughry, Thompson, Daniel, Martin, and Hawkins Nays: None Item 9c RESOLUTION NO. 131-94 RESOLUTION TO AUTHORIZE THE CITY MANAGER AND FIRE CHIEF TO EXECUTE A MUTUAL AID AGREEMENT BETWEEN THE CITY OF WICHITA FALLS FIRE DEPARTMENT AND THE SHEPPARD AIR FORCE BASE FIRE DEPARTMENT Moved by Councilor Hawkins that Resolution No. 131-94 be passed. Motion seconded by Councilor Thompson and carried by the following vote. Ayes: Mayor Lam, Councilors Mallonee, Loughry, Thompson, Daniel, Martin, and Hawkins Nays: None 653 Item 9d RESOLUTION NO. 132-94 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WICHITA FALLS, TEXAS, APPROVING THE AMENDMENT OF A PREVIOUSLY APPROVED FINAL STATEMENT; APPROVING THE 1994-1995 FINAL STATEMENT OF COMMUNITY DEVELOPMENT OBJECTIVES AND PROPOSED USE OF FUNDS; FINDING AND DETERMINING THAT THE MEETING AT WHICH THIS RESOLUTION WAS PASSED WAS OPEN TO THE PUBLIC AS REQUIRED BY LAW. Moved by Councilor Hawkins that Resolution No. 132-94 be passed. Motion seconded by Councilor Thompson. Mr. Clark clarified that the only item that was -• specifically earmarked which was being withdrawn was the Travis Street Drainage Project in the amount of $30, 000. City Manager informed that anything not funded at some time has to come back to the Council for reallocation. Councilor Daniel stated for the record that the $100,000 allocation to the North Central Texas Health Care Facility (Travis School Health Care Project) was approved by the Committee contingent upon this being a one time allocation and that it is a capital allocation. Motion carried by the following vote. Ayes: Mayor Lam, Councilors Mallonee, Loughry, Thompson, Daniel, Martin, and Hawkins. Nays: None Item 9e RESOLUTION NO. 133-94 RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT WITH THE TEXAS DEPARTMENT OF TRANSPORTATION FOR FEDERAL INTER-MODAL SURFACE TRANSPORTATION EFFICIENCY ACT FUNDS TO CONSTRUCT A TRAIL CONNECTING WEEKS PARK WITH HAMILTON, JAYCEE, AND KIWANIS PARKS; FINDING AND DETERMINING THAT THE MEETING AT WHICH THIS RESOLUTION WAS PASSED WAS OPEN TO THE PUBLIC AS REQUIRED BY LAW. Moved by Councilor Martin that Resolution No. 133-94 be passed. Motion seconded by Councilor Thompson. City Manager informed that this was a matching grant in the amount of $250,000, which Staff had hoped to match with sales tax funds that was on the issue which was defeated this weekend. Staff can pursue the grant and possibly down size it, or pursue the grant and if we cannot match it notify them or try to fund it from some other source. Mayor suggested that Staff proceed with grant and if we receive it that a decision be made at that point. Motion carried by the following vote. Ayes: Mayor Lam, Councilors Mallonee, Loughry, Thompson, Daniel, Martin, and Hawkins Nays: None 654 Item 10a Moved by Councilor Martin to award bid for Phase III , removal and disposal of demolition debris at the Multi-Purpose Event Center Site in the amount of $48,679. 00 to A.V. Mote, Inc. , Wichita Falls, Texas. Motion seconded by Councilor Thompson and carried by the following vote. Ayes: Mayor Lam, Councilors Mallonee, Loughry, Thompson, Daniel, Martin, and Hawkins. Nays: None Item lla No one wished to be heard. Item llb Councilor Loughry suggested that the City practice partnership in the area of City construction projects. Councilor Hawkins expressed his regret that the citizens did not see fit to pass the half cent sales tax; it would have been a positive move for our City. He hoped that the City could continue its operations without having to raise taxes; that they could find ways to fund these projects without raising taxes. Councilor Hawkins expressed his appreciation to the Staff for all the work and support during this effort. Item llc Mr. Bonnett informed that the barricades on Hamilton Street were set up because of a failure of a box culvert which was built in the 1930 ' s. This will be entirely replaced in about four weeks. A request from Council regarding Midwestern paving, that is an ICE-T project, a federal project, with a total cost of $1,246,886. 07. No City funds are involved. It is a total reconstruction of Midwestern from Taft to Jacksboro. All that was done in 1990 was to put a skin coat on it after Holliday Creek was completed in order to keep it alive until the ICE-T funds became available. City Manager informed that he had a meeting with the wrecker service providers and they were agreeable to leaving the one list instead of rotating. They want to meet again to discuss the rates they want to charge. Councilor Hawkins also mentioned the wait at the compound center and possibility of having more people available to open it. Mrs. Hillery informed that would be addressed at their next meeting. Item lld No executive session was held. Item lle Moved by Councilor Thompson that Mr. Art Frerich be appointed to serve on the Firefighters and Police Officers Civil Service Commission with term to expire March 1, 1997. Motion seconded by Councilor Hawkins and carried by the following vote. 655 Item 11e, cont'd. Ayes: Mayor Lam, Councilors Mallonee, Loughry, Thompson, Daniel, Martin, and Hawkins Nays: None The City Council adjourned at 12: 05 p.m. PASSED AND APPROVED this �lkday of , 1994. i hael Lam, or ATTEST: Lyd a Torres City Clerk