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HomeMy WebLinkAboutJanuary 25,2010 Special SessionMINUTES OF SPECIAL – JOINT SESSION TROPHY CLUB MUNICIPAL UTILITY DISTRICT NO. 1 January 25, 2010 The Board of Directors of the Trophy Club Municipal Utility District No. 1 of Denton and Tarrant Counties met in Special-Joint Session on Monday, January 25, 2010, in the Boardroom of the Administration Building, 100 Municipal Drive, Trophy Club, Texas 76262. DIRECTORS PRESENT: Jim Budarf Joint President Dean Henry Joint President Gary Cantrell Joint Vice President Kevin Carr Joint Vice President Jim Hase Joint Secretary/Treasurer Jim Thomas Joint Secretary/Treasurer Neil Twomey Director Steven Kohs Director Bob Fair Director DIRECTORS ABSENT: Joseph Boclair Director STAFF AND GUESTS PRESENT: Robert Scott District Manager Mary Moore MUD Secretary Pam Liston MUD Attorney Kathy DuBose Finance Director Danny Thomas Fire Chief John DeBarro Auditor, Weaver & Tidwell Shawn Parker Auditor, Weaver & Tidwell Carolyn Huggins P & Z Coordinator Scott Kniffen Police Chief Renae Gonzales Senior Accountant Tammy Thomas 1 Brook Creek Court Margi Cantrell 1105 Sunset Drive Pearl Ford 2 Spring Creek Court Shirley Hase 209 Inverness Drive Betty Ann Henry 308 Oakmont A. Graham Reporter, Alliance News Larry Hoover 1118 Berkshire Court TOWN COUNCIL PRESENT: Connie White Mayor Glenn Strother Mayor Pro Tem Kathleen Wilson Councilmember Bill Rose Councilmember Philip Sterling Councilmember Brandon Emmons Town Manager TCMUD No. 1 Special Session Minutes – January 25, 2010 2 SPECIAL SESSION Call to Order and Announce a Quorum. President Budarf announced a quorum and called the meeting to order at 5:02 p.m. 1. Discuss, review and take appropriate action to approve the 2009 annual audit report for Trophy Club MUD 1 (Consolidated). 2010-26-M1 The Auditors offered their overview of the audit. Shawn Parker, an Audit Partner with Weaver and Tidwell, addressed the Board regarding the 2009 annual audit for TCMUD 1. Mr. Parker met with the Audit Committee a couple of weeks ago. Parker went over the handout entitled, Auditor’s Communication the Audit Committee. The Auditors did evaluate and perform tests of the MUDs Compliance with certain provisions of laws, regulations, contracts, and grant agreements which are significant to the MUD for the purpose of determining if there was any noncompliance which needed to be reported. Parker advised they were not aware of any noncompliance or did not note any noncompliance in the course of their testing. The significant audit finding was the consolidation of the MUDs. The accounting is unique, under government standards, you are still allowed to use a pooling of interest method even though the consolidation took place late in the year, MUD 1 was able to show consolidated results of operation all the way through to the end of fiscal year of 2009. The most significant estimates that were noted were calculating depreciation expense on capital assets and then the Auditors also evaluate any allowance for any uncollectable accounts, and the Auditors determined they were reasonable. Significant Audit Adjustments regarded a prior period adjustments on capital assets. The net amount is really not material, $21,823; but there was a significant adjustment to both the cost and the related accumulated depreciation with respect to those assets. The Auditors encountered no difficulties in performing the audit. There were no corrected misstatements. There were no disagreements with management regarding any accounting matter or audit matter. Director Budarf asked where the $21,000 came from. Finance Director DuBose explained that the MUD had retired these assets in 2007, but had not reported them in the annual financial report or on the general ledger; however, it had only been retired in the fixed asset system. DuBose verified this with District Manager Scott and Staff. One of the items was a Fire Truck, and the others were miscellaneous vehicles and equipment that were retired in 2007; for a total of about $285,000; almost all it was totally appreciated except for the $21,000. John DeBarro, Senior Audit Manager with Weaver and Tidwell, went over the report entitled, Independent Auditor’s Report. DeBarro advised this report goes over internal controls, financial reporting, compliance and other matters. DeBarro stated there were some internal control deficiencies. DeBarro, as stated in past, the Auditors recommend that the District evaluate the benefits of preparing its own financial statement at year end against the cost to do so. The 2nd issue is segregation of duties. The Auditors recommend that the District segregate the duties of processing payments and entering new vendors in the payables system. The 3rd comment, purchase card approvals, the Auditors recommend that department head p-card transactions (including those made by the Finance Director) be reviewed/approved by someone in upper management or a Board Member. 4th Comment, Capital Assets Records and Depreciation, the Auditors recommend that the capital asst software be updated to reflect all capital asset activities on a regular basis. This subsidiary ledger should be reconciled to the capital assets acquisitions and dispositions recorded in the general ledger at least semi-annually. Director Hase clarified that the costs of having an audit firm prepare our CAFRs for the MUD audit runs at least 7 to 10 percent of the cost of our current audit. TCMUD No. 1 Special Session Minutes – January 25, 2010 3 Shawn Parker agreed that the cost will be at least 10 percent of the total cost of the MUD’s auditing fee. Finance Director DuBose presented the annual financial report for fy 2009, and went through the Audit. Finance consolidated the budgets, the revenues and expenses, the fixed assets, and the outstanding debt. DuBose advised that the MUD assets exceed our liabilities by over $9 million. Our Capital Assets net of depreciation are about $14 million. Cash and Investments are approximately $3.1 million. Of that $3.1 million, Fire Construction Reserves is $1.8 million; Interest and Sinking Fund was about $244,000; Utility and Fire Operation was $984,000. Outstanding Debt is $8.1 million; Tax and Revenue Bonds are $7.3 million of that; Contractual Obligations were about $750,000; and Note Payables of about $18,000; Capital Lease Obligations of about $63,000. Results of Operations, Revenues $5.7 million, and $4 million of that is for Utilities Revenues, Taxes are about $1.3 million; PID Utility Fees $515,200. Expenditures $5.3 million; Utility Operations were $3.7 million; Fire Operations was $784,000 and Admin was $818,000. The major Fixed Assets added were the Disc Filter System for $417,000 and the Generator for the WWTP for $140,000. The Water System Improvements were street improvements on Oak Hill, Avenue 20, Brook Hollow and Timber Ridge of about $61,000. Net Increase in Fund Balance was $450,000; of that $330,000 was Operations and Debt Service Fund was about $122,000. DuBose advised that bottom line, MUD 1 looks very good financially. MUD 1 still ended up with Operations increase of $330,000 and has substantial reserves. Director Carr moved to approve the 2009 fy Audit for Trophy Club MUD 1. Director Thomas seconded the motion. Motion carried unanimously (9-0 Director Boclair absent). 2. Discuss and take appropriate action to consider a proposal(s) to install a High Speed Service Plant Pump. 2010-07-M1 District Manager Scott stated the cost is approximately $216,000. We will be putting a generator and a switching gear with the Pump, which will be done in-house. Scott is looking at generators which are running between $25,000 to $30,000. The purpose of this pump is to pump water to our distribution system, and when water is not needed in the distribution system, it fills up the elevated tank for pressure control. Scott believes it is essential, and it will probably be online late summer. The $216,000 cost does not include a generator. Director Twomey asked what the supplemental cost is for a generator. District Manager Scott said around $35,000 to $45,000. Director Budarf confirmed that this pump is required to maintain pressure during high use times and especially during hot summers, and important in case of a fire at the high school and areas to the west of town to provide adequate fire protection. Director Budarf moved to approve the payment of $216,300 for a 3000 gpm, 250 hp, 480 VAC vertical turbine pump with a constant speed drive with a soft start, new transform pad, duct bank, at 3.9% interest based upon American National Bank quote for a 3-year note, and include a maximum of $45,000 for a generator for a total max of $261,300 at 3.9% interest,. Director Henry seconded the motion. Floor opened for discussion. Director Twomey asked if the generator would also be able to power other things. District Manager Scott advised that it would not. Director Hase asked if this was in the budget. District Manager Scott advised it was not. Director Hase asked how much would be paid this year. Director Twomey stated it’s a push. Director Budarf commented that the first payment will be next year. Motion carried unanimously (9-0 Director Boclair absent). TCMUD No. 1 Special Session Minutes – January 25, 2010 4 3. Discuss and take appropriate action to approve or disapprove the drilling of a new Trinity Well.2010-06-M1 District Manager Scott seeks approval for a new Trinity Well which will produce 500 gallons a minute at Well Site No. 2, Creek Courts Drive across from Beck Park. Scott advised that electricity is already there as well as a distribution line to the Water Plant. Scott said it will cost approximately $500,000 with the permits and all. Scott stated the new well could produce up to a million gallons a day. We may need to add a transformer. We will need about 50’ of pipe, which we could do in-house. President Henry stated that time is of the essence due to the pending groundwater rulings. President Henry moved to proceed with necessities to drill a new Trinity Well. Director Budarf seconded the motion. Floor opened for discussion. Henry went over the payment options, which the financing is for 3 years at 3.9%. Motion carried unanimously (9-0). 4. Discuss and take appropriate action regarding Order 2010-0125, assigning a position number to each director’s office in accordance with Section 49.103(c) of the Texas Water Code, so that directors shall hereafter be elected by position and not at large, beginning with the May 2010 election. – 2010-05-M1 Director Cantrell moved to adopt Order 2010-0125, to assign places, one through five, for the directors’ elections versus electing at large. Director Thomas seconded the motion. Floor opened for discussion. Attorney Liston stated she had two corrections, in Section 3 the word “government” should be “governed” and in the third Whereas clause, remove the comma after Directors. Both Mover and Seconder agreed to the Liston’s corrections. Director Cantrell stated that this will make it consistent and improve the overall ease in voting as this same system has been put in place by the Town, especially once the terms are put in place. Motion carried 8-1- 0 with Director Kohs voting against and Director Boclair absent. Director Carr asked Director Kohs if he wished to make any comment. Director Kohs stated he is not sure that doing it this way is really truly going to be a benefit to the Town. Director Carr asked Kohs even if the Town does it that way. Director Kohs replied, point taken. 5. Discuss and take appropriate action regarding a Joint Election Agreement with Town of Trophy Club and/or Denton County Elections - 2010-09-M1 Director Cantrell moved to approve to approve a full-service Joint Election Agreement with Denton County Election to perform election services for TCMUD 1 and Town of Trophy Club. Director Twomey seconded the motion. Motion carried unanimously (9-0 – Director Boclair absent). 6. Discuss and take appropriate action to instruct the District staff and attorneys to begin preparation of an amendment to TCMUD1’s Fire Plan, to update that plan, and to broaden the plan to include Public Safety. - 2010-02-M1 Director Thomas moved to instruct the District staff and attorneys to begin preparation of an amendment to TCMUD1’s Fire Plan, to update that plan, and to broaden the plan to include Public Safety. Director Carr seconded the motion. Floor opened for discussion. Motion carried unanimously (9-0 – Director Boclair absent). TCMUD No. 1 Special Session Minutes – January 25, 2010 5 7. Discuss and take appropriate action to begin the bond issuance process for construction of the new Fire Station. - 2010-23-M1 Director Carr requested we table this to February meeting, as we have not received any confirmation from TCEQ. Director Twomey stated that we may want to start up the Fire Station Committee. Twomey would like to see a timetable emailed out to help everyone to ensure we stay on track. District Manager Scott and Fire Chief Thomas are of the opinion that they would prefer only utilizing the committee as necessary. Action: Discussion held; agreed to table to February meeting. 8. Review and Approve Minutes 2010-16-M1 a. December 15, 2009 - Regular Session Minutes Director Twomey moved to approve the December 15, 2009 regular session minutes. Director Fair seconded the motion. Motion carried unanimously (9-0 – Director Boclair absent). 9. Set Next Meeting Date 2010-17-M1 a. Regular Session: Wednesday, February 10, 2010, 6:00 p.m. Board agreed to meet on Wednesday, February 10, 2010 at 6:00 p.m. Action: Discussion only. Public Comments or Presentations. Speakers requested to speak after Joint Session begins. Board took a break at 6:27 p.m., and resumed into Special Joint Session at 7:00 p.m. SPECIAL JOINT SESSION - TROPHY CLUB TOWN COUNCIL - 7:00 P.M. JS1 Town Council to call to Order and Announce a Quorum. Mayor White announced a quorum and called the meeting to order at 7:00 p.m., advising that Susan Edstrom was absent. Shirley Hase deferred her comment time to Margi Cantrell. Margi Cantrell of 1105 Sunset Drive approached the Board, and stated the following: I am a concerned citizen and pride myself in attempting to keep up with what is happening here in our Town, how it is running, where and how tax monies are spent and the like. Over the years, my expressed concerns have not deviated far from attempting to ensure all citizens are treated equally and fairly; and that tax dollars are as minimal as possible, while being spent wisely in support of what I believe is one of the finest communities in our area, and "a great place to call home". Therefore, I am taking this unique opportunity to speak to both the MUD #1 Board of Directors and the Council together. Last week, while paying our 2009 property taxes, I turned over the statement to see exactly where the tax monies were being sent. It was at that time that I noticed a trend. The trend being, that regardless of the evaluation of our property, over the last 5 years the following has occurred: Denton County tax monies have increased every year - and the county is now collecting $65 annually more than in 2005; Northwest ISD has gone up and down - but are actually collecting $350 LESS than in 2005, and we can see the structures to compliment these tax dollars right here; the Town of Trophy Club taxes have increased by $177 over 2005 and is now nearly 22% of my total tax bill versus 16.5% in '05. And, the Trophy Club MUD #1 rate has DECREASED consistently every year and the monies collected TCMUD No. 1 Special Session Minutes – January 25, 2010 6 are now $71 less than 5 years ago. The new rate is a drop of over 9% versus a year ago and, if I resided in the area of the former MUD 2, the rate would have dropped approximately 18% for ‘09 from the previous year, with the consolidation of the MUD districts, I believe. And let me clarify this - I do believe, I understand, unlike Trophy Club, most municipalities have other means of generating revenues in addition to property taxes, such as through water & sewer rates - much like the revenues generated from our storm water sewer fees. But my comments do not pertain to this tonight. On my tax statements, it is clear that even when the Town's tax rate was unchanged, due to evaluation increases in home values, tax dollars grew. And apparently, so did the Town's expenditures. Where has the money gone? To additional employees, increased legal fees, more vehicles, higher day to day operational costs, and the like? No doubt, we can see park development, but very little retail space expansion, if any. How much is too much to spend on park lands and operations for a community the size of ours, when revenues are limited almost solely to home property values? Is it time to re-consider park "user" fees? Our Home Rule form of government empowers a Town Manager to run the day to day operations and often I hear council refer to the position as the CEO of Trophy Club. However, the Town's Manager cannot be held solely accountable for the Towns expanded expenses because each of you are the elected gatekeepers of the tax monies collected. The tax rate and dollars collected by the MUDS suggest sound fiscal responsibility on the part of the Directors to date. And, certainly the choice of the citizens to down size 3 MUD entities into one MUD, helped reduce the 2009 MUD rates, but also suggest support of this organization and its operational cost history on behalf of tax payers. PLEASE be sure, as both of you work on budgets for 2010 and 2011, that you look for ways to hold down costs rather than ways to give away collectible tax dollars, expand staff, add more vehicles, generate legal fees, increase park expenditures and the like. Make no mistake, I like parks and enjoy our beautiful community. BUT, I hear from other citizens who, like myself, want and EXPECT all of you to seek ways to spend less, even if it means sharing staff, or reducing staff by out sourcing services rather than growing employee head count. Frankly, some of our residents have actually experienced these types of cut backs in their own lives and know it is painful, but also necessary in tough times. We are fortunate to be a part of 3 very fine adjoining communities and yet each unique in our own ways. Shared services could generate real tax dollar savings if we could ever get past who has the most employees, vehicles, or the highest overhead as a measurement of success. It has worked in the past. What does it matter if there is a "tri-community" police department protecting all of us or a regional parks board overseeing facilities, including the use of an existing community center, with shared costs spread over 2 or more communities with a 3-4 mile radius? Trophy Club has approximately 8% of retail space available, but we all spend money in Roanoke and contribute to their sale tax revenues; and many residents work in Westlake, as well as Roanoke. Wouldn't it have been more prudent if we had renamed Marshall Creek Park something to reflect a regional park that all 3 towns could have embraced, helped plan and contribute toward its development and continual operation? After all, numerous people from surrounding communities regularly use these amenities too. Take a page from the postal service - one building and one staff serving all three communities - without delivery delays. Who needs another government facility like the one 2 miles down the road? We need all of you to look outside the box together for ways to achieve less spending, thus less taxation now and in the future. Let's not wait until it is too little, too late, or another decision is made costing citizens more for some time to come. I do thank and sincerely appreciate each of your time and talents you provide our community. But after all, isn't that what you signed on for when you ran to be an elected official? Thank you. Town Manager Emmons read a letter from Councilmember Edstrom. 10. Receive report from the SEMO (Shared Employees MUD Organization) Committee, Town Manager to provide information regarding Service Provider, discussion regarding the same. 2010-01-M1 TCMUD No. 1 Special Session Minutes – January 25, 2010 7 Director Hase advised the SEMO Committee consisted of himself, Jim Thomas, Dean Henry, Kevin Carr. Hase then read to all present the memo entitled Committee Report. Carr also went over Chart No. 1 – Apples to Apples Comparison, as well as Chart No. 2 and addressed questions from Council. Mayor White offered a PowerPoint presentation entitled, Impact of the SEMO Committee Options on the Residents of Trophy Club. Wanted to reduce the government, benefit to the residents by sharing employees, could pay some of the administrative costs. Take the time before we do anything on both sides understanding all of the implications. How do we deal with remaining shared employees? Leaving IS and Fire/EMS, how is that going to work? When its two different entities, reporting. Financial impact on citizens, switching from water/ww revenue to tax base revenues. Even though it wasn’t always 50/50; town still will need a HR person, although maybe not 100%. Mayor White stated the employee costs should MUD 1 separate would cost the Town $291,798 with MUDs saving of $135,798. Director Budarf asked if we take our finance out, would you still need four employees for Town’s Finance Department. Town Manager Emmons replied that the Town would have three employees; as the Town is budgeted for five and currently have four and with the separation, we would have three. Mayor White stated that these are functions and skill sets that the Town needs. Mayor White feels there are some areas where it might make sense to make that separation and there are some areas where it doesn’t; and that’s part of what I would like us to talk about further. Director Cantrell asked Town Manager Emmons if a water-wastewater system should be a profit center. The MUDs run it as an enterprise on both sides of it and try to break even, and Mayor White is aware of our operating procedure. Mayor White stated that it is a cost-sharing center. When you have a Water Department under a City, some portion of that City core staff is covered by the water department, some portion of it covered by the street, everyone’s piece covers that main administration. The Town doesn’t have that opportunity. That’s why the MUDs have said it made sense for us to contribute because we were able to. Town Manager Emmons added that in almost all cities, when you examine their books a portion of the administrative overhead for operating or running the entire system is recouped in the cost of the water and wastewater systems. Director Thomas advised that the shared employees system is broken. Mayor White stated every single year we have been behind during the audit, every year for as long as I can remember we have been behind on Financials in October – November while they were doing the audits. Director Hase addressed the finance problems when someone is sick or retires, isn’t that an indicator that maybe this Town and MUD even combined is too small to sustain their own finance organization. Hase suggested the Town also look at outsourcing the Finance department, as the problems with Finance continue. Director Twomey stated the MUDs offered to pay for a full-time Finance Person, total MUD, and TCMUD No. 1 Special Session Minutes – January 25, 2010 8 were told it wasn’t necessary. We continue to suffer by not getting our financial statements in a timely manner. There was no effort to bring in any temporary help to take up the slack. The large financial firm we’re looking at has stated that they will have our financials seven to ten days after month end, and when it comes to audit time, they will prepare the financial statements to be submitted to the auditors, which has been the exception for years on most of our audit reports. The MUDs are trying to think out of the box, how to save money for the taxpayers and rate payers. If you look in columns, there’s a 3 to 5% decrease in the rate order. On Town side, you could look at working on joint agreements with surrounding municipalities. Town Manager Emmons commented that he appreciates comments that MUD 1 is trying to run a business, as lean as you can; however, one of the things we may be losing sight of is the MUD is a business but it is also government, and is here to provide a public service to its residents. Emmons thinks MUD 1 is looking too much at the bottom line as opposed to quality public service for our residents. He understands going out for financial services, but even in your proposal, the MUDs still have one employee that’s responsible for the daily input to get that info to the Finance Dept, to make this scenario function properly. We’ve experienced some issues with health issues or vacancies in positions but what happens if that one employee is out sick, or on vacation, etc, there’s a situation where you have to bring in a temporary employee in for a week or two weeks or you forgo input of that data, and the bills are delayed for two weeks. Under our current situation, we do have a little bit of a back up, unfortunately when we have two people out and we have other duties that we have to take care of, some of the processes take center stage to the reporting procedures. So, in order to keep our business running, we concentrate on the daily activities first and the reporting second. In the situation the MUDs present, you have just the opposite. Emmons addressed Thomas’ comments that shared employees worked at one time, but does not work today. There are a couple different factors that may lead to that impression. First and foremost, Emmons admitted there is lack of direction. There are conflicting, different directions between town and mud managers. There is prevailing idea that the funding is not secure for their position. Emmons referenced back to the information provided by SEMO Committee with a chart showing shared employees in 2000- 2001, and a chart showing shared employees for today and tomorrow. These charts show how the Town has continually shifted away from funding from the MUD to the Town. In 2000-2001, we had a Building Inspector that was a position that was shared between the MUD and the Town. Today, that Building Inspector is 100% funded by the Town. We had a P&Z Coordinator, that was shared in 2000-2001. Today, the P&Z Coordinator is paid 100% funded by the Town. We have Permitting / Customer Service Clerk – today, it is still shared. With this proposal, 100% paid by the Town. Public Works AA, Emmons stated he didn’t know who that was, so he would skip it. (Position was held by MUD Secretary Mary Moore, now a 100% MUD Employee). Code Enforcement Officer was shared in 2000-2001; today, that position is paid 100% by the Town. We have a Town Secretary shared in 2000-2001; today, the proposal is for that position to be 100% paid by the Town. Records Manager shared in 2000-2001; now it is a 100% fully funded Town employee. Emmons feels that in order to efficiently operate the Finance Department and the Town Secretary, those positions have to be available. Emmons shared that the shared employees fear that their position may not be funded in the future. Director Thomas stated that Emmons stated a good point regarding shared employees, more reason to eliminate the shared employee concept so employees no longer worry about being funded. Mayor White replied there are other possibilities as well as looking at all the implications. White wants to look at all the options, like contracting with MUDs for HR Services. Director Carr stated the MUDs are obligated to the taxpayers and our customers to run an efficient business and try and save money. TCMUD No. 1 Special Session Minutes – January 25, 2010 9 Director Hase commented that the proposed split is not any kind of detriment against working together. We still can work together on all kinds of things and we do. The desire on the part of the MUDs to do their own support system is like any business that wants to have control of their support personnel. How would the Town like to come to Robert for Financial information? They would not. That’s about how it works on the other side. It’s not a very desirable situation. It’s pretty desirable on the Town side because they have control of it; however, it’s not a very desirable situation for the MUD side. Director Budarf stated that the MUDs used to inspect plumbing, and the Town took that function over, but yet we kept paying for half the Building Inspector. Town Manager Emmons replied that the Town Secretary is in the process of helping the MUD Secretary through the election process this year for the first time; there’s a benefit there. Our Permitting Department; each water account, each new home that comes in, our Permitting Department is the first point of contact and arranges all of the information to set up the utility billing with the billing department. District Manager Scott stated that Ron (Permitting) is sending that over to Dana (Utility Billing) now. Director Budarf reminded Emmons that the MUDs pick up 100% of the costs for Fire Station and will continue to do that. Town Manager Emmons stated there are many benefits that the Town is giving to the MUD that the Board may not be aware of; i.e., grant services. Town is working on replacing the complete HVAC system in the Svore Building at a cost of $42,000 of Federal money that the Town applied for a grant for the MUDs. Mayor White stated that one of the points she and Emmons are trying to make is that there are a lot of open questions and potential impacts, and we need to take the time to work through. Director Cantrell reminded everyone of the saving in hard dollars in auditing expenses; we’re going from $40,000 to $17,500. Mayor White stated the Town is planning on doing an analysis of its employees and their positions. Town Manager Emmons stated that he is interested in offering a service contract to the MUD for employee services. Mayor White explained that the $51,500 Insurance has to do with the fact that with the increased cost of medical insurance. Town Manager Emmons stated that he did have contact with their insurance broker. This $51,500 is based his quote for the exact same policy we have today. In addition to that $51,500, the quote that he provided to us today also included approximately $1,000 per employee migrated over into small plan. When asked whether we would be allowed to purchase insurance through him as Trophy Club Entities, MUDs small plan and Town plan, and combine that into one large plan, the insurance broker stated that was not possible. Blue Cross/Blue Shield would cover it as two entities. The reason we can do this today is the Employee Services Agreement that’s in place that states that all the employees are Town employees and we purchase the insurance as the Town of Trophy Club to provide for those TCMUD No. 1 Special Session Minutes – January 25, 2010 10 employees. Based on the information received, by calling it Trophy Club Entities, would not give us the ability to aggregate two separate entities into one for purchasing insurance. Director Budarf asked if the $51,500 is the increase in the insurance. Town Manager Emmons stated that is the increase. The total increase for the exact same policy as we have today is over $67,000; and based on the family plans that we have, we have a percentage that we pay and there’s a percentage that the employee pays. Based on the increases, that percentage would stay the same; but the amount goes up, and that’s approximately $15,000 in addition to the $51,500. Mayor White stated that as of right now, Solana is paying almost 15% of the fixed costs portion of our revenue. Director Carr asked how that is different than the PID tax money going back into the Town and not the MUDs. Director Budarf clarified that the shared employees are Town employees, and the MUDs are just paying 50% of the salaries; that’s what we are talking about. The term “shared employees” is strictly payroll. Mayor White stated there are too many open questions. White agrees there are many issues that need to be fixed; not just tear it apart. Director Budarf stated that no changes would be made until end of September 2010. Mayor White stated that she does not know what the answer is, but feels that we need to find a way to work towards getting to a clear, common understanding. Councilmember Sterling stated that we get involved in an “us versus them” mentality. The Town versus the MUD and the MUD versus the Town. At the end of the day, minus the portion that Solana picks up, we’re all paying or saving. We need to ask what the final cost is going to be. MUDs may not need for Permit Clerk, so all of the costs, as citizens, go up. Director Hase stated if you have a full-time permitting clerk, either you don’t need all of him or he has a full time job with the Town. Councilmember Sterling stated the Town has a need for a permitting clerk. Sterling understands you can’t physically answer to two bosses. We’ve had that problem for years; we’re still having that same problem. Sterling agrees that if you only have one boss, you can be much more efficient, you’re not split. What the Town means by “shared employees” is just shared cost; plain and simple. Maybe we should rename them shared-cost employees. Sterling clearly understands that from a MUD’s standpoint, the desire to get rid of that position, because it’s outflow; it’s not cost neutral. However, at the end of the day, we’re all still paying for that position, but now we’re paying more for that position because we lose the cost benefit of Solana. Sterling believes we need to think more macro economically, rather, than this is Town and this is MUD. Director Carr asked who is financially responsible for that 100% person if they are on the Town side. Councilmember Sterling stated the Town. TCMUD No. 1 Special Session Minutes – January 25, 2010 11 Director Carr advised that the MUDs, through the SEMO Committee, showed a cost savings by running our own operation by eliminating unneeded positions. Carr believes that Town should look at streamlining their employees or look to find a savings on the Town side. Director Hase commented that we pay for half of the Permitting Clerk but do not receive any benefit because we have Solana. MUDs do not get the money for the Permitting Clerk from Solana taxes; we get it from the Water Rates. If Town shifts half of that cost to us, we have to raise the water rates by half an employee. Director Budarf stated that the Town receives a benefit from the PID. Director Twomey stated that the SEMO Committee is a catalyst. For years shared employees have been status quo, every year, it just keeps going, and no one looks at what is the benefit of going forward. SEMO is looking at contracting out; there are a lot of people that are affected by outsourcing. As an entity, is it cheaper for the owners of the MUD and the taxpayers of the Town, if we start looking at doing some outsourcing or do we just go with status quo? MUDs don’t see Town working on anything like this. A few months ago, the MUDs looked at EMS. If MUDs were to run EMS, the tax rate for the Town would go down seven cents ($0.07), while MUD side would go up five cents ($0.05), resulting in a two cents ($0.02) savings. This concept has not been discussed on the Town Council side. The MUD Board is looking at cost efficiencies, keeping water rates low, and lowering the tax rate. Twomey stated that he would have preferred the last side of the Town’s presentation project out a five-year scenario versus just showing one year. Town Manager Emmons stated that he keeps hearing the same terminology; cheap, least expensive; should be looking at best service to the citizens. Emmons stated that there are cheaper ways to do Police Services, cheaper to have County come in and service town. Emmons feels that is not best for our residents. Emmons stated that MUDs may not get the same benefit out of the permitting clerk as they might someone else. However, the Town is not saying that the MUDs should pay for the Building Inspector, as the MUDs receive a benefit from the Building Inspector. Town makes sure the homes are constructed appropriately and to code, which, a properly constructed home retains its value. The homes constructed in the MUD will retain their value longer if they built properly. There’s a benefit to the MUD for that. The Building Inspector is also Plumbing Inspector. One of the most critical positions in an operation is to ensuring the safety of our residents; that’s what our plumbing inspector does by ensuring that the proper infrastructure that is installed in the home that tie into the MUD water and sewer system. The Town does that before that meter is set by Robert’s staff. Town makes sure it is safe. That’s a benefit to the MUD that is not compensated back to the Town. Director Budarf verified that the Town receives money for its inspections. Town Manager Emmons agreed that it is cost neutral. Councilmember Rose stated penny smart, pound foolish. Rose commented on the MUDs not being able to get reports, and then finds out that the Finance Department is operating pencil and paper ledger, plus trying to get three different finance systems integrated; and about errors going back to 2000 and 2005. Rose admits there’s been a problem all along. Rose looked at the size of the Town’s Finance Department and surveyed 41 cities, ranging in size from 4,000 to 24,000 in population and determined that our Finance Department was critically undermanned with poor equipment. Of the 41 cities Rose surveyed, only one city contracted out for finance services. Rose believes by only one city contracting out finance that that it may not be the most efficient, the most effective or wisest way to go. Rose went to back to basic presentation, really not apples-to-apples comparison. Under contract for services for Finance, Town listed 38 items TCMUD No. 1 Special Session Minutes – January 25, 2010 12 in their proposal, CPA firm listed 16 items in their proposal. Rose stated that when he received the SEMO presentation, he sent off a request for a work-load analysis for the shared employees. Rose was told that it hadn’t been done. Rose stated that we have talked about cost but we haven’t talked about workload. Rose gave an example of the Permit Clerk having 100% of time with 98% of time going to Town and 2% of time going to MUD with each entity paying 50% of Permit Clerk’s salary. If MUDs take 2% away and doesn’t fund the permit clerk, Town still needs this employee, and now must fund permit clerk at 100%. If Town is paying 50% and MUD is paying 50%, Town folks with 23% kicker from Solana, that goes away. The Town has to pick it all up, but the MUDs can pick up that 2%. If you take that 25% factor and go to an outside firm and hire another employee to do that, the Town is going to pay the 100% and the residents are going to pay the additional for that other employee, so costs have to go up. Rose stated he is huge proponent of efficient, effective results. Rose thinks the answer is to get together and come up with a good, valid contract for services from the MUD; that the MUD can set standards that you expect in that contract for services and hold the Town to it. As far as that 20%, Rose would love MUDs to pay Town a very large premium for those services, because the larger premium you pay to the Town for those services; the greater the impact of that 23%. Director Hase asked Rose how he felt about the MUDs taking over Finance, HR and Permitting, and we will give you a firm price contract? How would Town like that arrangement? Council Rose answered that we should put that on the table for another meeting and see how that plays out. Director Hase stated that what you would find that you would not be very satisfied getting somebody else to do your work and you try to write down everything you want done, but it is hard to get everything. Hase asked if you have your own business, would you want someone else doing your accounting, your HR, and you have to plead with them to get information. Hase believes we will have more control with the CPA Firm, as many other firms are happy with their services. Director Carr asked that if you have a business and someone pays you to do their business, if that portion of the business goes away, do you keep paying that employee or do you do a reduction? Councilmember Rose stated that it would depend upon the service and the job description that the employee had and an evaluation would need to be done. Director Thomas asked Council if they have ever had any discussions at any time in any council meeting about outsourcing anything. Councilmember Rose said yes. Director Thomas stated that if the MUDs were to include EMS into the equation, have Solana pay for EMS, it would save the taxpayers money. Councilmember Rose stated that Council has had discussions, and Rose has said more than once, that the most cost-efficient way for the residents of this Town to receive full value for their dollar is to maximize Solana. If the MUDs had the responsibility for the Parks and Recreation Department and turned around and put it back on the Town for contract for services, there would be a 23% additional benefit because of the additional water revenue coming from Solana. These are all ideas that we need to sit around the table and talk about. What can you do for cost of services, and allow the Town to capitalize on water revenue. TCMUD No. 1 Special Session Minutes – January 25, 2010 13 Director Thomas reminded Rose that we offer no benefit to Solana with regard to parks. MUDs offering EMS services to Solana are a benefit. Director Hase stated that the finances were not the driving force regarding shared employees. Hase stated they work in an unpleasant atmosphere, they have two bosses. Hase feels an obligation to give our employees a pleasant atmosphere to work in and not create an unpleasant atmosphere. Hase is more concerned that the employees work in an unpleasant atmosphere than he is with the finances. Councilmember Strother agrees with Hase’s comments and believes there is a lot of added stress; however, he believes there are other solutions than just breaking apart, although he believes it will take time to work through. Strother commended the MUD Board for starting the SEMO committee and the work they have done, and for getting out of the box, as he feels these are certainly things we need to talk about. Strother stated at the end of the day, we’re all together at end of day. All of us pay taxes, there’s one dollar, whether it’s a city or mud tax, at the end of the day its all taxes and we all pay them. Strother’s goal is operate that as efficiently maintaining the level of service that the residents expect at the least amount of dollars. Working together, in Strother’s opinion, is the way to do it. Strother is a little discouraged by hearing “us” and “them.” We’re all together here. Strother believes we need to look at as a unit of one, not as a combined source. If we can do that in an open-minded process, and not go back to each other’s turf and look at the common goal of what is best for the residents, that’s who is paying for everything here. Strother believes we can get to an economical solution. Strother feels that there’s still a lot fine tuning to be done. Strother stated that if we get away from a shared-cost piece, there’s going to be an added cost on the Town side, so you need to add that back in on the Town savings, and if the two together still end up with a net savings dollars, then certainly that’s where we need to go. Councilmember Sterling answered the outsource questions, stating that Town has looked into outsourcing Streets and Building Inspectors. Part of what has plagued Council regarding the idea of outsourcing is quality control, continuity, convenience and promptness of service. Town Manager Emmons stated that this is about serving our community, and we have looked at outsourcing. We have employees who are tired of having their position looked over and over again. It always comes back to the quality of service versus price, sometimes the cost is more but it’s a trade off. One specific example is during our budget workshop last year, Emmons looked at the costs associated with the Inspections Department, looked at the number of inspections conducted, projected out total number of inspections for year; got a couple costs averaged for costs based on private inspecting firms, on the number of our projected homes. The projected costs was about 49 homes less than what we actually constructed, the total cost using an outside source averaged $183,326 based on 150 inspections. Town did 194 new home starts last year, in-house inspections cost $90,000 to operate; over $100,000 savings to the residents. There’s a cost to superior service but we have to remind ourselves that government is a service agency. Councilmember Wilson commented that there are some disingenuous statements being made with regards to our argument. We’re asking the MUDs on the behalf of the taxpayers to do something that we’re collectively one; we all serve one and so forth. It’s a lovely argument, however, I don’t get that feeling when I deliver my liaison report to my council as to what they’ve discussed, and it comes up about EMS; no, we’re not doing that. Okay, and that’s fine, if that’s how we want to govern from our end. But I think it is very disingenuous for us to sit in here and tell them that they are not thinking of what is best for our collective taxpayers, when we repeatedly don’t express that high notion ourselves. In past budget workshops, I think we need to examine various employees and consolidation and cost savings and what is the service that TCMUD No. 1 Special Session Minutes – January 25, 2010 14 is being delivered to the taxpayers with the cost analysis. I have not been met with any reception of us doing that because we have Council-Manager form of government, and our Manager makes those decisions, so therefore, end of discussion, and again; that’s okay, but when we’re arguing on behalf of our collective taxpayers that the MUD Board needs to govern their finances in a way, that is presented, again disingenuously, I don’t know what it is you want me to say. For years, I’ve seen both sides, before I sat on Council, in budget sessions, they’re not getting their 50% from the employee, and we aren’t really concerned with that, but we surely want them to give us the money. The benefit of sitting in both meetings on a regular basis, this Council snipes about the MUDs constantly, all the time; we can’t ever bring up MUD business without a snipe. Yet, we want them to entrust all of their business, their productivity, their employees to us, because that’s what’s best for the taxpayers. And I agree, I feel for our employees. They don’t know who to answer to, they don’t know who they are allowed to be seen talking to, I feel that way too when I walk into this office, I don’t know who I can talk to, because it can have a reverberating effect, but I don’t think, talking sheer numbers, and that’s why I think it’s very important for us to continue a frank workshop. We need to talk about trust levels, and if we’re going to say collectively what is best for the taxpayers, that goes for us as well. I’m not popular for my opinions, and that’s okay. It sounds really great, on behalf of xyz and I’m a taxpayer, and I want to do what is right for me as a taxpayer. Well, I’m a taxpayer, too, and I think there is so much aggregate nonsense at the top. Sounds great to argue for wanting to make it more efficient, dollar for dollar for the taxpayers, but we’re not talking about the problems at the top, and all I know is; they’ve paid and it’s not, they’re bad and we’re good. They’re paying 50% for services they haven’t received. I didn’t even know what we were going to be talking until I asked for a copy of this, and I reported on January 4th that they wanted us to get involved and start talking about these things, and I asked my Council if they wanted a copy of the SEMO report, and they replied, not really. How are we being genuine, in what they are arguing with their research and what we’re preaching for them to do? We have expenses upon expenses upon expenses, and yes we want them to kick in, and stayed kicked in, but I think we have to legitimize our own expenses before we ask them to let us run theirs, as Kathleen Wilson, 34 Meadowbrook, taxpayer for both entities. Councilmember Rose asked to go to Attachment 1D, page 67, full-time accountant. On that report, it says full time accountant $82,741, you roll back to Chart 1, that number is $45,000. Mayor White stated the next item on the agenda is to set a date for meeting for Saturday, February 6, from 9:00 a.m. to 12:00 p.m. Director Budarf asked for input from the Board. Budarf believes it is worth discussing. It’s important for the MUDs to do their due diligence, and this is part of it. In favor of it. Director Henry stated there is an open mind, that’s all we need, as long as you’re willing to try to come to find an answer. Director Hase agreed with Director’s Henry. Director Carr stated he would appreciate getting charts before the meeting; and asked the Board and Council to come to the meeting with a mindset to solve the issue at the meeting. Mayor White asked if anyone has any specific questions to forward those questions as soon as possible, so that we can prepare. Director Twomey stated there is an impact on the Town, on the citizens, and a definite impact on employees, given all those issues, this is our first joint meeting. The only reason we’re having this meeting is due to SEMO looking outside of the box, and Council realizing they might TCMUD No. 1 Special Session Minutes – January 25, 2010 15 have to take a hard look at their financials. There is an attitude that we’re the bad guys in some people’s minds, but we’re also the only ones that are cutting taxes, we’re running an efficient operation, and we’re tired of being put out like that. We cut our taxes this year and saved the taxpayers $386.000, We’re going to be cutting taxes down until we get down to the single pennies, in the next three or four years. Our water operation is run efficiently. It’s not there to make profit; it’s not there to pass on money to some other entity; it’s to keep the water rates low. The only thing we do is build up a little reserve just in case we have rainy summers, when they say “rainy day fund”, they mean it. If we’re going to go in there with an open honest attitude, let’s put everything on the table, because if we’re going to come in there and you’re going to throw charts up there that aren’t meaningful, then you’re wasting all of our time, and the taxpayers’ time, bottom line, if you’re going to be honest, let’s meet, if not, there’s no point. Director Fair advised that there’s been a lot of constructive discussions, and thinks of himself first as a resident citizen. Fair is optimistic that we are all of good heart, that we all have the right mission the right outcome, and is for the meeting. Director Thomas is in favor of meeting. Thomas would like Robert and Brandon to bring numbers to the meeting regarding bringing EMS over to the MUDs. Director Cantrell suggested that only elected officials meet. Director Kohs stated he is in favor of open dialogue. a. TCMUD 1 to take appropriate action regarding same. Board took no action. Action: Discussion only. JS2 Set Next Joint Meeting Date for Saturday, February 6, 2010, 9:00 a.m. – 12:00 p.m. and select the venue. a. TCMUD 1 to take appropriate action regarding same. Board agreed to meet without the attorneys on Saturday, February 6, 2010, 9:00 a.m. – 12:00 p.m. b. Town Council to take appropriate action regarding same. Council took no action. Action: Discussion only. JS3 Town Council to Adjourn Town Council recessed at 9:40 pm RECONVENE INTO SPECIAL SESSION The Board reconvened into Special Session 9:42 p.m. Adjourn. Meeting adjourned at 9:45 p.m. ___________________________ _____________________________