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HomeMy WebLinkAbout10/23/1985 - Workshop Minutes City Council MINUTES WORKSHOP CITY COUNCIL MEETING WEDNESDAY, OCTOBER 23, 1985 4:00 P.M. COUNCIL MEMBERS PRESENT: COUNCIL MEMBERS ABSENT: STAFF PRESENT: STUDENT GOVT. LIAISON: VISITORS PRESENT: Mayor Halter, Councilmen Bond, Tongco, Brown, McIlhaney, Runnels, Boughton None City Manager Bardell, Assistant City Manager VanDever, City Attorney Locke, Director of Capital Improvements Ash, Parks Director Beachy, Aquatics Super- intendent Szabuniewicz, City Secretary Jones, Deputy Finance Director Schroeder, Director of Planning Mayo, City Engineer Pullen, Traffic Engineer Black, Accountant Hubbard, Director of Community Development Stevens, Utili- ties Office Manager Piwonka, Assistant Utilities Office Manager Albright, Electrical Superintendent Guidry, As- sistant Personnel Director Lucas, Per- sonnel Director Dickson, Administrative Assistant Magoon, Printing Coordinator Fry, Purchasing Agent McCartney, Citi- zen Service Representative Dillard, Council Coordinator Jones Mike Hachtman See guest register. Agenda Item No. 1 - Closed session to discuss personnel [6252-17 (2) (~) ]. A. Personnel [6252-17(2)(g)]. 1. Discussion of Administrative Appointments. The Council did not convene in closed session. Agenda Item No. 2 - Action on closed session. Councilman Bond moved to approve the employment of William K. Cole as the City Manager of College Station with the effective date of employment of November 25, 1985. Councilman Runnels seconded the motion which was approved unani- mously, 7-0. WORKSHOP CITY COUNCIL MEETING WEDNESDAY, OCTOBER 23, 1985 PAGE 2 Mr. William K. Cole expressed his appreciation to the Council for their previous action and his excitement and enthusiasm about coming to College Station in his new capacity. The meeting was adjourned for a short recess to provide the news media an opportunity to address questions to Mr. Cole concerning his appointment. Agenda Item No. 3 - Council concerns. Councilman Brown reported that a committee had met with State Highway Department officials to ascertain what the future is for the East Bypass regarding the proposed overpasses. He noted that the Emerald Forest Parkway overpass will not be on-line for a number of years. He stated that many residents on the east side of the Bypass have expressed concern about the situation and would like the State to construct an additional entrance ramp on- to the Bypass. He further stated that Mr. Carol Zeigler of the Highway Department indicated if enough support for the proposal was shown from the residents in the area and Westinghouse Corpo- ration, it might be approved. He suggested that residents who are concerned about this situation should write letters to the State Highway Department, in addition to circulating petitions requesting the proposed action. He noted that the proposed en- trance ramp would cost approximately one million dollars. Councilman Bond asked what is the Highway Department preparing to do in the vicinity of Highway 30 and the East Bypass. Coun- cilman McIlhaney reported that the Highway Department is prepar- ing to widen Highway 30 from Business 6 to the intersection at the East Bypass. She questioned why the plans for widening High- way 30 do not include the portion of pavement under the overpass. City Manager Bardell replied that there is not sufficient free span under the overpass to allow for the addition of two lanes. Mayor Halter stated that since the Highway Department has indi- cated that public response to the proposal might aid in getting results, the city should encourage individuals to write letters to the city, which will be forwarded along with other information to the Highway Department. He suggested that individual Council- members contact the residents of subdivisions east of the Bypass and request that they circulate petitions requesting that these actions be undertaken by the Highway Department. Councilman Boughton stated that several elderly citizens had con- tacted her to express concern about the lack of uniformity in the city's population signs. She noted that the Highway Department will change the signs if the Council passes a resolution accept- ing a population figure. WORKSHOP CITY COUNCIL MEETING WEDNESDAY, OCTOBER 23, 1985 PAGE 3 Mayor Halter asked City Manager Bardell to investigate the proce- dures for updating the population signs. After some discussion concerning meeting dates for the Holiday Season, Mayor Halter suggested that the second regular meeting in November be cancelled and a special workshop meeting be scheduled on Wednesday, November 20, 1985 at 4:00 P.M. He suggested that the second regular and workshop meetings in December not be scheduled unless an item of urgency arises and at that time a special meeting can be scheduled on either the 16th, 17th or 18th day of December, 1985. The Council concurred with the recommended changes in meeting dates. A~enda Item No. 4 - Re~ort from the Franchise Advisory Committee. Dr. Larry Ringer, Chairman, presented the report. He stated the Committee's opinion that, unless amended, the franchise agreement does not allow a package with fewer than twelve channels. He stated that the Committee determined that there are residents of College Station who desire a level of cable service having fewer channels than the service presently available and noted that a package consisting of a minimum of twelve channels is permitted by the franchise agreement. He stated the Committee's recommen- dation that McCaw Cablevision should be encouraged to provide to subscribers an attractive offering consisting of twelve channels at a reasonable installation and monthly charge. In addition, he expressed the willingness of the Committee to work with McCaw to design the proposed offering. He expressed an additional concern regarding McCaw's current proposal of airing the local television channel on both channels 3 and 5 until after January 1, 1986, in an effort to determine which location offers the best reception. He pointed out that this proposal results in the loss of one channel and under the current franchise agreement the loss of a channel is considered a rate increase unless accompanied by a suitable decrease in the rate charge. Mr. Joseph DiBacco, representing McCaw Cablevision, complimented the Committee's willingness to get involved with the issues. He pointed out that the language of the franchise agreement is sub- ject to interpretation and stated that McCaw's primary goal and objective for offering the five channel basic package was to of- fer those citizens who could not afford the family pac nor who desire the variety it offers an opportunity for a lower price al- ternative. He stated that to deny the citizens of College Sta- tion that opportunity represents a disservice to them. He read several excerpts from a Report and Order from the Federal Commu- ri,n, 5-, .... WORKSHOP CITY COUNCIL MEETING WEDNESDAY, OCTOBER 23, 1985 PAGE 4 nications Commission issued April 19, 1985, which decreased the appropriate number of broadcast signals required for effective competition with basic cable television service to three or more. He expressed his disagreement with the Committee's recommendation which was based on the belief that the five channel alternative at $4.00 per month in some way puts the consumer at a disadvan- tage and the franchise agreement in jeopardy. He pointed out that in April, 1984, McCaw proposed a twelve channel basic pack- age similar to the lineup that the Committee is proposing and noted that at the time of McCaw's offering it was soundly re- jected by the consumer in this area. Councilman Brown asked if McCaw has considered polling its sub- scribers to determine how many are interested in the five channel basic package. Mr. DiBacco replied negatively. Councilman Bond asked what is the rate of subscription to the five channel package in Bryan. Mr. DiBacco stated that they have had fewer subscribers than anticipated. Councilman Tongco asked what was the price for the twelve channel package that was offered. Mr. DiBacco stated that the twelve channel package was offered at a price of $9.50 per month. Mr. DiBacco asked what is the reluctance on the part of the Coun- cil for accepting the proposed five channel basic package. Mayor Halter stated that if the five channel package is approved it will become the basis on which rates are set and the franchise fee is paid. Mr. DiBacco stated that McCaw has offered to the City Attorney a proposed amendment to the franchise agreement which specifically addresses that issue and sets forth that it would not in any way affect the franchise fee. City Attorney Locke stated that once the franchise agreement is amended creating a new basic level of service it becomes the ba- sis on which the franchise fee is paid. Mr. DiBacco stated that the language of the agreement reads, "that McCaw will pay the franchise fee based on the basic and movie services." He pointed out that the family pac is an expanded basic service. Ms. Locke replied that there can only be one basic service. Mr. DiBacco pointed out that no preclusions or restrictions are placed on the city for gathering franchise fees on any of the services that McCaw offers. Ms. Locke expressed her willingness to meet with Mr. DiBacco to review the proposed amendment to the franchise agreement. Mayor Halter stated that an additional concern is the deletion of some of the super-stations in an attempt to recover lost reve- nues. Mr. DiBacco addressed the concern. WORKSHOP CITY COUNCIL MEETING WEDNESDAY, OCTOBER 23, 1985 PAGE 5 Councilman Tongco asked a question concerning the cost of opera- tion for McCaw Cablevision. Mr. DiBacco explained that the cost of service depends on where the service is received from and what McCaw's relationship is with the company. Councilman Tongco asked why the cost of the extended family pac would increase with the addition of a twelve channel basic pack- age. Mr. DiBacco explained that no matter how many consumers subscribed to the twelve channel offering, a service offered for less than $12.50 would represent a reduction in revenues to the company and the lost revenues would have to be recouped in order for the company to continue its health and earn a fair return on its investment. Councilman Boughton asked Mr. DiBacco if in his opinion would more consumers subscribe to a twelve channel basic package offer- ing than had subscribed to the five channel basic package. Mr. DiBacco replied affirmatively, but pointed out that it would be determined by the degree of attractiveness of the package of- fered. Councilman Bond asked if the five channel basic package includes the three major networks. Mr. DiBacco replied that at this time it is technically infeasible, but by January 1, 1986 McCaw will be in the position to have the three major networks available on the five channel package. Mr. Steve Parker, member of the Franchise Advisory Committee, pointed out that the Committee extended several invitations to Mr. DiBacco to attend the meetings to discuss McCaw's proposals, but never had the opportunity to meet with him prior to submis- sion of the Committee's recommendation to Council. He pointed out that because of the date of approval of the Ordinance grant- ~ilg the franchise agreement it is grandfathered under federal law. He stated that if the franchise agreement is amended to al- low the five channel basic package, the Council will have adhered to the new findings of the FCC's Report and Order. Mayor Halter requested that Mr. DiBacco meet with City Attorney Locke and the Franchise Advisory Committee to determine if some- thing can be worked out. Councilman Tongco requested City Attorney Locke to review how the basic service affects the franchise fee and what effects if any the proposed amendment would have in regard to the franchise fee. WORKSHOP CITY COUNCIL MEETING WEDNESDAY, OCTOBER 23, 1985 PAGE 6 Councilman Brown suggested that McCaw determine exactly what type of service is de~tred by the consumer. Mr. DiBacco stated that a ~lumber of consumers in College Station have requested the five channel basic service, but have been de- nied. He pointed out that allowing a five channel service would not lose ~he grandfathering on rate regulation of the c~rrent franchise agreement until December 29, 1986 because the five channel service proposed would not become a basic service under the definition of the FCC according to the definition contained in the document referred to previously. Agenda Item No. 5 - Presentation of re~ort from the audit firm of Deloitte, Haskins & Sells. Mr. Charles Chaffin, Partner with Deloitte, Haskins & Sells, in- troduced Ms. Peggy McCormick, Audit Manager, and Ms. Kathy Kerns, the Senior Accountant responsible for the field work. He stated that in May, 1985 the Council engaged the firm of Deloitte Haskins & Sells to perform the 1985 Audit and at that time the Council wanted to insure that the city would continue to receive the Government Finance Officers Association's Certificate of Con- formance in recognition of the the Co,~prehensive Financial Re- port. He summarized the activities relating to the audit that had transpired to this date and stated that a draft of the Audit Report was distributed in order for it to be reviewed by the Council. He stated that an add[t[onal two weeks would be re- quired for the document to be finalized and printed. He stated that a review of the "Comprehensive Financial Report for 1985" and the "Report to Management" would be undertaken. He summa- rized the items that are listed on the Table of Contents and re- viewed the different sections of the auditors opinion on page 10 of the document. He further stated that the statistical tables included in the report were not audited. Ms. Peggy McCormick summarized the city's various funds as fol- lows: General Fund; the Special Revenue Funds; Debt Service Fund; Capital Projects Fund; Enterprise Fund; Trust Fund; and, Fixed Assets and Long-term Liability Fund. She pointed out that the Special Revenue Funds are designated as "Special" because of the nature of the revenue and are segregated out in order to as- certain that the funds are being spent in accordance with the source. She listed the four Special Revenue Funds as follows; Crime Prevention, Community Development, Revenue Sharing and Ho- tel/Motel Tax. Councilman McIlhaney referred to the Fund Balance for July ]., 1984 and questioned what is meant by the term "as restated." McCormick explained that several adjustments had to be made that WORKSHOP CITY COUNCIL MEETING WEDNESDAY, OCTOBER 23, 1985 PAGE 7 related to prior years and the fund balances that were affected had to be restated. Ms. Kathy Kerns, Senior Accountant, discussed the Capital Proj- ects Fund and the Enterprise Fund. She stated that the Capital Projects Fund accounts for the General Obligation Bond proceeds used to construct capital projects. Mr. Chaffin pointed out that currently there are six bond issues with monies outstanding. Councilman Bond asked if these monies are left from the sale of bonds or do they represent accrued earnings. Ms. Kerns replied that some of the monies represent accrued earnings. Mr. Chaffin stated that the Council should address that question to the staff. He stated that pages 55 and 56 delineate the ac- tivities in the Capital Projects Fund. Ms. Kerns briefly summarized the liabilities section of the Capi- tal Projects Fund which delineates amounts owed to contractors hired by the city. She noted that the Fund Balance is broken down into three major categories as follows: (1) "reserve for encumbrances" represents commitments generated through contract negotiations to spend funds on goods and services that are yet to be received; (2) "unreserved designated for" represents funds earmarked to be spent on various types of projects; and (3) "un- reserved - undesignated" represents accumulated interest earnings on bond proceeds. Ms. McCormick addressed Councilman Bond's previous question and stated that it appears that the bond proceeds in the first three bond funds would have been shown as "unreserved designated for" until such time as they were spent, and because all those catego- ries are virtually blank the amounts left in those accounts must represent accumulated interest earnings and not bond proceeds. Councilman Bond asked what type of reporting mechanism incorpo- rates the funds labeled "unreserved - undesignated." Mr. Chaffin noted that the "Report to Management" recommends an increase in reporting to the Council so that this type of information is re- ported on a more frequent basis. Councilman Brown referred to page 55 and questioned what the amounts listed as "reimbursed administrative expenditures" repre- sent. Ms. Kerns stated that the "reimbursed administrative ex- penditures'' are budgeted amounts that are transferred to the Gen- eral Fund from the Capital Projects Fund, which consists primari- WORKSHOP CITY COUNCIL MEETING WEDNESDAY, OCTOBER 23, 1985 PAGE 8 ly of salaries for individuals paid through the General Fund who have contributed to a given capital project. Councilman Bond asked if accrued interest earnings from bond pro- ceeds are tied to capital projects or are they free to be uti- lized in any way. Ms. McCormick stated that it would depend on the Bond Ordinance, but typically they are free. Councilman Brown asked if when these funds are drawn upon, is it reported to Council. Mayor Halter replied affirmatively. City Manager Bardell explained the city's policy concerning ~%e expenditure of accrued interest earnings from bond proceeds. He stated that it has been a practice to maintain the balances in the capital funds for accounting purposes. Ms. Kerns read a statement describing the Utility and Sanitation Funds which make up the Enterprise Fund. Mr. Chaffin pointed out that these funds most closely resemble a private enterprise. Ms. Kerns reviewed the balance sheets for the Utility and Sanita- tion Funds. Mr. Chaffin referred to page 60 delineating the ac- tivity within the Enterprise Fund for the year and noted that re- view of this information will indicate whether are not the city is having a good year. Ms. McCormick prov~del a brief summary of the city's position with regard to the bond coverage requirements. Ms. Kerns stated that the extraordinary loss reported on page 60 is a result o~ the Refunding Issue of the Utility Revenue Bonds that occurred in early 1985 and explained why it was accounted for in this manner. Mr. Chaffin noted that the city will more than make up for the loss over the life of the Bonds. Councilman Bond asked how the retained earnings of twenty million dollars compared to those for last year. Ms. McCormick stated that last year the retained earnings were fifteen million dol- lars. Councilman McIlhaney asked if any adjustments from previous years had to be made to the Enterprise Fund. Ms. McCormick re- plied affirmatively aad noted that there were some significant restatements in this Fund. Ms. McCormick summarized the Trust Funds which includes the Firemen's Relief and Retirement Fund, the Cemetery Perpetual Care Fund and the Employee Benefits Fund. In addition, she provided a brief summary of the city's General Fixed Assets and Long-term WORKSHOP CITY COUNCIL MEETING WEDNESDAY, OCTOBER 23, 1985 PAGE 9 Debts. She pointed out that a Statement of Grant Activity was included in the Audit Report as dictated by a new federal law en- acted to satisfy the audit requirements of the various grantor agencies. She listed the grants to the city as follows: (1) Block Grants; and (2) Revenue Sharing. Mr. Chaffin discussed the notes to the Financial Statement delin- eated on pages 23 through 29. Ms. McCormick pointed out that the purpose of the notes to the Financial Statement is to provide the reader with additional in- formation about how the Financial Statements are developed. She stated that during performance of the audit it was determined that there were several items on which the audit firm disagreed with the current accounting procedures and recommended to the staff that the accounting treatment be changed. She listed the two items that were recommended to be changed as follows: (1) reclassification of General Obligation Bonds that are being ser- viced by utility revenues to be shown in the Enterprise Fund; and, (2) accrual of unbilled utility bills to facilitate a proper matching of revenues and expenses. Mayor Halter explained that at the time the General Obligation Bonds were issued the city had changed suppliers of electrical energy and did not have a debt revenue history picture sufficient to allow the issue of Utility Revenue Bonds. He noted that the city secured the Revenue Bonds with property tax monies with in- tentions to repay them with utility revenues. Ms. McCormick requested clarification of Note 7 concerning the amount of the utility rebate. Mayor Halter stated the amount to be rebated and noted that the monies would be refunded in Fiscal Year 1985-1986. She reviewed the Statistical Tables included in the report and noted that they are required for the Certificate of Conformance. After additional discussion of the Audit Report, Mr. Chaffin be- gan a review of the Report to Management and explained that it summarizes a study of the city's internal controls undertaken in connection with the audit. He defined the term "material weak- ness" as a condition in which specific control procedures or the degree of compliance with them do not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the financial statements being audited may occur. He listed three areas of material weakness as follows: (1) the condition of accounting records is cumbersome and it is recommended that the city develop and implement a new Financial Management System and standardize procedures; (2) the area of property and equipment is below standard and it is recom- WORKSHOP CITY COUNCIL MEETING WEDNESDAY, OCTOBER 23, 1985 PAGE 10 mended that the city develop and maintain a detailed record of all assets including those assets that are donated to the city; and, (3) it is recommended that in the area of investments and overall control of investments should be included the maintenance of original documents wi~% the cost of the investment, the ap- proval process and the reconciliation of investment income to the subsidiary ledger. Mayor Halter asked if the Report presented is essentially the same Report that was discussed at a previous meeting. Mr. Chaffin replied affirmatively. Councilman Bond asked if there was anything about this Report as distinguished from that which was previously discussed, that is not mitigated by what is typically the staff's input or response to the Report to Management. Mr. Chaffin stated that the audi- tors met with staff and reviewed the Report and in several cases the findings and recommendations were made clearer based upon staff input. Mayor Halter asked if the staff had submitted a written response to the "Report to Management." Mr. Chaffin stated that at the meeting with staff two weeks ago they received a draft response and at that time reviewed the response with staff. He stated that the copy of the "Report to Management" and "Audit Report" that was received in College Station this week had not been re- sponded to as of yet. Councilman Brown asked Mr. Chaffin what he felt was a timely traasition period for implementing the new accounting proce- dures. Mr. Chaffin stated that two major areas that need to be addressed are as follows: (1) data processing; and, (2) overall accounting records. He stated that in his opinion these changes should be ~plemented within Fiscal Year 1985-1986. Councilman Runnels asked if the recommendations delineated in the "Report to Management" would necessitate additional personnel. Mr. Chaffin stated that there needs to be a thorough review of the data processing area and a possibility exists that a differ- ent type of personnel may be required. He stated that he had not reviewed thoroughly the situation in the Accounting Department and could not provide an opinion on whether or uot additional personnel would be required in order to implement a new Financial Management System. He further stated that the proposed Fixed As- set Accounting Process is a massive job and will require person- nel specifically designated to perform that function. Mayor Halter stated that he would like an opportunity to review the staff's response to the "Report to Management" and to WORKSHOP CITY COUNCIL MEETING WEDNESDAY, OCTOBER 23, 1985 PAGE 11 evaluate the situation. In addition, he stated that the Council needs an opportunity to work with Mr. Cole to deter,eLne what changes need to be made. Councilman McIlhaney asked if the recommendations concerning data processing should be made priority items. Mr. Chaffin recommend- ed that the Council appoint a Data Processing Steering Committee to evaluate the overall data processing needs of the city and re- turn a recommendation to the Council. He estimated that this process will probably take between three and four months. Councilman McIlhaney asked if the condition of the accounting records was a problem in the past and if past auditors had to perform a great deal of the accounting work. Mr. Chaffin stated that they were informed by staff and prior auditors that standard policy was for the accounting firm to close the books and make adjustments and prepare the Comprehensive Annual Financial State- ments. He stated that a significant amount of time was spent in actually preparing the document that was reviewed as opposed to performing the function of independent auditors. Councilman Tongco asked if that is normal procedure. Mr. Chaffin replied negatively. Mayor Halter thanked the Auditors for their presentation. Mr. Bardell asked how the asset on the well was handled. McCormick replied that it was capitalized. Ms. Councilman McIlhaney stated that she has been on the Council for four years and this is the first time a review of the Audit Re- port has been done and stated that hopefully it will enable the Council to make better decisions in the future. She thanked the Auditors for all the time and effort that was devoted to the pre- sentation. Agenda Item No. 6 - Closed session to discuss pending litigation [6252-17(2)(e)] and personnel [6252-17(2)(g)]. ae Personnel [6252-17 (2)(g)]. 1. D[sctlssion of Administrative Personnel. The Council moved to closed session and later reopened to the public. WORKSHOP CITY COUNCIL MEETING WEDNESDAY, OCTOBER 23, 1985 PAGE 12 A~enda Item No. 7 - Action on closed session. No action was taken on closed session. A~enda Item No. 8 - Adjourn. Mayor Halter adjourned the meeting at 7:30 P.M. ATTEST: Dian J; ~es~/Cit~ ~ecretary ® IO. 13. 15. 16. 17. 005345