08-19-2014 MinutesMINUTES
REGULAR MEETING
August 19, 2014
A Regular Meeting was held by the Schertz City Council of the City of Schertz, Texas, on
August 19, 2014, at 6:00 p.m., in the Hal Baldwin Municipal Complex Council Chambers, 1400
Schertz Parkway, Building #4, Schertz, Texas. The following members present to -wit:
Mayor Michael Carpenter
Councilmember Jim Fowler
Councilmember Cedric Edwards
Staff Present:
Deputy City Manager John Bierschwale
Chief of Staff Bob Cantu
City Secretary Brenda Dennis .
Mayor Pro -Tem Daryl John
Councilmember David Scagliola
Councilmember Matthew Duke
City Manager John Kessel
Executive Director Brian James
City Attorney Charles Zech
Councilmember Matthew Duke was absent during the Workshop and discussion items.
Call to Order
Mayor Carpenter called the Regular Meeting to order at 6:00 p.m.
Invocation and Pledges of Allegiance to the Flags of the United States and the State of
Texas ( Councitmember David Scagliola)
Councilmember David Scagliola provided the invocation followed by the Pledges of Allegiance
to the Flags of the United States and the State of Texas.
City Events and Announcements
• Announcements of upcoming City Events (J. Bierschwale/B. James)
No announcements provided.
• Announcements and recognitions by City Manager (J. Kessel)
Mayor Carpenter recognized City Manager John Kessel who asked Mayor Carpenter
to join him at the podium and then recognized Director of Development Services
Michelle Sanchez. Ms. Sanchez presented Mayor Carpenter with the 2014 Certificate
of Achievement for Planning Excellence the Planning Department received on
August 15, 2014. She stated the certificate recognized the professional planning
standards demonstrated by our planning staff and the support exhibited by our City
Council and Planning Comrnission. She continued to read stating that the City of
Schertz met the Chapter's goals for: increasing awareness of professional planning;
recognizing Planning Departments which meet certain professional requirements;
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enhancing neighborhood and citizen recognition of planning efforts; encouraging the
funding of professional training for Commissioners and Staff, and aiding in economic
development and community image. Mayor, Council and City Management
congratulated all those involved- in achieving this award. Ms. Sanchez recognized
and thanked her staff for their hard work in achieving this award.
Hearine of Residents.
Mayor Carpenter recognized the following who spoke:
Mr. Derek Sanchez, 4721 Green Bluff Drive, who spoke about revising the City
Ordinance to allow him to operate a pizza trailer. City Manager John Kessel stated that
this is something that staff has discussed with our Chamber of Commerce, and we would
very much like to have these types of businesses within the City and offered to have him
work with our Development Services Department to develop language and standards for
accomplishing this. Mr. Kessel asked that Mr. Sanchez get with Michelle Sanchez this
evening and provide her his information.
Workshop
Presentation and discussion regarding the CRS Program and discussion on future impact
on federally required flood insurance. (Item requested by Councihmember Fowler) (J.
Bierschwale /S. Willoughby /J. Hooks/L. Busch)
Mayor Carpenter recognized Storm Water Manager Larry Busch who introduced Ms.
Deidra Mares, Flood Specialist, ISO Community Hazard Mitigation and Manager of the
Community Rating System (CRS) who provided a PowerPoint presentation regarding the
CRS program, qualifications and point systems answering questions from Council. City
Manager John Kessel stated that Storm Water Manager Larry Busch will take lead on this
project and keep the Council updated.
• Discussion regarding Charter Review Commission (Mayor /J. Kessel/B. Dennis)
Mayor Carpenter recognized City Secretary Brenda Dennis who provided a brief
overview of how the City Charter can be amended, the Council's ability to periodically
appoint a Charter Review Commission, their duties, as well as information on how many
times the City Charter has been amended.
Mayor Carpenter stated that they haven't had a seated Charter Review Commission in
eight (8) years since 2006. The Charter directs Council to appoint a Charter Review
Commission periodically, but doesn't say what periodically is. Mayor Carpenter stated if
you look at the history they are a bit over due and this was mitigated due to
recommendations that came from staff and came from Council on the last two (2) sets of
charter revisions. Mayor Carpenter indicated that it is time to seat a Charter Review
Commission once again. The Charter states that a Charter Review Commission is made
up of five (5) citizens.
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Mayor Carpenter indicated that the Council needed to appoint this commission relatively
soon. He stated the Charter Review Commission sits for six months, 180 days, and if the
Council wants to take the recommendations of that citizen panel and put them before the
voters in May or November of next year, then the time is now to seat that Charter Review
Commission. Councilmembers concurred.
Mayor Carpenter directed the City Secretary to place this item on this agenda for the
Council to discuss methods of appointing the five (5) members of the community they
want to appoint to this commission and get them seated within the next 30 -days so they
can begin their work.
Consent Agenda Items
1. Minutes — Approve the minutes of the regular meeting of August 12, 2014. Q. Kessel/B.
Dennis)
2. Resolution No. 14 -R -69 — Consideration and/or action approving a Resolution
authorizing a renewal of an Interlocal Agreement among the City of Schertz, the City of
Cibolo, and Schertz- Cibolo - Universal City Independent School District (SCUCISD) to
provide police support to SCUCISD. (J. Bierschwale/M. Hansen)
The following was read into record:
RESOLUTION NO. 14 -R -69
A RESOLUTION BY THE CITY COUNCIL OF THE CITY OF SCHERTZ,
TEXAS AUTHORIZING AN INTERLOCAL COOPERATION AGREEMENT
WITH THE CITY OF CIBOLO, TEXAS AND THE SCHERTZ- CIBOLO-
UNIVERSAL CITY INDEPENDENT SCHOOL DISTRICT, AND OTHER
MATTERS IN CONNECTION THEREWITH
Mayor Carpenter recognized Councilmember Edwards who moved, seconded by
Councilmember Scagliola to approve the consent agenda items 1 and 2. The vote was
unanimous with Mayor Pro -Tem John, Councilmembers Fowler, Scagliola, and
Edwards voting yes and no one voting no. Councilmember Duke was absent. Motion
Carried
Discussion and Action Items
3. Public Hearings on Proposed Budget for FY 2014 -15 — Conduct a public hearing and
consideration and/or action regarding the adoption of the FY 2014 -15 Budget (First
required public hearings) (J. Kessel/J. Walters)
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Mayor Carpenter recognized Senior Budget & Finance Analyst James Walters who
introduced this item stating in accordance with Chapter 26 of the Texas Tax Code the
City Council must hold two (2) public hearings on a proposed budget for FY 2014 -15. He
stated the first required public hearing is this evening. The second required public hearing
will be conducted at the August 26, 2014 regular session.
The following information was included:
FY 2014 -15 Proposed Budget
Budget Goals:
• Balanced Structurally
• Conservative and Responsible
• Follows Financial Policies
• Maintains Current Service Levels
• Focuses on Priorities
Key City 5 Year Goals 2014
• Building Repairs* - Rec. Center, Admin Building & Parking Lot, Fire State #2
• Fire Station 3*
•
Master Facilities Plan*
•
Hold Tax Rate Flat*
•
Compensation Study*
•
FM 1518 Funding Study*
•
Maintain Reserves*
Currently being worked on
Budget Highlights
• Addresses all Key 5 Year Goals
Compensation Study and implementation
Administration Building, Fire Station #2 Repairs, Recreation Center Repairs
Continues Master Facilities Plan, which includes Fire Station #3
Includes a Funding Study on FM 1518
Continues to fund replacement reserves
• Focus on our Fleet vehicles and operations
• Replaces aging equipment
• Long Term Debt Model
All Funds — Revenues
Mr. Walters stated that the general fund makes up 39% of the budget, Water & Sewer
fund makes up 27 %, EMS fund makes up 12 %, I &S fund makes up 9 %, and the rest goes
to the smaller funds.
08 -19 -2014 Minutes Page - 4 -
General Fund
$25,814,170
Special Events Fund
153,800
PEG Fund
209,000
Water & Sewer Fund
17,860,678
EMS Fund
8,186,919
Drainage Fund
1,159,200
Hotel Tax
565,353
Park Fund
100;000
Tree Mitigation
116,335
Capital Recovery Water
885,500
Capital Recovery Sewer
1,160,497
I &S Fund
5,707,276
Other Funds
349,010
SEDC
302,257
GRAND TOTAL
$65,959,999
All Funds — Expenses
Mr. Walters stated that the general fund makes up 39% of the budget, Water & Sewer
fund makes up 28 %, EMS fund makes up 13 %, I &S fund makes up 9 %, and the other
funds make up the rest.
General Fund
$25,460,304
Special Events Fund
153,800
PEG Fund
209,000
Water & Sewer Fund
17,788,563
EMS Fund
8,151,501
Drainage Fund
1,094,618
Hotel Tax
564,402
Park Fund
60,000
Tree Mitigation
116,125
Capital Recovery Water
536,109
Capital Recovery Sewer
1,160,497
I &S Fund
5,636,157
Other Funds
339,000
SEDC
3,074,554
GRAND TOTAL
$64,344,630
Tax Rate
Mr. Walters stated that the state has us calculate different property taxes and present them
to City Council and to the citizens. Following are the calculations:
Effective:
08 -19 -2014 Minutes
The tax rate which, on average, will keep the tax bill the same as in 2013.
Page - 5 -
Current: The rate currently adopted by the City.
Proposed Max: The maximum rate set at which the final adopted rate cannot exceed,
and the rate we are requesting Council set tonight. This is also the rate
that we cannot exceed without issuing notices.
Rollback: The rate if exceeded allows citizens to initiate a rollback election. The
results of this election can reduce the adopted tax rate back to the
rollback rate.
Effective: $0.4857
Current: $0.4974
Proposed Max: $0.4974 - Proposed budget is balanced at this rate
Rollback: $0.5066
$0.01 is equal to $270,630 revenue or $17.42 on the average home
Target Tax Rate
Tax Rate
Current
Recommended
Alternative
Increase of Fund Balance
353,866
Maximum
5,936,141
M &O
$0.3010
$0.3164
$0.3139
I &S
$0.1964
$0.1810
$0.1810
Total
$0.4974
$0.4974
$0.4949
General Fund
Mr. Walters stated that using our revenue and expenses our increase in fund balance is
expected to be $353,866. Below is the breakdown:
Revenues
$25,814,170
Expenditures
25,460,304
Increase of Fund Balance
353,866
Beginning Fund Balance
5,936,141
Ending Fund Balance
6,290,008
25% Reserve Policy
$ 6,142,323
Mr. Walters stated that 25% reserve policy is for recurring operational expenses. Does
not include identified one -time expenses such as studies or irregular capital purchases.
08 -19 -2014 Minutes Page -6-
M &O $0.3164
Total Change in Expenditures
$ 203,000 New Employees
$ 54,015 Small Expanded Programs (10,000 or less)
$ 794,800 Large Expanded Programs (over 10,000)
$ 300,000 Act on Compensation Study
$ 770,000 Continued Existing Staffing Levels & Programs
$2,121,815 Total Increase
$ 353,500 Reserve Funding
M &O $0.3164
New Personnel
$ 26,000
2 Seasonal Park Workers
$ 45,000
Accountant
$ 93,000
2 additional mechanics
$ 39,000
Building Maintenance Worker I
$203,000
Total New Employees
M &O $0.3164
Small Expanded Programs
$ 1,500
Baby Changing Stations
$ 2,500
Lync Implementation — add on to our new Office 365 program
$ 5,250
Portable AC Unit
$11,200
Fleet Equipment
$19,565
Laptops, Tablets, Printers, and Servers
$14,000
2 Defibrillators - Fire
$54,015
Total Small Expanded Programs
M &O $0.3164
Large Expanded Programs
$ 327,200
Vehicle Replacements
$ 36,000
Planning Tracking Software
$ 109,600
Replace 1/3 of Self Contained Breathing Apparatus
$ 30,000
Additional Landscaping Services
$ 21,000
Animal Adoption Trailer (City Portion - $10,000)
$ 50,000
New/Replacement Desks & Minor Renovations
$ 150,000
Building Repairs — Admin. Bldg, and Parking lot, and Fire Station 2
$ 20,000
May Charter Election
$ 50,000
FM 1518 Funding Study (I -10 to FM 78)
$ 794,800
Total New Programs
08 -19 -2014 Minutes Page - 7 -
M &O $0.3164
Large Expanded Programs - Vehicles
$ 36,000
Replace Fire Chiefs Vehicle
$ 65,000
Replace Battalion Chief s Vehicle
$ 28,000
Replace Inspections' Truck
$ 28,000
Replace Streets' Truck
$ 25,200
CID Replacement Vehicle
$ 60,000
Replace Parks' Truck
$ 28,000
Building Maintenance Truck
$ 57,000
Fleet Replacement Fund
$327,200
Vehicle Replacements
M &O $0.3164
Reserve Funding
$ 169,000 Vehicle Replacement — able to replace more often
$ 24,500 A/C Replacement
$ 25,000 Server Replacement
$ 35,000 Phone System Replacement
$ 100,000 Unassigned Fund Balance — to be used on other projects necessary
$ 353,500 Total Reserve Funding
Public Works Equipment
Equipment
Expense
3 Backhoes
$
195,000
Haul Truck & Trailer
$
125,000
Belly Dump Trailer
$
50,000
Chipper & Truck
$
99,000
Tractor w /Arm Mower
$
105,000
Zero Turn Mower
$
16,500
Front End Loader
$
209,000
Replacement Motor Grader
$
200,000
Street Sweeper
$
200,000
Total:
$1,199,700
Mr. Walters stated that the information below does not include action on Employee Salary
Survey, includes no personnel and very little capital purchases in the final four years. He
stated it does include the pool and firefighter ramp up in FY 2016.
08 -19 -2014 Minutes Page -8•
2013 — 5 Year Forecast Information
2014 — 5 Year Forecast Information
FY2013
FY2014
FY2015
FY2016
FY2017 FY2018
Revenue
$ 22,689,507
$ 23 170,010
$ 23,501,901
$ 24,092,029
$ 24,754,718 $ 25,440 833
Expense
$ 21 513138
S22,618,597
S(22,776,669)
$(24,009,901)
$ 24,699,240 $(25,547,867)
Reserve
Funding
$1,176,369
$551,413
$725,232
$82,128
$55,479
M &O Fund
Balance
$3,976,709
$4,528,123
$5,253,355
$5,335,484
$5,390,962 $5,283,928
25% Goal
$52471,635
$5,637,149
$5,694,167
$5,983,725
$6,174,810 $6,371,967
Over/Under
$: ;494 92 :
T.$1,109;02
- ,$ 440,812`
$7,219,477
$7,448,981
2014 — 5 Year Forecast Information
Mr. Walters stated that the 2014 — 5 Year Forecast includes $600,000 for salary survey over
3 years, firefighter ramp up, natatorium operations, and between 4 and 8 employees added
every year. He stated that the general fund would need to add closer to 12 to keep the same
ratio.
5 Year Model Input
■ Revenues
• Property and Sales Tax estimated growth is based on historic trends and future
population estimates
• Model assumes the tax rate holds constant through FY 2019
5 Year Model Input
■ Expenses
• Operational costs are grown at rates based on a prior 3 years average
• Includes following programs:
♦ Funding for all 3 phases of the SCBA's replacement
♦ Aquatic Center Operations
♦ 12 Firefighters for new Station
♦ Estimates on the Compensation Study Action
♦ Continued Merit program throughout all years
♦ Between 3 and 5 additional employees (not including Firefighters) each
year
08 -19 -2014 Minutes Page - 9 -
FY2013
FY2014
FY2015
FY2016
FY2017
FY2018
Revenue
$ 24,611,808
$ 25 814170
$ 26,755,653
$ 27,822,123
$ 28,943 387
$ 30,122 409
Expense
$ 23,338,563
$(25,460,3'04)
$ 26,525,088
$(27,808,712)
$(28,9 2,910
$(29,795,924)
Reserve
Funding
$1,273,245
$353,866
$230,565
$13,410
$30,477
$326,485
M &O Fund
Balance
$5,936,141
$6,290,008
$6,520,572
$6,533,982
$6,564,460
$6,890,945
25% Goal
$5,686,391
$6,150,872
$6,578,522
$6,918,178
$7,219,477
$7,448,981
Over/Under
x:$249 750
.$139136
Mr. Walters stated that the 2014 — 5 Year Forecast includes $600,000 for salary survey over
3 years, firefighter ramp up, natatorium operations, and between 4 and 8 employees added
every year. He stated that the general fund would need to add closer to 12 to keep the same
ratio.
5 Year Model Input
■ Revenues
• Property and Sales Tax estimated growth is based on historic trends and future
population estimates
• Model assumes the tax rate holds constant through FY 2019
5 Year Model Input
■ Expenses
• Operational costs are grown at rates based on a prior 3 years average
• Includes following programs:
♦ Funding for all 3 phases of the SCBA's replacement
♦ Aquatic Center Operations
♦ 12 Firefighters for new Station
♦ Estimates on the Compensation Study Action
♦ Continued Merit program throughout all years
♦ Between 3 and 5 additional employees (not including Firefighters) each
year
08 -19 -2014 Minutes Page - 9 -
Long Term Debt Model
• For I &S Fund-
• Purpose:
• To avoid large tax increases in the future
• Design:
• Model is long term in nature
• Includes all current debt obligations
• Takes into account the growth of the tax base
• Ensures fund balance never falls below a certain level
• Includes bond elections every 5 years
Mr. Walters provided a slide of the Graph of Debt Services.
Training Slide
Educational Opportunities Expenses
Training & Professional Certification $358,348 .
Citywide Training Classes $ 7,000
Tuition Reimbursement 20,000
Total: $385,348
Does not include training provided at no additional cost from TML and other
membership organizations. These types of training include: Supervisory Training,
Safety Training, Financial Planning, and Harassment Awareness.
Mr. Walters provided the information below on what the budget calendar looks like:
Budget Calendar FY 2014/15
July 31 File with City Secretary, Budget Workshop
August 5 Budget Workshop, vote to place a preliminary tax rate on the agenda, and
schedule public hearings
August 6 First Community Budget Presentation — Civic Center
August 12 Budget Workshop
August 14 Second Community Budget Presentation — Schertz United Methodist
Church
August 19 First Public Hearing
August 26 Second Public Hearing, First Vote
September 2 Second Vote and adoption of the budget and tax rate
October 1 Budget goes into effect
Mayor Carpenter opened the public hearing and recognized the following:
• Mr. Robert Brockman, 1000 Elbel Road, who asked about the plans for a water
storage facility for Southern Schertz and also asked about funding of the Senior
Center. Mr. Brockman also inquired about the absences of the Deputy City
08 -19 -2014 Minutes Page -10 -
Manager and the Executive Director of Development. City Manager John Kessel
stated that they were on vacation.
As no one else spoke, Mayor Carpenter closed the public hearing. Mayor Carpenter
recognized City Manager John Kessel who asked Public Works Director Sam Willoughby
to come forward to address Mr, Brockman's question regarding the plans for the water
storage facility. Mr. Willoughby stated that they have started preliminary engineer work
and they are currently working on securing an appropriate site.
Mr. Kessel addressed Mr. Brockman's question regarding the funding of the Senior Center
stating that they have in the proposed budget funding for one - quarter of the calendar year
and they are looking into having an opportunity of having an outside agency operate that
facility as we do not have the staffing levels or expertise. He stated that if this is a better
option for our seniors then they will move forward, which would be discussed at a public
meeting with Council, and the Seniors, and if that does not work out they would be coming
back to Council for full year funding with some options for staffing so that we can continue
to have a good Senior Program. Mayor Carpenter concurred stating they are keeping their
options open.
Mayor Carpenter called for Council comments and recognized Councihnember Scagliola
who stated he had only two objections regarding the budget. One, is you call this
conservative and the other is you called it balanced. He stated we have a different
definition of conservative. Using conservative estimates does not make a budget
conservative. Conservatism is a physiology. Values, lean, efficiency focuses on synergy,
focuses on performance. Using conservative estimates may mitigate your risks but it does
so by padding the budget, and if you are going to error it tends to error on the side of
caution. That's what this budget does. The way he sees the budget it addresses the wants of
the City and it does indeed reflect some long range strategies. But it is not conservative. As
far as addressing those long range strategies, he is not sure that it does it by design. He
believes it was a fortunate outcome based on the way things worked out.
The second thing is claiming this is a balanced budget. He stated he was not impressed. It is
easy to balance a budget when you are going to spend $1.2 million dollars more than you
spent last year, or you get to increase taxes by that amount and add another million to it.
Balanced, where is the challenge in that? What opportunities are we missing?
Councihnember Scagliola stated that he thinks our staff has done an exceptional job with
economic development. When are the residents going to start benefrtting from the
exceptional job that our employees have put into economic development? That is how you
pay for future growth as far as he is concerned. He proposes adopting the effective rate
using that as a base line and then if you want to talk about balancing the budget, you
balance it from there. You don't take a top down approach. That is not a conservative
approach. You start from the base line. What do we need, not necessarily what we want,
but what do we need? If we went down to the effective rate at $0.4857, that's about
$300,000 in change. Councihnember Scagliola stated that what amazes him is that in a $65
million budget we are not able to find $300,000 in change. As he stated, he is all for the
effective rate and use that as a base line.
08 -19 -2014 Minutes Page - 11 -
Mayor Carpenter stated that he and Councihnember Scagliola get to have this discussion
every, year at budget time. He stated that if the city was closer to build out, if we were
somewhere near 90% build out we would probably be in a position to be looking at the
effective rate but potentially moving to a rate below the effective rate because we would no
longer be in growth mode and no longer be on a growth curve that we have to manage to
and support. One of the things that was decided several years ago as the Council was we
went to San Antonio and asked if they would cede to us from their ETJ the area between
FM 1518 and the creek. They agreed, and part of that agreement was that we would have
to annex that section of the city, which we've largely completed. Certainly to the point that
we have made good to the commitments to San Antonio, but because we have done this we
have to make commitments to some of the things we made to the residents in that part of
the city. In order to do so we actually have to spend some more money than we have been
spending before. We have to treat all sections of the city equally and in the growth mode
that we are in have to expect that we are not in the position to move to an effective rate or
lower. It is a good goal, it's a proper goal for the future, but he does not think they are at
that point right now where we could sustain that over the long term. We have seen other
cities that have attempted to do that, which caused a sling shot effect while they were still
in the growth mode. In order for them to maintain their maintenance and operation during
that growth phase they sling shot well back and then had to raise the tax rate not in small
increments, but in large increments to get back to maintaining. Mayor Carpenter continued
stating that he believes it is easier for the tax payer to deal with small incremental changes
rather than scale back, scale back and sling shot to a higher rate. Mayor Carpenter also
stated as another case and point if you saw the news today Live Oak is going to raise their
tax rate by .6 cents to fund I &S bond work. He stated with us holding our rate or slightly
reducing our rate is in his mind significantly easier for our population to deal with then
waiting, waiting and waiting, then sling shoting a .6 cent increase. It is a different point in
philosophy, and he thinks the way we are doing it is correct and will continue to advocate
for it. He further stated that Councihnember Scagliola and he will continue to disagree, but
it is a healthy thing.
Mayor Carpenter recognized Councilmember Fowler who asked Mr. Walters to explain the
difference between the effective rate and the proposed rate and roll back rate. Mr. Walters
stated that the effective rate is the rate at which on average the city will issue the same
amount on the tax bills as they did the year prior. The average tax bill will be the same this
year as last year. The proposed maximum rate is the rate the Council set on August 5,
2014, which the Council cannot now adopt a rate higher without starting the process all
over again. The roll back rate is the rate based on calculations set by the state where if
Council adopted a tax rate over the rollback rate the citizens would be allowed to vote, and
if they were to win, it would reduce the tax rate back to the roll back rate. It's basically
insurance for the citizens that Council does not raise their taxes too high too fast.
Councitmember Fowler had Mr. Walters clarify the amounts being proposed for the tax
rate to include M &O and I &S. Mr. Walters stated that the general fund increased 8% over
last year. He stated that on the M &O side they are looking at, the $2 million increase, it is
going to be higher than last year but the overall rate will remain the same. He stated even if
you keep the same tax rate or go to the effective rate, the effective rate can still increase the
08 -19 -2014 Minutes Page -12 -
overall revenue of the city, since the average tax bills are the same we will just have
basically new properties that are being built. When we add new residencies the tax bills are
the same but we have more residences we have more businesses being built. The tax bill is
the same but we have more going out. That is how tax revenues can actually increase with
the effective rate. What the effective rate is not taking into account is inflation that is
relatively neutral, it adjusts for inflation. Councilmember Fowler asked where we would
get the money to replace the equipment if we didn't get it from the proposed tax rate.
Mayor Carpenter answered through sales tax; if we increased our retail tax base then sales
tax could also potentially fund those things in the general fund.
Mayor Carpenter stated that one of the salient points to remember as we talk is if we
maintain the current tax rate or go to a slightly lower tax rate as opposed to going all the
way down to the effective rate is to look at how much development has occurred that is
commercial and how much valuation change has happened with residential properties. If
we have more commercial properties coming into the tax base representing a large portion
of that increase in evaluation as opposed to a year of rising up of residential property values
by the appraisal district, then we are in a strong position. If we have the reverse, if we have
the valuations from the appraisal district driving the valuations of the residential properties
up high and little or no commercial development then it would be fair to say that the
residents are really bearing the brunt of that cost. But with the addition of the commercial
businesses we have had, we have it balanced. We have it in the right place; it's not all on
the residents. To Councilmember Scagliola's point, when will the residents begin to feel
some of the positive effects of the commercial development? We are already feeling it
because a lot of those monies coming in are because of the valuations created by the
commercial development that we have. If we didn't have that then we would be
unbalanced and more of the burden would be on the residents. Mayor Carpenter also stated
to Councilmember Fowler's point we absolutely have to watch very carefully to make sure
that we are driving that economic engine of commercial development that keeps in check
the amount of that increase into the general fund that is required to be paid by the residents.
Mayor Carpenter recognized City Manager John Kessel who stated one other thing for
Council to consider while discussing the tax rate is we are discussing this year's proposed
rate for the upcoming year, but we also have to consider future years. One of the reasons
we went to a five year budget is we wanted to look at the long term effect on our tax rates
of our different projects we say we want to do. For example, Fire Station #3 is a project the
citizens, the City Council and staff all agree on that we need to build in Southern Schertz.
This is going to require twelve (12) fire fighters be hired to staff, which is three shifts of
four. That is a very minimum crew set. They need to be hired over the next few years. Mr.
Kessel stated that you can see on the five year model that it has those expenses and we
actually drop below our 25% goal even at the proposed tax rate. If we were to go to the
effective tax rate all of the numbers on the revenue side would decrease, yet the expenses
that we know we need to expend would increase, and the bottom line number would get
much worse. Mr. Kessel stated if you will recall from the previous year 2013, the number
for 2018 was over a million dollars under our goal and we have been working very hard to
not only meet today's needs but anticipate those needs tomorrow. There are different ways
we can do that. We could choose not to build a fire station, that would be one option, then
08 -19 -2014 Minutes Page -13-
we wouldn't have the staff or the expense but we also wouldn't have the fire station. The
other thing we could do is raise taxes in those years and that is something that staff is not
comfortable proposing. We know how difficult that would be on the citizens and the
Council. What our proposal on the staff side considers is we have to have these known
costs. Mr. Kessel demonstrated the effect on the 5 year forecast information.
Mayor Carpenter recognized Mr. Walters who addressed further questions regarding
revenue projections and how they were placed in the five year forecast model. City
Manager John Kessel stated that they do not know what new businesses will come into
town, stating that if we have a banner year we will get ahead, if we have a bust year we will
get behind. We use the term conservative not in a political party sense but in terms of the
degree to which we make our estimates based on hopefulness versus simply maybe more
risk based estimates. We do not assume we are going to have 20% growth in our
commercial tax base, we assume 5 to 6% growth totals, and that includes our ad valorem
tax and growth in our sales tax. It is unlikely that we are going to see an Amazon.com
come in every single year; it is simply not the case. We also do not know what world
events are going to take place. One of the things we discussed during the pre- budget
planning is the longest we have gone as a County without an economic downturn is about
ten years, from recession to recession. We are getting close to something along those lines,
certainly within the five year forecast. We could have a fantastic run and go ten years more
and do great, or something could happen that is outside of our control, like the flood in
1998, a man made situation like in 2001 or a simple economic meltdown. We can't always
assume an upside, yet the citizens of Southern Schertz will still need to have a fire station.
We can plan for those things or we can react to those things, from a staff's perspective it is
important that we consider them and obviously policy decisions are that of the City
Council. The information that has been made available this evening is critical not only to
this year but years to come.
Mayor Carpenter. recognized Councilmember Fowler who disagreed with going to the
effective rate stating that we would have to give up things that staff as a team have come up
with that are most important and that we would also have to give up on personnel that are
needed. Councilmember Fowler stated that we have been saying for months that we need
to hire more individuals and he doesn't believe going to the effective rate is a wise decision
at this time.
Mayor Carpenter recognized Councilmember Edwards who stated that going back to the
effective rate is irresponsible. If we use the rate that they are proposing he believes that will
help them accomplish all the goals that we have not only going forward next year but going
forward for the next five to even ten years out. Just because we would go to the effective
rate it does not mean that the taxes won't go up. A person's home could actually be valued
higher, and then they would get a higher tax bill. Mr. Walters stated it could. If property
values go up and we go to the effective rate, why not raise taxes when the property values
are going down; we would be irresponsible to do that as well. Councilmember Edwards
stated this is a good budget and has been put in place for a reason. He reiterated that they
have always talked about responsibility based management and being responsible. If there
are items that different departments need, he knows that we have the right people in place
08 -19 -2014 Minutes Page -14 -
to go to each other and say we can hold off on our purchase or hold off on a particular
budget item that would give the other departments priority. Those cost cutting saving
measures will always continue to go forward as long as he is on council. We will always
have cost cutting measures to give the citizens the biggest bang for the buck. It's the
responsible thing to do. Going to the effective rate would be irresponsible.
Mayor Carpenter recognized Councilmember Scagliola who stated he thinks the staff did a
great job working together. His problem isn't with the staff with their willingness to sit
down and collaborate. He thinks there are some long range assumptions that are built in
the model that may or may not be valid. That's where the savings are that he envisions, not
any particular line item, it the overall structure. There are certain things that don't happen
immediately, it requires a ramp up. You cannot spend money on a program that doesn't
exist yet. Incremental improvements, you start feeding into a program, you do not spend
everything all at once. This model takes a snap shot of assumptions. He stated that he was
speaking to Mr. Kessel today and they agreed that this is a nice two dimensional model.
Reality isn't two dimensional, it's. three dimensional. There are a whole lot of things going
on that we cannot see. We are looking at a flat screen, and that is his contention. As far as
being irresponsible he doesn't consider conservative values to be irresponsible. It may be a
different way of viewing things, but doesn't consider being different to be irresponsible.
Spending money that you do not have and isn't yours that is just available for the taking fits
his definition for irresponsible. He doesn't believe they are doing that either. This is
simply a difference of opinion and he is not saying that he is absolutely right, but he thinks
he is closer to the mark, especially during this year than he has in the past because he sees
the benefits of our economic strategy and that is what he is basing his assumptions on, not a
snap shot.
Mayor Carpenter stated that he wanted to provide a concrete example; one of the things
that has been discussed on the dais has been are we spending money on things that we
shouldn't be. Depending on how you value things whether looking at today's dollars, past
dollars or future dollars, it's arguable that there is probably between $13 to $19 million
dollars of needs and wants that they have not funded over the years. That's a continuous
movement. One of the things that they are looking at in this budget and probably a strong
example of what we mean when we say we put things off and prioritized with staff, staff
works together where this money should be spent and where the money can wait. We are
going to replace a backhoe that is in service today that was purchased in 1988, the year
after he graduated from high school. This backhoe he imagines is being held together with
gum and baling wire. This is something that we have put off for a long time and is
something that we cannot put off any longer. This is a legitimate need and we need to
replace. We have done tradeoffs year after year, which can wait one more year. Because
we are in a growth mode, we are not a city that is built out to its city limits, we have needs.
He doesn't believe that we have needs where we have to raise taxes and go over spending
our money, and to that point, don't forget everyone on the dais pays taxes; what ever we set
the rate at is what they have to pay as well. We are very careful and staff is very careful.
There are gives and takes and he feels very strong that this is a great budget and he doesn't
believe anyone on the dais has said that staff hasn't done an incredible job in putting it
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together and he doesn't believe that they have over spent at A. The budget is in the correct
place, that point of equilibrium that it needs to be at.
4. Public Hearings on Proposed Tax Rate — Conduct a public hearing and consideration
and/or action regarding the adoption of the FY 2014 -15 Tax Rate. (First required public
hearings) (J. Kessel/J. Walters)
Mayor Carpenter recognized Senior Budget/Finance Analyst James Walters who stated
that the proposed tax rate is at $0.4974, with $0.3164 for the M &O rate and $0.1810 for
the I &S rate. .
Mayor Carpenter opened the public hearing and as no one spoke, closed the public
hearing. Mayor Carpenter opened it up for Council comments and stated a lot of the
discussion was covered under the last item. No further comments from Council. Mayor
Carpenter stated there will also be an opportunity to speak next week as they will have
their second public hearing.
Roll Call Vote Confirmation
Mayor Carpenter recognized City Secretary Brenda Dennis who recapped the votes of items 1
and 2.
Executive Session
Mayor Carpenter stated before they go into executive session he wanted to say that from time to
time since he has been on Council for nine years, it is important to recognize the civility and the
collegial nature that this Council puts forth. We can have genuine disagreements on the dais, it
doesn't get personal and it doesn't get rude. It remains healthy discussions, disagreements on the
dais amongst Council is healthy for a city. The fact that this Council and previous Councils in
this city have been able to have those discussions and again have them in a collegial and civil
manner is a testament to who we are as a city. Mayor Carpenter thanked the Council for that
contribution. It is something to be remarked upon and savored; it doesn't happen that way in
every city. We are blessed to have a council who work together during the midst of
disagreements.
Mayor Carpenter recessed the regular meeting into executive session at 7:29 p.m.
Councilmember Duke arrived at 7.30 p. m.
5. City Council will meet in closed session for evaluation of the City Manager under Texas
Government Code Section 551.074 personnel issues.
Reconvene into Regular Session
Mayor Carpenter reconvened into regular session at 9:06 p.m.
08 -19 -2014 Minutes Page - 16 -
5. a. Take any necessary action based on discussions held in closed session under Agenda
Item number 5.
Mayor Carpenter recognized Councilmember Edwards who moved, seconded by
Councilmember Duke to set the City Manager's salary at $161,320. The vote was
unanimous with Mayor Pro -Tem John, Councilmembers Fowler, Scagliola, Edwards
and Duke voting yes and no one voting no. Motion Carried
Roll Call Vote Confirmation
Mayor Carpenter recognized City Secretary Brenda Dennis who recapped the vote on agenda
item 5a.
Requests and Announcements
6. Announcements by City Manager
• Citizen Kudos
• Recognition of City employee actions
• New Departmental initiatives
No further announcements provided.
7. Requests by Mayor and Councilmembers that items be placed on a future City Council
agenda.
Mayor Carpenter requested the City Secretary place on the next agenda for Executive
Session discussion regarding the City Manager's contract.
8. Announcements by Mayor and Councilmembers
• City and community events attended and to be attended
• City Council Committee and Liaison Assignments (see assignments below)
• Continuing education events attended and to be attended
• Recognition of actions by City employees
• Recognition of actions by community volunteers
• Upcoming City Council agenda items
Mayor Carpenter recognized Councilmember Fowler who stated he attended the
following:
• Tuesday, August 19, 2014, Schertz Chamber Luncheon
Mayor Carpenter recognized Councilmember Scagliola who stated he attended the
following:
08 -19 -2014 Minutes Page -17-
Thursday, August 14, 2014, Schertz Chamber Mixer at GVEC, as well as
attended the Schertz Chamber Luncheon.
Mayor Carpenter thanked the Council for their willingness to work collegial and in a
professional manner, not all Councils do it, but it has been the habit in Schertz for the better part
of 56 years. Thank you for continuing that tradition and it is good that we can disagree and
remain civil.
Adiournment
As there was no further business,
the meeting was adjourn24ch§aelR
Carpenter, Mayor
TTE�
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\Brenda Dennis, City Secretary
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