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HomeMy WebLinkAbout080309R CC Minn(V 0 The City A Neighborhood City CITY COUNCIL Bob Kelly, Mayor Bob Fry, Councilmember George Boehme, Councilmember Steven Segal, Councilmember Chuck Guffey, Councilmember STAFF Michael Ross, City Manager Alan Petrov, City Attorney Thelma Lenz, City Secretary CITY COUNCIL MEETING MINUTES City Council of the City of West University Place, Texas, met in special session Monday, August 3, 2009, in the Municipal Building Conference Room, 3800 University Boulevard, West University Place, Texas beginning at 4:30 p.m. Council and staff in attendance: Mayor Kelly, Mayor Pro Tern Fry, Councilmembers Boehme, Segal and Guffey, City Manager Ross, City Secretary Lenz, City Attorney Petrov, City Manager/Public Works Director Peifer, Finance Director Daugherty, Human Resources Director Standorf, Police Chief Walker, and Fire Chief Ralls. CALL TO ORDER Mayor Kelly called the special meeting to order at 4:40 p.m. Agenda items were as follows. Councilmember Chuck Guffey led the Pledge of Allegiance. City Secretary Lenz confirmed that the meeting was properly posted. Mayor Kelly announced that City Council would recess the regular meeting and convene into Executive Session beginning at approximately 4:42 p.m., in accordance with section 551.071 of the Texas Government Code, consultation with legal Counsel to seek or receive legal advice. Attending the Executive Session were Mayor Kelly, Mayor Pro Tem Fry, Councilmembers Boehme, Segal, and Guffey, City Manager Ross, City Attorney Petrov, and City Secretary Lenz. 1. Council Communications Matters related to Council communications including, but not limited to, executive session discussions, communications between Council members and Staff and form of government. At 5.25 p.m., Mayor Pro Tern Fry moved to close the Executive Session and reconvene into regular session. Councilmember Segal seconded the motion. MOTION PASSED. Ayes: Kelly, Fry, Segal, Boehme, and Guffey Noes: None Absent: None 2. Employee Compensation Matters related to the City of West University Place employee compensation and benefits. of West University Place Councilmember Segal moved to take Item 3 out of order for discussion at this time. Motion failed for lack of a second. City Council Minutes, August 3, 2009 Mayor Kelly explained his opinions and comments regarding TMRS as outlined in the attached document, marked Attachment "A". Mayor Kelly stated that these were his opinions only and they do not reflect the opinions of the rest of the Council. He said the reason for this discussion is because he wants to make sure Council understands the serious nature of the pension situation facing the City and to make sure that the plan was considered as a manner of paying for a new police station. Mayor Kelly said the main thing that put the retirement benefits on his radar is the 5 percent guarantee the plan gives employees. After Mayor Kelly went over his outline of comments, discussions ensued. Regarding Item IV.5 of Attachment "A", City Manager Ross stated that the City was $300,000 to $400,000 short, which is what the City has to make up over an 8-year period. City Manager Ross pointed out that if the plan begins to fall below 5 percent annually, he would assume there would be an overall look at the compensation packet for that year and that there would be an adjustment made in the overall compensation package to employees that would compensate for that shortfall. City Manager Ross said to say that the City's plan is rich compared to the private industry is probably true, but to say that the City's compensation package is rich compared to the private industry he would argue that there are compensation factors in the private sector that probably make up for all government entities pension plans. He said people make decisions as to whether they want their money now or later. Mayor Kelly said it is a problem when you have a plan that calls for a City to guarantee as much a retirement plan as we are and he wants to have an expert review the plan as we did with the medical insurance. City Manager Ross said this seems to sound like a crisis, but he's not quite sure just because Hedwig Village bailed out that it is a crisis, because City Council's every year have the choice of what budget they adopt. He said if the TMRS portion of the budget is too much, City Council will probably cut from other places and City Management would be bringing forward recommended cuts in order to stay in balance and adopt the tax rate the residents expect. Councilmember Guffey asked for clarification on what Memorial Villages exactly done. He asked if the reduced fund matching was just the Fire Department or all employees. City Manager Ross said the Fire Department only, effective January 1 of 2010, will go from a 2:1 matching to 1.5:1. Councilmember Guffey asked if Council goes through all the hassle of studying this and decide that we want to lower the City's matching is there a chance that the Texas Legislature will come in and mandate its own thing like they did with the cell phones and residential sprinklers. City Manager Ross said anything is possible, but he said the legislature didn't change how cities function with certain portions of TMRS, like the matching or percentages. He said those have been in place for decades. He said the only thing new to the plan was to allow more diversification in the investment portfolio over a 10-15 year period and the 5 percent guarantee. City Council Minutes, August 3, 2009 City Manager Ross said it is hard for staff to recommend departing from what 99.9 percent of the cities in the state and country are doing. He said if we want to be able to attract the best and the brightest, and if we want to be the Employer of Choice as Council said we wanted to be last year, decreasing the retirement benefits will not help us accomplish that. He said, however, staff will proceed however Council wants us to proceed. Mayor Kelly said the City has been out front on several things and said we will make our own decisions about whether we think this is a reasonable overall plan to be in; and, if so, do we have the right bells and whistles with the plan. He said all he wants is for everybody to look at this, so we can go into it with eyes wide open. City Manager said if decreasing benefits is on the table, it's something staff needs to know from a hiring perspective. Mayor Kelly said every budget year everything is on the table. Mayor Kelly said he's not blaming the City Manager or staff. He said he blames the legislature for allowing a 5 percent rate of return. Mayor Kelly said another thing he's asking is whether we are going to let TMRS play with a 12.4 million unfunded debt and see it maybe grow another $1 million to $2 million every year. Mayor Pro Tem Fry said this has to be in the budget process and something Council has to discuss. He said he doesn't know what the outcome will be, but he's not taking it off the table. Councilmember Segal said he would like more facts and would like to get a better understanding of the workings of the plan. He said he was told that the guaranteed percent rate is such that if the plan earns 7 percent, the two percent goes to reduce the unfunded liability. He said a very significant question to ask is if we decided to abandon the plan, does the unfunded liability go away, which he doesn't think it does. Councilmember Segal said one significant thing in the financial statement, as of 2007, reviewed last week was that the unfunded liability went from $7 million to $11.3 million, but in the notes it states "if the changes in actuarial funding method and assumptions have not been adopted for that valuation, the City's unfunded accrual would have been $7.3 and 69 percent." He said, so actually, we would have gone up $300,000, but we would have increased the percentage of funding. Councilmember Segal said another question he wants to know is the cost of the different benefits (i.e. updates service credit, restricted prior service credit, cost of living adjustment (COLA), etc.). City Manager Ross said we can have TMRS come to talk about the plan at a Council meeting. Councilmember Segal said he thinks TMRS would be the best because they will come to talk to us for free and are the best ones to tell us how the plan works. Mayor Kelly said he thinks it is also a good idea to have TMRS come to tell us how it works, but when it comes to evaluating the industry to other cities, the real world, etc., then we need to hire a consultant. City Manager Ross said TMRS has 2 or 3 independent actuarial companies looking at the same TMRS numbers because they want to hear the various aspects about what TMRS is doing and how they should plan for the future. If after listening to Eric Davis of TMRS, City Manager Ross said if Council still has the need to contract with an expert, staff will fulfill that need. City Council Minutes, August 3, 2009 Mayor Kelly said he still wants to have a consultant who is familiar with TMRS and who will sit in on the meeting with TMRS and get the story like our health insurance consultant did. Mayor Kelly said we need to have it on the next agenda to see if Council wants to go in that direction. City Manager said he suggests that we meet with TMRS first. Councilmember Segal reiterated that he would like to hear from TMRS to hear something about the plan before hiring a consultant. Councilmember Boehme said he has had experience in hiring and managing people and he said the way he views this is that we have no obligation to keep any salary or employee in the City. He said he has no problem in cutting what we pay in pension, if legal, but is concerned about what is in the best interest of West U residents. He said Mayor Kelly has very valid points that should be looked at, but it should be done as soon as possible because there are positions currently needing to be filled and we would need to share whatever we plan to do with prospective employees so they can make an informed decision to work here. Councilmember Boehme said another reason to get through this as soon as possible is because employees know this is being discussed and it does have an effect on job performance and moral and it affects the service the citizens receive. [Mayor Pro Tem Fry left the room at 6:24 p.m.] Councilmember Boehme said we also need to tread lightly and not reinvent the wheel. He said we are not out of step with what our benchmark and other cities are doing, which is his concern about the change. Councilmember Guffey said his experience in hiring and working throughout his life is that people look at salary a lot harder than they do retirement because retirement is so far off. He said he doesn't think that retirement is the major factor when people accept jobs. City Manager Ross said for certain level jobs and experienced employees it is very important. Councilmember Guffey said it is certainly a factor, but thinks it is something we really need to look at. He said $12,000,000 that could be $14,000,000 or $16,000,000 in a few years is pretty important and thinks it might take some tax increases, so it needs to be studied really closely. Councilmember Boehme said we need to learn more about that because he doesn't completely understand it, but said he thinks those amounts are not real and are based on assumptions. Mayor Kelly said it is those assumptions that are keeping it what it is now. He said if you change the actuarial numbers, it could be $24,000,000. Councilmember Segal said we need to get where we know what the assumptions are and not assume. Mayor Kelly said this is why we need an independent consultant like was done with the health insurance. He said to his knowledge, there has been no mass exit from West U because health insurance benefits were reduced. In fact, everyone is beating their chest about it because we saved $300,000 in health insurance benefits for the City. Councilmember Boehme said in all fairness, hiring an independent consultant was not the main reason for the savings. He said the main reason was because our loss ratio had changed. City Council Minutes, August 3, 2009 Mayor Kelly said that was one of the reasons, but the other reason was that we molded a policy that was competitive to go out and get this kind of rate. He said we would not have saved that money even with our experience rate had we kept the same benefits. Councilmember Boehme said it is an economic fact that cutting benefits is cutting the compensation package. Mayor Kelly said he doesn't think this Council will emasculate the pension plan. He's just saying that we need to take a hard look at how we get one that's more realistic in today's world. Councilmember Boehme said we need to resolve this quickly, because he has a huge problem with making offers to potential employees when this question mark is out there. Mayor Kelly said the freeze is not Council's decision. He said that is clearly Mike's decision whether he wants to institute and continue with a hiring freeze. He said he has personally taken the position that he doesn't agree with it, because if these are experienced government workers applying for the jobs, they know that a City Council can change anything at anytime on a whim anyway. City Manager Ross said the difference is that this type of reduction in TMRS has never been done in the history of West U or in the history of 99.9 percent of the other cities. Mayor Kelly said again he would like an expert to tell us that this is not the same world that we were in 5 or 10 years ago and said he feels somewhat duty bound to the citizens of this City to have the pension plan reviewed. Mayor Kelly said another issue is the proposed $6 to $8 million police station. He said he doesn't want to raise taxes and he doesn't want a bond election because he thinks we need to move quicker than that if it is determined that the facility is needed. Councilmember Segal said he thinks the first step is to get the TMRS representative to come and explain the plan to Council as soon as possible. He said he is not sure he wants to vote for a consultant until he understands the plan, because if he understands the plan totally, then it may be that a consultant is not necessary. Councilmember Boehme agreed. Councilmember Boehme said our driving force needs to be our selfish desire to have the very best employees for the dollars we're spending. He said while it's easy to point to ourselves, our neighbors, or our own stock portfolios, and say we're getting hit and we want West U employees to go with us, the truth is that the marketplace may not permit us to do that and at the same time attract and retain the employees we want and that our citizens deserve. Mayor Kelly said that is one of the many things that our expert needs to tell us. Councilmember Boehme said this is a different psyche from the private industry and we need to be conscious of that. Mayor Kelly said he understands that we need to get the best bang for the buck, but doesn't think we can ever lose sight of what our tax rate is and where it's headed in West U. Mayor Kelly said we need to get a TMRS representative before the next Council meeting. He said if they can't make it, then we need to vote on whether to move forward in hiring a consultant. He said he City Council Minutes, August 3, 2009 doesn't know how we can go forward without an expert, but if the rest of Council thinks we can, we can still look at it. [Mayor Pro Tem Fry returned at 6:53 p.m.] City Manager Ross said he is trying to understand what it is that an expert can tell us that TMRS can't Mayor Kelly said he thinks it is interesting that with the fantastic results that we had for the health insurance expert, that Mr. Ross is so negative on bringing an expert in to take a look at the pension plan. Councilmember Segal said an expert for benefits can't do the same thing as an expert in health insurance, because we have no control over the benefits plan and all we can do is tweak it. Mayor Kelly said to put things in perspective, if we're talking about a new police station and how we're going to pay for it, you have to take a hard look at this and maybe have to make to some hard calls. Councilmember Boehme said he thinks the employee benefits and building a police station are two separate issues and doesn't think the two should be co-mingled. He said if we build a new police station it's because our public safety needs to be upgraded, not because we can or can't afford it. He said it is a need based issue. Mayor Kelly said he agrees, but the question is how you would pay for new facility. Councilmember Boehme said he feels we have a lean budget and thinks it should be cut as thin as we can cut it; but, at the same token, he thinks the police department and public safety is driven by the fundamental needs to upgrade the quality of our public service. Mayor Kelly requested that an agenda item be placed on the agenda for next Monday night as to whether or not Council will authorize the city manager to hire a pension expert. City Manager Ross said he will ask TMRS to come and explain the system to Council as soon as possible. 3. Public Safety Facilities Matters related to police and fire facilities. Jeff Gerber with PGAL provided a history on the preliminary designs for the police facilities. He said 10 -12 concepts were reviewed, but three basic concepts materialized: Putting an addition onto City Hall (Option 6); building an independent police building on property not currently owned by the City; and putting a facility on the current footprint of where the public works building is and put the public works as an addition to City Hall. Mr. Gerber said they looked at all the pros and cons for all three approaches and for a number of reasons Option 6 seemed to be the most appropriate. Councilmember Guffey asked why the second floor isn't bigger. Mr. Gerber said it could be, but there are some critical functions of the police department that need to all stay together in order to operate efficiently and they were all put downstairs, so more space is required downstairs. He said EOC and administrative components are upstairs. City Council Minutes, August 3, 2009 In response to Mayor Kelly's question as to the square footage of the proposed facility versus the old one, Mr. Gerber said the existing building has a little over 6,000 square feet and the proposed facility, of which approximately 700 square footage is devoted to fire for a women's dormitory, is a little over 13,000 square feet. City Manager Ross pointed out that Option 6 has the least amount of square footage because, as Mr. Gerber pointed out, the building is being combined with the existing building so we're able to take advantage of existing restrooms, conference rooms, etc. Mayor Pro Tem Fry asked Chief Walker what is the driving force behind the additional 7,000 square footage. Chief Walker it's to fulfill existing needs by putting people in work areas they should be in now. When asked, Chief Walker said Option 6 is the quicker option, which is desperately needed; but long- term, Option 2 is better. Mayor Kelly said to add an agenda item on the August 10 agenda to authorize further evaluation of Options 6 and 2 for the police facilities. With no other business before Council, Mayor Pro Tern Fry moved to adjourn the regular meeting at 7:58 p.m. Councilmember Guffey seconded the motion. MOTION PASSED. Ayes: Kelly, Fry, Segal, Boehme, and Guffey Noes: None Absent: None Prepared By: A. Lenz, City Secretary I/ 'ST UN14~ Date Approved: 6LAA V~J ( O Tt o~~ r~xas a Ate,