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HomeMy WebLinkAbout09-29-10 TC Agenda PacketThe Regular Meeting of the Town of Westlake Town Council will begin immediat ely following the conclusion of the Town Council Workshop but not prior to the 7:00 p.m. posted start time. Page 1 of 4 TOWN OF WESTLAKE, TEXAS Mission Statement On behalf of the citizens, the mission of the Town of Westlake is to be a one-of-a-kind community that blends our rural atmosphere with our rich culture and urban location. Westlake, Texas – A Premier Knowledge Based Community TOWN COUNCIL MEETING AGENDA September 29, 2010 WESTLAKE TOWN HALL 3 VILLAGE CIRCLE, 2ND FLOOR COUNCIL CHAMBERS / MUNICIPAL COURT ROOM Workshop Session: 5:30 p.m. Regular Session 7:00 p.m. Workshop Session 1. CALL TO ORDER 2. DISCUSS AND REVIEW OF CONSENT AGENDA ITEMS FROM SEPTEMBER 29, 2010, COUNCIL REGULAR MEETING AGENDA. 3. EXECUTIVE SESSION Page 2 of 4 The Council will conduct a closed session pursuant to Texas Government Code, annotated, Chapter 551, Subchapter D for the following: a. Pursuant to Texas Government Code Section 551.087: Deliberation Regarding Economic Development Negotiations – The Town Council will deliberate the offer of a financial or other incentive to a business prospect. 4. RECONVENE MEETING 5. DISCUSSION REGARDING THE PROPOSED FISCAL YEAR 2010-2011 MUNICIPAL BUDGET AND FIVE (5) YEAR CAPITAL IMPROVEMENT PROGRAM. 6. COUNCIL RECAP / STAFF DIRECTION 7. ADJOURNMENT Regular Session 1. CALL TO ORDER 2. PLEDGE OF ALLEGIANCE 3. CITIZEN PRESENTATIONS AND RECOGNITIONS: This is an opportunity for citizens to address the Council on any matter whether or not it is posted on the agenda. The Council cannot by law take action nor have any discussion or deliberations on any presentation made to the Council at this time concerning an item not listed on the agenda. The Council will receive the information, ask staff to review the matter, or an item may be noticed on a future agenda for deliberation or action. Presentation of the Scenic City Gold Level Certification. 4. CONSENT AGENDA: All items listed below are considered routine by the Town Council and will be enacted with one motion. There will be no separate discussion of items unless a Council Member or citizen so requests, in which event the item will be removed from the general order of business and considered in its normal sequence. a. Consider approval of the minutes from the meeting held on August 25, 2010. b. Consider approval of the minutes from the meeting held on August 30, 2010. c. Consider approval of the minutes from the meeting held on September 8, 2010. d. Consider approval of the minutes from the meeting held on September 16, 2010. e. Consider approval of Resolution 10-26, Appointing members to the Westlake Academy Foundation Board. Page 3 of 4 f. Consideration of Ordinance 644, Approving Rates and a Settlement Agreement with Atmos Mid-Tex. g. Consider approval of Resolution 10-27, Approving the destruction of the Westlake Academy records in compliance with the Texas State Library and Archive Commission schedules. 5. CONDUCT A PUBLIC HEARING AND CONSIDERATION OF ORDINANCE 645, ADOPTING THE TOWN OF WESTLAKE REVISED BUDGET FOR FISCAL YEAR ENDING SEPTEMBER 30, 2010, AND ADOPTING THE PROPOSED BUDGET FOR FISCAL YEAR ENDING SEPTEMBER 30, 2011, AND PROVIDING AUTHORIZATION TO THE TOWN MANAGER TO APPROVE APPROPRIATED FUNDS UP TO $25,000. 6. CONSIDERATION AND DISCUSSION OF ORDINANCE 646, LEVYING MUNICIPAL AD VALOREM TAXES FOR THE 2010 YEAR IN ACCORDANCE WITH THE 2010- 2011 FISCAL YEAR BUDGET. 7. CONSIDERATION OF RESOLUTION 10-28, RATIFYING THE MUNICIPAL AD VALOREM TAX INCREASE. 8. CONSIDERATION OF RESOLUTION 10-29, APPROVING A CONTRACT WITH TARRANT COUNTY FOR THE COLLECTION OF AD VALOREM TAXES. 9. CONSIDERATION AND DISCUSSION OF RESOLUTION 10-30, APPROVING A CONTRACT WITH LINEBARGER, GOGGAN, BLAIR & SAMPSON, LLP FOR DELINQUENT TAX COLLECTION. 10. CONSIDERATION OF RESOLUTION 10-31, ESTABLISHING A 20% PENALTY ON DELINQUENT AD VALOREM TAXES AS ALLOWED BY THE TEXAS TAX CODE. 11. FUTURE AGENDA ITEMS: Any Council member may request at a workshop and / or Council meeting, under “Future Agenda Item Requests”, an agenda item for a future Council meeting. The Council Member making the request will contact the Town Manager with the requested item and the Town Manager will list it on the agenda. At the meeting, the requesting Council Member will explain the item, the need for Council discussion of the item, the item’s relationship to the Council’s strategic priorities, and the amount of estimated staff time necessary to prepare for Council discussion. If the requesting Council Member receives a second, the Town Manager will place the item on the Council agenda calendar allowing for adequate time for staff preparation on the agenda item. a. Discussion regarding the formation of and direction to be given to the Town of Westlake Green Team. b. Policy considerations for use of Westlake Academy facilities during the summer months. 12. COUNCIL RECAP / STAFF DIRECTION Page 4 of 4 13. COUNCIL CALENDAR - Town Council Meeting October 25, 2010 - Westlake Historical Preservation Society (WHPS) Living History Presentation October 26, 2010 (7:00 pm, WA Performance Hall) - Annual Texas Municipal League (TML) Conference October 26-29, 2010 (Corpus Christi, TX) - Annual WHPS Meeting November 4, 2010 (Home of Wayne and Karen Stoltenberg) - Town Council Meeting November 8, 2010 14. TAKE ANY ACTION FROM EXECUTIVE SESSION, IF NECESSARY The Council conducted a closed session pursuant to Texas Government Code, annotated, Chapter 551, Subchapter D for the following: a. Pursuant to Texas Government Code Section 551.087: Deliberation Regarding Economic Development Negotiations – The Town Council will deliberate the offer of a financial or other incentive to a business prospect. 15. ADJOURNMENT ANY ITEM ON THIS POSTED AGENDA COULD BE DISCUSSED IN EXECUTIVE SESSION AS LONG AS IT IS WITHIN ONE OF THE PERMITTED CATEGORIES UNDER SECTIONS 551.071 THROUGH 551.076 AND SECTION 551.087 OF THE TEXAS GOVERNMENT CODE. CERTIFICATION I certify that the above notice was posted at the Town Hall of the Town of Westlake, 3 Village Circle, on Friday, September 24, 2010, by 5:00 p.m. under the Open Meetings Act, Chapter 551 of the Texas Government Code. _____________________________________ Kelly Edwards, TRMC, Town Secretary If you plan to attend this public meeting and have a disability that requires special needs, please advise the Town Secretary 48 hours in advance at 817-490-5710 and reasonable accommodations will be made to assist you. CONSENT AGENDA: All items listed below are considered routine by the Town Council and will be enacted with one motion. There will be no separate discussion of items unless a Council Member or citizen so requests, in which event the item will be removed from the general order of business and considered in its normal sequence. a. Consider approval of the minutes from the meeting held on August 25, 2010. b. Consider approval of the minutes from the meeting held on August 30, 2010. c. Consider approval of the minutes from the meeting held on September 8, 2010. d. Consider approval of the minutes from the meeting held on September 16, 2010. e. Consider approval of Resolution 10-26, Appointing members to the Westlake Academy Foundation Board. f. Consideration of Ordinance 644, Approving Rates and a Settlement Agreement with Atmos Mid-Tex. g. Consider approval of Resolution 10-27, Approving the destruction of the Westlake Academy records in compliance with the Texas State Library and Archive Commission schedules. Town of Westlake Item # 2– Workshop Review of Consent Agenda Items 3. EXECUTIVE SESSION The Council will conduct a closed session pursuant to Texas Government Code, annotated, Chapter 551, Subchapter D for the following: a. Pursuant to Texas Government Code Section 551.087: Deliberation Regarding Economic Development Negotiations – The Town Council will deliberate the offer of a financial or other incentive to a business prospect Town of Westlake Item # 3 – Workshop Executive Session Town of Westlake Item # 4 – Workshop Reconvene Meeting Page 1 of 2 Town of Westlake Memo To: Honorable Mayor and Members of the Town Council From: Tom Brymer, Town Manager Subject: Meeting of September 29, 2010 Date: September 21, 2010 ITEM Wkshp Discussion regarding the Proposed Fiscal Year 2010-2011 Municipal Budget and Five (5) Year Capital Improvement Program Regular Conduct a Public Hearing and Consideration of Ordinance 645, Adopting the Town of Westlake Revised Budget for the fiscal year ending September 30, 2010, and Adopting the Proposed Budget for the Fiscal Year ending September 30, 2011, and Providing Authorization to the Town Manger to approve appropriated funds up to $25,000. VISION POINT AND KEY RESULT AREAS This item supports the following Vision Point and Key Result Areas: Inviting Residential & Corporate neighborhoods o On-going comprehensive planning o Sensitivity to neighborhood integrity o Outstanding community appearance o Highest quality development and aesthetic standards o Open space preservation We are Leaders o Premier educational facilities and programs o Producing well educated future leaders and thinkers o Business partnerships with Westlake Academy o Environmental stewardship initiatives o High quality services delivery coupled with financial stewardships o Infrastructure maintenance and planning Hospitality Finds its Home in Westlake o Citizen engagement and communication o Historic Preservation o Tourism development BACKGROUND: Two fiscal years ago, beginning in FY 2008-2009, the Town began moving its leadership and management systems to a framework utilizing a more program based budget designed to link desired outcomes with budgeted resources and accountability for results. This FY 2010-11 Budget represents the next step in this continuous improvement process. This budget document utilizes a systemic framework designed to link together critical governance and management decision making tools. This system is called “Governing and Managing for Outcomes” and is designed to integrate: Page 2 of 2 Strategic planning Five (5) year financial forecasting, budgeting, and performance measurement linked to priorities, objectives, and outcomes Reporting to monitor progress in outcome achievement and accountability for results Aligning resources to prioritized outcomes Citizen surveys to gauge service satisfaction levels with Town services and resident willingness to pay for those services Long term approach to ensure financial sustainability Maintaining core services Five (5) year capital improvement planning This budget focuses on the next twelve months of the Town’s future. However, the Council’s initiative to pursue a strategic planning approach to the Town’s governance is critical to providing the Council, and the community, with a multi-year focus that couples strategic priority setting with good financial stewardship decisions that achieve the long-term vision set by the Council for the Town of Westlake. The focus for the FY 2010-11 Proposed Budget has been positioning the Town for financial sustainability (both for the general municipal services and the Westlake Academy), a key priority found in the Town’s strategic plan. In addition to budget workshops held on May 24, 2010, August 20, 2010 and September 23, 2010, the Town Council has held public meetings/hearings on a proposal for a municipal ad valorem (property) tax to address the Town’s financial sustainability. Please note that the Westlake Academy operating budget has also been included, for presentation and transparency purposes, in this budget document. Additionally, transparency of this process and the information considered has been given strong emphasis. The Town has utilized its web site to place information from the various meetings concerning ad valorem tax discussions on its web site at: http://www.westlake-tx.org/en/FinancialSustainability.html FUNDING: The Town of Westlake’s Proposed FY 2010-2011 budget totals $16,194,203 (including $1,137,903 transfers in from fund balance for operating, debt service, capital projects, major maintenance and equipment replacement needs) for all funds. This budget also includes Westlake Academy’s FY 2010-2011 expenditures and transfers out totaling $4,749,094. RECOMMENDATION: This Public Hearing has been advertised as required by law. The recommendation is to first conduct and close the Public Hearing, followed by Council discussion as needed. Additionally, it is recommended to adopt the FY 2010-11 municipal budget as proposed. ATTACHMENTS: 1.) Proposed FY 2010-11 Budget sent under separate cover. Note: It is also on the Town’s web site for public viewing. 2.) Ordinance Town of Westlake Item #6 -Workshop Board Recap / Staff Direction Town of Westlake Item # 7 – Workshop Adjournment Town of Westlake Item # 2 – Pledge of Allegiance: USA & TX Texas Pledge: "Honor the Texas flag; I pledge allegiance to thee, Texas, one state under God, one and indivisible." CITIZEN PRESENTATIONS AND RECOGNITIONS: This is an opportunity for citizens to address the Council on any matter whether or not it is posted on the agenda. The Council cannot by law take action nor have any discussion or deliberations on any presentation made to the Council at this time concerning an item not listed on the agenda. The Council will receive the information, ask staff to review the matter, or an item may be noticed on a future agenda for deliberation or action. Presentation of the Scenic City Gold Level Certification Town of Westlake Item # 3 – Citizen’s Presentations and Recognitions Town of Westlake Memo To: Honorable Mayor and Members of the Town Council From: Eddie Edwards, Director of Planning and Development Subject: Meeting of September 29, 2010 Date: September 17, 2010 ITEM Presentation of a plaque to the Mayor and Town Council from the State of Texas, Scenic Texas Program, certifying the Town of Westlake as a Gold Level Certified Scenic City. VISION POINT AND KEY RESULT AREAS This item supports the following Vision Point and Key Result Areas:  Inviting Residential & Corporate neighborhoods o On-going comprehensive planning o Sensitivity to neighborhood integrity o Outstanding community appearance o Highest quality development and aesthetic standards o Open space preservation  We are Leaders o Environmental stewardship initiatives o In frastructure maintenance and planning  Hospitality Finds its Home in Westlake o Historic Preservation o Tourism development BACKGROUND The Scenic City Certification Program is part of the Scenic Texas program. Scenic Texas has identified a direct correlation between the success of a city’s economic development efforts and the visual appearance of its public spaces. In recognition of this link, Scenic Texas has developed the Scenic City Certification Program to support and recognize municipalities that implement high-quality scenic standards for public roadways and public spaces. The program recognizes Texas cities which already have strong scenic standards and will provide an incentive to others to adopt and implement the kind of stringent criteria that has been proven to enhance economic development, improve quality of life and foster a sense of place. The Scenic City certification program considers a municipality’s level of certification by assessing seventy-two different criteria covering fourteen different categories. The categories included: Streetscape requirements; Parks, Trails and Public Space development and maintenance; Protection of Trees and natural landscaping; Landscape requirements; and how clearly stated a community’s unity- of-design regulations are incorporated into their development standards. The Town of Westlake is one of only four municipalities in the State of Texas to be certified as a Gold level Certified Scenic City. CONSENT AGENDA: All items listed below are considered routine by the Town Council and will be enacted with one motion. There will be no separate discussion of items unless a Council Member or citizen so requests, in which event the item will be removed from the general order of business and considered in its normal sequence. a. Consider approval of the minutes from the meeting held on August 25, 2010. b. Consider approval of the minutes from the meeting held on August 30, 2010. c. Consider approval of the minutes from the meeting held on September 8, 2010. d. Consider approval of the minutes from the meeting held on September 16, 2010. e. Consider approval of Resolution 10-26, Appointing members to the Westlake Academy Foundation. f. Consideration of Ordinance 644, Approving Rates and a settlement agreement with Atmos Mid-Tex. g. Consider approval of Resolution 10-27, Approving the destruction of the Westlake Academy records in compliance with the Texas State Library and Archive Commission schedules. Town of Westlake Item # 4 - Consent Agenda Items Town Council Minutes 08/25/10 Page 1 of 3 MINUTES OF THE TOWN OF WESTLAKE, TEXAS TOWN COUNCIL SPECIAL MEETING August 25, 2010 PRESENT: Mayor Laura Wheat and Council Members, Tim Brittan, Clif Cox, and Carol Langdon. ABSENT: Rick Rennhack OTHERS PRESENT: Town Manager Tom Brymer, Town Attorney Stan Lowry, Town Secretary Kelly Edwards, Assistant to the Town Manager Ginger Awtry, Finance Director Debbie Piper, and Management Intern Scott Dixon. Regular Session 1. CALL TO ORDER Mayor Wheat called the meeting to order at 7:06 p.m. 2. PLEDGE OF ALLEGIANCE Mayor Wheat led the pledge of allegiance to the United States and Texas flags. 3. CONSIDERATION AND DISCUSSION TO ACCEPT COUNCIL MEMBER LARRY CORSON’S LETTER OF RESIGNATION. MOTION: Council Member Brittan made a motion to accept Mr. Corson’s resignation. Council Member Cox seconded the motion. The motion carried by a vote of 3-0. 4. CONSIDERATION AND DISCUSSION OF THE FISCAL YEAR 2010-2011 PROPOSED BUDGET AND TAX RATE, TAKING A RECORD VOTE IF THE PROPOSED TAX RATE WILL RAISE MORE REVENUE THAN PRECEDING YEAR’S REVENUE AND SCHEDULING PUBLIC HEARINGS. Town Council Minutes 08/25/10 Page 2 of 3 Town Manager Brymer provided a presentation and overview of the Town’s Financial Sustainability, the possible implementation of a property tax, exemptions set by the Town Council, a five (5) year projected forecast, a summary of tax abatements on Real and Personal property and Ad Valorem tax scenarios for debt issued for $2,5000,000 to $8,000,000 million dollars. Tom Lawrence, Lawrence Financial Consulting LLC, provided the I&S Tax Rate analysis for several schedules based on financing $2,000,000 $5,000,000 and $8,000,000 million dollars. Town Manager Brymer stated that the homestead exemption removes approximately $62,000,000 and the over 65 exemptions removes approximately $24,000,000 from the Town’s tax roll. Mayor Wheat read aloud to the audience the impact on home values as provided in their handout documentation. Mayor Wheat recessed the meeting at 7:49 p.m. Mayor Wheat reconvened the meeting at 7:59 p.m. Town Manager Brymer recommended the Council consider a property tax between $.22 and $.23 cents at this time. MOTION: Council Member Cox made a motion to call public hearings on the proposed FY 10-11 tax rate for 7:00 p.m. on September 8, 2010 and September 16, 2010, at 3 Village Circle, Second Floor Council Chambers, Westlake Texas and to consider a maximum property tax rate of $0.23. Council Member Brittan seconded the motion. The motion carried by a vote of 3-0. 5. CITIZEN PRESENTATIONS AND RECOGNITIONS Kenny Rogers, 1730 Ottinger Road, asked if the proposed tax would pay for the infrastructure on undeveloped land. Town Manager Brymer stated this property tax would be used to maintain existing infrastructure. 6. COUNCIL RECAP / STAFF DIRECTION Post the packet documentation provided to the Council on the Town’s website. Town Council Minutes 08/25/10 Page 3 of 3 7. COUNCIL CALENDAR - Council Meeting August 30, 2010 - Arbor Day September 25, 2010 - Westlake Baja at Vaquero September 27, 2010 - Council Meeting (adoption of budget) Sept. 29, 2010 - Annual TML Conference (Corpus Christi) October 26-29, 2010 Mayor Wheat announced that the date of the regular September Town Council meeting changed from September 27, 2010 to September 29, 2010. 8. ADJOURNMENT There being no further business before the Council, Mayor Wheat asked for a motion to adjourn the meeting. MOTION: Council Member Cox made a motion to adjourn the meeting. Council Member Langdon seconded the motion. The motion carried by a vote of 3-0. Mayor Wheat adjourned the meeting at 8:18 p.m. APPROVED BY THE TOWN COUNCIL SEPTEMBER 29, 2010. ATTEST: _____________________________ Laura Wheat, Mayor _____________________________ Kelly Edwards, Town Secretary Town Council Minutes 08/30/10 Page 1 of 5 MINUTES OF THE TOWN OF WESTLAKE, TEXAS TOWN COUNCIL REGULAR MEETING August 30, 2010 PRESENT: Mayor Laura Wheat and Council Members, Tim Brittan, Carol Langdon and Rick Rennhack. Clif Cox arrived at 4:52 p.m. ABSENT: OTHERS PRESENT: Town Manager Tom Brymer, Town Attorney Stan Lowry, Town Secretary Kelly Edwards, Assistant to the Town Manager Ginger Awtry, Public Works Director Jarrod Greenwood, Municipal Court Administrator Amanda DeGan, Facilities and Recreation Director Troy Meyer and Finance Director Debbie Piper. Workshop Session 1. CALL TO ORDER Mayor Wheat called the meeting to order at 4:42 p.m. 2. DISCUSS AND REVIEW OF CONSENT AGENDA ITEMS FROM AUGUST 30, 2010, COUNCIL REGULAR MEETING AGENDA. Town Manager Brymer stated that the Atmos steering committee has been advantageous for the Town. 3. PRESENTATION AND DISCUSSION OF THE PROPOSED CONTRACT WITH THE CITY OF FORT WORTH RELATED TO THE WHOLESALE PURCHASE OF TREATED WATER. Public Works Director Greenwood provided a presentation and overview of the proposed contract with the City of Fort Worth. Town Council Minutes 08/30/10 Page 2 of 5 Discussion ensued regarding the number of cities that receive their water by well and the reasons that Westlake would be unable to use well water, the legality of a PILOT to wholesale customers, and the equity of the water system. The Council asked staff to prepare a report showing the split of consumption of residential vs. commercial users. 4. PRESENTATION AND DISCUSSION OF THE REGIONAL TRAIL PLAN AND THE FM 1938 PROJECT. Facilities and Recreation Director Meyer provided a presentation and overview of the Regional Trail Planning System. Public Works Director Greenwood provided the history and overview of FM 1938 construction. Discussion ensued regarding the location of the pedestrian underpass location on FM 1938, the removal of the Vaquero stone wall, and how the trail will connect to our regional system. The Council asked Staff to discuss the option of a roundabout with TxDot on FM1938 at Dove Road. 5. ADJOURNMENT There being no further business, Mayor Wheat adjourned the workshop at 7:08 p.m. Regular Session 1. CALL TO ORDER Mayor Wheat called the regular meeting to order at 7:33 p.m., with all Council Members present. 2. PLEDGE OF ALLEGIANCE Mayor Wheat led the pledge of allegiance to the United States and Texas flags. 3. CITIZEN PRESENTATIONS AND RECOGNITIONS No one addressed the Council. Town Council Minutes 08/30/10 Page 3 of 5 4. CONSENT AGENDA a. Consider approval of the minutes from the meeting held on June 28, 2010. b. Consider approval of the minutes from the meeting held on August 20, 2010. c. Consider approval of Resolution 10-21, Approving the destruction of the Town and TSHA records in compliance with the Texas State Library and Archive Commission schedules. d. Consider approval of Resolution 10-22, Authorizing continued participation with the Atmos Cities Steering Committee and authorizing payment of two cents per capita to the Atmos Cities Steering Committee to fund regulatory and related activities related to Atmos Energy Corporation. e. Consider approval of Resolution 10-23, Appointing a member to the Public Arts Society. f. Consider approval of Resolution 10-24, Authorizing the Town Manager to execute an Agreement for Water Service between the Town of Westlake and the City of Fort Worth, Texas relating to the wholesale purchase of treated water. g. Consider approval of Ordinance 642, Consenting to assignment of Ordinance No. 408 to Allied Waste Services. MOTION: Council Member Cox made a motion to approve items b through g of the consent agenda. Council Member Rennhack seconded the motion. The motion carried by a vote of 4-0. MOTION: Council Member Cox a made a motion to approve item a of the consent agenda with amendments as discussed. Council Member Rennhack seconded the motion. The motion carried by a vote of 4-0. 5. CONSIDERATION AND DISCUSSION TO APPOINT A NEW COUNCIL MEMBER. Town Attorney Lowry stated that it is the Council’s choice and option to appoint a new member as nothing in state law dictates the process to appoint a new member. The previous Council accepted applications and interviewed candidates. Discussion ensued regarding the number of Council Members required to constitute a quorum with the current vacancy. Council Member Brittan recommended Terry Horton who is very active in the community, has a real estate background and grandchildren that attend Westlake Academy. MOTION: Council Member Brittan made a motion to appoint Mr. Terry Horton to fill the vacant seat of Council Member contingent upon his acceptance. Council Member Rennhack seconded the motion. The motion carried by a vote of 4-0. Town Council Minutes 08/30/10 Page 4 of 5 6. CONSIDERATION AND DISCUSSION TO APPOINT A MAYOR PRO TEM. MOTION: Council Member Brittan made a motion to appoint Council Member Langdon as the Mayor Pro Tem. Council Member Cox seconded the motion. The motion carried by a vote of 3-0. Council Member Langdon abstained. 7. CONSIDERATION AND DISCUSSION ORDINANCE 643, CONCERNING THE PROHIBITED USE OF A CELL PHONE IN A SCHOOL ZONE. Municipal Court Administrator DeGan provided the background of the proposed ordinance. Discussion ensued regarding the use of a hands free device and the use of a phone while in the school pick-up line. MOTION: Council Member Cox made a motion to approve Ordinance 643 with amendments as discussed. Council Member Langdon seconded the motion. The motion carried by a vote of 4-0. 8. CONSIDERATION AND DISCUSSION OF RESOLUTION 10-25, AMENDING THE FY 2009-2010 MUNICIPAL BUDGET FOR THE ARTS & SCIENCES BUILDING. Facilities and Recreation Director Meyer provided an overview and answered questions regarding the amendment as proposed. Discussion ensued regarding the implementation of the parking user fees and locations of faculty and student parking. MOTION: Council Member Langdon made a motion to approve Resolution 10-25. Council Member Cox seconded the motion. The motion carried by a vote of 4-0. 9. FUTURE AGENDA ITEMS - None 10. COUNCIL RECAP / STAFF DIRECTION - None Town Council Minutes 08/30/10 Page 5 of 5 11. COUNCIL CALENDAR - Arbor Day September 25, 2010 - Westlake Baja at Vaquero September 27, 2010 - Council Meeting (adoption of budget) Sept. 29, 2010 - Annual TML Conference (Corpus Christi) October 26-29, 2010 12. ADJOURNMENT There being no further business before the Council, Mayor Wheat asked for a motion to adjourn the meeting. MOTION: Council Member Rennhack made a motion to adjourn the meeting. Council Member Cox seconded the motion. The motion carried by a vote of 4-0. Mayor Wheat adjourned the meeting at 8:13 p.m. APPROVED BY THE TOWN COUNCIL SEPTEMBER 29, 2010. ATTEST: _____________________________ Laura Wheat, Mayor _____________________________ Kelly Edwards, Town Secretary Town Council Minutes 09/08/10 Page 1 of 4 MINUTES OF THE TOWN OF WESTLAKE, TEXAS TOWN COUNCIL REGULAR MEETING September 8, 2010 PRESENT: Mayor Laura Wheat and Council Members, Tim Brittan, Clif Cox, Carol Langdon and Rick Rennhack. ABSENT: OTHERS PRESENT: Town Manager Tom Brymer, Town Attorney Stan Lowry, Town Secretary Kelly Edwards, Public Works Director Jarrod Greenwood, Municipal Court Administrator Amanda DeGan, Facilities and Recreation Director Troy Meyer, Finance Director Debbie Piper, Interim Fire Chief Richard Whitten, Planning and Development Director Eddie Edwards, Director of Human Resources and Administrative Services Todd Wood and Management Intern Scott Dixon. Regular Session 1. CALL TO ORDER Mayor Wheat called the meeting to order at 7:03 p.m. 2. PLEDGE OF ALLEGIANCE Mayor Wheat led the pledge of allegiance to the United States and Texas flags. 3. ADMINISTER OATH OF OFFICE TO THE NEWLY APPOINTED COUNCIL MEMBER. - No action taken Town Council Minutes 09/08/10 Page 2 of 4 4. CITIZEN PRESENTATIONS AND RECOGNITION Town Manager Brymer provided a presentation and over view of the Town’s financial status. Allan Werst, 4035 Aspen Lane, stated he has lived in here since 2008 not in favor of a property tax. He would like the Council to entertain other options such as the addition of retail to increase sales tax revenue. Mike Mauler, 1855 Broken Bend Drive, posed the questions of why a Town of 700 is trying to fund our own school , how residents benefit from the grants provided to Fidelity and Deloitte, if privatizing the Academy was discussed, if we could tax those who use our infrastructure and why FM1938 needs to be a six (6) lane road. David Rollins 13239 Roanoke Road, stated he and his wife value the education at the Academy but they are not in favor of the ad valorem tax. He fears we have created an inequitable situation that is unsustainable and will lead to further disharmony and disunity in our community, especially with the imposition of an Ad Valorem tax to cover the shortfall. Darcy Anderson, 2005 Wood Thrush Ct., is against a property tax but agreed with Mr. Rollins comments. He supports the Academy and feels it adds value to the town and it is not an option to close a school. He would encourage privatizing the school and request Council take time to continue to study this implementation of a property tax. Pat Cockrum, 1825 Broken Bend, is opposed to a property tax. He asked the Council what has been done to entertain and cut cost or outsource cost. He also feels like the Fire and EMS should be on the table for discussion. Scott Bradley, 1 Paigebrooke, asked the Council how the revenues are doing currently, what the current sales tax has been since January. He also asked the Council to take time and not pass the tax this year to control the expenses. He feels we could cut service levels and people would understand the reduction in services. 5. CONDUCT THE FIRST (1ST) PUBLIC HEARING REGARDING THE PROPOSED TAX RATE AND TAX INCREASE. ANNOUNCE THE TIME, DATE AND PLACE OF THE MEETING AT WHICH THE TOWN COUNCIL WILL VOTE ON THE PROPOSED TAX RATE. Mayor Wheat and the Council provided explanations to the questions asked during Citizen Presentation. Mayor Wheat explained funding for the Academy, (state and town funding) and that the school is a public school and cannot charge students. Mayor Wheat also mentioned that consolidation of the ISD’s is not an option due to the fact it would require the consent of both ISD’s. Town Council Minutes 09/08/10 Page 3 of 4 Discussion ensued regarding the percentage of Westlake residents enrolled at the academy, its efficiency, the decision to increase the class size to 20 students, why privatizing the school is not an option due to the debt, and the amount of the current bonds that are backed by an Ad Valorem tax. Discussion also ensued regarding additional options that have not been previously discussed such as serving as an IB School for surrounding districts, offering Pre-school for-profit, outsourcing Fire and EMS services, how the daytime population affects the Town’s infrastructure, and transparency showing direct and indirect cost associated with the Academy, currently paid by the Town. Town Manager Brymer provided a budget transmittal letter outlining the evolution of the Town and the unique service delivery provided by support staff. He also provided clarification regarding the Keller and Southlake proposals and that no information was provided to include using our current station. Town Attorney Lowry stated the Sales tax is at the maximum and the only two options allowed by State law for municipalities to collect are sales tax and property tax. Interim Fire Chief Whitten spoke regarding the response time and the safety of the community. The department’s target time is 4 to 6 minutes. After 6 minutes a patient experiencing breathing problems could experience life threatening outcomes. Chief Whitten also provided an overview of the proposals provided by Southlake and Keller and the effect of residential sprinkler systems as required in residential homes and an explanation how the size of the home determines the number of Fire Fighters needed to respond. Discussion ensued regarding the interoperability of communications due to the difference of County communication systems, letters received from residents and businesses, and how the town could suffer should there be a disaster in the contracting city and Westlake simultaneously. Interim Chief Whitten also explained the Keller contract would keep revenue, respond from their current location and not provide inspection services. 6. COUNCIL RECAP / STAFF DIRECTION - None 7. COUNCIL CALENDAR - Special Council Meeting September 16, 2010 - Arbor Day September 25, 2010 - Westlake Baja at Vaquero Town Council Minutes 09/08/10 Page 4 of 4 September 27, 2010 - Council Meeting (adoption of budget) September 29, 2010 - Council Meeting October 25, 2010 - Annual TML Conference (Corpus Christi) October 26-29, 2010 8. ADJOURNMENT There being no further business before the Council, Mayor Wheat asked for a motion to adjourn the meeting. MOTION: Council Member Rennhack made a motion to adjourn the meeting. Council Member Cox seconded the motion. The motion carried by a vote of 4-0. Mayor Wheat adjourned the meeting at 9:20 p.m. APPROVED BY THE TOWN COUNCIL SEPTEMBER 29, 2010. ATTEST: _____________________________ Laura Wheat, Mayor _____________________________ Kelly Edwards, Town Secretary Town Council Minutes 09/16/10 Page 1 of 4 MINUTES OF THE TOWN OF WESTLAKE, TEXAS TOWN COUNCIL REGULAR MEETING September 16, 2010 PRESENT: Mayor Laura Wheat and Council Members, Tim Brittan, Clif Cox, Carol Langdon and Rick Rennhack. ABSENT: OTHERS PRESENT: Town Manager Tom Brymer, Town Attorney Cathy Cunningham, Town Secretary Kelly Edwards, Assistant to the Town Manager Ginger Awtry, Public Works Director Jarrod Greenwood, Municipal Court Administrator Amanda DeGan, Facilities and Recreation Director Troy Meyer, Finance Director Debbie Piper, Interim Fire Chief Richard Whitten, Planning and Development Director Eddie Edwards, Director of Human Resources and Administrative Services Todd Wood and Management Intern Scott Dixon. Regular Session 1. CALL TO ORDER Mayor Wheat called the meeting to order at 7:04 p.m. 2. PLEDGE OF ALLEGIANCE Mayor Wheat led the pledge of allegiance to the United States and Texas flags. 3. PRESENT A PROCLAMATION IN RECOGNITION OF ARBOR DAY. Mayor Wheat read the proclamation declaring Arbor Day on September 25, 2010. Facilities and Recreation Director Meyer provided an overview of the event. Town Council Minutes 09/16/10 Page 2 of 4 4. CITIZEN PRESENTATIONS AND RECOGNITIONS There was no one present wishing to address the Council at this time. Persons signed up to speak will speak during the Public Hearing. 5. PRESENT A PROCLAMATION IN RECOGNITION OF ARBOR DAY. - No Action 6. CONDUCT THE SECOND PUBLIC HEARING REGARDING THE PROPOSED TAX RATE AND TAX INCREASE. ANNOUNCE THE TIME, DATE AND PLACE OF THE MEETING AT WHICH THE TOWN COUNCIL WILL VOTE ON THE PROPOSED TAX RATE. Town Manager Brymer provided a presentation and overview of Financial Sustainability and Ad Valorem taxes. During his presentation he referred to pages 5 and 9 of the Financial policies adopted by the Town Council. Interim Chief Whitten provided an overview of outsourcing Fire and EMS services, the impacts to Mutual Aid if the department was outsourced and community risk assessment. Town Manager Brymer provided an overview of the Keller Proposal stating that Keller would respond from their current stations. Mayor Wheat opened the public hearing Scott Bradley, 1 Paigebooke, quoted sales tax revenues he reviewed and the retail sales. He stated he does not agree with the day time population or sales tax as presented. He asked the Council if the property tax is adopted and they chose to issue bonds, would they allow residents to vote on those bonds Allan Werst, 4035 Aspen, asked what the population of Westlake is since it is listed different in several publications. He would like Council to delay the tax giving the economy a chance to rebound and continue to negotiation the Fire Department. David Rollins, 13239 Roanoke Road, has two children enrolled in the Academy and he opposes the tax. He asks the Town Council to postpone the tax, live within our means and eliminate an inequity that weighs heavily on a community. Stef Mauler, 1855 Broken Bend Drive, opposes the property tax and asked Council if they could collect property taxes from our corporate residents or if there are any additional exemptions for HOA members or families with children and if they knew for certain that no one could assume the Academy debt. Town Council Minutes 09/16/10 Page 3 of 4 Warren Bonham, 1818 Broken Bend Drive, opposes the property tax. He feels that there needs to be more of an emphasis on cutting expenditures. Reviewing salaries at the academy, privatizing options, the cost to employ international, if we should continue to push the HS program, letting more students to the school, athletic programs, and the bus. Pat Cockrum, 1825 Broken Bend, opposes the property tax. He applauds the shared- services model. He feels the Town needs to make real decisions such as other entities and that we should not eliminate the unique factor of not having a property tax. He asked the Council to make the hard decisions and give the residents the opportunity to save the unique factor of no property tax. Rebecca Rollins, 13239 Roanoke Road, stated that most Charter Schools pay rent. So to be fair to residents a lease payment should be paid back to the Town for the facility. Linda Bjorn, 6010 Stagecoach Circle, opposes the property tax. She asked the Council if anyone has acknowledged that they are in favor of the property tax and if so the reasons they support the tax. Darcy Anderson, 2005 Wood Thrush Ct., asked the Council if we waited one year, wouldn’t we be going through the same process next year when revenues hit the budget? Discussion ensued regarding the calculation of resident and daily population, the Fire and EMS response time and if there are standard methods used to calculate the time, outsourcing the Academy and the conservative forecasting of sale tax. Mayor Wheat provided information regarding block scheduling and increasing the class size of the school, how the Council is addressing the issue by placing the direct cost covered by the Town into the Academy budget and the indirect cost will be moved to the Academy’s 2011-2012 budget. Clif asked what would happen with the debt if the school was dissolved and could we move the city offices back to the school campus, thus saving rent on town offices. 7. COUNCIL RECAP / STAFF DIRECTION - None Town Council Minutes 09/16/10 Page 4 of 4 8. COUNCIL CALENDAR - Arbor Day September 25, 2010 - Westlake Baja at Vaquero September 27, 2010 - Council Meeting (adoption of budget) September 29, 2010 - Council Meeting October 25, 2010 - Annual TML Conference (Corpus Christi) October 26-29, 2010 9. ADJOURNMENT There being no further business before the Council, Mayor Wheat asked for a motion to adjourn the meeting. MOTION: Council Member Rennhack made a motion to adjourn the meeting. Council Member Langdon seconded the motion. The motion carried by a vote of 4-0. Mayor Wheat adjourned the meeting at 10:22 p.m. APPROVED BY THE TOWN COUNCIL SEPTEMBER 29, 2010. ATTEST: _____________________________ Laura Wheat, Mayor _____________________________ Kelly Edwards, Town Secretary Town of Westlake Memo To: Honorable Mayor and Council Members From: Kelly Edwards, Town Secretary Subject: Meeting of September 29, 2010 Date: September 3, 2010 ITEM Regular Consider a Resolution appointing new members to the Westlake Academy Foundation. VISION POINT AND KEY RESULT AREAS This item supports the following Vision Point and Key Result Areas:  Hospitality Finds its Home in Westlake o Citizen engagement and communication BACKGROUND Currently the Westlake Academy Foundation has vacancies. A recommendation has been made to consider Charlotte Ryan and Kevin Hansen to fill the vacant positions. FUNDING N/A RECOMMENDATION Staff recommends that the Board fill these vacancies. ATTACHMENTS Board Applications Resolutions Resolution 10-26 Page 1 of 2 TOWN OF WESTLAKE RESOLUTION NO. 10-26 A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS, APPOINTING MEMBERS TO THE WESTLAKE ACADEMY FOUNDATION BOARD. WHEREAS, Currently, vacancies exist on the Westlake Academy Foundation board; and WHEREAS, the Town Council has received two applications for consideration of appointment; and WHEREAS, the meeting at which this Resolution was considered was open to the public as required by law, and public notice of the time, place, and subject of the meeting has been given in accordance with Chapter 551, Government Code. NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS: SECTION 1: That, all matters stated in the Recitals hereinabove are found to be true and correct and are incorporated herein by reference as if copied in their entirety. SECTION 2: That the Town Council of the Town of Westlake does hereby appoint the following individuals to serve as members of the Westlake Academy Foundation board for the term noted below: Charlotte Ryan and Kevin Hansen - terms expiring June 2012. SECTION 3: If any portion of this Resolution shall, for any reason, be declared invalid by any court of competent jurisdiction, such invalidity shall not affect the remaining provisions hereof and the Council hereby determines that it would have adopted this Resolution without the invalid provision. SECTION 4: That this resolution shall become effective from and after its date of passage. PASSED AND APPROVED ON THIS 29th DAY OF SEPTEMBER 2010. ___________________________________ Laura Wheat, Mayor Resolution 10-26 Page 2 of 2 ATTEST: ____________________________________ __________________________________ Kelly Edwards, Town Secretary Thomas E. Brymer, Town Manager APPROVED AS TO FORM: ____________________________________ L. Stanton Lowry, Town Attorney Page 1 of 2 Town of Westlake Memo To: Honorable Mayor and Members of the Town Council From: Tom Brymer, Town Manager Subject: Meeting of September 29, 2010 Date: September 21, 2010 ITEM Regular Consideration and Discussion of an Ordinance Approving Rates and a Settlement Agreement with Atmos Mid-Tex. (consent item) VISION POINT AND KEY RESULT AREAS This item supports the following Vision Point and Key Result Areas: We are Leaders o High quality services delivery coupled with financial stewardship o Infrastructure maintenance and planning BACKGROUND: Most municipalities have retained original jurisdiction over gas utility rates and services within their corporate limits. The Atmos Cities Steering Committee ("ACSC") is composed of municipalities, including Westlake, in the service area of Atmos Energy Corporation, Mid-Tex Division regardless of whether original jurisdiction has been retained. Atmos is a monopoly public utility provider of natural gas. Because Atmos has no competitors, regulation of the rates it charges its customers in the only way that cities can insure that natural gas rates are equitable and competitive. Working as a coalition to review the rates charged by Atmos allows cities to accomplish more collectively than each city could do acting alone. Cities have more than 100 years experience in regulating natural gas rates in Texas. Rates cannot change and the Settlement Agreement with Atmos Mid-Tex cannot be implemented without passage of rate ordinances by cities. No related matter is pending at the Railroad Commission. The purpose of the Ordinance is to approve rate tariffs (“Attachment A”) and Proof of Revenues (“Attachment B”) that reflect the negotiated rate change pursuant to the RRM process and to ratify a Settlement Agreement recommended by the ACSC Settlement Committee and Executive Committee. As a result of the negotiations, ACSC was able to reduce the Company’s requested $70.2 million RRM increase to $27 million. Approval of the Ordinance will result in the implementation of new rates that increase Atmos Mid-Tex’s revenues effective October 1, 2010. The Settlement Agreement (“Attachment C”) to be ratified by the Ordinance authorizes an extension of the RRM process, in modified form to eliminate the true-up component, for an additional two annual filings. The Settlement Agreement also addresses the Atmos Mid-Tex steel service line replacement program and authorizes current cost recovery via an adder to residential and commercial customer charges. Page 2 of 2 Please review the attached Staff Report for additional information. FUNDING: Financially, the impact of this settlement with Atmos Mid-Tex by the cities allows the company to: (1) increase base rate revenues by $27 million (as opposed to the $56.8 million requested in Atmos’ original rate filing); (2) extend the RRM (rate review mechanism) process, with modifications for an additional two cycles and to thereafter require the filing of a system- wide Statement of Intent rate case on or before June 1, 2013; and (3) in the interim to allow current recovery of incremental direct costs of the steel service line replacement program in rates set via this ordinance and in future RRMs. RECOMMENDATION Town Staff and the ACSC Executive Committee, as well as ACSC lawyers and rate consultants, recommend approval of this Ordinance. ATTACHMENTS: 1.) Staff report on the negotiated settlement of this Atmos rate case. 2.) Memo from Cities’ rate case attorneys re: advising of Atoms’ rate filing in March of this year and increase requested from the Texas Railroad Commission 3.) Ordinance without attachments 4.) Attachments (including Settlement Agreement) Atmos RRM Ordinance Staff Report 1 MODEL STAFF REPORT The City, along with approximately 148 other cities served by Atmos Energy Mid-Tex Division (“Atmos Mid-Tex” or “Company”), is a member of the Atmos Cities Steering Committee (“ACSC” or “Steering Committee”). On or about March 15, 2010, Atmos Mid-Tex filed with the City an application to increase natural gas rates pursuant to the Rate Review Mechanism (“RRM”) tariff approved by the City as part of the settlement of the Atmos Mid-Tex 2007 Statement of Intent to increase rates. This is the third RRM filing under a three year experimental program. The Atmos Mid-Tex RRM filing sought a $70.2 million rate increase. The City worked with ACSC to analyze the schedules and evidence offered by Atmos Mid-Tex to support its request to increase rates. The Ordinance and attached rate and RRM tariffs are the result of negotiations between ACSC and the Company to resolve issues raised by ACSC during the review and evaluation of ACSC’s RRM filing. The Ordinance resolves the Company’s RRM filing by authorizing an increase in the Company’s base rate of $27 million effective for bills rendered on or after October 1, 2010. Additionally, the Ordinance authorizes supplemental revenue of $3.4 million to be recovered through the customer charge component of rates to cover direct costs associated with a steel service line replacement program. The monthly bill impact for the average residential customer will be a $1.40 increase (about a 3.15% increase in the total bill). The ACSC Executive Committee and ACSC legal counsel recommend that all ACSC Cities adopt the Ordinance implementing the rate change. RRM Background: The RRM tariff was approved by ACSC Cities as part of the settlement agreement to resolve the Atmos Mid-Tex 2007 system-wide rate filing at the Railroad Commission. Atmos Mid-Tex’s current action represents the third filing pursuant to the three -year trial project known as the RRM process. The RRM process was created collaboratively by ACSC and Atmos Mid - Tex as an alternative to the legislatively authorized GRIP surcharge process. ACSC opposed GRIP because it constituted piecemeal ratemaking, did not allow any reasonableness review, and did not allow participation by cities or recovery of cities’ rate case expenses. The RRM process has allowed for a more comprehensive rate review and annual adjustment as a substitute for GRIP filings during the three-year trial period specified by the tariff. There are two components to the current RRM adjustment. The prospective component adjusts rates for known and measurable changes in operations and maintenance (“O&M”) expense and net plant investment. Atmos Mid-Tex and ACSC agreed to cap changes to expenses and invested capital at no more than five percent per year. The true-up component evaluates whether the Company has over or underrecovered its earnings for the previous year. For purposes of the RRM true-up component, the Atmos Mid-Tex rate of return on equity and its capital structure are frozen to avoid the parent company from manipulating the overall rate of return. Costs expressly prohibited from recovery through the RRM include first-class air fare, travel, meals or entertainment for an employee’s spouse, alcohol, sports events, entertainment, Atmos RRM Ordinance Staff Report 2 arts and cultural events, sponsorship of sports, arts or cultural events, and social club membership dues. Purpose of the Ordinance: Rates cannot change and the Settlement Agreement with Atmos Mid-Tex cannot be implemented without passage of rate ordinances by cities. No related matter is pending at the Railroad Commission. The purpose of the Ordinance is to approve rate tariffs (“Attachment A”) and Proof of Revenues (“Attachment B”) that reflect the negotiated rate change pursuant to the RRM process and to ratify a Settlement Agreement recommended by the ACSC Settlement Committee and Executive Committee. As a result of the negotiations, ACSC was able to reduce the Company’s requested $70.2 million RRM increase to $27 million. Approval of the Ordinance will result in the implementation of new rates that increase Atmos Mid-Tex’s revenues effective October 1, 2010. The Settlement Agreement (“Attachment C”) to be ratified by the Ordinance authorizes an extension of the RRM process, in modified form to eliminate the true -up component, for an additional two annual filings. The Settlement Agreement also addresses the Atmos Mid-Tex steel service line replacement program and authorizes current cost recovery via an adder to residential and commercial customer charges. Reasons Justifying Approval of the Negotiated Resolution: During the time that the City has retained original jurisdiction in this case, consultants working on behalf of ACSC cities have investigated the support for the Company’s requested rate increase. While the evidence does not support the $70.2 million increase requested by the Company, ACSC consultants agree that the Company can justify an increase in revenues of $21 million. The agreement on $27 million is a compromise between the positions of the parties. The Settlement Agreement includes an allowance for recovery of direct costs, excluding overheads, of the steel service line replacement program. Current year recovery factors shall be $00.15 for residential customers and $00.41 for commercial customers per month. The rates will be adjusted annually, but shall be capped at $00.44 cents for residential customers and $1.22 for commercial customers. The alternative to a settlement of the RRM filing would be a contested case proceeding before the Railroad Commission on the Company’s current application, would take several months and cost ratepayers millions of dollars in rate case expenses, and would not likely produce a result more favorable than that to be produced by the settlement. The ACSC Executive Committee recommends that ACSC members take action to approve the Ordinance authorizing new rate tariffs. Atmos RRM Ordinance Staff Report 3 Steel Service Line Replacement: Under pressure from the Railroad Commission to establish a comprehensive program to replace service lines that contain steel which is subject to corrosion and le aks, ACSC has worked with Atmos Mid-Tex to establish a risk based approach to steel service line replacement that accomplishes the following goals: 1. Replace all service lines throughout the Mid-Tex Region with the highest degree of risk within two years; 2. Coordination between ACSC city members and Atmos Mid-Tex to minimize disruption of rights of way without compromising safety; 3. To minimize and spread the rate impact on customers of the replacement program, the service lines with little relative risk of leaks should be replaced over a 10-year period; and 4. Current recovery of incremental (above and beyond normal maintenance and repair addressed in RRM proceedings) direct (excluding Atmos Mid-Tex overheads) cost of service line replacement should be permitted as an adder to customer charges. Fulfillment of these goals in this case will lead to $00.15 and $00.41 added to residential and commercial customer charges, respectively. The customer charge assessment may not exceed $00.44 and $1.22 for residential and commercial customers, respectively, prior to the entry of a Final Order in the next system-wide Statement of Intent rate proceeding. Pursuant to the Settlement Agreement, 100,000 steel service lines will be replaced prior to September 30, 2012. Explanation of “Be It Ordained” Paragraphs: 1. This paragraph approves all findings in the Ordinance. 2. This section adopts the attached tariffs (“Attachment A”) and the Company’s Proof of Revenues (“Attachment B”) in all respects and finds the rates set pursuant to the attached tariffs to be just, reasonable and in the public interest. Note that only new tariffs or existing tariffs being revised are attached to the Ordinance. Existing tariffs not being changed in any way are not attached to the Ordinance. 3. This section requires the Company to reimburse ACSC for reasonable rate making costs associated with reviewing and processing the RRM application. 4. This section ratifies the Settlement Agreement (“Attachment C”) between ACSC and Atmos Mid-Tex. 5. This section repeals any resolution or ordinance that is inconsistent with this Ordinance. Atmos RRM Ordinance Staff Report 4 6. This section finds that the meeting was conducted in compliance with the Texas Open Meetings Act, Texas Government Code, Chapter 551. 7. This section is a savings clause, which provides that if any section(s) is later found to be unconstitutional or invalid, that finding shall not affect, impair or invalidate the remaining provisions of this Ordinance. This section further directs that the remaining provisions of the Ordinance are to be interpreted as if the offending section or clause never existed. 8. This section is a “Most Favored Nations” clause, which protects the City by mandating that if the City determines any rates, revenues, terms and conditions, or benefits resulting from a Final Order or subsequent negotiated settlement approved in any proceeding addressing the issues raised in the Company’s RRM filing would be more beneficial to the City than the terms of the attached tariffs, then the more favorable rates, revenues, terms and conditions, or benefits shall additionally accrue to the City. 9. This section provides for an effective date upon passage. 10. This paragraph directs that a copy of the signed Ordinance be sent to a representative of the Company and legal counsel for ACSC. Ordinance 644 Page 1 of 4 TOWN OF WESTLAKE ORDINANCE NO. 644 AN ORDINANCE OF THE TOWN OF WESTLAKE, TEXAS, (“TOWN”) APPROVING A NEGOTIATED RESOLUTION BETWEEN THE ATMOS CITIES STEERING COMMITTEE (“ACSC” OR “STEERING COMMITTEE”) AND ATMOS ENERGY CORP., MID-TEX DIVISION (“ATMOS MID-TEX” OR “COMPANY”) REGARDING THE COMPANY’S THIRD RATE REVIEW MECHANISM (“RRM”) FILING IN ALL CITIES EXERCISING ORIGINAL JURISDICTION; DECLARING EXISTING RATES TO BE UNREASONABLE; REQUIRING THE COMPANY TO REIMBURSE CITIES’ REASONABLE RATEMAKING EXPENSES; ADOPTING TARIFFS THAT REFLECT RATE ADJUSTMENTS CONSISTENT WITH THE NEGOTIATED SETTLEMENT AND FINDING THE RATES TO BE SET BY THE ATTACHED TARIFFS TO BE JUST AND REASONABLE; APPROVING ATMOS MID-TEX’S PROOF OF REVENUES; EXTENDING THE RRM PROCESS FOR TWO CYCLES AND ADOPTING A NEW RRM TARIFF; RATIFYING THE SETTLEMENT AGREEMENT, INCLUDING COST RECOVERY FOR A STEEL SERVICE LINE REPLACEMENT PROGRAM; ADOPTING A SAVINGS CLAUSE; DETERMINING THAT THIS ORDINANCE WAS PASSED IN ACCORDANCE WITH THE REQUIREMENTS OF THE TEXAS OPEN MEETINGS ACT; DECLARING AN EFFECTIVE DATE; AND REQUIRING DELIVERY OF THIS ORDINANCE TO THE COMPANY AND THE STEERING COMMITTEE’S LEGAL COUNSEL. WHEREAS, the Town of Westlake, Texas (“Town”) is a gas utility customer of Atmos Energy Corp., Mid-Tex Division (“Atmos Mid-Tex” or “ Company”), and a regulatory authority with an interest in the rates and charges of Atmos Mid-Tex; and WHEREAS, the Town is a member of the Atmos Cities Steering Committee (“ACSC” or “Steering Committee”), a coalition of approximately 148 similarly situated cities served by Atmos Mid-Tex that have joined together to facilitate the review of and response to natural gas issues affecting rates charged in the Atmos Mid-Tex service area (such participating cities are referred to herein as “ACSC Cities”); and WHEREAS, pursuant to the terms of the agreement settling the Company’s 2007 Statement of Intent to increase rates, ACSC Cities and the Company worked collaboratively to develop a Rate Review Mechanism (“RRM”) tariff that allows for an expedited rate review process controlled in a three year experiment by ACSC Cities as a substitute to the current GRIP process instituted by the Legislature; and WHEREAS, the Town took action in 2008 to approve a Settlement Agreement with Atmos Mid-Tex resolving the Company’s 2007 rate case and authorizing the RRM Tariff; and WHEREAS, the 2008 Settlement Agreement contemplates reimbursement of ACSC Cities’ reasonable expenses associated with RRM applications; and Ordinance 644 Page 2 of 4 WHEREAS, on or about March 15, 2010, Atmos Mid-Tex filed with the Town its third application pursuant to the RRM tariff to increase natural gas base rates by approximately $70.2 million, such increase to be effective in every municipality that has adopted the RRM tariff within its Mid-Tex Division; and WHEREAS, ACSC Cities coordinated its review of Atmos Mid-Tex’s RRM filing by designating a Settlement Committee made up of ACSC representatives, assisted by ACSC attorneys and consultants, to resolve issues identified by ACSC in the Company’s RRM filing; and WHEREAS, the Company has filed evidence that existing rates are unreasonable and should be changed; and WHEREAS, independent analysis by ACSC’s rate expert concluded that Atmos Mid- Tex is able to justify an increase over current rates of $21 million; and WHEREAS, Atmos Mid-Tex has commenced a program to replace steel service lines based on a relative leak repair risk analysis; and WHEREAS, the Steering Committee has entered a Settlement Agreement (“Attachment C” to this Ordinance) with Atmos Mid-Tex to: (1) increase base rate revenues by $27 million; (2) extend the RRM process, with modifications for an additional two cycles and to thereafter require the filing of a system-wide Statement of Intent rate case on or before June 1, 2013; and (3) in the interim to allow current recovery of incremental direct costs of the steel service line replacement program in rates set via this ordinance and in future RRMs; and WHEREAS, the ACSC Executive Committee, as well as ACSC lawyers and consultants, recommend that ACSC members approve the attached rate tariffs (“Attachment A” to this Ordinance), which will increase the Company’s revenue requirement by $27 million; and WHEREAS, the attached tariffs implementing new rates and Atmos Mid-Tex’s Proof of Revenues (“Attachment B” to this Ordinance) are consistent with the negotiated resolution reached by ACSC Cities and are just, reasonable, and in the public interest; and WHEREAS, it is the intention of the parties that if the Town determines any rates, revenues, terms and conditions, or benefits resulting from a Final Order or subsequent negotiated settlement approved in any proceeding addressing the issues raised in the Company’s Third RRM filing would be more beneficial to the Town than the terms of the attached tariff, then the more favorable rates, revenues, terms and conditions, or benefits shall additionally accrue to the Town; and WHEREAS, the negotiated resolution of the Company’s RRM filing and the resulting rates are, as a whole, in the public interest. Ordinance 644 Page 3 of 4 NOW, THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS: Section 1. That the findings set forth in this Ordinance are hereby in all things approved. Section 2. That the Town Council finds the existing rates for natural gas service provided by Atmos Mid-Tex are unreasonable and new tariffs and Atmos Mid-Tex’s Proof of Revenues, which are attached hereto and incorporated herein as Attachments A and B, are just and reasonable and are hereby adopted. Section 3. That Atmos Mid-Tex shall reimburse the reasonable ratemaking expenses of the ACSC Cities in processing the Company’s rate application. Section 4. That the Settlement Agreement, attached as Attachment C, which includes in addition to resolution of the Third RRM: (1) extension of a modified RRM process; (2) requirement that Atmos Mid-Tex file a system-wide Statement of Intent rate case on or before June 1, 2013; and (3) current recovery of incremental direct costs for a steel service line replacement program, is hereby ratified. Section 5. That to the extent any resolution or ordinance previously adopted by the Council is inconsistent with this Ordinance, it is hereby repealed. Section 6. That the meeting at which this Ordinance was approved was in all things conducted in strict compliance with the Texas Open Meetings Act, Texas Government Code, Chapter 551. Section 7. That if any one or more sections or clauses of this Ordinance is adjudged to be unconstitutional or invalid, such judgment shall not affect, impair or invalidate the remaining provisions of this Ordinance and the remaining provisions of the Ordinance shall be interpreted as if the offending section or clause never existed. Section 8. That if the Town determines any rates, revenues, terms and conditions, or benefits resulting from a Final Order or subsequent negotiated settlement approved in any proceeding addressing the issues raised in the Company’s Third RRM filing would be more beneficial to the Town than the terms of the attached tariff, then the more favorable rates, revenues, terms and conditions, or benefits shall additionally accrue to the Town. Section 9. That this Ordinance shall become effective from and after its passage with rates authorized by attached Tariffs to be effective for bills rendered on or after October 1, 2010. Section 10. That a copy of this Ordinance shall be sent to Atmos Mid-Tex, care of David Park, Vice President Rates and Regulatory Affairs, at Atmos Energy Corporation, 5420 LBJ Freeway, Suite 1862, Dallas, Texas 75240, and to Geoffrey Gay, General Counsel to ACSC, at Lloyd Gosselink Rochelle & Townsend, P.C., P.O. Box 1725, Austin, Texas 78767-1725. Ordinance 644 Page 4 of 4 PASSED AND APPROVED ON THIS 29th DAY OF SEPTEMBER 2010. _____________________________ ATTEST: Laura Wheat, Mayor ____________________________ ______________________________ Kelly Edwards, Town Secretary Thomas E. Brymer, Town Manager APPROVED AS TO FORM: ____________________________ L. Stanton Lowry, Town Attorney RATE SCHEDULE:R - RESIDENTIAL SALES APPLICABLE TO:All Gities except the Gity of Dallas and all unincorporated area$ EFFECTIVE DATE:Bills Rendered on or after 10/01/2010 Exhibit A to $ettlement Agreement Attachment A to OrdinflnceATMOS ENERGY CORPORATION MID.TEX DIVISION Application Applicable to Residential Customers for all natural gas provided at one Point of Delivery and measured through one meter. Type of $ervice Where service of the type desired by Customer is not already available at the Point of Delivery, additional charges and special contract arrangements between Company and Customer may be required prior to service being furnished. Monthly Rate Customer's monthly bill will be calculated by adding the following Customer and Mcf charges to the amounts due under the riders listed below: Gharge Amount Customer Charge per Bill $ 7.15 per month Commodity Charge - All Mcf $2.5246 per Mcf Gas Cost Recovery: Plus an amount for gas costs and upstream transportation costs calculated in accordance with Part (a) and Part (b), respectively, of Rider GCR. Weather Normalization Adjustment Plus or Minus an amount for weather normalization calculated in accordance with Rider WNA. Rate Review Mechanism: Plus or Minus an amount for rates as calculated in accordance with Rider RRM. Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider FF. Rider FF is only applicable to customers inside the corporate limits of any incorporated municipality. Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX. Surcharges: Plus an amount for surcharges calculated in accordance with the applicable rider(s). Agreement An Agreement for Gas Service may be required. Notice Service hereunder and the rates for services provided are subject to the orders of regulatory bodies having jurisdiction and to the Company's Tariff for Gas Service. RATE SCHEDULE:C - GOMMERCIAL SALES APPLICABLE TOr All Cities except the Gity of Dallas and all unincorporated areas EFFECTIVE DATE:Bills Rendered on or after 10/01/2010 Exhibit A to Settlement Agreement Attachment A to OrdinanceATMOS ENERGY CORPORATION MID.TEX DIVISION Application niflicaUe to Commercial Customers for all natural gas provided at one Point of Delivery and measured prrough one meter and to Industrial Customers with an average annual usage of less than 3,000 Mcf. Type of Seruice Wnere service of the type desired by Customer is not already available at the Point of Delivery, additional charges and special contract arrangements between Company and Customer may be required prior to service being furnished. Monthly Rate Customer's monthly bill will be calculated by adding the following Customer and Mcf charges to the amounts due under the riders listed below: Gharge AmOunt Customer Charge per Bill $ 13.91 per month Commodity Charge - All Mcf $ 1.0796 per Mcf Gas Cost Recovery: Plus an amount for gas costs and upstream transportation costs calculated in accordance with Part (a) and Part (b), respectively, of Rider GCR. Weather Normalization Adjustment: Plus or Minus an amount for weather normalization calculated in accordance with Rider WNA. Rate Review Mechanism: Plus or Minus an amount for rates as calculated in accordance with Rider RRM. Franchise Fee Adjustment. Plus an amount for franchise fees calculated in accordance with Rider FF. Rider FF is only applicable to customers inside the corporate limits of any incorporated municipality. Tax Adjustment Plus an amount for tax calculated in accordance with Rider TAX. Surcharges: Plus an amount for surcharges calculated in accordance with the applicable ride(s). Agreement An Agreement for Gas Service may be required. Notice Service hereunder and the rates for services provided are subject to the orders of regulatory bodies having jurisdiction and to the Company's Tariff for Gas Service. RATE SCHEDULE:I - INDUSTRIAL SALES APPLIGABLE TO:All Cities except the City of Dallas and all unincorporated areas EFFECTIVE DATE:Bills Rendered on or after 10/01/2010 ATMOS ENERGY CORPORATION MID-TEX DIVISION Exhibit A to Settlement Agreement Attachment A to Ordinflnce Application Applicable to Industrial Customers with a maximum daily usage (MDU) of less than 3,500 MMBtU per day for all natural gas provided at one Point of Delivery and measured through one meter. Service for Industrial Customers with an MDU equal to or greater than 3,500 MMBIU per day will be provided at Company's sole option and will require special contract arrangements between Company and Customer. Type of Service Where service of the type desired by Customer is not already available at the Point of Delivery, additional charges and special contract arrangements between Company and Customer may be required prior to seruice being furnished. Monthly Rate Customer's monthly bill will be calculated by adding the following Customer and MMBIU charges to the amounts due under the riders listed below: Charge Amount Customer Charge per Meter $ 450.00 per month First 0 MMBtu to 1,500 MMBtu $ 0.2750 per MMBtu Next 3,500 MMBIU $ 0.2015 per MMBtu All MMBIU over 5.000 MMBIU $ 0.0433 per MMBtU Gas Cost Recovery: Plus an amount for gas costs and upstream transportation costs calculated in accordance with Part (a) and Part (b), respectively, of Rider GCR. Rate Review Mechanism: Plus or Minus an amount for rates as calculated in accordance with Rider RRM. Franchise Fee Adjustment: Plus an amount for franchise fees calculated in accordance with Rider FF. Rider FF is only applicable to customers inside the corporate limits of any incorporated municipality. Tax Adjustment Plus an amount for tax calculated in accordance with Rider TAX. Surcharges: Plus an amount for surcharges calculated in accordance with the applicable ride(s). Curtailment Overpull Fee Upon notification by Company of an event of curtailment or interruption of Customer's deliveries, Customer will, for each MMBtu delivered in excess of the stated level of curtailment or interruption, pay Company 200o/o of the midpoint price for the Katy point listed in P/affs Gas Daily published for the applicable Gas Day in the table entitled "Daily Price Survey." Exhibit A to Settlernent Agreement Attachment A to OrdinanceATMOS ENERGY CORPORATION MID.TEX DIVISION Replacement Index f n the event the "midpoint" or "common" price for the Katy point listed in P/affs Gas Daily in the table entiled "Daily price Suley" is no longer published, Company will calculate the applicable imbalance fees utilizing a Oiily price index recogniied as authoritative by the natural gas industry and most closely approximating the applicable index. Agreement An Agreement for Gas Service may be required' Notice Service hereunder and the rates for services provided are subject to the orders of regulatory bodies having jurisdiction and to the Company's Tariff for Gas Service' Special Gonditions ln order to receive service under Rate l, Customer must have the type of meter required by Company' Customer must pay Company all costs associated with the acquisition and installation of the meter' RATE SGHEDULE:I- INDUSTRIAL SALES APPLICABLE TO:All Gities except the Gity of Dallas and all unincorporated areas EFFECTIVE DATE:Bills Rendered on or after 10/01/2010 RATE $CHEDULE:T - TRANSPORTATION APPLICABLE TO:All Cities except the City of Dallas )nd all unincorporated areas EFFECTIVE DATE:Bills Rendered on or after 10/0{/2010 Exhihit A to Settlement Agreement Attachment A to OrdinanceATMOS ENERGY CORPORATION MID.TEX DIVISION Application npfilicante, in the event that Company has entered into a Transportation Agreement, to a customer diri:c1y connected to the Atmos Energy Corp., Mid-Tex Division Distribution System (Customer) for the transpbrtation of all natural ga$ supptidO ny Customer or Customer's agent at one Point of Delivery for use in Customer's facilitY. Type of Service Where service of the type desired by Customer is not already available at the Point of Delivery, additional charges and special contract arrangements between Company and Customer may be required prior to service being furnished. Monthly Rate Customer's bill will be calculated by adding the following Customer and MMBIU charges to the amounts and quantities due under the riders listed below: Oharge AmoUnt Customer Charge per Meter $ 450.00 per month First 0 MMBtu to 1,500 MMBtu $ 0.2750 per MMBtU Next 3,500 MMBtu $ 0.2015 per MMBtu All MMBIU over 5,000 MMBIU $ 0.0433 per MMBtu Upstream Transportation Cost Recovery: Plus an amount for upstream transportation costs in accordance with Part (b) of Rider GCR. Rate Review Mechanism: Plus or Minus an amount for rates as calculated in accordance with Rider RRM. Retention Adjustment: Plus a quantity of gas as calculated in accordance with Rider RA' Franchise Fee Adjustment: Plus an amount for franehise fees calculated in accordance with Rider FF. Rider FF is only applicable to customers inslde the corporate limits of any incorporated municipality. Tax Adjustment: Plus an amount for tax calculated in accordance with Rider TAX. Surcharges: plus an amount for surcharges calculated in accordance with the applicable ride(s). lmbalance Fees All fees charged to Customer under this Rate Schedule will be chargg{ based on the quantities determined under the applicable Transportation Agreement and quantities will not be aggregated for any Customer with multiple Transportation Agreements for the purposes of such fees. Exhibit A to Settlement Agreement Attachment A to OrdinanceATMOS ENERGY CORPORATION MID-TEX DIVISION Monthly lmbalance Fees CustomLrshall payCompanythegreaterof (i) $O.10perMMBtu,or(ii) 150%of thedifferenceperMMBtu between tne nigjnest and lowest "midpoint" price for the Katy point listed in P/affs Gas Daily in the table entiled "Daily Frice Survey" during such month, for the MMBtu of Customer's monthly Cumulative lmbalance, ai defined in the applicable Transportation Agreement, at the end of each month that exceeds 10% of Customer's receipt quantities for the month. Gurtailment Overpull Fee Upon notification by Company of an event of curtailment or interruption of Customer's deliveries, Customer will, for each MMBtu delivered in excess of the stated level of curtailment or interruption, pay Company ZOO% of the midpoint price for the Katy point listed in P/affs Gas Daily published for the applicable Gas Day in the table entitled "Daily Price Survey'" Replacement Index tn ine event the "midpoint" or "common" price for the Katy point listed in P/affs Gas Daily in the table entiled "Daily Price Survey" is no longer published, Company will calculate the applicable imbalance fees utilizing a Oiily price indix recognized as authoritative by the natural gas industry and most closely approximating the applicable index. Agreement A transportation agreement is required. Notice Service hereunder and the rates for services provided are subject to the orders of regulatory bodies having jurisdiction and to the Company's Tariff for Gas Service. Special Conditions ln order to receive service under Rate T, customer must have the type of meter required by Company. Customer must pay Company all costs associated with the acquisition and installation of the meter. RATE SGHEDULE:T _ TRANSPORTATION APPLICABLE TO:All Cities except the City of Dallas and all unincorporated areas EFFECTIVE DATE:Bills Rendered on or after 10/01/2010 RIDER:WNA - WEATHER NORMALIZATION ADJUSTMENT APPLICABLE TO:All Cities except the City of Dallas and all unincorporated areas EFFECTIVE DATE:Bills Rendered on or after 10/01/2010 Exhibit A to Settlement Agreement Attrchment A to Ordinsnce ATMOS ENERGY GORPORATION MID-TEX DIVISION Provisions for Adiu.stment The base rate per Mcf (1,000,000 Btu) for gas service set forth in any Rate Schedules utilized by the cities of the Mid-Tex Division service area for determining normalized winter period revenues shall be adjusted by an amount hereinafter described, which amount is referred to as the "Weather Normalization Adjustment." The Weather Normalization Adjustment shall apply to all temperature sensitive residential and commercial bills based on meters read during the revenue months of November through April. The five regional weather stations are Abilene, Austin, Dallas, Waco, and Wichita Falls. Computation of Wqather Normalizatiotl Adjustment The Weather Normalization Adjustment Factor shall be computed to the nearest one-hundredth cent per Mcf by the following formula: (HSF; x (NDD-ADD) ) WNAFI = R; (BLi + (HSF; x ADD) ) Where i - any particular Rate Schedule or billing classification within any such particular Rate Schedule that contains more than one billing classification WNAF; = Weather Normalization Adjustment Factor for the ith rate schedule or classification expressed in cents per Mcf R; = base rate of temperature sensitive sales for the ith schedule or classification approved by the entity exercising original jurisdiction. HSFi = heat sensitive factor for the ith schedule or classification calculated as the slope of the linear regression of average sales per bill (Mcf) and actual heating degree days by month for the test year by schedule or classification and weather station as part of the RRM filing. NDD = billing cycle normal heating degree days calculated as the simple ten-year average of actual heating degree days. ADD = billing cycle actual heating degree days. Bli = base load sales for the ith schedule or classification calculated as the y- intercept of the linear regression of average sales per bill (Mcfl and actual heating degree days by month for the test year by schedule or classification and weather station as part of the RRM filing. The Weather Normalization Adjustment for the jth customer in ith rate schedule is computed as: WNA' = WNAF; x qx Exhibit A to Settlement Agreement Attachment A to OrdinflnceATMOS ENERGY CORPORATION MID.TEX DIVISION Where qx is the relevant sales quantity for the jth customer in ith rate schedule. Filinqs with Entities Exercising Original Jurisdiction As part of its annual RRM filing the Company will file (a) a copy of each computation of the Weather Normalization Adjustment Factor, (b) a schedule showing the effective date of each such Weather Normalization Adjustment, (c) a schedule showing the factors of values used in calculating such Weather Normalization Adjustment and (d) a random sample and audit of thirty (30) actual customer bills, with customer information deleted, for each rate schedule or classification to which the WNA was applied in the preceding 12 month period. To the extent that source data is needed to audit the WNA application, such data will be provided by the Company as part of the annual RRM filing. lf the RRM is discontinued, as provided in the Rider RRM tariff, the information required herein to be filed with the entities exercising originaljurisdiction shall be filed on March 1 of each year. Base Use/Heat Usq Factors Reside,ntial Base use Heat use Commercial Base use Heat use RIDER:WNA - WEATHER NORMALIZATION ADJUSTMENT APPLIGABLE TO:All Gities except the City of Dallas and all unincorporated areas EFFECTIVE DATE:Bills Rendered on or after 10/0{/2010 M Abilene 1.06 .0131 9.03 .0588 Austin 1.17 .0138 19.39 .0674 Dallas 1.49 .0191 20.37 .0872 Waco 1.13 .0137 11.81 .0610 Wichita Falls 1.19 .0136 11.21 .0549 Samole WNAF' Calculation: (.0131 2.5246 (1.06 Residential Single Block Rate Schedule 2.5246 per MCF .0131 (Residential - Abilene Area) (30-17) .3352 per Mcf = Where (.0131 x 17) ) i R; HSF; NDD ADD Bli = = 30 HDD (Simple ten-year average of Actual HDD for Abilene Area - 9/15/06 - 10/14/06) = 1 7 HDD (Actual HDD for Abilene Area - 9/15/06 * 10114106] 1,06 Mcf (Residential - Abilene Area) Exhibit A to Settlement Agreement Attachment A to OrdinanceATIVIOS ENERGY CORPORATION MID.TEX DIVISION RIDER:RRM - RATE REVIEW MECHANISM APPLICABLE TO:All Gities except the Gity of Dallas and all unincorporated areas EFFECTIVE DATE:Bills Rendered on or after 10/01/2010 l. Purpose. This mechanism is designed to provide annual earnings transparency. All rate calculations under this tariff shall be made on a system wide basis. lf, through the implementation of the provisions of this mechanism, it is determined that rates should be decreased or increased, then rates will be adjusted accordingly in the manner set forth herein. The rate adjustments implemented under this mechanism will reflect annual changes in the Company's cost of service and rate base. This Rider RRM will be effective for the period commencing with the Company's RRM filing on April 1, 2011 , and concluding with the implementation of new, final rates established pursuant to the general rate case that Atmos will file on or before June 1, 2013. ll. Definitions a) The Annual Evaluation Date shall be the date the Company will make its annual filing under this mechanism. The Annual Evaluation Date shall be no later than April 1, of each year. This filing shall be effective in electronic form where practicable. b) Audited Financial Data shall mean the Company's books and records related to the Company's Mid- Tex operating area and shared services operations. Audited Financial Data shall not require the schedules and information provided under this tariff to undergo a separate financial audit by an outside auditing firm similar to the Company's annual finaneial audit. c) The Evaluation Period is defined as the twelve month period ending December 31, of each calendar year. d) The Rate Effective Period is defined as the later of the twelve month period for which rates determined under this mechanism will be in effect or subsequent rates are implemented. e) Per Connection Basis is defined as the existing average number of Mid-Tex active meters to customers during the Evaluation Period. f) Final Order is defined as the most recent order establishing the Company's latest effective rates for the area in which the mechanism is implemented, and shall include municipal rate ordinances and resolutions. lll, Fate Review Mechanjsln The Company shall file with each regulatory authority having original jurisdiction over the Company's rates the schedules specified below for the Evaluation Period, with the filing to be made by the Annual Evaluation Date following the end of the Evaluation Period. The schedules, which will be based upon the Company's Audited Financial Data, as adjusted, and provided in the same format as Atmos' RRM filing with municipalities on March 15, 2010, will exclude a true-up computation, but will include the following: a) Evaluation Period ending balances for actual gross plant in service, accumulated depreciation, accumulated deferred income taxes, inventory, working capital, and other rate base components will be used for the calculation of rates for the Rate Effective Period. The ratemaking treatments, principles, findings and adjustments included in the Final Order will apply. Regulatory adjustments due to prior regulatory rate base adjustment disallowances will be maintained. Cash working capital will be calculated using the lead/lag days approved in the Final Order. Accumulated deferred income taxes (ADIT) will be calculated using the methodology used in the Final Order. The RRM $chedules & Information section of this tariff identifies those ADIT components to be included in the calculation of rate base for both the Evaluation Period and Rate Effective Period calculations. Exhibit A to $ettlernent Agreement Attachment A to OrdinanceATMOS ENERGY GORPORATION MID.TEX DIVISION RIDER:RRM - RATE REVIEW MEGHANISM APPLICABLE TO:All Gities except the Gity of Dallas and all unincorporated areas EFFECTIVE DATE:Bills Rendered on or after 10/0{/2010 b) Depreciation rates booked in the period will be those approved in the Final Order, or the rate most recenly approved. All calculation methodologies will be those approved in the Final Order except wheie hoted or included in this tariff, oi in the most recent order addressing the methodology. In addition, the Company shall exclude from operating and maintenance expense the discreti-onary costs to be disallowed from Rider RRM filings listed in the RRM Schedules and lnformation section of this tariff. c) Return on Equity (ROE) shall be maintained at 9.7%. d) Cost of debt will reflect actual cost for the Evaluation Period. Evaluation Period ending balances for cost of debt and capital structure will be used for the calculation of rates for the Rate Effective period. Capitat structure will be the actual Evaluation Period ratio of long-term debt and equity, with perceni"ge equity not to exceed 50%, based on the calculation methodology outcomes used above. e) All applicable accounting adjustments along with all supporting work papers. Such adjustments may include: 1) pro-forma adjustments to update and annu alize costs and revenue billing determinants for the Rate Effective Period. Z) pro-forma or other adjustments required to properly account for atypical, unusual, or nonrecurring events recorded during the Evaluation Period. 0 Shared Services allocation factors shall be recalculated each year based on the latest component factors used during the Evaluation Period, but the methodology used will be that approved in the Final Order. g) Any changes to corporate structure or allocation of common costs will inelude narrative explanations with the filing. lV. Calc-Ulation gf Rate Adjustm9nt a) The Company shall provide additional schedules indicating the following revenue deficiency/suffiiiency calculations using the methodology acceqted_ in the Final Order with the exception of any allowance for a true-uf component in the April 1, 2011 or the April 1,2012 RRM filingi. Evaluation Period ending balances will be used for the calculation of rates for the Rate Effective period. These schedulbs shall identify the rate adjustments necessary for the setting of prospective rates for the Rate Effective Period. The result shall be reflected in the proposed new rates to be established for the Rate Effective Period. In calculating the required rate adjustments, such adjustments will be made pro-ratably to the customer charge and usage charge based upon actual 1-Luenu* generated, as adjusted under the Company's approved Weather Normalization Adjustment (WN-A) Rider. Provided, however, that neither the Residential nor the Commercial customer charges may increase more than 20% per year. b) The Company may also adjust rates for the Rate Effective Period to include recovery of any known anb mbasuiable changes to operating and maintenance costs including, but not limited to, payroll and compensation -expense, benefit expense, pension expense, insurance costs, materials and supplies, bad debt costs, medical expense, transportation and building and lease costs for the Rate'Effective Period. Provided, however, that adjustments may only be made for costs that are reasonable and neeessary. Additionally, utility plant and rate base for the Rate Exhibit A to Sefflement Agreement Attachment A to OrdinanceATMOS ENE RGY CORPORATION MID.TEX DIVISION RIDER:RRM - RATE REVIEW MECHANISM APPLICABLE TO:All Cities except the City of Dallas and all unincorporated areas EFFEGTIVE DATE:Bills Rendered on or after 10/01/2010 Effective Period will be established by using the Evaluation Period ending balances, including associated changes in depreciation and amortization expense and taxes. In calculating the Company's known and measurable changes for prospective RRM adjustment purposes, the following limitations will apply, on a Per Connection Basis. 1. Operating and Maintenance expenses per connection for the Rate Effective Period cannot increase more than 5% per year without specific identification and justification. Any proposed adjustment above 5o/o per year, is subject to the provisions of the Evaluation Procedures of this tariff. Such procedures provide that the regulatory authority will review the proposed adjustment and that the Company and regulatory authority will work collaboratively to seek agreement on the proposed adjustments to the Company's schedules and proposed rates. Justification for such expenditures over the cap shall include an event or combination of events beyond the control of the Company. The beginning adjusted Operation and Maintenance expense per connection for the 2007 RRM Evaluation Period will be limited to not exceed $151 million divided by the connections for the period. The increase in adjusted Operation and Maintenance expenses per connection for the 2008 Rate Effective Period and the subsequent Rate Effective periods cannot exceed 5o/o per year, without specific identification and justification 2. Net plant investment per connection for the Rate Effective Period cannot increase more than 5% per year without specific identification and justification. Any proposed adjustment above 5% per year, is subject to the provisions of the Evaluation Procedures of this tariff. Such procedures provide that the regulatory authority will review the proposed adjustment and that the Company and regulatory authority will work collaboratively to seek agreement on the proposed adjustments to the Company's schedules and proposed rates. However, in performing a cap test to verify compliance, the Company shall exclude any changes in net plant investment associated with federal, state, or local mandates related to safety, compliance, or road moves, including steel service line replacement program costs incurred prior to October 1, 2010. The initial 2008 rate will be set using net plant limited to not exceed [$1,243,607,206 divided by average active meters for the 12 months ended June 30 20071 times 1.025 times the average active meters for calendar year 2007. Subsequent filing calculations of net plant investment will be made using the same method used in the Company's September 20, 2007 Statement of Intent except that Evaluation Period ending balances will be used for net plant in the calculation of rates for the Rate Effective Period. The rate increase limitations set forth in this tariff shall not preclude the Company from recovering any excluded net plant costs during a subsequent Evaluation Period in which the 5% limitation for net plant investment is not reached or in a subsequent Statement of Intent case. To the extent that the Company seeks to recover any excluded net plant costs during a subsequent Evaluation Period in which the 5% limitation for net plant investment is not reached or in a subsequent $tatement of Intent case, the Company shall identify these costs as a specific line item in the schedule accompanying the RRM rate adjustment fili ng. The regulatory authority may disallow any net plant investment that is not shown to be prudently incurred. Approval by the regulatory authority of net plant investment pursuant to the provisions of this tariff shall constitute a finding that such net plant investment was prudently incurred. Such finding of prudence shall not be subject to further review in a subsequent Evaluation Period or Statement of Intent filing. Exhibit A to Settlement Agreement Attachment A to Ordinflnc€ATMOS ENERGY GORPORATION MID.TEX DIVISION RIDER:RRM - RATE REVIEW MECHANISM APPLICABLE TO:All Gities except the Gity of Dallas and all unincorporated areas EFFECTIVE DATE:Bills Rendered on or after 10/01/2010 c) Notwithstanding the limitations in subparts lV (a) through (b) of this tariff, the Company shall be entitled to separately adjust rates for the Rate Effective Period to include recovery for direct incremental costs associated with a steel service line replacement program incurred on and after October 1, 2010, a return on equity of 9.0% for such incremental costs as capitalized, depreciation, and applicable taxes. Capital structure will be the actual Evaluation Period ratio of long-term debt and equity, with percentage equity not to exceed 50%, based on the calculation methodology outcomes used above. Rate recovery associated with a steel service line replacement program shall be recovered through the Residential and Commercial customer charges and shall not be subject to or included in the rate increase limitations set forth in lV (a) through (b) of this tariff. Current year recovery factors are presumed to be $0.15 for residential customers and $0.+t for commercial customers. The rates will be adjusted annually, however, in no case will the per customer monthly cost recovery factors aftributable to a steel service line replacement program exceed $0.++ for residential customers or $1 .22 tor commercial customers, prior to or during the pendency of the Company's next Statement of Intent case. Moreover, the per customer amount attributable to cost recovery for a steel service line replacement program shall be subject to review by the regulatory authority in a subsequent Evaluation Period and all costs associated with a steel service line replacement program will be subject to a prudence/reasonableness review in the Company'$ next Statement of lntent rate case. d) The Company shall provide a schedule demonstrating the "proof of revenues" relied upon to calculate the proposed rate for the Rate Effective Period. The proposed rates shall conform as closely as is practicable to the revenue allocation principles approved in the Final Order. V. Attestation A sworn statement shall be filed by the Company's Chief Officer in Charge of Mid-Tex Operations affirming that the filed schedules are in compliance with the provisions of this mechanism and are true and correct to the best of his/her knowledge, information and belief. No testimony shall be filed, but a brief narrative explanation shall be provided of any changes to corporate structure or allocation of common costs. Vl, _EvAluation Procedures The regulatory authority having original jurisdiction over the Company's rates shall have no less than ninety (90) days to review the Company's filed schedules and work papers. The Gompany will be prepared to provide all supplemental information as may be requested to ensure adequate review by the relevant regulatory authority. The Company shall not unilaterally impose any limits upon the provision of supplemental information and such information shall be provided within ten (10) working days of the original request. The regulatory authority may propose any adjustments it determines to be required to bring the schedules into eompliance with the above provisions. During and following the ninety (90) day review period and a thirty (30) day response period, the Company and the regulatory authority will work collaboratively and seek agreement on, the proposed adjustments to the Company's schedule and proposed rates. lf agreement has been reached by the Company and the regulatory authority, the regulatory authority shall authorize an increase or decrease to the Company's rates so as to achieve the revenue levels indicated for the Rate Effective Period. lf, at the end of the thirty (30) day response period, the Company and the regulatory authority have not reached agreement on the proposed adjustments, the Company shall have the right to appeal the regulatory authority's action or inaction to the Railroad Commission of Texas. Upon the filing of any appeal, the Company shall have the right to implement the proposed RRM rate adjustment, including the adjustment attributable to steel service line replacement program costs, subject to refund. RIDER:RRM - RATE REVIEW MECHANISM APPLICABLE TO:All Gities except the Gity of Dallas and all unincorporated areas EFFECTIVE DATE:Bills Rendered on or after 10/01/2010 ATMOS ENERGY GORPORATION MID-TEX DIVISION Exhibit A to Settlement Agreement Attachment A to 0rdinance Rates established pursuant to the Rate Review Mechanism, if approved as provided herein, shall be effective on August 15 of each year. Vll. Reconsidera!,ion and Appeal Orders issued pursuant to this mechanism are ratemaking orders and shall be subject to appeal under Sections 102.001(b) and 1 03.021 , et seq., of the Texas Utilities Code (Vernon 2007). Vlll. Notice Notice of the annual Rate Review Mechanism filing shall be provided pursuant to Section 104.103, Tex. Ull. Cooe ANN. no later than forty-five (45) days after the Company makes its annual filing pursuant to this tariff. The notice to customers shall include the following information: a) a description of the proposed revision of rates and schedules; b) the effect the proposed revision of rates is expected to have on the rates applicable to each customer class and on an average bill for each affected customer; c) the service area or areas in which the proposed rate adjustment would apply; d) the date the proposed rate adjustment was filed with the regulatory authority; and e) the Company's address, telephone number and website where information concerning the proposed rate adjustment may be obtained, lX. RRM Schedules and Information a. Accumulated Deferred,l.ncome Tax ("AD|T") ltems To Be Recoqnized in Rate Base The following list identifies those ADIT components to be included in the calculation of rate base for both the Evaluation Period and Rate Effective Period calculations: Mid-Tex: Gas Plant in Service lnsurance Accruals Benefit Accruals Deferred Expense Projects Allowance for Doubtful Accounts Customer Advances UNICAP Section 2634 Costs (which shall be removed from Atmos Mid-Tex when these costs are transferred to Atmos Pipeline Texas) Regulatory Asset - Mid Tex Regulatory Liability - Mid-Tex Other Plant SSU - Customer Support: Gas Plant in Service Exhibit A to Settlement Agreement Attachment A to Ordinance ATIdIOS ENE RGY GORPORATION MID.TEX DIVISION RIDER:RRM - RATE REVIEW MECHANISM APPLIGABLE TO:All Cities except the Gity of Dallas and all unincorporated area$ EFFECTIVE DATE:Bills Rendered on or after 10/01/2010 SSU - General Office: Gas Plant in Service lnsurance Accruals Benefits Accruals Deferred Expense Projects Prepaid Expenses Regulatory Liability - Atmos 109 FAS 115 Adjustment Treasury Lock Adjustment Revenue Agent Report Carryforward Adjustments 1990-1985 Tax Net Operating Loss Credit Carryfonruards State Bonus Depreciation R & D Credit Valuation Allowance Other Plant b. Discretionary Costs to Be Disallowed ff.om Rider RRM filinqs The following types of employee reimbursed expenses and directly incurred costs are to be removed from all expense and rate base amounts included within Rider RRM filings for the Evaluation Period and for the Rate Effective Period: Amounts incurred for travel, meals or entertainment o:f employee spouses. Amounts for air travel that exceed published commercial coach air fares. Amounts incurred for hotel rooms exceeding $250 per night inclusive of taxes and fees assessed on such rooms. Amounts for alcoholic beverages. Amounts paid for admission to entertainment, sports, art or cultural events, and all event sponsorship costs. Amounts for social club dues or fees. Exhibit B to Settlement Agreement Attachment B to Ordinanc€ ATMOS ENERGY CORP., MID-TEX DIVISION SUMMARY OF CURRENT AND PROPOSED RATE STRUCTURE TEST YEAR ENDING DECEMBER 31, 2OO9 12010 RRM SETTLEMENT PROPOSAL) Line No. Proposed (Beginning Gurrent Oct 1)Description 1 2 3 4 5 6 7 II 10 11 12 13 14 15 16 17 1B 19 20 21 22 23 24 25 26 27 2B 29 30 31 32 33 (a) Rate R Customer Charge Per month (b) $7.00 (d) $7.00 Consumption Charge per MCF $2.2647 $2.5246 2008 RRM True-up per MCF $0.0000 $0.0000 2009 RRM True-up per MCF $0.0060 $0.0000 Total Consumption Charge per MCF fi2.2707 $2.5246 Rate G Customer Gharge per month $13.50 $13.50 Gonsumption Charge per MCF $0.9825 $1.0796 200S RRM True-up per MCF $0,0000 $0.0000 2009 RRM True-up per MCF $0.0052 $8.0000 Total Consumption Charge per MCF $0.9877 $1.0796 Ratel&T $425.00 $450.00 $0.2496 $0.2750 $0.1 820 $0.201 5 $0.03e0 $0.0433 $0.0087 $0.0000 $0.0064 $0.0000 $0.0014 $0.0000 $0.0000 $0.0000 $0.0000 $0.0000 $0.0000 $0.0000 $0.2583 $0.2750 $0.1 884 $0.201 5 $0.0404 $0.0433 Customer Charge per month Consumption Charge per MMBTU: First 1,500 MMBTU Next 3,500 MMBTU Over 5,000 MMBTU 2008 RRM True-up per MMBTU: First 1,500 MMBTU Next 3,500 MMBTU Over 5,000 MMBTU 2009 RRM True-uP Per MMBTU: First 1,500 MMBTU Next 3,500 MMBTU Over 5,000 MMBTU Total Gonsumption Charge per MMBTU First 1,500 MMBTU Next 3,500 MMBTU Over 5,000 MMBTU Exhibit B to Settlement Agreement Attachment B to Ordinance ATMOS ENERGY CORP., MID.TEX DIVISION CUSTOMER IMPACT OF PROPOSED RATES COMPARED TO CURRENT RATES TEST YEAR ENDING DECEMBER 31, 2OO9 (2010 RRM $ETTLEMENT PROPOSALI Line ProsPective No. Description - Rate Increase {a) tb}1 Rate R 2 Consumption Charge per MCF 3 Change from Current Rate 4 Billing Units for Specified Period 5 TotalChange in Base Revenue 6 Associated Revenue Taxes 7 Total Rate lmpact I Number of Bills for Specified Period I Average lmpact per Bill 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 Rate C Consumption Charge per MCF Change from Current Rate Billing Units for Specified Period TotalChange in Base Revenue Associated Revenue Taxes Total Rate lmpact Number of Bills for Specified Period Average lmpact per Bill Rates l&T - Gustomer Charge Customer Charge Change from Current Rate Billing Units for Specified Period TotalChange in Base Revenue Associated Revenue Taxes Total Rate lmpact Rates l&T - lst block Consumption Charge per MCF Change from Current Rate Billing Units for Specified Period TotalChange in Base Revenue Associated Revenue Taxes Total Rate lmpact Rates l&T - Znd block Gonsumption Charge per MCF Change from Current Rate Billing Units for Specified Period Total Change in Base Revenue Associated Revenue Taxes Total Rate lmpact Rates l&T - 3rd block Consumption Charge per MCF Change from Current Rate Billing Units for Specified Period TotalChange in Base Revenue Associated Revenue Taxes Total Rate lmpact Rates l&T - Total Total Rate lmpact Number of Bills for Specified Period Average lmpact per Bill TotalChange in Base Revenue Total Rate lmpact (lnc. Rev. Taxes) $0.253e 78,500,000 $19,934,212 $1.490.401 $21,424,613 17,287,740 $1.24 $0.0e19 49,500,000 $4,547,060 $s39,966 $4,887,026 1,445,436 $3.38 $25.00 10,985 $274,625 $20,533 $295,157.61 $0.0167 10,597,655 $177,031 $13,236 $190,266 $0.0131 10,791,216 $141,297 $10.564 $151,862 $0.0029 16,585,623 $47,655 $3.563 $51,218 $688,504 10,985 $62.68 $25,121,880 $27,000,{42 Line 1 2 3 4 5 6 7 I I 10 11 12 13 14 15 16 17 18 19 20 Rate R@4.5 Mcf Customer charge Consumption charge RiderGCR PartA Rider GCR Part B Subtotal Rider FF & Rider TAX Total Custom€r charge Consumption charge Rider GCR Part A Rider GCR Part B Subtotal Revenue-related Tax Reimbursement Total ATMOS ENERGY GORP., MID-TEX DIVISION AVERAGE BILL COMPARISON- OCTOBER I, 2O1O TEST YEAR ENDING DECEMBER 3I, 2OO9 Exhibit B to Settlement Agreement Attachment B to Ordinance $7'00 11.46 21.03 , 3.00 $42.49 3.18 -$45=Z- $1.24 z, t v70 .fRqqo,sEp GHANGE $13.50 36.S7 158.57 18.98 $228.02 17.05 -$ZisTf - PROPOSED $450.00 412.51 394.31 0.00 16,006.67 1,058.43 $18,321.91 $450.00 $25.00 412.5't $25.06 394.31 $25.62 0.00 1,058.42 $2,315.24 173.10 -ffi'ffi4- $81.84: 3.gB% 4.5 MCF X 4,5 MCF X 4.5 MCF X cpRRENT $ 7,00 52.2707 = 10.31 $4.6303 = 21.03 $0.6611 = 3.00 ocToBER 1,2010 PROPOSED CHANGE $ 41.34 0.07477 = 3.09 $44.43 $2.5246 = $4.6303 = $0.6611 = 0.07477 CURRENT $13.50 $0.9877 = 33.82 $4.6303 = 158.57 $0.5542 =.........€ $224.87 0.07477 = 16.81 -$ffi $1.0796 = $4.6303 = $0.5542 = 0.07477 = GURRENT $425.00 $0.2583 = 387.45 $0.1884 = 368.69 $3.38 1.40t/o CHANGE $0.0404 0.00 $4.6303 = 16,006.67 $0,3062 = _l_.058.tq_ $18,246.23 0.07477 = _1-@q_ $19.610.43 $0.2750 = $0.2015 = $0.0433 = $4.6303 = $0.3062 = O.O7477 E $81.34 O.41olo CURRENT- PROPOSED CHANGE $425.00 $0.2583 = 387.45 $0.1884 = 368.69 $0.0404 = 0.00 $0.3062 = _1qry_ $2,239.56 A.07477 = 167.44 _q2,40299- 4.5 MCF X 4,5 MCF X 4,5 MCF X 34.2 MCF X 34.2 MCF X 34.2 MCF X 34.2 MCF X 34.2 MCF X U.2 MCF X X X X X X $41.34 $42.49 21 Rate C @ 34.2 Mcf 22 Customer charga 23 Consumption charge 24 RiderGCR PartA 25 Rider GCR Part B za 27 2g 29 30 31 32 33 34 35 36 37 38 39 40 Subtotal Revenue-related Tax Reimbursemenl Total Customer charge Consumption charge Rider GCR Part A Rider GCR Part B Subtolal Revenue-related Tax Reimbursement Total 41 Rate l@ 3457 MMBTU 42 Customer charge 43 Consumption charge 44 Consumption charge 45 Consumption charge 46 Rider GCR Part A 47 Rider GCR Part I 4S 49 Subtotal 50 Revenue-relatedTaxReimbursement 51 Total 52 53 Customer charge 54 Consumption charge 55 Consumption charge 56 Consumption charge 57 Rider GCR Part A 58 Rider GCR Pad B 59 Subtotal60 Revenue-relatedTaxReimbursement 61 Total 62 63 Rate T {O 3480 MMBTU 64 Customer charge 65 Consumption charge 66 Consumption charge 67 Consumption charge 68 Rider GCR Part B 69 70 Subtotal 71 Revenue-relatedTaxReimbursgment72 Total 73 74 Customer charge 75 Consumption chargo 76 Consumption charge 77 Consumption charge 78 Rider GCR Pari B 79 Subtotal 80 Revenue-relatedTaxReimbursement 81 Totai 1,500 1,9s7 0 3,457 3,457 1,500 1,957 0 3,457 3,457 1,500 1,957 0 3,457 1,500 1,957 U 3,457 $228.02 MMBTU MMBTU MMBTU MMBTU MMBTU $18,246.23 MMBTU MMBTU MMBTU MMBTU MMBTU $18,321.91 MMBTU MMBTU MMBTU MMBTU $2,23S.56 MMBTU MMBTU MMBTU MMBTU $2,315.24 $0 2750 = $0.2015 = $0.043s = $0.3062 = 0.Q7477 = X X X X X X X X X X X X X X X Exhibit B to Settlement Agreement Attachment B to Ordinance Line No. ATMOS ENERGY CORP., MID-TEX DIVISION CUSTOMER IMPACT OF PROPOSED RATES COMPARED TO CURRENT RATES (STEEL SERVICE REPLAGEMENT PROGRAM} Description Prospective Rate lncrease (a) 1 Rate R2 Monthly Customer Charge 3 Change from Current Rate 4 Billing Units for Specified Period 5 TotalChange in Base Revenue 6 Associated Revenue Taxes 7 Total Rate lmpact I Number of Bills for Specified Period I Average lmpact per Bill10 Rate G11 Monthly Customer Charge 12 Change from Current Rate13 Billing Units for Specified Period14 Total Change in Base Revenue 15 Associated Revenue Taxes 16 Total Rate lmpact17 Number of Bills for Specified Period 18 Average lmpact per Bill 19 20 TotalGhange in Base Revenue 21 Total Rate lmpact (lnc. Rev. Taxes) 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 (b) $0.15 17,287,740 $2,593,161 $193.880 $2,787,041 17,287,740 $0.16 $0.41 1,445,436 $592,629 M4.308 $636,937 1,445,436 $0.44 $3,185,790 $3,423,979 Attachment C to Ordinance SBTTLE},IBNT AGREEMENT BETWEEN ATMOS ENERGY CqRP.. MID-TEX DIVISION AND ATMO-S CITIES STEERING COMUITTEE WHEREAS, this settlement agreement is entered into by Atmos Energy Corp's Mid- Tex Division and Atmos Cities Steering Committee ("ACSC") whose members include the Cities of Abilene, Addison, Allen, Alvarado, Angus, Anna, Argyle, Arlington, Bedford, Bellmead, Benbrook, Beverly Hills, Blossom, Blue Ridge, Bowie, Boyd, Bridgeport, Brownwoodo Buffalo, Burkburnett, Burleson, Caddo Mills, Carrollton, Cedar Hill, Celeste, Celina, Cisco, Cleburne, Clyde, College Station, Colleyville, Colorado City, Comanche, Coolidge, Coppell, Corinth, Corral City, Crandall, Crowley, Dalworthington Gardens, Denison, DeSoto, Duncanville, Eastland, Edgecliff Village, Emory, Ennis, Euless, Everman, Fairview, Farmers Branch, Farmersville, Fate, Flower Mound, Forest Hill, Fort Worth, Frisco, Frost, Gainesville, Garland, Garrett, Grand Prairie, Grapevine, Haltom City, Harker Heights, Haskell, Hewitt, Highland Park, Highland Village, Honey Grove, Hurst, Iowa Park, Irving, Justin, Kaufman, Keene, Keller, Kemp, Kennedale, Kerrville, Killeen, Krum, Lakeside, Lake Worth, Lancaster, Lewisville, Lincoln Park, Little Elm, Lorena, Malakoff, Mansfield, McKinney, Melissa, Mesquite, Midlothian, Murphy, Nocona, North Richland Hills, Northlake, Oakleaf, Ovilla, Palestine, Pantego, Paris, Parker, Pecan Hill, Plano, Ponder, Pottsboro, Prosper, Quitman, Red Oak, Reno (Parker County), Richardsono Richland, Richland Hills, Roanoke, Robinson, Rockwall, Roscoeo Rowlett, Sachse, Saginawo Seagoville, Sherman, Snyder, Southlake, Springtown, Stamfordo Stephenville, Sulphur SpritrBSo Sweetwater, Temple, Terrell, The Colony, Tyler, University Park, Venus, Vernono Waco, Watauga, Waxahachie, Westlake, Whitesboro, White Settlement, Wichita Falls, Woodway, ffid Wylie. WHEREAS, on March 15,2010, Atmos filed with the ACSC Cities an application, hereafter referred to as the 2010 RRM filing, to adjust rates pursuant to Rider RRM - Rate Review Mechanism; and WHEREAS, ACSC has hired experts and lawyers to analyze the rates proposed by Atmos Energy Corp.'so Mid-Tex Division ("Atmos" or "Company") in its 2010 RRM filing; and WHEREAS, the Settlement Agreement resolves all issues between Atmos and ACSC ("the Signatories") regarding the 2010 RRM filing, which is currently pending before the ACSC Cities, in a manner thaf the Signatories believe is consistent with the public interest, and the Signatories represent diverse interests; and WHEREAS, the Signatories believe that the resolution of the issues raised in the 2010 RRM filing can best be accomplished by each ACSC City approving this Settlement Agreement and the rates, terms and conditions reflected in the tariffs attached to this Settlement Agreement as Exhibit A; NOW, THEREFORE, in consideration of the mutual agreements and covenants established herein, the Signatories, through their undersigned representatives, agree to the following Settlement Terms as a means of fully resolving all issues between the ACSC Cities and Atmos involving the 2010 RRM filing: Attachment C to Ordin&nce Settlemgnt Terms 1. Upon the execution of this Settlement Agreement, Atmos and the counsel for the ACSC cities will recommend that an ordinance or resolution be adopted to approve this Settlement Agreement and implement the rates, terms and conditions reflected in the tariffs attached to this Settlement Agreement as Exhibit A, (Attachment A to the Ordinance ratifying this Agreement). Said tariffs should allow Atmos an additional, prospective $27 million in annual revenue by implementation of rates shown in the proof of revenues attached as Exhibit B. (Attachment B to the Ordinance ratifying this Agreement). The uniform implementation of gas rates, terms and conditions established by this Settlement Agreement shall be effective for bills rendered on or after October l, 2010. 2. In an effort to streamline the regulatory review process, Atmos and ACSC have agreed to renew the Rate Review Mechanism ("Rider RRM") for a period commencing with the Company's April 1,2011 filing under this mechanism for the calendar year 2010, effective August 15,2011, and concluding upon the implementation of new, final rates established pursuant to the general rate case that Atmos will file on or before June l, 2013. Rider RRM provides for an annual rate adjustment to reflect changes in billing determinants, operating and maintenance expense, depreciation expense, other taxes expenseo flf,d revenues as well as changes in capital investment and associated changes in gross revenue related taxes. The revised RRM tariff is included in Exhibit A. 3. Notrvithstanding the RRM rate adjustments that will occur pursuant to paragraph 2 of this Settlement Agreement, Atmos and ACSC agree that on or before June 1,2013, Atmos shall file a general, system-wide rate case for the Mid-Tex Division. During the pendency of the general rate case, Atmos and ACSC agree that rate adjustments associated with the RRM filing for calendar year 2011 shall be implemented on August 15,2012, and shall remain in effect until the earlier of either the issuance of a final order by the Railroad Commission of Texas in the general rate case to be filed on or before June 1,2013, or the entry of an agreed upon order resolving all issues involved in the general rate case. The adjustrnents made or requested in ihe 5'h year RRM shall not be considered precedent during the general rate case. 4. Atmos and ACSC further agree that for the period commencing March 1,2010 through September 30, 2012, Atmos will expand its existing steel service line replacement program to complete the replacement of 100,000 steel service lines within its Mid-Tex Division during this period. Atmos and ACSC agree that a risk-based approach should be adopted to allow replacement of the highest priority steel service lines within this time period. Atmos agrees to provide the ACSC cities with quarterly reports providing the number and location of the lines replaced during the quarter. Atmos agrees to coordinate with ACSC member cities to minimize disruption to cities' rights of way without compromising the safety of residents of the cities. 5, Atmos and ACSC agree that costs incurred to replace steel service lines prior to October I,2010 shall be included in the RRM rate adjustment calculation forthe 2010 calendar yoffi, and shall not be subject to or included in the rate cap limitations set forth in subsection IV (a)-(b) of the Rider RRM tariff. 6. Attachment C to Ordinflnce Atmos and ACSC agree that the projected incremental direct costs incuned to replace steel service lines on or after October 1, 2010 shall be separately identified and shall not be subject to or included in the rate cap limitations set forth in subsection IV (a)- (b) of the Rider RRM tariff. Atmos and ACSC further agree that such projected direct incremental costs incurred to replace steel service lines after October 1,2010, shall be separately calculated and recovered as a discrete component of customer charges in the Company's annual RRM filings as set forth below: a. Atmos and ACSC agree that Atmos shall be entitled to separately adjust rates for the Rate Effective Period as defined in the Rider RRM tariff to allow recovery of the projected annual revenue requirement associated with direct incremental costs to be incurred in connection with a steel service line replacement program, that are not otherwise included within the RRM cost of service, including a return on equity of 9.0Yo within the overall weighted cost of capital applied to net investment (net plant additions, less accumulated depreciation and accumulated deferred income taxes), depreciation expense and applicable taxes; b. Atmos and ACSC further agree that the capital structure used to calculate the steel service line replacement rate adjustment will be the actual Evaluation Period (as defined in the Rider RRM tariff) ratio of long-term debt and equity, with an equity percentage not to exceed 50%; c. Rate recovery associated with a steel service line replacement program shall occur through an adjustment to the Residential and Commercial customer charges. Current year recovery factors as of October L,2010 shall be $0.15 for residential customers and $0.41 for commercial customers. The rates will be adjusted annuallyo however, Atmos and ACSC agree that in no case will the per customer monthly cost recovery factors attributable to a steel service line replacement program exceed $0.44 for residential customers or $1.22 for commersial customers, either prior to or during the pendency of the general rate case Atmos will file on or before June l, 2013. d. Atmos and ACSC further agree that any per customer amount attributable to cost recovery for a steel service ine replacement program shall be subject to review by the regulatory authority in a subsequent Evaluation Period as defined in the Rider RRM tariff and all incremental costs associated with a steel service line replacement program shall be subject to a prudence/reasonableness review in the general rate case to be filed by Atmos on or before June 1,2013 . With respect to the Company's annual RRM filings, Atmos agrees to pay all reasonable and necessary expenses of each entity having original jurisdiction that are incurred to review the Company's annual RRM filings. Atmos further agrees that in calculating the proposed rate for any Rate Effective Period, the Company shall not include: (l) any external legal, expert, or consultant costs to prepare and/or provide supportive information related to its filing; or (2) reimbursements to original jurisdiction entities. Not"arithstanding paragraph 7 of this Settlement Agreement, Atmos and ACSC agree that in the event of an appeal of an original jurisdiction entity's decision regarding a proposed RRM adjustment, recovery of rate case expenses shall be determined J 7. 8. 9. 10. Attachment C to Ordinance according to Chapters 103 and 104, Tex. Uru.. ConE Anil*I. Further, in the event of such appeal(s), Atmos shall recover any reimbursement made to the original jurisdiction entity through a surcharge to all customer rates that are subject to the Commissionos jurisdiction in that proceeding or proceedings that might be joined therewith, regardless of whether such reimbursements are made during the initial review period or appeal period. The ACSC Cities agree that they will not challenge the legal basis of the rates, terms, and conditions reflected in Exhibit A, or any annual RRM adjustment that is implemented pursuant to Rider RRM. Atmos and the ACSC Cities further agree that the express terms of the Rider RRM are supplemental to the filing, notice, regulatory review, or appellate procedural process of the ratemaking provisions of Chapter 104 of the Texas Utilities Code. If the statute requires a mandatory action on behalf of the municipal regulatory authority or Atmos, the parties will followthe provisions of such statute. Ifthe statute allows discretion on behalf of the municipal regulatory authority, the ACSC Cities agree that they shall exercise such discretion in such a way as to implement the provisions of the RRM tariff. If Atmos appeals an action or inaction of an ACSC City regarding an RRM filing to the Railroad Commission, the ACSC Cities agree that they will not oppose the implementation of interim rates or advocate the imposition of a bond by Atmos consistent with the RRM tariff. Atmos agrees that it will make no filings on behalf of its Mid-Tex division under the provisions of TBx. Urn. Cons Aml. $ 104.301 while the Rider RRM is in place. In the event that a regulatory authority fails to act or enters an adverse decision regarding the proposed annual RRM adjustment, the Railroad Commission of Texas shall, pursuant to the provisions of the Texas Utilities Code, have exclusive appellate jurisdiction to review the action or inaction of the regulatory authority exercising exclusive original jurisdiction over the RRM request. In addition, the Signatories agree that this Settlement Agreement shall not be construed as a waiver of the ACSC Cities' right to initiate a show cause proceeding or the Company's right to file a Statement of Intent under the provisions of the Texas Utilities Code. Atmos and ACSC further agree that the ordinance or resolution adopting this Settlement Agreement shall include a provision authorizing Atmos to establish regulatory asset account(s) for costs related to working gas in storage, Atmos and ACSC further agree that the language authorizing these regulatory asset account(s) shall be the same as that set forth in the 4'n Ordering Paragraph (Page 10 of ll) of the Final Order Nunc Pro Tunc issued by Railroad Commission of Texas in GUD No. 9869 on Februwy 23,2010. This language states as follows: IT IS FURTHER ORDERED that Atmos shall be allowed to establish a regulatory asset for the ad valorem taxes related to working gas in storage. In addition, Atmos shall be allowed to establish a regulatory asset for (1) the costs associated with Accumulated Deferred Income Ta>r for UNICAP Section 263A, (2) the WACOG to FIFO change, and (3) an amount equal to the rate of return approved in this RRM Proceeding for the Accumulated Defened Income Tax items related to working gas in storage. Atmos shall record these amounts in Other Regulatory Assets (Account I S2.3). These deferred items shall be considered, along with the 11. 12. Attachment C to Ordinance investment in working gas, for consideration and possible inclusion in rates for Atmos Pipeline-Texas in that entity's next filed rate case. If the Commission determines that such deferred items are not properly included in the rates of Atmos Pipeline - Texas, the items shall be further deferred until the next Atmos Mid=Tex rate case filed after the final decision in the Atmos Pipeline-Texas rate case for inclusion with the working gas investment in the Atmos Mid-Tex rates. Atmos and ACSC agree that each ACSC city should approve this Settlement Agreement and adopt an ordinance or resolution to implement for the ACSC Cities the rates, terms, and conditions reflected in the tariffs attached to this Settlement Agreement as Exhibit A, as well as the regulatory asset authorization language discussed in paragraph 12 of this Settlement Agreement. The Signatories agree that the terms of the Settlement Agreement are interdependent and indivisible, and that if any ACSC city enters an order that is inconsistent with this Settlement Agreement, then any Signatory may withdraw without being deemed to have waived any procedural right or to have taken any substantive position on any fact or issue by virtue of that Signatory's entry into the Settlement Agreement or its subsequent withdrawal. If any ACSC city rejects this Settlement Agreement, then this Settlement Agreement shall be void ab initio and counsel for the ACSC Cities shall thereafter only take such actions as are in accordance with the Texas Disciplinary Rules of Professional Conduct. The Signatories agree that all negotiationso discussions and conferences related to the Settlement Agreement are privileged, inadmissible, and not relevant to prove any issues associated with Atmos' 2010 RRM filing. The Signatories agree that neither this Settlement Agreement nor any oral or written statements made during the course of settlement negotiations may be used for any purpose other than as necessary to support the entry by the ACSC Cities of an ordinance or resolution implementing this Settlement Agreement. The Signatories agree that this Settlement Agreement is binding on each Signatory only for the pu{pose of settling the issues set forth herein and for no other pu{poses, ffid, except to the extent the Settlement Agreement governs a Signatory's rights and obligations for future periods, this Settlement Agreement shall not be binding or precedential upon a Signatory outside this proceeding. The Signatories agree that this Settlement Agreement may be executed in multiple counterparts and may be filed with facsimile signatures. 13. 14. 15. 16. 17. Attachment C to Ordinflnc€ Agreed to this _ day of August,2010. - ATMOS ENERGY CORP., MID-TEX DIVISION By: John A. Paris President, Mid-Tex Division 6 Attachment C to Ordinance Agrcerl to thisJ# ctay of August, 2010. ATMOS ENEIIGY CORP., By; ident, Micl-Tex Divisinn I r Attachment C to Ordinance Agreed to this 2,oft day of August 2010. ATTORNEY FOR ATMOS TEXAS MUNICIPALITIES, WHOSE MEMBERS INCLUDE THE CITIES OF ABILENE, ADDISON, ALLEN, ALVARADO, ANGUS, ANNA, ARGYLE, ARLINGTON, BEDFORD, BELLMEAD, BENBROOK, BEVERLY HILLS, BLOSSOM, BLUE RIDGE, BOWIE, BOYD, BRIDGEPORT, BROWNWOOD, BUFFALO, BURKBURNETT, BURLESON, CADDO MILLS, CARROLLTON, CEDAR HILL, CELESTE, CELTNA, CISCO, CLEBURNE, CLYDE, COLLEGE STATION, COLLEWILLE, COLORADO CITY, COMANCHE, COOLIDGE, COPPELL, CORINTH, CORRAL CITY, CRANDALL, CROWLEY, DALWORTHINGTON GARDENS, DENISON, DESOTO, DUNCANVILLE, EASTLAND, EDGECLIFF VILLAGE, EMORY, ENNIS, EULESS, EVERMAN, FAIRVIEW, FARMERS BRANCH, FARMERSVILLE, FATE, FLOWER MOUND, FOREST HILL, FORT WORTH, FRISCO, FROST, GAINESVILLE, GARLAND, GARRETT, GRAND PRAIRIE, GRAPEVINE, HALTOM CITY, HARKER HEIGHTS, HASKELL, HEWITT, HIGHLAND PARK, HIGHLAND VILLAGE, HONEY GROVE, HURST, IOWA PARK, IRVING, ruSTIN, KAUFMAN, KEENE, KELLER, KEMP, KENNEDALE, KERRVILLE, KILLEEN, KRUM, LAKESIDE, LAKE WORTH, LANCASTER, LEWISVILLE, LINCOLN PARK, LITTLE ELM, LORENA, MALAKOFF, MANSFIELD, MCKINNEY, MELISSA, MESQUITE, MIDLOTHIAN, MURPHY, NOCONA, NORTH RICHLAND HILLS, NORTHLAKE, OAKLEAF, OVILLA, PALESTINE, PANTEGO, PARIS, PARKER, PECAN HILL, PLANO, PONDER, POTTSBORO, PROSPER, QUITMAN, RED OAK, RENO (PARKER COUNTY), zuCHARDSON, RICHLAND, zuCHLAND HILLS, ROANOKE, ROBINSON, ROCKWALL, ROSCOE, ROWLETT, SACHSE, SAGINAW, SEAGOVILLE, SHERMAN, SNYDER, SOUTHLAKE, SPzuNGTOWN, STAMFORD, STEPHENVILLE, SULPHUR SPRINGS, SWEETWATER, TEMPLE, TERRELL, THE COLONY, TYLER, LINIVERSITY PARK, VENUS, VERNON, WACO, WATAUGA, WAXAHACHIE, WESTLAKE, WHITESBORO, WHITE SETTLEMENT, WICHITA FALLS, WOODWAY, AND WYLIE By: * Subject to approval by ACSC City Councils Page 1 of 2 Town of Westlake Memo To: Honorable Mayor and Members of the Town Council From: Kelly Edwards, Town Secretary Subject: Meeting September 29, 2010 Date: September 14, 2010 ITEM Consider a Resolution authorizing the destruction the destruction of the Westlake Academy records in compliance with the Texas State Library and Archive Commission schedules. VISION POINT AND KEY RESULT AREAS This item supports the following Vision Point and Key Result Areas:  We are Leaders o Environmental stewardship initiatives o Infrastructure maintenance and planning  Hospitality Finds its Home in Westlake o Historic Preservation BACKGROUND In 1991 Council passed Ordinance 190 establishing Records Management. The Town Secretary is designated as the Record Manager. Pursuant to Chapter 2, Section 2-208, we are requesting the Town Council’s authorization to destroy the records contained on the destruction log. Each record has met its retention requirement as established by the Texas State Library and Archive Commission as adopted. If approved the Town will use an Interlocal agreement established with Tarrant County for destruction of these records. This is a free service provided by the County. Sec. 2-208. Implementation of records control schedules; destruction of records under schedule. (a) A records control schedule that has been approved and adopted under section 2-207 shall be implemented according to the policies and procedures of the records management plan. (b) A record whose retention period has expired on a records control schedule shall be destroyed unless an open records request is pending on the record, the subject matter of the record is pertinent to a pending law suit, or there is a request in writing to the records management officer that the record be retained for an additional period. Page 2 of 2 (c) Prior to the destruction of a record under an approved records control schedule, authorization for the destruction must be obtained by the records management officer from the board of aldermen. (Ord. No. 190, § 9, 10-10-1991) State law references: Retention periods, Local Government Code § 203.042. FUNDING No impact RECOMMENDATION To approve the Resolution ATTACHMENTS: Resolution Destruction log Resolution 10-27 Page 1 of 2 TOWN OF WESTLAKE RESOLUTION NO. 10-27 A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS, AUTHORIZING THE DESTRUCTION OF WESTLAKE ACADEMY RECORDS IN COMPLIANCE WITH THE TEXAS STATE LIBRARY AND ARCHIVE COMMISSION SCHEDULES. WHEREAS, the Town Council adopted Chapter 2, Administration, Article VI, Records Management; and WHEREAS, it is desirable to reduce the cost of records storage of academic and municipal and records; and WHEREAS, the Town Council finds that the agreement from Tarrant County meets the necessary requirements of the records destruction requirements established by State law. NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS: SECTION 1: All matters stated in the Recitals above are found to be true and correct and are incorporated herein by reference as if copied in their entirety. SECTION 2: The Town Council of the Town of Westlake hereby authorizes the destruction of those records that have met the retention requirements hereto as Exhibit “A” and further authorizes the Records Manager, Town Secretary, to destroy the said records in accordance to the State law through an Interlocal agreement with Tarrant County. SECTION 3: If any portion of this Resolution shall, for any reason, be declared invalid by any court of competent jurisdiction, such invalidity shall not affect the remaining provisions hereof and the Council hereby determines that it would have adopted this Resolution without the invalid provision. SECTION 4: That this resolution shall become effective from and after its date of passage. PASSED AND APPROVED ON THIS 29TH DAY OF SEPTEMBER, 2010. _____________________________ Laura L. Wheat, Mayor Resolution 10-27 Page 2 of 2 ATTEST: _______________________________ ________________________________ Kelly Edwards, Town Secretary Thomas E. Brymer, Town Manager APPROVED AS TO FORM: ____________________________ L. Stanton Lowry, Town Attorney 9/24/2010 EXHIBIT A - RESOLUTION 10-27 Schedule Record Series Number TYPE OF RECORD DESCRIPTION OF RECORD INCLUSIVE DATES LOCATION TO BE STORED STATE RETENTION PERIOD DESTRUCTION DATE Inventory Conducted DESTRUCTION DATE Letters of Schedule Schedule Assigned number Reference State Retention Heading/Type of Record Reference Specific Record Beginning and Ending Date of Materials Enclosed Off-site location (name of facility), Fire Station, Town Hall, etc Reference State Retention Schedules/Periods Calculated by State Retention Schedule according to last date in box or file 1st Initial/Last Name of person preparing box Date Record was destroyed SD 3200-07 Parental Permission Records Permission slips, forms, med info for international travel 8/2007-6/2008 file room at Academy 2 years Jul-10 D. White GR 1050-14 Employment Applications Resumes (Not selected)2004-2007 file room at Academy 2 years Sep-09 D. White SD 3275-02 a,b Attendance Reports Daily and 6 weeks attendance reports 2004-2005 file room at Academy 5 years Jul-10 D. White SD 3275-02 a,b Attendance Reports Daily class attendance rosters-teachers, notes 1/2005-6/2005 file room at Academy 5 years Jul-10 D. White GR 1050-14 Employment Applications Resumes (Not selected)2006-2008 file room at Academy 2 years Sep-10 D. White SD 3275-02 a,b Attendance Reports Daily register, attendance summaries and 6 weeks attendance reports 2003-2004 file room at Academy 5 years Sep-09 D. White SD 3275-02 a,b Attendance Reports Daily class attendance rosters-teachers, parent notes 8/2004-12/2004 file room at Academy 5 years Jan-10 D. White S:\Town Secretary\Town\Town Council\Town Agendas\2010\09-29-10\Item 4g3 Res 10-27 Exhibit A-WA Destruction Log.xlsItem 4g3 Res 10-27 Exhibit A-WA Destruction Log.xls 1 of 1 Page 1 of 2 Town of Westlake Memo To: Honorable Mayor and Members of the Town Council From: Tom Brymer, Town Manager Subject: Meeting of September 29, 2010 Date: September 21, 2010 ITEM Wkshp Discussion regarding the Proposed Fiscal Year 2010-2011 Municipal Budget and Five (5) Year Capital Improvement Program Regular Conduct a Public Hearing and Consideration of Ordinance 645, Adopting the Town of Westlake Revised Budget for the fiscal year ending September 30, 2010, and Adopting the Proposed Budget for the Fiscal Year ending September 30, 2011, and Providing Authorization to the Town Manger to approve appropriated funds up to $25,000. VISION POINT AND KEY RESULT AREAS This item supports the following Vision Point and Key Result Areas: Inviting Residential & Corporate neighborhoods o On-going comprehensive planning o Sensitivity to neighborhood integrity o Outstanding community appearance o Highest quality development and aesthetic standards o Open space preservation We are Leaders o Premier educational facilities and programs o Producing well educated future leaders and thinkers o Business partnerships with Westlake Academy o Environmental stewardship initiatives o High quality services delivery coupled with financial stewardships o Infrastructure maintenance and planning Hospitality Finds its Home in Westlake o Citizen engagement and communication o Historic Preservation o Tourism development BACKGROUND: Two fiscal years ago, beginning in FY 2008-2009, the Town began moving its leadership and management systems to a framework utilizing a more program based budget designed to link desired outcomes with budgeted resources and accountability for results. This FY 2010-11 Budget represents the next step in this continuous improvement process. This budget document utilizes a systemic framework designed to link together critical governance and management decision making tools. This system is called “Governing and Managing for Outcomes” and is designed to integrate: Page 2 of 2 Strategic planning Five (5) year financial forecasting, budgeting, and performance measurement linked to priorities, objectives, and outcomes Reporting to monitor progress in outcome achievement and accountability for results Aligning resources to prioritized outcomes Citizen surveys to gauge service satisfaction levels with Town services and resident willingness to pay for those services Long term approach to ensure financial sustainability Maintaining core services Five (5) year capital improvement planning This budget focuses on the next twelve months of the Town’s future. However, the Council’s initiative to pursue a strategic planning approach to the Town’s governance is critical to providing the Council, and the community, with a multi-year focus that couples strategic priority setting with good financial stewardship decisions that achieve the long-term vision set by the Council for the Town of Westlake. The focus for the FY 2010-11 Proposed Budget has been positioning the Town for financial sustainability (both for the general municipal services and the Westlake Academy), a key priority found in the Town’s strategic plan. In addition to budget workshops held on May 24, 2010, August 20, 2010 and September 23, 2010, the Town Council has held public meetings/hearings on a proposal for a municipal ad valorem (property) tax to address the Town’s financial sustainability. Please note that the Westlake Academy operating budget has also been included, for presentation and transparency purposes, in this budget document. Additionally, transparency of this process and the information considered has been given strong emphasis. The Town has utilized its web site to place information from the various meetings concerning ad valorem tax discussions on its web site at: http://www.westlake-tx.org/en/FinancialSustainability.html FUNDING: The Town of Westlake’s Proposed FY 2010-2011 budget totals $16,194,203 (including $1,137,903 transfers in from fund balance for operating, debt service, capital projects, major maintenance and equipment replacement needs) for all funds. This budget also includes Westlake Academy’s FY 2010-2011 expenditures and transfers out totaling $4,749,094. RECOMMENDATION: This Public Hearing has been advertised as required by law. The recommendation is to first conduct and close the Public Hearing, followed by Council discussion as needed. Additionally, it is recommended to adopt the FY 2010-11 municipal budget as proposed. ATTACHMENTS: 1.) Proposed FY 2010-11 Budget sent under separate cover. Note: It is also on the Town’s web site for public viewing. 2.) Ordinance Ordinance 645 Page 1 of 2 TOWN OF WESTLAKE ORDINANCE NO. 645 A ORDINANCE OF THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS, REVISING THE BUDGET FOR THE 2009-2010 FISCAL YEAR; ADOPTING THE BUDGET FOR THE TOWN OF WESTLAKE, TEXAS FOR THE FISCAL YEAR BEGINNING OCTOBER 1, 2010 AND ENDING SEPTEMBER 30, 2011; PROVIDING AUTHORIZATION TO THE TOWN MANGER TO APPROVE APPROPRIATED FUNDS UP TO $25,000; PROVIDING THAT THE BUDGET TO BE KEPT IN CITY SECRETARY’S OFFICE; PROVIDING FOR A SEVERABILITY CLAUSE; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, public notice of a public hearing on the proposed annual budget, stating the date, time, and place and subject matter of the public hearing, was given as required by the laws of the State of Texas and; and WHEREAS, a public hearing was duly held and all interested persons were given an opportunity to be heard for or against any item therein on September 29, 2010; and, WHEREAS, as required by Texas Local Government Code 102.002, the budget officer has prepared a municipal budget to cover the proposed expenditures of the municipal government for the succeeding year; and, WHEREAS, the Town Council finds that the passage of this Ordinance is in the best interest of the citizens of Westlake. NOW, THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS: SECTION 1: That, all matters stated in the Recitals hereinabove are found to be true and correct and are incorporated herein by reference as if copied in their entirety SECTION 2: That the Town Council hereby adopts the revised budget for the fiscal year beginning October 1, 2009 and ending September 30, 2010 as shown in Exhibit “A.” SECTION 3: That the Town Council does hereby approve the proposed Municipal Budget attached as Exhibit “B”, adopting the budget for the Fiscal Year Beginning October 1, 2010, and for Fiscal Year Ending September 30, 2011. SECTION 4: That the Town Council hereby gives the Town Manager authorization to approve any appropriated funds up to the amount of $25,000. SECTION 5: That a copy of the official adopted 2010-2011 budget documents shall be kept on file in the office of the Town Secretary Ordinance 645 Page 2 of 2 SECTION 6: If any portion of this Ordinance shall, for any reason, be declared invalid by any court of competent jurisdiction, such invalidity shall not affect the remaining provisions hereof and the Council hereby determines that it would have adopted this Ordinance without the invalid provision. SECTION 7: That this Ordinance shall become effective from and after its date of passage. PASSED AND APPROVED ON THIS 29TH DAY OF SEPTEMBER 2010. ATTEST: ________________________________ Laura L. Wheat, Mayor _______________________________ _________________________________ Kelly Edwards, Town Secretary Thomas E. Brymer, Town Manager APPROVED AS TO FORM: _____________________________ L. Stanton Lowry, Town Attorney Page 1 of 2 Town of Westlake Memo To: Honorable Mayor and Members of the Town Council From: Tom Brymer, Town Manager Subject: Regular Meeting of September 29, 2010 Date: September 21, 2010 ITEM Regular Consideration and discussion of an Ordinance Levying Municipal Ad Valorem (Property) Taxes for the 2010 Year in accordance with the Fiscal Year 2010-11 Budget. VISION POINT AND KEY RESULT AREAS This item supports the following Vision Point and Key Result Areas: Inviting Residential & Corporate neighborhoods o On-going comprehensive planning o Sensitivity to neighborhood integrity o Outstanding community appearance o Highest quality development and aesthetic standards o Open space preservation We are Leaders o Premier educational facilities and programs o Producing well educated future leaders and thinkers o Business partnerships with Westlake Academy o Environmental stewardship initiatives o High quality services delivery coupled with financial stewardships o Infrastructure maintenance and planning Hospitality Finds its Home in Westlake o Citizen engagement and communication o Historic Preservation o Tourism development BACKGROUND: Two fiscal years ago, beginning in FY 2008-2009, the Town began moving its leadership and management systems to a framework utilizing a more program based budget designed to link desired outcomes with budgeted resources and accountability for results. This FY 2010-2011 Budget represents the next step in this continuous improvement process. This budget document utilizes a systemic framework designed to link together critical governance and management decision making tools. This system is called “Governing and Managing for Outcomes” and is designed to integrate: Strategic planning Five (5) year financial forecasting, budgeting, and performance measurement linked to priorities, objectives, and outcomes Reporting to monitor progress in outcome achievement and accountability for results Aligning resources to prioritized outcomes Page 2 of 2 Citizen surveys to gauge service satisfaction levels with Town services and resident willingness to pay for those services Long term approach to ensure financial sustainability Maintaining core services Five (5) year capital improvement planning This budget focuses on the next twelve months of the Town’s future. However, the Council’s initiative to pursue a strategic planning approach to the Town’s governance is critical to providing the Council, and the community, with a multi-year focus that couples strategic priority setting with good financial stewardship decisions that achieve the long-term vision set by the Council for Westlake. The focus for the FY 2010-11 Proposed Budget has been positioning the Town for financial sustainability (both for the general municipal services and Westlake Academy), a key priority found in the Town’s strategic plan. Please note that the Westlake Academy operating budget has also been included, for presentation and transparency purposes, in this budget document. In addition to budget workshops held on May 24, 2010, August 20, 2010 and September 23, 2010, the Town Council has also held several public meetings/hearings on a proposal for a municipal ad valorem (property) tax to address the Town’s financial sustainability. Additionally, transparency of this process and the information considered has been given strong emphasis. The Town has utilized its web site to place information from the various meetings concerning ad valorem tax discussion on its web site at: http://www.westlake- tx.org/en/FinancialSustainability.html On June 28, 2010 the Town Council set the residential homestead tax exemption at the maximum (20%) allowed by State law. There were also exemptions adopted by that earlier Resolution (which is restated and confirmed in the tax levy ordinance) for an exemption for people who are disabled or over 65 and an exemption for Freeport goods. In addition, there is a provision in the current Town Code for a “tax freeze” for people over 65 or who are disabled and have a Westlake residence homestead. This Town Code provision has been interpreted by the Town’s attorney to mean that a person who currently, as of this year, has a Westlake homestead residence and is over 65 or disabled prior to the date the tax levy is adopted will have a zero tax rate. That intrepretaton was presented and accepted by the Town Council. FUNDING: As proposed by staff, a municipal ad valorem tax of $0.1562 per $100 of assessed valuation for maintenance and operations of the General Fund would generate an estimated $1,000,426 in FY2010-2011 to address the Town’s financial sustainability challenges. Additionally, depending on desires for funding currently unaddressed capital improvement needs, an interest/sinking (debt service) ad valorem tax rate could be levied in the amount of $0.0152 per $100 of assessed valuation. This would bring the total proposed FY 2010-2011 ad valorem tax rate to $0.1714 per $100 of assessed valuation. RECOMMENDATION: Recommend adoption of an ordinance levying a municipal ad valorem (property) tax. ATTACHMENTS: 1.) Ordinance Levying Ad Valorem Tax for FY 10-11 2.) Various charts and graphs related to assessed valuation, area cities’ tax rates, and impact by home value. Ordinance 646 Page 1 of 4 TOWN OF WESTLAKE ORDINANCE NO. 646 AN ORDINANCE OF THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS LEVYING TAXES TO BE ASSESSED ON ALL TAXABLE PROPERTIES WITHIN THE TOWN LIMITS OF THE TOWN OF WESTLAKE FOR THE TAX YEAR 2010 (FISCAL YEAR 2010-2011); SETTTING OUT EXEMPTIONS AND LIMITATION; SETTING OUT STATE LAW REQUIRED STATEMENTS; PROVIDING FOR THE COLLECTION OF DELINQUENT TAXES AND A COLLECTION PENALTY TO BE ADDED TO DELINQUENT TAXES; PROVIDING FOR A SEVERABILITY CLAUSE; AND DECLARAING AN EFFECTIVE DATE. WHEREAS, a public hearing on the proposed annual budget for the Town of Westlake, Texas, for the fiscal year beginning on October 1, 2010 and ending on September 30, 2011, was duly advertised giving the dates, time, place and subject matter of the public hearing, and WHEREAS, public hearings were set by the Town Council in a duly posted Town Council meeting on August 25, 2010, then advertised, and public the hearings were conducted on September 8, 2010 and September 16, 2010, and all citizens were invited to participate and be heard; and WHEREAS, all requirements of state law were met, including Open Meetings Act, Texas Government Code chapter 551 requirements and the requirement of Texas Local Government Code 102.002 that the budget officer prepare a municipal budget to cover the proposed expenditures of the municipal government for the succeeding year; and WHEREAS, it is deemed to be in the best interest of the citizens of the Town of Westlake, Texas to levy a tax as set forth below, on all taxable properties within the Town limits of Westlake in order to provide the necessary funds to provide municipal services to its citizens and to meet all municipal commitments; and WHEREAS, the Town of Westlake has passed exemptions to certain applicable taxes which were previously adopted by earlier Resolution and recognized and adopted a tax limitation set out in the Town Municipal Code and such exemptions and limitation are included and adopted as part of this Ordinance; and WHEREAS, the Town Council finds the passage of this Ordinance to be in the best interest for the citizens of Westlake, for the preservation of public health, safety and welfare of the citizens of the Town; NOW, THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS: Ordinance 646 Page 2 of 4 SECTION 1: That all matters stated in the findings hereinabove are found to be true and correct and are incorporated herein by reference as if copied in their entirely. SECTION 2: That the Town Council of the Town of Westlake, Texas shall hereby levy the following taxes on each One Hundred Dollars ($100.00) of taxable valuation on all taxable property within the Town limits of the Town of Westlake, Texas to be assessed and collected by the Tax Assessor / Collector for the tax year 2010 (Fiscal year 2010-2011) for the purposes stipulated below, to-wit: (a) For General Fund Maintenance and Operations (M&O) levied on the $100.00 of taxable valuation: $0.1562 (b) For Interest and Sinking Fund (debt service) levied on $100.00 of taxable valuation: $0.0152 SECTION 3: Exemptions: That the Town Council authorizes the following exemptions and limitations: (a) Homestead exemption - That it is the intent of the Town Council of the Town of Westlake to adopt the highest possible homestead exemption, which would be a homestead exemption in the amount of twenty percent (20%) of the value of the homestead, and in any event, the exemption shall be at least a minimum of Five Thousand dollars ($5,000.00). For purposes of this section "residential homestead" is defined as a structure (including a mobile home) or a separately secured and occupied portion of a structure (together with land, no to exceed ten (10) acres, and improvements used in the residential occupancy of the structure and the land and i mprovements have identical ownership) that (1) is owned by one or more individuals, either directly or through a beneficial interest is a qualifying trust; (2) is designed or adapted for a human residence; (3) is used as a residence; and (4) is occupied as his or her principal residence by an owner or, for property owned through a beneficial interest in a qualifying trust, by a trustee of the trust who qualifies for the exemption. (b) Over 65 or Disabled exemption - That an exemption for a resident over 65 or disabled, pursuant to section 11.13(b) of the Texas Tax Code shall be authorized in the amount of $10,000.00. A resident is eligible for an exemption under this section if the resident is over 65 or disabled, but the resident shall not be entitled to two exemptions under this section, as set out in section 11.13(b) of the Texas Tax Code. (c) Freeport exemption - The Town elects not to tax that tangible personal property described in article VIII, section 1-j, subsection (a), Texas Constitution, and Texas Tax Code Section 11.251, which would otherwise be exempt, referred to as "Freeport goods." (d) The Town of Westlake previously adopted an ad valorem tax limitation in section 86-2 of the Town Code, for elderly and disabled citizens according to Article VIII, Section 1-b of the Texas Constitution and Texas Tax Code § 11.261, which provides “The county, municipality, or junior college district may not increase the total annual amount of ad valorem taxes the county, municipality, or junior college district imposes on the residence homestead of a disabled individual or an individual 65 years of Ordinance 646 Page 3 of 4 age or older above the amount of the taxes the county, municipality, or junior college district imposed on the residence homestead in the first tax year, other than a tax year preceding the tax year in which the county, municipality, or junior college district established the limitation described by Subsection (a), in which the individual qualified that residence homestead for the exemption provided by Section 11.13(c) for a disabled individual or an individual 65 years of age or older.” This provision, commonly referred to as a “tax freeze” means that residents who are already eligible for the provisions of that section will not have any increase in their taxes from the time that they became eligible, as citizens of Westlake, for that section. SECTION 4: State Law Required Statements: (A) Because the Town of Westlake has not had a municipal tax rate before, the tax rate will be higher this year. When the tax rate is higher, the Texas Tax Code requires the following statement: “THIS TAX RATE WILL RA ISE MORE TAXES FOR MAINTENANCE AND OPERATIONS THAN LAST YEAR'S TAX RATE.”; and (B) Because the Town of Westlake has not had a municipal tax rate before, the tax rate will be higher this year. If the tax rate exceeds the effective maintenance and operations rate, the Texas Tax Code requires a statement concerning a percentage increase. This statement is difficult to make in this situation as the increase is not a percentage, since the prior tax rate was zero (mathematically, one cannot show a percentage of zero), but we have shown the amount of increase from zero ($0.0000) to a tax rate of $0.1714. The following statement tracks the statute as closely as this situation will allow: THE TAX RATE WILL EFFECTIVELY BE RAISED BY GOING FROM ZERO PERCENT TO A TAX RATE OF $0.1714 (M & O OF $0.1562 AND INTEREST AND SINKING FUND OF $0.0152, FOR A TOTAL OF $0.1714) AND WILL RAISE TAXES FOR MAINTENANCE AND OPERATIONS ON A $100,000 HOME BY APPROXIMATELY $124.96, WITH A HOMESTEAD EXEMPTION. SECTION 5: The Town of Westlake will pursue collection of delinquent taxes and adopts the provisions of Section 33.07 of the Texas Tax Code so that hereafter an additional penalty of Twenty (20) percent of the delinquent tax, penalty and interest on delinquent taxes will be imposed on taxes becoming delinquent as provided by the Texas Tax Code and the Town’s collection agreement. SECTION 6: If any portion of this Ordinance shall, for any reason, be declared invalid by any court of competent jurisdiction, such invalidity shall not affect the remaining provisions hereof and the Council hereby determines that it would have adopted this Ordinance without the invalid provision. SECTION 7: That this Ordinance shall become effective from and after its date of passage. PASSED AND APPROVED ON THIS 29th DAY OF SEPTEMBER 2010. Ordinance 646 Page 4 of 4 _____________________________ Laura L. Wheat, Mayor ATTEST: ____________________________ ______________________________ Kelly Edwards, Town Secretary Thomas E. Brymer, Town Manager APPROVED AS TO FORM: ____________________________ L. Stanton Lowry, Town Attorney Town of Westlake FY 10/11 FY 11/12 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22 FY 22/23 FY 23/24 FY 24/25 1 Real Estate Residential Property Totals ***521,898,037 521,898,037 532,335,998 542,982,718 553,842,372 564,919,219 576,217,604 587,741,956 599,496,795 611,486,731 623,716,466 636,190,795 648,914,611 661,892,903 675,130,761 2 Real Estate Commercial Property Totals 360,128,750 480,128,750 560,128,750 571,331,325 582,757,952 594,413,111 606,301,373 618,427,400 630,795,948 643,411,867 656,280,105 669,405,707 682,793,821 696,449,697 710,378,691 3 Personal Property Commercial 73,420,539 73,420,539 99,888,950 101,886,729 103,924,463 106,002,953 108,123,012 110,285,472 112,491,181 114,741,005 117,035,825 119,376,542 121,764,072 124,199,354 126,683,341 4 Agriculture Taxable Property Total 70,087,970 70,087,970 71,489,729 72,919,524 74,377,914 75,865,473 77,382,782 78,930,438 80,509,047 82,119,228 83,761,612 85,436,844 87,145,581 88,888,493 90,666,263 4 Ag Deferrals (Exemption)(69,824,195) (69,824,195) (71,220,679) (72,645,092) (74,097,994) (75,579,954) (77,091,553) (78,633,384) (80,206,052) (81,810,173) (83,446,377) (85,115,304) (86,817,610) (88,553,962) (90,325,042) 5 Arbitration Cases estimated (82,881,010) (82,881,010) (84,538,630) (86,229,403) (87,953,991) (89,713,071) (91,507,332) (93,337,479) (95,204,228) (97,108,313) (99,050,479) (101,031,489) (103,052,118) (105,113,161) (107,215,424) Arbitration - Est min taxable value (add back)- - - - - - - - - - - - - - - 5 Incomplete Accounts (3,245,856) (3,245,856) (3,310,773) (3,376,989) (3,444,528) (3,513,419) (3,583,687) (3,655,361) (3,728,468) (3,803,038) (3,879,098) (3,956,680) (4,035,814) (4,116,530) (4,198,861) Incomplete -Est net taxable value (add back)- - - - - - - - - - - - - - - 5 20% Homestead Exemption (66,574,802) (66,574,802) (67,906,298) (69,264,424) (70,649,712) (72,062,707) (73,503,961) (74,974,040) (76,473,521) (78,002,991) (79,563,051) (81,154,312) (82,777,398) (84,432,946) (86,121,605) 5 Disabled Vets (12,000) (12,000) (12,240) (12,485) (12,734) (12,989) (13,249) (13,514) (13,784) (14,060) (14,341) (14,628) (14,920) (15,219) (15,523) 5 Absolute Exemptions (6,038,661) (6,038,661) (6,159,434) (6,282,623) (6,408,275) (6,536,441) (6,667,170) (6,800,513) (6,936,523) (7,075,254) (7,216,759) (7,361,094) (7,508,316) (7,658,482) (7,811,652) Tarrant Cty Certified Taxable Value 796,958,772 916,958,772 1,030,695,372 1,051,309,280 1,072,335,465 1,093,782,175 1,115,657,818 1,137,970,975 1,160,730,394 1,183,945,002 1,207,623,902 1,231,776,380 1,256,411,908 1,281,540,146 1,307,170,949 6 Denton County Taxable Property Total 1,352,244 1,352,244 1,352,244 1,379,289 1,406,875 1,435,012 1,463,712 1,492,987 1,522,846 1,553,303 1,584,369 1,616,057 1,648,378 1,681,345 1,714,972 Certified Taxable Value 798,311,016 918,311,016 1,032,047,616 1,052,688,569 1,073,742,340 1,095,217,187 1,117,121,531 1,139,463,961 1,162,253,241 1,185,498,305 1,209,208,271 1,233,392,437 1,258,060,286 1,283,221,491 1,308,885,921 7 Fidelity Phase I tax abatement/rebate (61,675,718) - - - - - - - - - - - - - - 8 Fidelity Phase II tax abate./rebate (thru FY 18-19)(72,036,961) (72,036,961) (73,477,700) (74,947,254) (76,446,200) (77,975,124) (79,534,626) (81,125,319) (82,747,825) - - - - - - 9 Fidelity Phase I comm. personal property .66%(7,366,679) - - - - - - - - - - - - - - 10 Fidelity Phase II comm. personal property .33%(3,683,339) (3,757,006) (3,832,146) (3,908,789) (3,986,965) (4,066,704) (4,148,038) (4,230,999) (4,315,619) - - - - - - 11 Deloitte tax abatement/rebate (thru FY 20-21)- (90,000,000) (150,000,000) (153,000,000) (156,060,000) (159,181,200) (162,364,824) (165,612,120) (168,924,363) (172,302,850) (175,748,907) - - - - 12 Deloitte commercial personal property - - (18,750,000) (19,125,000) (19,507,500) (19,897,650) (20,295,603) (20,701,515) (21,115,545) (21,537,856) (21,968,613) (22,407,986) - - - Total Net Taxable Value 653,548,318 752,517,049 785,987,770 801,707,525 817,741,676 834,096,509 850,778,439 867,794,008 885,149,888 991,657,599 1,011,490,751 1,210,984,451 1,258,060,286 1,283,221,491 1,308,885,921 Assumption of 98% collection rate 640,477,352 737,466,708 770,268,014 785,673,375 801,386,842 817,414,579 833,762,871 850,438,128 867,446,891 971,824,447 991,260,936 1,186,764,762 1,232,899,080 1,257,557,061 1,282,708,203 64,048$ 73,747$ 77,027$ 78,567$ 80,139$ 81,741$ 83,376$ 85,044$ 86,745$ 97,182$ 99,126$ 118,676$ 123,290$ 125,756$ 128,271$ ***65 and older taxable value represents $24,091,253 which is not included in the totals above Assumptions: 1 Current residential valuations remain flat for FY 11-12 and then increase 2% annually (inflation plus new improvements) 2 Current commercial valuations remain flat for FY 11-12 + $120K (80% of $150M cost on Deloitte) and flat for FY 12-13 + $80K (80% of $100M on Deloitte) and then increase 2% annuall 3 Commercial personal property valuations remain flat for FY 11-12 and then increase at 2% annually, plus estimated increase of $25M from new development at Deloitte. 4 Agriculture valuations and deferrals remain flat for FY 11-12 and then increase 2 % annually 5 Based on TAD amounts on certified 7.25.10 values; Remain flat for FY 11-12 and then increase 2% in subsequent years 6 Denton County Taxable Property is flat for FY 11-12 and FY 12-13 and then appreciates 2% annually 7 90% Fidelity Phase I tax abatement; 2010 Roll taxable value $68,528,575. Rebate effective until mid-2011 under 2000 economic development agreement 8 90% tax abatement for 10 years beginning year of intial CO; Thru FY 18/19; 2010 Roll taxable value $80,041,068, flat for FY 11-12 and 2% annual appreciation in subsequent years. 9 2010 Roll taxable value of personal property $12,277,810 for All Fidelity - Assumed 66% for Phase I 10 2010 Roll taxable value of personal property $12,277,810 for ALL Fidelity - Assumed 33% for Phase II; flat for FY 11-12 with 2% annual appreciation in subsequent years. 11 75% tax abatement for 10 years; assumes CO in-mid 10/11, with taxable value of $120M on tax rolls as of Jan. 2011, $80M as of Jan. 2012 12 Assumes $25M in taxable commercial personal property in FY 12/13, abated at same schedule as #11 with 2% annual appreciation. Excluding Gas Wells FIFTEEN YEAR FORECAST (20% Homestead Exemption and 65 & Older Freeze Included) (September 1 Certified Values) Abatements and rebates Tax Revenue from one cent property tax Town of Westlake FY 10/11 FY 11/12 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22 FY 22/23 FY 23/24 FY 24/25 FY 25/26 Tax Revenue from one cent property tax 64,048$ 73,747$ 77,027$ 78,567$ 80,139$ 81,741$ 83,376$ 85,044$ 86,745$ 97,182$ 99,126$ 118,676$ 123,290$ 125,756$ 128,271$ Tax rate of: 0.10 640,477 737,467 770,268 785,673 801,387 817,415 833,763 850,438 867,447 971,824 991,261 1,186,765 1,232,899 1,257,557 1,282,708 0.15 960,716 1,106,200 1,155,402 1,178,510 1,202,080 1,226,122 1,250,644 1,275,657 1,301,170 1,457,737 1,486,891 1,780,147 1,849,349 1,886,336 1,924,062 0.20 1,280,955 1,474,933 1,540,536 1,571,347 1,602,774 1,634,829 1,667,526 1,700,876 1,734,894 1,943,649 1,982,522 2,373,530 2,465,798 2,515,114 2,565,416 0.25 1,601,193 1,843,667 1,925,670 1,964,183 2,003,467 2,043,536 2,084,407 2,126,095 2,168,617 2,429,561 2,478,152 2,966,912 3,082,248 3,143,893 3,206,771 0.30 1,921,432 2,212,400 2,310,804 2,357,020 2,404,161 2,452,244 2,501,289 2,551,314 2,602,341 2,915,473 2,973,783 3,560,294 3,698,697 3,772,671 3,848,125 0.35 2,241,671 2,581,133 2,695,938 2,749,857 2,804,854 2,860,951 2,918,170 2,976,533 3,036,064 3,401,386 3,469,413 4,153,677 4,315,147 4,401,450 4,489,479 0.40 2,561,909 2,949,867 3,081,072 3,142,693 3,205,547 3,269,658 3,335,051 3,401,753 3,469,788 3,887,298 3,965,044 4,747,059 4,931,596 5,030,228 5,130,833 0.45 2,882,148 3,318,600 3,466,206 3,535,530 3,606,241 3,678,366 3,751,933 3,826,972 3,903,511 4,373,210 4,460,674 5,340,441 5,548,046 5,659,007 5,772,187 0.50 3,202,387 3,687,334 3,851,340 3,928,367 4,006,934 4,087,073 4,168,814 4,252,191 4,337,234 4,859,122 4,956,305 5,933,824 6,164,495 6,287,785 6,413,541 0.55 3,522,625 4,056,067 4,236,474 4,321,204 4,407,628 4,495,780 4,585,696 4,677,410 4,770,958 5,345,034 5,451,935 6,527,206 6,780,945 6,916,564 7,054,895 WHAT A PENNY WILL GENERATE Municipality Proposed Tax Rates FY 2010-2011 M&O I &S Collection Rate Fort Worth **0.855 0.7109 0.1441 Not released Burleson 0.71 0.5478 0.1622 98% Hurst 0.578 0.4452843 0.1327157 97% Trophy Club 0.535 0.41533 0.11967 100% Bedford 0.491609 0.309075 0.182534 97% Euless 0.47 0.343905 0.126095 Not released Southlake 0.462 0.332 0.13 97% Flower Mound 0.4497 0.3227 0.127 Not released Keller 0.44219 0.31219 0.13 99.10% Roanoke 0.37521 Not released Not released 99% Colleyville 0.3559 0.29758 0.05832 98% Grapevine 0.35 0.13643 0.21357 99% Westlake (FY 10-11)0.1714 0.1562 0.0152 98% Westlake (FY 11-12 Est.)0.2151 0.1562 0.0589 98% Median 0.466 0.332 0.13 98% Mean 0.5062 0.3793813 0.138745882 98% Min 0.3500 0.13643 0.05832 97% Max 0.855 0.7109 0.21357 100% ** Tax Rate for FY 2009-2010 Assumption of $6.21M bond issue in FY 10-11 for CIP Neighboring Muncipalities Proposed Tax Rates for FY 2010-2011 and Current Collection Rates Number of Homes Total Appraised Value With 20% Exemption Tax Amount per $.1714 Tax Rate (FY 10-11) Tax Amount per $.2151 Tax Rate (FY 11-12) 203 $ 200,000 $ 160,000 $ 274 $ 344 70 $ 500,000 $ 400,000 $ 686 $ 860 185 $ 1,000,000 $ 800,000 $ 1,371 $ 1,721 53 $ 1,500,000 $ 1,200,000 $ 2,057 $ 2,581 11 $ 3,000,000 $ 2,400,000 $ 4,114 $ 5,162 1 $ 4,000,000 $ 3,200,000 $ 5,485 $ 6,883 1 $ 5,000,000 $ 4,000,000 $ 6,856 $ 8,604 1 $ 6,000,000 $ 4,800,000 $ 8,227 $ 10,325 1 $ 7,000,000 $ 5,600,000 $ 9,598 $ 12,046 * Average home value in Westlake = $1,417,955 Impact by Home Value Page 1 of 2 Town of Westlake Memo To: Honorable Mayor and Members of the Town Council From: Stan Lowry, Town Attorney Subject: Meeting of September 29, 2010 Date: September 22, 2010 ITEM Regular Consideration of a Resolution Ratifying the Municipal Ad Valorem (Property) Tax Increase as reflected in the FY 2010-2011 Town of Westlake Budget VISION POINT AND KEY RESULT AREAS This item supports the following Vision Point and Key Result Areas: Inviting Residential & Corporate neighborhoods o On-going comprehensive planning o Sensitivity to neighborhood integrity o Outstanding community appearance o Highest quality development and aesthetic standards o Open space preservation We are Leaders o Premier educational facilities and programs o Producing well educated future leaders and thinkers o Business partnerships with Westlake Academy o Environmental stewardship initiatives o High quality services delivery coupled with financial stewardships o Infrastructure maintenance and planning Hospitality Finds its Home in Westlake o Citizen engagement and communication o Historic Preservation o Tourism development BACKGROUND Pursuant to the requirements of Texas Local Government Code section 102.007(c) it is necessary for the Town Council to vote to ratify the property tax increase as reflected in the 2010/2011 Budget. “SECTION 4. Section 102.007, Local Government Code, Subsection (c), reads as follows: “Adoption of a budget that will require raising more revenue from property tax es than in the previous year requires a separate vote of the governing body to ratify the property tax increase reflected in the budget. A vote under this subsection is in addition to and separate from Page 2 of 2 the vote to adopt the budget or vote to set the tax rate required by Chapter 26, Tax Code, or other law”. [Emphasis added.] The Council is reminded that the tax increase that is included in this budget totals $6,183 and all of that increase resulted from new properties on this year’s tax roll. FUNDING n/a RECOMMENDATION Staff recommends the following motion: Approval of a resolution to ratify the municipal ad valorem (property) tax increase as reflected in the in the tax levy ordinance and referenced in the FY 2010-2011 Budget ATTACHMENTS Resolution Resolution 10-28 Page 1 of 1 TOWN OF WESTLAKE RESOLUTION NO. 10-28 A RESOLUTION OF THE TOWN OF WESTLAKE RATIFYING THE MUNICIPAL AD VALOREM (PROPERTY) TAX INCREASE AS REFLECTED IN THE FY 2010-2011 TOWN OF WESTLAKE BUDGET WHEREAS, the Town of Westlake has not previously had a municipal property tax; and WHEREAS, the Town of Westlake is adopting a property tax for the tax year 2010 (fiscal year 2010//2011 budget); and WHEREAS, Westlake has adopted an annual budget that requires raising more revenue from property taxes than in the previous year, when no revenue was raised from property taxes; and WHEREAS, any municipal taxes would be more than zero, thus more revenue will be raised from municipal property taxes this year than last year, thus, pursuant to the terms of Texas Local Government Code section 102.007(c), a separate vote in addition to the vote to adopt the budget is required. NOW THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS: SECTION 1: That the Town Council of the Town of Westlake, Texas hereby ratifies the property tax rate reflected in the tax levy ordinance and referenced in the budget. SECTION 2: That any prior Resolutions inconsistent with the Resolution are hereby repealed. PASSED AND APPROVED ON THIS 29th DAY OF SEPTEMBER 2010. ATTEST: _____________________________ Laura L. Wheat, Mayor ____________________________ ______________________________ Kelly Edwards, Town Secretary Thomas E. Brymer, Town Manager APPROVED AS TO FORM: ____________________________ L. Stanton Lowry, Town Attorney Page 1 of 2 Town of Westlake Memo To: Honorable Mayor and Members of the Town Council From: Tom Brymer, Town Manager Subject: Regular Meeting of September 29, 2010 Date: September 21, 2010 ITEM Regular Consideration of a Resolution Approving a Contract with Tarrant County for Collection of Municipal Ad Valorem Taxes VISION POINT AND KEY RESULT AREAS This item supports the following Vision Point and Key Result Areas: Inviting Residential & Corporate neighborhoods o On-going comprehensive planning o Sensitivity to neighborhood integrity o Outstanding community appearance o Highest quality development and aesthetic standards o Open space preservation We are Leaders o Premier educational facilities and programs o Producing well educated future leaders and thinkers o Business partnerships with Westlake Academy o Environmental stewardship initiatives o High quality services delivery coupled with financial stewardships o Infrastructure maintenance and planning Hospitality Finds its Home in Westlake o Citizen engagement and communication o Historic Preservation o Tourism development BACKGROUND The focus for the FY 2010-11 Proposed Budget has been positioning the Town for financial sustainability (both for the general municipal services and Westlake Academy), a key priority found in the Town’s strategic plan. Please note that the Westlake Academy operating budget has also been included, for presentation and transparency purposes, in this budget document. In addition to budget workshops held on May 24, 2010, August 20, 2010 and September 23, 2010, the Town Council has held public meetings/hearings on a proposal for a municipal ad valorem (property) tax to address the Town’s financial sustainability. Additionally, transparency Page 2 of 2 of this process and the information considered has been given strong emphasis. The Town has utilized its web site to place information from the various meetings concerning ad valorem tax discussion on its web site at: http://www.westlake-tx.org/en/FinancialSustainability.html On June 28, 2010 the Town Council set the residential tax exemption at the maximum (20%) allowed by State law and accepted the Town Attorney’s legal interpretation that the Over 65/Disabled Exemption base year for taxable value would be zero for those residential property owners of that age or of that disability as of this year. As proposed by staff, a municipal ad valorem tax of $.1562 per $100 of assessed valuation for maintenance and operations of the General Fund would generate an estimated $1,000,426 in FY10-11 to address the Town’s financial sustainability challenges. Additionally, depending on desires for funding currently unaddressed capital improvement needs, an interest/sinking (debt service) ad valorem tax rate could be levied in the amount of $0.0152 per $100 of assessed valuation. This would bring the total proposed FY 2010-11 ad valorem tax rate to $0.1714 per $100 of assessed valuation. This resolution would approve a contract with Tarrant County for collection of ad valorem taxes on behalf of the Town of Westlake (i.e. outsourcing this service). FUNDING Funds have not been budgeted for this service. Estimated total cost is approximately $635.70; $0.65 per account and the Town has 978 accounts. Denton County will convey the information for billing of properties located in their jurisdiction for collection to Tarrant County in order to avoid duplication. RECOMMENDATION Recommend adoption of the resolution if the Town Council approves an ad valorem tax levy. ATTACHMENTS: 1.) Resolution 2.) Contract for Ad Valorem Tax Collection by Tarrant County Resolution 10-29 Page 1 of 1 TOWN OF WESTLAKE RESOLUTION NO. 10-29 A RESOLUTION OF THE TOWN OF WESTLAKE APPROVING A CONTRACT FOR THE COLLECTION OF TAXES BY THE TARRANT COUNTY ASSESSOR/ COLLECTOR. WHEREAS, the Town of Westlake has not previously had a municipal property tax; and WHEREAS, the Town of Westlake is adopting a property tax for the tax year 2010 (fiscal year 2010//2011 budget); and WHEREAS, the Town of Westlake wishes to defray its costs of collection, as authorized by Texas Tax Code § 31.01 by authorizing the Tarrant County Tax Assessor / Collector to collect taxes for the Town of Westlake. NOW THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS: SECTION 1: That the recitals set forth above in this Resolution are true and correct. SECTION 2. That the Town Council of the Town of Westlake, Texas hereby approves the Agreement between the Town of Westlake and the Tarrant County Assessor / Collector, attached hereto as Exhibit “A” for the collection of taxes for the Town of Westlake by the Tarrant County Assessor / Collector. SECTION 3: That any prior Resolutions inconsistent with the Resolution are hereby repealed. PASSED AND APPROVED ON THIS 29th DAY OF SEPTEMBER 2010. ATTEST: _____________________________ Laura L. Wheat, Mayor ____________________________ ______________________________ Kelly Edwards, Town Secretary Thomas E. Brymer, Town Manager APPROVED AS TO FORM: ____________________________ L. Stanton Lowry, Town Attorney § Agreement For The Collection Of Taxes COUNTY OF TARRANT § Agreement made this _____day of__________________, 2010, by and between the Tarrant County Tax Assessor/Collector, hereinafter referred to as ASSESSOR/COLLECTOR, and Tarrant County, hereinafter referred to as the COUNTY, both of whom are addressed at 100 E. Weatherford Street, Fort Worth, Texas 76196-0301, and the Town of Westlake, hereinafter referred to as Town, whose address is 3 Village Circle, Suite 202, Westlake, TX 76262-7940. PURPOSE OF AGREEMENT The purpose of this Agreement is to state the terms and conditions under which the ASSESSOR/COLLECTOR will provide assessment and collection services of Ad Valorem taxes levied by the Town. NOW THEREFORE, in consideration of the mutual promises herein contained, the parties hereto agree as follows: I. SERVICES TO BE PERFORMED The ASSESSOR/COLLECTOR agrees to bill and collect the taxes due and owing on taxable property upon which the Town has imposed said taxes. The ASSESSOR/COLLECTOR shall perform the said services in the same manner and fashion as Tarrant County collects its own taxes due and owing on taxable property. The services performed are as follows: receiving the Certified Appraisal Roll from the appropriate Appraisal District and monthly changes thereto; providing mortgage companies, property owners and tax representatives, tax roll and payment data; providing all necessary assessments of taxes and Truth in Taxation calculations as required; the transmittal of tax statements via the U.S. Mail or electronic transfer of data; and payment processing. All Town disbursements, made by check or by electronic transfer (ACH), for collected tax accounts will be made to the Town on the day the COUNTY Depository Bank indicates the mandatory assigned "float" period has elapsed and the funds are posted to the collected balance . If any daily collection total is less than one hundred dollars ($100.00), the disbursement may be withheld until the cumulative total of taxes collected for the Town equals at least one hundred dollars ($100.00), or at the close of the month. II. REPORTS The ASSESSOR/COLLECTOR will provide the Town the following reports, if requested: Daily: General Ledger Distribution Report Weekly: Detail Collection Report (Summary) Monthly: Tax Roll Summary (Totals Only) Year-to-Date Summary Report Detail Collection Report (Summary) Distribution Report (Summary) Delinquent Tax Attorney Tape Annual: Paid Tax Roll Delinquent Tax Roll Current Tax Roll A selection of the above listed Reports will only be available by internet access. The ASSESSOR/COLLECTOR will provide the Town the General Ledger Revenue & Expense Report monthly as required by Sec. 31.10 of the Texas Property Tax Code. III. COMPENSATION In consideration of the services to be performed by the ASSESSOR/COLLECTOR, compensation for the services rendered is a rate of sixty five cents ($.65) per account. The number of accounts will be based on the October billing roll certified to the ASSESSOR/COLLECTOR by the Appraisal District. New accounts added by the appropriate Appraisal District will be billed to the entity. The ASSESSOR/COLLECTOR will invoice for all these accounts by January 11, 2011 with payment to be received from the Town by February 14, 2011. The scope of services identified in this contract does not include the administration of a rollback election. In the event of a successful rollback election, these costs incurred by the Tarrant County Tax Office will be separately identified, billed, and paid by the entity. IV. AUDITS The ASSESSOR/COLLECTOR will provide to the Town auditor necessary explanations of all reports and access to ASSESSOR/COLLECTOR in-house tax system computer terminals to assist the Town auditor in verifying audit samples of the financial data previously provided by the ASSESSOR/COLLECTOR during the past audit period. V. TAX RATE REQUIREMENT The Town will provide the ASSESSOR/COLLECTOR, in writing, the Town’s newly adopted tax rate and exemption schedule to be applied for assessing purposes by Wednesday, September 15, 2010. Under authority of Section 31.01 (h) of the Property Tax Code, any additional cost of printing and mailing tax statements because of late reporting of the tax rate or the exemption schedule will be charged to and must be paid by the Town. If the Town wishes its collection reports to be itemized as to maintenance and operation fund and interest and sinking fund, then the notice advising of the new tax rate must set out the separate rates, as well as the total rate. The tax rate and the exemption schedule for each of the last five (5) years in which an ad valorem tax was levied, or all prior years where there remains delinquent tax, must be furnished in writing to the ASSESSOR/COLLECTOR at the time of the initial contract. VI. COMPLIANCE WITH APPLICABLE STATUTES, ORDINANCES, AND REGULATIONS In performing the services required under this Agreement, the ASSESSOR/COLLECTOR shall comply with all applicable federal and state statutes, final Court orders and Comptroller regulations. If such compliance is impossible for reasons beyond its control, the ASSESSOR/COLLECTOR shall immediately notify the Town of that fact and the reasons therefore. VII. DEPOSIT OF FUNDS All funds collected by the ASSESSOR/COLLECTOR in the performance of the services stated herein for the Town shall be promptly transferred to the account of the Town at the Town’s depository bank. All payments to entities will be made electronically by the automated clearing house (ACH). The ASSESSOR/COLLECTOR has no liability for the funds after initiation of the ACH transfer of the Town’s funds from the COUNTY Depository to the Town’s designated depository. VIII. INVESTMENT OF FUNDS The Town hereby agrees that the COUNTY, acting through the COUNTY Auditor, may invest collected ad valorem tax funds of the Town during the period between collection and payment. The COUNTY agrees that it will invest such funds in compliance with the Public Funds Investment Act. The COUNTY further agrees that it will pay to the Town all interest or other earnings attributable to taxes owed to the Town. All parties agree that this Agreement will not be construed to lengthen the time period during which the COUNTY or the ASSESSOR/COLLECTOR may hold such funds before payment to the Town. IX. REFUNDS Refunds will be made by the ASSESSOR/COLLECTOR except as set forth herein. The ASSESSOR/COLLECTOR will advise the Town of changes in the tax roll which were mandated by the appropriate Appraisal District. The ASSESSOR/COLLECTOR will not make refunds on prior year paid accounts unless the prior year paid accounts for the past five (5) years are provided to the ASSESSOR/COLLECTOR. All refunds of overpayments or erroneous payments due, but not requested, and as described in Section 31.11 of the Texas Property Tax Code, will after three years from the date of payment, be proportionately disbursed to those entities contracting with the ASSESSOR/COLLECTOR. The contract must have been in force, actual assessment and collection functions begun and the tax account was at the time of the over or erroneous payment within the Town’s jurisdiction. The proportional share is based upon the Town’s percent of the tax account's total levy assessed at the time of receipt of the over or erroneous payment. In the event any lawsuit regarding the collection of taxes provided for in this agreement to which Town of Westlake is a party, is settled or a final judgment rendered, and which final judgment is not appealed, and the terms of such settlement agreement or final judgment require that a refund be issued by Town of Westlake to the taxpayer, such refund shall be made by ASSESSOR/COLLECTOR by debiting funds collected by ASSESSOR/COLLECTOR on behalf of Town of Westlake and remitting such refund to the taxpayer in conformity with the terms of the settlement agreement or final judgment. X. DELINQUENT COLLECTIONS The ASSESSOR/COLLECTOR will assess and collect the collection fee pursuant to Sections, 33.07, 33.08, 33.11 (changed order) and 33.48 of the Property Tax Code, when allowed. The ASSESSOR/COLLECTOR will collect attorney fees that are specified by the Town through written agreement with a delinquent collection Attorney. The ASSESSOR/COLLECTOR will disburse the amount directly to the Town for compensation to a Firm under contract to the Town. If the delinquent collection Attorney contracted by the Town requires attendance of ASSESSOR/COLLECTOR personnel at a court other than the District Courts in downtown Fort Worth, and the COUNTY is not a party, the employee's expenses and proportionate salary will be the responsibility of the Town and will be added to the collection expenses and charged to the Town. The ASSESSOR/COLLECTOR will not be responsible for the collection of prior year delinquent accounts unless all delinquent accounts information is provided to the ASSESSOR/COLLECTOR. XI. TERM OF AGREEMENT This Agreement shall become effective as of the date hereinabove set out, and shall continue in effect during the 2010 tax year, unless sooner terminated by providing sixty (60) day written notice, as outlined in paragraph XII. XII. NOTICES Any notices to be given hereunder by either party to the other may be effected, in writing, either by personal delivery or by mail, registered or certified, postage prepaid with return receipt requested. Mailed notices shall be addressed to the address of the parties as they appear in the introductory paragraph of this Agreement, but each party may change this address by written notice in accordance with this paragraph. XIII. MISCELLANEOUS PROVISIONS This instrument hereto contains the entire Agreement between the parties relating to the rights herein granted and obligations herein assumed. Any oral representations or modifications concerning this instrument shall be of no force or effect. This Agreement shall be construed under and in accordance with the laws of the State of Texas, and all obligations of the parties created hereunder are performable in Tarrant County, Texas. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective legal representatives and successors. In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or enforceability shall not affect any other provision hereof and this Agreement shall be construed as if such invalid, illegal, or unenforceable provisions had never been contained. This Agreement and the attachments hereto constitutes the sole and only agreement of the parties hereto and supersedes any prior understandings or written or oral agreements between the parties respecting the within subject matter. Executed on the day and year first above written, Tarrant County, Texas. BY:______________________________ _________________ BETSY PRICE, RTA DATE TAX ASSESSOR/COLLECTOR TARRANT COUNTY FOR THE TOWN OF WESTLAKE: BY: ______________________________ ___________________ DATE TITLE: ________________________ FOR TARRANT COUNTY: BY: ______________________________ ___________________ B. GLEN WHITLEY DATE TARRANT COUNTY JUDGE APPROVED AS TO FORM * AND CONTENT BY:_______________________________ ___________________ DISTRICT ATTORNEY’S OFFICE DATE *By law, the District Attorney’s Office may only advise or approve contracts or legal documents on behalf of its clients. It may not advise or approve a contract or legal document on behalf of other parties. Our review of this document was conducted solely from the legal perspective of our client. Our approval of this document was offered solely for the benefit of our client. Other parties should not rely on this approval, and should seek review and approval by their own respective attorney(s). Page 1 of 2 Town of Westlake Memo To: Honorable Mayor and Members of the Town Council From: Tom Brymer, Finance Director Subject: Meeting of September 29, 2010 Date: September 21, 2010 ITEM Regular Consideration of a Resolution Approving a Contract with Linebarger, Goggan, Blair & Sampson LLP for Delinquent Ad Valorem Tax Collection. VISION POINT AND KEY RESULT AREAS This item supports the following Vision Point and Key Result Areas: Inviting Residential & Corporate neighborhoods o On-going comprehensive planning o Sensitivity to neighborhood integrity o Outstanding community appearance o Highest quality development and aesthetic standards o Open space preservation We are Leaders o Premier educational facilities and programs o Producing well educated future leaders and thinkers o Business partnerships with Westlake Academy o Environmental stewardship initiatives o High quality services delivery coupled with financial stewardships o Infrastructure maintenance and planning Hospitality Finds its Home in Westlake o Citizen engagement and communication o Historic Preservation o Tourism development BACKGROUND This resolution authorizes the Town to execute a contract with Linebarger, Goggan, Blair & Sampson, LLP, for collection of delinquent ad valorem taxes. If the Town chooses to adopt a tax rate this year, collection of delinquent taxes will be vital to the budgeting process and the effectiveness of the adopted rate. Without a firm to collect delinquent taxes, the adopt ed tax rate may be insufficient for all projected expenditures. Linebarger has extensive experience in this field and has a proven track record in the field of tax collection and has an excellent reputation in dealing with taxpayers. Page 2 of 2 FUNDING This resolution will require no funding from the Town. All funding comes in the form of the previously adopted collection penalty which is paid by delinquent taxpayers. The penalty is in addition to the taxes owed, so the Town will incur no expense. RECOMMENDATION Staff recommends that the Town Council adopt this resolution authorizing Linebarger, Goggan, Blair & Sampson, LLP, to be retained by contract as the Town’s attorney for purposes of delinquent ad valorem tax collection. ATTACHMENTS: Resolution Contract with Linebarger, Goggan, Blair & Sampson, LLP Resolution 10-30 Page 1 of 7 TOWN OF WESTLAKE RESOLUTION NO. 10-30 A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS, AUTHORIZING A CONTRACT WITH LINEBARGER, GOGGAN, BLAIR & SAMPSON LLP FOR DELINQUENT TAX COLLECTION. WHEREAS, the Town Council for the Town of Westlake has approved an Ad Valorem tax rate to ensure the continued provision of services necessary to the quality of life expected by the residents of the Town; and WHEREAS, the Town Council has adopted a resolution for the collection of delinquent Ad Valorem taxes in an effort to defray costs and to provide the maximum efficiency of the adopted Ad Valorem tax rate; and WHEREAS, pursuant to Section 6.30 of the Texas Tax Code, the Town Council is permitted to enter into a contract with a private law firm for the purpose of collecting delinquent taxes; and WHEREAS, the Town Council desires the appointment of the firm of Linebarger, Goggan, Blair & Sampson, LLP, as the private law firm responsible for delinquent Ad Valorem tax collections for the Town of Westlake, based on the firm’s outstanding record in service and collection efforts; and WHEREAS, the Town Council finds that the passage of this Resolution is in the best interest of the citizens of Westlake. NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS: SECTION 1: That, all matters stated in the Recitals hereinabove are found to be true and correct and are incorporated herein by reference as if copied in their entirety. SECTION 2: The Town Council of the Town of Westlake hereby approves the contract with Linebarger, Goggan, Blair & Sampson LLP, attached as Exhibit “A”, for the collection of delinquent Ad Valorem taxes. SECTION 3: If any portion of this Resolution shall, for any reason, be declared invalid by any court of competent jurisdiction, such invalidity shall not affect the remaining provisions hereof and the Council hereby determines that it would have adopted this Resolution without the invalid provision. SECTION 4: That this resolution shall become effective from and after its date of passage. Resolution 10-30 Page 2 of 7 PASSED AND APPROVED ON THIS 29TH DAY OF SEPTEMBER 2010. ATTEST: ________________________________ Laura L. Wheat, Mayor ________________________________ _________________________________ Kelly Edwards, Town Secretary Thomas E. Brymer, Town Manager APPROVED AS TO FORM: _______________________________ L. Stanton Lowry, Town Attorney Resolution 10-30 Page 3 of 7 Exhibit “A”, Agreement for Tax Collection Services This Agreement is made between Linebarger Goggan Blair & Sampson, LLP (hereinafter referred to as the "Firm") and the Town of Westlake (hereinafter referred to as the "Client"). Article I Nature of Relationship 1.01 The parties hereto acknowledge that this Agreement creates an attorney-client relationship. 1.02 The Client hereby employs the Firm to provide the services hereinafter described for compensation hereinafter provided. Article 2 Scope of Services 2.01 The Firm shall take reasonable and necessary actions to collect property taxes that are owed to the Client and to any other taxing unit whose taxes are assessed and collected by the Client, and that are subject to this agreement, as hereinafter provided. 2.02 The Client may from time-to-time specify in writing additional actions to be taken by the Firm in connection with the collection of taxes that are owed to the Client. Client further constitutes and appoints the Firm as Client's attorneys to sign all legal instruments, pleadings, drafts, authorizations and papers as shall be reasonably necessary to prosecute the Client's claim for taxes. 2.03 Taxes owed to the Client shall become subject to this agreement upon the following dates, whichever occurs first: (a) On February 1 of the year in which the taxes become delinquent if a previously filed tax suit is then pending against the property subject to the tax; (b) On the date any lawsuit is filed with respect to the recovery of the tax if the tax is delinquent and is required to be included in the suit pursuant to TEX. TAX CODE § 33.42(a); (c) On the date of filing any application for tax warrant where recovery of the tax or estimated tax is sought and where the filing of an application for tax warrant by the Firm is at the request of Client's Tax Assessor-Collector; (d) On the date of filing any claim in bankruptcy where recovery of the tax is sought; or Resolution 10-30 Page 4 of 7 (e) In the case of tangible personal property, on the 60th day after the February 1 delinquency date; or (f) On July 1 of the year in which the taxes become delinquent. Article 3 Compensation 3.01 Client agrees to pay to the Firm, as compensation for the services required herein twenty (20%) percent of the amount of all 2010 and subsequent year taxes, penalty and interest subject to the terms of this contract as set forth in Paragraph 2.03 above, collected and paid to the collector of taxes during the term of this contract, as and when collected. 3.02 The Client shall pay the Firm by the twentieth day of each month, all compensation earned by the Firm for the previous month as provided in this Article 3. All compensation above provided for shall become the property of the Firm at the time payment of the taxes, penalty and interest is made to the collector. Article 4 Intellectual Property Rights 4.01 The Client recognizes and acknowledges that the Firm owns all right, title and interest in certain proprietary software that the Firm may utilize in conjunction with performing the services provided in this Agreement. The Client agrees and hereby grants to the Firm the right to use and incorporate any information provided by the Client ("Client Information") to update the databases in this proprietary software, and, notwithstanding that Client Information has been or shall be used to update the databases in this proprietary software, further stipulates and agrees that the Client shall have no rights or ownership whatsoever in and to the software or the data contained therein, except that the Client shall be entitled to obtain a copy of such data that directly relates to the Client's accounts at any time. 4.02 The Firm agrees that it will not share or disclose any specific confidential Client Information with any other company, individual, organization or agency, without the prior written consent of the Client, except as may be required by law or where such information is otherwise publicly available. It is agreed that the Firm shall have the right to use Client Information for internal analysis, purposes of improving the proprietary software and database, and to generate aggregate data and statistics that may inherently contain Client Information. These aggregate statistics are owned solely by the Firm and will generally be used internally, but may be shared with the Firm's affiliates, partners or other third parties for purposes of i mproving the Firm's software and services. Resolution 10-30 Page 5 of 7 Article 5 Costs 5.01 The Firm and Client recognize that publication costs for citations and notices of sale and title abstract costs will be incurred in the process of providing the litigation services contemplated in this Agreement. All such costs shall be billed to the Client, in care of the Firm, and the Firm will advance the payment of such costs on behalf of the Client. Upon recovery of such costs from the defendants or from the tax sale of defendants' property, the Firm shall be reimbursed for the advance payment. Alternatively, the Firm may arrange with the vendor or agency providing the service that actual payment of the costs of services is wholly contingent upon recovery of such costs by the Client or the Firm from the defendants or from the tax sale of defendants' property. In such contingent arrangements, the Client has no responsibility or liability for payment or advancement of any costs, other than forwarding to the vendor or service provider any cost amounts received from defendants or from the tax sale of defendants' property. 5.02 The Client acknowledges that the Firm may provide services, such as title research, with its own employees or with other entities or individuals who may be affiliated with the Firm, but the Firm agrees that any charges for such services will be reasonable and consistent with what the same services would cost if obtained from a third party. The Client agrees that upon the recovery of such costs, the Client will: (i) pay the Firm for any such costs which have been advanced by the Firm or performed by the Firm, and (ii) pay any third party agency or vendor owed for performing such services. Article 6 Term and Termination 6.01 This Agreement shall be effective on October 1, 2010 (The "Effective Date") and shall expire on September 30, 2013 (the "Expiration Date") unless extended as hereinafter provided. 6.02 Unless prior to 60 days before the Expiration Date, the Client or the Firm notifies the other in writing that it does not wish to continue this Agreement beyond its initial term, this Agreement shall be automatically extended for an additional one year period without the necessity of any further action by either party. In the absence of any such 60 day notice b y either the Client or the Firm, the Agreement shall continue to automatically renew for additional and successive one-year terms in the same manner at the end of each renewal period. 6.03 If at any time during the initial term of this Agreement or any extension hereof, the Client determines that the Firm's performance under this Agreement is unsatisfactory, the Client shall notify the Firm in writing of the Client's determination. The notice from the Client shall specify the particular deficiencies that the Client has observed in the Firm's performance. The Firm shall have sixty (60) days from the date of the notice to cure any such deficiencies. If at the conclusion of that sixty-day remedial period, the Client remains unsatisfied with the Firm's performance, the Client Resolution 10-30 Page 6 of 7 may terminate this Agreement effective upon the expiration of thirty days following the date of written notice to the Firm of such termination ("Termination Date"). 6.04 Whether this Agreement expires or is terminated, the Firm shall be entitled to continue to prosecute any tax suits, applications for tax warrants or bankruptcy claims pending on the Termination Date or Expiration Date for an additional six months following termination or expiration. The Client agrees that the Firm shall be compensated as provided by Article 3 for any base tax, penalties and interest collected in the pending matters during the six-month period. 6.05 The Client agrees that the Firm shall be reimbursed for any costs advanced and shall be paid for any services performed pursuant to Article 5 when such costs are recovered by or on behalf of the Client, regardless of the date recovered. It is expressly agreed that neither the expiration nor the termination of this Agreement constitutes a waiver by the Fi rm of its entitlement to be reimbursed for such costs and to be paid for such services. It is further expressly agreed that the expiration of any six-month period under Section 6.04 does not constitute any such waiver by the Firm. Article 7 Miscellaneous 7.01 Assignment and Subcontracting. This Agreement is not assignable, provided however, the Firm may from time-to-time obtain co-counsel or subcontract some of the services provided for herein to other law firms or entities. In such cases, the Firm will retain supervisory control and responsibility for any services provided by such co-counsel or subcontractors and shall be responsible to pay any compensation due to any such co-counsel or subcontractor. 7.02 Arbitration. Any controversy between the parties to this Agreement involving the construction or application of any of the terms, covenants, or conditions of this Agreement shall, on the written request of one party served on the other, be submitted to arbitration, and such arbitration shall comply with and be governed by the provisions of the Texas General Arbitration Act. 7.03 Integration. This Agreement contains the entire agreement between the parties hereto and may only be modified in a written amendment, executed by both parties. 7.04 Representation of Other Taxing Entities. The Client acknowledges and consents to the representation by the Firm of other taxing entities that may be owed taxes or other claims and be secured by the same property as the Client's claim. Resolution 10-30 Page 7 of 7 In consideration of the terms and compensation herein stated, the Firm hereby accepts said employment and undertakes the performance of this Agreement as above written. This Agreement is executed on behalf of the Firm and of the Client by the duly authorized persons whose signatures appear below. Town of Westlake Linebarger Goggan Blair & Sampson, LLP By: _______________________________ By: _______________________________ Stephen T. Meeks, Capital Partner Date: Date: ATTEST: _______________________________ _______________________________ Page 1 of 2 Town of Westlake Memo To: Honorable Mayor and Members of the Town Council From: Tom Brymer, Town Manager Subject: Meeting of September 29, 2010 Date: September 21, 2010 ITEM Regular Consideration of a Resolution Adopting a Twenty (20) percent Collection Penalty for Delinquent Ad Valorem Taxes. VISION POINT AND KEY RESULT AREAS This item supports the following Vision Point and Key Result Areas: Inviting Residential & Corporate neighborhoods o On-going comprehensive planning o Sensitivity to neighborhood integrity o Outstanding community appearance o Highest quality development and aesthetic standards o Open space preservation We are Leaders o Premier educational facilities and programs o Producing well educated future leaders and thinkers o Business partnerships with Westlake Academy o Environmental stewardship initiatives o High quality services delivery coupled with financial stewardships o Infrastructure maintenance and planning Hospitality Finds its Home in Westlake o Citizen engagement and communication o Historic Preservation o Tourism development BACKGROUND This resolution authorizes the Town to impose a twenty (20) percent collection penalty to delinquent ad valorem taxes pursuant to Sections 33.07 and 33.08 of the Texas Tax Code. If the Town Council chooses to adopt an ad valorem tax for the Town of Westlake, the collection penalty will be imposed on those taxes which remain delinquent on June 1 of the year taxes become due. The collection penalt y will be paid by the taxpayer in addition to the full tax amount due. FUNDING This resolution will require no funding from the Town. Page 2 of 2 RECOMMENDATION Staff recommends that the Town approve the resolution authorizing a twenty (20) percent collection penalty for delinquent ad valorem taxes. The penalty is not imposed until taxes are four months overdue and appears to be reasonably related to the costs of collections. ATTACHMENTS Resolution Resolution 10-31 Page 1 of 2 TOWN OF WESTLAKE RESOLUTION NO. 10-31 A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS, ESTABLISHING A TWENTY PERCENT PENALTY ON DELINQUENT AD VALOREM TAXES AS ALLOW BY THE TEXAS TAX CODE. WHEREAS, the Town Council of the Town of Westlake has, pursuant to its authority as a Type A General Law Municipality, adopted an ad valorem tax rate to ensure the continuance of the quality services provided to residents of the Town; and WHEREAS, the Town Council wishes to defray its costs of ad valorem collections, as authorized by Texas Tax. Code § 33.07 and §33.08, that it incurs under a contract for collection of delinquent property taxes between the Town and a private law firm entered into pursuant to Texas Tax Code § 6.30; and WHEREAS, under said Sections 33.07 and 33.08, the governing body of the Town of Westlake is empowered to authorize the addition of a collection penalty in an amount that does not exceed the amount of the compensation specified in the contract with the private law firm; and WHEREAS, the Town Council deems affordable and efficient collections as a necessary need for the Town of Westlake; and WHEREAS, the Town of Westlake wishes to defray its costs of collection, as authorized by Texas Tax Code § 33.11, that it incurs under a contract for collection of delinquent property taxes between the Town and a private law firm entered into pursuant to Texas Tax Code § 6.30; and WHEREAS, under said Section 33.11, the governing body of the Town of Westlake is empowered to authorize the addition of a collection penalty in an amount that does not exceed the amount of the compensation specified in the contract with the private law firm. NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, THAT: SECTION 1: The recitals set forth in this resolution are true and correct. SECTION 2: (a) An additional penalty on delinquent taxes for tax years 2010 and subsequent years is hereby authorized and imposed, as provided by Section 33.07, Texas Tax Code, in the amount of 20% of the delinquent tax, penalty and interest if the tax becomes delinquent on or after February 1 of a year but not later than May 1 of that year and remains delinquent on July 1 of the year in which the tax becomes delinquent; and Resolution 10-31 Page 2 of 2 (b) An additional penalty on delinquent taxes for tax years 2010 and subsequent years is hereby authorized and imposed, as provided by Section 33.08, Texas Tax Code, in the amount of 20% of the delinquent tax, penalty and interest if the tax becomes delinquent on or after June 1 under Section 26.07(f), 26.15(e), 31.03, 31.031, 31.032, or 31.04, Texas Tax Code. SECTION 3: An additional penalty on delinquent personal property taxes for tax years 2010 and subsequent years is hereby authorized and imposed, as provided by Section 33.11, Texas Tax Code, in the amount of 20% of the delinquent tax, penalty and interest if the tax becomes delinquent on February 1 of a year and remains delinquent on the 60th day thereafter. PASSED AND APPROVED ON THIS 29TH DAY OF SEPTEMBER 2010. ATTEST: _____________________________ Laura L. Wheat, Mayor ____________________________ ______________________________ Kelly Edwards, Town Secretary Thomas E. Brymer, Town Manager APPROVED AS TO FORM: ____________________________ L. Stanton Lowry, Town Attorney FUTURE AGENDA ITEMS: Any Council member may request at a workshop and / or Council meeting, under “Future Agenda Item Requests”, an agenda item for a future Council meeting. The Council Member making the request will contact the Town Manager with the requested item and the Town Manager will list it on the agenda. At the meeting, the requesting Council Member will explain the item, the need for Council discussion of the item, the item’s relationship to the Council’s strategic priorities, and the amount of estimated staff time necessary to prepare for Council discussion. If the requesting Council Member receives a second, the Town Manager will place the item on the Council agenda calendar allowing for adequate time for staff preparation on the agenda item. a. Discussion regarding the formation of and direction to be given to the Town of Westlake Green Team. b. Policy considerations for use of Westlake Academy facilities during the summer months. Town of Westlake Item #11 - Future Agenda Items BOARD RECAP / STAFF DIRECTION Town of Westlake Item #12 - Board Recap / Staff Direction COUNCIL CALENDAR - Town Council Meeting October 25, 2010 - Westlake Historical Preservation Society (WHPS) Living History Presentation October 26, 2010 (7:00 pm, WA Performance Hall) - Annual Texas Municipal League (TML) Conference October 26-29, 2010 (Corpus Christi, TX) - Annual WHPS Meeting November 4, 2010 (Home of Wayne and Karen Stoltenberg) - Town Council Meeting November 8, 2010 Town of Westlake Item # 13 – Council Calendar The Council conducted a closed session pursuant to Texas Government Code, annotated, Chapter 551, Subchapter D for the following: a. Pursuant to Texas Government Code Section 551.087: Deliberation Regarding Economic Development Negotiations – The Town Council will deliberate the offer of a financial or other incentive to a business prospect Town of Westlake Item # 14 – Take any Action, if necessary Town of Westlake Item # 15 – Adjournment Back up material has not been provided for this item.