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MIN CC 02/16/1988MINUTES OF THE FEBRUARY 16, 1988 COUNCIL MEETING BOOK "P" 27 MINUTES OF THE HUNTSVILLE CITY COUNCIL MEETING HELD ON THE 16TH DAY OF FEBRUARY, 1988 IN THE CITY HALL COUNCIL CHAMBERS, LOCATED AT 1212 AVENUE M IN THE CITY OF HUNTSVILLE, COUNTY OF WALKER, TEXAS AT 6:30 P.M. The Council met in a regular session with the following members present: Jane Monday, Mayor 0. Eugene Barrett Member absent City Officers Present Gary Bell Jim Carter Ila G. Gaines William B. Green William L. Hammock Scott Bounds, City Attorney Percy Howard, Jr. William H. Knotts, Jr. Ruth DeShaw, City Secretary EXECUTIVE SESSION Mayor Monday called the meeting to order at 6:30 P.M. and then recessed into Executive Session to consider pending litigation regarding Acker V. City and Schaper V. City; and to consider real estate acquisition matters involving 13th Street and Avenue F properties. The Executive Session discussions concluded at 6:59 P.M. with no formal action taken. The Mayor reconvened the formal session at 7:00 P.M. Pastor Paul Morris of New Hope Free Will Baptist Church presented the invocation. CONSIDER THE MINUTES OF THE PREVIOUS MEETING Councilmember Barrett made the motion to approve of the minutes of February 9. 1988 and Councilmember Howard seconded the motion All were in favor and the motion Passed unanimously. CONSIDER ORDINANCE Review Procedures and options regarding collection and remittance of hotel -motel occupancy tax: consider Ordinance amending Chapter 15B of the Code of Ordinances to provide for monthly remittance (rather than quarterly) of the collected tax Mr. Scott Bounds, City Attorney, reviewed the memorandum from the Tax Assessor /Collector, Barbara Shelly, concerning delinquent hotel /motel occupancy taxes, dated February 9, 1988. Listed delinquent for various quarterly payments were: Sam Houston Inn, Huntsville Super 8 Motel, Royal "T" Inn, Holiday Inn, Huntsville Inn and the Center Motel. Mr. Bounds noted the owners of the existing structures known as the Sam Houston Inn and the Huntsville Super 8 Motel, during the time for which quarterly hotel /motel tax payments are now shown to be delinquent, are now shown to be in bank foreclosure. He advised the Royal "T" Inn, owned and operated at the time by Haney Investments, has since changed ownership. He said the Holiday Inn owes the largest amount: approximately $32,443. He said Mr. Joe Moore, President of Southwest Inns, which owns the Holiday Inn, has advised they have been having financial difficulties and they are posted for foreclosure for the first Tuesday of this month. He said they have apparently renegotiated and made some arrangements, and Mr. Moore will be working with the city to possibly work out some payment plan. In regard to Royal "T" Inn, Mr. Bounds stated the management has moved to the protection under the bankruptcy laws and has stated to the Court that it owes the City approximately $7,000 in back hotel /motel taxes. He said while the motel has not filed returns for August, the City's estimate of the amount they owe is approximately $20,000 with penalties and interests. He said the management of Royal T Inn has recently changed ownership and the new management is current on taxes owed since they assumed control. Mr. Bounds then presented a proposed ordinance which would require monthly payment of hotel-motel taxes, or security therefore, provide for a lien to secure hotel-motel occupancy tax and would further authorize the City Attorney to file suits to collect the taxes; and provide for injunctive relief including enjoining the operation of the hotel or motel for which taxes are due until the reports are filed and the 1. taxes are paid. He noted this ordinance amendment is intended to prevent the City from getting too far MINUTES OF THE FEBRUARY 16, 1988 COUNCIL MEETING BOOK "P" 28 delinquent before there is an awareness that there is a collection problem. He said, for instance, in the case of the Super 8 Motel, they were basically four months behind in taxes at the time the city noted there was a problem and by that time, the problem is such that the owner becomes insolvent or declares bankruptcy and the city has then an uncollectible quarter of taxes before the problem is recognized. Mr. Bounds then reviewed the provisions of the ordinance with the Council, which basically require the monthly filing of hotel -motel taxes with the city. After some discussion for clarification and understanding, Councilmember Knotts suggested that the ordinance provide that any payments that are received shall be applied to the first delinquent amounts rather than to pay off the most recent delinquent amount. Councilmember Carter noted a typographical error in Section 158-12 (f) to change the word "made" to "paid" or "rendered" to the Tax Assessor - Collector; and Councilmember Green noted subsection (h) in that same section should read "purchaser" rather than "purchases" in the second line. Mr. Bounds noted several hotels currently pay their taxes on a monthly basis and he felt the city can decrease the amount of risk it has if it requires monthly tax payments. Mayor Monday reported since there is a consensus on the Council to do this, the City Attorney is then instructed to finalize the ordinance and provide it for approval next week. After some discussion on how much time would be allowed to get that monthly payment in, it was suggested a period of 15 days should be adequate, before injunctive relief would be instituted. Mr. Bounds suggested the city could require the that the report of the amount of taxes due be filed within 15 days with payment of those taxes due within 30 days. The Council felt that time limitation would be acceptable. CONSIDER BID Consider authorization for Purchase of 300 tons of grade 4 black lava chip rock and 150 tons of grade 3 black lava chip rock to be used in the 1988 street Daving work in the amount of $14,000 from the White Mines Division of Vulcan Materials Company Mr. Bounds, City Attorney, advised this is a sole source purchase because there is only one mine in the state that provides this grade of rock. He noted the staff is requesting that this material be trucked to Huntsville rather than being sent by rail, and that the cost of this material is the same as it was last year, but there has been an increase in freight cost because of having the material trucked in versus using rail, and that cost increase is $1.47 per ton ($661.50 total) after the city's cost of unloading and hauling is added to the rail freight price. Councilmember Barrett made the motion to approve of this bid and Councilmember Bell seconded the motion. All were in favor and the motion Passed unanimously. CONSIDER BALLFIELD PRESS BOXES Consider a proposal from the Huntsville Softball Association to build press boxes at the Thomas Henry Ball Memorial Park and the Kate Barr Ross Memorial Park ballfields as recommended by staff. Mr. Bounds, City Attorney, advised the Huntsville Softball Association has requested permission to build press boxes at Thomas Henry Ball Park and Kate Barr Ross Park ballfields. He said the type of press boxes they propose to build does meet the city's approval and, according to Mr. Ray Black, Parks and Recreation Superintendent, will enhance the appearance of the city's baseball complex. Mr. Black also advises all costs of materials, labor and construction involved with this project will be furnished by the Huntsville Baseball Association. A sketch of the press boxes was provided to the Council. Councilmember Howard made the motion to approve of this proposal as discussed and Councilmember Barrett seconded the motion. All were in favor and the motion passed unanimously. CITY ATTORNEY'S REPORT - -SCOTT BOUNDS Sales Tax Report as of February, 1988 ($232,747.21) Mr. Bounds advised this report reflects an approximate 8.5% increase in revenue over the same period two years ago, and over a 10% increase in sales taxes over this time last year. He noted it includes the change in tax base, which accounts for about 1.5% of this increase. MINUTES OF THE FEBRUARY 16, 1988 COUNCIL MEETING BOOM upn 29 CITY COUNCILMEMBER ACTION Review Councilmember Gary Bell's remarks to the Interim Study Committee on a state -wide energy Plan meetinnA in Port Arthur on February 19, 1988. Councilmember Bell advised Mr. Gene Pipes,,City Manager, has assisted him in preparing for his attendance at this meeting, by writing their collective thoughts in a letter addressed to the Chairman, Terral Smith, and members of the Statewide Energy Plan Interim Study Committee (a legislative committee) in Austin. He said the problem is that a nuclear power generating plant was built in Louisiana which turned out to be very costly. In order to pay for that facility, he said, our electric rates are going to double over the next four years if GSU's rate increase request is granted. He said the first year, they propose a 38% increase; the second year, 34%; the third year, 13.73%; and the fourth year, 11.53%, for a total increase of approximately 98%. He noted we are already paying some of the highest rates in the nation. He said we are paying a GSU residential rate of $74.06 for 1,000 kilowatt hours for our electricity, which compares with Houston Lighting and Power Company which is paying $78.41 for that quantity; nothing these two rates are the highest being paid in the state. He said other comparison rates are the electric power company that services Austin who charges $57.15; SWEPCO (Louisiana) charges $54.25, etc. He said in Seattle where they have hydroelectrical power, they are paying $39.07 as of December of 1987; Miami pays more, at $81.60; in Chicago through Commonwealth Edison, the rate is $59.26. He said we are on the top of the list nationally and are certainly on the top of the list statewide; and now GSU proposes to double those rates. He said this portends economic disaster for Southeast Texas. He said to think about the cost of running government and the small businesses in the state. He said Huntsville was invited to participate in a statewide energy analysis meeting on Friday. He said the recommendations will be submitted to this legislative committee. Councilmember Bell noted the Letter identifies and discusses the problems and offers solutions. He reviewed the letter with the Council which basically encouraged legislative action to resolve the problems. Solutions offered in the letter include: (1) mandatory planning and regulatory construction supervision of generation- transmission projects for better coordination of surpluses and balanced supply and demand among electric service companies (It was noted in addition to the increases caused by the River Bend Project, a recent preliminary study indicates Texas power companies expect to build a 33.5 percent increase in generation capability over the next ten year period, some of which is represented by the South Texas Nuclear Project, Commanche Peak and other generation types.); (2) the authorization for the Attorney General to file an equal Protection federal court action to establish the Principal of cross -state service at equal cost by any company falling under the regulatory jurisdiction of two or more states--in response to the inequity of rates paid by Texas and Louisiana (He noted Texas pays much more than the Louisiana ratepayers, whose PUC denied the GSU rate increase and Texas ratepayers began paying for construction costs for the River Bend project two to three years ago, which Louisiana ratepayers never undertook, and Texas has paid $18 to S20 million more to-date than Louisiana ratepayers paid, simply on the River Bend construction costs.); (3) addition of a Consumer Advocacy Division to the Public Utilities Commission staff to pool and represent the intervenors causes in an effective balancing of the companies financial clout (and possibly making the PUC an elected board from specific regions of the state rather than an appointed board (if corporate contributions to election campaigns could be restricted] in response to a need to revise the structure and operation of the PUC, which seems to be hamstrung and neutralized in coping with the GSU rate case for the past 18 months); and finally, (4) repeal the constitutional segregation of Texas utility systems from the national Dower grid and a possible exchange of surplus Power to meet demands without overriding generation needs - -in response to the fact that there is a surplus of electrical generation capability now, so as to encourage the power companies to get on the national grid, which would have a tendency to level rates to some extent, and allow the sale of power to other areas and wheel power as far as Massachusetts -New York areas, so as to utilize the capacity of River Bend and have another source to help pay for the plant. Councilmember Bell asked for the Council's comments and suggestions or other recommendations. Councilmember Green noted the problem is well identified in this letter, but he felt the recommendations were headed completely in the wrong direction. He personally believes the problem was created by the MINUTES OF THE FEBRUARY 16, 1988 COUNCIL MEETING BOOK "P" 30 regulatory scheme we now have and that with a different regulatory scheme altogether, it would have encouraged the transmission of electricity across state lines, but because of the regulations that exist, it is discouraged. He said the direction of our recommendations should be not for "more regulation," but toward "deregulation" that would encourage the transmission and efficiency. He said this letter seems to be saying that we want more power in the hands of the regulators, which is more of the same that we already have. He said this is a mistake. Mayor Monday noted the national regulations required that we go away from gas and that we go to an alternate fuel, noting that under Jimmy Carter's administration, they had two choices: nuclear or solar. Councilmember Green said this is why we have it, not because of competition, but because of the regulatory schemes that we have. Mayor Monday noted now, however, the rules have changed and they are now allowing what they disallowed. Councilmember Green noted studies ongoing at the Harvard Energy Institute all say that the long run effects are that we are going to have to go to nuclear anyway, and the direction that the state of Texas and other states are going in terms of dealing with that problem, is wrong, and that we ought to be encouraging the movement of electricity across lines, encouraging more competition, and if we give more power to the PUC, we are not going in the right direction, particularly if we allow them to do the planning. Councilmember Carter thought we ought to change the structure of the PUC. He said the focus of this effort is to take the power out of the hands of the power companies, who have made disastrous errors. Councilmember Bell felt we should put the matter in the hands of the people through an elected Public Utilities Commission. Councilmember Green said that will not work in the long run. After some discussion, Councilmember Knotts reminded the Council that the cities are the source of the noncompetitiveness because they grant 50 and 75 year franchises. Councilmember Green noted that is right and we thought it was to our advantage, but it has not been. Councilmember Carter felt that Louisiana seems to be doing alright with regulation. Councilmember Carter felt the stockholders, shareholders, and the management of GSU should make up the cost, rather than the ratepayers. Mayor Monday noted then what Councilmember Green is recommending is less regulation and a more competitive atmosphere being created. Councilmember Green said this will ultimately lower the price for the consumer. Councilmember Carter said there was a misprojection on the population growth and the River Bend Project was overbuilt; noting no matter what the presidential orders were, GSU did not need to build the River Bend plant. Councilmember Green said competition will do better for us, not regulation. Councilmember Carter noted he will be satisfied with competition once we settle this problem. Councilmember Barrett felt Louisiana is the main problem here in that they are not paying their share, in this particular case, and it is not correct to assume that all the plants coming on line are going to have River Bend's financial problems. Councilmember Carter noted even if Louisiana paid an equivalent amount, GSU is still talking about a 100% rate increase. Councilmember Green noted GSU needs more customers. Mayor Monday noted everyone agrees that GSU needs more customers and we need to sell this power across interstate lines. Councilmember Carter noted too that ratepayers should not pay for the mistakes of GSU. Mayor Monday noted Councilmember Bell may want to add a fifth item that expresses the fact that we would certainly encourage a monopoly for the distribution system, but not for the production of power. COUNCIL ACTION Landfill Permit -- Councilmember Knotts noted the Houston City Council has discovered that they issued a Landfill permit to Philadelphia and now that garbage is on its way into their landfill. He noted he is appreciative of the fact that, while the City is sometimes criticized for its regulations on land use and sewer plant permits, it is cognizant of the permits it issues and that this dilemma will not happen to us. H-GAC Meeting- - Councilmemlber and Mayor Pro tem Howard advised the Council of the upcoming H -GAC General Assembly Meeting to be held in Houston on March 4, 1988. He encouraged them to attend the meeting and noted he will be there to represent the City. ADJOURNMENT Yut��DeShawb,city ctfully submitted, c,=2��iL! Secretary, February 16, 1988