HomeMy WebLinkAbout2006-05-08 Regular Meeting Public Hearing and Workshop Meeting
REQUEST FOR CITY COUNCIL AGENDA ITEM
Agenda Date Requested: Mal'> 22. 2006
Requested By: Mayor Alton orter
Appropriation
Source of Funds:
Department:
City Council
Account Number:
Report:
Resolution:
Ordinance:X
Amount Budgeted:
Exhibits: Ordinance
Amount Requested:
Exhibits:
Budgeted Item: YES NO
Exhibits:
SUMMARY & RECOMMENDATION
City Council to approve an ordinance declaring results of the Special Election City of La Porte Election held on May
13,2006
Action Required bv Council:
Approve ordinance 2006-2886
anager
,5-);6"/0 t:
Date' I
ORDINANCE NO. 2006-~3~~
AN ORDINANCE DECLARING THE RESULTS OF A SPECIAL ELECTION HELD IN
THE CITY OF LA PORTE ON MAY 13, 2006, TO PERMIT VOTING FOR OR
AGAINST THE PROPOSITION: nTHE ADOPTION OF A LOCAL SALES AND USE
TAX IN THE CITY OF LA PORTE AT THE RATE OF ONE - FOURTH OF ONE
PERCENT TO PROVIDE REVENUE FOR MAINTENANCE AND REPAIR OF MUNICIPAL
STREETsn, FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW, AND
PROVIDING AN EFFECTIVE DATE HEREOF.
WHEREAS, there was held in the city of La Porte on the 13th
day of May, 2006, a special election to permit voting for or
against the proposition: "THE ADOPTION OF A LOCAL SALES AND USE
TAX IN THE CITY OF LA PORTE AT THE RATE OF ONE-FOURTH OF ONE
PERCENT TO PROVIDE REVENUE FOR MAINTENANCE AND REPAIR OF MUNICIPAL
STREETS"; and there were cast at said election on said proposition,
the following number of votes:
FOR THE PROPOSITION "ADOPTION OF A LOCAL SALES
AND USE TAX IN THE CITY OF LA PORTE AT THE RATE
OF ONE-FOURTH OF ONE PERCENT TO PROVIDE REVENUE
FOR MAINTENANCE AND REPAIR OF MUNICIPAL STREETS": 226
AGAINST THE PROPOSITION "ADOPTION OF A LOCAL SALES
AND USE TAX IN THE CITY OF LA PORTE AT THE RATE
OF ONE-FOURTH OF ONE PERCENT TO PROVIDE REVENUE
FOR MAINTENANCE AND REPAIR OF MUNICIPAL STREETSIl: 85
as shown in the official election returns heretofore delivered by
the Election Manager and officials to the Mayor and City Council of
the City of La Porte and submitted to the City Council.
NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF LA PORTE:
Section 1.
That said election was duly called and notice
thereof given in accordance with law; that said election was held
in the manner required by law; that due returns of said election
have been made by the proper officers; that said returns have been
canvassed by the City Council of the City of La Porte; that said
election has resulted in the adoption of the following proposition,
to-wit:
"THE ADOPTION OF A LOCAL SALES AND USE TAX IN THE CITY OF
LA PORTE AT THE RATE OF ONE - FOURTH OF ONE PERCENT TO
PROVIDE REVENUE FOR MAINTENANCE AND REPAIR OF MUNICIPAL
STREETS" .
section 2.
The sales and use tax effective date shall be
October I, 2006, the first day of the first calendar quarter
occurring after the expiration of the first complete calendar
quarter occurring after the date on which the Comptroller of Public
Accounts receives notice of the results of the election.
Section 3.
The City Council officially finds, determines,
recites and declares that a sufficient written notice of the date,
hour, place and subject of this meeting of the City Council was
posted at a place convenient to the public at the City Hall of the
City for the time required by law preceding this meeting, as
required by Chapter 551, Texas Government Code; and that this
meeting has been open to the public as required by law at all times
during which this ordinance and the subject matter thereof has been
discussed, considered and formally acted upon. The City Council
further ratifies, approves and confirms such written notice and the
contents and posting thereof.
Section 4. This Ordinance shall be effective from and after
its passage and approval, and it is so ordered.
PASSED AND APPROVED, this 22nd day of May, 2006.
By:
CITY OF LA PORTE
Cbx-~LCYM-~
Alton E. Porter
Mayor
2
ATTEST:
~nt"-Jf#!/4J t.IJ1
ar ha A. G lett
City Secretary
APPR~ &)
Knox W. Askins
City Attorney
3
6
REQUEST FOR CITY COUNCIL AGENDA ITEM
Agenda Date Requested: Mal> 22. 2006
Requested By: Mayor Alton orter
Appropriation
Source of Funds:
Department:
City Council
Account Number:
Report:
Resolution:
Ordinance:X
Amount Budgeted:
Exhibits: Ordinance
Amount Requested:
Exhibits:
Budgeted Item: YES NO
Exhibits:
SUMMARY & RECOMMENDATION
City Council to approve an ordinance declaring results of the City of La Porte Election held on May 13,2006
Action Required bv Council:
Approve ordinance 2006-2887
A
p/;6fot
Date
ORDINANCE NO. 2006-~o~1
AN ORDINANCE DECLARING THE RESULTS OF THE ELECTION HELD IN THE CITY
OF LA PORTE ON MAY 13 , 2006 , FOR THE ELECTION OF A MAYOR,
COUNCILPERSON DISTRICT 2, AND COUNCILPERSON DISTRICT 3, FINDING
COMPLIANCE WITH THE OPEN MEETINGS LAW, AND PROVIDING AN EFFECTIVE
DATE HEREOF.
WHEREAS, there was held in the City of La Porte on the 13th
day of May, 2006, an election for the purpose of electing a Mayor;
Councilperson District 2; and Councilperson District 3; all in
accordance with section 8.10 of the Home Rule Charter of the City
of La Porte; and
WHEREAS, there were cast at said election for the following
listed persons the number of votes opposite their respective names:
MAYOR
Alton E. Porter
261
COUNCILPERSON -- DISTRICT 2
Chuck Engelken, Jr. 15
COUNCILPERSON -- DISTRICT 3
Howard R. Ebow
33
as shown in the official election returns heretofore delivered by
the Election Manager and officials to the Mayor and City Council of
the city of La Porte and submitted to the City Council.
NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY
OF LA PORTE:
Section 1.
That said election was duly called and notice
thereof given in accordance with law; that said election was held
in the manner required by law; that due returns of said election
have been made by the proper officers; that said returns have been
canvassed by the City Council of the City of La Porte; that said
election has resulted in the election of the following named
persons, to-wit:
MAYOR
Alton E. Porte
COUNCILPERSON -- DISTRICT 2
Chuck Engelken, Jr.
COUNCILPERSON -- DISTRICT 3
Howard R. Ebow
Section 2.
The City Council officially finds, determines,
recites and declares that a sufficient written notice of the date,
hour, place and subject of this meeting of the City Council was
posted at a place convenient to the public at the City Hall of the
City for the time required by law preceding this meeting, as
required by Chapter 551, Texas Government Code i and that this
meeting has been open to the public as required by law at all times
during which this ordinance and the subject matter thereof has been
discussed, considered and formally acted upon. The City Council
further ratifies, approves and confirms such written notice and the
contents and posting thereof.
Section 3. This Ordinance shall be effective from and after
its passage and approval, and it is so ordered.
PASSED AND APPROVED, this 22nd day of May, 2006.
~~ OF LA ~E
~~~-'.V~
Alton E. Porter
Mayor
By:
ATTEST:
~~~~~MJ
City Secretary
APPR~u/ ~
Knox W. Askins
City Attorney
2
8
REQUEST FOR CITY COUNCIL AGENDA ITEM
Agenda Date Requested: Mal> 22. 2006
Requested By: Mayor Alton orter
Appropriation
Source of Funds:
Department:
City Council
Account Number:
Report:
Resolution:
Ordinance:X
Amount Budgeted:
Exhibits: Ordinance
Amount Requested:
Exhibits:
Budgeted Item: YES NO
Exhibits:
SUMMARY & RECOMMENDATION
City Council to approve an ordinance appointing a Mayor Pro-Tern of the City of La Porte, for the term expiring
May 31, 2007.
Action ReQuired by Council:
Approve ordinance 2006-2888
r );,j!)6
Date / I
ORDINANCE NO. 2006 - J{<6~r
AN ORDINANCE APPOINTING A MEMBER OF THE CITY COUNCIL TO SERVE AS
MAYOR PRO-TEM OF THE CITY OF LA PORTE, FOR THE TERM COMMENCING
JUNE 1, 2006, AND EXPIRING MAY 31, 2007; FINDING COMPLIANCE WITH
THE OPEN MEETINGS LAW; PROVIDING AN EFFECTIVE DATE HEREOF.
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE:
Section 1. The City Council of the City of La Porte hereby
appoints Tommy Moser to serve as Mayor Pro-Tern of the City of La
Porte, for the term commencing June 1, 2006, and expiring May 31,
2007, or until his successor shall have been duly appointed and
qualified.
Section 2.
The Mayor Pro-Tern shall serve in such office
during said term, during the absence or incapacity of the Mayor
and shall do all things, perform all duties, and in fact have all
the powers and duties of the Mayor of the City of La Porte during
such absence or incapacity of the Mayor.
Section 3.
The City Council officially finds, determines,
recites, and declares that a sufficient written notice of the
date, hour, place and subject of this meeting of the City Council
was posted at a place convenient to the public at the City Hall of
the City for the time required by law preceding this meeting, as
required by the Open Meetings Law, Chapter 551, Texas Government
Code i and that this meeting has been open to the public as
required by law at all times during which this ordinance and the
subject matter thereof has been discussed, considered and formally
acted upon.
The City Council further ratifies, approves and
confirms such written notice and the contents and posting thereof.
Section 4. This Ordinance shall be effective from and after
ORDINANCE NO. 2006-~O8'8'
PASSED AND APPROVED, this~
By:
ATTEST:
APP~;J d
Knox W. Askins
City Attorney
PAGE 2
day of May, 2006.
CITY OF LA PORTE
~G~~
Alton E. Porter
Mayor
/
/
A
MINUTES OF REGULAR MEETING, PUBLIC HEARING AND WORKSHOP MEETING
OF THE LA PORTE CITY COUNCIL
May 8, 2006
1. CALL TO ORDER
The meeting was called to order by Mayor Alton Porter at 6:01 p.m.
Members of City Council Present: Mayor Alton Porter, Council members Tommy Moser,
Mike Clausen, Louis Rigby, Howard Ebow, Barry Beasley, Peter Griffiths and Chuck
Engelken.
Members of Council Absent: Mike Mosteit
Members of City Executive Staff and City Employees Present: Assistant City Manager John
Joerns, Assistant City Attorney Clark Askins, Public Works Director Steve Gillett, Planning
Director Wayne Saba, Fire Chief Mike Boaze, EMS Chief Ray Nolen, Assistant City
Secretary Sharon Harris, , City Secretary Martha Gillett, Assistant Fire Chief John Dunham,
Fire Marshal Cliff Meekins, Assistant Fire Marshal Eric Cadden, Assistant Police Chief
Aaron Corrales, Purchasing Manager Susan Kelley and Assistant Finance Director Michael
Dolby.
Others Present: Sue Gail Kooken, Carol Christian of Houston Chronicle, Betty Waters,
Leon Waters, Michael Davis, Colleen Hicks, Ted Powell, Lanny Connell, Kelsey Kalen,
Krissy Bailey, Anthony Lopez and other citizens.
2. Michael Davis First Assembly of God of La Porte delivered the Invocation.
3. Mayor Porter led the Pledge of Allegiance.
4. PRESENT A nONS / PROCLAMA nONS
Mayor Porter presented a proclamation to Ray Nolen, Brian Dean, Scott Griffin, Jake Evans,
Darrel Fales and Rachel Ashley in honor of Emergency Medical Services Week.
5. Consent Agenda
A. Consider approving Minutes of the Regular Meeting, Public Hearing and Workshop
Meeting of City Council held on April 24, 2006.
B. Council to consider approval or other action regarding awarding a bid for concrete
. . .
pavmg raIsmg.
C. Council to consider approval or other action regarding an ordinance to vacate,
abandon, and close the alley of block 242, Town of La Porte.
D. Council to consider approval or other action regarding an ordinance to vacate,
abandon, and close the South "R" Street right-of-way, Town of La Porte.
E. Council to consider approval or other action regarding an ordinance to vacate,
abandon, and close the Park A venue right-of-way, Town of La Porte.
City Council Regular Meeting, Public Hearing and Workshop Meeting -May 8, 2006
Page 2
F. Council to consider approval or other action regarding an ordinance authorizing the
City Manager to execute an annual contract for sewer rehabilitation to Horseshoe
Construction, for sanitary sewer rehabilitation; appropriating $170,520.00 plus a
contingency of$3,473.00.
G. Council to consider approval or other action regarding a resolution on Texas Tax
Reform.
Councilmember Rigby had questions on item F.
Motion was made bv Council member Beasley to approve the consent agenda as
presented. Second by Council member Rigby.
Motion carried.
Ayes: Beasley, Moser, Engelken, Rigby, Ebow, Clausen, Griffiths and Mayor Porter.
Nays: None
Abstain: None.
6. PETITIONS, REMONSTRANCES, COMMUNICATIONS, AND CITIZENS AND TAX
PAYERS WISHING TO ADDRESS COUNCIL ON ANY ITEM POSTED ON THE
AGENDA.
La Porte High School student Krissy provided Mayor and Council with an overview of the
T.R.D.T.H. Organization. The organization randomly drug tests students and provides
counseling to those who test positive. The program is very similar to D.A.R.E.
7. Public Hearing - Council to consider taking action on an ordinance designating a 19.607 Ac
tract as La Porte Reinvestment Zone "B" "Packwell, Inc."
Open Public Hearing - Mayor Porter opened the Public Hearing at 6: 16 p.m.
Review by Staff -Assistant City Manager John Joerns provided an overview on designating
a 19.607 Ac tract as La Porte Reinvestment Zone "B" Packwell, Inc."
Public Input: None
Recommendation of Staff- Staff recommended City Council consider approval of an
ordinance designating a 19.607 Ac tract as La Porte Reinvestment Zone "B" "Packwell,
Inc."
The Public Hearing was closed at 6:20 p.m.
8. Council to consider approval or other action regarding Ordinance 2855.
Assistant City Attorney Clark Askins read: ORDINANCE 2855-AN ORDINANCE
AUTHORIZING THE DESIGNATION OF CITY OF LA PORTE REINVESTMENT
ZONE "B" - "P ACKWELL, INC."; MAKING VARIOUS FINDINGS OF FACT;
City Council Regular Meeting, Public Hearing and Workshop Meeting -May 8, 2006
Page 3
FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING AN
EFFECTIVE DATE HEREOF.
Motion was made by Council member Beasley to approve Ordinance 2855 as recommended
by Staff. Second by Council member Clausen. The motion carried.
Ayes: Beasley, Moser, Engelken, Rigby, Ebow, Clausen, Griffiths and Mayor Porter.
Nays: None
Abstain: None
9. Council to consider approval or other action regarding a variance to allow construction of
improvements for a proposed manufacturing and plastics packaging and distribution facility
to be located at 10016 Porter Road, La Porte, Texas, to commence prior to the execution and
delivery of a Tax Abatement Agreement with Packwell, Inc. The variance is "at risk" and
does not commit or bind the City to approval of a Tax Abatement Agreement with Packwell,
Inc.
Motion was made by Council member Griffiths to approve the variance to allow
construction of improvements for a proposed manufacturing and plastics packaging and
distribution facility to be located at 10016 Porter Road, La Porte, Texas, to commence prior
to the execution and delivery of a Tax Abatement Agreement with Packwell, Inc. as
presented by Mr. Joerns. Second by Councilmember Ebow. The motion carried.
Ayes: Beasley, Moser, Engelken, Rigby, Ebow, Clausen, Griffiths and Mayor Porter.
Nays: None
Abstain: None
10. Public Hearing - Council to consider taking action on an ordinance amending Chapter 106
(Zoning) to amend section 106-268 of the Code of Ordinances.
Open Public Hearing - Mayor Porter opened the Public Hearing at 6:26 p.m.
Review by Staff -Planning Director Wayne Sabo provided an overview on amendments to
the Code of Ordinances.
Public Input: None
Recommendation of Planning & Zoning Commission- Unanimously, the Planning and
Zoning Commission recommended City Council consider approval of an ordinance
amending Chapter 106 (Zoning) to amend section 106-268 of the Code of Ordinances.
The Public Hearing was closed at 6:31 p.m.
11. Council to consider approval or other action regarding an ordinance amending Chapter 106
(Zoning) to amend Section 106-268 of the Code of Ordinances.
Assistant City Attorney Clark Askins read: ORDINANCE 150l-A5- AN ORDINANCE
AMENDING THE CODE OF ORDINANCES OF THE CITY OF LA PORTE, CHAPTER
106, ARTICLE II "ADMINISTRATION" DIVISION 9 "NONCONFORMING
BUILDINGS, STRUCTURES, AND USES" SECTION 106-268; NONCONFORMING
LOTS OF RECORD" BY MODIFYING SECTION 106-268(a) TO INCLUDE A CHANGE
City Council Regular Meeting, Public Hearing and Workshop Meeting -May 8, 2006
Page 4
IN TENANT AND/OR OCCUPANT TO INITIATE A REVIEW OF NONCONFORMING
LOTS OF RECORD WITHIN THE ZONING DISTRICTS OF THE CITY OF LA PORTE,
BY CITY STAFF; MAKING CERTAIN FINDINGS OF FACT RELATED TO THE
SUBJECT; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND
PROVIDING AN EFFECTIVE DATE THEREOF.
Motion was made by Council member Moser to approve Ordinance 1501-A5 as presented by
Mr. Sabo. Second by Council member Griffiths. The motion carried
Ayes: Beasley, Moser, Engelken, Rigby, Ebow, Clausen, Griffiths and Mayor Porter.
Nays: None
Abstain: None
12. Public Hearing - Council to consider taking action on an ordinance amending Chapter 106
(Zoning) to delete Section 106-741 (h) of the Code of Ordinances.
Open Public Hearing - Mayor Porter opened the Public Hearing at 6:33 p.m.
Planning Director Wayne Sabo provided an overview on amendments to the Code of
Ordinances.
Public Input: Lou Large - 231 Falk Ct., La Porte, Texas 77571 - Ms. Large informed
Mayor and Council she was in favor of the changes to the ordinance.
Sue Gail Kooken - 410 S. 1 S\ La Porte, Texas 77571 - Ms. Kooken informed Council she
thinks this ordinance needs reworking and is not in favor of 18 wheelers being parked in
residential yards.
Recommendation of Planning & Zoning Commission- Unanimously, the Planning and
Zoning Commission recommended City Council consider approval of an ordinance
amending Chapter 106 (Zoning) to delete Section 106-741 (h) of the Code of Ordinances.
The Public Hearing was closed at 6:44 p.rn.
13. Council to consider approval or other action regarding Ordinance 1501-B5.
Assistant City Attorney Clark Askins read: ORDINANCE 1501 B5-AN ORDINANCE
AMENDING THE CODE OF ORDINANCES OF THE CITY OF LA PORTE, CHAPTER
106, ATRICLE V "SUPPLEMENTAL DISTRICT REGULATIONS", DIVISION
2."ACCESSORY BUILDING, USES AND EQUIPMENT", SECTION 106-741,
"GENERAL PROVISIONS", BY DELETING SECTION 106-741(h), PERTAINING TO
THE PARKING OF BOATS AND RECREATIONAL VEHICLES WITHIN
RESIDENTIAL ZONING DISTRICTS OF THE CITY OF LA PORTE; MAKING
CERTAIN FINDINGS OF FACT RELATED TO THE SUBJECT; FINDING
COMPLIANCE WITH THE OPEN MEETINGS LAW; AND PROVIDING AN
EFFECTIVE DATE HEREOF.
Motion was made by Council member Engelken to approve Ordinance 1501 B5 as
recommended by Planning & Zoning. Second by Council member Ebow. The motion
carried.
City Council Regular Meeting, Public Hearing and Workshop Meeting -May 8, 2006
Page 5
Ayes: Beasley, Moser, Engelken, Rigby, Ebow, Clausen, Griffiths and Porter
Nays: None
Abstain: None
14. Close Regular Meeting and Open Workshop at 6:47 p.m.
A. Planning Director Wayne Sabo discussed final draft of 2020 Comprehensive Plan 5 -
Five Year Update. In addition, Chairperson Betty Waters informed the Council the
committee met on numerous occasions to review progress and interview city
departments. She was pleased to report the City is following the plan and making
progress toward goals.
B. Assistant Finance Director Micheal Dolby provided six month financial update
(information used for budget forecasting). He reported revenues and expenditures are
favorable.
C. Mayor Alton Porter discussed Boards & Commissions appointments.
Mayor requested Council review members with terms expiring and advised at a future
meeting of any changes they would like to make. There were discussions of how
members and the Chairman are appointed/elected to the Board of Adjustments. Tommy
Moser requested the Council consider making a change appointing Chester Pool as
Chairman on the Board of Adjustments. Council noted they would discuss making
changes to the Board of Adjustments appointment ordinance at a future meeting.
D. Planning Director Wayne Sabo provided a report regarding an ordinance amending
section 2 ordinance 2003-2665 -A- regarding waiver of construction fees imposed by the
City of La Porte on improvements to real property conveyed to certain non-profit
corporations and/or for city initiated programs which provide housing for low income
families; by including wavier of additional fees and requested council to provide staff
with direction. A consensus of council directed Wayne Sabo to bring back as written for
formal approval at next City Council meeting.
15. Closed Workshop meeting and reconvened Regular Meeting at 7:47 p.m.
16. Administrative Reports
Assistant City Manager John Joems gave a report on Sylvan Beach Day, 50th anniversary,
April 29, 2006, reminded council Early Voting May 1, through May 9,2006, Election Day,
Saturday May 13, 2006, Plan Manager's Appreciation Breakfast, May 17, 2006, 7: 15 a.m. at
Sylvan Beach Pavilion, City Employee/Family Appreciation Picnic and City Offices
Closing, Monday, May 29th, 2006 observance of Memorial Day.
17. Council Comments
Ebow, Engelken, Clausen, Rigby, Moser, Beasley, Griffiths and Mayor Porter had
comments.
18. EXECUTIVE SESSION - PURSUANT TO PROVISION OF THE OPEN MEETINGS
LAW, CHAPTER 551.071 THROUGH 551.076, 551-087, TEXAS GOVERNMENT CODE
(CONSULTATION WITH ATTORNEY, DELIBERATION REGARDING REAL
City Council Regular Meeting, Public Hearing and Workshop Meeting -May 8, 2006
Page 6
PROPERTY, DELIBERATION REGARDING PROSPECTIVE GIFT OR DONATION,
PERSONNEL MATTERS, DELIBERATION REGARDING SECURITY DEVICES, OR
EXCLUDING A WITNESS DURING EXAMINATION OF ANOTHER
WITNESS IN AN INVESTIGATION, DELIBERATION REGARDING ECONOMIC
DEVELOPMENT NEGOTIATIONS)
A. 551.081 (PENDING OR CONTEMPLATED LITIGATION) MEET WITH CITY
ATTORNEY AND CITY MANAGER REGARDING CITY OF LA PORTE VS. 200
GARFIELD, LLC
Council retired to Executive Session at 8:00 p.m.
19. There was no action taken during Executive Session.
Council returned to the table at 8:26 p.m.
20. There being no further business to come before Council, the Regular Meeting was duly
adjourned at 8:27 p.m.
.
~~~
Martha Gillett, TRMC, CMC
City Secretary
Passed and approved on this 22nd day of May 2006
OJ~~v_L~~
Mayor Alton E.Porter
B
ASKINS & ARMSTRONG. P. C.
ATTORNEYS AT LAW
702 W. FAIR MONT PARKWAY
P.O. BOX 1218
LA PORTE, TEXAS 77572-1218
CLARK T. ASKINS
TELEPHONE 281.471.1886
TELECOPIER 281.471.2047
KASKINS@HOUSTON.RR.COM
JOHN-A@SWaE.LL.NET
CTASKINS@SWBELL.NET
KNOX W. ASKINS
JOHN D. ARMSTRONG
May 8, 2006
Hon. Mayor & City Council
city of La Porte
city Hall
La Porte, Texas
Re: Ordinance Ratifying and Confirming the Selection of Clark T.
Askins as Assistant City Attorney and Prosecutor in Municipal
Court.
Gentlemen:
It has come to my attention that, although there are ordinances in
place appointing Knox W. Askins as City Attorney, and John D.
Armstrong as Assistant City Attorney, there is not an ordinance in
place ratifying and confirming City Council approval of the
selection by the city Attorney of Clark T. Askins, as Assistant
city Attorney and Prosecutor in the Municipal Court.
I have prepared an ordinance, which I request be placed on the
agenda for the May 22, 2006, City Council meeting.
Clark T. Askins did take his oath of office as a Assistant City
Attorney, and his actions thereunder are valid.
YffCda
Knox W. Askins
City Attorney
City of La Porte
KWA: sw
Enclosure
ORDINANCE NO. 2006 - J.ts9
AN ORDINANCE RATIFYING AND CONFIRMING THE CITY ATTORNEY'S SELECTION
OF AN ASSISTANT CITY ATTORNEY, FINDING COMPLIANCE WITH THE OPEN
MEETINGS LAW, PROVIDING AN EFFECTIVE DATE HEREOF.
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE:
Section 1. The city Council of the City of La Porte hereby
ratifies and confirms its approval of the selection by Knox W.
Askins, City Attorney, of Clark T. Askins, as Assistant City
Attorney and Prosecutor in the Municipal Court.
Section 2. The City Council officially finds, determines,
recites, and declares that a sufficient written notice of the date,
hour, place and subject of this meeting of the City Council was
posted at a place convenient to the public at the City Hall of the
City for the time required by law preceding this meeting, as
required by the Open Meetings Law, Chapter 551, Texas Government
Code; and that this meeting has been open to the public as required
by law at all times during which this ordinance and the sUbject
matter thereof has been discussed, considered and formally acted
upon.
The city Council further ratifies, approves and confirms
such written notice and the contents and posting thereof.
Section 3. This Ordinance shall be effective from and after
its passage and approval, and it is so ordered.
PASSED AND APPROVED, this ~ day of Jj,ay , 2006.
~Y OF LAPORTE
By: ~~~~
Alton E. Porter, Mayor
ATTEST:
~nlJ..~ VJV
<;t ha A. Gillett
C1ty Secretary
AP~2v!~
Knox W. Askins
City Attorney
RE UEST FOR CITY COUNCIL AGENDA ITEM
Agenda Date Requeste . Appropriation
Requested By:
Source of Funds:
N/A
Account Number:
Department:
Plannine
Amount Budgeted:
Report: _ Resolution: Ordinance: ....x
Amount Requested:
N/A
Exhibits: Ordinance #2003-2665-A
Budgeted Item:
SUMMARY & RECOMMENDATION
In October 2003 City Council passed Ordinance #2003-2665 to waive construction fees for certain non-profit
corporations and/or City initiated programs which provided housing for low income families. Since passage, the
ordinance language has required clarification and additional construction related fees have been implemented.
Ordinance #2003-2665-A has been drafted to address those matters and to clarify application is for "single family
dwellings" only.
This item was reviewed during a Council workshop on May 8, 2006. Council requested additional information
regarding whether a "for profit" developer and/or projects of other governmental agencies merit fee waivers under
this ordinance.
In coordination with the City Attorney, the intent of the waiving of fees is not based upon whether the builder is a
"non-profit" or "for-profit" builder, but rather that the end product was classified as affordable housing, that the
builder received some sort of HUD subsidy and that the buyer qualified under the parameters of HUD. The current
2003 ordinance 2665 states in section 2: "The City Council of the City of La Porte authorizes the waiver of water
and sewer "front foot fees", and building permit and inspection fees, in the case of construction of housing for low
income families, by non-profit corporations and/or programs initiated by the City." For those completed projects
which already have fees waived (each requested by separate letter), we maintain the HUD-I settlement documents
on file to ensure that the HUD parameters for the owners have been met. In the 'spirit' of the law governing this
program, the builder can either be a non-profit or for-profit entity as long as the final product is affordable housing
as described above and fees may be waived. Staff requests that Council consider the following proposed
amendments to the fees being waived by this ordinance:
FEES CURRENTL Y WAIVED
Development Fees
(Front Foot Fees)
Building Permit Fees
Inspection Fees
FEES RECOMMENDED FOR ADD
Plan Permit Review Fee
Field Re-inspection Fee
Parkland Cash in Lieu of Land Fee
Parkland Development Fee
FEES NOT RECOMMENDED
Water and Sewer Tap Fees
Residential Driveway Tie-in
Staffalso recommends that the fee waivers be applicable to an application from other governmental agencies (e.g.
Harris County) whose projects are being constructed in the City of La Porte.
Action Required bv Council:
Consider approval of Ordinance #2003-2665-A to clarify intent and add waived fees.
1)6 lot
Dati
ORDINANCE NO. 2003-2665-A
fA fif])
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AN ORDINANCE AMENDING ORDINANCE NO. 2003-2665 REGARDING
WAIVER OF CONSTRUCTION FEES IMPOSED BY THE CITY OF LA
PORTE ON IMPROVEMENTS TO REAL PROPERTY, BY INCLUDING
WAIVER OF ADDITIONAL PERMIT, INSPECTION, AND PARKLAND
DEVELOPMENT FEES FOR HOUSING FOR LOW INCOME FAMILIES BY
CERTAIN NON-PROFIT CORPORATIONS AND/OR CITY OF LA PORTE
OR OTHER GOVERNMENTAL AGENCY INITIATED PROGRAMS;
FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW;
CONTAINING A SEVERABILITY CLAUSE; CONTAINING A REPEALING
CLAUSE; AND PROVIDING AN EFFECTIVE DATE HEREOF.
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE, TEXAS:
Sectionl. Section 2 of Ordinance No. 2003-2665 is hereby amended and shall
hereafter read as follows, to-wit.
Section 2. The City Council of the City of La Porte authorizes the waiver of
water and sewer development fees, residential home construction (building,
plumbing, electrical, mechanical) permit fees, permit plan review fees, field
re-inspection fees, parkland cash payment in lieu of land fees and parkland
development fees, in the case of construction of single-family housing for low
income families by non-profit corporations and/or for low-income housing
programs initiated by the City of La Porte or other governmental agencies.
Section 2. All ordinances or parts of ordinances inconsistent with the terms of this
ordinance are hereby repealed; provided, however, that such repeal shall be only to the
extent of such inconsistency and in all other respects this ordinance shall be cumulative
of other ordinances regulating and governing the subject matter covered by this
ordinance.
Section 3. If any section, sentence, phrase, clause, or any part of any section, sentence,
phrase, or clause, of this Ordinance shall, for any reason, be held invalid, such invalidity
shall not affect the remaining portions of this Ordinance, and it is hereby declared to the
intention of this City Council to have passed each section, sentence, phrase, or clause, or
part thereof, irrespective of the fact that any other section, sentence, phrase, or clause, or
part thereof, may be declared invalid.
Ordinance No. 2003-2665-A
Page 2
Section 4. The City Council officially finds, determines, recites and declares that a
sufficient written notice of the date, hour, place and subject of this meeting of the City
Council is posted at a place convenient to the public at the City Hall of the city for the
time required by law preceding this meeting, as required by the Chapter 551, Tx. Gov't
Code; and that this meeting has been open to the public as required by law at all times
during which this ordinance and the subject matter thereof has been discussed, considered
and formally acted upon. The City Council further ratifies, approves and confirms such
written notice and the contents and posting thereof.
Section 5. This Ordinance shall be effective from and after its passage and approval, and
it is so ordered.
PASSED AND APPROVED this the
day of
,2006.
CITY OF LA PORTE
By:
Mayor
ATTEST:
City Secretary
APP~ -r: ~
City Attorney
2
ASKINS & ARMSTRONG, P.C.
ATTORNEYS AT LAW
702 W. FAIRMONT PARKWAY
P. O. BOX 1218
LA PORTE, TEXAS 77572-1218
CLARK T. ASKINS
TELEPHONE 281 471-1886
TELECOPIER 281 471-2047
E-MAIL: kwaskins@aol.com
iohn-a@swbell.net
ctaskins@swbell.net
KNOX W. ASKINS
JOHN D. ARMSTRONG
May 16, 2006
Mayor and City Council
City Hall
City of La Porte
RE: Fee waiver ordinance
Dear Mayor and Council:
I have been asked to render an opinion on the proposed expansion of Ordinance
2003-2665, to include waiver of permitting, inspection, and parkland fees for low-
income housing developments in the city. Specifically, it has been asked if it would be
permissible for the city to waive fees in the case of developments for low income
housing construction where the construction is handled by for-profit companies.
Our office has reviewed the matter and is satisfied that so long as the ultimate
purchaser under a low-income housing development program is a qualifying buyer
under applicable HUD regulations, then there shouldn't be an issue under the law if the
builder is a for-profit company. That is, HUD regulations do not disqualify for-profit
companies from participating in development of HUD subsidized projects, and on this
basis, city council may as a policy matter decide to waive fees towards such projects, to
lower the end cost to the buyer.
In this regard I believe that Knox Askins has advised the Planning Department
that as a part of the fee waiver process that it continue to require, and maintain in its
records, documentation evidencing that a particular development and home purchase
has been certified under HUD, in the case of low-income housing.
Thank you, and should you have any questions please do not hesitate to contact
me at my office.
Sincerely,
~7:~
Clark T. Askins
Assist. City Attorney
Cc: City Manager
Debra Feazelle
Cc: Assistant City Manager
John Joerns
Cc: Assistant City Manager
Cynthia Alexander
Cc: Planning Director
Wayne Sabo
MEETING HANDOUTS
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Port of Houston June 19, 2006
FTZ Tax Issues
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----------~-_.. -- -
REQUEST FOR CITY COUNCIL AGENDA ITEM
Agenda Date Requested June 7. 2006
Requested By: R. Swanagan 't?- l.. ~
Appropriation
Source of Funds:
Department:
Report: X Resolution:
HR
Ordinance:
Account Number:
Exhibits: Letter from Neal Welch
Amount Budgeted:
Exhibits: Health Plan topics for 2006-2007 Bud2et
Amount Requested:
Exhibits:
Budgeted Item: YES NO
SUMMARY & RECOMMENDATION
Receive presentation from Neal Welch on Employee Health Insurance.
Action Required bv Council:
Receive above presentation.
s- _S{)-V(o
Date
-HRH
4t
h i l b r 0 gal & hob b s'
1155 Dairy Ashford, Suite 350
Houston, TX 77079
Phone: 281-584-1616
Fax: 281-249-8016
Date May 11, 2006
To: Robert Swanagan
From: Neal W. Welch
cc: Debra Feazelle
Cynthia Alexander
Subject: 172 Board
First, let me thank you for assembling the Board to discuss the important topic of the future of the
Health plan. Their insight and opinions are valuable, and I believe they represent their constituency
well.
As a result of the past two meetings, and the Board reviewing numerous financial alternatives and
projections, it appears that they are in consensus on the topic of employee/retiree contributions. As
you know we illustrated to the Board the disparity between over 65, under 65, and active employee
claim cost. We then discussed the future of the plan, and how these three classes of premium would
be affected if we separated the groups. Their final opinion was that all plan participants should share
the same premium level, understanding of course that there is a vesting schedule for retiree/City
contribution based on service with the City.
For the purpose of the upcoming Council Workshop, I see a few topics that should be discussed.
1. Employee and retiree contribution levels (relationship discussed above)
2. Disposition of "Fund Subsidy" (to City 100%, to employee/retiree 100%, or a combination of
both)
3. Future City versus employee/retiree percent of premium balance. (Le., 90/10, 80/20, 70/30,
etc.)
Part of the goal of this exercise is to somewhat simplify the annual renewal process for the City and
all plan participants. For example:
1. All employee/retirees (over and under age 65) pay the same gross contribution to the plan
(currently four plans).
2. Each year the City works through the budget process to determine the financial needs to
operate the plan (10/1 budget set for 1/1 renewal).
3. Administration and Council determine the appropriate percentage split between the City and
employee/retiree (as needed).
4. By 10/1 of each year, administration can quote active/retiree premium levels starting 1/1 of the
following year (Retiree vesting schedule applies).
c:\documents and settingslswanaganr\local settings\temporary internet files\olkI48\robert memo 5-2 172 board meeting.doc
I hope this description does not oversimplify a solution. The Board spent a lot of time and energy
evaluating the options. I believe the first obstacle that Council must address is the disposition of the
"Fund Subsidy". This decision will affect the balance of premium responsibility for the future. With
that item resolved, you can move forward with any future projections of cost and the proper
apportionment. If you feel that Council should review the workbook used by the Board, please feel
free to include it. I apologize for not being able to join you next Monday night. If Council would like to
hold an additional workshop on the topic, I will make every effort to comply with their schedule.
Thank you again for involving us with this process. We look forward to working with you on an
equitable resolution to this issue, and future opportunities facing the health plan.
c:\documents and settingslswanaganr\1ocal settings\temporary internet files\olk148\robert memo 5-2 172 board meeting.doc
City of LaPorte
Health Plan Topics
200612007 Bude:et
This projection is based on stop loss attachment factors, trend on existing claims, plus a
one-time TML run-out factor. Cost estimates for plan for 10/1/2006 to 10/1/2007 are as
follows:
100% 112.5% 125%
Expected Midpoint Maximum Liability
Claims
(Medical + Rx) $2,874,240 $3,193,600 $3,592,800
Plan Expenses
(Admin + Stop Loss
$135,000 + $ 348,000 $ 348.000 $ 348,000
$213,000)
$3,222,240 $3,541,600 $3,940,800
Notes:
. Based on stop loss renewal for 2006 - 2007 (4/1)
. Based on actual $2,540,047 paid claims from 3/05 to 2/06 (trended plus TML run
out factor)
. Total plan liability (active + retirees)
The population is growing in number of employees carrying dependents and total
members. These numbers are included in the above forecast but we must carefully watch
the member count as it will add cost if this trend continues. Increased dependent
membership does not necessarily increase revenues to the plan. (Example)
Date
112005
3/2006
# Emp. Only
127
122
# Emp. + Dependent
237
252
# Members
894
944
Currently plan contributions are:
. City standard contribution at $500 PEPMl374 employee
. Employee/retiree contribution at last years grandfather rates
. Special City assessment
. Total Contributions
, $2,244,000
556,007
433,695
$3,233,702
Discussion & Notes
Page 1
;~
City of LaPorte
Health Plan Topics
Enrollment Impact
Since the inception of the Humana program with their multiple plan offerings (new for
City employees), there has been a dramatic migration toward the lesser cost plans
(premium). While cost sharing with the employee increases (good), premium/revenue
volume may decrease to the overall plan (bad). For 2006, this cycle continues.
Coverage 1st - $1,500 Ded.
Coverage 1 Sl_ $1,000 Ded
PPO - $500 Ded.
PPO - $300 Ded.
2005
65
82
127
..--2Q
364
2006
86
120
73
~
374
The previously sighted contributions reflect the 3/2006 participation. Please see the
attached Premium and Contribution Worksheet (Exhibit 1).
Essentially, the total current contribution ($3,233,702) is sufficient to fund total expected
claims plus expenses ($3,222,240). However, this contribution level includes the "one-
time assessment" that the City absorbed in 2005. The midpoint and maximum liability
reflect a 112.5% and a 125% increase respectively.
Therefore, if all plan participants (active + retiree) pay the same premium amount per
coverage type and the City retains its annual contribution of$6,000, the employee/retiree
rates would be as shown in Exhibit 2,3, and 4 (expected, midpoint, and maximum
liability) .
Discussion & Notes
Page 2
.....---...
City of La Porte
Current Premium and Contribution Worksheet
Effective January 1, 2006
Subs
Coverage 1st. $1,500 Deductible
Employee Only 24
Employee & Spouse 13
Employee and Children 17
Employee and Family 24
Coverage 1st. $1,000 Deductible
Employee Only 50
Employee & Spouse 23
Employee and Children 20
Employee and Family 35
PPo . $500 Deductible
Employee Only 26
Employee & Spouse 19
Employee and Children 10
Employee and Family 21
PPo . $300 Deductible
Employee Only 22
Employee & Spouse 14
Employee and Children 4
Employee and Family 52
Total Monthly Funding
Total Annual Funding
Employee/Employer %
374
Proposed Premium and
Contributions
Employer Employee
Contribution Contributions
$500.00 $14.65
$500.00 $105.00
$500.00 $95.24
$500.00 $120.69
$500.00 $22.70
$500.00 $130.34
$500.00 $120.07
$500.00 $155.60
$500.00 $50.23
$500.00 $165.74
$500.00 $155.15
$500.00 $185.32
$500.00 $79.14
$500.00 $225.79
$500.00 $215.99
$500.00. $239.56
$187,000 $46,334
$2,244,000 $556,007
69% 17%
Fund Subsidy
$11.43
$81.90
$74.29
$94.14
$17.71
$101.67
$93.65
$121.37
$39.18
$129.28
$121.02
$144.55
$61.73
$176.12
$168.47
$186.86
$36,141
$433,695
13%
Exhibit 1
Total Premium w/
Contributions & Subsidy
$526.08
$686.90
$669.53
$714.83
$540.41
$732.01
$713.72
$776.97
$589.41
$795.02
$776.17
$829.87
$640.87
$901.91
$884.46
$926.42
$269,475
$3,233,702
100%
City of La Porte
Proposed Premium and Contribution Worksheet
Effective October 1, 2006
Expected Claims
Subs
Coverage 1st - $1,500 Deductible
Employee Only 24
Employee & Spouse 13
Employee and Children 17
Employee and Family 24
Coverage 1st - $1,000 Deductible
Employee Only 50
Employee & Spouse 23
Employee and Children 20
Employee and Family 35
PPo - $500 Deductible
Employee Only 26
Employee & Spouse 19
Employee and Children 10
Employee and Family 21
PPo - $300 Deductible
Employee Only 22
Employee & Spouse 14
Employee and Children 4
Employee and Family 52
374
Total Monthly Funding
Total Annual Funding
Employee/Employer %
* Employee contributions plus subsidy
Proposed Premium and
Contributions
Employer Employee
Contribution Contributions*
$500.00 $25.78
$500.00 $184.74
$500.00 $167.57
$500.00 $212.34
$500.00 $39.94
$500.00 $229.32
$500.00 $211.24
$500.00 $273.76
$500.00 $88.37
$500.00 $291.60
$500.00 $272.97
$500.00 $326.05
$500.00 $139.24
$500.00 $397.26
$500.00 $380.01
$500.00 $421.48
$187,000 $81,520
$2,244,000 $978,240
70% 30%
Exhibit 2
Total Premium w/
Contributions & Subsidy
$525.78
$684.74
$667.57
$712.34
$539.94
$729.32
$711.24
$773.76
$588.37
$791.60
$772.97
$826.05
$639.24
$897.26
$880.01
$921.48
$268,520
$3,222,240
100%
City of La Porte
Proposed Premium and Contribution Worksheet
Effective October 1 , 2006
Midpoint Claims I
Subs
Coverage 1st - $1,500 Deductible
Employee Only 24
Employee & Spouse 13
Employee and Children 17
Employee and Family 24
Coverage 1st - $1,000 Deductible
Employee Only 50
Employee & Spouse 23
Employee and Children 20
Employee and Family 35
PPo - $500 Deductible
Employee Only 26
Employee & Spouse 19
Employee and Children 10
Employee and Family 21
PPo - $300 Deductible
Employee Only
Employee & Spouse
Employee and Children
Employee and Family
Total Monthly Funding
Total Annual Funding
Employee/Employer %
* Employee contributions plus subsidy
22
14
4
52
374
Proposed Premium and
Contributions
Employer Employee
Contribution Contributions *
$500.00 $34.19
$500.00 $245.04
$500.00 $222.27
$500.00 $281.66
$500.00 $52.98
$500.00 $304.19
$500.00 $280.21
$500.00 $363.14
$500.00 $117.23
$500.00 $386.80
$500.00 $362.09
$500.00 $432.49
$500.00 $184.69
$500.00 $526.94
$500.00 $504.07
$500.00 $559.0~
$187,000 $108,133
$2,244,000 $1,297,600
63% 37%
Exhibit 3
Total Premium w/
Contributions & Subsidy
$534.19
$745.04
$722.27
$781.66
$552.98
$804.19
$780.21
$863.14
$617.23
$886.80
$862.09
$932.49
$684.69
$1,026.94
$1,004.07
$1,059.08
$295,133
$3,541,600
100%
//
Exhibit 4
City of La Porte
Proposed Premium and Contribution Worksheet
Effective October 1 , 2006
Maximum Claims
Subs
Coverage 1st ~ $1,500 Deductible
Employee Only 24
Employee & Spouse 13
Employee and Children 17
Employee and Family 24
Coverage 1st - $1,000 Deductible
Employee Only 50
Employee & Spouse 23
Employee and Children 20
Employee and Family 35
PPo ~ $500 Deductible
Employee Only 26
Employee & Spouse 19
Employee and Children 10
Employee and Family 21
PPO ~ $300 Deductible
Employee Only 22
Employee & Spouse 14
Employee and Children 4
Employee and Family 52
374
Total Monthly Funding
Total Annual Funding
Employee/Employer %
* Employee contributions plus subsidy
Proposed Premium and
Contributions
Employer . Employee
Contribution Contributions*
$500.00 $44.71
$500.00 $320.43
$500.00 $290.65
$500.00 $368.32
$500.00 $69.28
$500.00 $397.77
$500.00 $366.41
$500.00 $474.85
$500.00 $153.29
$500.00 $505.80
$500.00 $473.48
$500.00 $565.55
$500.00 $241.52
$500.00 $689.06
$500.00 $659.14
$500.00 $731.08
$187,000 $141,400
$2,244,000 $1,696,800
57% 43%
Total Premium w/
Contributions & Subsidy
$544.71
$820.43
$790.65
$868.32
$569.28
$897.77
$866.41
$974.85
$653.29
$1,005.80
$973.48
$1,065.55
$741.52
$1,189.06
$1,159.14
$1,231.08
$328,400
$3,940,800
100%
City of LaPorte
Health Plan Topics
Retiree Cost
To further refine plan contributions by capturing active versus retiree healthcare costs,
Humana was asked to retrospectively abstract plan participants into three classifications
(actives, retirees over 65 and retirees under 65). This report was made available last
week and includes retrospective capture of claims by these three groups. "What we have
learned is as follows for the experience period 3/2005 to 312006.
Units Members Claims $ Cost PMPM
Active 326 849 $2,414,610: $237.0G.
Retiree under 65 30 62 286,709 385.36
Retiree over 65 18 33 79,004 199.5<1
374 944 $2,780,323 $245.43*
*Keep in mind that the membership has increased during the year. Actual cost PMPM as
shown here reflects the entire year. (Members include employees and individual
dependents; these are actual persons in the plan).
This exercise leads to a discussion of bow retiree versus active rates should be calculated.
In the past, the claims experience for the entire group was the basis for calculation. With
one years data now captured, it is feasible to set separate rates for each category.
We can project rates based on the cost PMPM using a simple multiple or load factor. The
more difficult task is to project what the effect of that type ofprernium change would
have on participation. With the advent of GASB-45 it is reasonable to assume that the
actuarial study will focus on the actual health cost of the retiree population and how that
cost is projected on a downstream (future) basis. (GASB-45 actuarial services proposal
will be provided to Cynthia in the first week of April).
If we are to review the above PMPM cost and project premiums for retirees in an exact
multiple of active cost the factors would be:
Active = X
Retiree under 65 = X + 63%
Retiree over 65 = X-16%
Since the City can utilize actual retiree cost as a basis for calculating retiree rates, it is
therefore reasonable to propose the following illustrations (Exhibit 5). A fixed expense
load for administration and stop loss of $30.72 will be added to each rate. Exhibit 6 is the
retiree claims and participation data from Humana.
Discussion & Notes
Page 3
Coverage 1st - $1,500 Deductible
Employee Only
Employee & Spouse
Employee and Children
Employee and Family
Coverage 1st - $1,000 Deductible
Employee Only
Employee & Spouse
Employee and Children
Employee and Family
PPo - $500 Deductible
Employee Only
Employee & Spouse
Employee and Children
Employee and Family
PPo - $300 Deductible
Employee Only
Employee & Spouse
Employee and Children
Employee and Family
Total Monthly Funding
Total Annual Funding
Employee/Employer %
· Employee contributions plus subsidy
'---
City of La Porte
Proposed Retiree Premium and Contribution Worksheet
Effective October 1 , 2006
Subs
24
13
17
24
50
23
20
35
26
19
10
21
22
14
4
52
374
Proposed Premium and
Contributions
Employer Employee
Contribution Contributions.
$500.00 $25.78
$500.00 $184.74
$500.00 $167.57
$500.00 $212.34
$500.00 $39.94
$500.00 $229.32
$500.00 $211.24
$500.00 $273.76
$500.00 $88.37
$500.00 $291.60
$500.00 $272.97
$500.00 $326.05
$500.00 $139.24
$500.00 $397.26
$500.00 $380.01
$500.00 $421 .48
$187,000 $81,520
$2,244,,000 $978,236
70% 30%
Total Premium w/
Contributions & SubsidY
$525.78
$684.74
$667.57
$712.34
$539.94
$729.32
$711.24
$773.76
$588.37
$791.60
$772.97
$826.05
$639.24
$897.26
$880.01
$921.48
$268,520
$3,222,236
100%
Under 65
Premium
Exhibit 5
Illustration Only
at Expected Claims.
Over 65
Premium
$857.02 $441.66
$1,116.13 $575.18
$1,088.14 $560.76
$1,161.11 $598.37
$880.10 $453.55
$1,188.79 $612.63
$1,159.32 $597.44
$1,261.23 $649.96
$959.04 $494.23
$1,290.31 $664.94
$1,259.94 $649.29
$1,346.46 $693.88
$1,041.96 $536.96
$1,462.53 $753.70
$1,434.42 $739.21
$1,502.01 $774.04
Exhibit 6
Under65 65 and Over Total
Month EEs Members Medical RX Total Claims EEs Members Medical RX Total Claims EEs Members Medical RX Total Claims
Jan-05 26 56 1,091 2,265 3,355 15 22 76 1,752 1,829 41 78 1,167 4,017 5,184
Feb-05 26 53 7,990 3,336 11,326 16 27 3,691 2,633 6,324 42 80 11,681 5,969 17,650
Mar-05 26 53 22,744 4,983 27,727 16 27 1,850 2,300 4,151 42 80 24,594 7,284 31,878
Apr-05 26 53 12,735 2,973 15,708 16 27 348 1,582 1,930 42 80 13,082 4,555 17,637
May-05 26 53 21,656 6,206 27,862 16 27 1,078 4,179 5,257 42 80 22,734 10,385 33,120
Jun-05 27 56 21,702 5,064 26,767 16 27 9,417 2,932 12,348 43 83 31,119 7,996 39,115
Jul-05 27 56 8,399 5,048 13,447 16 27 2,339 2,803 5,142 43 83 10,738 7,851 18,589
Aug-05 27 57 14,472 5,316 19,788 17 29 8,652 3,491 12,143 44 86 23,124 8,808 31,931
Sep-05 26 54 2,784 4,974 7,759 18 32 4,257 2,931 7,188 44 86 7,042 7,905 14,947
Oct-05 29 61 2,593 4,683 7,277 18 32 4,292 3,280 7,573 47 93 6,886 7,964 14,849
Nov-05 29 61 5,979 6,834 12,813 18 32 2,566 4,261 6,828 47 93 8,545 11,095 19,640
Dec-05 29 61 69,613 4,295 73,908 18 32 487 3,483 3,970 47 93 70,100 7,778 77,878
J a n-06 30 62 37321 5006 42 327 18 33 2282 3,868 6,150 48 95 39,603 8,874 48,477
Grand Total 354 736 229,080 60,984 290,064 218 374 41,337 39,496 80,833 . 572 1,110 270,416 100,480 370,896
The City of LaPorte Division 03
Membership and Costs by Pre and Post 65
Based on Age of EE
Percentages
61.9%
66.3%
84.7%
60.7%
78.2%
38.1%
33.7%
15.3%
39.3%
21.8%
/
./
./
/
./
City of LaPorte
Health Plan Topics
Past Projections
You had requested a review of prior health plan financial projections to determine why
the plan experienced a shortfall in 2005. In June of2004, David Strickler and I put
together some expected contribution projections using TML participation data. (Exhibit
7) The City's contribution was set at $5,000 per year. The attached illustration showed
total premium funding at $2,812,842 at the expected level and $3,234,768 at the expected
plus reserve level. These levels would have been acceptable if:
1. Participation stayed at 403 employees/retirees
2. TML run out would have met expectation
3. Plan participation remained in the PPO options
As with any projection, hindsight now shows that:
1. Membership was overstated by TML or it actually dropped from 403 to 374,
<$218,544>
2. Budgeted run out $400,000, actual $526,000 <$126,000>
3. Membership migrated to lower premium plans <$100,000>
This shortfall amount of $444,544 affected both revenues and expenses. The expense
component (run out) was a one-time event. The lower contribution totals are ongoing,
and are included in our earlier illustrated calculations.
I have attached a 2006 forecast (made in late 2005) and our meeting notes from January
31, 2006 to help explain the 2005 shortfall. (Exhibits 8a and 8b).
Discussion & Notes
./
,/
/
/
/
./
/
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,
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//
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Subs
Coverage 1st - $1,500 Deductible
Employee Only 25
Employee & Spouse 10
Employee and Children 10
Employee and Family 24
Coverage 1st - $1,000 Deductible
Employee Only 58
. Employee & Spouse 8
Employee and Children 8
Employee and Family 19
PPO - $500 Deductible
Employee Only 24
Employee & Spouse 26
Employee and Children 26
Employee and Family 60
PPo - $300 Deductible
Employee Only 37
Employee & Spouse 16
Employee and Children 16
Employee and Family 36
Total Monthly Funding
Total Annual Funding
Employee/Employer %
403
City of La Porte
Premium and Contribution Projection
Effective January 1, 2005
Exhibit 7
Premiums and Contributions set for Expected Costs Plus Reserves
Current
Total Employer Employee Employee
Premium Contribution Contributions Contribution Change
$452.20 $416.66 $35.54 $25.00 $10.54
$581.64 $416.66 $164.98 $140.00 $24.98
$530.40 $416.66 $113.74 $100.33 $13.41
$632.86 $416.66 $216.20 $200.00 $16.20
$487.88 $416.66 $71.22 $25.00 $46.22
$627.51 $416.66 $210.85 $140.00 $70.85
$572.24 $416.66 $155.58 $100.33 $55.25
$682.77 $416.66 $266.11 $200.00 $66.11
$508.39 $416.66 $91.73 $25.00 $66.73
$653.91 . $416.66 $237.25 $140.00 $97.25
$596.31 $416.66 $179.65 $100.33 $79.32
$711.49 $416.66 $294.83 $200.00 $94.83
$554.31 $416.66 $137.65 $25.00 $112.65
$712.95 $416.66 $296.29 $140.00 $156.29
$650.16 $416.66 $233.50 $100.33 $133.17
$775.73 $416.66 $359.07 $200.00 $159.07
$246,124 $167,914 $78,210 $45,820 $32,390
$2,953,484 $2,014,968 $938,516 $549,838 $388,679
100% 68% 32% I
Premiums and Contributions set for Expected Costs
Current
Total Employer Employee Employee
Premium Contribution Contributions Contribution Chanoe
$430.67 $416.66 $14.01 $25.00 -$10.99
$553.94 $416.66 $137.28 $140.00 -$2.72
$505.15 $416.66 $88.49 $100.33 -$11.84
$602.72 $416.66 $186.06 $200.00 -$13.94
$464.64 $416.66 $47.98 $25.00 $22.98
$597.62 $416.66 $180.96 $140.00 $40.96
$544.99 $416.66 $128.33 $100.33 $28.00
$650.26 $416.66 $233.60 $200.00 $33.60
$484.19 $416.66 $67.53 $25.00 $42.53
$622.77 $416.66 $206.11 $140.00 $66.11
$567.92 $416.66 $151.26 $100.33 $50.93
$677.61 $416.66 $260.95 $200.00 $60.95
$527.91 $416.66 $111.25 $25.00 $86.25
$679.00 $416.66 $262.34 $140.00 $122.34
$619.20 $416.66 $202.54 $100.33 $102.21
$738.79 $416.66 $322.13 $200.00 $122.13
$234,404 $167,914 $66,490 $45,820 $20,670
$2,812,842 $2,014,968 $797,874 $549,838 $248,037
100% 72% 28% I
Assumotions:
1. Humana Smart Suite plan design.
2. Rate differentials based on Humana book of business.
3. Enrollment assumptions based on Humana plan experience.
4. Employee and total premiums are based on previously stated projections of expected costs and expected costs plus reserves (5%).
Exhibit 8b
MEMORANDUM
The
Welch
Company
January 31, 2006
From:
Robert Swanagan
Neal W. Welch ~
Two Memorial City Plaza
820 Gessner, Suite 1470
Houston, Texas 77024
T: 713.827.8755
F: 713.461.5788
www.thewelchco.com
To:
Cc:
Cynthia Alexander
Debra Feazelle
Jose Castro - Humana
Subject:
City of La Porte
Backaround
In 2004 customer service and medical claims cost were issues with the TML administered plan.
TML began to see their ASO business fail as Fort Bend ISO and other large self-funded clients
began to leave primarily due to under performing network contracts and service issues. Since then
TML has merged with TASB and they provide pooled medical plans for Cities. With growing
pressure to seek greater efficiency in its health plan operation, the City went to the commercial
insurance marketplace to review alternatives. Humana was chosen as the ASO vendor in the fall of
2004. TML paid their own run out claims.
Based on the records through 12/31/05 the financial performance from both years is as follows:
Medical Claims
Rx Claims
Run in Claims
2004 (TML)
$3,081,595
(inc!. )
(N/A)
$3,081,595
$ 120,000
$ 190,000
(N/A)
$3.391.595
2005 (Humana)
Admin
Stop-Loss
Misc*
Total
$2,160,000
306,000
526,000 (TML)
$2,992,000
$ 130,000
200,000
14.000 * Run Out Admin (TML)
$3.336.000
At mid year 2005 our estimate of plan cost for 2005/2006 budget purposes was as follows:
Annualized
I
j
I
!
Paid Claims (Humana) 10 mos. $1,954,564
Run in from TML (Est)
Expenses (Admin + S / L)
$2,345,476
400,000
330,000
$3,075,476
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Also at mid-year we proposed an initial 2006 projection.
Paid Claims w 1 8% Trend
Run In (N/A)
Expenses (Admin + S/L) wi 5% Trend
$2,965,144
o
345.500
$3,310,614
$ 562,804
Projected full funding including IBNR @ 17%
Actual full funding (14% + fixed cost at 12/31/06)
With the 2005 plan year completed we can now revise the 2006 plan year projection as follows:
Paid claims wi 8% Trend $2,992,000 x 1.08%
Fixed Cost w 1 5% Trend
Projected Plan Cost for 2006
$3,231,360
346.500
$3.577.860
In hindsight I believe everyone's projections of plan cost were close to budget. The anomaly that
was realized in the transition from TML to Humana was the movement by actives and retirees to
lower contribution plans. Keep in mind we moved from a single option to a four option plan. This
fact is further aggravated in 2006 as people move further into the Coverage First plans.
Plan Name 2005 2006
Coverage First $1500 61 78
Coverage First $1000 82 127
PPO $500 127 72
PPO $300 -1liL ~
360 372
Even with the increased participation overall, the rating by plan level must keep pace with the
overall contribution budget of the plan. Based on current participation (2006) we provided a special
contribution projection late last year that anticipated the financial needs of the plan. (see attached
Premium + Contribution Projection). This funding would take the plan to $3,200,000.
Future Contribution Calculations
Since we now know what the anticipated cost of plan operations should be, plus the actual plan
participation by actives and retirees, it should be easier to arrive at future employee I retiree
contribution levels each year. Keep in mind that in the past this task was much easier with only one
plan alternative.
I have asked Humana to look at their projections for 2006, independent of my illustrations, using the
aggregate stop loss quotation for guidance. I asked them to project employee 1 retiree rates based
on the City's $500 per month contribution for a breakeven, midpoint and plan maximum level.
Essentially, this projection allows the City to look at options relating to reserve building. We
anticipate having these projections for our meeting. If they are not available we will schedule an
additional meeting to go over the projections.
Employee Benefits Consulting
2
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Retiree Health CoveraQe
Based on your recent experience relating to retiree health insurance and its ultimate cost (premium)
for the future I offer some information for your consideration. From an underwriting perspective
consider these factors regardless of plan option chosen, vesting schedule etc.
1) Retiree without Medicare is more expensive than active employee:
a. Age
b. Lack of supervision
c. Adverse selection (not working for someone else)
d. Occupational illness (even though prohibited)
2) Retiree with Medicare is less expensive than active employee:
a. Part A+B primary
b. Part 0 subsidy
Therefore, I would suggest that each year an overall targeted health care cost be established for
the plan. That target should include all claims, operational expenses and reserves. With that target
cost, calculate an increment for retirees under age 65 and a decrement for those over 65. I believe
25% load or discount would be appropriate. Then set individual plan rates as with Humana's
guidance. This same overall calculation can be used to set COBRA premiums as well. We look
forward to working with you on these rates once we agree on the factors to be included.
HealthCare SavinQs Accounts
In the absence of a long explanation relating to this new concept in plan design, we have enclosed
some Power Point slides and a detailed comparison of how the HSA, HRA, and FSA operate. With
a discussion on the cost I benefit relationship completed, we can project plan impact with the
introduction of an HSA. In the City's situation the HSA concept may be more understandable since
the current Coverage First plans resemble an HSA. There will be many decisions that must be
made with this type of plan offering, weighting the needs of the population to be covered. This
concept may also make an interesting topic for 172 training and I or a council workshop.
Employee Benefits Consulting
3
Exhibit Sa
City of La Porte
2006 Health Plan Forecast
2005
Ten months Medical claims @ 10 months
$ 1,954,564
$ 2,345,476
$ 400,000
$ 330,000
$ 3,075,476
Annualized w/o trend
Run in from TML (est.)
Expenses: Admin ($130,000), SL ($200,000)
2006
Trend @ 8% on claims ($2,745,476 x 1.08)
Trend @ 5% on expenses ($330,000 x 1.05)
$ 2,965,114
$ 345.500
$ 3,310,614
$ 562.804
$ 3,873,418
Run out (IBNR) @ 17%
J
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Annual Plan contribution @ current $500.00 PEPM (City) for 2006 $ 2,775,032 (a)
Participation (372 total)
- Waivers (42 total)
(a) Lower than expected employee/retiree contributions due to dramatic migration to
Coverage 1 st plans from 2005 to 2006.
I
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2005 2006
- Coverage 1 st $1500 ded. 61 78
- Coverage 1 st $1000 ded. 82 127
- PPO $500 ded. 127 72
- PPO $300 ded. --2.Q 99
360 372
2006 should be slowed with enrollment in Coverage 1 st plans.
1
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2006/2007 Budget
Retiree Projections
2004/2005 Information
Notes
Retiree Healthcare
Offer retiree health coverage, 1993-2005
Large employers (500 employees)
500~
450/0
40%
35O~
U) 30%
'-
~ 25O~
0
Q.
E
w 200/0
-
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1993 1995 1997 1999 2001 2003 2005
Offer retirees coverage
-+- Pre Medicare
-*- Current Medicare
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Retiree Healthcare
Average health benefit cost per retiree
Large employers (500 employees)
10
8.178
8
fn
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0 Eligible Retirees
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fn o 2004*
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Current Medicare
* As reported by respondents to the 2005 survey
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Retiree Healthcare
Contribution strategies* for retirees
Large employers (500 employees)
Pre-Medicare
eligible retirees
Medicare
eligible retirees
* For retiree-only coverage
D Cost is shared
. Reti ree pays all
Il.EmpIeyee pays all
tj1)pltyer
D Cost is shared
. Reti ree pays all
. EmpIeyee pays all
employ~(
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Retiree Healthcare
A few basics about GASB Statement 45
· Requires all US public sector employers to
account for and report their annual cost of
non-pension post employment benefits
(OPES) and related outstanding
obligations and commitments, rather than
accounting for these benefits on a pay-as-
you-go basis
.
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Mercer National Survey of Employer-Sponsored Health Plans 200S ' :,::i:~:"
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Retiree Healthcare
· Effective dates for the new requirements are for
the fiscal year beginning after:
- December 15, 2006, for Phase 1
governments (total revenues of $100 million
or more)
- December 15, 2007, for Phase 2
governments (total revenues of less than
$10 million or more)
- December 15, 2008, for Phase 3
governments (total revenues of less than
$10 million)
.
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Retiree Healthcare
· Affects accounting and financial reporting only;
does not require funding of OPEB, but the
method encourages funding
· Results will be reported or disclosed in the
entities' financial statements
· These requirements parallel the requirements
of FAS 106 for the private sector, but there are
substantial differences in the overall approach
· Unfunded liabilities may affect governmental
bond ratings
.
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City of LaPorte
Health Plan Topics
2006/2007 Budl!:et
This projection is based on stop loss attachment factors, trend on existing claims, plus a
one-time TML run-out factor. Cost estimates for plan for 10/1/2006 to 10/1/2007 are as
follows:
· Based on stop loss renewal for 2006 - 2007 (4/1)
· Based on actual $2,540,047 paid claims from 3/05 to 2/06 (trended plus TML run
out factor)
. Total plan liability (active + retirees)
The population is growing in number of employees carrying dependents and total
members. These numbers are included in the above forecast but we must carefully watch
the member count as it will add cost if this trend continues. Increased dependent
membership does not necessarily increase revenues to the plan. (Example)
Date
1/2005
3/2006
# Emp. Only
127
122
# Emp. + Dependent
237
252
# Members
894
944
Currently plan contributions are:
· City standard contribution at $500 PEPMl374 employee
· Employee/retiree contribution at last years grandfather rates
· Special City assessment
. Total Contributions
$2,244,000
556,007
433,695
$3,233,702
Discussion & Notes
Page 1
City of LaPorte
Health Plan Topics
Enrollment ImDact
Since the inception of the Humana program with their multiple plan offerings (new for
City employees), there has been a dramatic migration toward the lesser cost plans
(premium). While cost sharing with the employee increases (good), premiwn/revenue
volume may decrease to the overall plan (bad). For 2006, this cycle continues.
Coverage 1 st - $1,500 Ded.
Coverage 1 st - $1,000 Ded
PPO - $500 Ded.
PPO - $300 Ded.
2005
65
82
127
--2.Q
364
2006
86
120
73
~
374
The previously sighted contributions reflect the 3/2006 participation. Please see the
attached Ptemium and Contribution Worksheet (Exhibit 1).
Essentially, the total current contribution ($3,233,702) is sufficient to fund total expected
claims plus expenses ($3,222,240). However, this contribution level includes the "one-
time assessment" that the City absorbed in 2005. The midpoint and maximum liability
reflect a 112.5% and a 125% increase respectively.
Therefore, if all plan participants (active + retiree) pay the same premium amount per
coverage type and the City retains its annual contribution of $6,000, the employee/retiree
rates would be as shown in Exhibit 2,3, and 4 (expected, midpoint, and maximum
liability).
Discussion & Notes
Page 2
City of La Porte
Current Premium and Contribution Worksheet
Effective January 1, 2006
Subs
Coverage 1st - $1,500 Deductible
Employee Only 24
Employee & Spouse 13
Employee and Children 17
Employee and Family 24
Coverage 1st - $1,000 Deductible
Employee Only 50
Employee & Spouse 23
Employee and Children 20
Employee and Family 35
PPo - $500 Deductible
Employee Only 26
Employee & Spouse 19
Employee and Children 10
Employee and Family 21
PPo - $300 Deductible
Employee Only 22
Employee & Spouse 14
Employee and Children 4
Employee and Family 52
Total Monthly Funding
Total Annual Funding
Employee/Employer %
374
(}}
ru rr li
.-PtvIJused Premium and
Contributions
Employer Employee
Contribution Contributions
$500.00 $14.65
$500.00 $105.00
$500.00 $95.24
$500.00 $120.69
$500.00 $22.70
$500.00 $130.34
$500.00 $120.07
$500.00 $155.60
$500.00 $50.23
$500.00 $165.74
$500.00 $155.15
$500.00 $185.32
$500.00 $79.14
$500.00 $225.79
$500.00 $215.99
$500.00 $239.56
$187,000 $46,334
$2,244,000 $556,007
69% 17%
Fund Subsidy
$11.43
$81.90
$74.29
$94.14
$17.71
$101.67
$93.65
$121.37
$39.18
$129.28
$121.02
$144.55
$61.73
$176.12
$168.47
$186.86
$36,141
$433,695
13%
Exhibit 1
Total Premium w/
Contributions & Subsidy
$526.08
$686.90
$669.53
$714.83
$540.41
$732.01
$713.72
$776.97
$589.41
$795.02
$776.17
$829.87
$640.87
$901.91
$884.46
$926.42
$269,475
$3,233,702
100%
City of La Porte
Proposed Premium and Contribution Worksheet
Effective October 1, 2006
Expected Claims
Subs
Coverage 1st - $1,500 Deductible
Employee Only 24
Employee & Spouse 13
Employee and Children 17
Employee and Family 24
Coverage 1st - $1,000 Deductible
Employee Only 50
Employee & Spouse 23
Employee and Children 20
Employee and Family 35
PPO - $500 Deductible
Employee Only 26
Employee & Spouse 19
Employee and Children 10
Employee and Family 21
PPO - $300 Deductible
Employee Only 22
Employee & Spouse 14
Employee and Children 4
Employee and Family 52
374
Total Monthly Funding
Total Annual Funding
Employee/Employer %
* Employee contributions plus subsidy
Proposed Premium and
Contributions
Employer Employee
Contribution Contributions*
$500.00 $25.78
$500.00 $184.74
$500.00 $167.57
$500.00 $212.34
$500.00 $39.94
$500.00 $229.32
$500.00 $211.24
$500.00 $273.76
$500.00 $88.37
$500.00 $291.60
$500.00 $272.97
$500.00 $326.05
$500.00 $139.24
$500.00 $397.26
$500.00 $380.01
$500.00 $421.48
$187,000 $81,520
$2,244,000 $978,240
70% 30%
Exhibit 2
Total Premium w/
Contributions & Subsidy
$525.78
$684.74
$667.57
$712.34
$539.94
$729.32
$711.24
$773.76
$588.37
$791.60
$772.97
$826.05
$639.24
$897.26
$880.01
$921.48
$268,520
$3,222,240
100%
Exhibit 3
City of La Porte
Proposed Premium and Contribution Worksheet
Effective October 1 , 2006
Midpoint Claims
Subs
Coverage 1st. $1,500 Deductible
Employee Only 24
Employee & Spouse 13
Employee and Children 17
Employee and Family 24
Coverage 1st - $1,000 Deductible
Employee Only 50
Employee & Spouse 23
Employee and Children 20
Employee and Family 35
PPo - $500 Deductible
Employee Only 26
Employee & Spouse 19
Employee and Children 10
Employee and Family 21
PPo - $300 Deductible
Employee Only 22
Employee & Spouse 14
Employee and Children 4
Employee and Family 52
374
Total Monthly Funding
Total Annual Funding
Employee/Employer %
* Employee contributions plus subsidy
Proposed Premium and
Contributions
Employer Employee
Contribution Contributions*
$500.00 $34.19
$500.00 $245.04
$500.00 $222.27
$500.00 $281.66
$500.00 $52.98
$500.00 $304.19
$500.00 $280.21
$500.00 $363.14
$500.00 $117.23
$500.00 $386.80
$500.00 $362.09
$500.00 $432.49
$500.00 $184.69
$500.00 $526.94
$500.00 $504.07
$500.00 $559.08
$187,000 $108,133
$2,244,000 $1,297,600
63% 37%
Total Premium wI
Contributions & Subsidy
$534.19
$745.04
$722.27
$781.66
$552.98
$804.19
$780.21
$863.14
$617.23
$886.80
$862.09
$932.49
$684.69
$1,026.94
$1,004.07
$1,059.08
$295,133
$3,541,600
100%
Exhibit 4
City of La Porte
Proposed Premium and Contribution Worksheet
Effective October 1 , 2006
Maximum Claims
Subs
Coverage 1st - $1,500 Deductible
Employee Only 24
Employee & Spouse 13
Employee and Children 17
Employee and Family 24
Coverage 1st - $1,000 Deductible
Employee Only 50
Employee & Spouse 23
Employee and Children 20
Employee and Family 35
PPo - $500 Deductible
Employee Only 26
Employee & Spouse 19
Employee and Children 10
Employee and Family 21
PPo - $300 Deductible
Employee Only 22
Employee & Spouse ,14
Employee and Children 4
Employee and Family 52
374
Total Monthly Funding
Total Annual Funding
Employee/Employer %
* Employee contributions plus subsidy
Proposed Premium and
Contributions
Employer Employee
Contribution Contributions*
$500.00 $44.71
$500.00 $320.43
$500.00 $290.65
$500.00 $368.32
$500.00 $69.28
$500.00 $397.77
$500.00 $366.41
$500.00 $474.85
$500.00 $153.29
$500.00 $505.80
$500.00 $473.48
$500.00 $565.55
$500.00 $241.52
$500.00 $689.06
$500.00 $659.14
$500.00 $731.08
$187,000 $141,400
$2,244,000 $1,696,800
57% 43%
Total Premium w/
Contributions & Subsidy
$544.71
$820.43
$790.65
$868.32
$569.28
$897.77
$866.41
$974.85
$653.29
$1,005.80
$973.48
$1,065.55
$741.52
$1,189.06
$1,159.14
$1,231.08
$328,400
$3,940,800
100%
-,
3
--
City of LaPorte
Health Plan Topics
Retiree Cost
To further refme plan contributions by capturing active versus retiree healthcare costs,
Humana was asked to retrospectively abstract plan participants into three classifications
(actives, retirees over 65 and retirees under 65). This report was made available last
week and includes retrospective capture of claims by these three groups. What we have
learned is as follows for the experience period 3/2005 to 3/2006.
Units Members Claims $ Cost PMPM
Active 326 849 $2,414;610 $237.00
Retiree under 65 30 62 286,709 385.36
Retiree over 65 18 33 79,004 199.50
374 944 $2,780,323 $245.43*
*Keep in mind that the membership has increased during the year. Actual cost PMPM as
shown here reflects the entire year. (Members include employees and individual
dependents; these are actual persons in the plan).
This exercise leads to a discussion of how retiree versus active rates should be calculated.
In the past, the claims experience for the entire group was the basis for calculation: . With
one years data now captured, it is feasible to set separate rates for each category.
We can project rates based on the cost PMPM using a simple multiple or load factor. The
more difficult task is to project what the effect of that type of premium change would i
have on participation. With the advent of GASB-45 it is reasonable to assume that the
actuarial study will focus on the actual health cost of the retiree population and how that
cost is projected on a downstream (future) basis. (GASB-45 actuarial services proposal
will be provided to Cynthia in the first week of April).
If we are to review the above PMPM cost and project premiums for retirees in an exact
multiple of active cost the factors would be:
Active = X
Retiree under 65 = X + 63%
Retiree over 65 = X - 16%
Since the City can utilize actual retiree cost as a basis for calculating retiree rates, it is
therefore reasonable to propose the following illustrations (Exhibit 5). A fixed expense
load for administration and stop loss of $30.72 will be added to each rate. Exhibit 6 is the
retiree claims and participation data from Humana.
Discussion & Notes
Page 3
City of La Porte
Proposed Retiree Premium and Contribution Worksheet
Effective October 1,2006
Subs
Coverage 1st - $1,500 Deductible
Employee Only 24
Employee & Spouse 13
Employee and Children 17
Employee and Family 24
Coverage 1st - $1,000 Deductible
Employee Only 50
Employee & Spouse 23
Employee and Children 20
Employee and Family 35
PPo - $500 Deductible
Employee Only 26
Employee & Spouse 19
Employee and Children 10
Employee and Family 21
PPo - $300 Deductible
Employee Only 22
Employee & Spouse 14
Employee and Children 4
Employee and Family 52
Total Monthly Funding
Total Annual Funding
Employee/Employer %
· Employee contributions plus subsidy
374
Proposed Premium and
Contributions
Employer Employee
Contribution Contributions.
$500.00 $25.78
$500.00 $184.74
$500.00 $167.57
$500.00 $212.34
$500.00 $39.94
$500.00 $229.32
$500.00 $211.24
$500.00 $273.76
$500.00 $88.37
$500.00 $291.60
$500.00 $272.97
$500.00 $326.05
$500.00 $139.24
$500.00 $397.26
$500.00 $380.01
$500.00 $421.48
$187,000 $81,520
$2,244,000 $978,236
70% 30%
Total Premium w/
Contributions & Subsidy
$525.78
$684.74
$667.57
$712.34
$539.94
$729.32
$711.24
$773.76
$588.37
$791.60
$772.97
$826.05
$639.24
$897.26
$880.01
$921.48
$268,520
$3,222,236
100%
Exhibit 5
Illustration Only
at Expected Claims
Over 65
Premium
Under 65
Premium
$857.02 $441.66
$1,116.13 $575.18
$1,088.14 $560.76
$1,161.11 $598.37
$880.10 $453.55
$1,188.79 $612.63
$1,159.32 $597.44
$1,261.23 $649.96
$959.04 $494.23
$1,290.31 $664.94
$1,259.94 $649.29
$1,346.46 $693.88
$1,041.96 $536.96
$1,462.53 $753.70
$1,434.42 $739.21
$1,502.01 $774.04
Exhibit 6
Under 65 65 and Over Total
Month EEs Members Medical RX Total Claims EEs Members Medical RX Total Claims EEs Members Medical RX Total Claims
Jan-05 26 56 1,091 2,265 3,355 15 22 76 1,752 1,829 41 78 1,167 4,017 5,184
Feb-05 26 53 7,990 3,336 11,326 16 27 3,691 2,633 6,324 42 80 11,681 5,969 17,650
Mar-05 26 53 22,744 4,983 27,727 16 27 1,850 2,300 4,151 42 80 24,594 7,284 31,878
Apr-05 26 53 12,735 2,973 15,708 16 27 348 1,582 1,930 42 80 13,082 4,555 17,637
May-05 26 53 21,656 6,206 27,862 16 27 1,078 4,179 5,257 42 80 22,734 10,385 33,120
Jun-05 27 56 21,702 5,064 26,767 16 27 9,417 2,932 12,348 43 83 31,119 7,996 39,115
Jul-05 27 56 8,399 5,048 13,447 16 27 2,339 2,803 5,142 43 83 10,738 7,851 18,589
Aug-05 27 57 14,472 5,316 19,788 17 29 8,652 3,491 12,143 44 86 23,124 8,808 31,931
Sep-05 26 54 2,784 4,974 7,759 18 32 4,257 2,931 7,188 44 86 7,042 7,905 14,947
Oct-05 29 61 2,593 4,683 7,277 18 32 4,292 3,280 7,573 47 93 6,886 7,964 14,849
Nov-05 29 61 5,979 6,834 12,813 18 32 2,566 4,261 6,828 47 93 8,545 11,095 19,640
Dec-05 29 61 69,613 4,295 73,908 18 32 487 3,483 3,970 47 93 70,100 7,778 77,878
Jan-06 30 62 37,321 5,006 42,327 18 33 2,282 3,868 6,150 48 95 39,603 8,874 48,477
Grand Total 354 736 229,080 60,984 290,064 . 218 374 41,337 39,496 80,833 572 1,110 270 416 100,480 370,896
The City of LaPorte Division 03
Membership and Costs by Pre and Post 65
Based on Age of EE
Percentages
61.9%
66.3%
84.7%
60.7%
78.2%
38.1%
33.7%
15.3%
39.3%
21.8%
4
City of LaPorte
Health Plan Topics
Past Proiections
You had requested a review of prior health plan financial projections to determine why
the plan experienced a shortfall in 2005. In June of2004, David Strickler and I put
together some expected contribution projections using TML participation data. (Exhibit
7) The City's contribution was set at $5,000 per year. The attached illustration showed
total premium funding at $2,812,842 at the expected level and $3,234,768 at the expected
plus reserve level. These levels would have been acceptable if:
I. Participation stayed at 403 employees/retirees
2. TML run out would have met expectation
3. Plan participation remained in the PPO options
As with any projection, hindsight now shows that:
1. Membership was overstated by TML or it actually dropped from 403 to 374,
<$218,544>
2. Budgeted run out $400,000, actual $526,000 <$126,000>
3. Membership migrated to lower premium plans <$100,000>
This shortfall amount of $444,544 affected both revenues and expenses. The expense
component (run out) was a one-time event. The lower contribution totals are ongoing,
and are included in our earlier illustrated calculations.
I have attached a 2006 forecast (made in late 2005) and our meeting notes from January
31, 2006 to help explain the 2005 shortfall. (Exhibits 8a and 8b).
Discussion & Notes
Page 4
Coverage 1st. $1,500 Deductible
Employee Only 25
Employee & Spouse 10
Employee and Children 10
Employee and Family 24
Coverage 1st. $1,000 Deductible
Employee Only 58
Employee & Spouse 8
Employee and Children 8
Employee and Family 19
PPo . $500 Deductible
Employee Only 24
Employee & Spouse 26
Employee and Children 26
Employee and Family 60
PPo . $300 Deductible
Employee Only 37
Employee & Spouse 16
Employee and Children 16
Employee and Family 36
Total Monthly Funding
Total Annual Funding
Employee/Employer %
City of La Porte
Premium and Contribution Projection
Effective January 1, 2005
Subs
Premiums and Contributions set for Expected Costs
Current
Total Employer Employee Employee
Premium Contribution Contributions Contribution Change
$430.67 $416.66 $14.01 $25.00 -$10.99
$553.94 $416.66 $137.28 $140.00 -$2.72
$505.15 $416.66 $88.49 $100.33 -$11.84
$602.72 $416.66 $186.06 $200.00 -$13.94
$464.64 $416.66 $47.98 $25.00 $22.98
$597.62 $416.66 $180.96 $140.00 $40.96
$544.99 $416.66 $128.33 $100.33 $28.00
$650.26 $416.66 $233.60 $200.00 $33.60
$484.19 $416.66 $67.53 $25.00 $42.53
$622.77 $416.66 $206.11 $140.00 $66.11
$567.92 $416.66 $151.26 $100.33 $50.93
$677.61 $416.66 $260.95 $200.00 $60.95
$527.91 $416.66 $111.25 $25.00 $86.25
$679.00 $416.66 $262.34 $140.00 $122.34
$619.20 $416.66 $202.54 $100.33 $102.21
$738.79 $416.66 $322.13 $200.00 $122.13
$234,404 $167,914 $66,490 $45,820 $20,670
$2,812,842 $2,014,968 $797,874 $549,838 $248,037
100% 72% 28% I
Exhibit 7
Premiums and Contributions set for Expected Costs Plus Reserves
Current
Total Employer Employee Employee
Premium Contribution Contributions Contribution Chal1se
$452.20 $416.66 $35.54 $25.00 $10.54
$581.64 $416.66 $164.98 $140.00 $24.98
$530.40 $416.66 $113.74 $100.33 $13.41
$632.86 $416.66 $216.20 $200.00 $16.20
$487.88 $416.66 $71.22 $25.00 $46.22
$627.51 $416.66 $210.85 $140.00 $70.85
$572.24 $416.66 $155.58 $100.33 $55.25
$682.77 $416.66 $266.11 $200.00 $66.11
$508.39 $416.66 $91.73 $25.00 $66.73
$653.91 $416.66 $237.25 $140.00 $97.25
$596.31 $416.66 $179.65 $100.33 $79.32
$711.49 $416.66 $294.83 $200.00 $94.83
$554.31 $416.66 $137.65 $25.00 $112.65
$712.95 $416.66 $296.29 $140.00 $156.29
$650.16 $416.66 $233.50 $100.33 $133.17
$775.73 $416.66 $359.07 $200.00 $159.07
$246,124 $167,914 $78,210 $45,820 $32,390
$2,953,484 $2,014,968 $938,516 $549,838 $388,679
100% 68% 32% I
Assumptions:
1. Humana Smart Suite plan design.
2. Rate differentials based on Humana book of business.
3. Enrollment assumptions based on Humana plan experience.
4. Employee and total premiums are based on previously stated projections of expected costs and expected costs plus reserves (5%).
403
Exhibit 8a
City of La Porte
2006 Health Plan Forecast
2005
Ten months Medical claims @ 10 months
$ 1,954,564
$ 2,345,476
$ 400,000
$ 330,000
$ 3,075,476
Annualized w/o trend
Run in from TML (est.)
Expenses: Admin ($130,000), SL ($200,000)
2006
Trend @ 8% on claims ($2,745,476 x 1.08)
Trend @ 5% on expenses ($330,000 x 1.05)
$ 2,965,114
$ 345,500
$ 3,310,614
$ 562,804
$ 3,873,418
Run out (IBNR) @ 17%
Annual Plan contribution @ current $500.00 PEPM (City) for 2006
- Participation (372 total)
- Waivers (42 total)
$ 2,775,032 (a)
(a) Lower than expected employee/retiree contributions due to dramatic migration to
Coverage 1 st plans from 2005 to 2006.
2005 2006
- Coverage 1 st $1500 ded. 61 78
- Coverage 1 st $1000 ded. 82 127
- PPO $500 ded. 127 72
- PPO $300 ded. -2Q 99
360 372
2006 should be slowed with enrollment in Coverage 1 st plans.
C:\Documents and Settings\KClarklMy DocumentslCity ofLaPortelReportslCity of La Porte 2006 Health Plan Forecast.doc
Exhibit 8b
MEMORANDUM
The
Welch
Company
From:
Robert Swanagan
Neal W. Welch ~
Two Memorial City Plaza
820 Gessner, Suite 1470
Houston, Texas 77024
T: 713.827.8755
F: 713.461.5788
www.thewelchco.com
January 31, 2006
To:
Cc:
Cynthia Alexander
Debra Feazelle
Jose Castro - Humana
Subject:
City of La Porte
Backaround
In 2004 customer service and medical claims cost were issues with the TML administered plan.
TML began to see their ASO business fail as Fort Send ISO and other large self-funded clients
began to leave primarily due to under performing network contracts and service issues. Since then
TML has merged with TASS and they provide pooled medical plans for Cities. With growing
pressure to seek greater efficiency in its health plan operation, the City went to the commercial
insurance marketplace to review alternatives. Humana was chosen as the ASO vendor in the fall of
2004. TML paid their own run out claims.
Based on the records through 12/31/05 the financial performance from both years is as follows:
Medical Claims
Rx Claims
Run in Claims
2004 (TML)
$3,081,595
(incl. )
(N/A)
$3,081,595
$ 120,000
$ 190,000
(N/A)
$3,391,595
2005 (Humana)
$2,160,000
306,000
526,000 (TML)
$2,992,000
$ 130,000
200,000
14,000 * Run Out Admin (TML)
$3,336,000
Admin
Stop-Loss
Misc *
Total
At mid year 2005 our estimate of plan cost for 2005 / 2006 budget purposes was as follows:
Annualized
Paid Claims (Humana) 10 mos. $1,954,564
Run in from TML (Est)
Expenses (Admin + S / L)
$2,345,476
400,000
330.000
$3,075,476
Also at mid-year we proposed an initial 2006 projection.
Paid Claims w 1 8% Trend
Run In (N/A)
Expenses (Admin + S/L) w 1 5% Trend
$2,965,144
o
345.500
$3,310,614
$ 562,804
Projected full funding including IBNR @ 17%
Actual full funding (14% + fixed cost at 12/31/06)
With the 2005 plan year completed we can now revise the 2006 plan year projection as follows:
Paid claims wI 8% Trend $2,992,000 x 1.08%
Fixed Cost w 1 5% Trend
Projected Plan Cost for 2006
$3,231,360
346.500
$3.577,860
In hindsight I believe everyone's projections of plan cost were close to budget. The anomaly that
was realized in the transition from TML to Humana was the movement by actives and retirees to
lower contribution plans. Keep in mind we moved from a single option to a four option plan. This
fact is further aggravated in 2006 as people move further into the Coverage First plans.
Plan Name 2005 2006
Coverage First $1500 61 78
Coverage First $1000 82 127
PPO $500 127 72
PPO $300 --.lliL ~
360 372
Even with the increased participation overall, the rating by plan level must keep pace with the
overall contribution budget of the plan. Based on current participation (2006) we provided a special
contribution projection late last year that anticipated the financial needs of the plan. (see attached
Premium + Contribution Projection). This funding would take the plan to $3,200,000.
Future Contribution Calculations
Since we now know what the anticipated cost of plan operations should be, plus the actual plan
participation by actives and retirees, it should be easier to arrive at future employee 1 retiree
contribution levels each year. Keep in mind that in the past this task was much easier with only one
plan alternative.
I have asked Humana to look at their projections for 2006, independent of my illustrations, using the
aggregate stop loss quotation for guidance. I asked them to project employee 1 retiree rates based
on the City's $500 per month contribution for a breakeven, midpoint and plan maximum level.
Essentially, this projection allows the City to look at options relating to reserve building. We
anticipate having these projections for our meeting. If they are not available we will schedule an
additional meeting to go over the projections.
Employee Benefits Consulting
2
Retiree Health Coveraae
Based on your recent experience relating to retiree health insurance and its ultimate cost (premium)
for the future I offer some information for your consideration. From an underwriting perspective
consider these factors regardless of plan option chosen, vesting schedule etc.
1) Retiree without Medicare is more expensive than active employee:
a. Age
b. Lack of supervision
c. Adverse selection (not working for someone else)
d. Occupational illness (even though prohibited)
2) Retiree with Medicare is less expensive than active employee:
a. Part A+B primary
b. Part D subsidy
Therefore, I would suggest that each year an overall targeted health care cost be established for
the plan. That target should include all claims, operational expenses and reserves. With that target
cost, calculate an increment for retirees under age 65 and a decrement for those over 65. I believe
25% load or discount would be appropriate. Then set individual plan rates as with Humana's
guidance. This same overall calculation can be used to set COBRA premiums as well. We look
forward to working with you on these rates once we agree on the factors to be included.
HealthCare Savings Accounts
In the absence of a long explanation relating to this new concept in plan design, we have enclosed
some Power Point slides and a detailed comparison of how the HSA, HRA, and FSA operate. With
a discussion on the cost I benefit relationship completed, we can project plan impact with the
introduction of an HSA. In the City's situation the HSA concept may be more understandable since
the current Coverage First plans resemble an HSA. There will be many decisions that must be
made with this type of plan offering, weighting the needs of the population to be covered. This
concept may also make an interesting topic for 172 training and I or a council workshop.
Employee Benefits Consulting
3
,-
-
------------
Notes:
~otes~
A
REQUEST FOR CITY COUNCIL AGENDA ITEM
Agenda Date Requested May 22 2006
Requested By: Mayor Alton E. Porter
Department:
MJlygr'll Office
Report: X Resolution:
Appropriation
Source of Funds: nla
Account Number: nla
Ordinance:
Amount Budgeted: nla
Exhibits:
Amount Requested:
Exhibits:
Budgeted Item: YES NO
SUMMARY & RECOMMENDATION
City Council to discuss replacing or renewing positions on various Boards and Commissions, and also discuss one
vacant slot on the Chapter 172 Employee, Retirement Insurance & Benefits Board.
Airport Advisory Board
Hector Villarreal
Tucker Grant
8/31/06
8/31/06
Tax Increment Reinvestment Zone Number One
Dave Turnquist, Position 1 8/31/06
Horace Leopard, Position 4 8/31/06
JJ Meza, Position 6 8/31/06
Chester Pool, Position 8 8/31/06
Chapter 172 Employee. Retirement Insurance & Benefits Board
Vacant 9/30106
Civil Service Commission
Keith Trainer, Chairman
Fire Code Review Committee
Jeff Brown, District 2
Woodrow Sebasta, District 3
Floyd Craft, District 4
Jim Bridge, District 5
Bryan Moore, At-LargeA
Lynn Green, Mayor
La Porte Area Water Authority
Chester Pool
Paul Berner
8/31/06
8/31/06
8/31/06
8/31/06
8/31/06
8/31/06
8/31/06
8/31/06
8/31/06
La Porte Development Corporation Board
Mike Clausen 8/31/06
Bill~~ 8Dlffi6
Pat Muston 8/31/06
La Porte Redevelopment Authoritv
Dave Turnquist 8/31/06
Horace Leopard 8/31/06
JJ Meza 8/31/06
Chester Pool 8/31/06
Main Street Advisorv Board
Bill Manning, Position 4
Jeffery Carpenter, Position 5
Gerald Metcalf, Position 6
Paul Pieri, Position 7
8/31/06
8/31/06
8/31/06
8/31/06
Plannin1!: and Zonin1!: Commission
Pat Muston, Chairperson
Nick Barrera, District 2
Kirby Linscomb Jr., District 3
8/31/06
8/31/06
8/31/06
Southeast Texas Housin1!: Finance Corporation Board
Pat Muston 8/31/06
Zonin1!: Board of Adiustment
Lawrence Mc Neal, Alternate I
Gilbert Montemayor, Alternate 2
8/31/06
8/31/06
There are not any applications on file from citizens.
Action ReQuired bv Council:
Discuss replacing or renewing positions on various Boards and Commissions, and also the discussion of one vacant
slot on the Chapter 172 Employee, Retirement Insurance & Benefits Board.
Approved for City Council Aeenda
Debra Feaz
Date
-0ro~
Harris, Sharon
Cc:
Subject:
Gillett, Martha
Tuesday, May 16, 2006 3:21 PM
Alton Porter; Barry Beasley (barry.beasley@sbc.com); engelken@aol.com; Feazelle, Debra;
harriss@ci.la-porte.tx.us; Howard Ebow (hebow@houston.rr.com); Louis & Marlene Rigby
(Louis.Rigby@halliburton.com); Mike Clausen; Mike Mosteit; mosteit66@aol.com; Peter
Griffiths; Tommy Moser (moser_electric@sbcglobal.net); Bonnie Garrison (GarrisonY@ci.la-
porte.tx.us); Susan Felty
Harris, Sharon
Boards and Commissions
From:
'-'nt:
.J:
You requested I let you know which members do not have an application on file:
They are as follows:
Airport Advisory Board
Tucker Grant
William Gray
Dan Myhaver
Fire Code Review
Floyd Craft
Brian Moore
Fire Pension Board
Bruce Compton
Johnny Jones
La Porte Area Water Authority
Chester Pool
Steve Valerius
Planning and Zoning
Dottie Kaminski
Hal Lawler
These are people who have been on prior to the requirement to have an application on file was implemented.
Let me know if you have any additional questions.
Thanks
Martha A. Gillett, TRMG,CMC
City Secretary/Public Information Officer
City of La Porte
604 West Fairmont Parkway
La Porte, Texas 77571
281-471-5020 ext. 5019
1
B/C
City of La Porte Zoning "lrd of Adjustment
Attendanc. hart
Sidney Grant !;lI ~ !;lI r; III b!1 ~ IiZI Ii] !;lI !;l]
Bob Capen ~ ~ bZJ ~ b2l I!lI 1lI blI ~ V1
Rod Rothermel ~ !ill ~ III ~ IiZI !ill b2l
WIllie Walker !;lI ~ !ill ~ III b!1 bZI III Ii] !ill !;l]
Ruben Salinas !;lI ~ !ill ~ bZI III hi)
Charles Schoppe (Alt. 1) !;lI QI ~ III ~ bZI IiZI bZJ b2l
George Maltsberger (Alt. 2) ~ III b!1 Ii] !;lI b2l
1/27/00 2/24/00
6/1/00 10/12/00 3/22/01 5/24/01 7/12/01 1/24/02 6/27/02 10/24/02 11/20/02
Sidney Grant (Chairperson) !ill ~ IilI 121 III b2I bZI I2J Ii] b2l
Bob Capen IilI ~ !ill 121 I2J !;I'I bZI I2J Ii] !;lI b2l
Rod Rothermel !ill ~ ~ III b2I Ii] IilI !;l]
Willie Walker ~ ~ IiZI Replaced
Ruben Salinas bZJ bZJ [71 Replaced
Charles Schoppe IilI ~ blI I2J b2I bZI III Ii] bZJ b2l
George Maltsberger !ill ~ !ill III III b2I III Ii]
Barbara Norwlne (Alt. 1) b2I bZI Ii] bZJ b2I
Bernard Legrand (Alt. 2) b2I III Ii] !ill b2l
3/27/03 4/24/03 5/22/03 7/24/03 8/28/03 12/4/03 1/22/04 4/22/04 5/27/04 6/24/04 7/22/04
Sidney Grant (Chairperson) !ill ~ !ill Zl .i21 Q'l III !ill !;l]
George Maltsberger (Vice) !ill III !ill Zl b2I ~ I2J iii !;l]
Bob Capen IilI IilI 12I 121 b2I bZI 121 iii !;lI
Rod Rothermel !ill III 121 Ii] !;lI !;l]
Charles Schoppe !;lI 12I iii 121 121 b2I 6Zl Ii] iii 0
Barbara Norwlne (Alt. 1) ~ ~ -Q1 ResIgned
Bernard Legrand (Alt. 2) !ill IilI Replaced
Lawrence McNeal (Alf. 1) 121 I2J b2I 6Zl 121 iii IilI
Gilbert Montemayor (Alt. 2) 121 121 b2I 6Zl 121 bZJ !;lI b2l
7/27/04 8/26/04 9/23/04 11/23/04 2/24/05 3/24/05 5/26/05 7/28/05 10/27/05 2/23/06 3/23/06
City of La Porte Planning and z~ -;,g Commission
Attendance Ct, )
Dottie Kaminski I;Zj iii bZl iii III III ~ III 0 ~ !;ZI bZI
Nick Barrera I;Zj iii bZl blJ 0 !;lI ~ III 0 iii [;2] bZI
Paul Berner III I!l1 fll I!l1 171 ~ III I!l1 b2l bZI
Doretta Finch I;Zj iii blJ 0 III ~ III III iii bZI
Kirby Linscomb, Jr. iii l;z] iii III !;2J III III iii !;ZI
Hal Lawler (Alt. 1) !;2l blJ III III iii b2l
Pat Muston I;Zj iii bZl iii III III !;2J 0 iii b2l bZI
Claude Meharg !;2l iii bZl blJ !;2J blJ bZI
Les Bird (Alt. 2) I!l1 III ~ ~ III I!l1 b2l
4/21/05 5/19/05 6/16/05 7/21/05 8/18/05 9/15/05 10/20/05 11/17/05 12/15/05 1/19/06 2/2/06 2/16/06
Dottie Kaminski ~ iii
Nick Barrera ~ iii I
Paul Berner ~ iii
Doretta Finch III I!l1
Kirby Linscomb, Jr. bZl
Hal Lawler (Alt. 1)
Pat Muston bZl iii
Claude Meharg
Les Bird (Alt. 2)
3/16/06 4/20/06
Chairperson: $15 per meeting Members: $10 per meeting
Betty Waters blI ~ blI blI III ~ IiZI III blI bZJ bZI
Dottie Kaminski I;{J ~ III bZI ~ bZI III blJ [l2J bZI
MeRon Wolters III Resigned
Hal Lawler Ii:J blI ~ QI [;l ~ III blI QI bZJ bZI
Ross Morris blJ I;z] QI III [i III III bZJ bZI
Ralph Dorsett IZI [;l 121 blJ b2l bZI
Pamela Baldwin I;{J IZI blJ III
Doretta Finch III bZI b2l bZI
City of La Porte Planning and 1~ "'\rIg Commission
Attendance C~. .'
(no quorum) (no quorum)
3/21/02 4/18/02 5/16/02 5/30/02 6/20/02 7/18/02 8/1/02 8/15/02 9/19/02 10/17/02 11/21/02 12/19/02
Betty Waters III IlIi IZI III ~ Ii2l III blJ bZI
Dottie Kaminski III IlIi III III ~ Ii2l III bZI
Hal Lawler III IlIi IZI III ~ Re-appolnted as [l2J bZI
Ross Morris III III ill III Alternate Members !;21 I!ZJ
Ralph Dorsett blI IZI blJ 121 Ii2l bZJ bZI
Pamela Baldwin III Resigned. actual date unknown
Doretta Finch blJ Ii:J Il.I ~ Il.I III bZI [l2J
Kirby Linscomb, Jr. Il.I III bZl bZJ bZI
Nick Barrera Il.I III bZI b2l bZI
Paul Berner Ii] Ii) iii !;21
1/30/03 2/20/03 3/20/03 4/17/03 5/15/03 6/19/03 8/27/03 9/18/03 10/16/03 11/20/03 1/15/04 2/19/04
Betty Waters III IZI III Resigned
Dottie Kaminski III IZI bZI 121 Ii2l bZI [l2J bZI
Nick Barrera III III ill 121 Ii] III !;21 I!ZJ
Paul Berner I I;z] bZl III III III Ii2l III blJ bZJ bZI
Ralph Dorsett I Resigned
Doretta Finch III I I;z] bZl ~ III b2J
Kirby Linscomb, Jr. bZI bZI ~ IiZI bZI
Hal Lawler (Alt. 1) III blI IiZl ~ III bZI bZJ
Ross Morris (AR 2) III 121 Resigned
Pat Muston ~ Ql h2) J;7I
Claude Meharg Ql I;z!
Les Bird CAR. 2) bZJ I;z!
3/29/04 4/15/04 5/20/04 6/17/04 7/15/04 8/19/04 9/16/04 10/21/04 11 /18/04 1/20/05 2/17/05 3/17/05
Chairperson: $15 per meeting
Members: $10 per meeting
T FOR CITY COUNCIL AGENDA ITEM
Appropriation
Requested By:
Source of Funds:
Department:
Account Number:
Report: X Resolution:
Ordinance:
Amount Budgeted:
Exhibits: Memorandum with Exhibits
Amount Requested:
Exhibits: Draft Development A~reement
Budgeted Item: YES
NO
Exhibits: Draft Utility Rxtension Aereement
SUMMARY & RECOMMENDATION
Prior correspondence to Council and the TlRZ/Redevelopment Authority noted that the developer of Lakes at Fairmont Greens
could not secure financing for the development because of significant up front costs associated with the trunk sewer and lift
station, even though the TlRZ/Authority could eventually reimburse the developer. With this cost center removed, the
developer was able to secure financing. During 05-06 budget preparation, Council approved $645,000 for the construction of
the trunk sewer and lift station based on the understanding that the TlRZ/ Authority would reimburse the City from future
increment.
The first agreement, between the City and TlRZ/ Authority provides for the City to advance the funds ($645,000) for the trunk
sewer and lift station and act as construction manager for the TlRZ/ Authority. The agreement further provides for the
TlRZ/ Authority to reimburse the City in the future.
The second agreement is a Utility Extension Agreement (UEA) that establishes the City's oversight and control over the design
and construction of the trunk sewer and lift station. The design and construction contracts would be let/owned by the
developer with the City issuing joint checks to the developer/designer or engineer and developer/contractor as certain approvals
and milestones are met.
New cost estimates are being prepared by the developer's engineers. The agreements provide for the possibility that the
bids mav exceed budgeted funds (see Section 8 of the UEA).
These agreements have been circulated for comment by the party's and by the City's attorneys. It is anticipated that the
TlRZlAuthority will consider approval at the May 24 meeting and the Council at June 12 meeting.
Attached are 3 approaches being looked at for this project. They each have advantages/disadvantages and of course there is a
wide cost differential and opinion on the appropriate final design approach. While the base proposal is the lowest, there is
some concern over long term maintenance trade-offs and some unanswered questions on the depth of line segments near and
along McCabe Road.
For these reasons we are still working with the developer and design engineers on a final design approach. In fact we may
consider bidding alternates.
Therefore, certain terms of the UEA may change to cover these options.
The key issue is to reinforce what was noted in the February 27 presentation to Council. These costs upon final approach and
bid opening may exceed the original estimate that was provided and budgeted last year.
Action Required bv Council:
A
~1-6
Date
_~i,,"',
(]t\' of La POl1e
1:\t..JI)Ji....17ed 189:.!
FnMII:
John Joem~ Nt
Wayne J8fM -/
Steve Gillett
~ll'ltD' c.0 _ e'1{t-jP
t/1-(~vlPV~ 4 t
o~
Memo
To:
cc:
Date: 5-16-06
Re= Southeast Sanitary Sewer Trunk Main and Uft Station F adlities Altemate Cost Estimates
John:
As per your request. I have instructed Rodney to modify the submitted oost estimates to the reflect the
total engineering oosts as well as deleting the sanitary sewer run along McCabe Road east of Taylor
Bayou, terminating at Uft Station No. 12. In addition, well pointing oosts have been induded in the
various oost estimates to account for any dewatering.
The following are some of the key points for the various altematives:
Base Desion
. Total Cost of $585,393.00 (for a more ooncise oomparison an additional $100,000 should be
added to this design to account for the extra sanitary sewer trunk main required for the service
areas north of Wharton Weems Boulevard in order to oonvey its sewage to the City's existing
infrastructure along the far northem reach of the project area, bringing the total oost to
$685.393.00).
. Of the three designs, this one maximizes the amount of 8" force main which allows the overall
oosts to be lower.
. Requires a deep gravity sanitary sewer along the west bank of Taylor Bayou from McCabe
Road to the proposed lift station south of Lakes at Fairmont Green Section 1. If wet sand
oonditions are enoountered and the contrador is unable to dewater the proposed alignment,
the 12" gravity line can be raised and a siphon designed under Taylor Bayou to extend
sanitary sewer service along McCabe Road to areas east of Taylor Bayou.
Altemate One
. Total Cost of $841,525.00
. Provides a gravity trunk line to the areas north of Wharton Weems Boulevard.
. Requires the same deep gravity sewer along Taylor Bayou as the Base Design.
Alternate Two
. Total Cost of $976,689.00
. Moves the lift station to McCabe Road, thereby eliminating the need for the deep gravity sewer
along the west bank of Taylor Bayou.
. Is the most expensive of the alternatives due to it having the most large diameter gravity
sewer.
. Page 2
2702.00 LAKES AT FAIRMONT GREENS SEC 1
SS TRUNK MAIN: BASE DESIGN
100% Quantity Takeoff & Construction Cost Projection
Off-5ite Construction
j' "."-,=LU~L,_ ilJL ,8"', II
=1 ~~"/-- i~tet~
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BAY FOREST
Ga.F OOURSE
/AlS~t
,-=::::::'~-::'=:=Jji'~~~:':~ -
General Conditions
Sanitary Sewer
12" PVC San Sewer Pipe
24" PVC San Sewer Pipe
8" PVC San Sewer Force Main
Street Auger for 12" Sewer Pipe
Street Auger for 24" Sewer Pipe
Street Auger for 8" Force Main
Manholes
Inspection & Miscellaneous
Sanitary Sewer Lift Station
Trench Safety
Trench Dewatering System
Contingencies
Engineering Services
Total
ION DESIGN GROUP, lLC
05.16.2006
de ieted
$40,782.00
$11,550.00
$182,754.00
$13,720.00
$0.00
$5,n5.00
$17,200.00
$14,644.00
$175,000.00
$13,238.00
$32,430.00
$23,700.00
$10,500.00
$530,793.00
$44,100.00
$585,393.00
Page 1 of 3
2702.00 LAKES AT FAIRMONT GREENS SEC 1
SS TRUNK MAIN: ALTERNATE 1
65% Quantity Takeoff & Construction Cost Projection
Off-Site Construction
2+-
GR-'V:
q) -l
~ -.-t ._ ,__'_,
. :::::1 " I ! i !J ' ! ,i "
~ 'iHJaj.tj(r~iJ ~i
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1=1!EBfB2
1::~TIf~rt~j
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p f'-,,:..-.LL.J.....l-LLLLLLL.L) ~_.L.l-.-:-:'_)~_~
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/.,1, "V' . J J f',__ 1 J r ' ,. L.l.. ~ _J__LJ._-+.-~._"..l.-:
,i,," il",~.: 1-," f ..
,l~lF ...
/;'~j7!!/ 8. r~'~"~- 'M~__'_~____~'___
//~'f///-: F.~ l6'J ~~
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~/: / ~.'. i\'/~'
~.(____</l _ '~:4.l~:/',..~~'~:,~~
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=if
,~=::-:=----==:M;'~:~
clele+ed
General Conditions
Sanitary Sewer
1 Z' PVC San Sewer Pipe
24" PVC San Sewer Pipe
8" PVC San Sewer Force Main
Street Auger for 12" Sewer Pipe
Street Auger for 24" Sewer Pipe
Street Auger for 8" Force Main
Manholes
Inspection & Miscellaneous
Sanitary Sewer Uft Station
Trench Safety
Trench Dewatering System
Contingencies
$40,782.00
$244,230.00
$109,626.00
$13,720.00
$0.00
$5,n5.00
$29,200.00
$14,644.00
$175,000.00
$13,238.00
$98,910.00
$32,300.00
Engineering Services
Total
ION DESIGN GROUP, LLC
05.16.2006
$10,500.00
$n7,425.00
$53,600.00
$841,525.00
Page 2 of 3
2702.00 LAKES AT FAIRMONT GREENS SEC 1
S$ TRUNK MAIN: ALTERNATE 2
36% Quantity Takeoff & Construction Cost Projection
Off-$ite Construction
r[==~-~=~==~i---
J 1 ii, ]
t, :::::;:::-~~L-
_"__~_~__'____m_.____l
BA.Y FOREST
GOLF COURSE
r------
I
I
General Conditions
Sanitary Sewer
12" PVC San Sewer Pipe
24" PVC San Sewer Pipe
8" PVC San Sewer Force Main
Street Auger for 12" Sewer Pipe
Street Auger for 24" Sewer Pipe
Street Auger for 8" Force Main
Manholes
Inspection & Miscellaneous
Sanitary Sewer Lift Station
Trench Safety
Trench Dewatering System
Contingencies
$0.00
$392,175.00
$95,172.00
$0.00
$14,850.00
$10,290.00
$20,370.00
$14,644.00
$175,000.00
$13,238.00
$112,050_00
$36,800.00
Engineering Services
Total
ION DESIGN GROUP, LLC
05_16_2006
$10,500.00
$884,589.00
$81,600.00
$976,689.00
Page 3 of 3
DEVELOPMENT AGREEMENT
This Development Agreement (this "Agreement") is made as of ,2006, by and
between the REINVESTMENT ZONE NUMBER ONE, CITY OF LA PORTE, TEXAS (the
"Zone "), a tax increment reinvestment zone created by the City pursuant to Chapter 311 of the
Texas Tax Code, as amended, acting by and through its governing board of directors (the "Zone
Board"), LA PORTE REDEVELOPMENT AUTHORITY, a nonprofit local government
corporation formed by and on behalf of the City of La Porte, Texas (the "A uthority "), and CITY
OF LA PORTE, TEXAS a home-rule city (the "City ").
RECITALS
WHEREAS, pursuant to Chapter 311 of the Texas Tax Code, the City Council of the City
created the Zone in the City; and
WHEREAS, the Zone Board adopted a Project and Financing Plan (as defined below in Section
1.1), as amended, that provides that the Zone will undertake to make certain acquisitions and
improvements in the Zone, and was approved by the City Council; and
WHEREAS, the Texas Tax Code provides that the Zone may enter into agreements as the Zone
Board considers necessary or convenient to implement the Project and Financing Plan and
achieve its purposes; and
c,..-.
WHEREAS, the City and the Zone have contracted with the Authority as a nonprofit, Texas
local government corporation pursuant to the provisions of Chapter 431, Subchapter D, TEX.
TRANS. CODE, to carry out the purposes of the Zone, including administration, supervision,
construction, financing and other duties, and committed the revenues of the Zone to the
Authority for such purposes, all as more particularly set forth in the Agreement Between the
City, the Zone and the Authority, dated (the "Tri-Party Agreement"); and
WHEREAS, the City wishes to make certain improvements to its sanitary sewer system within
the Zone, to further development within the Zone and to carry out the purposes of the Zone as
described in the Project and Financing Plan, and for the reimbursement of the City for such
improvements in accordance with such Plans; now, therefore,
AGREEMENT
For and in consideration of the mutual promises, covenants, obligations, and benefits of this
Agreement, the Zone, the Authority and the City contract and agree as follows:
ARTICLE 1
GENERAL TERMS
1.1 Definitions. The terms "Agreement," "Authority, " "City," "Zone," "Zone Board,"
and "Tri-Party Agreement" have the meanings set forth in the preamble hereof, and the
following capitalized terms shall have the meanings provided below, unless otherwise defined or
the context clearly requires otherwise. For purposes of this Agreement the words "shall" and
"will" are mandatory, and the word "may" is permissive.
Act shall mean the Increment Financing Act, Chapter 311, Texas Tax Code, as amended.
Authority Bonds shall mean any bond, note or other obligation issued or incurred in one or more
series pursuant to Article V, secured by Tax Increment or funds deposited in the Revenue Fund,
including refunding bonds.
City Advances shall mean any funds advanced by the City pursuant to Section 5.1, and shall
include any interest payable thereon.
City Improvements shall mean the improvements described in Article 3 hereof.
County shall mean Harris County, Texas.
LPISD shall mean the La Porte Independent School District.
Net Tax Increment shall mean the annual collections of the Tax Increment, less (i) any amounts
required to be disbursed to LPISD for the payment of project costs related to educational
facilities incurred directly by LPISD, and (ii) amounts reasonably required or anticipated to be
required for the administration and operation of the Zone, including a reasonable operating
reserve.
Parties or Party shall mean the Zone, the Authority and the City as parties to this Agreement.
Plan shall mean the final project plan and reinvestment zone financing plan for the Zone, as
amended, as approved by City Council.
Revenue Fund shall mean the special fund established by the Authority and funded with Tax
Increment payments made by the City pursuant to the Tri-Party Agreement (which payments are
attributable to incremental ad valorem property taxes paid on the Project and other properties in
the Zone).
Tax Increment shall mean funds deposited in the Revenue Fund by the City pursuant to the Tri-
Party Agreement, comprised of funds received pursuant to those certain Interloca1 Agreements or
similar agreements between the City, the County and the Zone; the City, and the Zone and;
between the City, LPISD and the Zone.
Taxing Unit shall mean individually and collectively the City, the County, and LPISD.
1.2 Singular and plural; gender. Words used herein in the singular, where the context
so permits, also include the plural and vice versa. The definitions of words in the singular herein
also apply to such words when used in the plural where the context so permits and vice versa.
Likewise, any masculine references shall include the feminine, and vice versa.
ARTICLE 2
REPRESENT A TIONS
2.1 Representations of the Authority. The Authority hereby represents that:
(A) It is duly authorized, created and existing in good standing under the laws of the
State and is duly qualified and authorized to carry on the governmental functions and operations
as contemplated by this Agreement.
(B) It has the power, authority and legal right to enter into and perform this
Agreement and the execution, delivery and performance hereof (i) have been duly authorized,
(ii) will not, to the best of its knowledge, violate any applicable judgment, order, law or
regulation, and (iii) does not constitute a default under, or result in the creation of, any lien,
charge, encumbrance or security interest upon any assets of the Authority under any agreement
or instrument to which the Authority is a party or by which the Authority or its assets may be
bound or affected.
(C) This Agreement has been duly authorized, executed and delivered by the
Authority and, constitutes a legal, valid and binding obligation of the Authority, enforceable in
accordance with its terms.
(D) The execution, delivery and performance of this Agreement by the Authority does
not require the consent or approval of any person which has not been obtained.
2.2 Representations of the City. The City hereby represents that:
(A) It is duly authorized, created and existing in good standing under the laws of the
State and is duly qualified and authorized to carry on the governmental functions and operations
as contemplated by this Agreement.
(B) It has the power, authority and legal right to enter into and perform this
Agreement and the execution, delivery and performance hereof (i) have been duly authorized,
(ii) will not, to the best of its knowledge, violate any applicable judgment, order, law or
regulation, and (iii) does not constitute a default under, or result in the creation of, any lien,
charge, encumbrance or security interest upon any assets of the City under any agreement or
instrument to which the City is a party or by which the City or its assets may be bound or
affected.
(C) This Agreement has been duly authorized, executed and delivered by the City
and, constitutes a legal, valid and binding obligation of the City, enforceable in accordance with
its terms.
(D) The execution, delivery and performance of this Agreement by the City does not
require the consent or approval of any person which has not been obtained.
2.3 Representation of the Zone. The Zone hereby represents that:
(A) The Zone is duly authorized, created and existing under the laws of the State and
is duly qualified and authorized to carry on the governmental functions and operations as
contemplated by this Agreement.
(B) The Zone has the power, authority and legal right to enter into and perform this
Agreement and the execution, delivery and performance hereof (i) have been duly authorized,
(ii) will not, to the best of its knowledge, violate any applicable judgment, order, law or
regulation, and (iii) does not constitute a default under, or result in the creation of, any lien,
charge, encumbrance or security interest upon any assets of the Zone under any agreement or
instrument to which the Zone is a party or by which the Zone or its assets may be bound or
affected.
(C) This Agreement has been duly authorized, executed and delivered by the Zone
and, constitutes a legal, valid and binding obligation of the Zone, enforceable in accordance with
its terms.
(D) The execution, delivery and performance of this Agreement by the Zone does not
require the consent or approval of any person which has not been obtained.
ARTICLE 3
THE PROJECT
3.1 The City Improvements. The City Improvements are intended to enhance the
proposed implementation of a development within the Zone as a whole, as more fully described
in the Plan.
3.2 City Improvements description. The City Improvements consist of improvements
to (working on description) The City Improvements shall include all engineering, legal and
other consultant fees and expenses related to such City Improvements.
3.3 Additional Prolects. This Agreement does not apply to any projects not
specifically defined herein unless this Agreement is amended to provide for the design and
construction of such additional projects.
..-
ARTICLE 4
DUTIES AND RESPONSIBILITIES OF THE CITY
4.1 Construction manager. The City agrees to act as construction manager for any
contracts entered into with respect to the City Improvements including all materials and services
as and when required in connection with the construction of the City Improvements. The City
will obtain all necessary permits and approvals from governmental officials and agencies having
jurisdiction, and provide supervision of all phases of construction of the City Improvements so as
to cause the construction to be performed in accordance with the Plan.
4.2 Design of the City Improvements. The City shall prepare or cause to be prepared
the plans and specifications for the City Improvements. City Improvements shall be designed in
accordance with City standards applicable to similar public improvements within the City.
4.3 Construction contracts. The Authority shall negotiate and award all contracts for
the City Improvements from among contractors qualified and approved by the City and shall be
the owner of the facilities until completion ofthe contract, subject to the duty of the City to act as
construction manager in accordance with Section 4.1, above, and to guarantee all payments to
the contractor, in accordance with Section 5.1, below.
4.4 Com{lletion. Upon completion of a contract for the construction of the City
Improvements, the City shall provide the Authority with a final cost summary of all costs
associated with such contract, and show that all amounts owing to contractors and subcontractors
have been paid in full evidenced by customary affidavits executed by such contractors. The
Authority shall immediately upon certification of the completion of any City Improvements
convey them to the City for incorporation into the City public works system for all purposes.
ARTICLE 5
PROJECT FINANCING AND FUNDING
5.1 The City Advances.
(a) In connection with the construction of the City Improvements, the City agrees to
provide sufficient funds as such become due for all costs thereof (the "City Advances"),
constituting "project costs," as defined in the Act, including costs of design, engineering,
materials, labor, construction, and inspection fees arising in connection with the City
Improvements, all payments arising under any contracts entered into pursuant to this Agreement,
all costs incurred in connection with obtaining governmental approvals, certificates or permits
required as a part of any contracts entered into in accordance with this Agreement, and all related
legal fees and out-of-pocket expenses incurred on behalf of the Authority in connection
therewith. City Advances shall further include any amounts advanced by the City in connection
with the administration of the Authority and the Zone and the design and construction of the City
Improvements.
(b) Interest on each City Advance shall accrue at a rate equal to the prime commercial
lending rate of Chase Manhattan Bank, National Association, or any successor to its
commercial banking activities, plus one percent per annum, compounded semiannually, whether
such costs, fees, or expenses are paid or incurred before or after the effective date of this
Agreement. Interest shall be calculated on the basis of a year of 360 days and the actual days
elapsed (including the first day but excluding the last day) occurring in the period for which such
interest is payable, unless such calculation would result in a usurious rate, in which case interest
shall be calculated on the per annum basis of a year of 365 or 366 days, as applicable, and the
actual days elapsed (including the first day but excluding the last day).
( c) The City shall act as guarantor of the obligations of the Authority with respect to any
contracts awarded in the name of the Authority as provided in Section 4.3, above, and any such
contract shall provide that the contractor may look for payment only to the City, or to funds
provided to the Authority by the City specifically for the purpose of making payments to such
contractor. The City agrees to timely make such payments to allow for payment in accordance
with the terms of the applicable construction contract.
5.2 Repayment of City Advances.
(a) In consideration of the construction of the City Improvements, the Authority shall
begin repaying the City Advances, and shall continue such repayment until repaid in full, on the
earliest date that funds are available from any of the following sources, and solely from such
sources:
(i) proceeds from the sale of the Authority Bonds, as set forth in subsection (b), and
(ii) the Net Tax Increment, subject to the limitations set forth in subsection (c).
(b) As provided herein, the Authority shall issue one or more series of Authority Bonds at
the earliest feasible date, which Authority Bonds will be secured by a pledge of the Revenue
Fund. The net proceeds of the Authority Bonds shall be deposited to a special fund of the
Authority, and shall be used by the Authority to reimburse the City for the full amount (or such
portion thereof as is deemed by the Authority as supportable by available Tax Increment as
provided below) eligible City Advances, plus interest. Such Authority Bonds shall be sold
within 120 days (or such other period as may be agreed by the Parties) of a written request
therefor from the City; provided that the City's Net Tax Increment (based upon the tax valuation
of the Zone as certified or estimated by the Fort Bend County Appraisal District, or its successor)
expected to be generated with respect to available Tax Increment is sufficient to support the
applicable Authority Bonds bearing interest at the then-current rate of interest as determined by
the Authority's financial advisor for comparable issues, after taking into account the portion of
the City's Net Tax Increment required to pay any outstanding Authority Bond issued for any
purpose, including Authority Bonds issued to refund outstanding Authority Bonds. The City's
Net Tax Increment is determined as the total Net Tax Increment, less any amounts that are used
or to be used to determine eligibility of developers within the Zone for reimbursement of
advances to the Authority for construction or anticipated construction of public improvements
under the Plan pursuant to reimbursement agreements approved by the Authority, either now or
during the life of the Zone.
(c) In addition to the City's right to reimbursement from Authority Bond proceeds,
upon request from the City, the Authority shall reimburse the City for City Advances, plus
interest, from the City's Net Tax Increment (computed as above) accumulated in the Revenue
Fund and available in accordance with the priorities described in Section 5.3, below.
(d) At such time as funds are available to pay all or any portion of the City Advances
made hereunder, the Authority shall hire a certified public accountant to calculate the amount
due the City and prepare and submit a report to the Authority certifying (1) the amount due the
City for the City Advances being repaid with interest calculated thereon, and (2) that funds are
available to make such payment. Such report shall be approved at the earliest practicable time,
but not later than 90 days after submission by the City of the records required therefor. The
Authority shall make payment to the City within 30 days of approval of the auditor's report.
(e) The Authority shall provide to the City, upon the written request of the City, and on
the earliest date such information is available after the date of such request, certified copies of all
statements of revenue and the sources of such revenue of the Zone and Authority the intended
use of which is to verify the availability of funds for repayment of the City Advances, if
applicable, under this section.
5.3. Priorities. Amounts deposited in the Revenue Fund shall be applied in the
following order of priority (i) disbursement to LPISD, if applicable, for educational facilities in
accordance with the Interlocal Agreement with LPISD, the City and the Zone; (ii) administrative
costs of the Zone and the Authority; (iii) amounts pledged or required for the payment of
outstanding Authority Bonds, including Authority Bonds in the process of issuance and
refunding Authority Bonds, and (iv) payments to the City pursuant to Section 5.2(c), above.
5.4. Multiple developers and the City. The Authority has entered into other
agreements with developers of land within the Zone for the financing of Zone Improvements,
and may enter into others. It is the intention of the parties that each developer shall be
responsible for the creation of Tax Increment required for its own reimbursement. In such case,
the Tax Increment generated within a developer's project as defined in the applicable
reimbursement agreement shall not be considered in determining whether sufficient Net Tax
Increment exists for the issuance of Authority Bonds, or direct payment of available Net Tax
Increment, for reimbursement of City Advances unless the applicable developer shall give its
written consent thereto. The net proceeds of Authority Bonds issued to reimburse multiple
developers and the City shall be allocated based upon the proportion of Tax Increment generated
by each developer, or such other method as the developers may agree upon, and any unallocated
Tax Increment shall be used for calculation of the City's Net Tax Increment and reimbursement
of City Advances.
ARTICLE 6
DEFAULT
6.1 Default
(a) If any Party does not perform its obligations hereunder in substantial compliance
with this Agreement, in addition to the other rights given the other Parties under this Agreement,
such non-defaulting Parties may enforce specific performance of this Agreement or seek actual
damages incurred by the City for any such default.
(b) The Party alleging default shall provide written notice to the other party of such
default, and the defaulting party shall have 60 days to remedy the default prior to the declaration
of any default hereunder.
ARTICLE 7
GENERAL
7.1 Inspections. audits. The City agrees to keep such records with respect to the City
Improvements and all costs associated therewith as may be required by the Authority, the Zone,
or by State and federal law or regulation. The City shall allow the Zone access to, and the Zone
shall have a right at all reasonable times to audit, all documents and records in the City's
possession, custody or control relating to the City Improvements that the Authority deems
necessary to assist the Authority in determining the City's compliance with this Agreement.
7.2 City operations and employees. All personnel supplied or used by the City in the
performance of this Agreement shall be deemed employees, contractors or subcontractors of the
City and will not be considered employees, agents, contractors or subcontractors of the Zone or
the Authority for any purpose whatsoever. The City shall be solely responsible for the
compensation of all such contractors and subcontractors.
7.3 Personal liability of public officials. legal relations. To the extent permitted by
State law, no director, officer, employee or agent of the Zone or the Authority shall be personally
responsible for any liability arising under or growing out of the Agreement. THE PARTIES SHALL
INDEMNIFY AND SAVE HARMLESS EACH OTHER AND THEIR RESPECTIVE OFFICERS.
REPRESENT A TIVES. AND AGENTS FROM ALL SUITS. ACTIONS. OR CLAIMS OF ANY CHARACTER
BROUGHT FOR OR ON ACCOUNT OF ANY INJURIES OR DAMAGES RECEIVED BY ANY PERSON.
PERSONS. OR PROPERTY RESULTING FROM THE NEGLIGENT ACTS OF SUCH PARTY. OR ANY OF ITS
AGENTS. OFFICERS. OR REPRESENTATIVES IN PERFORMING ANY OF THE SERVICES AND ACTIVITIES
UNDER THIS AGREEMENT. The expenses of the Zone or the Authority with respect to this section
or Section 7.15, below, shall be satisfied from uncommitted City Net Tax Increment.
7.4 Notices. Any notice sent under this Agreement (except as otherwise expressly
required) shall be written and mailed, or sent by electronic or facsimile transmission confirmed
by mailing written confirmation at substantially the same time as such electronic or facsimile
transmission, or personally delivered to an officer of the receiving party at the following
addresses:
La Porte Redevelopment Authority
604 W. Fairmont Parkway
La Porte, Texas 77571
Attn: John Joems
Reinvestment Zone Number One
604 W. Fairmont Parkway
La Porte, Texas 77571
Attn: John Joems
City of La Porte
604 W. Fairmont Parkway
La Porte, Texas 77571
Attn: City Manager
Each party may change its address by written notice in accordance with this section. Any
communication addressed and mailed in accordance with this section shall be deemed to be
given when so mailed, any notice so sent by electronic or facsimile transmission shall be deemed
to be given when receipt of such transmission is acknowledged, and any communication so
delivered in person shall be deemed to be given when receipted for by, or actually received by,
the Authority, the Zone, or the City, as the case may be.
7.5 Amendments and waivers. Any provision of this Agreement may be amended or
waived if such amendment or waiver is in writing and is signed by the Zone, the Authority and
the City. No course of dealing on the part of the Parties, nor any failure or delay by one or more
of the Parties, with respect to exercising any right, power or privilege under this Agreement shall
operate as a waiver thereof, except as otherwise provided in this section.
7.6 Invalidity. In the event that any of the provisions contained in this Agreement
shall be held unenforceable in any respect, such unenforceability shall not affect any other
provision of this Agreement.
7.7 Successors and assigns. All covenants and agreements contained by or on behalf
of a Party in this Agreement shall bind its successors and assigns and shall inure to the benefit of
the other Parties, their successors and assigns.
7.8 Exhibits~ titles of articles. sections and subsections. The exhibits attached to this
Agreement are incorporated herein and shall be considered a part of this Agreement for the
purposes stated herein, except that in the event of any conflict between any of the provisions of
such exhibits and the provisions of this Agreement, the provisions of this Agreement shall
prevail. All titles or headings are only for the convenience of the Parties and shall not be
construed to have any effect or meaning as to the agreement between the Parties. Any reference
herein to a section or subsection shall be considered a reference to such section or subsection of
this Agreement unless otherwise stated. Any reference herein to an exhibit shall be considered a
reference to the applicable exhibit attached hereto unless otherwise stated.
7.9 Construction. This Agreement is a contract made under and shall be construed in
accordance with and governed by the laws of the United States of America and the State of
Texas, as such laws are now in effect.
7.10 Entire Agreement. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR.
CONTEMPORANEOUS. OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
7.11 Term. This Agreement shall be in force and effect from the date of execution
hereof for a term expiring on the date that the City Advances have been repaid in full, or January
1 of the year following the expiration of the Zone.
7.12 Time of the essence. Time is of the essence with respect to the obligations of the
Parties to this Agreement.
7.13 Approval by the Parties. Whenever this Agreement requires or permits approval
or consent to be hereafter given by any of the parties, the parties agree that such approval or
consent shall not be unreasonably conditioned, withheld or delayed.
7.14 Counterparts. This Agreement may be executed in multiple counterparts, each of
which when so executed and delivered shall be deemed an original, but such counterparts
together shall constitute but one and the same instrument.
7.15 Legal costs. If any Party hereto is the prevailing party in any legal proceedings
against another Party brought under or with relation to this Agreement, such prevailing Party
shall additionally be entitled to recover court costs and reasonable attorneys= fees from the non-
prevailing Party to such proceedings.
7.16 Further assurances. Each Party hereby agrees that it will take all actions and
execute all documents necessary to fully carry out the purposes and intent of this Agreement.
7.17 Effect of Tri-Party Agreement. The obligations of the Parties hereunder are
specifically conditioned upon the approval, execution, and effectiveness of the Tri-Party
Agreement.
[EXECUTION PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed as
of , 2006.
REINVESTMENT ZONE NUMBER
ONE, CITY OF LA PORTE, TEXAS
CITY OF LA PORTE, TEXAS
By:
Name:
Title:
By:
Mayor
Attest:
City Secretary
LA PORTE REDEVELOPMENT
AUTHORITY
By:
Name:
Title:
DRAFT #5
UTILITY EXTENSION AGREEMENT
THE STATE OF TEXAS:
COUNTY OF HARRIS:
This Development Agreement (this "Agreement '') is made as of , 2006 by and between
the REINVESTMENT ZONE NUMBER ONE, CITY OF LA PORTE, TEXAS (the "La Porte Zone''), a tax
increment reinvestment zone created by the City pursuant to Chapter 311 ofthe Texas Tax Code, as amended, acting
by and through its governing board of directors (the "Zone Board''), LA PORTE REDEVELOPMENT
AUTHORITY, a nonprofit local government corporation formed by and on behalf of the City of La Porte, Texas
(the "La Porte Authority ''), and CITY OF LA PORTE, TEXAS, a home-rule city (the "City '') and 65 LA
PORTE, LTD., a Texas limited liability partnership (the "Developer'').
AGREEMENT
1. All references to The Project hereunder shall, for the purposes of this agreement, refer to the Southeast Sanitary
Sewer Trunk Main and Lift Station Facilities anticipated by the Preliminary Design Report, T.C. & B. Job No.
13-14501-00l/Dated October 1997 together with any modifications or phased construction approved, in writing,
by the City acting as construction manager for the, Zone Board, and La Porte Authority. The Project Engineer
shall be the Professional Engineering firm authorized by the City to design the Project.
2. Developer is the owner of certain property in the City of La Porte, Harris County, Texas, identified as Lakes at
Fairmont Greens; a Subdivision of 135.4 acres ofland Located in the W.P. Harris Survey A-30 and the J. Hunt
Survey A-35, City of La Porte, Harris County, Texas. The property is further defined by "Exhibit A" attached
hereto and incorporated herein by reference. City's utility main(s) presently do not extend to Developer's said
property. Developer has requested the extension of City's utility main(s) identified as the Project to serve
Developer's said property.
3. City hereby agrees to the design, construction and installation of the Project to said property commencing at the
nearest existing utility main(s) of sufficient size and capacity. Thence along/through public rights-of-way
and/or easements to and through said Developer's property. Provided, however, that should City not possess all
necessary rights-of-way and/or easements to complete the Project, Developer shall be solely responsible for
obtaining said additional rights-of-way and/or easements at no cost to City on City approved forms.
4. City agrees to advance funds to the La Porte Zone and La Porte Authority to pay all costs related to the design,
construction and installation of said Project including necessary appurtenances in conformance with City's
standards and specifications for said utility main(s). Costs shall include all engineering fees for survey, design,
contract documents, bidding, construction staking, construction inspection, and preparation and submittal of
DRAFT #5
2
final record drawings upon completion of construction. The La Porte Zone and La Porte Authority agree to
reimburse the City for said costs according to terms and provisions of a separate agreement.
5. The Developer recognizes that the Zone and Authority have authorized the City to act on their behalf as the
construction manager of the project.
6. It is recognized that the developer has retained the services of a Professional Engineering firm to design the
infrastructure for the development identified as the Lakes at Fairmont Greens (Exhibit A). Furthermore, it is
recognized that certain efficiencies exist in utilizing the same Professional Engineering firm to design the
Project and all parties agree to utilize the same firm as the Project Engineer with the following stipulations.
a.) Developer has provided to the City a copy of the Professional Engineering Services Agreement, scope of
services and fee for services which have been approved by the City in a letter dated
b.) Progress payments shall be made by the Authority jointly to the Developer and Engineer according to the
fee schedule supplied pending successful completion of each milestone.
c.) The City shall have final authority regarding any design decisions relating to the Project and any progress
payments to the Developer and Project Engineer.
7. Upon final approval of the Design Drawings for the Project, the Developer shall have the Project Engineer
furnish for the Project Contracting and Construction and Project Closeout Services as defined in Exhibit B to
this agreement. Additionally, the City may require special conditions to be included in the project manual.
The Developer agrees that the City shall have reVIew and approval authority during the bidding and
construction phase services provided by the Developer's Engineer.
8. Subject to the provisions of this agreement, City hereby agrees to the design, construction and installation of
the Project according to the plans and specifications to be prepared by the Project Engineer and approved by the
City. Upon final approval of plans and specifications, Developer will solicit no less than three (3) competitive
bids for construction of the project each from a contractor with demonstrated experience in construction of
public utility mains, lift stations and related infrastructure. When received, the Project Engineer shall tabulate
the bids and a copy of said tabulation shall be provided to City. The Developer shall recommend and City shall
approve the selection of a contractor based on the competitive bids and City shall authorize construction of said
Project. City, in its approval of the contractor, may take into account the overall costs for installation of other
public infrastructure to serve Section 1 of the Lakes at Fairmont Greens.
9. The City has available $645,000 for the Project. In the event the Project costs, after bid opening, are estimated
to be greater than the amount available, the parties shall have the following options:
DRAFT #5
3
a) The City, the Zone Board, the La Porte Authority or the Developer may elect to pay the additional
costs of the Project or any Combination of City, Zone Board, La Porte Authority or Developer
may provide funding for additional costs for the Project.
b) City may withhold approval and elect not to proceed with the letting of the contract
and terminate this agreement as provided below.
c) City may withhold approval and request Developer to re-advertise for bids for construction of the
Project in accordance with the approved drawings and specifications in the same manner as before
and under the same conditions.
d) City may negotiate a reduced Scope of Work to be agreed upon by all parties
prior to re-bid or acceptance of alternate bids for the Project.
10. Upon receipt of a "notice to proceed" the Developer shall authorize the contractor to construct the
"Project." Progress payments shall be made based on monthly submittal of work performed less 10%
retainage. Said monthly submittal shall be reviewed and approved by City and Project Engineer.
a.) Progress payments shall be made by the Authority jointly to the Developer and the Contractor.
b.) The City shall have final authority regarding any progress payments to the Developer and Contractor.
11. During construction the City shall have the right to inspect the contractor's work for compliance with the plans
and specifications. Work not in compliance shall not be approved for payment. It is agreed and understood that
the Developer shall be responsible for maintenance of the Project until final acceptance of the construction and
installation of the Project and other public infrastructure installed by Developer to serve Section 1 of the Lakes
at Fairmont Greens by City, at which time maintenance responsibilities of the Project shall be transferred to
City.
12. Upon execution of this agreement and compliance with terms herein, Developer agrees to begin construction
thereof as soon as the same may be let for contract as herein provided. Developer shall require the contractor
under such contract to diligently pursue the construction ofthe project to completion.
IN WITNESS WHEREOF, the Parties to these presents have executed this agreement in several counterparts, each
of which shall be deemed an original, in the year and day first mentioned above.
DRAFT #5
ATTEST:
BY:
NAME:
TITLE:
ATTEST:
BY:
NAME:
TITLE:
ATTEST:
BY:
NAME:
TITLE:
4
65 LA PORTE, LTD
DEVELOPER
BY:
NAME:
TITLE:
REINVESTMENT ZONE NUMBER ONE,
CITY OF LA PORTE
BY:
NAME:
TITLE:
REDEVELOPMENT AUTHORITY,
CITY OF LA PORTE
BY:
NAME:
TITLE:
ATTEST:
BY:
NAME:
TITLE: City Secretary
APPROVED AS TO FORM:
City Attorney
DRAFT #5
CITY OF LA PORTE, TEXAS
BY:
NAME: Alton Porter
TITLE: Mayor
5
~._-~~,/-
D
Foreign Trade Zone (FTZ) Request L \\1 ~h
by IMS Worldwide on behalf of -,;
Underwood Business Park 200+/- Ac and
Port Crossing (formally Texas Import/Export) 300+/- Ac
Note to City Council:
These notes are meant to supplement previous information supplied on FTZ's. They can serve as
an outline for discussion and questions during the May 22nd Workshop.
Back2.round
Council has been provided information in previous workshops regarding a request to establish a
General Purpose FTZ for Underwood Business Park. Since then, Port Crossing has also
requested a FTZ.
o There are two types ofFTZ's - we will be discussing a General Purpose Zone
o General Purpose Zone covers a specified area
o Sub Zone - by contract with a specific company/dies when company leaves
o If a company qualifies, remember there are several "Federal level" benefits
The basic decision is to determine the following:
o Does the City of La Porte wish to offer no objection to the creation of a FTZ?
o Does the City of La Porte wish to participate in the local (qualified) exemptions offered
in Foreign Trade Zones? If so, at what level_%
Once a decision is made it is essentially final (unless the zone is abandoned at the Federal level
for other reasons). Plus, there is the issue of future requests from other groups that suggests La
Porte should adopt one policy for equity purposes.
La Porte Internal Concerns/Relationships
o Industrial District Agreements
o Inventory assessed at 53%
(remember negotiations coming up - and this is subject to change)
o From a relationship perspective we have existing Foreign Trade Zones in the Industrial
District and have offered no objection to creation based on fact that "no effect" on the
IDA's. Therefore, there is no further local inventory exemption
City is currently offering Tax Abatements
o Current published guidelines in place (expire every two years)
o Taxes on structures, land equipment, etc. are abated (above base value) by
declining %-age over 10 years
o Inventory is not abated
o If City decision is to offer no objection and participate in FTZ by offering local
exemptions
o Then we could have a situation where there is both tax abatement (for 10 years)
and the inventory in the FTZ being abated by L %)
o Give incentives to attract what we want
Last, the TIRZ area:
o Collection of Taxes (Increment above base value) within the TIRZ is what fuels the TIRZ
o Mr. Boring has indicated that he now represents the developer of Port Crossing
Area approaches on FTZ's
o The closest area cities that may be competing for Economic Development opportunities
have reported the following:
(No formal action to date by Deer Park or La Porte ISD)
o Deer Park - no objections/no local inventory exemptions
o Deer Park ISD no objections/no local inventory exemptions
o Pasadena - encourages the industrial district as location for FTZ requests
o Pasadena ISD (unknown)
o LPISD already offers
· Freeport Exemption and anticipates participating in the FTZ by offering
75% FTZ abatement increment.
o Miscellaneous
o Harris County - no objections/no local inventory exemptions
o Chambers County (Cedar Crossing)
· 65/205 Ac in FTZ - 100% participation (does not include Wal-Mart)
o Goose Creek ISD (unknown)
Timing Concerns (need confirmation)
o June 12 - Regular City Council Meeting
o Also, deadline for submission of items to the Port of Houston Authority Agenda
o June 19 - Port of Houston Commission Meeting Date
o Last date to consider approval of application by the Port of Houston to the
Federal Government
o July (?) - Applications due to the Federal Government
If these schedules are not met, then it could be 6 months to 1 year before next submittal.
Agenda Date Requested: F
ST FOR CITY COUNCIL AGENDA ITEM
Appropriation
Requested By:
Source of Funds:
Department:
Account Number:
Report: X Resolution:
Ordinance:
Amount Budgeted:
Exhibits: Tax Impact Analysis for Clay Development
(prepared by Consultant for Clay Development)
Amount Requested:
Budgeted Item: YES NO
Exhibits: General Information - Forei2n Trade Zones
* Policy Statement for Foreign Trade Zone No. 171
* Pearland Economic Development Corp.
* The Port of Houston Authority
* Port Freeport
* List of Foreign Trade ZoneslTexas
Exhibits: Recent Articles:
* Houston Chronicle:
Deer Park International Trade Zone Proposed
County Challenges Shell Oil's Tax Break Lawsuit
Deer Park Council Holds on Trade Zone Plan
~/11/0b :r);;!p
r~t
SUMMARY & RECOMMENDATION
A consultant representing Clay Development has asked to speak to Council regarding the possibility of establishing
a Foreign Trade Zone.
We have provided some general information for Council regarding Foreign Trade Zones.
Note that the City has, in the past, issued a letter of support regarding foreign trade zones in our ETJ. They were
issued based on the premise that there was no affect on local ad-valorem taxes and on our Industrial District
Agreement.
If Council wishes to consider establishing Foreign Trade Zones we would need to understand the effect of such
declaration on other Economic Development Incentives, i.e.
o The Industrial District Agreements
o The Tax Abatement Guidelines
o The Tax Increment Reinvestment Zone
Included in that review Council may wish to consider the level oflocal participation (from 0-100%) which I
understand can be set by a separate agreement. This would still allow companies to benefit from exemption or
deferral from Federal duty.
Action Required bv Council:
Approved for City Council A1!enda
Debra B. Feazelle, City Manager
Date
Tax Impact Analysis for
Clay Development & Consulting, Inc.
Underwood Business Park, Phase III (UBP) in
Eastern Harris County
The attached tax impact analysis is based upon job growth and real property investment generated by the
location of the Clay Development & Consulting, Inc., (Clay Development) Underwood Business Park, Phase
III (UBP) in the site located in Eastern Harris County. The inventory numbers and total investment are
estimates based upon current plans for the facilities if the current companies interested in the project can be
attracted to the project.
The first assumption used in the analysis is that the project decision is made and construction begins by early
2006. The second assumption is that the taxing authority is in agreement on the Foreign-Trade Zone (FTZ or
Zone) issue with Clay Development.
The City of La Porte Park (the City) will see significant benefit with this project. It will increase the value of
the land and will put a significant amount of investment into the land in terms of real property enhancement,
buildings and equipment that will add to the tax roles of the City. The Federal exemptions on inventory tax
collection at the facility will not negatively impact the City, since the inventory is not currently on the City's
tax roles. Furthermore, an estimated 60% of the inventory is currently estimated to qualifY for the exemption.
Clay Development is seeking a letter of support or a letter of "no contest" from the City in conjunction with the
FTZ Expansion Application that will be required to establish the Zone Site for the facility. The overall net
benefit to the City is anticipated to be an annual tax revenue stream of no less than $700,000 after the FTZ
exemption is granted.
Clay Development has identified that Zone status is a key factor for the marketing of these sites. If the letter of
support is garnered from the City, then the development will locate in Eastern Harris County. A failure to
realize a satisfactory FTZ status in Deer Park will make the marketing of the sites to companies versus
neighboring Counties more difficult. This analysis does not include any of the indirect economic benefits of
having this project, and the estimated 275 jobs it would create.
I:\PROJ\Clay Development\Clay tax narrative City of La Porte.doc
Tax Analysis
Direct Effects of Underwood Business Park - No FTZ Exemption
La Porte ISO and City of La Porte
2005 2006 2007 2008 2009 2010
Taxable Total Inventory $0 $7,500,000 $20,000,000 $20,000,000 $20,000,000 $20,000,000
Total Investment in Building and Equipment $0 $120,000,000 $120,000,000 $120,000,000 $120,000,000 $120,000,000
Total Value of Property - F1 (Real Com.) $2,042,700 $2,042,700 $2,042,700 $2,042,700 $2,042,700 $2,042,700
Real Property Tax Rate - City of La Porte 0.710%
Total Impact on City of La Porte $14,503 $919,753 $1,008,503 $1,008,503 $1,008,503 $1,008,503
l:projlClay DevelopmenlfTax Impact (2)
Tax Analysis
Direct Effects of Underwood Business Park - With FTZ Exemption
La Porte ISO and City of La Porte
2005 2006 2007 2008 2009 2010
Taxable Domestic Inventory $0 $3,000,000 $4,500,000 $4,500,000 $4,500,000 $4,500,000
Total Investment in Building and Equipment $0 $120,000,000 $120,000,000 $120,000,000 $120,000,000 $120,000,000
Total Value of Property - F1 $2,042,700 $2,042,700 $2,042,700 $2,042,700 $2,042,700 $2,042,700
Real Property Tax Rate - City of La Porte 0.710%
Total Impact on City of La Porte $14,503 $887,803 $898,453 $898,453 $898,453 $898,453
l:proVClay DevelopmenUTax Impact (2)
}
I -
Ir Tax Impact on
City of La Porte - Underwood
~ 1500000rl--
] 10000001
x 500000,
III
I-
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o
Years
N
-----
. Current Revenue
. Revenue with FTZ Exemption
o Revenue no FTZ Exemption
------ ---
LIBERTY COUNTY
ECONOMIC
DEVELOPMENT
CORPORATION
P.O. Box 857
Liberty, TX 77575
PH (936) 336-7311 FAX (936) 336-9282
Issuance of Official Inventory Tax Policy for Foreign-Trade Zone No. 171
November 14, 2003
By this policy statement the Grantee of Foreign-Trade Zone (FTZ or Zone) No. 171 is outlining
the definitions of the Inventory Tax Policy as outlined by the Foreign-Trade Zones Board (FTZ
Board) Regulations 15 CFR 400.1(c). "...Foreign merchandise (tangible personal property)
admitted to a Zone and domestic merchandise held in a Zone for exportation are exempt from
certain state and local ad valorem taxes (19 U.S.c. 810(e))."
By this definition, the regulations and the Grantee require a Zone Operator to be activated with
The Bureau of Customs and Border Protection (Customs) inside an approved FTZ site. The Zone
Operator must "admit" the merchandise into a Zone under Zone procedures outlined in 19 CFR
146, in order to access the Inventory Tax benefit allowed under the federa11aw. The inventory
that qualifies for the Inventory Tax benefit is defined as those items that are foreign in their origin
and domestic merchandise held for export within an activated Zone site.
1. Definition of foreign merchandise is any merchandise that is manufactured outside
the United States. The evidence required for qualification under this definition is any
one of the following: An original invoice identifying the country of origin of the
merchandise or a copy of a Customs document that identifies the country of origin of
the merchandise.
The Customs document can be a Customs entry into the United States (CF3461), a
Zone Admission form (CF214), Customs In-Bond Transportation Form (7512) or any
other official Customs document that carries a statement of the merchandise's
country of origin.
2. Definition of domestic merchandise held for exportation is any merchandise
manufactured within the United States that is held in the Zone specifically for
exportation outside the Untied States and its related territories. The evidence required
for qualification under this definition is anyone of the following: A purchase order
for a customer outside the United States or its related territories, a sales agreement
showing the commitment to purchase the merchandise by a foreign customer, or any
definable determination showing the merchandise is destined for exportation.
It is the intention of the Zone Grantee to outline the processes and requirements for accessing the
Inventory Tax benefit in order to eliminate any confusion with the Zone Operators and the local
taxing authorities. The definitions and requirements enclosed in this document are taken from the
FTZ Board Regulations as outlined above. This policy is subject to all Federal Regulations at all
times.
I:\PROJ\LBRTY\lssuanee of Official Inventory Tax Policy for FfZ .doe
. Pearl and Eco!1omic Development Corporation - Foreign Trade Zones
Page 1 of2
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In August 2001, three business sites were designated in Pearland as part of a Foreign
Trade Zone (FTZ): the Northern Industrial Complex, the Southern Industrial
Complex, and the Bybee-Sterling Complex. The three sites, totaling nearly 1,500
acres, are part of FTZ No. 149 administered by Port Freeport.
FTZ's are specially designated areas either adjacent or within the U.S. Customs port
of entry in which merchandise is considered to be outside the Customs territory of the
U.S. Importers may bring foreign merchandise into FTZ's and defer payment of
duties until the items are shipped out to other destinations within the U.s. or avoid
the duties entirely if the item is ultimately exported to another country. FTZ's allow
companies to enhance their cost competitiveness with other foreign manufacturers.
Cost saving benefits of being in a Foreign Trade Zone
. Duty Exemption on Re-Exports - If merchandise is exported after being
placed in a FTZ or shipped to another FTZ and then re-exported, no
duty is ever paid.
. Relief from Inverted Tariffs - If foreign merchandise is brought into a
FTZ or sub-zone and manufactured into a product that carries a lower
duty rate, the lower rate applies.
. Duty Elimination on Waste and Scrap - No duty is charged on most
waste and scrap from production in a FTZ.
. No Duty on Rejected or Defective Parts - Merchandise found to be
- defective or faulty may be returned to the country of origin for repair or
to be destroyed. Whichever choice is taken, no duty is paid.
. Duty Deferral - No duty is ever charged on merchandise while it is in a
FTZ and there is no limit on the length of time merchandise may be
kept in the FTZ. By deferring the duty, the FTZ user frees its capital for
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Pearl and Economic Development Corporation - Foreign Trade Zones
Page 2 of2
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more important needs.
· No Duty on Domestic Content or Value Added - The "value added" to
a product in a FTZ (including the manufacturer using domestic parts
and cost of labor, overhead, and profit) is not included in its dutiable
value when the final product leaves the Zone. Final duties are
assessed on foreign content only.
· Relief from State and Local Ad Valorem Taxes - Foreign merchandise
stored in a FTZ or merchandise held in a zone for export is not subject
to any state or local ad valorem taxes.
· Duty Savings on Sales to the U.S. Military, NASA, or other
Governmental Agencies - Generally, no duty is assessed when Zone
merchandise is sold to the U.S. Military, NASA, or other governmental
agencies.
To learn more about Foreign Trade Zones and Port Freeport, CliCk here.
Copyright @ 2002 -2005, pearland Economic Development Corporation. All rights reserved.
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Page 1 of2
HE PORT or HOt ST()]'.; AU 11()HJTY
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FACI L1TI ES
FOREIGN TRADE ZONE
What is a Foreign Trade Zone?
A foreign trade zone is a designated area in which foreign and
domestic merchandise is generally considered by the U.S.
government as being outside U.S. Customs territory. Merchandise
may be brought into an FTZ without a formal customs entry, import
quotas and most other import restrictions. Duties and excise taxes
are not assessed until the merchandise enters U.S. commerce.
P ','
The Port of Houston Authority is manager of a foreign trade zone
which includes many privately owned and port-owned sites located
throughout Houston and Harris County, Texas. The Houston Zone
offers users special benefits. For example, customs duties on
imported goods entering the FTZ can be delayed until the cargo is
removed from the zone. No duty is paid if the merchandise is
exported directly from the zone.
Benefits of Using a Foreign Trade Zone
Storage: Foreign and domestic merchandise may be stored within
the zone for an unlimited period of time, thereby avoiding all duties
and excise taxes.
Product Handling: Merchandise may be opened, examined,
assembled, mixed, cleaned, labeled or repackaged within a zone.
Manufacturing: Products may be manufactured within a zone and
may even include the combining of foreign and domestic
merchandise.
Exhibiting: Merchandise may be displayed, sampled or examined
within the zone.
Disposal: Waste materials and damaged or valueless
merchandise may be destroyed within the zone to avoid duties.
Advantages Offered at the Houston Foreign Trade Zone
Houston offers a strategic link to interior U.S. markets. Its location
makes Houston an ideal distribution point for shippers sending
goods to the U.S. West and Midwest. Shipping overland to these
areas is easy because of direct access to a vast network of
interstate highways and railroads, plus the fact that Houston is
served by numerous airlines, railroads and motor freight
companies.
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Foreign-Trade Zone
Nancy Stephens, FTZ Administral
Stephens@portfreeport,cc
979-233-2667 x 43
Understanding Foreign-Trade Zones
Foreign-Trade Zones (FTZs) were created to neutralize irrational U.S. tariff
structures on products used by manufacturers operating in the United States
and keep U.S. businesses competitive with businesses operating offshore or
overseas. Though the benefits of operating in an FTZ vary, they are substant
and are certainly worth investigating. The following information is meant to
provide insight into FTZs in general and into FTZ #149 in particular.
What Is A Foreign-Trade Zone?
Authorized by the Foreign-Trade Zone Act of 1934, FTZs exist within the
boundaries of the United States, but are considered to be outside of U.S.
customs territory. These areas were designed to increase the use of Americal
labor and to stimulate capital investment by allowing activity to occur within'
U.s. prior to application of U.S. customs laws. The benefits of using an FTZ
include duty deferral, lower duty rates, duty elimination on defective or
damaged materials and waste or scrap materials, management of quota
restrictions, and the possibility of tax and licensing savings.
How Do These Benefits Apply To My Company?
As one of the primary benefits of using an FTZ, duty deferral allows companiE
to defer paying duty on imported merchandise until the merchandise leaves t
FTZ and enters the commerce of the United States. For merchandise admitte.
into and re-exported from an FTZ, no duty is assessed.
An FTZ user that assembles or manufacturers in a zone can apply to the
Foreign-Trade Zones Board for authorization to elect to pay duties on importE
components either at the duty rate applicable to the components or at the dl
rate applicable to the finished product. If the duty rate on the finished produ<
is lower than the components, an FTZ provides lower overall duties.
Quota restrictions can generally be managed by admitting goods into a FTZ.
Over-quota merchandise can usually be held in a zone until the next quota
period begins, and may often be used as a component part of a product that
not over quota. Some marking restrictions can also be avoided by bringing
goods into an FTZ.
Export savings can be realized by moving domestic goods into an FTZ due to
the fact that they are treated as already being exported upon entering a zonE
Consequently, exporters can accelerate drawbacks by moving goods to be
exported into a zone. Additionally, defective merchandise is treated as expon
and subject to drawback.
http://www.portfreeport.com/ftz/index.htm
11/16/2005
port Freeport
Page 2 of2
Savings are also available through the exemption of state or local taxes on
merchandise admitted in an FTZ due to federal preemption. For example: Stc
and local ad valorem tax is not applicable to foreign origin or foreign destinat
goods in an FTZ.
What Does FTZ #149 have To Offer?
FTZ # 149 exists within the boundaries of the Brazos River Harbor Navigation
District and provides manufacturer-shippers with duty deferred, in-transit
storage and assembly of products for import and no duty assessment on
products re-exported. Sites within the district have been set aside for this
purpose and general light manufacturing. Available real estate and warehous
space, combined with an energetic and skilled local labor force make FTZ # 1,
an excellent choice for manufacturers exporting to other countries or serving
U.S. markets.
To see a use case study of the Foreign-Trade Zone, click here.
http://www.portfreeport.com/ftzlindex.htm
11/16/2005
List of Foreign-Trade Zones by State
Page 1 of4
-
hT:\i 2 I (I
TEXAS FTZ No. 12 McAllen Hidalgo/Pharr
Grantee/Operator: McAllen Economic
Development Corporation I,............). . --'" -- \
6401 South 33rd Street, McAllen, TX .-._~_.,_...,..,-- ...
78501
Joyce Dean (956) 682-2875
Fax (956) 682-9111
FTZ No. 36 Galveston 36A Deepsea Flexibles Houston
Operator: Port of Galveston
P.O. Box 328, Galveston, TX 77553
Diane Falcioni (409) 766-6121
Fax (409) 766-6107
Grantee: Board of Trustees of the
Galveston Wharves
HZ No. 39 Dallas/Fort Worth 39B GM Dallas/Fort
Grantee/Operator: Dallas/Fort Worth 39C Sanden Worth
International Airport Board 39E Fossil Partners
P.O. Drawer 619428, DFW Airport, TX 39F Zale Corporation
75261-9428 39G Maxtor Corporation
Michael Pyles (972) 574-3214 39H American Eurocopter LLC
Fax (972) 574-8069 391 Turbomeca U.S.A.
HZ No. 62 Brownsville Brownsville/Los
Grantee/Operator: Brownsville Navigation Indios
District
1000 Foust Road, Brownsville, TX 78521
Jo Lynne Saban (956) 831-4592
Fax (956) 831-5353
HZ No. 68 EI Paso EI Paso
Grantee: City of EI Paso
501 George Perry, Suite i, EI Paso, TX
79906
Jose Quinonez (915) 771-6016
Fax (915) 772-2491
Quinonezji@elpasotexas.gov
www.elpasotexas.govlftz
FTZ No. 80 San Antonio 80A Bausch & Lomb San Antonio
Grantee: City of San Antonio Economic 80B Colin Medical Instruments
Development Department 80C Friedrich Air Conditioning
P.O. Box 839966, San Antonio, TX 78283 800 R. G. Barry
Carmelina Davis (210) 207-6529
Fax (210) 207-8151
carmelinad@sanantonio.gov
www.saftz.com
~ HZ No. 84 Harris County 84C DuPont Houston
Grantee: Port of Houston Authority 84E Gulf Coast Maritime
111 East Loop North 84F Valero Refining
Houston, TX 77029 84H Shaffer, Inc.
Jack Beasley (713) 670-2604 841 Tuboscope Vetco Int'I
Fax (713) 670-2564 84J Shell Oil Co.
84K Dril-Quip
84L Tadiran Microwave
Networks
84M Hydril
84N Crown Central Petroleum
800 EXXON Mobil
84P Lyondell-CITGO
84Q Equistar Chemicals
84R Michelin North America,
Inc.
HZ No. 94 Laredo I I La,edo
Operator: Laredo International Airport
Operator of Foreign-Trade Zone No. 94
5210 Bob Bullock Loop, Laredo, TX
78041
http:// ia. ita. doc. go V / ftzpage/l etters/ ftzlist.html
11/18/2005
List of Foreign-Trade Zones by State
Page 2 of 4
LJ Humberto Garza (956) 795-2000 I ILJ
Fax (956) 795-2572
Grantee: City of Laredo
FTZ No. 95 Starr County Rio Grande
Grantee/Operator: Starr County Industrial City
Foundation
P.O. Box 502, Rio Grande City, TX 78582
Hector Soliz (956) 487-2709
Fax (956) 716-8560
FTZ No. 96 Eagle Pass Eagle Pass
Operator: Maverick Co. Dev. Corp.
P.O. Box 3693, Eagle Pass, TX 78853
Marga Baker (830) 773-6166
Fax (830) 773-6287
Grantee: City of Eagle Pass
FTZ No. 113 Ellis County Dallas/Fort
Operator: Trade Zone Operations, Inc. Worth
1500 North Service Road, Highway 67
Midlothian, TX 76065
Mark Nichols (800) 235-7378
Fax (949) 706-7994
Grantee: Midlothian Trade Zone
Corporation
FTZ No. 115 Beaumont 115A Bethlehem Steel Port Arthur
Grantee: Foreign-Trade Zone of 115B EXXON Mobil
Southeast Texas, Inc.
P.O. Drawer 2297, Beaumont, TX 77704
David C. Fisher (409) 835-5367
Fax (409) 835-0512
FTZ No. 116 Port Arthur 116A Motiva Enterprises Port Arthur
Grantee: Foreign-Trade Zone of 116BATOFINA
Southeast Texas, Inc. 116C Premcor Refining Group
P.O. Drawer 2297, Beaumont, TX 77704 1160 US DoE Strategic
David C. Fisher (409) 835-5367 Petroleum Reserve
Fax (409) 835-0512
FTZ No. 117 Orange Port Arthur
Grantee: Foreign-Trade Zone of
Southeast Texas, Inc.
P.O. Drawer 2297, Beaumont, TX 77704
David C. Fisher (409) 835-5367
Fax (409) 835-0512
FTZ No. 122 Corpus Christi 122C Trigeant, Ltd. Corpus Christi
Grantee/Operator: Port of Corpus Christi 1220 Baker's Port
Authority 122E Berry Contracting
222 Power Street, P.O. Box 1541 122H TOR Minerals Inti
Corpus Christi, TX 78403 1221 Citgo Refining &
Hilda Boyce (361) 885-6187 Chemicals
Fax (361) 882-7110 122J Valero Refining Co.
122K Sherwin Alumina Co.
122L Flint Hills Resources LLC
122M Valero Three Rivers
Refinery
122N Equistar Chemicals
1220 I nternational Resistive
Company
122P Kiewit Offshore Services
FTZ No. 149 Freeport 149A BASF Freeport
Grantee: Port of Freeport 149B DSM Nutritional
Brazos River Harbor Navigation District Products, Inc.
P.O. Box 615, Freeport, TX 77542-0615 149C ConocoPhillips
Phyllis Saathoff (979) 233-2667 x4258 1490 Seaway Crude Pipeline
Fax (979) 233-5625 149E BP Products North
America
http://ia. ita. doc. go vi ftzpage/l ettersl ftzlist.h tml
11/1812005
List of Foreign-Trade Zones by State
Page 3 of 4
I II 1149F Equistar Chemicals I I
149G Dow Chemical
FTZ No. 150 EI Paso EI Paso
Grantee: Westport Economic
Development Corporation
1865 Northwestern Dr., EI Paso, TX
79912
Brent Harris (915) 877-4300
FTZ No. 155 CalhounNictoria Counties 155C Alcoa Port Lavaca-
Grantee: Calhoun-Victoria Foreign-Trade Point Comfort
Zone, Inc.
P.O. Drawer 397, Point Comfort, TX
77978
Robert Van Borssum (361) 987-2813
Fax (361) 987-2189
FTZ No. 156 Weslaco Progreso
Grantee: City of Weslaco
500 South Kansas, Weslaco, TX 78596
Bernard Rodriguez (956) 447-3401
Fax (956) 973-3128
FTZ No. 165 Midland 165A ConocoPhillips Midland
Grantee: City of Midland
c/o Midland International Airport
9506 Laforce Blvd., P.O. Box 60305,
Midland, TX 79711
Tommy Martin (432) 560-2200
Fax (432) 560-2237
FTZ No. 168 Dallas/Fort Worth 168A B&F Systems Dallas/Fort
Operator: Foreign Trade Zone Operating 168B Ultrak Worth
Co. of Texas
P.O. Box 742916, Dallas, TX 75374-2916
(Ms.) Lou Thomas (972) 915-0083
Fax (972) 929-7228
Grantee: Metroplex International Trade
Development Corporation
FTZ No. 171 Liberty County Houston
Grantee: Liberty County Economic
Development Corporation Foreign-Trade
Zone 171
P.O. Box 857, Liberty, TX 77575
John Hebert (936) 336-7311
Fax (936) 336-9285
FTZ No. 183 Austin 183A Dell Computer Austin
Grantee: Foreign Trade Zone of Central Corporation
Texas, Inc.
City of Round Rock
301 W. Bagdad Ave. # 210
Round Rock, TX 78664-5835
Joe Vining (512) 218-5420
Fax (512) 218-3286
FTZ No. 196 Fort Worth [Dallas/Fort
Grantee: Alliance Corridor, Inc. Worth
c/o Hillwood Development Corporation
13600 Heritage Pkwy., Suite 200
Fort Worth, TX 76177
Tom Harris (817) 224-6008
Fax (817) 224-6060
FTZ No. 199 Texas City 199A BP Products North Houston
Grantee: Texas City Foreign-Trade Zone America
Corporation 199B Marathon Petroleum
P.O. Box 2608, Texas City, TX 77592 Company LLC
Doug Hoover (409) 643-5927 199C Valero Refining
Fax (409) 942-1073 199D Seaway Crude Pipeline
Co.
http://ia. ita. doc. go vi ftzpage/l etters/ftzlist.htrnl
11/18/2005
List of Foreign-Trade Zones by State
Page 4 of 4
--
."-
I II 11199E ISP Technologies II I
D FTZ No. 234 Gregg County 234A Eubank Manufacturing Shreveport-
Grantee: Gregg County, Texas Enterprises, Inc. Bossier City
269 Terminal Circle, Longview, TX 75603 234B Letourneau, Inc.
Shelby Keys (903) 643-3031
Fax (903) 643-7371
FTZ No. 246 Waco Dallas/Fort
Grantee: City of Waco, Texas Worth
c/o Economic Development Division
Greater Waco Chamber of Commerce
900 Washington Avenue, Suite 501
Waco, TX 76701
Sarah Roberts (254) 296-0405
Fax (254) 296-2505
FTZ No. 251 Edinburg Hidalgo/Pharr
Grantee: City of Edinburg
210 W. Mcintyre Street, P.O. Box 1079
Edinburg, TX 78540-1079
John Milford (956) 383-5661
Fax (956) 383-7111
FTZ No. 252 Amarillo Amarillo
Grantee: City of Amarillo
c/o Amarillo Economic Development
Corporation
Bank One Center, Suite 1503, 600 South
Tyler
Amarillo, TX 79101
Alan Taylor (806) 378-3012
Fax (806) 378-9394
FTZ No. 258 Bowie County Shreveport-
Grantee: Red River Redevelopment Bossier City
Authority
107 Chapel Lane, New Boston, TX 75570
Duane E. Lavery (903) 223-9841; Fax
(903) 223-8742
FTZ No. 260 Lubbock Lubbock
Grantee: City of Lubbock
Lubbock International Airport
Reese Technology Center
5401 North Martin Luther King Boulevard
Lubbock, TX 79403
Warren Warner (806) 775-2048
Fax (806) 775-3133
D FTZ No. 265 Con roe (Montgomery I IHou~n
County)
Grantee: City of Con roe
300 W. Davis Street, Conroe, TX 77305
Tommy Metcalf (936) 539-4431
http://ia.ita.doc.gov/ftzpage/1etters/ftz1ist.htm1
11/1812005
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HoustonChronicle.com - Harris County challenges Shell Oil's tax break lawsuit
,. ..
Page 1 of2
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HQuslQl1I:hronicle.com -- http://~.HQustQnChI"Qnick.co~ I Section: Houston & Texas
Feb. 7, 2006, 11:50PM
County challenges Shell Oil's tax break lawsuit
Officials dispute firm's claim that fees were unfair
By BILL MURPHY
Copyright 2006 Houston Chronicle
A county official assailed Shell Oil Co. on Tuesday for suing to avoid paying $2 million annually in county taxes on its
local inventory.
Commissioners Court authorized the county attorney's office to
seek to intervene in Shell's lawsuit to try to prevent the tax relief.
ADVERTISEMENT
"SjJ.ell Oil doesn't think they have to pay taxes," Commissioner
S ; Radack said. "We have hospital district costs going up, and
we have all kinds of costs going up. We expect more from our
corporate citizens like Shell."
In 2004, Shell sued the Harris County Appraisal District, looking
to revisit a 1993 agreement requiring it to pay county taxes on oil
and other inventory in a foreign trade zone at its Deer Park
complex. It is this suit that the county now will try to enter.
Shell spokeswoman Destin Singleton wrote in an e-mail, "Shell
has always paid its share of taxes. In 2005, Shell and related
companies paid more than $50 million in property taxes to Harris
County and other taxing jurisdictions within Harris County."
Shell paid the taxes at the center of the court dispute and is arguing that it should receive a refund because the
assessments were "unfairly applied and unlawful," Singleton wrote.
Shell received a county tax bill of $1.5 million on its $300 million inventory in the zone two years ago. Its bill rose to
about $2 million last year, County Judge Robert Eckels said.
The trade zone was created in 1993 after the county sponsored Shell's application for the zone in exchange for the
company's commitment to pay county taxes on inventory within it. The sponsorship was needed to get federal approval
fo- zone, which provides certain tax breaks to trade-related activity and property.
As a matter of policy, the county has protected its tax base by declining to sponsor applications for firms that won't
agree to pay county taxes on inventory.
http://www.chron.com/cs/CDA/printstory .mpl/headline/metro/364 3551
2/9/2006
.HoustonChronicle.com - Harris County challenges Shell Oil's tax break lawsuit Page 2 of2
. .
The city of Deer Park and the Deer Park Independent School District do not receive tax payments on such inventory.
The agreement with Shell was to stay in place as long as the county did not let competing oil firms avoid paying taxes
on.inventory in foreign trade zones created after Shell's pact, Harris County Appraisal District Chief Appraiser Jim
R .lson has said.
Shell argues that a competitor, Valero, is not paying county taxes on its foreign trade zone inventory, Eckels said.
The appraisal district contends that the agreement allowing Valero not to pay taxes on its inventory predates the Shell
pact, Robinson said. That agreement was in place before Valero bought the property and, as a matter of law, remains
intact after a sale, Robinson said.
The lawsuit "is just a blatant abrogation by Shell on the agreement that they made," he said. "I don't object to a
company making money. But I think they are acting in bad faith on this."
bill. murphv@chron.com
HoustonChronicle.com -- http://www.HoustonChmnicJ~,C9Jl11 Section: Houston & Texas
This article is: http://www.chron.com/disp/story.mpl/headline/metro/3643551.html
http://www.chron.com/cs/CDAlprintstory .mpl/headline/metro/3 643551
2/9/2006
) )
HOUSTON?icHRDNICLE Z3
** THURSDAY, FEBRUARY 16,2006 · chron.com
'.1.:".,
I DEER PARK I GAlE;NA PARK I SOUTH HOUSTON ! JACINTO CITY I CHANNElVIEW I SHOREACRES
..
Deer. Park b6un~11'11i0~Cls.jj~~f(on trade zone plan 1
. ' .-' '~ . '" ,- ," " :"', ,:',' ".:.:',' ,., :'''..':.,,'. ," '~-':. <,
-
<. Shell OilCo.'s'
suit against. county
could sink deal .
fj';
By HEATHER LNICHOLSON
CHRONtCLE COItRESPONDEN.T
, ,'''':' ',.':,',
, .... A.recent.' lawsuit . between
Shell Oil Co.andliarris County
. has the citypf Deer Parkfeeling
squeamish about granting more
foreign trade zones.
The .Feb. 7 announcement
that Shell wants to rescind its
contract to pay $2 million, in
taxes to tpe Harris County Ap-
praisal. Distri~t is having some.
impact on whether Deer Park
will create a foreign trade' zone
for Clay Development & Con-
sulting Inc., city officials said.
Deer Park city officials began
discussing the. idea of a foreign
trade.zone)n January~. The pro-
posal'would allow businesses
dealing. with overseas trade. to .
setup sh()p in Deer Parkandnot
paylocaUaxes on their prod..
ucts.
some wary of plan
From the beginning, some'
c()un.cilmembers were waryofa'
'plall to waive.a tax exe111ptipn,
an.dnews of Shell's lawsuit with ,
the county only .multiplied the
city'sworries.., .'. ..Ii
"I think the decision we need
to make wouldbe.'a loteasier if
this Shell thing wasn't going on.
We still got some homework to
do on this'one,".saidDeer Park
MayorWayne Riddle.. . "
.The Shell. refinery in.peeri
Park's'industrial district is part
of a 1993 foreign trade zone'
agreement.
Under that agreement, the
ttD()n'tthrbwthe bhby out of the bath water;
}ffe' arei1J.a poten,fial situation to get a rather
largebusitu~$sProposition in Deer Park. "
'. . -DENTON MCDUGLE.
" Deer Park City Council
. - . . -...... .
" .. .. .. .." '- .
\ ',_.,:.":,' "....'"..- ,_'," '0, ' '_'
co~nty.would.,only.sP6nsotthe
;~()n~if ~hellagreedto con.tinue.
paying taxes.;". ...
Granting a'foreign trade zone
cary beamajor,~sset forcompa-
.' '. nie~ ~ince it providesc~rtain
,federal and local tax bl'eakson
their)1l'1P()rted and, exported
property.;', '..;' . ......, .
It'haslongbe.enthe c?~nty' s
policynof to grant tax ex~tiip-
tions as away to protect its tax
base.', "
. . "It may be worth further
cpnsideratioh. We probably
KEY TO TH,E I R
.
1 {"co" Illilifli"i,;;.-,i'.(.;,!lIJj,',:, .1JII1",i-,:..'/iiflfif1oll'.-"-;'rncr0"i.WJIVii,'"IfIiili!JIJ_'":(!~':.'!fi!i'i'" ;",yliii';':':":!ifiJ!!.'y"i,~','i,i,''&i i/i;,-,r~:!,"';nfij_ .. .. ','.'."-;,_'if.:'0i;.~."i.'ii,'2';.i'_~":.". '."...,: J.!I;';"'?~~.ifl( .:!Ji'!lidi,::,'i,';;~~i'!t:"'::"):.>,'i:'__':ii/I!':ii:'~'
need to take more time to, see
what exactly we, can do to un-
derstand more about the impact
of a foreign trade zone, not only
on us but businesses, too," said
Deer. Park City Manager Ron
Crabtree.
Clay Development. has ap~'
proached both Deer Park and La
Porte. about the new foreign
trade zone agreement. Both cit-
ies are. in preliminary discus-
sions.
Clay is hoping to build a
. 100,000 to 200,000 square-
,-
foot building and then. rent ou~
the facilitie.s to different firms. ",
It would be more attractive
to incoming businesses if local,
taxes were exempt, said Steve.
Schellenberg, vice president..o~
business development at IMS<
Worldwide. "
AttraCtion for importers ,I
"I'd like to set some of the
mystery about foreign trade'
zones to rest. Importerswhd
look at Houston see this as a ~e~
sirable location," Schellenber~
said. .'
,."We're asking for some~
where between zero to 100per-'
cent, of (tax)exetnption," he
said. . ..j
Schellenberg said La Porte,
Independent School District:
has already agreed to give a 70
percent tax . exemption in sup-
Please see PACT, Page 5
I:I....';....L&- .....
'ThUrsday, February 16, 2006
NEIGHBORHOOD NEWS
PA~T: Deer Park council TAX: Bay town ponders
~u1ls trade plan further for funding public sa
CONTINUED FROM PAGE 1 . . $1.4 million in revenue to the
port of the. zone, ,but admitted~ity. ... ", .
mat Harris County has denied '~'What we have with Shell
su~h an exemption and s~ic~ to expires at the end of this year. It
its policy of zero percent. .... ..' wj11hav~tp be renegotiated Jan.
-"Harris. County only sup" 1, 2007. There is $1.4 inillion at
ports foreign trade zones if they risk with the negotiation of this
get to tax all the productsina contract," he said.
foreign.trade zonetlte said. .. CouncU asked Schcl,lenberg
But Schellenberg's presE!nce for his opinion on 'the Shell law-
as a proponent of Clay's opera-suit and wanted to know if Clay
tion" at the. Feb. 7. city council Development could provide any
meeting did little to quell some assurances they wouldn't also
counciltnembers' concerns. rescind years from now. .
,. ,.councilman CharlesGarri- "With me not being able to
son was once again the most read the arrartgements (be-.
skeptical to grant.a .!OO percent tween Shell and the county) I
tax-exempted . foreign trade am on the cautious side to giv-
zone.' 'ing a flon conunent on that.
. "Tome, it doesn't sound like
it's in the best interest to the
parties involved," he said.' .
Councilman Denton McDu-
gle . voiced his support in the
matter. He said he believes Deer
Park passing on the foreign
trade zone would ensure more
businesses flock to other cities
willing to grant such .. exemp-
tions.
"Don't throw the baby out of
the bath water. We are in a po~
tential situation to get a rather
large business proposition in
Deer Park," McDugle said.
centrad with' COunty
"What is the future of this?"
he- said. "The countyls' und.er
cont"-~ with Shell saying they
vgqu . )ay.t~e,s.. ptla' foreign
tradezone:They'vedonethat
aI!:these years, except,n()w Shell
is contesting' the '. agreement.
They are tryirig to get out of that
~eement.
"It would appear the attitude
Shell had a few years ago has to-
tally changed," Garrison said.
Shell has stated publicly that
the reason it wants a refund on
its county tax payments is be-
cause a competitor, Valero, is
e~empt. However, VCl1ero's for-
eign trade agreement was estab-
lished before Shell's.
Deer Park will re-exatnine
tlwir current zone agreement
with. Shell' when it expires in
W07.
'^.Crabtree said Shell brings in
A win-win situation
"The way I continue to look
at this is it has got to be a win-
win situation for us. We can still
tax on land, machines, build-
ings - the only thing we're giv-
ing UP' are items. importing and
exporting '.in the' foreign' trade
zone."
SERVING OUR ~OUNTRY
i:ody Blair, 17, Of La Porte has
:oined the U. S.Navyunder
:he Delayed Entry Program.
fie is the son of Reed and
rhe"'- Blair of La Porte. He is
l sel. at La Porte High
;Chool and is scheduled to
lttend boot camp July 13. After
lOot camp he will receive
urther training to become an
\viation Ordanceman.
:rancisco Guerra Jr. of South
: many job flelds.
I
I
I
i Jeffrey Newcomb Jr. of
!Pasadena has joined the
i Navy through the Delayed
! Entry Program. He is the ,
I son of Jeffrey Newcomb of
! Pasadena and Terri O'Kelly
i of Irvington, Ala. He is
i attending his senior year
I at C.E. King High School.
I He is scheduled to attend
i boot camp at Nav~ Trai~g
CONnNUEDFRO~ PAGE 1 .
'samem~~prig,. fire. Chief'Shon
Blake addressed.thecouncil
about a. proposed five-year bud -
getfoc:' a FireControl,preven-
tion. .' and' Emergency Medical
SerVIces Djstrict.
also iJ
fleers
, sible t
to ail<
mone:
Jac
the b,
cIDc y
ReI
trainil
.' parlm
it ylOt
. overti
~ayto1
intov
,Porte'
could be put to a variety of uses,
frompersonn~lto capital equip~
ment,jackson told the counciL
Jones said that.;ifapproyed
by voters,. nine of the}O.. extra
officers funded by the new dis~
trict would be u~edon the night
shift, inutiiform,!lS'a ~~hotsppt'
Building, amblllaDees eyed team" or to auginent routine P<l~
The fire corttl;"ol district bud- trol.. ' . . . .... . . .' ..'
get )Vould inc1tldefunding for a' . The 10th officer would be
newfrreflghters' training build- added to BaYtown'stwp-person
ing,fp-efighting~quipment, am- crewthatE:lnforces state trans-
bulance,sand improved conunu- p~rtation.' regulations; Jones
nicationt~chnology. satd.., ..... ..... .., . .....................
, Each district'sproposedflve- ,. Based on feedback from resi-
year b9dg~i is<$3.75 million, dents, Jones said hetMughf'
wltichwouldbe funded by an most peoplew,?,uld prefertos~ ....
Cidditional1!B-centsales tax for extra taxrevenuespentonaddi-
each distJic::tif approved by vot- tional. ,offlcers, . rather .than .
~rs.,. ..'. ., equipment upgrades;, '
, ,The proposals arlscheduled "This would help US a.ddress.
tobe discUssed at a public hear- burglary of vehicles and robber-
ing cit 5 p.:in.Feb~23 at CitY-Hall, ies," the chief said.~ItwoWd .
'i401'Market St. . give us more flexibility~.. n"
At the ertdqfthe hearing, the Mayor 'Calvin Mundinger
pr(}p()salS. .arc"expected to be said that although he previously
voted on by.each district's tem- had doubts about payingsala~
porary board, City Manager ries with' funding of limited du-
Gary Jackson ~aid. ration, he liked the proposal for
The City Council is serving 10 extra offlcers. .... .'. .. .
. as .' each . district',s temporary' "I'm proud of this.proposal,"
Qoard. The council will appoint.. the maYor said. "I thinkthe ho~:-
separClte, permanent boards for spot approach is valid. ~1 ..' .... '.
thenvodistricts if voters ap- Councilman Ronnie Ander- ..
prove s.uestax increases to fund son, who also voiced s~pport for
the districts. .' the proposal, said he thought .
Proposals to. create the two part of the crime control district
safety districts will be included money' . should go tOWard. an
on the May 13 municipal e1ec- anti-gang task force.
. tions ballot, if approved by City "It's beelliny belief for sev-
~ouncil in its role as temporary eral years tha.twe're seeUJ:g a re-
board. stirgence in gang activity,"
By state law, the revenue Anderson said.
from the two proposed districts Councilman Don Murray,
. Cost-.
Mu
goodi
analys
ity, wI
. eratiol
. nearly
, years.
: ;Ba~
Crime
DiStril
Contr<
., The
distric
years'
expire
vQters
Be!
contrc
tax in
mum
$1.
As
the Ih
2004
tax fm
carol.l
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PRESENTATION TO BE MADE AT MEETING