City Council

Belton City Council Meeting December 11, 2018- 5:30 P.M. The Belton City Council met in regular session in the Wright Room at the Harris Community Center with the following members present: Mayor Marion Grayson, Mayor Pro Tern Craig Pearson and Councilmembers David K. Leigh, John R. Holmes, Sr. and Wayne Carpenter. Councilmembers Guy O'Banion and Dan Kirkley were absent. Staff present included Sam Listi, Gene Ellis, John Messer, Amy Casey, Brandon Bozon, Chris Brown, Matt Bates, Paul Romer, Bob van Til, Bruce Pritchard , Judy Garrett, Angellia Points, Charlotte Walker, Cheryl Maxwell, and Cynthia Hernandez. The Pledge of Allegiance to the U.S. Flag was led by Councilmember John R. Holmes, Sr., the Pledge of Allegiance to the Texas Flag was led by Director of Parks and Recreation Matt Bates, and the Invocation was given by Dr. Claudette Morgan-Scott, Pastor of Shiloh Worship Center. Mayor Grayson congratulated the University of Mary Hardin-Baylor football team on their upcoming championship game at the Stagg Bowl. She said that a UMHB fan held up a sign at the taping of the TODAY show in New York that said "Belton, Texas," and "Go Cru!" Additionally, she reminded the audience about the Family, Fishing and Fun events coming up on December 21 st and December 28th, and she congratulated Josh Isbell on his recent promotion to Lieutenant at the Fire Department. 1. Call to order. Mayor Grayson called the meeting to order at 5:33 p.m . 2. Public Comments. There were none. 3. Receive Child Safety Fee funds in the amount of $22,605.67 from Bell County. Bell County Tax Assessor-Collector Shay Luedeke said that Bell County registered 285,263 vehicles in Bell County between October 2017 and September 2018. The County is allowed to charge an additional $1 .50 per vehicle as a Child Safety Fee to help support school crossing guard programs. The funds are distributed by population, and Belton's share of the funds for this period are $22,605.67. Mr. Luedeke said that the total amount collected and provided to Belton since inception of the program in 2001 is $341,647.60. Mayor Grayson thanked the County, and indicated the City will remit the funds to the School District for its use in the school crossing guard program. Commissioner Russell Schneider explained that he is presenting the City of Belton with its share of the Hotel Occupancy Tax Revenue related to the expansion of the Bell County Expo Center and Equine Center. Belton's share for this year is $9,508.26. He expressed his appreciation to the City of Belton for their partnership. 4. Recognitions: Assistant City Manager/Chief of Police Gene Ellis and Fire Chief Bruce Pritchard will present lifesaving awards. Belton City Council Meeting December 11, 2018 - Page 2 Assistant City Manager/Chief of Police Gene Ellis and Fire Chief Bruce Pritchard , along with Deputy Police Chiefs Jen Wesley and Larry Berg, and Assistant Fire Chief Wesley Gilbreath, presented lifesaving awards to Sergeant William Hamilton, Officer Richard Spurgeon, Firefighter/Paramedic Josh Isbell, Firefighter Mario Fuentes, Firefighter Bradley Haymaker, Officer Ray Rodriquez, Officer Josh Tulloch, Fire Lieutenant/ Paramedic Arie Henkelman, Fire Lieutenant/Paramedic Clayton King , and Firefighter Richard Chavarria. Each of these employees was responsible for saving the life of individuals who were in distress. The Chiefs presented them with recognition certificates as well as challenge coins. 5. Consider minutes of previous meetings: A. November 27, 2018, City Council Workshop Meeting B. November 27, 2018, City Council Regular Meeting Upon a motion by Councilmember Leigh and a second by Councilmember Holmes, Item 5 was unanimously approved by a vote of 5-0. 6. Consider authorizing the City Manager to execute the Second Amendment to the Amended and Restated Water Supply Contract with Belton Water Control and Improvement District (BCWCID} No. 1, and to take all associated steps needed for contract compliance. City Manager Sam Listi explained that the City's current comprehensive contract with BCWCID No. 1 was executed in 2004, and it amended the 1997 Water Supply Contract. The contract provides for water supply, treatment and system transmission facilities; issuance of bonds for system capital facilities ; allocation of election and option water for Belton; and associated costs for Belton's water. Addendum No. 1 in 1997 provided for $33 million in funding for water plant upgrades, increasing water production capacity from 53 mgd to 80 mgd , to be funded by the member entities (Copperas Cove, Ft. Hood, Killeen, Harker Heights, 439 WSC, BCWCID #3 and Belton). Two 2006 amendments include: • March 2006: Addendum No. 2 provided for the City's cost to rehab the 3 million gallon water storage tank, a total cost of $559,800, paid 2006-2011 at $93,300 annually. • May 2006: First Amendment provided for addition of 1,000 acre feet of water for the City of Belton. Mr. Listi said that Belton's outstanding bond payments due to BCWCID No. 1 for plant upgrades from Addendum No. 1 will be paid off in June 2019. This proposed amendment would extend the contract term to the later time of either December 31, 2041, or until any future bonds issued for the purpose of modifying or expanding the Belton City Council Meeting December 11 , 2018- Page 3 District's water supply, treatment or transmission facilities, are paid in full. He explained that the December 31 , 2041 , date aligns with the District's Water Supply Contract with the Brazos River Authority. Listi added that he has been in discussions with the District recently about an upgrade to the Belton Transmission System. Since the design and construction of this system project will extend beyond the June 2019 date when Belton's outstanding bonds will be paid off, this contract amendment is recommended by the City and by the District. The District is scheduled to consider action on this amendment at its Board Meeting on December 12, 2018. The project including design and construction is estimated to cost $1 .5M. Mayor Grayson said that providing water to our community is one of her top priorities especially since there are communities that struggle with the issue of water availability. Councilmember Holmes asked if the 14-inch line can provide 10 mgd. Mr. Listi responded that the 14-inch line cannot, but upgrading to the 16-inch line as proposed will provide 10 mgd. Mr. Holmes asked how much water is currently being used . Mr. Listi said right now it is around 2 mgd , but during peak time, the City uses approximately 7 mgd. Listi added that the City cannot receive its full contracted amount with the 14-inch line. Upon a motion by Councilmember Holmes and a second by Councilmember Carpenter, Item 6 was unanimously approved by a vote of 5-0. 7. Consider an ordinance modifying the City's TMRS retirement plan by increasing the employee deposit rate from 5% to 6% and decreasing the Updated Service Credit from 100% to 50%. Director of Finance Brandon Bozon said that for several years City Staff has been seeking a solution to increase the City's competitiveness with regard to its TMRS benefits. He presented proposed changes as shown in Exhibit "A." Councilmember Leigh asked what the plan is to restore the 100% Updated Service Credits (USC). Mr. Bozon reviewed the path to 100% USC if that is the direction the Council desires to go. Mr. Leigh said that this proposed plan will allow us to either provide either a 6% contribution rate with a 100% USC or a 7% contribution rate with a 50% USC. Mr. Bozon said that Mr. Leigh was correct. Mr. Leigh asked what will trigger the discussion in two years. Mr. Bozon suggested that it could be put in the City's Strategic Plan. Mr. Leigh said it would be good to codify it. Mr. Listi said it will be part of the annual budget discussion as well. Councilmember Holmes said that the 30% cost of living adjustment caught his eye. He said that seems a little low as most other cities are at 70%. He said he Belton City Council Meeting December 11, 2018- Page 4 understands the cost to increase the COLA is high. Mr. Bozon agreed that the cost is fairly substantial, but Staff will continue to review it. Mr. Holmes asked if the six employees affected by the USC will receive a windfall when the City moves back to 100% USC. Mr. Bozon said they will have a higher benefit, but it will not be significantly out of line. Mr. Holmes and Mr. Bozon discussed the amount of a retiree pension in terms of a percentage of current salary. The percentage is higher the longer the employee works. Mr. Holmes added that the employee will also be eligible for Social Security benefits. Mr. Bozon introduced Anthony Mills from TMRS who is the City's representative. Mr. Mills explained that he has been in this business for 26 years, and he has worked with some outstanding employees at various cities. He said he has not worked with anyone who is as capable as Brandon Bozon. He said it has been a pleasure to work with him, and the City of Belton is fortunate to have him as the Director of Finance. Mayor Pro Tern Pearson thanked Mr. Bozon for his hard work, and said that it is important for the Council to continue to understand what employees want. Councilmember Carpenter said he appreciated what has been proposed, and expressed that it is important for employees to know the Council appreciates what they do, and he hopes that is conveyed through the Council's action tonight. He asked if the Social Security benefit is offset by the TMRS benefit like it is in the public teacher retirement system . Mr. Bozon said it is not affected since the City participates in the Social Security system . City Manager Sam Listi thanked Anthony Mills and Brandon Bozon for their hard work on this project. He said he hopes the City employees recognize that they are appreciated by this action. Upon a motion by Councilmember Holmes, and a second by Mayor Pro Tern Pearson , Item #7, including the following captioned ordinance, was unanimously approved by a vote of 5-0. ORDINANCE 2018-41 AN ORDINANCE AUTHORIZING AND ALLOWING, UNDER THE ACT GOVERNING THE TEXAS MUNICIPAL RETIREMENT SYSTEM, "UPDATED SERVICE CREDITS" IN SAID SYSTEM ON AN ANNUAL BASIS FOR SERVICE PERFORMED BY QUALIFYING MEMBERS OF SUCH SYSTEM WHO AT THE EFFECTIVE DATE OF THE ALLOWANCE ARE IN THE EMPLOYMENT OF THE CITY OF BELTON; PROVIDING FOR INCREASED PRIOR AND CURRENT SERVICE ANNUITIES FOR RETIREES AND BENEFICIARIES OF DECEASED RETIREES OF THE CITY; TO INCREASE THE RATE OF DEPOSITS TO THE Belton City Council Meeting December 11, 2018 - Page 5 TEXAS MUNICIPAL RETIREMENT SYSTEM BY THE EMPLOYEES OF THE CITY; AND ESTABLISHING AN EFFECTIVE DATE FOR THE ORDINANCE. There being no further business, the Mayor adjourned the meeting at 6:17 p.m. ATTEST: A~ s~ Ci~  Texas Municipal Retirement System Proposed Plan Changes Exhibit "A" December 11, 2018 Plan Overview TMRS is a hybrid retirement plan. • Instead of a “defined benefit” based on a percentage of salary, the basic TMRS retirement benefit is “cash balance” in nature, meaning it is based on the contributions made by an employee, the matching amount agreed to by the city, and interest income credited to the employee’s account over the employee’s career. • TMRS benefits are funded by employee contributions, city contributions, and investment earnings generated from TMRS’ portfolio. Employees covered by TMRS contribute a percentage of their pay (5%, 6%, or 7%). Employee deposits are combined with city contributions and invested by the System. • A city employee under TMRS only receives the city match at retirement – usually after 20 or 25 years of service. In 2010, the average benefit payment to a new TMRS retiree with 20 to 25 years of service was approximately $1,414 a month. Belton’s TMRS Plan Belton’s TMRS History Belton’s Plan History • Belton began its participation in TMRS in June 1956 • Belton adopted its 100% updated service credit in 2004 Discussion of Potential Plan Changes • City Staff began evaluating the financial implications of potential changes to Belton’s TMRS plan in July of 2016 • Council Workshop on TMRS benefits was conducted on April 25, 2017 – Employee survey was directed • Employee Survey was conducted in Spring 2018 Belton’s Market Position Belton’s plan is middle of the road as far as structure, but behind in the market  Benefits offered by TMRS cities with a population of 15,000 to 25,000: Belton’s Market Position Recruiting and Retention  In the employee survey, retirement benefits ranked as the 2nd most important compensation element behind base pay among all employees  Ranked 1st among employees with more than 11 years of experience  Ranked 1st among civil service employees All area competitors* are utilizing a higher employee deposit rate  7%: Killeen, Waco, Temple, Harker Heights, Corsicana, Gatesville, Hewitt, Robinson  6%: Copperas Cove, Bellmead *Area competitors listed include cities in the TMRS Heart of Texas Region with populations over 10,000 Financial Challenges Changing Belton’s TMRS plan structure to be more competitive with the market brings immediate budget implications and affects the plan’s overall financial health Fund Current Plan 7% Plan (100% USC) General $534,006 $902,359 Water & Sewer $91,373 $154,402 Drainage $10,705 $18,089 BEDC $11,718 $19,801 Total $647,802 $1,094,650 Required Contribution Rate 7.64% 12.91% Funded Ratio 91.0% 77.6% Unfunded Actuarial Liability $2,042,223 $5,936,366 Proposed Plan Changes The solution is a phased approach that improves Belton’s market competitiveness while controlling the short and long term financial costs of a plan change • Increase Employee Deposit Rate from 5% to 6% • This change will increase the retirement benefit paid to employees as it will increase the cash balance of their account, which is matched by the City 2:1 at retirement • Decrease the Updated Service Credit percentage from 100% to 50% • This will decrease the financial impact of the change to the Deposit Rate, limiting the growth in the unfunded actuarial liability and required contribution rate The changes above would raise the City’s required contribution rate to 8.06% for 2019, and increase the City’s UAL by $115,219 Employee Impact 162 of 168 employees will receive a larger retirement benefit on their earliest eligible retirement date as a result of this plan change • Increase in benefits range from 1.4% to 19.8% • Actual change will vary depending on the individual employee’s tenure and payroll history • Generally, the longer an employee stays with the City, the greater the impact of the proposed change will be on their retirement benefit • Future employees will experience an increase in benefits of up to 20% Six employees could experience a decrease in benefits based on their particular employment history. City management has met with these six employees and has a plan to address any possible adverse impact. Employees will begin paying 1% additional deposit into TMRS starting in January 2019 Long Term Plan Required City contribution is 8.06%, but staff recommendation is to increase to 8.50% for 2019, as additional contribution will: • Boost the financial health of the City’s TMRS plan • Set up a multi-year strategy to continue benefit increases by either restoring the USC or increasing the Employee Deposit Rate over the next five years Financial Impact The FY 2019 (January – September) cost of the plan changes are as follows: Fund Budget Impact General $45,083 Water & Sewer $7,714 Drainage $904 BEDC $989 Total $54,690 • These costs can be absorbed into the FY 2019 operating budgets due to lower than budgeted insurance renewals • The annualized cost of the plan changes is $72,920 • Additional increases to the City’s contribution rate in future years will cost approximately $26,000 per 30 basis points Council Action Recommendation: Adopt the ordinance modifying the City’s TMRS retirement plan by: • Increasing the employee deposit rate from 5% to 6%; and • Decreasing the Updated Service Credit from 100% to 50% No formal Council action needed to authorize the contribution rate (8.50%) in excess of the required contribution rate (8.06%)