City of Canyon Commission Meetings

AGENDA NOTICE OF MEETING Notice is hereby given that the governing body of the City of Canyon will meet at 5:30 p.m. on the 17th day of March, 2014, in the Commission Chambers of City Hall at 301 16th Street in the City of Canyon to discuss the following agenda items: 1. Call to Order. 2. Invocation. 3. Approval of the Minutes of the Meeting of March 3, 2014. 4. Public Forum – Comments from Interested Citizens. 5. Update from City Staff (4th Avenue Paving Project, Rockwell Road Well Field Project, Drill Field, Hydrant Maintenance, Entryway Lighting Project, and City Hall Study Update) 6. Consider and Take Appropriate Action on Second and Final Reading of Resolution No. 18-2013 for Panhandle-Plains Historical Museum, Harrington Petroleum Wing Renovation. 7. Consider and Take Appropriate Action on Request from Reeves-Hinger Elementary School for Assistance with Playground Equipment Purchase. 8. Consider and Take Appropriate Action on Final Pay Request from A&S Builders for Construction on the Kent Johnson Memorial Baseball Complex. 9. Consider and Take Appropriate Action on Ordinance No. 1002, Atmos Energy Rate Settlement. 10. Executive Session Pursuant to Texas Government Code §551.072 Real Property and §551.074 for Personnel (Commissioner Place 5, City Attorney, Firefighters Pension Board). 11. Consider and Take Appropriate Action on Items Discussed in Executive Session. 12. Appointment and Swearing in of Commissioner Place 5 to fill unexpired term. 13. Adjournment. Randy Criswell, City Manager I certify that the above Notice of Meeting was posted on the bulletin board of the Civic Complex of the City of Canyon, Texas on the 14th day of March, 2014. Gretchen Mercer, City Clerk City of Canyon City Commission Meeting March 3, 2014 The City Commission of the City of Canyon met in regular session at 5:30 p.m. in the City Commission Chambers of the Civic Complex. Mayor Quinn Alexander presided over the meeting with the following Commissioners in attendance: Mayor Pro-Tem Jed Welch, Gary Hinders, Jon Behrens and David Logan. Also present were the following City Staff: City Manager Randy Criswell, Assistant City Manager Chris Sharp, City Secretary Gretchen Mercer, Code Enforcement Director Danny Cornelius, Chief of Police Dale Davis, Business and Community Development Director Evelyn Ecker, Director of Public Works Dan Reese, Parks and Recreation Director Brian Noel and City Attorney Chuck Hester. Item 1. Call to Order. Mayor Alexander called the meeting to order at 5:35 p.m. Item 2. Invocation. Mayor Pro-Tem Welch gave the invocation. Item 3. Approval of Minutes of the Meeting of February 3, 2014. Commissioner Logan moved, duly seconded by Mayor Pro-Tem Welch to approve the minutes of February 3, 2014. Motion carried unanimously. Item 4. Public Forum – Comments from Interested Citizens. No Comment was made. Item 5. Update from City Staff (4th Ave Paving Project, Rockwell Road Well Field Project, Drill Field and Hydrant Maintenance). City Manager Randy Criswell gave brief updates on the following: Mr. Criswell said the curb and gutter is being poured on the 4th Avenue Project and if the weather holds the job will completed pretty quickly. Mr. Criswell reported SPS has installed the power for the Rockwell Road Well Field. Mr. Criswell said the meters should be set soon if not already done and the well field should be online when needed with higher usage. Mr. Criswell stated the Training Tower at the Fire Department Drill Field has been demolished and construction should begin soon on the new tower and smokehouse. Mr. Criswell reported a company had been contracted with to conduct the city’s water hydrant testing and maintenance. Mr. Criswell said the company hired could perform the maintenance more efficiently with much less water loss. City Commission Meeting March 3, 2014 Page 2 of 6 Mayor Alexander introduced and welcomed the City of Canyon Chamber Director Roger Remlinger who was present at the commission meeting. Item 6. First Reading of Resolution No. 8-2013 for Panhandle-Plains Historical Museum, Harrington Petroleum Wing Renovation.. Business and Community Development Director Evelyn Ecker presented Resolution No. 18-2013 for its first reading. Ms. Ecker stated the proposed funding of $100,000 would be used as lead-off funding of the 2nd floor renovation of the Harrington Petroleum Wing. Ms. Ecker stated the total cost of the Petroleum Wing renovation encompassing 16,000 sf is estimated to be $100 sf for a total of $1.6 million. Ms. Ecker said the Canyon Economic Development Board conducted a public hearing October 15, 2013 with no opposition of the project. No action required for the first reading of Resolution No. 18-2013. RESOLUTION NO. 18-2013 A RESOLUTION APPROVING A PROJECT FUNDING AGREEMENT BETWEEN CANYON ECONOMIC DEVELOPMENT CORPORATION AND THE PANHANDLE-PLAINS HISTORICAL MUSEUM FOR THE RENOVATION OF THE SECOND FLOOR DON D. HARRINGTON PETROLEUM WING. Item 7. Consider and Take Appropriate Action on Recommendations from the Board of City Development (BCD) for 2014 Budget. Assistant City Manager Chris Sharp presented the proposed Board of City Development 2014 budget for approval. Billboard Lease $ 6,000 Xcel Energy $ 1,400 Texas $34,000 WTAMU $34,000 PPHM $34,000 Chamber of Commerce $33,000 Canyon Main Street $25,000 Kids Inc. $ 3,000 TOTAL $170,400 Mr. Sharp reported collections for 2013 were up around 4% from the previous year and totaled $167,728. Mr. Sharp stated the BCD felt confident that collections would be the same if not more for 2014 and voted unanimously to recommend the budget of $170,400 for 2014. After discussion, Commission Hinders moved, duly seconded by Commissioner Logan to approve the BCD Budget as presented. Motion carried 4-0 with Mayor Alexander Abstaining. Item 8. Hold Public Hearing and Consider and Take Appropriate Action on Ordinance No. 1000, Rezoning of Proposed Canyon East Unit No. 3. City Commission Meeting March 3, 2014 Page 3 of 6 Director of Code Enforcement Danny Cornelius presented Ordinance No. 1000 for consideration. Mr. Cornelius stated Kuhlman and Sons LP and Canyon East Development LLC had submitted a plat for Canyon East Unit No. 3. Mr. Cornelius said the property was recently annexed as Single- Family Agricultural Residential District intended for undeveloped land and agricultural use. Mr. Cornelius said the property owners proposed use is single-family Suburban Residential and Single-Family Estate Residential. Mr. Cornelius stated 34 letters were sent to property owners within 200 feet with 6 responses all in favor of the zoning request. Mayor Alexander opened the public hearing, there being no comment, Mayor Alexander closed the public hearing. After discussion, Commissioner Logan moved, duly seconded by Commissioner Behrens to approve Ordinance No. 1000 as presented. Motion carried unanimously. ORDINANCE NO. 1000 Rezoning Canyon East Unit No. 3 AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF CANYON, TEXAS, REZONING CANYON EAST UNIT NO. 3, AN ADDITION TO THE CITY OF CANYON, RANDALL COUNTY, TEXAS, PROVIDING THAT THE ZONING CLASSIFICATION BE POSTED UPON THE ZONING DISTRICT MAPS OF THE CITY OF CANYON, PROVIDING THAT ALL ORDINANCES OR PARTS OF ORDINANCES IN CONFLICT HEREWITH ARE EXPRESSLY REPEALED, AND PROVIDING FOR AN EFFECTIVE DATE. Item 9. Consider and Take Appropriate Action on Plat for Canyon East Unit No. 3. Director of Code Enforcement Danny Cornelius presented a plat for Canyon East Unit No. 3 for consideration as discussed with the rezoning request (Ordinance No. 1000). After discussion, Commissioner Logan moved, duly seconded by Mayor Pro-Tem Welch to approve the plat for Canyon East Unit No. 3 as presented. Motion carried unanimously. Item 10. Consider and Take Appropriate Action on Ordinance No. 1001, Updating Parking Regulations Along the 2300 and 2400 Blocks of 4th Ave. Canyon Police Chief Dale Davis presented Ordinance No. 1001 for consideration. Chief Davis said businesses in the 2300 block of 4th Ave. had requested the limited parking restrictions be changed from 1 hour parking between the hours of 9:00 am to 11:30 am to one hour parking between the hours of 8:00 am to 5:00 pm daily except weekends and holidays. Chief Davis said with the current restrictions, WT students could park all afternoon in front of the businesses leaving no place for paying customers to park. Chief Davis stated he had visited with each affected business owner about the proposed change and had overwhelming support. Chief Davis said the change from one hour parking to loading and unloading only in the north side of the 2400 block of 4th Avenue reflects changes West Texas A&M University already made, conflicting with the current ordinance. Chief Davis said WT had already placed signs citing loading and unloading only and painted the curbs in front of the Panhandle Plains Historical Museum. City Commission Meeting March 3, 2014 Page 4 of 6 After discussion, Mayor Pro-Tem Welch moved, duly seconded by Commissioner Behrens to adopt Ordinance No. 1001 as presented. Motion carried unanimously. ORDINANCE NO. 1001 AN ORDINANCE OF THE CITY OF CANYON, TEXAS, REPEALING ORDINANCE NO’S. 429, 506 AND 580; AMENDING CHAPTER 75; PARKING SCHEDULES, SCHEDULE LIMITED PARKING; ESTABLISHING LIMITED PARKING ON THE SOUTH AND NORTH SIDE OF THE 2300 BLOCK OF FOURTH AVENUE AND THE NORTH SIDE OF THE 2400 BLOCK OF FOURTH AVENUE; FIXING A PENALTY FOR VIOLATION; AND PROVIDING AN EFFECTIVE DATE. Item 11. Consider and Take Appropriate Action on Bids Received for Sealcoating – 2014 Project. Director of Public Works Dan Reese presented bids received for the 2014 Sealcoating project. Mr. Reese stated the sealcoat area included all streets between 16th and 23rd Streets and all Avenues south of BNSF Railroad. Mr. Reese said paved alleys would be included. Mr. Reese said the base bid was for a combination of regular rock and pre-coated rock, but with the success of the areas treated with pre-coated rock last year, an alternate bid for using all pre-coated rock was included. BID TAB – SEALCOAT 2014 January 14, 2014 BASE BID Lipham Asphalt & Freeman Lewis Construction Paving Construction Item Estimated Ext. Unit Ext. Unit Ext. No. Description Quantity Unit Unit Price Amount Price Amount Price Amount 1 Construction of Single Sealcoating 89,970 SY $1.620 $145,751.40 $1.680 $151,149.60 $1.630 $146,651.10 1 Construction of Single Sealcoating 69,430 SY $1.820 $126,362.60 $1.910 $132,611.30 $2.165 $150,315.95 Using Pre-coated Rock BASE BID TOTAL $272,114.00 $283,760.90 $296,967.05 Number of calendar days to complete project 45 45 60 TOTALS $562,222.00 $585,026.90 $649,241.05 BASE BID AND ALTERNATE BIDS ALTERNATE BID NO. 1 Lipham Asphalt & Freeman Lewis Construction Paving Construction Item Estimated Unit Unit Ext. Unit No. Description Quantity Unit Price Ext. Amount Price Amount Price Ext. Amount Construction of Single A1-1 Sealcoating Using Pre-coated 159,400 SY $1.820 $290,108.00 $1.890 301,266.00 $2.210 352,274.00 Rock ALTERNATE BID NO. 1 TOTAL $290,108.00 $301,266.00 $352.274.00 Number of calendar days to complete project 45 45 60 Mr. Reese said it was the recommendation of the City Engineer and staff to award the alternate sealcoating bid to Lipham Asphalt and Paving in the amount of $290,108.00. City Commission Meeting March 3, 2014 Page 5 of 6 After discussion, Commission Hinders moved, duly seconded by Mayor Pro-Tem to award the 2014 Sealcoating Bid, Alternate Bid, to Lipham Asphalt and Paving in the amount of $290,108.00. Motion carried unanimously. Item 12. Consider and Take Appropriate Action on Purchase of a New Backhoe for Utilities Department. Public Works Director Dan Reese presented quotes received for a new backhoe. Mr. Reese stated this purchase had been approved in the budget. Mr. Reese said the current John Deere backhoe is 10 years old with a 1988 model Case as a backup. Mr. Reese stated the John Deere would become the backup and the 1988 Case would be used in another department. Mr. Reese said both local equipment dealers John Deere and Caterpillar are Buyboard members and quotes were obtained from both. Yellowhouse Machinery (John Deere) $106,200.00 Warren Cat (Catterpillar) $106,700.00 Mr. Reese said after allowing the backhoe operators to run both models it was determined the Caterpillar was a better fit. Staff said the cab layout is functionally better, it has a stronger lifting capability and CAT has always been ahead of the curve on meeting the EPA emission standards, all justifying the $500.00 difference. Mr. Reese said the funding would come from the capital equipment fund and paid back with 10 installments of $14,880. Mr. Reese said it was staff’s recommendation to award the purchase of the new backhoe to Warren Cat in the amount of $106,700.00. After discussion, Mayor Pro-Tem Welch moved, duly seconded by Commissioner Logan to award the purchase of a new backhoe to Warren Cat in the amount of $106,700.00. Motion carried unanimously. Item 13. Executive Session Pursuant to Texas Government Code, §551.071, for Consultation With Attorney Pertaining to Pending or Contemplated Litigation, §551.087 Economic Development Negotiations, §551.072 Real Property and §551.074 Personnel Matters (Commissioner Place 5, City Attorney). Mayor Alexander indicated the Commission would adjourn into executive session at 6:15 p.m. Item 14. Consider and Take Appropriate Action on Items Discussed in Executive Session. Upon returning from executive session at 8:24 pm, no action was taken. Item 15. Consider and Take Appropriate Action on Resignation of Commissioner Place 5. Mayor Alexander presented a letter of resignation from Commissioner Behrens. After the commissioners and city staff expressed gratitude to Commissioner Behrens, Mayor Pro-Tem Welch moved, duly seconded by Commissioner Hinders to accept the resignation of Commissioner Jon Behrens. Motion carried unanimously. Item 16. Adjournment City Commission Meeting March 3, 2014 Page 6 of 6 There being no further business, Mayor Pro-Tem Welch moved this meeting be adjourned. __________________________ Quinn Alexander, Mayor ATTEST: ________________________________ Gretchen Mercer, City Secretary  AGENDA To: Randy Criswell, City Manager, Mayor and City Commission From: Evelyn Ecker, Executive Director, CEDC Date: February 19, 2014 Re: Consider and Take Appropriate Action on Second and Final Reading of Resolution No. 18-2013 for Panhandle-Plains Historical Museum, Harrington Petroleum Wing Renovation. The Canyon Economic Development Corporation unanimously approved a funding request on September 12, 2013 from the Panhandle-Plains Historical Museum for $100,000. The funds are going to be used as lead-off funding of the 2nd floor Don D. Harrington Petroleum Wing renovation. The cost of the Petroleum Wing renovations, encompassing 16,000s.f. is estimated to be $100 s.f. or $1.6 million. The public hearing for this project was held on October 15, 2013 during the regular scheduled meeting of the CEDC. There was no opposition for the project. Enclosed is a draft of the proposed Funding Agreement. In the agreement we have proposed the funding to be paid in three (3) payments. The first payment of $50,000 will be made when the project officially starts (estimated September 2014). Two (2) equal payments of $25,000 will be made at the halfway mark of the renovation and upon completion. The estimated length of the project is eighteen (18) months. It is staff’s recommendation to adopt Resolution No. 18-2013. City of Canyon  RESOLUTION NO. 18-2013 A RESOLUTION APPROVING A PROJECT FUNDING AGREEMENT BETWEEN CANYON ECONOMIC DEVELOPMENT CORPORATION AND THE PANHANDLE-PLAINS HISTORICAL MUSEUM FOR THE RENOVATION OF THE SECOND FLOOR DON D. HARRINGTON PETROLEUM WING. WHEREAS, the Board of Directors of the Canyon Economic Development Corporation (“CEDC”), having taken action by majority vote on September 12, 2013 to approve a funding request from Panhandle-Plains Historical Museum; and, WHEREAS, On October 15, 2013, the Canyon Economic Development Corporation (“CEDC”) held a public hearing regarding the use of sales tax revenues in regards to a funding agreement. The sales tax supporting the CEDC is authorized by Chapter 504 and 505 Texas Local Government Code, formerly known as the Development Corporation Act of 1979 TEX. REV. CIV. STAT. ART. 5190.6 §4B (“the Act”) the primary purpose of which is to develop, stabilize, diversify, and expand the economy; and, WHEREAS, the CEDC is providing $100,000 for the renovation of the second floor Don D. Harrington Petroleum Wing located at the Panhandle-Plains Historical Museum. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF CANYON, TEXAS: That the project funding agreement between the CEDC and the Panhandle-Plains Historical Museum is hereby approved, and the sales tax revenue collected pursuant to “the Act” by CEDC may be used to fund the project referred to above. INTRODUCED at the First Reading on the 3rd day of March 2014, and Adopted on the Second Reading the 17th day of March, 2014. ______________________________ QUINN ALEXANDER, MAYOR ATTEST: ________________________________ Gretchen Mercer, City Clerk  CANYON ECONOMIC DEVELOPMENT CORPORATION PROJECT FUNDING AGREEMENT This agreement is made by and between the Canyon Economic Development Corporation (CEDC), a Texas non-profit corporation duly organized and existing pursuant to the TEXAS DEVELOPMENT CORPORATION ACT and Panhandle-Plains Historical Museum, a Texas non-profit corporation duly organized and existing under the laws of the State of Texas and qualified to do business in Texas (hereinafter referred to as “Second Party.”) 1. The purpose of this agreement is to facilitate the proper use of funds held and administered by the CEDC, a tax supported non-profit corporation whose primary income is from sales tax collected within the City of Canyon and dedicated exclusively to economic development, and other purposes authorized by statute. The sales tax supporting CEDC is authorized by Chapters 504 and 505 Texas Local Government Code formerly known as TEX. REV. CIV. STAT. ART. 5190.6 § 4B, the primary purpose of which is the developing, stabilizing, diversifying, and expanding the economy through the retention, recruitment, expansion, and employment opportunities of the citizens of Canyon and the surrounding area. 2. The project and performance requirements to be implemented by means of this agreement are described in the agreement and in the application, business plan and other supporting documents submitted to CEDC by Second Party. 3. The CEDC will provide the following funding and economic incentives for development of the project: $100,000 in lead-off funding for the first phase of renovations to permanent gallery space at the facility. The renovation includes 16,000 SF. encompassing the Don D. Harrington Petroleum Wing and the estimate for the project is $1,600,000. The funding is based on promoting economic and civic vitality in the region through job creation, encouraging retail sales and by generating state and local tax revenue, and encouraging tourism locally, regionally, and statewide. The funding will be in three installments. The first being $50,000 disbursed on or before September 1, 2014. One disbursement of $25,000 will be made when the project is 50% complete, and the final disbursement of $25,000 will be made when project is complete. 4. Second Party agrees to undertake the following actions in order to accomplish the project: (a) Seek additional funds for the project, leveraging additional monies and maximizing the effect of the CEDC Investment. (b) Start and complete the renovation project as soon as funds are available and (c at completion of project, provide the CEDC with an accounting of all expenditures for project. 5. The failure of Second Party to fully and timely comply with any performance requirement shall be an act of default by Second Party which shall entitle the CEDC to suspend further funding and, at its option, to terminate this agreement by written notice delivered pursuant to paragraph nine (9). Page 1 6. Second Party makes the following covenants and warranties to the CEDC and agrees to timely and fully perform the following obligations and duties: a. Any false or substantially misleading statement contained herein or the failure of Second Party to comply and fully perform as required in this agreement, shall be an act of default by Second Party. Failure to comply with any covenant or warranties shall constitute an act of default and entitle the CEDC to suspend further funding and at its option to terminate this agreement by written notice in accordance with paragraph nine (9) below. b. Second Party is authorized to do business in Texas, is in good standing in the State of Texas and shall remain in good standing in the State of Texas during the term of this agreement. c. The execution of this agreement has been duly authorized by the governing body of Second Party and all necessary corporate approvals have been obtained. Second Party’s designated agent or officer executing this agreement is duly authorized and empowered to execute this agreement and bind Second Party to the covenants, warranties and other terms of this agreement. Second Party’s execution of this agreement and the performance thereof is not contrary to any law, rule, regulation, or provisions of Second Party’s organizational documents or any contract, instrument, or agreement to which Second Party is a party or by which it may be bound at the time this agreement is executed. The necessary authority for the agent whose signature that appears below is evidenced by a resolution attached to this agreement as Exhibit “A” which is incorporated herein by reference for all purposes. d. No litigation or governmental proceeding is pending or to the knowledge of Second Party is contemplated or threatened against Second Party or affecting it’s operations or business that may result in any material or adverse change in Second Party’s business, properties, or operations. To Second Party’s knowledge, no additional consent, approval, or authorization of a governmental entity or other authority is required in connection with the execution and performance of this agreement or the transactions contemplated hereby. e. To Second Party’s knowledge no certificate or statement delivered by Second Party to CEDC in connection with this agreement or any transaction contemplated by this agreement contains any untrue statement or fails to state the facts necessary to keep the statements contained therein from being misleading or false. f. There are no bankruptcy proceedings or other legal proceedings currently pending or contemplated affecting the Second Party. The Second Party has not been informed of any intent to initiate involuntary bankruptcy proceedings against Second Party. Page 2 g. To its knowledge Second Party has acquired and maintained all necessary rights, licenses, permits, and authority to carry on its business in Texas and to perform the terms of this agreement and will continue to use its best efforts to maintain all necessary rights, licenses, and permits in current status and good standing. h. The funds provided by CEDC shall be utilized solely for the purposes of the project as stated in this agreement and within the scope of the project as stated in this agreement and for no other purpose. i. Second Party shall pay all taxes and assessments due and owing to all taxing authorities having jurisdiction over Second Party’s property and business operations. In addition, Second Party shall timely pay all employment, income, franchise, and other taxes due and owing by Second Party to all local, state, and federal entities. j. Second Party shall complete the project required by this agreement and shall provide the necessary staff and employees for the completion and performance of this agreement. k. Second Party shall timely and fully perform and comply with all terms and conditions of this agreement. l. Second Party shall notify CEDC in writing of substantial changes in the management of Second Party within seven (7) days. Substantial changes shall mean changes in executive officers, board members, or managers. m. The Second Party agrees, that with regard to all programs and activities arising out of this agreement, the Second Party shall fully comply with all civil rights acts and specifically will not discriminate against any person upon the basis of race, color, national origin, gender, or by reason of being disabled. 7. The CEDC under the following circumstances and at the sole discretion of it’s board of directors may suspend the obligations under this agreement or may terminate this agreement and recapture from Second Party any of the funds provided pursuant to this agreement or consideration paid by the CEDC without liability to the CEDC: a. The filing of bankruptcy proceedings or the appointment of a receiver of Second Party or any part of it’s assets or property and failure of such bankruptcy or receivership to be discharged within sixty (60) days of filing. b. The adjudication of Second Party as a bankrupt. c. A change in ownership of Second Party which constitutes a material change in the nature of Second Party’s business and operations. Page 3 8. Second Party agrees to the following reports and monetary requirements in connection with the project: a. Second Party shall provide periodic reports as requested by the CEDC regarding the status of the project. b. During normal business hours, Second Party shall allow a representative of the CEDC reasonable access to its books and records to verify employment, expenditure of funds, and other relevant records related to economic development considerations and incentives provided by this agreement. CEDC agrees to maintain the confidentiality of such records. Information shall be used only for the purpose of administering the funding provided by CEDC pursuant to this agreement and for no other purpose; provided however, CEDC may, if required by legal process or at the discretion of the office of the Attorney General provide such documentation to a third party as is required by the Attorney General or pursuant to such legal process. 9. Should Second Party fail to timely, fully, and completely comply with any one or more of the requirements, obligations, duties, terms, and conditions or warranties of this agreement such failure shall constitute an act of default by Second Party and, if not fully and completely cured within 30 days after written notice by CEDC to Second Party, the CEDC may terminate this agreement and pursue any legal remedies existing under the law; provided however, that Second Party’s liability under this agreement shall be limited to the immediate return by Second Party of all funds or other economic incentives provided by the CEDC and any consideration previously paid to Second Party by the CEDC. The rate of interest on all funds paid by the CEDC to Second Party subject to refund shall be 6% per annum. In the event CEDC should prevail in any litigation to recover funds pursuant to this paragraph, the CEDC shall, in addition to all other damages provided by this paragraph, be entitled to recover reasonable attorneys fees and expenses of litigation. 10. In the event of unforeseeable third party delays, in the performance of this agreement by Second Party, or force majeure, and upon a reasonable showing by Second Party that it has immediately and in good faith commenced and is diligently and continuously pursuing the correction, removal, or abatement of such delays by using its best efforts, CEDC may consent and excuse any such delay, which consent shall not be unreasonably conditioned or withheld. The failure by Second Party to continuously and diligently pursue compliance shall constitute an act of default. 11. Any delay by the CEDC in providing notice of default to Second Party, shall in no event be deemed or constitute a waiver of such default by CEDC or waiver of any of its rights and remedies available under this agreement or at law or in equity. 12. Any waiver provided by CEDC to Second Party of an act of default shall not be deemed to constitute a continuing waiver or a waiver of any other existing or future act of Page 4 default by Second Party even if the act or default is of the same or a similar nature. 13. Second Party specifically agrees that CEDC shall only be liable to Second Party for the amount of money actually budgeted and committed to the project described in this agreement. CEDC shall not be liable or held responsible for any other direct or indirect costs, attorneys fees, court costs, actual or consequential damages, direct or indirect, for any act of default by CEDC under the terms of this agreement. It is further stipulated and agreed that CEDC shall only be required to pay the amount of the project cost out of it’s sales tax revenues held and administered pursuant to §4B of the Development Corporation Act for the fiscal year in which the funding of this agreement is approved and from no other source. It is specifically agreed however, that in the event actual total sales tax revenues collected by CEDC for any year during which this agreement is to be performed should be less than the total amount of all grants to all contracting parties with the CEDC for that year, then in that event, all contracting parties shall receive only their prorated share of the available sales tax revenue for that year, less CEDC’s customary and usual administrative costs and expenses compared to each contracting party’s total grant amount for that year, and CEDC shall not be liable to any contracting party for any such deficiency for that time or in the future. In the event of such revenue shortfall, CEDC will provide written notice to all contracting parties affected by the revenue shortfall along with such documentation as will allow the contracting party to ascertain their prorated share of the funding to be provided. 14. This agreement incorporates the entire agreement of the parties hereto and supersedes any oral or written previous and contemporaneous agreements between the parties relating to the matters covered by this agreement, except as otherwise provided herein, this agreement cannot be modified or amended without a written agreement of the parties. 15. No term or provision of this agreement or an act of the CEDC in the performance of this agreement shall be construed as making or constituting Second Party or its employees, or agents, partners of the CEDC or employees of the CEDC. This contract shall not benefit any third party not a direct party to this agreement. 16. The termination of this agreement as provided herein may be upon mutual agreement of the parties or pursuant to the provisions hereof relating to default. The termination of this agreement either by mutual agreement or by notice served by the CEDC shall extinguish all rights, duties, and obligations of the CEDC and Second Party except as provided herein. 17. This agreement may be executed in a number of identical counterparts each of which shall be deemed an original upon execution and shall constitute the same instrument. 18. This agreement is made pursuant to the laws of the State of Texas and shall be governed and interpreted under the laws of the State of Texas without regard to any conflict of laws provision. Venue in any litigation arising out of the execution or performance of this agreement shall be in the court of appropriate jurisdiction in Randall County, Texas and in no other Venue. Second Party, by signing this agreement, consents Page 5 to and waives any objections to in personam jurisdiction in Randall County, Texas. 19. In the event one or more of the provisions contained in this agreement should, for any reason, be held invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions of this agreement. This agreement shall be construed as if such invalid, illegal, or unenforceable provision had not been contained herein. 20. This agreement is subject to all legal requirements contained in the Municipal Charter of the City of Canyon and Code and Ordinances of the City of Canyon and all other applicable state and federal laws and regulations. Second Party agrees that, in compliance with this agreement, it will promptly comply with all applicable laws, regulations, orders, and rules of the state, city, and other governmental entities. 21. This agreement shall be binding upon the parties hereto, their successors, and (where permitted) assigns. This agreement may not be assigned by either party without the specific prior written consent of the other, which consent shall not be unreasonably withheld or conditioned. Provided however, that in the event Second Party transfers all or substantially all its assets to another entity or merges with another entity to the extent that the underlying purpose of this agreement cannot, in the sole discretion of the CEDC’s board of directors, be accomplished, the CEDC shall have the option to suspend it’s performance under this agreement or terminate this agreement. 22. Second Party represents that no member of the board of directors of the CEDC or member of the governing body of the City of Canyon or any officer or employee of the City of Canyon or CEDC will be compensated in any manner with respect to directly or indirectly bringing the parties together for the purpose of this agreement or participation in the negotiation or formation of this agreement. No finders fee or other origination fee of any type will be paid or will become payable to any officer or employee of the City of Canyon, member of the governing body of the City of Canyon, or the governing body of the CEDC with regard to the formation or performance of this agreement. 23. All notices from one party to the other party required or permitted by this agreement shall be delivered personally or sent by certified mail postage prepaid addressed to the party at the address shown on the signature page. All notices shall be deemed given on the date so delivered or deposited in the mail unless otherwise provided. Either party may change its address by sending written notice of such change to the other party in the manner provided by this agreement. 24. All representations, warranties, covenants, and agreements of the parties as well as all rights and benefits of the parties pertaining to the transaction contemplated by this agreement shall survive the original execution date of this agreement and shall constitute continuing obligations. Page 6  25. All other terms or provisions of this agreement notwithstanding, the obligations of CEDC hereunder are subject to: (a.) Approval of the financial incentives by the CEDC Board; (b.) Approval of the financial incentives by the Canyon City Commission; and, (c.) Compliance with the requirements of the Texas Local Government Code, Chapter 501, 502, 504 and 505 together with any other provisions of Subtitle C1 applicable to Type B Corporations. Effective Date________________________________________ Canyon Economic Development Corporation Second Party: By:__________________________ By:_______________________ Name:_______________________ Name:_____________________ Title:________________________ Title:______________________ Address:1604 4th Avenue, Suite 21 Address: 2503 4th Avenue Canyon, Texas 79015 Canyon, Texas 79015 Page 7  AGENDA To: Mayor and City Commission From: Randy Criswell, City Manager Date: March 17, 2014 Re: Consider and Take Appropriate Action on Request from Reeves-Hinger Elementary School for Assistance with Playground Equipment Purchase _________________________________________________________________________ I was recently approached by Tina Finke, Assistant Principal at Reeves-Hinger Elementary School. She was asking for financial assistance from the City to help them purchase some playground equipment that would be of extra benefit to children with special and developmental needs. Please see her attached letter of request. We don’t have any money in the budget for an expenditure such as this, and I don’t really want to forfeit something that we DID budget for in order to fund this request. However, it is a legitimate request, and it is true that our City Parks don’t have equipment like what is being proposed. Their request is for $6,235. I’m sure that if you want to do this, we can find a way to fund it. City of Canyon  Canyon Independent School District Reeves-Hinger Elementary Brandi Parker Tina Finke and Joe Cole Michael L. Wartes Principal Assistant Principals Superintendent Proposal for City of Canyon Assistance with Reeves-Hinger Elementary Playground Renovation PROPOSAL REQUEST: Reeves-Hinger Elementary is requesting an agreement with the City of Canyon to provide specific equipment that is not found on any other playground in the City of Canyon to address special needs for children with disabilities, including: 1. Individual play with vestibular (rotating movement) that is soothing and safe for students with autism and other disabilities that affect motor planning. 2. Adaptive swings with harnesses for Pre-K – 4th graders who cannot enjoy regular swings because of lack of balance and muscularity of the legs and arms. 3. A teeter-totter that is low to the ground to accommodate children who cannot climb onto tall equipment. The total cost of the above equipment that Reeves-Hinger is requesting assistance in providing is $6,235.00. This is for 3 adaptive swings, 1 triangle see-saw rider, and 2 tea cup spinners. This equipment would be located at Reeves-Hinger Elementary playground, but is used by the community after school hours and during the summer months. (Pictures attached) REEVES-HINGER PLAYGROUND RENNOVATION: Reeves-Hinger is currently undergoing a major campus playground renovation that began Spring 2013. We have received a bid from Playground, etc. out of Midland, TX to renovate and add new equipment with a total proposed bid of $39,163.00. Through campus fund-raising this spring, we have raised $20,871.00. This includes $5700.00 from 27 local businesses who supported this fundraiser. We are very pleased with the response from the community to help us provide safe play areas. Our goal is continue exploring avenues to help with funding (such as this proposal to the City of Canyon) so that we can purchase and begin installing new equipment before the end of this school year. CAMPUS BACKGROUND and DEMOGRAPHICS: Reeves-Hinger Elementary currently serves 695 Pre-K through 4th grade students including students with special needs: TLC (The Learning Class) and PPCD (Pre-School for Children with Disabilities). We are the only campus within the City of Canyon that services students with severe mental and physical disabilities. We are also a Title I school, which means that our population of students who are in income deficient homes and qualify for free/reduced lunches is 44%. Reeves-Hinger Elementary has operated as two separate campuses (Oscar Hinger and Rex Reeves) until 2004 when the campuses were combined into one large campus with one principal and one full- time assistant principal. Before the campuses merged, the PTAs of each campus spent their remaining budgets on playground equipment, which are the two large playground complexes that are still there 1005 21 St., Canyon, Texas 79015 (806) 677-2870 Fax (806) 677-2889 www.canyonisd.net today. These are the last pieces of equipment that have been added in the last 10 years. They are still in good shape and are being used daily by students and through the summer by the community. FUNDING FOR PLAYGROUND EQUIPMENT IN CISD: Playground equipment is not considered capital outlay for us to be able to budget into our campus budget because of its indirect link to instruction. Playground areas are not a necessity for curriculum so campuses have basically three choices: 1. Utilizing PTA to raise funds for updates and new equipment, 2. Partnering with the City to help provide safe playground areas (this is the case with Gene Howe, Arden Road, Hillside, and City View schools in the Amarillo area.) These areas are used by the neighborhood schools, but available for the neighborhood children to use when school is not in session. 3. Raise funds as a campus through student activity fund-raisers. The last few years, our Reeves-Hinger PTA has chosen to raise funds specific to our campus, but outside of the playground needs. Proceeds from PTA fund-raising is used to provide school supplies for all students at Reeves-Hinger. This has been a huge help to families who struggle with providing school supplies at the beginning of the year. Our PTA also pays for field trips for our grade levels to give our kids learning opportunities in the community such as: The Amarillo Opera, Discovery Center, Panhandle Plains Museum, The Amarillo Zoo/Botanical Gardens, Palo Duro Canyon, etc. Because our campus is a Title I campus, we limit our fund-raising efforts so that there is not a strain on the families and communities from the school. We have chosen to not have any other major campus fund-raisers outside of PTA, so that they could be successful in the programs mentioned above that we believe very strongly in providing and that directly touch every child at our school. SUMMARY: Through partnering with the City of Canyon, the Reeves-Hinger playground would provide equipment that is unique for our special populations of students who cannot typically utilize the other playgrounds that are available in the City of Canyon. While there are some very nice facilities available, students with severe mental and physical needs and their families do not have equipment available that they can use. Because Reeves-Hinger students with special needs will use this equipment in their classes with their teachers, students will feel comfortable using this equipment after school hours and during the summer months. Reeve-Hinger families and area businesses have raised over half of the funds needed to renovate and add other equipment to make it a safe, enjoyable playground area. The total renovation will include swing sets on all three playground areas, balance beams, climbing walls, and parallel bars, in addition to the adaptive equipment. Thank you for your time and consideration of this proposal and partnership. 1005 21 St., Canyon, Texas 79015 (806) 677-2870 Fax (806) 677-2889 www.canyonisd.net 1005 21 St., Canyon, Texas 79015 (806) 677-2870 Fax (806) 677-2889 www.canyonisd.net  AGENDA To: Mayor and City Commission From: Randy Criswell, City Manager Date: March 17, 2014 Re: Consider and Take Appropriate Action on Final Pay Request from A&S Builders for Construction on the Kent Johnson Memorial Baseball Complex. _________________________________________________________________________ The architect has informed me that the Kent Johnson Building is complete, and the contractor has requested that his final payment be made. Since I’ve been updating you for months about the status of this project, I wanted you to see the final pay request. And since they didn’t really finish the job in the designated time period, I think you would actually have the authority to assess Liquidated Damages if you chose to. However, that would have to be pretty well documented, and I don’t know that it is. My recommendation is that we do NOT assess Liquidated Damages. Typically, LD’s are intended to recover actual losses that an owner would have incurred as a result of the project not finishing on time. For example, if we had lost the State Baseball Tournament last summer, then I would see that as a reason for LD’s. Or if we had lost revenue or something like that. But none of that is really the case, so I would recommend that we approve the final pay request in the amount of $102,132.70. City of Canyon  AGENDA To: Mayor and City Commission From: Chris Sharp, Assistant City Manager Date: March 12, 2014 Re: Consider and Take Appropriate Action on Ordinance No. 1002, Atmos Energy Rate Settlement. The City Canyon, along with other similarly situated cities served by Atmos Energy Corp., is a member of the Steering Committee of Cities Served by Atmos West Texas. On October 18, 2013, Atmos West Texas filed with the City a Statement of Intent to increase natural gas rates. The effective date was suspended by City resolution and extended further by the Company to facilitate settlement discussions. The Atmos West Texas Statement of Intent filing sought approximately $12 million in increased revenues. The Company also proposed a revised Rate Review Mechanism (“RRM”) tariff. The City worked with the Steering Committee to analyze the schedules and evidence offered by Atmos West Texas to support its request to increase rates. The Ordinance and attached Settlement tariffs are the result of negotiation between the Steering Committee and the Company to resolve issues raised by the Steering Committee during the review and evaluation of Atmos West Texas’ filing. The Ordinance and Settlement tariffs approve rates that will increase the Company’s revenues by $8.3 million on a system-wide basis, effective for bills rendered on or after April 1, 2014. The monthly bill impact for the average residential customer will be a $0.77 increase (about a 3.9% increase in the total bill). Recommendations: Staff recommends approval of Ordinance No. 1002 allowing for rate increase and settlement agreement for Atmos Energy. City of Canyon  ORDINANCE NO. 1002 AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF CANYON, TEXAS, APPROVING A NEGOTIATED SETTLEMENT AGREEMENT BETWEEN THE STEERING COMMITTEE OF CITIES SERVED BY ATMOS WEST TEXAS (“CITIES”) AND ATMOS ENERGY CORP., WEST TEXAS DIVISION REGARDING THE COMPANY’S 2013 STATEMENT OF INTENT TO INCREASE RATES IN ALL CITIES EXERCISING ORIGINAL JURISDICTION; DECLARING EXISTING RATES TO BE UNREASONABLE; ADOPTING TARIFFS THAT REFLECT RATE ADJUSTMENTS CONSISTENT WITH THE NEGOTIATED SETTLEMENT AND FINDING THE RATES TO BE SET BY THE TARIFFS ATTACHED TO THE SETTLEMENT AGREEMENT TO BE JUST AND REASONABLE; APPROVING A NEW RATE REVIEW MECHANISM; REQUIRING THE COMPANY TO REIMBURSE CITIES’ REASONABLE RATEMAKING EXPENSES; REPEALING CONFLICTING RESOLUTIONS OR ORDINANCES; DETERMINING THAT THIS ORDINANCE WAS PASSED IN ACCORDANCE WITH THE REQUIREMENTS OF THE TEXAS OPEN MEETINGS ACT; ADOPTING A SAVINGS CLAUSE; DECLARING AN EFFECTIVE DATE; AND REQUIRING DELIVERY OF THIS ORDINANCE TO THE COMPANY AND THE CITIES’ LEGAL COUNSEL. WHEREAS, the City of Canyon, Texas (“City”) is a gas utility customer of Atmos Energy Corp., West Texas Division (“Atmos West Texas” or “Company”), and a regulatory authority with an interest in the rates and charges of Atmos West Texas; and WHEREAS, the City is a member of the Steering Committee of Cities Served by Atmos West Texas (“Cities”), a coalition of similarly situated cities served by Atmos West Texas that have joined together to facilitate the review of and response to natural gas issues affecting rates charged in the Atmos West Texas service area; and WHEREAS, on or about October 18, 2013, the Company filed with the City its Statement of Intent to change rates in all municipalities exercising original jurisdiction within its West Texas Division service area; and WHEREAS, Cities coordinated a review of Atmos West Texas’ Statement of Intent filing through its designated attorneys and consultants, to resolve issues identified by Cities in the Company’s filing; and 4365176.1 1  WHEREAS, Cities have successfully relied upon an annual Rate Review Mechanism (“RRM”) as a substitute for the statutory GRIP process prior to the filing of the Company’s previous two Statement of Intent rate cases and desire to implement a new RRM process; and WHEREAS, Cities and Atmos West Texas have negotiated a new RRM process to govern rate setting in 2015 and beyond; and WHEREAS, Cities’ Executive Committee, legal counsel and consultants recommend that Cities approve the rate tariffs and RRM tariff (“Exhibit A” to the attached Settlement Agreement), which will increase the Company’s revenues by $8.3 million on a system-wide cost of service basis; and WHEREAS, the Exhibit A rate tariffs implementing the new rates are consistent with the negotiated resolution reached by Cities and are just, reasonable, and in the public interest, and will lead to rates throughout the Company’s service territory that are economically equivalent to rates based on a system-wide cost of service; and WHEREAS, the effective date of new rates is April 1, 2014. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF CANYON, TEXAS: Section 1. That the findings set forth in this Ordinance are hereby in all things approved. Section 2. That the City Commission approves the attached Settlement Agreement as a fair resolution to the Company’s 2013 Statement of Intent rate filing. Section 3. That the City Commission finds the existing rates for natural gas service provided by Atmos West Texas are unreasonable and new tariffs which are attached to the Settlement Agreement as Exhibit A and incorporated herein, are just and reasonable, the rates therein established are based on a system-wide cost of service, and are hereby adopted. The new RRM process reflected in the tariff included in Exhibit A is hereby approved. Section 4. That Atmos West Texas shall reimburse the reasonable ratemaking expenses of the Cities in processing the Company’s Statement of Intent filing and negotiating a new RRM process. Section 5. That to the extent any resolution or ordinance previously adopted by the Commission is inconsistent with this Ordinance, it is hereby repealed. 4365176.1 2  Section 6. That the meeting at which this Ordinance was approved was in all things conducted in strict compliance with the Texas Open Meetings Act, Texas Government Code, Chapter 551. Section 7. That if any one or more sections or clauses of this Ordinance is adjudged to be unconstitutional or invalid, such judgment shall not affect, impair or invalidate the remaining provisions of this Ordinance and the remaining provisions of the Ordinance shall be interpreted as if the offending section or clause never existed. Section 8. That this Ordinance shall become effective from and after its passage with rates authorized by attached tariffs to be effective for bills rendered on or after April 1, 2014. Section 9. That a copy of this Ordinance shall be sent to Atmos West Texas, care of Mr. Jeffrey Foley, Vice President, Rates and Regulatory Affairs, 5110 80th Street, P.O. Box 1121, Lubbock, Texas 79408-1121, and to Geoffrey Gay, General Counsel to Cities, at Lloyd Gosselink Rochelle & Townsend, P.C., 816 Congress Avenue, Suite 1900, Austin, Texas 78701. PASSED AND APPROVED this 17th day of March, 2014. _________________________________ Quinn Alexander, Mayor ATTEST: __________________________________ Gretchen Mercer, City Clerk APPROVED AS TO FORM: ___________________________________ City Attorney 4365176.1 3  MEMORANDUM TO: Steering Committee of Cities Served by Atmos West Texas FROM: Geoffrey Gay Georgia Crump Eileen McPhee DATE: February 28, 2014 RE: Atmos West Texas Settlement – ACTION NEEDED BY MARCH 31, 2014 The Steering Committee of Cities Served by Atmos West Texas (“Cities” or “Steering Committee”), with advice and input of designated consultants and lawyers, has worked to resolve Atmos West Texas’ pending $12 million rate increase request without the necessity of a protracted and costly contested case before the Railroad Commission. Attached please find an Ordinance that approves the recommendation of the Executive Committee of the Cities Steering Committee to settle with Atmos West Texas on a system-wide cost of service that increases test year revenues by $8.3 million and implements a new Rate Review Mechanism (“RRM”) process for 2015. The negotiated result reduces Atmos West Texas’ requested rate increase by more than 30%. The monthly bill impact for an average residential customer will be $0.77. In addition, and most importantly, the negotiated result reflects a cost of service for the Company based on its entire system, which means that the West Texas Cities will no longer be subsidizing lower rates of the other cities. The establishment of system-wide rates was a non-negotiable demand of the Steering Committee. The negotiated settlement also includes a new RRM tariff to be used to govern the Company’s ratesetting beginning in 2015. West Texas Cities have benefitted from the implementation of the RRM tariff in the past, as opposed to the statutory GRIP filings in which Cities had no right to participate or influence the outcome. The recommended RRM tariff preserves the ceiling on residential customer charge increases of $0.50 per month in any annual filing, and requires the Company to forego any increase in the residential customer charge in the first filing under the tariff. The Executive Committee of the Cities Steering Committee recommends approval of the negotiated resolution because it establishes system-wide rates, eliminates rate subsidization of cities that do not participate with the Steering Committee, maintains cities’ role as regulators of natural gas rates, implements the preferred RRM process, and represents an outcome that is equal to or better than the outcome expected from a lengthy contested case proceeding before the Railroad Commission. 4365327.1 February 28, 2014 Page 2 Please schedule consideration of the Ordinance at your next available council meeting. Final council action to approve the Ordinance should take place by March 31, 2014. To assist you, several documents are attached:  An Ordinance approving a Settlement Agreement and setting new rates.  A Model Staff Report.  The Settlement Agreement attached to the Ordinance includes a number of Exhibits including:  Exhibit A – New rate tariffs and a new RRM tariff  Exhibit B – Proof of Revenues  Exhibit C – Factors required by Section 104.301 of the Gas Utility Regulatory Act (GURA)  Exhibit D – Pensions and Retiree Medical Benefits Benchmark  Exhibit E – West Texas Cities covered by the Settlement Agreement  Exhibit F – Baseload and Heat Sensitivity Factors for WNA Billing Please contact Geoffrey (512/322-5875, ggay@lglawfirm.com), Georgia (512/322-5832, gcrump@lglawfirm.com) or Eileen (512/322-5817, emcphee@lglawfirm.com) immediately if your city is unable to meet the March 31, 2014 deadline for final action. Once final action has been taken by your city, please forward a copy of the Ordinance to Atmos West Texas and to our paralegal, Holly Whitehurst (fax number: 512/472-0532, hwhitehurst@lglawfirm.com). 4365327.1  MODEL STAFF REPORT The City, along with other similarly situated cities served by Atmos Energy Corp., West Texas Division (“Atmos West Texas” or “Company”), is a member of the Steering Committee of Cities Served by Atmos West Texas (“Cities” or “Steering Committee”). On October 18, 2013, Atmos West Texas filed with the City a Statement of Intent to increase natural gas rates in all cities exercising original jurisdiction in its West Texas Division. The effective date was suspended by City resolution and extended further by the Company to facilitate settlement discussions. The Atmos West Texas Statement of Intent filing sought approximately $12 million in increased revenues. The Company also proposed a revised Rate Review Mechanism (“RRM”) tariff. The City worked with the Steering Committee to analyze the schedules and evidence offered by Atmos West Texas to support its request to increase rates. The Ordinance and attached Settlement tariffs are the result of negotiation between the Steering Committee and the Company to resolve issues raised by the Steering Committee during the review and evaluation of Atmos West Texas’ filing. The Ordinance and Settlement tariffs approve rates that will increase the Company’s revenues by $8.3 million on a system-wide basis, effective for bills rendered on or after April 1, 2014. The monthly bill impact for the average residential customer will be a $0.77 increase (about a 3.9% increase in the total bill). The Steering Committee’s Executive Committee and its designated legal counsel and consultants recommend that all Cities adopt the Ordinance approving the Settlement Agreement and implementing the rate change. Purpose of the Ordinance: The purpose of the Ordinance is to approve rate tariffs (Exhibit A to the Settlement Agreement) and a tariff that implements a new RRM process (included with Exhibit A). As a result of the negotiations, the Steering Committee was able to reduce the Company’s requested $12 million rate increase by over 30%. Approval of the Ordinance will result in rates that implement an increase of $8.3 million in Atmos West Texas’ revenues effective April 1, 2014. Additionally, the Ordinance approves a new RRM process with the 2015 case to be filed December 1, 2014. The amount of the $8.3 million system-wide increase to be borne by West Texas Cities is $2,566,678. Reasons Justifying Approval of the Negotiated Resolution: During the time that the City has retained original jurisdiction in this case, consultants working on behalf of Cities have investigated the support for the Company’s requested rate increase. While the evidence does not support the $12 million increase requested by the Company, Cities’ consultants agree that the Company can justify a slight increase in revenues. The agreement on $8.3 million is a compromise between the positions of the parties. In addition, the rate increase reached in this compromise is based upon a system-wide cost of service for the Company, which eliminates subsidies previously provided to cities that are not members of the Steering Committee. The agreement of the Company to establish its rates throughout its service area on a system-wide cost of service basis is a significant achievement for Cities and a material basis for approval of the rate tariffs. 4365275.1 1  The alternative to a settlement of the Statement of Intent filing would be a contested case proceeding before the Railroad Commission of Texas (“RRC”) on the Company’s current application, would take several months and cost ratepayers millions of dollars in rate case expenses, and would not likely produce a result more favorable than that to be produced by the settlement. The Steering Committee’s Executive Committee (consisting of representatives from Midland, Odessa, Plainview, Pampa, Levelland, Seminole, Dimmitt, Big Spring, Lamesa, Littlefield, Canyon and Slaton) recommends that Cities take action to approve the Ordinance authorizing new rate tariffs. Reasons for Approval of New RRM: The RRM process is not new to Atmos West Texas. The Company and Cities negotiated the original form of the RRM in 2008, and Cities approved adjustments to the Company’s rates under this mechanism in 2008, 2009, and 2010. The RRM process was created collaboratively by the Company and the Cities as an alternative to the legislatively authorized Gas Reliability Infrastructure Program (“GRIP”) surcharge process. GRIP, like the RRM, is an alternative form of expedited rate relief for utilities (which avoids the long and costly process of a full rate filing). However, Cities strongly oppose GRIP because it constitutes piecemeal ratemaking, does not allow any reasonableness review, and does not allow participation by cities or recovery of cities’ rate case expenses. In short, GRIP unfairly raises customers’ rates without any real regulatory oversight. The Railroad Commission undertakes only an administrative review of GRIP filings (instead of a full hearing) and the rate increases go into effect without any material adjustments. The RRM process has historically allowed for a more comprehensive rate review and annual adjustment as a substitute for GRIP filings. The Ordinance and RRM tariff (Exhibit A) approve the format of a revised RRM process that preserves the authority of Cities to annually review and act upon the Company’s RRM filing. Under the provisions of this tariff, the Company will file for adjusted rates by December 1 of each year, and Cities will have until March 31 to take action on the filing before the rates otherwise will go into effect. The RRM tariff continues to allow 50% of the increase to be recovered from the customer charge, but also limits the annual increase in the residential customer charge to $0.50 per month. Under the terms of the recommended tariff, the Company will not make any changes to the residential customer charge with its first filing on December 1, 2014. The attached RRM tariff provides a discount for Cities for permitting the Company annual rate relief. The RRM tariff includes an “ADJ” adjustment amount that is a reduction from the Company’s requested increase. The ADJ adjustment lowers the Company’s rate request by at least $300,000 each year. Additional reductions will also be made, depending on the size of the Company’s requested increase. The attached RRM tariff also constrains the Company’s capital structure to use no more than 55% equity. In short, this benefits consumers by lowering the Company’s cost of business. Cities are also able to review and make adjustments, such as for operating expenses that are unreasonable. The alternative to adoption of the attached RRM tariff would be the Company filing for a GRIP adjustment. A GRIP adjustment would place the entire amount of the Company’s requested increase into the customer charge. It is expected that non-members of the Steering Committee will not approve the RRM tariff, but will direct the Company to make its GRIP filing 4365275.1 2 instead. The Company estimates that its first GRIP filing after implementation of the settlement rates will increase the residential customer charge by an additional $2.50 per month. Explanation of “Be It Ordained” Paragraphs: 1. This paragraph approves all findings in the Ordinance. 2. This paragraph approves the Settlement Agreement. 3. This section adopts the rate tariffs (Exhibit A to the Settlement Agreement), and the RRM tariff (also Exhibit A), and finds the rates set pursuant to the attached tariffs to be just, reasonable and in the public interest. This section also specifically notes that the rates established in the new tariffs are based on a system-wide cost of service. Note that only new tariffs or existing tariffs being revised are attached to the Ordinance. Existing tariffs not being changed in any way are not attached to the Ordinance. 4. This section requires the Company to reimburse Cities for reasonable ratemaking costs associated with reviewing and processing the Statement of Intent application. 5. This section repeals any resolution or ordinance that is inconsistent with this Ordinance. 6. This section finds that the meeting was conducted in compliance with the Texas Open Meetings Act, Texas Government Code, Chapter 551. 7. This section is a savings clause, which provides that if any section(s) is later found to be unconstitutional or invalid, that finding shall not affect, impair or invalidate the remaining provisions of this Ordinance. This section further directs that the remaining provisions of the Ordinance are to be interpreted as if the offending section or clause never existed. 8. This section provides for an effective date upon passage. 9. This paragraph directs that a copy of the signed Ordinance be sent to a representative of the Company and legal counsel for the Steering Committee. 4365275.1 3