Jan 10, 2017 City Council on 2017-01-10 1:00 PM

Good afternoon everyone. I want to welcome you to this meeting of the Denton City Council. It is 1 0 7. We will now open this meeting and I wanted to let you know that we adjourned our closed meeting before, but that meeting is still open so we will take back up that issue and reconvene in that closed session. Once we complete the closed session of this particular posted agenda. Moving on to the agenda item. Agenda item one is citizen comments on consent agenda items . We do have one. Mr. Willie Hutzpeth, if you'll come forward and state your name and address, your time will begin. Mayor and council members, acting city manager, my name is Willie Hutzpeth, I live at 623 Newton. I want to state for the, just because I want to and I'll tie it into consent agenda is, I wish first there are too many. There are a lot of them and they keep, they're the same number or more every week. And the citizens don't realize that there's a lot that you talk about somewhere and that we're not in those conversations. And you just say I and they're passed. It's too many of those. But I would like to have one thing put on that consent agenda since you're doing it is, why aren't there, there's only in the history of Denton, one firefighter? One. That's all. Put on the agenda, why is that? What is it that African Americans need to do to get to be firemen? There's some other jobs too, but that one just puzzles me. And I thought, well, here's what happens to me growing up. That was what I start thinking because I grew up in the 60s when we had to go to the back door and all of the stuff. And we couldn't go into certain places. We were going to movie theaters. We had to go upstairs and all of that. And it was just because of the color of our skin. That was it. So the yeah, but to me is, when I answer the question, is it because of the color of our skin that they're not? Firemen? Now that's sad if that's the case. So for the consent agenda, I would like for you to put on there, why don't we have African American firemen? What is it that we don't have to allow us to do that in the history of this city? One. Thank you. Thank you. All right. We're going to move on to agenda item number two , the request for clarification of agenda items listed on the agenda for January the 10th, 2017. Councilmember Gregory. Thank you, Mayor. I have a couple of questions. First on item M, and this has to do with route where for fleet management for I believe it's solid waste. We're being asked to authorize some money for a pilot program. And I couldn't tell for sure in the backup if we decided to do that, what the total cost would be for implementation. I think I see it, but I'm not sure. Mayor. Yes, I'm sorry. Go ahead. Let me call on Vance Kemmerer, General Manager of Solid W aste. And then Mayor, I have a couple of others. Yes. OK. You bet. I'm sorry. I was out in the hallway, so I probably missed part of that question. On item M, we're being asked to authorize some money for a pilot program to test out some new software route where fleet management to maybe look at rerouting or making more efficiencies in our solid waste pickup and our recycling pickup. Is if we decide that the pilot is good and we want to buy the whole package, how much more is it? OK, for both residential and commercial services, collection services, that total package will be just about $400,000 less the cost of this pilot. OK, $400,000 less the pilot cost. OK, thank you. Then-- Yes, go ahead. And this has to do with solid waste also, it's on items H, S, T, and U, several different purchases that we're making, some that are rather small and some that are larger. And it says that this would come from the solid waste capital fund, that the purchases for those items. So my question is, is this cash funding or are we using the solid waste capital fund to pay back a loan? Are we borrowing money to buy those items or are we just cash funding? OK, H is some new equipment and some replacement equipment. That would be-- I believe all of that would be a combination of cash from a vehicle replacement fund and bonds. OK, S, T, and U. S is a bond purchase for a body that goes on a garbage truck. T and U are-- one is wall components like we have parallel ing the huge concrete block wall next to mail. Our extension of that is a 20-year bond. And the alpha block is something that we use at our building material and recycling processing facility. Those are movable blocks that we make bins out of to hold commodities. And that is also out of a bond fund. OK, thank you. And that might have been in the backup. If I missed it, if Mr. interim city manager, maybe you could show me how I could read it and understand it better in the future. So I didn't catch that. Just one observation on item L, I was very much appreciative of the listing out the individual cost for the different elements in that. I thought that that was very helpful to see those in the backup. Any other clarification? Any other clarification? On a couple, I guess. And I guess, Madam City Manager-- I'm sorry, City Attorney. One of them has to do with the closed session item. Not necessarily. I don't think specific, but I just had sort of a general question. So I guess I might ask my question. And then if it is something that needs to be addressed in closed session or that's the option for counsel, then you can certainly instruct me on that. And it's on posting-- let's see. Believe B is in Baker. It's a modification. According to the posting, amend the scope of work component in an existing contract that provides engineering procurement construction services for a particular contract . Help me understand-- because I know that that was a contract that had gone out for an RFP or Q. I can't recall. I think it might have been a Q. And so what are the limitations-- and maybe I just put this question in the form of a general question. What are the limitations that if this discussion goes beyond some point, that that would have to be re-let, so to speak, because the amendments or the modifications exceed a certain amount per state statute? Is that something that we can discuss here in general? Or you could provide some comment on that? I can make a general comment. If you want to delve into it some more, we can have additional discussion at your pleasure when we move to closed session. We have done some field work on this Burns and McDonald contract. This is an amendment to that contract. We have looked at it. We do believe that it is an appropriate amendment and within the prescribed limitation of dollar amount so that the amendment would be appropriate. And recommended to counsel for action. So from speaking generally from state statute not associated with any particular contract, is there a percentage limitation of an amendment that then would have to be resubmitted for bid in general? Is it a dollar amount? What is that? Typically, it's a percentage. I believe 25%. Is that 25% of the original contract amount? Correct. Colin Elton Brock, our purchasing manager. Yes, Mayor, that's 25% either up or down. OK, so just as an example, and I don't even know the numbers, but let's just say you had a contract that was $40 million. So 20% of that is-- or 25% of that is, I believe-- what is that? Who's the math? 10? 10 million. So if there was an amendment for $10 million to a contract that was a $40 million contract, if it didn't go over that, then that can be decided for by counsel instead of having to go back out. Correct. Wow. OK. All right. Appreciate that clarification. On agenda item-- consent agenda item K, where it's the authorizing legal services for the expansion of the landfill. It's not to exceed $715,000, but I believe, if I read correctly in the backup, that that's the worst case scenario if there is a contest of the permit. And if there wasn't, then it was, I think, more in the realm of about $125,000 or $175,000 or something along those lines. Is that correct? And it may seem-- I don't know. I guess then my question is, how often-- first of all, have we had expansion permits before that we have applied for? And if so, have they been contested? Let me call on Vance Kemmler, our general manager of Solid Waste. Yes. Thank you. And the current permit that we're operating under was authorized as a major permit amendment from the original permit for the facility, but because that was mostly due to a change in federal rules, then we did not have that as a contested case hearing at that time. That's been quite a few years ago. Currently in the marketplace, in the last five to 10 years, it seems that most every single new facility or major permit amendment, almost all of them have been contested. Well, and I'm probably the only one that feels this way. I think I would like to maybe reduce that authorization authority simply because I think, if I remember correctly, this was if it was contested and went to trial, you had dep osition of experts. I mean, the whole gamut. Is that correct? Correct. Okay. Well, I just get concerned when we make these kind of authorizations sometimes. I mean, I would just assume come back at a later stage if we need to amend it, like we do on a lot of different legal contracts. We do become, in fact, there's several amendments to contracts here, but I don't have a number for that. I mean, I just be throwing out an arbitrary number. I just I think in the future, I would like to see that we maybe not have to necessarily authorize up to the worst case scenario, because I think that sends a message also on people who are fee based, but that's just me. So those are my comments on that. Any other questions? Clarifications for agenda items? Okay. Thank you, Vance. Appreciate it. I've had a request because we have several people here for this particular work session report. We're moving on to agenda item number three, work session reports for agenda item C. So if there's not any objection with the council about taking up agenda item C first, any objections? Seeing none, we'll take up agenda item number three C, which is receive report, hold discussion, provide direction relating to the proposed job, public works contract in the amount of $4.814 million for the construction of fire station number four to be located at the corner of Sherman Drive and Kings Road. Thank you, Mayor. I'm going to ask Mark Nelson to start this topic off and he has a number of people that I think he's going to call on to help present some of these particular items. I may save everybody a lot of time because it seems from previous discussion, I'm the only one that's really concerned about this at this particular moment. And I just will express my objection again that I think that we could do better on the cost of this. But I'm not going to put the council nor staff through 30 or 45 minute or hour presentation to try to come up with this and engage in some very lengthy conversation in this regard. So I don't necessarily need that, Mayor Pro Tem. Mayor and the rest of my colleagues, I apologize. I wasn't here last week for that conversation. I did watch it online. I love watching you guys when I'm- Thank you. Can make all sorts of comments. Anyways, I think it was an interesting question. I would hate to move on and miss the policy implications in terms of long term future projects like this. So while I'm in support of continuing on with this particular project, I certainly appreciate the issues that were brought to the front and your concern for the cost going up. And I have some thoughts about based on that conversation from a policy perspective moving forward. I don't know if that pertains to this posting, but I'd hate to miss out on that part of the conversation by just moving forward with this. So my suggestion would be if there's a time in which we can work session, a general conversation relating to these sorts of big capital projects and how we can't maybe avoid some of the pitfalls of this. I think we can have a productive conversation. I think that's the value of the objections you raised. I just for the sake of moving this project along would like to see it moving on. >> I agree, I agree, yes. Councilman Wasney. >> Council received a staff report and I want to thank our assistant fire chief, Ken Hedges, for it. It came out in our Friday packet and I know that our concern was taxpayer dollars in the building of fire stations. And the conversation circulated that maybe other cities are building for same product for less money. And so it's why this report was so impactful. Because what the report actually comes forward with are multiple cities who are building fire stations. And the key is orange to orange or apple to apple, not apple to orange. And so the report was so impactful because not only did it show the cost per square foot, but it also showed the construction basic specifics. So that it then shows that our figures are not out of line. And I come forward with three cities, Grand Prairie, Ar lington, and Irving. Who all have very similar costs per square foot for the same specs for construction. And I didn't really take a look at things built in 2013 or 2014 because construction costs as we said last time have increased dramatically. Because of the North Texas boom in construction. So looking at those fire stations where they were completed in 2016 and being completed now as in Irving. The cost per square foot really fell in line close to things that we're doing here. So I want to again thank our assistant fire chief for this report. Because numbers are important and again, using the same specs for construction. And so I really appreciate this report. Because I don't want the taxpayers to think that we're not watching the bottom line. And that we're not paying attention to construction costs. But this was really helpful for me to look at the different stations. Which is why we asked for this report. And again, same specs, similar cost per square foot. >> And I appreciate that. But I have to be honest with you, I disagree with that assessment. Because I don't know what the specs are on that report. And I do believe that there are some very good policy discussions to come out that we need to discuss. Because just because those numbers show that people are building it for the same price. The real key indicator on that report, quite frankly, was that we had the lowest number of bidders. Of everybody on that list. Which tells me, and I've talked to people about sometimes bidding on our projects. That sometimes because of our regulations and such that we don't get that. So while I appreciate your observation on the report, I don 't concur with your conclusion. I think there is a way that we can continue to look at this and save the taxpayers dollars. I don't know what Irving's doing. I don't know what Graham Perry's doing. People are bidding on fire stations all over the place based upon certain specs. So I understand the building process and the bidding process enough to know that when it's a municipal construction project. There's certain things, so I appreciate your comments. I disagree with them. I don't think that the conclusions for me rise to the point of this is all we need to know about this process. So I want to make sure that if the public hears your version of that report, that they also hear mine as far as some of the research that I've done. So I do appreciate you bringing that up. I wasn't going to bring it up because I didn't really put that much. It's not that I didn't put any credence in it. I appreciate the figures. But I think there's fire stations out there. There's one down in Richmond, the mayor called me about, that was completed in 2016. That was, I believe, LEED certified and won a design award that was built for $268 a square foot in 2016. Don't know exactly what all that entails. Just like with these, I don't know what that entails. So the big thing for me was three bidders. And I think we've got some major policy discussions to talk about, not just with the construction of public safety facilities. But if we're looking at a 50 or $60 million sort of joint municipal complex where that's the construction price today . If we go by this example, it's going to be 40% higher than that, or 50% higher 10 years from now. So appreciate that. I'm not trying to be argumentative, but I just shared a different observation of that report. Sorry. Yes, I'm going to go with Joey and then Sarah. Joey, go ahead. >> Okay, well just to add to that, Mayor, the blaring number on that is Argyle had 17 bids in dent net three. So just for anybody watching at home wanting to know what we're talking about, I too just want to move forward with this. >> Sure. >> But having the policy discussion later would be a good thing. So I know I missed last week too, but I did not watch the meeting. I just want to put that down for the record. >> Councilmember Geary. >> Do we know why fire station number two got ten bids and fire station number four got three bids? Any idea, anyone? Because the same city was one of them. And following up with the contractors that normally bid the city's contracts are the opportunities that we have out there. Some of them had projects they are already engaged in and Smolt, for instance, I know they bid our project but they were just awarded the Wayful project as well. But a lot of those folks, I can't come to a reason, they didn't really have a reason why they didn't bid our projects. >> Are they both LEED certified projects? >> No, Argyle was not LEED certified. >> What about Dutton Two and Dutton Four? >> Dutton Two and Dutton Four are both LEED certified buildings. And so I'm sure that has something to play with it because in our requirements, we're looking for a contractor that has experience in LEED certification and mastering that. And so you have to have three years of experience in that. And those other contractors that might not have had that, that probably kept them away from bidding. >> Thank you, I appreciate that, that's helpful. >> Council Member Gregory. >> Just one observation. The comment about the 17 bidders for Argyle, remember that was 2013. It was several years ago when construction market was a little bit different than it is today. And I don't know what all else goes into play on that. And I think the speculation would be interesting, but I don 't know that it would be conclusive. My question is this. My anxiety over this discussion and the reconsideration vote this evening is that these stations, especially station number four, is going to accommodate an ambulance unit. And the folks being served by Fire District Four have been waiting for an ambulance unit for a lot of years. So I hope that our discussions regarding policy decisions and changes that we might be making that would affect and hopefully lower the prices are done in a way that don't delay future stations because of the need for, for example, expansion of station three. And for the other services that we need at those other stations. I think that the policy discussion is good. I know that we're already slated in the council committee on the environment to have a discussion about lead certification. And the implications, the cost implications and the return on investment that comes with lead certification in the very near future. And I know that that would be part of the policy discussion . So I'm welcoming to have that. I hope that we have it sooner than later. >> Sure. >> So that we don't experience delays in much needed public safety facilities. >> I'd just like to say two and a half years ago, the city of Denton had ten bidders on fire station two. And we actually had four this time. One was 25 seconds or so late in submitting their bid. And so by law, we're not allowed to review that. And so they were just late. So we actually had four. Wasn't ten, but it was four. >> Well, and let me make sure I've said this. I feel I need to say this every time. I certainly reiterated this with the fire chief. Where's the fire chief? >> He's not here. >> He's not here. Jason, who's the Firefighter Association President. No way is this about anything, about trying to delay. What I'm simply saying is it's very simple for me. If we're going to have a construction project where we have to decide on a price and the only time that we see it is when we have to approve it. We don't know if there were any alternatives that could be less, but provide the same amenities, provide the same lifetime. In other words, it's an all or nothing. I don't know how else to say it. I mean, it's pretty simple to me. It's not about trying to delay ambulance service. It's not trying, we've got medic eight that's coming in that's going to help relieve some of that. It's about being good stewards of taxpayer dollars. And I don't know anyone who goes out and just accepts a contractual bid without knowing exactly what went into it. That's nothing against staff. It's nothing against the fire police. It's nothing against anybody. It's saying we've got to have a different process so that when we have a geotech engineering firm that says you got to have a slab on carton or you got to have this or this. They give you alternatives. They give alternatives. And if they're not giving alternatives, we need to be asking for alternatives. So actually, that's the essence of my policy discussion is just do it differently where council is more involved in the cost of the construction and the design along the way. Because I think it's incumbent upon us when it comes to and truthfully, when I hear about the legislature that's coming after local governments for taxing for revenue caps. Unfortunately, they pick out things and processes where they see that is there the kind of process that looks at and make sure that we maximize taxpayer dollars. So this in no way is trying to delay harm public safety, anything against anybody except we fought about $100,000 at the budget discussions. And we're not even wanting to see, well, could we have saved 750,000 or half a million or a million doing something different? It's just ironic to me. So that's all I have to say about that. We don't need a big presentation. I'm almost certain that the vote is going to be the same as it was in the beginning on the reconsideration that this project will move forward. But we'll make sure we get that policy discussion on the agenda forthwith because we don't want to have the same thing happen with station three. And I want to make sure the bidder who bid and got the contract awarded for fire station number two, they bid on this one for number four, is that correct? >> Yes, sir. >> So my understanding was how we have a sort of a fairly lengthy delay on the completion of fire station two. Is that correct? I mean, aren't we sort of behind schedule on that? >> Yes. >> Okay, all right. Enough said on that. Any other questions on this? Sorry, I sound so fiery, but I'm very passionate about this because I think that there are some savings there that we can realize. So everybody who was here for that, enjoy the rest of your day. No, I'm just kidding. I'm teasing. >> Yes, yes. >> Members of the council, we do have an action item for the reconsideration of fire station four under items for individual consideration during a regular meeting. >> Yeah, I don't need a presentation on that. That's just because the council had voted to reconsider it, so it's going to just be on the agenda and vote. So I don't need a presentation on that. We'll just vote it up or down. Yeah, thank you. All right, work session 3A. Receive report and hold discussion. Give staff direction regarding the limitation of municipal taxes on homestead of disabled and elderly. >> Thank you, Mayor. Chuck Springer, our director of finance, chose a short straw on this one, I believe. >> Thank you for that positive introduction. And I'm going to go over some of these slides quickly. I gave some of this information before, but it kind of been requested since this is coming forward to council again to make some additional estimates of the impact to the city. So really, really all I want to do is present information on the over 65 and disabled tax limitation. And let me stress some very rough estimates of the financial impacts. This is just a summary of all of the exemptions on what is now the current year tax roll 2016. To give an idea of level of exemptions, I should mention that about, and I think I stated this before, about 66% of single family residences received the homestead exemption. That means they're owner occupied. And these numbers are prior to increasing the disabled exemption from 10,000 to 50,000. The council did that during the budget process. Just to give a little bit of background. >> I'm just about to write down from that slide and it went away. Just hang it there for one second. All right, you can go on. Thank you. >> In terms of the homestead exemption and how that works and a little bit of background, it's currently set at 5,000 or half a percent of the value, whichever is greater. Vast majority in Denton is the 5,000. About 18,300 of the 27,857 qualified for the homestead exemption. 6,874 qualified for the over 65 exemption. So about a third of those that qualified for the homestead exemption qualified for the over 65. And we had 260 that were the disabled exemption and that was raised during the budget process to 50,000. A little history of the over 65 exemption, it was raised from 25,000 in 2008. In 5,000 increments to 50,000, it hit in 2013 based on council direction back in 2008. >> Chuck, if I could just, and I just want people to note that that was in the middle of the recession. >> 2008? >> Yeah, well 2008, 9, 10. So we were raising that in the midst of, and that's how important we thought it was at that time. I'm sorry. >> The other item that we had discussed is deferral for those that are over 65 or disabled. They have the ability to defer payment of their taxes. They do stay outstanding and there's an interest that accru es every year. We had about 177 that had selected that option for the 2016 tax year. And in terms of the last time we looked at our delinquent tax roll, there were about 176 properties on the deferral. I should mention that those can't be collected until there 's a change of ownership in the property. >> Councilman Wasney. >> And to clarify, you can defer your property tax, but it racks up an 8% per year. >> Interest. >> Interest, which then compounds the following year, compounds the following year. So it's a hefty interest rate that piles up if you do opt to defer those taxes. >> That is correct. >> Councilmember Gregory. >> But the purpose of the deferral is we hear some people from time to time saying that they lose their homes. We have seniors losing their homes because they can't pay their property taxes. But doesn't the deferral mean that they can opt not to pay their property taxes and those property taxes would then be paid if they moved out of the home and sold it or if the home, if they died in the home, then would be taken care of, the taxes would be taken care of when the estate was settled. Is that correct? >> That's what occurs. I assume that was the legislative intent of that. >> The idea that people over 65 don't have to move out of their home because they can't pay their taxes. >> Yes, Councilmember Wasney. The flip side of that is that you have to pay your tax if you have a mortgage or if you have a reverse mortgage. A lot of seniors have opted for the reverse mortgage which allows you to kind of take some of the equity out of your home. But you must pay your property tax to stay concurrent with that either mortgage or reverse mortgage. >> That's a really good question, I mean, or observation. Is that correct? I mean- >> That is correct. I fall under that. >> Okay. >> Yes. >> Okay, so you cannot take that election as a senior if you have a mortgage because the payment of taxes is a condition on the deed of trust? Is that- >> I don't think that's a state law issue. I think it's a mortgage company issue. The lender is going to require that. >> Okay. >> Reverse mortgage is much more of a tool for seniors. And the reverse mortgage is a federal guideline and you must pay. And you've got to sign a piece of paper once a year that says you've paid your taxes and then they go back and check on that. >> All right. >> And of course, the other fact that goes along with that is that the percentage of people over 65 that don't have a mortgage is the highest of any group of people that are homeowners. Over 50% of people over the age of 65 have paid off their home. So they don't have a mortgage payment. So they're not necessarily faced with having to make that payment unless they did a reverse mortgage in which they're getting income off their home. >> Okay, I'm sorry, Chuck. >> Just a few other quick points. At least under current state law, once adopted by ordinance or approved at election, the limitation is permanent and can't be rescinded. Again, it just impacts owner occupied property that qualify for one of the exemptions. And the disabled exemption is based on individuals qualification for disability insurance benefits under social security. So if you qualify for that, you can qualify for the exemption. The tax year in which the limitation is enacted sets the maximum property tax dollar amount paid to the jurisdiction . So the limitation is on a dollar amount of property taxes, not on a value. And it's based on the actual tax paid after any other exemptions are taken. The qualifying property owner that's under the tax limitation, you can pay less in any given year. If your total tax amount goes down, you'll pay that lower amount. So it's only a limitation on the maximum amount. It can be passed to the surviving spouse if it's a disability exemption and the surviving spouse is disabled. Or if it's an over 65, if the spouse is 55 or older when the qualifying individual dies. There's also some rules under state tax law where the property owner can transfer their limitation to a new property in the same community. It's proportional based on the proportional value of the two properties. >> Sure, sure. >> So it doesn't stay the exact same amount. >> I'm sorry, could you explain that a little bit? If you had a real easy example. >> Let's say you sell a house that in the first year the tax freeze was $200,000. And you go to a new house that's $300,000, so it's 50% more . If your limitation was $500, it would go up 50% to 750. So they try to look at the value of the house when the limitation was put. And then the new house that you purchased, what was the value of that house in the same year? And then they proportion it up. So your limitation may go down if you go to a house that's less value in that same year that your limitation was set. >> So that's interesting because at least from what I understand is the need that we're trying to address here, what the community is trying to address is seniors getting taxed out of their home. So somebody could have this in place, move up to a bigger home, more expensive home, and get that proportion. In other words, there's not an assessment of that proportional value at the tax rate when they move. It's just they take that proportional value based upon the tax rate when it was frozen. Is that what you're saying? >> I think complications come in if you're going into a new house that didn't have a value when it was frozen. You have to go through some other kind of computation. >> Right, okay. >> But it's a proportional change is how it's designed. >> Okay, all right. Yes, Council Member Mayer-Protest. >> If I vacate a home that's been frozen for ten years based on my age, somebody coming into my home is over 65 and would qualify. They're coming from another state that doesn't have this or another jurisdiction that doesn't. Does their freeze occur at the time they purchase the home and whatever the value is? So it's not backing up to the time in which it was enacted? >> Yeah, it's based on each owner or occupant. >> Each owner, okay, thanks. >> Again, the revenue impact will be incremental over time, grows over time. But I want to stress the exact long term impact is really difficult to accurately determine. I've got some estimates in here, but I just want to say it 's really difficult. And one of the challenges is when you point that out, is the sale of homes subject to the limitation is another factor that's very hard to estimate the turnover rate. How long are people going to stay in that house versus leaving and someone else comes in? So that's one of the factors that makes it very difficult. Here's an example of a $200,000 house. Year one, the year the limitation is enacted, we back out the homestead exemption in the over 65 taxable value, 145, 000. I adjusted to the tax rate that was adopted this year by the council. So their limitation would be about $991. If you take year two, and I'm just assuming a 3% increase in value to 206, you can see their tax without the limitation would have gone up $41. But with the limitation, it would stay at that 990.84 cents . And again, just to stress, it can decline if in year two the value went down. Or if the exemptions were changed, they can pay less than that limitation, just not more. >> So that would then just be calculated in the normal way, and that is the valuation times the assessed rate. >> Correct. >> Yes, I'm sorry, sir. >> Chuck, did I hear you right about if the exemptions were changed? >> Yes. >> So the exemption could be changed after a property tax freeze? >> I thought the exemption was final. >> The over 65 exemption can be changed any year by the city council. If the city council in year two were to increase it, the limitation would stay the same. But their property tax bill may be lower than it was the prior year. I was just trying to stress that they can pay less than the limitation, they just won't pay more. And the next couple of tables, we brought back to the council during the budget time on a presentation just to give kind of a breakdown of values of the over 65 exemption and the disabled exemption. And one of the questions that came up was what's the estimated total taxable value of the properties that receive those two exemptions? And it came up to about, at least in the current tax year, about 11.5% of the total tax roll fall within one of those two categories, either those receiving the over 65 or disabled exemption. >> Chuck, before you move on from that slide, and I think I know the answer to this, but it seems like the majority, or not the majority, but almost half, or less than half of the exemptions are from $100,000 to $200,000. Do we have a breakdown of if it was at 150, how many homes are below the 150? Do we stratify that 100, 200,000? Because that's a large amount. And so if most of those were at the lower end, I think that 's significant. Whereas if they're mostly up at the upper end, then- >> I think I looked at those numbers. I think it was pretty close breakdown between 100 to 150, 150 to 200. I think there were a few hundred more that were 150 to 200, 000 than the 100 to 150. >> Okay, all right. >> And this just gives the history of it, the number receiving the exemptions and the low and high value and the average. I want to stress this one because I've kind of tied it to the next slide that has the estimates. The average annual growth in the number of exemptions during this time period was 5%. So each year we saw about a 5% growth in the number of exemptions. And the average annual value growth, if you look at this average value on the right, was about 3.6%. So I've put together an estimate, and let me stress again how difficult this is to clearly estimate what the impact's going to be. >> I do have one of these. I want to make sure I understand the low value column. That's before any of the either homestead or over 65 exempt ions. So there's a property that is occupied that is receiving the over 65 exemption that is valued at $ 9,000, $1,329. >> And there's a few small ones that there may be some unique circumstances for. >> But it's before the exemptions are applied. I mean, either if you're veteran or disabled, this is what it would show before any of those. Okay, all right. >> That's not my house. >> Yes, Council Member Begay. >> Before you move forward, so the average annual growth in the number of exemptions was 5%. Do we know what the average annual growth of the actual number of homesteads in general? So is that mirroring that there's a 5% increase in homest eads overall? Or is the exemptions number rising higher than the number of homesteads? >> I haven't analyzed, I can analyze the homestead exempt ions, but I haven't analyzed the growth in that. I'm sure we've got that data. >> It might help understand some trends. That's my contribution to this conversation. >> Okay, now with all the caveats I've given on my estimates, I'll kind of go over this and tell you the assumptions. What I've said is you can see 2016 is the fiscal year 16-17 that we're in. Got number of exemptions, the average taxable value and a net taxable value after the exemptions. The upcoming tax year 2017 would be the base year of the free should it pass at the election. Because the election will be this May, it goes into effect the first tax year after it's enacted. So it would be with whatever tax levy the council has in this upcoming budget in September. So that, I've said, is the base year of the freeze. And then based on the assumptions at a, and I've tried to lower these compared to the other because of that turnover I talked about. I'm just saying a growth in exemptions at 3% per year and a 2% growth in property values. So I've kind of tried to lower those to take into account that turnover effect. And you can see if you look in this column that's property tax dollars, how it kind of grows over time, the first year being about 200,000 and then it grows. Again, this is because the property values are going up each year, but the amount paid is frozen. So based on that, the impact at the end of that ten years would be about 2.6 million. I estimated it at higher, you can see if growth is higher, it'd be 4.15 million. If value growth are lower, it's going to be lower than that , significantly lower. >> Chuck, those, the property tax reduction column is not an accumulated number. That's a yearly number. >> Yeah, that, that, well, it's kind of comparing to the base year of the freeze versus that. In other words, if the freeze had not occurred and everything else had stayed the same, there would be 2.6 million in additional revenues in that year. It's not cumulative. >> So, then maybe I'm looking at this incorrectly. >> Okay. >> So let's say we added up all those numbers from 2018 to 2027, all right? At least based upon these assumptions, based upon this analysis. What you're saying is, and so correct me if I'm wrong, that by the year 2027, that over that ten year period, I guess, if you added up all those, I don't know what that looks like. It looks like probably close to what, $11 million or something like that or, so am I seeing that correctly that over ten years we would have lost out on that much revenue? >> $15 million. >> $15 million? Okay. Okay. All right. Okay. >> I was trying to drop in my spreadsheet, but. >> No, no, you guys are. >> That's not an estimate. >> You know, and just to let you know, this isn't like that in year ten it would end. It can continue to grow as you get further away. At some point it probably stabilizes as you have people coming and going and you don't see as much growth. But that may be 15 to 20 years out. It's hard to know. >> And so your 4.152 million is if values increase at 3% a year. >> Instead of 2%. >> And over the last three or four or five years, what have we had in growth? >> Well, I had. >> Is it on, did I miss it? >> Yeah. >> Okay, I'm sorry. >> We were averaging about 3.6%. >> Okay, all right. >> But again, this doesn't take into account any turnover of people leaving. You know, stay in their house for five years and move out. >> And then it goes back on the tax rolls at the normal rate. >> That's correct. >> All right. Yes, Mayor Pro Tem. >> Thank you. Does your chart that looks at not the tax freeze, but the current tax exemption, does it chart out over ten years to give a similar kind of cumulative effect of. >> This one? >> Of that one? >> I think it's not. >> I think it's one of the first slides. >> One of the. >> Where you talked about, are you talking about the cumulative over ten years, the tax abatements, the disabled persons and. >> Yes. >> Yeah. >> And really, I guess to look at the cumulative, if we're looking at the cumulative effect of the tax freeze, which has budgetary implications, but looking at even what the previous council's direction was in terms of, as you mentioned, bumping up that exemption. Right over five years to where it's at currently. Accumulate, I mean, right now you said it's a taxable value just for that over 65 exemption of $2.2 million a year. So that has a cumulative effect too. So if you take the 15 million that's estimated over ten years, you have about, average 2 million a year over ten years, roughly about 20 million. You're at about 35 million going to this population to help and give relief. So I think it's important to put all those numbers in context. Anyways, thank you. >> That's all I have unless there's any additional questions. >> Councilmember Hawkins. >> I don't know who this would be for, but who regulates the homestead exemption amount? Is that just voted on by city and the over 65 is too? >> Yeah, the city council sets those. >> Are there any examples of any communities, neighboring communities, that they had a property tax freeze where the homestead amount had to be dropped to try to balance? Or the over 65 had that amount had to be dropped to try to counter that? >> I talked to the appraisal district and they didn't have an example where the exemption was changed when a tax limitation went into effect. They did not have an example of that. But that is determined each year. All those exemptions can be changed each year by the city council. >> It's hard about that. I mean, that affects everybody. But anyway, thank you. >> So just a question about your chart. Under property tax reduction, so let's just say what you're saying is here in 2018, you've got some budget, you've got this analysis of how much is going to be maybe frozen. So we've got our property tax collections, if you will, would theoretically be 206,000 less given everything being equal, given everything that you said, the assumptions for this particular program. Is that my understanding? >> If it were not frozen, the difference, if it were frozen or not frozen. Now how it kind of administratively works with the apprais al district is when they give us those taxable property value numbers, if there's a freeze, they reduce the value that's going to be lost from that freeze out of what they give us. In other words, so when we get a certified value, it's just what we can levy the tax on. They adjust it down in terms of value for properties that are frozen. So it's not that we levy the tax and don't collect it. It's just not part of the appraised value that we have to set the tax rate with. >> Just for discussion purposes, let's have a couple of assumptions. That in year 2018, you've got, before the freeze, I'm just going to say $5 billion worth of assessed value. After the freeze, you've got whatever that is. >> That's about 30 million, so. >> Okay, so before, and our tax rate's the same, say the tax rate's the same, we're going to collect a certain amount of taxes based upon that pre-freeze value. Post-freeze, tax rate the same, we're going to base it upon the assessed values that they've given us, which subtracts out that freeze value, which therefore will equal a corresponding reduction in the tax collections, the property tax collections. So we either as a council work with that amount, or if we need to somehow do something different, either we needed the amount that was accounted for in this freeze, we have to somehow make an adjustment somewhere to increase the revenue, either through property tax collection or somewhere else to make up that difference, if we don't choose to keep it the same as far as tax collections. >> That's correct. And I want to mention one other thing, because Council Member Hawken asked about exemptions. When the base year of your freeze, again, because it's a dollar amount, if the exemption is changed after that, lowered after that, for example, your freeze is still based on the year where the exemption was at that amount. You can't change the exemption and it changed the freeze amount. It would only impact individuals who froze in that year. >> Yes, Council Member Wasney. >> Two observations. The first one is that the mayor's assumption is that new construction, property tax revenues would not be coming in. And because we are anticipating growth, those new homes are going to generate additional property tax revenue. Because the city is growing, we're also going to experience an increase in sales tax revenue, just like we've seen in the last couple of years. So it's not just a stagnant pool of money that, we're in a growth spurt, and we are right now, that those revenues are going to be increased. The other thing I want to address, there seems to be some confusion in the public that this could be modified into a property tax freeze for people of just certain income or certain property amounts. This is all based on state law. So it's state law. State law offers one column. >> Right. >> And that column is to freeze the tax. It's not based on income, it's not based on value of home, it's state law. >> Boom. >> I will also point out that school taxes have been frozen for a long time for the over 65. And as construction booms, those school taxes are also now new monies that come into the schools. But that amount is frozen. So this mirrors that freeze, and it too is coming from the state. >> That's correct. Council Member Gregory and Mayor Pro Tem. >> Couple of points on the school tax freeze set by the state imposed upon school districts. The state is required to make up the difference. State monies makes up the difference for those frozen school taxes. That doesn't happen with the city. And I appreciate you bringing up the argument that some folks are making that new construction will more than offset the reduction in revenue that we would experience by the senior freeze. Of course, new construction means new people in town, which means more people driving on the roads, which means need for more city services. So that new construction and the taxes that are generated by that simply, the taxes that are generated simply are covering the cost of handling the growth. They're not gonna make up for the losses that we experience here. It's not going to be equaling out in any way whatsoever. >> Mayor Pro Tem. >> I guess what I was looking for more is an education to myself and the community as everyone kind of considers this and we're allowed to talk about the facts relating to these issues and not publicly advocate one way or another as I understand. >> That's only after. >> Once they get called to an election, which will be tonight. Is we, and this goes along, I guess, with the mayor's question. And I guess what I was hoping to see, and maybe we can get in a report at some point, is we do assumptions looking out on at least five year forecasts that have all these things in terms of revenue assumptions built into it. That do assume, Council Member Wasney, growth in the city. I mean, we conservatively kind of factor in growth scenarios, both in sales tax and in property tax, and this would be one that would have to be factored in. Of course, year one, nominal. Year two, it's getting a little different in terms of its impact. You start going out there and we do need to think about how that changes out the schedule of potential tax increases or what it gives us in terms of our ability to play around with tax relief or not raising taxes at least for our citizens. And so these are complicated questions and it becomes, I think once this gets into the political sphere, unfortunately it becomes controversial, unnecessarily divis ive. And I don't want it to be that way, but I want everyone to understand those long term consequences of this. Again, even as we addressed this last time when it was brought before council, as I looked at that, what we're already doing in terms of the over 65 tax exemption at equaling out to $2.2 million a year. That's the thing to go after if you're looking for tax relief. That's huge and that's immediate in terms of its impact on your average property owner. This thing kind of starts just building up over time and you don't see that really. The one example you showed us I think was a $40 difference per year. So I kind of wish our community had time to stew on this to look at some of those options because I sure would hate to put any council in the position of having to look back at that over 65 exemption. Just to get ourselves into a situation where we're not ten years out looking at $35, $40 million loss to the city on behalf of those two parallel decisions that as I understand, some of the council at the time understood this was going to be it. And we're going to go after the tax freeze as well and that 's huge. $35 million tax implication, revenue implication over ten years is enormous. So when people talk about the burden falling on the rest of the city, that's a real thing. And so I guess it's a long way of saying I do want to see this in a forecast because I won't be here in May after the election. But others will and you're going to have a new kind of forecast that's going to have to factor this in should this pass. And I just think that information needs to be out there for everyone to see potential tax increase implications over a five, ten year period. Thank you. >> Councilmember Gary. >> Is there a way to put this presentation in the financial section of the website so that perhaps people wanting information about the property tax freeze implications can access it? >> We can do that. >> Thank you. >> If the council would. So directed by the council, we can put it on the website. >> So directed. Councilmember Hawkins. >> And just so I understand too, if this tax freeze were to pass, it cannot be reversed. >> Under current state law, that's correct. It's irrevocable under current state law. >> I just wanted that to be on record there, so thank you. >> I've got a couple of, just a couple of comments and I've debated whether to share some of these. But I said when I ran for council eight years ago, I wasn't going to make decisions based on politics. And I think what's unfortunate about this particular issue is there is a question out there of, can whatever this is, tax freeze, be more needs based? And you're absolutely right. State law does not allow that. They say it's all or nothing. And I think the reason why that conversation, at least the people who've had that conversation with me, have said, well, if we're concerned about seniors being tax ed out of their homes. And I have the slant of, if I'm going to be in government, my basic philosophy is, if we have an issue, if we have a problem, how do we find the narrowest solution to target and immediately hit that need without maybe having some overly broad implications? And I'm just going to be truthful. Let's just put it out on the table. Unfortunately, this issue has become divisive in our community, I think. And I think it's become divisive and it's really pitted communities against communities. And that is really unfortunate because we're sort of all in this together. And I think there are, for me, the reason why I struggle with being personally supportive of this, I mean, I'm not making this statement as mayor, but also as a citizen of the city of Denton. Because I strongly believe there's an alternative that we can use to more specifically target. You can raise that exemption from 50 to either 75 or to $ 100,000, depending on the impact. And so if 30% of the homes that have this over 65 exemption are 200,000 or less. From what Chuck had said of that, no, I'm sorry, not, yeah, 30% are between 100 and 200,000. If you take into consideration 0 to 100, you got 3,600 homes under $200,000 that have the over 65 exemption. >From what you had said, it's about half between that one strata of 100 to 200,000. So you got 1,500, you said it's a couple more hundreds. So let's say you got, there's maybe 1,200 or 1,300, there's 150 below. So about 2,000 homes that are at 150 or below. And to me, those are the seniors that are at risk of losing their homes. So you raise the exemption. You're giving not only a tax freeze, you're giving a tax reduction. I mean, when we went from 25,000 to 50,000, we didn't freeze taxes, we reduced them. Now some will say, well, appraisal creep has occurred. And that's, I think, one of the reasons for the purpose behind the tax freeze. Unfortunately for me, it's targeting the need, but it's also having consequences that I think can be harmful to a broader cross section of the community. And the saddest part about this is it has some of the discussions I've been involved in. And I've just told people, it's not about people who are from this neighborhood or from that neighborhood or this senior or that senior. It's about how do we identify a need and meet it. So this is going to have some financial implications on the city. And if it passes, we'll deal with it. I feel very strongly that we will. But like you, Mayor Pro Tem, to me, the real key to this as it moves forward to the ballot is data. There's already a lot of emotion surrounding this, which some of it's way off the charts. Some of it's not warranted on either side as far as I'm concerned, because the real key here is the data. So I really hope the public, no matter what side you fall on, educates themselves on the data. So whatever data we can provide as a city, and I think that 's what you're talking about Mayor Pro Tem, is what data can we provide because who's going to go out there and crunch this data? I mean, it's going to impact us. The school district does have their taxes made up by the state, and the school portion of our taxes are 50 to 65% or more of our property tax bill. So I just hope that people educate themselves on this, because this can have some grave implications for the city. Yes, growth will make some of that up. But even in that statement, growth will make up some of that. And so some of that burden will also fall on some others in our community. And it just becomes a policy issue for each individual voter that goes to the ballot box. So it's something that's important, and I hope that people will look at that and vote what they believe is not just in their own best interest, but in the best interest of the entire city. Yes. >> So to your point, if the exemption was raised to 100,000 , wouldn't that then double the income loss to the city? So that currently, to your point, the current exemption is 2.2 million a year. >> Is that correct? Is that correct? From 25 to 50,000 is a $2.2 million a year spread? Is that, I don't think that's correct. >> Our current exemption, 50,000, is 2.2 million a year. >> Well, but what was it at 25? >> Off the rolls. >> What was, I mean, you can't say, I mean, the difference really is from 25 where we were to 50 where we came. That's really the delta of what the difference is. And we did that really because you and Elma had come and asked us to do that. So- >> We did that because debt was behind other cities surrounding us. We had gone for 15 years. >> Yes. >> Property values had increased and the city had not kept up with the exemption and other cities had. But I come back to the 2., over 65 tax amount, 2.2 million is the tax amount that is reducing from the city right now. So what I'm saying is, if you took the 2.2 and doubled the add. >> But that's not what we would be doing. The 2.2 includes the 25 we had originally. So you have to look at what was it originally at 25,000 exemption. And then go to 50,000, there's a delta in there. We had that computed at one point. So if you raised it another 25 or 50, you wouldn't be doubling that number. You would be doubling the number of the delta from 50 to 100 or 75 or whatever it is. So that's just not accurate to say that all we would do if we raised it 50,000 is to double that. Because you're not taking into consideration the other 25, 000 that we'd had for so many years that we hadn't kept up with because we doubled that portion. So if anything it would be 1.1 or something like that is what I'm thinking. >> Yeah, at 25,000, if that were exemption, were 25,000 instead of 50,000. >> Right. >> The impact would be about 1.1 million. >> So it's half? Yes, okay. So that would be the- >> So if you added 1.1. >> Right. >> Then you're looking at 3.3 million for the exemption. Either way, I'm just trying to say you have one solution. If your solution is not to reduce the monies coming into the city, raising that exemption will also cost the city. >> Sure. >> Yeah. >> Yes, and I think if you were to put that on side by side chart and it stayed static, this exemption amount, because it would stay static except for as the values increased. It will catch up to the freeze numbers probably within the ten years, I mean for sure. So my point being, what has been shared for the reason for this is to keep seniors from being taxed out of their homes. And when I hear that statement, I hear it's seniors who have lived in houses for 20, 30, 40 years. That have gone up maybe tenfold from maybe that much, but 30,000 to 100,000. And you start giving 75,000 exemption or $100,000, you're almost making tax free. Those seniors who are probably the most vulnerable to losing their homes to property taxes if they choose not to defer them. Yes. >> Do we have an idea of percentage of renters versus homeowners in the over 65 category? >> In terms of that, we don't have data on how much are ren ters, but we know about 66% of the homes receive the homestead exemption. So about a third are non-owner occupied in terms of rental housing. What that percentage is for those that are over 65, I don't really have a data point to find that. My guess is the over 65 is probably a little bit heavier on the homeowner side than overall. So I guess it'd probably be somewhere more like 75, 25 for the over 65, but that's just an estimate. >> But your homestead does not take into consideration multifamily. >> Correct. >> And multifamily, I think, is where you'll find most of those senior residents, because they'll be in sort of subsidized tax qualified housing, elderly housing. They'll be in apartment complexes or assisted living centers. They're not necessarily paying rent, but they are. They're renting a room every month. So I don't know if the number of single family homes is a good barometer of maybe how many seniors out there actually renting, yes. >> But it's a good point because the tax exemption doesn't benefit all people over the age of 65. Only those that own homes. So those that don't have enough income to own a home or have chosen not to own a home and they're renting, their rent will probably go up because the taxes for rental property will probably go up. Somebody's going to have to make up the difference for the revenue loss. And so it'll be people under the age of 65 who own homes or businesses or rental properties. So you'll see taxes going up. So those seniors that probably can least afford it because they can't own a home, will probably end up experiencing rent increases to subsid ize seniors who can afford to own their own homes. >> Council Member Gary. >> If council will agree, I have a couple other suggestions for what we could add to the website in terms of the data that we provide. One of the things I thought we might add is making people aware of every cent of tax rate for this last budget cycle. I believe it was 460,000 was one cent of the tax rate. So that might help people when they see 960,000 is out of the coffers, that that equals about two cents in the tax rate, so something to help people understand that. >> Sure. >> The other thing, maybe linking up the open data portal or taking some information from there, because the open data portal says that 9.43% of our population is over the age of 65. So that's about 12,000 people. So that could help people think through these things, assuming that they want to spend that much time on it. >> Yes, Mayor Proctor. >> Yeah, I like that suggestion. And it seems like we've provided factual information for past election issues. And I guess we could defer to our attorney's office to kind of know how to thread that needle in a way that's legal. I'm almost saying let's take some of this data and curate it into one spot. And then people want to dig in and go a little bit further. But I'm almost envisioning some sort of infographic that kind of makes this one page easy for folks who want the basics. But then the links to go deeper. So I don't know the way to foster that or then to give direction to staff to prepare something to have council review. And then if we could put it up and highlight it on our brand new website. >> Make us a picture. >> Yeah, that's right. That's what I need is a picture. >> Any other questions? Yes, Councilmember Wasney. >> To your point that there are a lot of people who've been in their homes 20, 30, or 40 years. There are a lot of seniors who buy a home and maybe after just five or six years, the spouse passes away. That's very real landscape for the senior community. Often when that spouse passes, the retirement income that that spouse had is no longer viable or it's greatly reduced . So you have either a widow or a widower who now, because their spouse has passed away, they're having trouble staying in that house. So that's a story that I am hearing often. The other issue is that I've lived in a lot of different places in this country. And as property values start to skyrocket, it's the seniors struggling to hang on to those homes. And we're the ones who eventually just can't live there any longer because they can't afford to stay. And it's a senior exodus out of the home that they love, the home that they want to stay in, but they can't afford the tax. So just trying to get you into the mindset of some of the seniors. But I've seen it around the country and it happens. It's very, very real, very real. So just wanted to tell those two stories. >> Yeah, I appreciate that. Anybody else? Madam City Attorney. >> Thank you, Mr. Mayor. Just tonight the council has a public hearing on the tax freeze for persons who are disabled or 65 or over and also an election ordinance. And just for those who might be watching this this afternoon, I would point out that as council has noted, this is a state law and constitutional right for this matter to come forward and it has under those state law and constitutional provisions. But the process and the procedure by which the city handles that state law issue is through our local charter provisions. Hence, we are required by our local charter to have a public hearing. But contrary to what we would do where this actually a local initiative, the council does not have the opportunity to actually adopt the freeze itself tonight. And we've checked with the Texas Municipal League. We've vetted this pretty closely. We must, the council must call the election tonight. So you do not have that opportunity. So public comment will be taken, but the council cannot adopt the freeze tonight. We must call the election. >> I do have a procedural question. >> Sir. >> Why do we have two different agenda postings? I mean, would we not be able to move the call for the election under the public hearing? Posted agenda item instead of having two separate ones because number one, each one of those has different requirements for speakers. Public hearing is anyone can speak, item for individual consideration is blue card. Can we not consolidate those into one agenda hearing? >> Mr. Mayor, I smile because- >> I don't like it when you smile like that. >> Mayor Pro Tem contacted us and Mr. Knight is in the back of the room smiling as well, because we have struggled with this mightily because it is really very confusing. Because it is a state law provision and yet you use the mechanisms of your local charter. So we've tried to unravel it and separate those out so that it would be clearer. And that's why we've done what we've done. I'm certainly not going to sit here and suggest that it's perfectly clear because we've had to cobble a process on top of the state law provisions. So we've done the best we can to try to make it as clear as possible. But if the council would desire, I'll be glad to make that announcement tonight as well. Before we go into the public hearing and then maybe the citizens can better understand why we're doing what we are doing. >> But then I guess the thrust of my question is, are we able to move the call for the election ordinance vote up into the public hearing agenda item and just have and consolidate those into one agenda? Are we able to do that by law or are you saying we are prohibited from doing that? >> Well, we posted them as separate items. I don't think that there's going to be a fatal flaw where you have the public hearing and then not allow the blue cards on the calling of the election because I think it's going to be self-remitting in that the election must be called. It's really something that we do not have an option on. It's a shall call the election once the certified petition is in fact submitted. So I don't think there'll be an error there and doing that, again, we simply did this because it is quite confusing. >> So I could call them at the same time? >> If you please, yes. >> Okay, all right, thank you. Any other questions? Chuck, any other? How's the short straw feel? >> [LAUGH] >> Thank you, Chuck, I appreciate it. The next agenda item is receive report and hold discussion and give staff direction regarding the Texas Department of Housing and Community Affairs Tax Credit Program. >> Thank you, Mayor. Ron Mingata, our long range planning administrator, is going to handle this item for us tonight, this afternoon . [BLANK_AUDIO] Did y'all want to take a five minute break? No, okay. Okay, all right. >> She says that she won't count. >> Yes, yes, you're right. Yeah, yeah, yeah, okay. So as the break's needed, y'all just excuse yourselves. >> Thank you, Mayor, members of council, members of staff. What I brought for you today is a request for resolutions from developers that are looking to apply for state tax credit. A program that's available through the Texas Department of Housing and Community Affairs Tax Credit Program, and the program is targeted towards helping low income individuals through the development, either through acquisition, rehab, or new construction of rental houses, mainly multi-family or senior housing development as well. The tax credit, there's two levels. There's a 9% and a 4% tax credit. The 9% requires competitive application process, a competitive competition process, while the 4% does not. All that the 4% requires is that the financial documentations are applied and are accepted. There are three projects that were brought to staff just recently. The first one is Palladium Denton. The developer and management of this proposed development will be Palladium USA. It's approximately ten acres. It's a 180 unit three story multi-family development. Shown here in this exhibit is just a conceptual rendering of what the development would look like. It's all one, two, and three bedrooms proposed. It will be surface parking lot. Again, this one in particular would be requesting a 9% state tax credit. The property is owned CMG, Community Mixed Use General, and the general location is Loop 288 and Sherman Drive. This exhibit here illustrates the general location of the proposed development. This is the Loop, this is Sherman Drive, and it's generally on the southeast corner of that major intersection. The second proposed development is by Ohala Holdings. It's called Standard at Med Park Station. It would be primarily developed and managed by the Ohala Holdings company, that is. It's approximately 10.3 acres. Again, it's three stories. It is 263 units of multi-family, one, two, and three bedrooms. Again, surface parking lot. This particular development is requesting a state tax credit of 4% in the zone RCCD and generally located on Mayhill Road and Colorado Boulevard. The third project is directly south of the prior proposed development. Again, it's by Ohala Holdings. This one is approximately 6.65 acres. It will be three stories. The target here is 160 units for seniors. It is both one and two bedrooms. Again, the applicant is requesting a 4% state tax credit. Again, in the same general location, so it's zone RCCD and again, Mayhill Road and Colorado Boulevard. The red box here illustrates the general location of the proposed development. This is Mayhill Road here. Colorado is here. And it's just north of the train station and adjacent to existing multi-family to the west and to the south. Options for staff are for the city council for the 9%. If the council chooses to approve a resolution of support or they can take and direct staff to proceed with no action. For the 4% tax credit applications proposed today, a resolution of no objection would be what we would bring forward if again, the council chooses to move forward with a resolution or a no action from council is also an option. With that, that concludes my presentation. Yes, Mayor Pro Tem. I guess I can call it myself. I'm the only one here to do that. We're looking at this list of tax credit projects in Denton . I first thought when I saw this on the agenda, how come I don't recall ever having a presentation like this in the past? And it looks like the last one was 2015 and prior to that, it had been a while before we've seen some. >> Sure. >> The one we just looked at on East McKinney, which would have been 2016, I guess. Is that the same one that's listed here as Denton Apart ments 2015? >> Let me ask Barbara Ross to help with that. But I just want to just help explain a little bit. This was something, we do get these applications. I believe the one that you're referring to was directed to put on an agenda under consent. And that was not brought forward as a work session item. But I think we're starting to bring this up front to help educate the council a little bit more than just put it on the consent. That might be the quick answer, but I don't know if Barbara has anything else to add to that answer. >> She's saying no. And she's walking in. >> Actually, no, the only thing I would say is that, again, the state can change its qualified application plan every year. So they may not always request a resolution of no objection or something like that. But that is now called the veranda and that was the housing authorities was a party to that project as well. >> Okay. And do any of these projects that you're showing require any other further action on behalf of council in terms of zoning change, SUP, things that would have to come in order for them to actually become reality? Or are they already kind of zoned appropriately? >> No, they're not zoned. The first one is zoned as CMG, Community Mixed Use General. And that approves multifamily with limitations, limitations to L6 and L4. L4 specifically, because the way it's being proposed, would require a specific use permit, which will go through the planning zone commission for recommendation and ultimately to city council for consideration. >> Okay. >> So we're not, by approving these resolutions, giving any signal that we're approving all those- >> That's correct. >> Other zoning questions that will then have to be part of a public process. >> Correct. >> And the other two projects have the similar limitations, L6 and L4. And those two also need to come through the planning zoning commission and city council for an SEP. >> Can I just add one more follow up question? I noticed from the existing ones, they're all in my council district, every single one. Which means we're tending to put lower income apartments in areas of lower income already. And two out of three of these are also going in my council district as well. Which is striking, and I wonder if from a planning perspective, is that healthy? Should we as a city start to encourage seeing these at a greater part of our population geographically? Or are we condensing? >> Right, right. >> I don't know, I'm asking you as a planner. >> I know that- >> And if there are some policy implications to that, that we ought to be thinking about moving forward. >> I know that the state has certain requirements for concentration of these types of applications. As far as planning, we certainly look at it as the area. And I know this is within our dam plan 2030. I know the density requirement, or not requirement, but rather the preferred growth concept has it within the core area. So primarily having these multi-family developments within an area that can be easily served through transit or close proximity to the urban connections . That's generally what we tend to look at. Now if they're concentrated more in one area than the other option, we would prefer that they don't. And be more spread out. I don't think that this particular two are next to each other. However, as you pointed out, there are some congregation or concentration that is of others in generally the area that you're certainly serving at this point. >> Let's see, who was in the- >> Mayor Pro Tem. >> Okay, so I thought I saw you raise your hand. Did you raise your hand? And then I saw. So then McGarry and then Councilmember Wasney, I think is the order as well. >> Okay, Councilmember McGarry. >> Yeah, I was just going to reiterate in our AIS it had some criteria and I think part of it is the proximity to public transportation. Because your particular area is well served by public transportation, I think probably because of your advocacy. But I mean, that's the flip side of it is now you have a good criteria for low income housing to win those tax awards. >> Can I respond to that? Just to be on topic. >> That was a great seat, really. >> No, and I agree, and I'm not opposed at all. I just know we had an apartment complex with heavy opposition in a place that's well served by public transit. Right next to where it should be, next to a university. And because there is well established richer neighborhoods fighting against it. I just think that it's important to understand that dynamic in our community, that there's places that would not accept this. And I'm not fighting against it, because I think this is a need. I think it's a heart check for our entire community to think about this. There's people that are excited to put it in areas that's not in their backyard. And that's important to think about. So I just think there's policy implications long term. >> Councilmember Waske. >> I think it really underscores the need for these small area plans that we've been talking about. And that planning is going to bring forward because it brings in neighborhood stakeholders to allow them to help plan kind of their part of town. Denton is bigger than it used to be. It continues to grow. And that's where the small area plans are so impactful. Because you have the stakeholders who say, well this is kind of where we'd like to see our city. So then it starts to place some guidelines on the neighborhood. And it's much bigger than a neighborhood. It's a section of town. And you brought forward, Mr. Magida, what was the name? It was the whole land use plan basically for the city. >> The future land use designation. >> Yes, yes. And we're trying to really look at the city as a whole. So I think implementation of that plan along with, then which is kind of a macrocosm. And then the small area plans, which is a microcosm. And you get both of those things in place and in play. And now you do have a plan moving forward so that things don't just get approved here and don't get approved there. There is a consistency, there is a pattern. And it's not just the big plan, but it's the small area plan. So that the people who live and work in one of those small area plans, that they own businesses, that they are looking at, here's what we'd like to see. And then the city develops that overlay. And that overlay then becomes the guideline. So we're not kind of seeing the willy-nilly, whoop it's here and whoop it's not here, that we actually have a plan. And so I think that's a solution that planning is working on. >> That's correct. >> That will help address all of these questions and all of these concerns. Because right now they're in place, but we're trying to make them better. And we certainly don't have the small area plans. And we're certainly in need of a re-tuning, recalibration of our whole city plan. >> That's correct. >> Yes, Council Member Greg. >> And I apologize, Ron, if you went over this. >> It's okay. We've been here since 930 and sometimes when the bottom gets tired, the brain doesn't work. >> Which one is which? >> Well, there's that confusion too that happens. >> I'm sorry, that's about the best I'll give. I should just leave right now like George was saying. >> Yeah, leave on a high note. >> I'm out on a good high note. >> And I don't know why the neurology of the bottom and the brain, I don't get it. >> There was a time when the council sort of by policy, by agreement was just passing on taking any action on any of these. And I know that that probably hurt a few applicants because they have to earn so many points and that they can earn some points by a resolution from the council. So my question is, is that still the case? And what it looks like is for a 4% tax credit, I'm not sure if I'm reading this right. They can get a 4% tax credit if the council approves a resolution of no objection, which is odd, or if the council takes no action, they could still get the 4%. >> That's my understanding is that, like you mentioned earlier, it's competing against other applications. And so if the council does proceed with a resolution, it would help their cause in competing with other applicants that are buying for the same tax credit. >> And is it true that these investment groups that do this are looking at certain areas because there's something that has already triggered in terms of demographics, the need in terms of population and a certain income category. Or does it also have to do with the current inventory of apartments that are affordable? >> I think, I can't answer their response to something like that. But I would guesstimate that if someone was looking to develop a project, they're going to look at every advantage that they can. Obviously, competitive housing is going to play a big role in the market and relates to relationships to other developments in the area. My guess is that they do a fairly good amount of research on where and what their market is and how they want to develop this area , where they want to develop. We do have, and I don't know if this is the council's choice, but we do have a member of Poladium USA here, Ryan Combs, available if you'd like to ask that question of him if that 's something that the council desires. >> Maybe, I don't know for sure. A couple more questions that I have though. I know that the council's sort of warmed to the notion of supporting some of these. When they were targeting seniors, and part of the reason that the council seemed to be more comfortable with those is because we had heard from our colleagues over at the school district. That these projects had sometimes significant impacts on schools. Because you would get suddenly a lot of new students to a particular school that were qualifying for free and reduced lunch. They might need other support services that come with those who have less financial advantage. And so we were sort of more comfortable with supporting those that were targeting senior population. >> I know now we have a whole different situation because we just have a question about affordable housing and Denton period and I haven't heard much from our colleagues at the city council later. Do you know if those two programs that you showed us, if either one of those is specifically for seniors or are they for all age levels? >> The Hudson Admet Park station is specifically targeted towards senior housing. The 160 unit, this is the one that's part of the Med Park station development. It's the smaller version, or smaller area shown here. That's where that development would occur. And that again would be for senior housing. So one of the three will have senior housing. The other two is pretty much across the board. Age is not a factor in leasing out units. >> Okay. >> And we might need at some point a legal opinion if that 's a legal basis for even making those determinations because I know at Med Park station right across, maybe to the north of the station, there's another rather large complex that's been there for several years. That provides some housing credits for folks who do have school aged children. So, okay, thank you. >> Thank you. >> So my question is about the, I remember hearing about these tax credits before, the state tax credits. Once this is approved, are there certain rules and requirements by the state for these developments that they have to go by as far as inspections and things? It's pretty strict standards, right? That once you're approved, you have to follow. And this might be something that you address, all the stuff that you have to do. Is it like? >> Yes, I'd like to defer that if something. >> Yeah, it's, okay. >> Right, would you like to address that question with us? >> I got a question. Are we here to talk specifically about these projects or is this just about the state program in general? Because I don't, I mean, if you have a general question, I certainly want to be able to answer it. But I don't want to get into a discussion about specific projects because they haven't come before us. So. >> Well, mine is about the state tax credit. >> Okay. >> Per se. I mean, certain guidelines and restrictions are given to these developments from the state once they're approved. And I'm just curious what those are if they're approved since, you know. >> But, Ms. Ross, do you understand? >> I'm not certain that I could answer it as well as our developer. But obviously when the developers do their applications for these facilities, they set up the number of affordable units that they will have for residents under 60% and 30% and percentages of the area median income. And they have to continue to provide those affordable units . And the state reviews and comes in and takes a look at what's happening at the facility if they have included services to the residents as part of their application. The state will look and make sure those services are being provided so they do, you know, and that the facility remains up to code and, you know, in a living, a way that people want to live there. So yes, the state does track that and stay with the agencies for the period in which the tax credits are. >> And that is tied directly to this credit, this tax credit? >> Yes. >> Okay, thank you. >> One, I'm sorry, were there any other comments? I've got a couple. >> No, that answered my question. >> Yes. I'm just curious, do these developments agree with the future land use or 2030 plan? >> Yes, as far as the density, it does fit. Now, obviously, zoning is going to be the key. And with the current zoning of the property, it is permitted with the approval of an SUP. So that SUP would need to come through again to city council. >> And the SUP is probably regarding height or density or all the above? >> All the above. >> Okay. >> Design standards, anything that would warrant any mitigation of potential impacts. >> Okay. >> And I just would, if I could mention that the state has become a little more strict in terms of what they look at these applications. They're looking at developments that are in school areas where the schools meet the state standard of met standard. There are also tie breakers in the process are those that are farther away from other tax credit developments. So they've made some changes and are taking a better look at trying to make sure they don't concentrate these in poverty areas or areas where they don't have good schools, things like that. >> Let me make a couple comments. One thing that ties into this discussion is we had the Dent on Housing Authority come before us about a month or so ago, two months ago. Floating an idea that, of course, they're involved in a partnership with the tax credit program there off East McK inney, an apartment building there. In which, because of their partnership, they were able to participate in the developer fee and also participate in some cash flow revenue and sort of increase their ability to receive additional revenue. I believe that's, Barbara, you're looking at me sort of oddly, is that, yeah, okay. So one thing, I'm going to struggle with giving a direction on either a resolution of support or resolution of no objection to these or any coming forward until we have the discussion about the housing authorities asked to see if they would be the exclusive sort of partner. Because I had a meeting with legal to determine what exactly is the charge of the Denton Housing Authority. In other words, we have some particular goals and some objectives and mission that we have regarding workforce housing, homelessness housing. And I think that some of those revenues can be directed, if I remember some of the discussion in our meeting, that's another work session we'll need to have that I'll ask for in concluding items. To determine that if we're able to have them partner with some of these developments and participate in some of the revenues, that will provide some additional revenue for additional programs other than just the voucher system or the affordable housing programs they have currently administered under the federal government. And I would like to explore that a little bit more before we necessarily give our yes, we support or we have no objection because that is a very comprehensive discussion that could help us in achieving some of our goals with our workforce housing issues and our homeless issues. >> And it is my understanding that the Denton Housing Authority is partnering with the OHALA developers on the two Med Park projects. >> Okay. >> So they are involved in these. >> Okay, well I would like to get a presentation from them on, because my concern with these project is they're coming at the last minute. These applications are due very quickly and it's my understanding they're due in February or something like that or March. >> I think the 9% tax credit are due in March and I believe the 4%, there's no- >> So we don't have to make any decision on resolution or no objection on the 4% tax credit? >> Correct. >> Not today or not in the near future? >> Not in the near future. >> The 9% you're saying we may need to. So I would like to have a discussion on if there is a partnership with that particular one, what does it entail? There's not one there from what I'm seeing a head shaking. But also we need to have a discussion with the Denton Housing Authority because my agreement to allow those partnerships and exclusive partnerships would only be predicated upon those additional revenues being able to fund some of our goals with workforce housing and homelessness housing and the like. So there's still some discussion to have with the Denton Housing Authority, I think I've been saying affordable housing. Denton Housing Authority in regard to the intent of those partnerships from a policy perspective as well. So for me, resolution of support or no objection is premature for these particular developments in my opinion based upon some larger policy discussions that we have. So I know that the interim city manager had said that that was one of the objectives of this particular work session was to give direction. Whether either a resolution of support or resolution of no objection should be included on a fairly recent or upcoming agenda. And so my answer to that is no until we have this policy discussion. And so what is the rest of the council's direction? >> Okay, all right. Yes, I'm sorry Mayor Protein. >> Well, again, I don't know the ins and outs of that enough. I mean, it seems like part of the reason why some agencies in our community lost that latest grant, that big grant that the city and others helped subsidize a bit was our lack of affordable housing. And so we're going to get requests coming in. And I don't know the impact of that on that final number. I mean, what I do know is the discussion you're talking about, who knows where the fruit comes of that in terms of just getting more housing on the ground for our community. While we've got three projects lined up ready to get something going. We're talking about a government agency dealing with several government agencies, perhaps partnering in the future. >> No, I understand. >> And so is there, if these came in the time frame that they're kind of anticipating, does this even have any impact on the metric that the state agency that was distributing those grants, does this make any difference? >> No, the agent, so correct me if I'm wrong. Those four agencies that were receiving those grants were Hope Incorporated, Friends of the Family, Salvation Army, and CCA, Christian Community Action in Louisville. It was more of a housing first for homelessness. It wasn't so much a housing first for workforce housing, affordable housing, people who are just, but it also was the homelessness component of that. So personally, I don't think that they're going to have that big of impact unless the council says you will provide X amount of units, not for low income, not for 50% of median, or not for 80% of median. But you will provide so many units for homeless people and housing first initiatives. Now in that case, yes, I believe it may. But we have an agency who's really, when you read the ordin ances for the creation of the Denton Housing Authority, whose primary charge is to provide for affordable housing and to provide decent and affordable housing for those who can't afford it. So that's their charge, and I'm just simply saying, I think there's a way that we can create a policy that will allow us to increase the availability to meet this housing first need. It's under a different paradigm than what the Denton Housing Authority is currently working under. And I would like to explore that first, because they're receiving an additional, I don't even know how many hundreds of thousands, if not millions of dollars as a partnership with this property on McKinney. Without any kind of city involvement as far as, well, we want you to also provide some of that funding to go to some of these housing first programs that we can implement. >> So it's the connection, I'm just trying to understand your connection between that and this. >> Yes. >> Is you're thinking that if that gets ironed out and there's some policy moving forward in terms of what sort of outside of those types of projects we will encourage in our city. Is that the tie in? I mean, in other words, if these come into town, that's not prohibiting them from doing what they want to do too, is it ? >> No, but what it does is it provides an additional revenue source. See, for instance. >> Okay, I guess I'm trying to understand, does this prevent them from taking advantage of those programs in the future? Are you just saying- >> No, but I'm saying if we've got them sitting here now, why not take advantage of them now? >> That's my question. So it seems like approving these might somehow prevent their ability to take that opportunity in the future. >> With these particular ones, it would prevent it, because it's a participation from a financial perspective of the project. >> I was trying to understand how you're connecting these two things. And of course, it's a discussion with the Housing Authority , says these are what we're thinking. If you do partner with these developments and you're able to achieve these additional revenues, this is what we would like for you to use it for. Well, they may say, we're not going to do that. Well, then this discussion is moved. So it's having that discussion first, as far as I'm concerned. Yes, Council Member Begheri. >> Well, I mean, the developer's here. Can we just ask them if they have any intent to partner with the Housing Authority? >> Well, I think we've- >> Did I miss that? >> Communication that one, two are- >> Two are- >> But they're on down the road where there's no timeline. And the one that's at least listed as an exhibit currently is not. >> I still think we can vote on their tax credit and they can still move forward if they so choose to have some type of partnership with the Housing Authority, couldn't they? >> Well, they could, but then that's at their election. That's not necessarily the city council's election if we say, hey, these programs that come into our community, we would like for them to partner through. And that's what I'm saying, it's a policy discussion. You may say, we don't want to do that. And I'm just simply saying, I don't know if the urgency is so great right now because we do have 300 units that are coming up that are being built right now over on East McKin ney Street. I think it's just a comprehensive policy discussion. So let's just go back. You said you're okay with- >> I support you. >> Okay. >> Councilmember Oden. >> I'd like them to get their tax credit, so I'm in favor of a resolution. >> Okay. >> I would like to put it off till the policy discussion. >> Policy discussion. >> I want to put it off and too, I just wanted to add, maybe I missed something. I just want to make sure I understand this. When the applicant is going through their checklist, marking down all the things, the reason they need a resolution from the city is it shows to the federal government that the city is okay with them putting that there or they're in agreement that, and that's all that that is saying, right? >> It's got support. >> Gives them some points on their overall score, and so they found the right location ultimately. Am I understanding that right or no? >> I think it's just saying that the city doesn't object, number one, or supports, and that gives additional points. Whereas if we don't do anything, doesn't mean they can't make their application. >> No, but I just wanted, we hadn't talked about this in a little bit, and I just wanted to really make sure I was understanding. What, by resolution, what are we doing? >> Right. >> So. >> No, I understand. >> But yeah, I definitely, I think the policy conversation is needed right now. >> Council Member Briggs? Of course, I guess we've got four, so, or five, but we still want to hear your input. >> Well, I know that workforce housing is really needed, and that's something that's lacking in our community. But I also know that the Denton Housing Authority presented some interesting facts in their partnerships, and I would like to explore that as well. >> And we can have that sooner than later. I mean, we can have that discussion with the Denton Housing Authority in the next couple of agenda items, agenda sessions, or city council meetings, so as to maybe not create a delay. Okay, any other questions on this agenda item? >> Council Member Spagari? >> We can have breakfast, lunch, and dinner here another day. >> Okay. >> So just to recap real quick, so staff has an understanding. We're going to hold off on making decisions on the request for resolutions until after we have a presentation brought forward back to the city council during a work session with the Denton Housing Authority. >> Yes, and a policy discussion on. >> A policy discussion. >> Partnerships and the like. >> And as we move forward with that discussion and in any further applications in the near future, this is something that you would like for us to continue to do is to bring forward these requests through a work session discussion or how would you like for us to bring forward any future requests, I guess? >> Well, I'm hoping that we can have the policy discussion with, because if the housing authority is entering into these partnerships without us having the policy discussion, the council, I'm just as concerned about that as well, because then we're not able to use some of those additional revenues for programming that might achieve some of the goals that we have council sort of seeing we need for workforce housing and for also housing first initiatives. >> Okay. >> Yeah. >> All right, thank you. >> Thank you. Okay, that ends our open session. We will now convene in closed session for our one o'clock agenda closed session. At 3.04, I will convene the closed session at 3.04. We will consider the following items. Consultation with attorneys under Texas Government Code section 551.071. Deliberations regarding real property under Texas Government Code section 551.072. Deliberations regarding certain public power utility competitive matters under Texas Government Code section 551 .086. [BLANK_AUDIO] [BLANK_AUDIO]