Dec 03, 2018 City Council on 2018-12-03 11:30 AM

All right, welcome everybody to this meeting of the Denton City Council on Monday the third 2018. It's about 1134 a.m. We do have a quorum. We have several that are absent, but yet they'll probably be coming in shortly. Moving through our work session reports, work session 1A, receive a report, hold discussion to give staff direction in the establishment of a governance process for the City Auditor's Department for the purpose of defining the City Auditor's authority and responsibilities for the City of Denton, Texas. Okay, when I had a meeting with the City Council on my performance evaluation, City Council had, I discuss about the internal audit process in city governments, and at that time I was given a guidance to prepare a document and present it to the City Council for adoption. Sure. And if you all approve this or make changes to this, I have a placeholder on December 11th to present the ordinance for adoption. Okay. So, with that, I'm going to be presenting the internal audit governance document. Basically, today I'm going to be discussing several issues, like, for example, why do we need internal audit function. A brief discussion on internal controls, auditing standards, auditor's independence, auditor's authority and responsibilities, management responsibilities, and peer review. First of all, need for internal audit, now there are some legal requirement and some generally accepted requirements, like, it's almost like expectations from a government. Legal requirement pertains to the charter section 6.04, which basically says that the city shall have internal auditor, and it defines a function of the internal auditor is to provide independent appraisal of the government operations, policies and procedures, et cetera. To verify that the information that are presented to you all and the external parties are accurate and reliable, the assets of the cities are safeguarded and risks are identified and mitigated. This is important because, I mean, this could have a very far-reaching impact on the city government, and resources are used effectively and efficiently and economically, and the city's objectives are achieved. So charter also costs responsibility on internal auditor to manage fraud-based and abuse investigations. Now, basically, internal controls are process to provide reasonable assurances that the objectives of the city are being met, and you can classify those objectives in broad categories like effectiveness and efficiency of operations, reliability of reporting, compliance with laws, regulations and policies, and proper checks and balances, existence of proper checks and balances and prudence in managing operation. There are two sets of auditing standards that are being used in the United States. One is issued by the Institute of Internal Auditors, and the other is issued by the General Accounting Office of the United States. Now, the Institute of Internal Auditing standards are applicable generally to private sector, and the GAO standards are applicable to the government or public sector auditing. Basically, these standards cost responsibility on government, and also cost responsibilities on auditors. Yes, Councilmember Briggs. So I have a question about that, because before you were here, we sent out our audit externally, so which standard were they following since they were private business? How does that work? Well, they were supposed to follow the Government Accountability Office standards, because those are the standards applicable to the government. I do not know what standards they followed. However, this Government Accountability standard, there is a major emphasis on accountability in government. And these principles also, principles in this standard also are applicable to the auditor. And the expectation from auditor is having emphasis on public interest, having integrity and objectivity. Now, as auditors, we have access to a lot of information, and we should be very careful, and the Government Auditing standard requires us to be careful about how we use that information. Many times information is confidential, and we have responsibility to keep it confidential. And again, I mean, standard expects professional behavior from us. Now, the only way an auditor is successful in government, or any other places, if the auditor is independent. So basically, there should not be any influence on auditor's work, whether it is funding, or any other kind of influence, or organizational position in the entity. Now, yes, sir. No, go ahead. I'm sorry. Go ahead and finish. Yes. I'm going to say that the current organizational position at the City of Denton assures us independence, so that is really appropriate. You had a question, sir? Yeah. I guess, because I know, I don't think we've talked about this yet, and if it's more appropriate in a different slide, just let me know. But as far as, I know that, you know, sometimes when Councilmembers have questions for the city manager, they can send questions and emails and things such as that to try to research some issues. But as far as individual Councilmembers requesting either, not necessarily investigations, but kind of requesting you to look at numbers, or requesting something like that, I don't know if we've really ever talked about that on Council, and with three of them missing, I don't know if this is the day to talk about it, actually. But just your thoughts on that, because I don't think that, correct me if I'm wrong, I don't think any one person could ask you to do some type of audit or investigation. Yes. They could. No, they could not. No, they could, and it would need to come from the Council as a whole, unless it was something that was placed on the fraud, waste, and abuse hotline, I guess. That's where you would do some preliminary investigation. Sure. So is that my correct understanding? Well, I can share with you what is my experience from the past. Okay. And again, I mean, City Council will have to kind of put in their policies and procedures. My past experiences, and again, I mean, in the past, whenever a City Councilmember had a question, if that question is like, "Oh, I need XYZ information, and it doesn't take much of my time," then I would, if I have that information, if I retrieve that information, then I forward that information, the response to that information to everybody, all the Councilmembers. Okay. Got you. But, if it takes work that will impact on my work plan, then in the past, at least three Councilmembers had to agree to make that request, but again, I mean, there is no hard and fast rule. I mean, this is just my experience from the past. Sure. And whatever you all decide, I mean, that's what matters. Okay. Well, that's probably something we'll need to get on another agenda item so that we can have the full Council discussion, because I think that's a worthy discussion, just to help everybody understand and help you understand what are the parameters and the rules. No, that's exactly what it is. Councilmember Meltzer. That's actually later, you know, Intermesh's document is something that I wanted to ask him to clarify. He talks about, you talk about, sorry to talk about your third person, you know, three people to start something, but four people to actually put it on the schedules. So I hope at least we understand, you know, Intermesh's proposal, how it might work. Okay. But it's in there. Yep. All right. Great. Okay. This document briefly describes what is my authority, I mean, that authority is necessary. For example, I need to have unrestricted access to all city functions, information and records, property and personnel. This is necessary to do my job and this ability to allocate my resources allocated to me for to determine the scope of the work, frequencies, timing, and subjects that I can select. Of course, with the Audit and Finance Committee's approval and City Council's approval. Ability to determine what kind of staff I'm going to have access to the findings of regulatory agencies and other external agencies like consultants that city might have. So if they make recommendations, I should have access to that documentation. And again, I mean, we need to follow up whether we spend money on consultants or whether we are implementing recommendations. And ability to perform unplanned audit because sometimes it will happen that there may be some issue that kind of balls up to the front and we have to conduct some audits. So I should have the ability to conduct unplanned audit, of course, with City Council's approval. So Auditor's responsibility as is included in the document that providing City Council and management assurances about the internal controls and operating performance. Welcome, no problem, continue. My duties would include annually developing a flexible internal audit plan. We talked about administering external audit contract. And from my past experience, internal auditor was responsible for administering that. It doesn't have to be like that, but I mean, whatever City Council decides. It just provides the separation for the, I mean, like segregation because external auditor is auditing finances and there needs to be some segregation. So I mean, that just provides that. Again, I'm responsible for managing fraud, waste and abuse hotline, receive complaints and conduct investigations. Conduct follow-up reviews. So when the recommendations are made and sometimes later we will be following up with recommendations are implemented, what are the outcomes of those recommendations? Or as a matter of fact, if consultant makes recommendation, then we want to see whether we implemented those recommendations. And what are the outcomes? Communicate with the City Council when necessary. So as in when there is an issue, I will have to communicate the City Council. And very recent addition to my duty was providing administrative support to the ethics board. Again, the standard also cast some responsibility on management, which is very standard stuff all across the country. City administration will provide adequate resources, meaning that office space and other necessities like computer equipment or access to the network. Again, these are the things which are necessary for me to do my work. Report during audits and investigations, so far I have not had any issue with that. Address issues noted during any internal audit or investigation. Again, implement procedures to resolve the issues that were identified during the audit. Come to audit and investigative recommendations in writing and in timely manner. And explain what actions are either planned or already taken to resolve those findings. And the last item is peer review. Now, I am required to follow the standards. So now, who audits the auditor? That is a question that is being asked many times. We have got a national association of local government auditors. And this national association conducts peer review, meaning that auditors from the other shop will come to my shop and kind of audit my records and advise the city council whether I am following the auditing standards. So that provides city council assurance that our work is done in compliance with those standards. And therefore, all these requirements that I was talking about are applicable to us. So basically, that is my presentation for that. >> Yes, go ahead. It was in the backup. Yes, go ahead and ask your question again or comment. >> So well, there are a couple of points that I would like to mention so we can get a chance to talk about. One was in the sort of detailed document, you described the standard -- >> Microphone. >> How much of that do you want me to do? >> No, just keep going. You are good. >> In the backup, kind of more extensive document, you talked about a process where three members might initiate something, but then right below it, you talked about that it would take four members to actually put something in your sort of official roster of what you are working on. So I really didn't understand that and I hope you might explain the difference. >> What that is, that is what I was talking about, that if a request has to come from city council for an additional audit, I just include my past experience here, that three council members has to agree at minimum to request that audit project. >> Okay. Go ahead. >> Yes, but then if it takes four for it to actually make it to your list of what you are going to work on, what does that accomplish, what does what the three do accomplish? What is the difference between that and making it to your list? >> This is what it worked in the past for me. That can be different. >> I understand that it worked, but I don't understand what it is. >> Oh, no, no. So basically in the past, when three council members agreed to request an audit, we put it on our audit plan. >> And what do you want four members to approve? >> Well, four members are going to approve any request from the management. So say for example if we get a request from management that we need certain audit, then we'll have to bring that back to the city council, full city council and say this is going to impact our audit plan. So need your approval. But it doesn't I mean there's no hard and fast rule about that. >> I just want to understand the proposal. >> Councilmember Briggs. >> Thank you for your work, and I am in favor of your audit document here. I think it's good. I had a question because on the management responsibilities and we talked about independence. >> Sure. >> But then also when we do budget, I think my question is do you present your budget to the city manager and is that, because I know that all the requests come through us, but just how is that balanced between your independent department but then having to I guess present your budget and request to the city manager? >> Well, again, I mean, I revert back to my past experience. In the past, I presented my budget straight to the city council. >> Okay. >> Because I'm city council appointed. But again, man, it doesn't have to be that way. Only thing as long as there's no influence on auditing function. So whatever city council decides, I mean, that's good. >> Okay. Thank you. >> Councilmember. >> I had another item as well on page eight of the document, item six, also the management responsibility part. You have a sentence in there that says city management is responsible for addressing issues noted during any internal audits and investigations. But wouldn't you agree on reflection that the kind of reporting path is you make recommendations, council approves the recommendations, and then city management is responsible? In other words, they're responsible for responding to any recommendations approved by council, you know? Because I can see that this is a very, there's two areas that are potentially a little ticklish, I can imagine, with the audit function, you know, correct me if I'm wrong. You know, and it all comes from the fact that the work that you do and that you ask of people in management is not part of their objectives, right? People have accountabilities and objectives. These are the things you get credit for in your job and accountabilities are just stuff you got to do. And they kind of get in the way of you meeting your objectives sometimes, at least, you know, from a time perspective. So you need the clout to make sure that people actually respond to your requests. >> Sure. >> Even though it's not meeting their immediate objectives. And you need the clout to have them follow up and actually take part in the recommendations. But I think the interaction is sort of, you know, gets a seal of approval if it comes through council. You investigate, they have to comply with your needs for information to do your investigation. You make recommendations, council approves or amends, and now it's, you've got the clout of hey, this is the council approved set of recommendations, you have to respond to this. >> Yeah. I mean, it can be set up like that. But many times what happens is something is broken and we need to fix it. So city management will prefer to get started. Because many times what happens is, while we are auditing, we share that information with the department. And department will say, okay, we agree with this findings. And what can we do about this, and we agree on a solution. So many times they get started during the audit. >> Okay. That's a different case. And then I take your point that, you know, that's the case of they want to act on it. >> Yeah. >> I took, I had the impression from when I was reading that you're protecting for the case of reluctance to act on it. Well, the thing is that I present my audit reports to audit and finance committee. And then, like I'm going to be presenting customer service report today, it goes to the entire council. So in that process, if city management has not implemented or indicated that they're not going to implement, because they're going to assume the risk, then city council or audit and finance committee can ask city manager why is the case and what is the rationale. And basically at that point, again, city manager may have perfect, the good rationale for not implementing something. But that's fine. I mean, if that is accepted by the city council, then that's okay. I mean, otherwise, I mean, if that is not okay, then obviously you're going to say to the city manager that, hey, we need this to be implemented. >> Yeah, and that should all come out in the review process, your management point of view. >> Yeah. >> And in the case where management wants to act on it, it's always their job to manage. It's not the council's job to manage. >> Right. So there are going to be many policy issues, like there are a couple policy issues that I'm going to be discussing during customer service audit. Those are the only thing management deferred that they are going to wait until city council approves those policy decisions. But they got started on implementing, and they did implement lots of recommendations by the time we were done. So basically, I mean, that improved internal controls. >> Well, I'm happy with the document and willing to give it a try. >> Okay. And I -- anyway, Mayor Pro Tem, and then we'll go to Councilmember Briggs. >> Thank you, Mayor. A question on the -- can you give an example of how the three-person coming forward would actually work that we're not taking any chance of a telma violation because a fourth person knows about it as well? Is that -- how would -- would it be something that needs to be posted before it comes -- before you would move forward even with three people, or how would that -- because if four people know and it's not a posted item and there's discussion between those four people, we can run into problems. And if, let's say, two are interested in it, so they talk to a third one and the third one's not, so they go and try and solicit someone else, now you've got the four people you're in violation of. >> I'll just put that issue to the city attorney. >> Let me comment before that. If you don't mind, then let you answer. Because that is -- that's probably one of my only really kind of concerns here is that if -- if -- I just think it should take four council members to put something on the audit plan because that's sort of how we do it. And to have three, we run into -- then we're going to let the city attorney answer that question. I think it would just make it cleaner. And that way it would be something that is discussed in a work session. Because I think it would be really odd if something got on the audit plan and there was never a discussion here, or if there was a discussion here and it got on the audit plan with only three, then it would seem a little inconsistent. So those are my thoughts on that, but we'll let the city attorney address that. >> I think you answered it, Mayor. I was just going to add to what Mayor Pro Tem inside is if you have three, there's always at risk that the three council members will find a fourth and may get caught up in a potential TOMA violation. So I agree with you that four would probably be the safest way to ensure that you're not violating TOMA. >> Okay. All right. Does that answer your question, Mayor Pro Tem? Okay. Councilmember Briggs, you had a question? >> I just wanted to make a comment about the way the audits are now and reading the customer service audit, I was very happy to see that management had already implemented some of those things really quickly because they were very high risk and needed to be done. And so having -- if we had to wait for all of that to come back through the process and something had happened and, you know, so I actually like management having the ability to make those corrections as soon as they can when they see fit on that. >> So just another question because of the conversation we just had in our lengthy discussions about getting things on a work session. So would that request just fall into our survey that we have and then it would just be part of that same process or would a request for something to be put on the audit plan be a different type of process because I'm just curious if that would be the same type. Is that what we're saying here? >> Well, no. I don't think -- I don't know if that's what we're saying and that's a good question. I think that's a good question that would need to be addressed by the full council. We've got a couple of members out so that's -- because putting something on the audit plan doesn't necessarily mean that there's some emergency or there's some -- it could be that there's some emergency or there's some idea that there's some malfeasance or some wrongdoing. But typically also those things come up as we sort of discover tools. But that's a good question and I think we need to have that discussion. Is there a precedent that it takes priority over some of the others if we have that? >> One question I have when you mentioned -- again, I don't have my computer so I can't remember exactly what's in the document -- but when you mentioned that if an individual council member asks -- sends you questions, that your responses to those questions go back to all the council. Is that what I heard you say? >> Yes. >> Is that hard-coded in the document, your position on that? >> No, it is not, but I can put it in. >> If we could put that in there, if that's what you would like to do, unless there's some objection on that. >> When I bring back the draft for the ordinance, I'll present red line document and the final document. >> Okay. Great. Okay. I'd say any other questions? Did you have any questions on this agenda item off the top of your head? >> No. Just apologies that I was late. I teach until noon. I got here as soon as I could. >> No problem. You bet. Thank you. Okay. So I think you have some direction for bringing the red line back. It sounds like there's only just a couple of modifications. One is if you submit a question or answers to a single member question, you send that out to all the council members and then it takes forward to put it on the audit plan. And what we may do is when that comes back for a second review or a second look, let's go ahead and put on in the posting the discussion of the priority of the request for the agenda. I think that would be a good time to sort of clean all that up and seal it up sort of real quick. Yep. All right. Fantastic. Okay. Thank you. We'll go on to our next work session item, which is 1B, receive a porthole discussion and give staff direction regarding an audit of the customer service division of the finance committee. This audit was presented to the audit and finance committee on September 17th, and I kept the presentation intact. I want to present it again to the city council. Yes, sir. Go ahead. Customer service processes $268 million worth of resources, which is like 24 and like one fourth of all the resources city has, city uses during the year. So this area was very, very significant, and having good internal controls was very critical in this area. We found several things that are working well in this area. First of all, overall internal controls worked well, but there was room for improvement. Customers are billed appropriately at the rate approved by the city council, which should be right on the money. Duties of cashiers and collection personnel are properly segregated, again, and that, again, eliminates possibility of abuse. City has adequate insurance policy to cover losses from employee dishonesty, forgery, alteration, and computer fraud. PCI is all the requirements that credit card industry has for all the entities processing credit cards, and this is to protect the consumers, and there are some requirements. Before we started on audit, technology services was working on it, and while I've been doing the audit, they achieved full compliance. Question, customer? I know recently we moved animal services over to the customer service. Were they included in this, or was that after? No, this was after. Now, we had several findings during this audit, and again, I'm not going to read all, but I'm going to discuss all of them in detail. So first issue is safeguarding of cash. I mean, we've got substantial amount of cash flowing through this operation. As a matter of fact, on the customer service location, we are processing $32 million of cash and checks. Remaining cash and checks, the remaining checks come from what we call is a lockbox, so that checks go directly to our bank, and they deposit, they process, and deposit the amount in our account. But $32 million we get on the premises. Now, we found that the cash, I mean, access to the cash was not properly safeguarded. Now, the safe where the cash was stored was kept in a vault, which is behind the secured area in the customer service. But that was accessible by everybody that worked in the customer service. The safe were either open or the access to the safe, I mean, the keys were right there, hung right in the area. There was a closed-circuit camera, but the camera was, I mean, the recording of those cameras are not routinely reviewed. Now, the risk is that if cash was misappropriated or stolen, we may not be able to establish accountability for that. We recommended solutions for safeguarding the cash, and the customer service manager immediately implemented those recommendations, before even we wrote it up. So that was a good thing, which prevented a major risk from precipitating. Is similar risk... Sorry. Sure. You got a question, Councilmember? Yeah, I guess it's a question, but more like a hypothetical. I assume it's been this way for a really, really long time before it changed. Is there any way to know if something had happened in the past with the way that it was... Unfortunately, the answer to that question is no. Okay. There is no way. Okay. Thank you. Now, access control. This is about access to the computerized data, and there was one employee who administered that access. Now, typically, this is a normal process that one employee would have control over access. However, considering the closed-knit group, meaning that there were very few employees in that area, and the amount of resources flowing through this system, if collusion occurred, city could be at risk of losing significant amount of money. We made a recommendation those access controls be segregated, and city administration did segregate those and mold the access control to technology services. The next issue is about the check processing. Now, about half of, like $16 million of money that we receive at the customer service location do come from mail or drop box. We have a drop box right outside the facility where people drop their payment. Now, we found that one employee retrieved the check from that drop box independently without any checks and balance. One other employee processed all those checks independently without any supervision, again. There was a closed-circuit CC camera, but the recordings are not viewed routinely. And again, those recordings are retained only for a period of 90 days. So if something happened before 90 days, we will have no way to find those. Again, I mean, there has been cases in the industry where checks have been misappropriated. There are ways and means which I'm not going to discuss here how to, but the audit recommendations to alleviate this situation have been implemented. Councilmember Armitage has a question. Oh, yeah, just a quick question. So when did they -- was the situation alleviated? Was this in August, July? Yeah. So when we were conducting -- when these are the something that customer service manager was proactive, and she said that if this is a major risk, in our opinion, then she has -- she mowed right a while to fix that issue. So that was late summer? Yeah. Okay. Okay, we also found that formal written policies and procedures were not available. Now, what they had was basically guidance how to work through the computer and those sort of things, but it did not meet the elements of good policies and procedures like reference to the city policies, date of issuance so that we know whether the policies are outdated. There needs to be approvals that city manager, city council have approved those policies. It did include what are the expectations from the employees and what are the consequences. Again, I mean, this leaves employee at kind of at risk because they don't know exactly what are the expectations, and if these -- their expectations are going to be used for their performance evaluation, I mean, they need to know that. Formal policies and procedures, as I know, are being developed. Now, we found that the in-house collection of account receivable took 100 -- I mean, they kept accounts in-house for 160 days and then referred it to the collection agency. Now, one thing that I want to share with you that most of these accounts belong to the formal residents of Denden. We found that the collection rate drops dramatically, as I'm going to show it on the next slide, after 60 days. There was a question in the audit committee and we provided additional information and management and management agreed the benefit of referring that sooner than 160 days. So they have agreed to do that. So the data showed that it would be more beneficial financially to submit it sooner because of the collection rate based upon the days when it's submitted, is that correct? Sure, that is correct. There is another benefit that the accounts belonging to the management companies, like management company who handles, for example, accounts, they will be followed up a lot sooner. That is about -- forget the amount. Is that $500,000? How much was that? $500,000? We need somebody on the microphone if they're going to answer questions. She confirmed that. It is about $500,000 annually that will be followed up sooner. So we will get that cash sooner. Will that be reflected on your next slide as far as you can show us the time, here's what we were doing on the slide and this is what we're doing now? Never mind. Go ahead. As I said, this presentation was intact from the time. Yeah, I forgot it. Gosh, yeah, it's a couple months ago. In addition to that, there is additional benefit is the staff person who's working on this collection, that staff person's time will free up to work on the accounts that are more lucrative. So again, this shows that after 60 days or maybe after 90 days, the collection rate drops and we don't collect. So let me just follow up on that question that I had with you, Council Member Briggs. So this is what we were doing, in other words, we're referring now these delinquent accounts before we were referring them after -- 160 days? And now we're referring them at 60 to 90 days? 90 days. Okay. All right. Council Member Briggs, go ahead. And so these accounts that you're specifically talking about are accounts that are no longer in residence that they've closed and they've moved on or they're not currently still trying to -- Yeah, almost all of the accounts are like that. Okay. Thank you. We also found issue with the large receivable. Now, when we audited, the total account receivable balance was $989,000. But we found that the four accounts, four of the accounts had balance of $452,000, so 50% almost. I'm sorry. No, I'm sorry, Council Member Arbiter. So these are commercial accounts, correct? Commercial accounts, yes. We also found that one of the accounts which owed us $206,000. Now that company had changed hands. So the previous company also owed us about a million dollars. In our books, we wrote it off, but that's still collectible. Again, for the most part, these accounts were not followed up. But the Finance Department is working with City Attorney's Office to take action. So a question on that bullet point for, and I want to ask the City Attorney first. I think as far as -- are we in litigation with anybody regarding that right now? I mean, just a yes or no, just so I know what I can ask and not ask. I'm not aware of any pending litigation on this. Because what I want to do is make sure that I understand which company this is. And I think in the audit finance company we talked about who it was because of a sale. So this was Verizon, I believe, and then when Verizon and Frontier sold, Frontier or somebody allegedly picked up this, and so this is sort of what got caught up in that transaction. Is that correct? Yes, that is correct. Okay. There is one issue that was talked about in audit finance committee, but not included in the slide, is the city ordinance requires that the interest in late payment charges cannot be waived. And we found one account where a customer owed us $55,000, including late payment charges and interest. But 50% of that balance represented interest and late payment charges. And that was waived. So we pointed it out and then city administration immediately took some action. So Councilmember Briggs and Councilmember Meltzer. So I read the report, and when I got through, that one stuck out to me, but not just necessarily that one, and that was a really large amount. But when we were talking about smaller accounts and people that are struggling, we've had discussions about deposits and late fees and interest, and a separate discussion, you know, pretty thoroughly. And I -- it was -- I mean, if we need to make adjustment to the policy to give our reps the ability to work with those customers that I assumed was there, is not, then I'm willing to do that. I want them to have that ability, you know, to work with certain customers or work with customers if they're having issues making those payments, and I was just surprised to see that, you know, that was an issue or a recommendation because it was just my understanding that that was okay. Yeah, and I think we've got -- if I'm not mistaken, so somebody correct me if I'm wrong, because I saw it somewhere, and it might have been in, you know, upcoming agendas, that we've got something that -- coming up that will allow that change to occur where I think it's the city manager or his designee can do that instead of it being so locked solid on it can't be done and you have to go to some type of lien or something like that. Is that correct? Mayor, Tony pointed out the CFO. Yes, we're planning to have a discussion with the PB on the 10th and then with the council on the 11th on that particular policy, and we'll address these drainage-only accounts as well. We've been working with the city attorney's office on that, and we'll be ready to have that discussion with you on the 11th. Okay, thank you. Councilmember Meltzer, and then Jim. For the other accounts that you referred to, I had a very brief discussion with the city attorney, and I'll defer -- because this is a legal issue, I'll defer it to him on the specific waiver of interest and on the accounts where people are struggling. The -- and I guess I have to start off with the general rule, which is reported in the audit, is the general rule is that any waiver of debt owed to the city is treated as a constitutional gift by the Texas Constitution and it's prohibited. With that being said, there is case law out there in some statutes implemented by the legislature that do allow the cities to give a gift if it seeks to achieve a public purpose, and that public purpose could be -- let's say in the term -- if electricity could be that we will work with people, set them up on payment plans, maybe waive some of the fees and penalties, especially during the summer and the winter months, which would help them -- the public purpose would be to make sure that people do not go without electricity during our hot, brutal summers or cold winters. That's just kind of an example of where we can go, and so in order to do that, you know, we'll be working with the management office and finance department to kind of implement the structure of how something like that would be implemented by customer service in the future, should the council wish to go in that direction. So we've got an upcoming agenda item, it sounds like, for that. >> If I could go back a slide, if I should have caught this in audit and finance, and I missed it, I apologize, but if I can go back a slide -- well, it's not on the slide. No, no, what I'm about to ask about is on the slide. Why would it make sense for us to write -- for the city to write off a million dollars when it's owned by a company like Verizon, who truly has the resources? >> This wasn't -- and I'm going to have to defer to Umesh, but this was, if I'm not mistaken, this was written off years ago, and so if Umesh can give you the factual background, I'm not aware of the circumstances that led to the writeoff, whether it even came to council. >> I need to clarify that this is just an accounting entry to write off to satisfy the external auditors, is that correct? >> Mayor Tony Puente, first of all, yes, these accounts are related to poll attachment revenues. We're currently reviewing those particular documents in those agreements, and Umesh is exactly right, this is an accounting entry, it has not been written off, the account is still on the books, but for financial statement purposes we have zeroed out or backed out the revenue, because again, we don't anticipate collection on those accounts currently, we're continuing to have discussions with the legal department about those particular issues and whether or not we're able to collect, whether or not those were billed correctly from the onset or not, and so again, we're currently in the process of addressing that particular issue. >> I just want to make sure I understand, so we may, we don't know for sure, but we may legitimately be owed that $1 million by Verizon? >> That's correct, that's what we're trying to determine, whether or not those were actually billed correctly from the onset or not. >> And if my memory serves me well, which most of the time it does not, I recall that this is also, there's a dispute about this, I mean, it's not just whether we billed them incorrectly, but they're saying we don't owe it because of various different reasons, so it's not just we sent them an invoice and they decide not to pay it and whether this invoice is correct or not, there's a dispute, they're disputing the amount of that poll attachment amount, is that sort of? >> That is correct. >> Okay. >> That helps. >> Okay. >> Obviously worth pursuing. >> Yeah. >> A million dollars here, a million dollars there, pretty soon you have real money, right? >> Sure, okay. Yes, Councilmember Armitage. >> So first, I want to say I'm really thrilled by this audit and that this is an issue that I've been concerned about since I started on the Public Utility Board, the question of why are we spending so much staff time and effort chasing after this certain amount of money that we're just not getting when there's other money out there that needs collecting from larger accounts. I didn't know the full extent of this until reading this report, but I'm wondering, when you were assessing the risk and recommendations for future policy, did you look at the interest that was charged to the large commercial accounts? And I forget exactly how those large commercial accounts are defined, I think it's taken something like $24,000 or more bill per month, something like that, utility bill. But did you look at the interest as maybe a factor in, maybe they weren't being charged enough interest for the large commercial accounts to incentivize them to pay at all? Was that looked at? >> No, we did not segregate commercial account versus other accounts. >> Okay, yeah. I'd be curious for future just to see what your opinion would be on that. >> Yeah, we can do a separate project if City Council approves on that. >> I would love that even just as an individual small audit request. Thanks. >> Okay, so basically the outcome out of this audit was that finance department took prompt actions to address the recommendation, all but two recommendations have been implemented. One recommendation that is yet to be implemented is about this large utility accounts. And the other recommendation is one in the process about the waiver of interest. So those are not implemented. But with that, I mean, I can answer any questions. >> Yes, sir. Any other questions on this presentation? Seeing none. Thank you very much. Appreciate it. >> Thank you, sir. >> We'll move on to our next agenda item, which is agenda item 1C, receive a porthole discussion and give staff direction regarding the nomination and appointment of a member to the board of directors of the Denton County Transportation Authority. >> Mayor and members of the council, I'll be very brief on my comments. Our board representatives for DCTA have all resigned. They resigned in November. There's an upcoming meeting in the middle of the month, December the 13th. And so the fact that Denton has no board representatives, we are here to ask if you have any nominations for folks to serve on the board. Just to kind of give you an idea, the current term, the unexpired, they could theoretically serve to the unexpired term through the middle of November, November 12, 2019, unless the council decides to change those terms based on some pending legislation that we're working with a few other cities as part of the DCTA. There's some eligibility requirements. They must be familiar with the field of transportation, business, government, or engineering or law. And again, just here before you to see if you have any candidates in mind to serve on the board. And if you do, we have basically the same agenda item tomorrow as an action item to formally make that appointment, for you all to formally make that appointment if you so choose. And then they'll be at their first board meeting on the 13th. So you'll see this presentation again tomorrow. Okay. So is this the time when either we proffer names or do we do that tomorrow or what? What do we do? My preference, if we could, if we could do that today, call for names if you have those. And then if that's the case, then I'll bring basically the same presentation. I may modify it just to indicate that the consensus of council was to insert person, whomever that is, and then we'll and then that way you call it. So typically our procedure on nominations for different types of things have been we would take the nominations in order they were proffered. So if there's multiple nominations, we would take one and consider it. I mean, everybody would sort of say who their nomination is, but we would go in the sequential order until we received, you know, a majority majority vote. I have someone but I'm not going to take the first shot because I'm the chair. So I'm going to leave it. I'm going to recognize mayor pro tem and then we'll go and I'll be the last of that. So go ahead. I'd like to nominate Sarah, but Gary, okay. All right. Are there any other nominations that we'll take up in that order tomorrow? Because we can't vote today, obviously. Councilmember Thank you. I was just, can we talk about the term of the appointment? Because that's going to play into, I'd like to buy more time to even appoint one of us to sit in on that meeting on the 13th if necessary to then understand the dynamics of the group, understand, you know, I've watched them online periodically, but in my mind, I just would, I want to understand how long we're appointing someone and then sit in on the meeting on the 13th, just me individually, if need be, just as a, as a, in the audience to understand the dynamics of the group, understand kind of what goes in and how, who would to understand better who would process and thrive well in that environment. So let just a question of clarification. When you say have more time, let me rephrase that. So right now we don't have board representation and there's a very important board meeting coming up on December the 13th to look at some different things. And are you saying you don't, you don't want to appoint a board member by then, or you're saying maybe time wise, okay, we'll just truncate it off at a year or help me understand what, what you're, what you're describing. Yes, ultimately I don't, I think that's too fast of a turnaround to appoint someone for a one year term. So you're saying you'd might want it longer. I think their normal terms are two years. Correct. Normal terms are two years. This is the last year of the unexpired term. Correct. Right. Yeah. No, I'm saying to make a decision and we'll have names come forward and then to make a decision this week for someone that's going to put, be in a position for an entire year on this board. That is a hot button. I don't know that that's you're wanting longer. Well, no, I don't want it longer. I want longer time, more time to decide, to consider. Yes. Because, and I don't know what's, admittedly, maybe I'm not up to speed on my reading my DCTA meeting agendas, but so I, if I'm ignorant in that regard, I'm ignorant in that regard, but either way, if, if someone needs to go for this meeting even, but yes, I just. Okay. It's just. Sure. I understand what you're saying now. Quick. Yep. Okay. Councilmember Meltzer, I think you had a comment or you. Well, you know, I'm expecting to receive a resume from Rick Wolfoak that I'd like to consider and I have made forward as a nominee, because someone has a long experience in, in transportation and I believe actually served in this capacity. At some time in the past, no aspersions at all on, you know, uh, other nominees. Okay. All right. Anybody else? Is somebody taking a list of the names in the order they're being taken? I have, excuse me. I have, uh, uh, Sarah Baguerre and Rick Wolfoak. Did he spell his? I'll get it later. Yeah. Councilmember Meltzer. Um, I have a question. Would, um, someone who had, um, had served in the, uh, in the military, does that count as in the field of government? Is that kind of close enough? I think, I think, uh, Mr. Huckabee had, was a veteran. I mean, I think he was a lieutenant colonel actually. Yeah. Okay. Okay. Great. Okay. Yes, professor. Yes. Okay. Thanks. Okay. Any, any, we've got two names that we'll consider tomorrow. Of course, obviously there's, you still, we still take nominations tomorrow and then we'll also be able to discuss more in depth your, uh, concern or your observation about the, uh, hesitant or the quickness of this. So yeah. And if I may add, uh, the reason why the, the meeting on the 13th is, is that's off their schedule. Normally they meet the, I believe the last, uh, week of the month, the last Thursday of the month. And so because of it being the Christmas, the week of Christmas, this meet, this meeting has been pushed up a couple of weeks. That's the, usually would be towards the end of the month. Okay. All right. Okay. Any other questions or comments? So right now we have two, uh, with the possibility of having some additional ones tomorrow. Okay. No more questions. Fantastic. Thank you. Okay. That, uh, ends at least our work session reports. We have concluding items. Anybody have concluding items? Remember we're going to have concluding items tomorrow too. Yes. Council member Briggs. Well, it just, uh, a question more so that maybe could be answered by tomorrow. Um, the way finding signs are up, which I like. Um, there are some that are, my question is, will the ones that have been put directly in front of signs and covering them up, are they going to be removed and attached to the way finding signs and some that are right in front of older signs? Are, are we going to go through and clean those up a little bit, or is it what we see right now is what we get? If we could maybe have that some, some, yeah. And I don't know, I guess I don't, yeah, because I don't think we'll, I don't know if we'll be able to respond to it in actual open session cause it's not posted and that's, it's a concluding item, but we'll figure it out. Okay. Uh, okay. Any concluding items over here? No. Yes. Council member Meltzer. Um, uh, this goes back to one of our favorite topics, gas wells, uh, setbacks. You know, we, we were unable to reach consensus on the direction last time this came before us. And, uh, I think they're, they're a very logical reason for that is that, uh, we don't have authoritative, uh, science based on our local geology. Uh, and you know, it's obvious that, uh, we don't have a, you know, a clear view on the safety and health of setbacks cause we have contradictory, uh, ordinances now. So, um, in the interest of trying to get it off of politics and onto data that we can, uh, respond to, uh, I would like to see an informal staff report on what it would take to, um, design the requirements for a study that would be based on local geology, uh, whether it's for the city to conduct or for, you know, other, or to solicit other parties, but just to investigate the whole idea of what would it take to get to definitive science and really kind of, uh, give us data that we can respond to. Uh, I'm not suggesting that our setbacks necessarily need to be greater or they need to be less. I just think, you know, we ought to do science. Okay. All right. Council member Duff or council member Husbeth, any concluding items? Sure. Yeah. No, just real quick. I wanted to, uh, say thank you to staff and all those that helped with the, uh, and all organizations help with holiday lighting event. I mean, what a dynamic event that's been for our town. Uh, in addition to, um, the, um, holiday express, uh, they, Randy Skinner heard and friends of the family did an outstanding job with, with that presentation and heard great things about that. Um, and then lastly, unfortunately, uh, Lamont Jones, um, young man and his, uh, his family's going through things with, with him, his passing. He was a student there at DHS where my mom's a lead counselor. So that, and I knew his, his dad well, so, uh, just thought some prayers with, with their family and, and some significant loss for the community, but it's a great family. I think he has like six kids or so that have all gone through DHS. Really, really great guy. So thank you. Anybody else? I do want to say thank you to council member Briggs for MCing or giving the welcome at the holiday lighting because I wasn't able to be back from Austin at that time. Heard you did a wonderful job. So thank you so much for that and reading the proclamation. Okay. If there's no more questions or concluding items, we will stand adjourned at 1245.