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HomeMy WebLinkAbout(B) FEBRUARY 1, 2005REGULAR MEETTNG - February 1, 2005 I. ROLL CALL, INVOCATTON & PLEDGE The City Council of the City of Port Arthur met in Regular Session on Tuesday, February 1, 2005 at 8:35 a.m. in the City Council Chambers, City Hall, with the following members present: Mayor Oscar G. Ortiz; Mayor Pro Tern .1ohn Beard, .ir.; Councilmembers Felix A. Barker, Thomas _1. Henderson, Martin Flood, Ronnie Thompson, Deloris "Bobbie" Prince and Michael "Shane" Sinegal; City Manager Steve Fitzgibbons; City Secretary Evangeline "Van" Green and City Attorney Mark T. Sokolow. The invocation was given by Councilmember Henderson and followed by the pledge to the flag. II. PROCLAMATTONS & MINUTES The Mayor presented the following Proclamations: (1) (2) (3) (4) February 13, 2005 February 4, 2005 February 7, 2005 February 6--12, 2005 "Go Red Sunday" "National Wear Red Day" "National African-American H~V/AIDS Awareness and Information Day" =Black Heritage Festival of Southeast Texas Week" Minutes: 3anuary 18, 2005 - Regular Meeting Upon the motion of Councilmember Barker, seconded by Councilmember Flood, and carried unanimously, the City Council approved the above-mentioned minutes. III. PETITIONS &COMMUNICATIONS A. Presentation (1) Presentation Of Comprehensive Annual Financial Report For The Year Ending September 30, 2004 The Mayor introduced Independent Auditor Gayle Botley. Mr. Botley appeared before the City Council to present the Comprehensive Annual Financial Report for the year ending September 30, 2004. For a matter of record, the following transcription has been entered into the Official Records: Independent Auditor Gayle Botley: Good Morning. I'm Gayle Botley, your independent auditor, and my office is located at 4749 Twin City Highway in the Lincoln Tower, Suite 280. You have the CAFR (Comprehensive Annual Financial Report) in front of you. This is the CAFR, the multi- colored book. Right behind the financial tab, you will see the Independent Auditor's Report. Everybody have it? Okay. I'll read the third paragraph. That's the most important paragraph. That's the opinion. It says: In our opinion the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund and the aggregate remaining fund information of the City of Port Arthur, Texas as of September 30, 2004, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the general fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. That is an unqualified opinion. That's also known as the clean opinion, which you've become accustomed to receiving. Again, in that paragraph it says: "in all material respects." And what you also have become accustomed to is--we're also distributing a management letter, which T think everybody has as well. We'll talk about that right now. Some of the items, well, really all of the items, in the management letter we've already discussed throughout this fiscal year audit. Some of the items Councilmembers have communicated to me before we even started the fieldwork of the audit. And, let me tell you again, when items appear in the management letter, you've come to know that these items are not considered to be material. Because if they were material, they would not be in the management letter, they would be in the auditor's report. But as always, ! tell you that this is what the Council and management needs to focus on. Because if you don't take care of the immaterial items now, or try to prevent them from happening, they have a potential to become material items which will affect the opinion if they do. Some of the repeat items that you will see in this year's Management Letter is concerning the EDC, dealing with contracting. Again there were three contracts that we talked about throughout this fiscal year. And if you turn to page two, I don't think any of those items that you see on page two is unfamiliar to you. We've discussed them throughout. The other item is concerning the Port Arthur Community Building Initiative and Redevelopment Initiative. And the main concerns there, were the expenses that we never could reconcile. If you recall, I gave you a status report, probably about 30 days ago or maybe 45 days ago, pertaining to the fact that we had spent quite a few hours in trying in reconcile that data. And, we had data just steadily streaming in. And at that time, Council made a motion for us to cease working on it. That, that was enough. And, I think Council has taken action to try to get the consultants to answer questions about that. The last item is dealing with a follow up we did to a HUD report pertaining to the monitoring of the sub-recipients of federal funds mainly the CHDO's (Community Housing Development Organization). And, what we've said in this report is that HUD (//.5'. Department of Housing and Urban Development) has required the City to give progress reports on what they were doing about the findings they had. And, we followed up on those and ! think HUD is very satisfied with the progress that the City is making. We've endorsed the patient steps the City has already taken and believe that if they continue and maintain that consistency that, that problem will be taken care of. But, that's pretty much the management letter and I don't think I've said anything in the management letter that I haven't said before. ! think Council is very much aware of the issues, especially the repeat issues that we've talked about them throughout the year, we talked about them last year. I think my job is to communicate that to you and I think we've done that. I'll shut up and ask you if you have any comments at this time. Mayor Ortiz: On the report that you did on the Port Arthur Initiative, how much money did we end up spending trying to get that audit done? Auditor Botley: Well, if you're just talking about this fiscal year. Okay, this fiscal year ! don't remember the exact dollars, but ! think it exceeded $9,000 dollars that we billed. City Council Minutes February 1, 2005 Mayor Ortiz: And, then, if ! remember correctly, you came to the Council saying that it was going to take another ten thousand or something to continue the audit. Eventhough at that point we didn't have a guarantee that it was going to be able to be, I guess in laymen's terms, it would be balanced out, that we could account for all the money that the EDC spent with the Port Arthur Initiative. Auditor Botley: I don't think I gave you a definite dollar amount that it would take. I think what I said was that in my report, the progress report was that we did not know how much more time, because we did not know how much more data that the consultants were going to give us. I had communicated with the consultants and EDC management and the comment was that this would be ongoing. As well as you know, the consultants have not completed Phase III and that's an ongoing process. And, the comments to me were that as they receive more information that they were gathering, plus more activities that they were going to take on, we would be receiving more data. So there's no way we could estimate the timing or the dollar amount. Mayor Ortiz: If ! remember correctly, this was about a $340,000 contract that we had with the two gentlemen from Carolina regarding this Port Arthur Initiative. What were the things that you found in your audit that were most glaring to you? T mean other than beside the fact 90% of the contract was paid off before we even had a contract with them for more than 30 days which is totally unheard of, to pay off a contract that quickly. But what were the things that you found that were so glaring as far as the accounting procedures? Auditor Botlev: Well again, talking about this year, because last year I'm not recalling right now, but I know ongoing was the issue of trying to reconcile the travel expenses, the out of pocket expenses, that according to the contract were supposed to be reconciled at the end. The way the contract was stipulated, the consultants could bill and receive payment as they progressed through the contract. But once they completed the contract they had to, if you will, prove those expenses at the end. What we found is, that T think in the prior years that the contract was paid in full, but yet we had not received the reconciliation of those expenses and that's what we were talking about just a few minutes ago. Mayor Ortiz: But what I could never understand is that according to the contract, they were supposed to reconcile their expenses and then bring them to us. But instead, they ended up giving you a bag full of receipts, credit card receipts and so forth. Then the citizens of Port Arthur had to end up paying the $9,000.00 dollars to try to decipher all those pieces of paper that we got. Auditor Botley: That's correct. According to the contract, not only were the consultants supposed to do that, the EDC management was also supposed to do their reconciliation to verify, if you will, those numbers. I would tell you that we never received a reconciliation report from the consultants or the EDC management. Mayor Ortiz: We had a Councilman that was not able to attend, Councilmember Hannah, because he had three funerals to handle this morning and he left us some City Council Minutes February 1, 2005 3 questions. And I'm going to ask one of them, because I think it's important that we hear some of these issues and the first question that he asked is: "Could you please point out consistencies you found from the 01 report to 04 regarding the EDC?" Auditor Botley: Consistencies? Well, concerning the EDC, I guess in our management letter, we've talked about, year after year, it's been internal control matters. Okay? I've already pointed out to you the repeat matters and those are the types of consistencies we see. We did not perform a performance-type audit. So we're not going to talk about the operations, because that's not the type of audit that we performed. But whereas the financial audit goes, we're concerned with internal controls not just with EDC, but throughout the City. But to focus on the EDC again, the repeat matters that we've already stipulated dealing with contracting, dealing with compliance of those contracts, which we've stipulated several items in the management letter that's been consistent throughout probably the past three years. Tf you go back and look at all three management letters, you would see issues dealing with the EDC incentive contracts--EDC contracting with third parties. Then reading this letter--the consulting contract, this also was a contract. So I guess summarized, the consistencies have been issues dealing with contracts. Mayor Ortiz: So actually the consistencies that you're talking about are all negative consistencies, because all they are is just a repeat of the first two years. Wherein we had problems with contracts and we seem to be having problems with contracts again for the third year in a row. Because it seems to me they're are all negative consistencies, there's nothing positive about what's being done in regards to contracts. Auditor Botley: That you know, this management letter again, is about areas of improvement. If it appears in this management letter, there's going to be a weakness. Mayor Ortiz: (The I~ayor read another question from £ounci/member Hannah's memorandum) "Internal controls within the City: With the exception of the EDC, do the internal controls seem to be sufficient and work effectively for all other City departments?" Auditor Botley: Excuse me, say that again. Mayor Ortiz: (The ~layor repeated Councilmember Hannah's question)"Tnternal controls within the City: With the exception of the EDC, do the internal controls seem to be sufficient and work effectively for all other City departments?" Auditor Botley: There was another item that we stipulated in the contract this year dealing with Housing, a City department, and that one was dealing with CHDO's. Okay? And, you know, when we do it again...the management letter is saying that these items are not material. So if your internal control--we found your internal control insufficient in any area of the City--you would not have received an unqualified opinion. Okay? So, in our opinion, the internal control is sufficient overall. Okay? City Council Minutes Februa~/1, 2005 4 But we have issues and we've concentrated and the focused those issues on the EDC operations. Mayor Orr!z: Okay, when you talk about qualified, unqualified opinions, T hope that a lot of the people in the audience understand that a qualified opinion would be disastrous to the City of Port Arthur. We would lose a lot of our potential to get funding at Iow interest rates. We would lose a lot of the CDBG funding, which helps a lot of our minority people in the City of Port Arthur. It would affect our bond ratings, it would affect the way the State audits us and everything else. So, it would be quite devastating to us. Mayor Ortiz: (The Alayor read another question from Counc//member Hannah's memorandum) "Secondly, in your professional opinion, why do they seem to be ineffective in this department? And T ask your professional opinion because you've spent the past three years reviewing our operations?" Auditor Botley: As T've said Mayor, City Council, you hold the key. The Council is where the buck stops. You determine, you know what's going on. As I stated in my management letter, you have done some things differently this year, but we still have some repeat matters. So, as ! also stated in my management letter, normally that means we need to do something different. That's your prerogative, m respect that. But again, as i stated all along, a controlled environment starts with the Mayor and the City Council. You're totally responsible for what happens with the City and the EDC operations. So, you know. Mayor Ortiz: Well, we're in agreement there, ! mean the state statutes are clear. The word total is used in there, that the City Council has total control over the EDC. ! guess my last question--there's some other ones in here--but some of the Councilmembers are going to ask you. When you talk about qualified and unqualified opinions, would you care to say how close we came this time to getting a qualified opinion? Auditor Botley: No, ! wouldn't. There is no...that's a judgment call as well as a mathematical calculation. There are some material thresholds that we set. And, when we render an opinion, we don't say how close, or how far, or what, its just an unqualified opinion. That's all ! have to say about that. Mayor Ortiz: T guess the reason why ! ask that Mr. Botley, is that after three years of what I consider disastrous financial statements on behalf of the EDC, ]~'m just wondering how long we're going to be able to skate by and get by without a qualified audit. Auditor Botley: You earned this opinion. You earned your real opinion that we rendered. Okay? As ! stated previously, as well, it depends on the actions and the operations and on the given fiscal year. We audit that fiscal year. What this management letter is supposed to do is alert you--alert you to issues that you need to focus and require your attention and try to improve on. Because again, these are the areas that we feel, as auditors, that have the potential to become material and impact that opinion. City Council Minutes February 1, 2005 Mayor Ortiz: Now you are going to do another audit come the end of September for the City? Auditor Botley: That's correct. Mayor Ortiz: Councilman Sinegal. Councilmember Sinegal: Mr. Botley, ! appreciate your candidness and what your management letter says and ! do agree with some of the things you put in here. But ! seem to feel that we're ooking for answers to fixing the EDC problem and we keep coming back to it's the Council's job to fix the EDC. That's the answer that seems to keep coming back. ! hear what you said that you're not in the position to tell us our thinking. But ! said at the last Council Meeting, last Tuesday, the emergency meeting we called--the nitpicking neeos to stop and I believe that sometimes you ~(now if you...in a case of diabetes you have to cut the foot off. So, ! see no one else saying that. Let's just put a referendum on the ballot and let the citizens decide whether or not we want to keep the EDC, or if it's a problem that we can't seem to fix. Maybe we're not doing what we should do as a Council to fix it. So we bear a lot of the blame that we keep getting these management letters that refer to the same problems over and over again. And, ! would also figure that some people would say that T would be pretty passionate (about) how the EDC performs and ! have Deem But ! just don't think we've done as a Council due diligence of trying to correct the problems n the proper manner. We're trying to out Band-Aid's© on it. We're trying to pick the little sore that ifts us every once in awhile. And ! think it's time we get real with each other on the Council and as the overseers of the EDC, that we shoulcJ do something and stop shoo-shooing about it. You know, T'm not going to call names of what some people feel needs to be done. But ! believe we need to say this outright what we think the problem is. So everyone knows and that we're going to fix that problem. ! think that the reason we can't do it is because we're not doing it the proper way, we're not following the chain of command of policy. ! mean, evaluations are the most clear cut way of eliminating an employee if they're not doing what they're supposed to. And, T appreciate your candidness on this letter. ! think it was right on the money. ! think you're being very unbiased on your comments today and ! think you're right. The thing ! have to agree with the most is that it's in our hands, so we need to do the right thing the right way and stop picking at the sores and seek treatment--a whole list of treatments of fixing this EDC problem. Or we're going to be back here again--maybe with a qualified issue because...unless something's done the right way, T'm not going to go along with it and ! can say that for the record. Thank you. Mayor Ortiz: Councilmember Thompson. Councilmember Thompson: Thank you. Good morning, Mr. Botley. City Council Minutes February 1, 2005 6 I'm going to ask this auestion on behalf of Craig Hannah, who could not attend. Can you hear me okay? Auditor Botley: Yes. Councilmember Thompson: (Cound/member Thompson read a quest/on from Cound/member Hannah's memorandum) "During your review of the tt~ree contracts mentioned above, you had an opportunity [o question Mr. Mills. You asked why resolutions sent to the EDC from Council were not followed--the resolution that sets the guidelines for conducting business with clients. Can you please give us his response?" Auditor Botley: When I asked Mr. Mills about what now, about the resolutions? Councilmember Thompson: About the three contracts mentioned above. And he was given--the Council had given them guidelines--and those were not followed. Then you asked wny. What was his response? Auditor Botley: Okay, the response ! got was the problem (from) Mr. Mills and his attorney was that they didn't reao the resolutions. Councilmember Thompson: Thank you, sir. Mayor Ortiz: Mr. Botley, I have one more to read from Councilmember Hannah and it goes like this: "In last year's report you sooke specifically to the EDC's need to look more closely and give more attention [o contracts. This year you were asked by Council to look at three contracts specifical y. After your review of these contracts, talk about your findings and share with us how it reflects on the City and the EDC after speaking directly to this last year?" Auditor Botley: Well, the findings on those contracts are summarized on page two. Ill just read those: During our compliance review of the above contracts, we noted several incidents of non-compliance in one or all contracts that are summarized below: PAEDC agreed and accepted work from third parties before Council approved contract as evidenced by some of the contract dates PAEDC's executed contract included terms that did not agree with the terms of the related resolutions approved by Council Billings were incurred from third parties by PAEDC before Council approved contracts Cit!/Council Minutes February 1, 2005 ? PAEDC did not manage contracts in a proper manner to maintain the budget discipline approved by Council Now we found, probably about...I'm guessing about 12 to 15 instances of non- compliance that we summarized into those four categories. The impact on the City if we don't get a handle on this, ! think the Attorney can probably talk to that more than ! can about the possibility of litigation issues. Okay? And, i'm not going to say anything else about litigation, but he can talk to that better than ! can. That's the major impact, as well as, dealing with the budget issues. Mayor Ortiz: Councilmember Sinegal. Councilmember Sineqah Yes. One more quick thing, Mr. Botley, okay, I know you put that in the management letter. But, as a Council, we've eliminated the EDC Attorney. We have our City Attorney acting as the EDC Attorney. That's one thing we tried to do to fix it. We eliminated the EDC Chairman, as a Council we did that, well, with the majority vote of the Council. One board member we replaced ano other board members have resigned. So, I don't see anything left. Do you see anybody else to eliminate, to try and get control of the EDC? Auditor Botley: Again, I'm not going to get into your personnel issues. Councilmember Sineqah Okay, and that's what I was concerned about because we mentioned the EDC Director's name and I tried to not mention it. ! Know Councilman Henderson, I mean--I apologize Councilmember Henderson. Councilman Hannah mentioned Mr. Mills' name. ! mean if that's the sore we need to get rid of, we need to say it. That's what ! was saying earlier. That we need to stop picking and choosing, and if the management is wrong for that job, we need to replace it. And I'm say~ng this on the record, because as ! said, Tuesday, I'm pretty fed up with it. I think it's being said, but it's not being said in the proper form that Mr. Mills is not what we need as Director of the EDC. Since his name was mentione(~, ! was trying not to mention it, but if that's what it is, the ladies and gentlemen of this Council in the deep, deep prayers of their heart needs to say it out loud. We just need to take a vote and do whatever it takes to do that. Thank you. Auditor Botley: Let me just say this. You know I'm standing here giving you the independent auditor's report today on the CAFR, ;ut !'m trying to answer your questions to the best of my ability. Councilmember Sineqah I appreciate that. Thank you. AUditor Botley: But, ! will not get into your personnel issues. I believe that's your position and I respect that and !'m going to let you hancJ e that. Councilmember $ineqah Thank You. City Council Minutes February 1, 2005 Hayor Ortiz: Mayor Pro Tern Beard. Mayor Pro Tem Beard: Thank you, Mayor. Good morning, Hr. Botley, I hope you can hear me. I'm a little bit under the weather this morning. Auditor Botlev: Good morning, ! hear you fine. Hayor Pro Tern Beard: Let's go back on some of what you discussed just recently with us. You've previously talked about the three grant policies that we've had problems with. How would you describe those problems once again? Auditor Botley: You say grants, did you mean contracts? Mayor Pro Tern Beard: Yes, the three contracts. Those problems that we had were what? How would you describe it? Auditor Botley: Hanagement, internal controls, ! guess that puts it in a nutshell. Hayor Pro Tem Beard: Would you also say contract compliance, too? Auditor Botley: Well, yes. Mayor Pro Tern Beard: Okay, and is this the first year that you've come to us with these advisories or warnings about material issues regarding contract compliance and etc., etc? Auditor Botley: Let me correct you. They are not material issues. Because if they were material issues, they would be in the audit report. Okay? But, no, this is not the first time T'm coming to you about contract compliance. Nayor Pro Tern Beard: Okay. Now, how precisely would you categorize these findings if they're not material findings and what impact would a material finding have on the overall financial report of the City? Auditor Botlev: Well, a material finding would definitely qualify at the least. Tt requires issuing a qualified opinion. Okay? How T would define a material finding? Again, remember City Council Minutes February :~, 2005 9 ! told you it's a judgment call, as well as, it is a mathematical calculation. And, let's talk about, T guess, the simple one, the calculation part of it. Jif issues had taken place that would have impacted the financial statements, okay, talking about dollar amounts, that would have caused some issues with the financial statement then that would have been a material impact. Part of the internal control of the City is your finance department. And, you know their job is to take a look at what Council has approved and to book the expenses and revenues properly. Okay? That internal control, as I pointed out to you during the year, it is part. That's a big reason that your financial statements have not been impacted. Okay? But ! think I've answered your question about the opinion part. That it definitely would have qualified the opinion at the least, we would have issued a qualified opinion. Mayor Pro Tem Beard: Also, do you think the action taken, as you've spoken of in the three previous ears and this would make I guess you'd say the third possibly the fourth year, do you think with those problems remaining or being as they are were those actions sufficient in order to correct the problem? Auditor Botley: From an auditor's point of view, if T see a repeat issue in a management letter, then that tells me it was not sufficient. And ! think 1I've stated that pretty much in the management letter by telling you if you see repeat matters in your management letter, that means you probably need to do something different. Mayor Pro Tem Beard: Okay. So this is from a management standpoint that has a potential financial impact on the City? Auditor Botley: Correct, Correct, Mayor Pro Tem Beard: Okay. One of the things T'm concerned about and T'm not saying this directly to you, Mr. Botley. T think T fully understand and I think in the beginning ~ understood the implications of what you are talking about, because, this has been ongoing for three years. But in trying to look for solutions to the problems, you cannot put a Band-Aid©, or take a Band-Aid© approach, to something that has a material weakness as you answered earlier. That the City's financial controls are sufficient to handle a City of this size, $50 Million a year budget, 600 people working, numerous staff people, and it is sufficient to handle it. is that correct? Auditor Botley: Mayor Pro Tem Beard: But, the findings that you have regarding those controls with regards to the EDC, in terms of the EDC, not the City, are not sufficient to avoid the issues that you've brought before us regarding contracts and contract compliance. Auditor Botley: Again, when you say as far as sufficient to me, as an auditor, when T issue an unqualified opinion, my call is that your internal controls are sufficient. But T have City Council Minutes February 1, 2005 10 found issues in your internal control system. The EDC, they are a separate component. When we do an audit, we make the City and the EDC one. That's why the EDC impacts your audit report, because the EDC is a component unit of the City in the sense that the Council controls the EDC. Any organization that the Council controls is looked upon as a component unit. Sort of like Pleasure Tsland. Pleasure Tsland is a component unit of the City. You appoint all the Commissioners of Pleasure Tsland. Same thing you do for the EDC. So when T issue an unqualified opinion, we're saying the system is sufficient. Because if we find the system to be deficient, we would have to issue something other than an unqualified opinion; however, there are some issues with the internal control system and we pointed those out to you. Mayor Pro Tem Beard: That's right, and in pointing those out, it should be relatively easy for us to correct any of those deficiencies. Auditor Botley: Again, you have the key. Mayor Pro Tern Beard: Right, because we have the control. Auditor Botley: That is correct. Mayor Pro Tern Beard: Because we are duly elected by the citizens to oversee all of their tax dollars and to administer this city. Something that T've spoken of previously about this, for we all have to remember is we're all put in a position of leadership here and the accountability starts at the top. Because granted, a lot of the EDC Board members are volunteers, per se. But when you volunteer for something you know what you're committing yourself to. We have a volunteer army and ! don't think that anybody joins the army (without) knowing full well that they may go to Traq, or Iran, or to Afghanistan to potentially lose their life. So, when you volunteer, you need to count the cost of what the sacrifices are going to be in order to be in the position to do the thing that you are trying to do. That also pertains to us too. if we need to be more aware of how we're handling this business.... (Inaudible) It's unreasonable to me to think that as many EDC's as you have, with over 250 of them across the great state of Texas, that we should be embroiled in some of the controversies and problems we have. Of course, that's Port Arthur for you, anybody been here long enough knows, if there's a way to do it, Port Arthur is going to do it the hard way. But this is too important for us to basically set it down and say it's too big a burden. Because of the way I see it, it's too big a burden to say that there's a single Mother out there with children, who's working a job that's not paying enough for her to make the bills. And, here we are with an opportunity to use our tax dollars and generate jobs and create economic activity to change the conditions of this city. People offcen wonder why we have problems with street curbs, gutters and drainage. Well, it's a lack of money, money is the root of the problem and until City Council Minutes February 1, 2005 11 you apply cures to that problem and put more money in the City's pocket and with the proper type of leadership to guide the use of that money you're going to continue to have problems. So, [ think what has been lacking is we haven't taken the approach necessary, based on the information that you've given us. Because obviously, in three years, that indicates to us we need to do something different. And if that is truly the case, then why didn't we do it differently three years ago? The problems are still there and we must apply the correct cure to them based on the information you're giving us here. 17 that doesn't correct it, then we seek stronger measures. But, first and foremost we've got to have some leadership from here. Because nobody is going to look at those board members or anybody else, if we should get a qualified opinion. When taxes go up, when the ability to borrow money gets harder to do because we have a qualified opinion staring us in the face. It's not going to do us any good to tell the citizens; well we had a volunteer group of people that made a few mistakes. That's not going to wash and [ certainly don't want to be one of those up here to say that, you know, I participated in doing that. But, ~ thank you for your opinion. [ think what you've brought out to us is sufficient to give us the proper guidance to do what is good and what is right for all the citizens of Port Arthur. And, to correct these problems so that, as it was said earlier, you don't have to come back here next year and talk to us about these same things. But, ! would like to thank you for that. Mayor Ortiz: Councilmember Henderson. Councilmember Henderson: Thank you, Mayor. Morning, Mr. Botley. Auditor Botley: Morning. Councilmember Henderson: On Page two of your management letter, you make a recommendation there regarding the handling of contracts. You ended with saying, "Furthermore, Council's immediate message to management and employees who execute a contract inconsistent with Council's approved resolution or without Council's approval should indicate they may be held individually liable for debt incurred." Are you saying that possibly the city policy regarding contracts needs to be revised in that regard? Auditor Botley: Well, that's the recommendation, you can certainly look at, Mr. Henderson. The.i'm aware that the state, as well as the military, instituted this policy years and years ago and it's very effective. You've read the horror stories in the media about how third parties have come into the state and the military swindled them out of just thousands and thousands of dollars. And, nobody really knowing how or why that happened, because everybody was participating in contracting and they had to get a handle on it. Then, they put out some really strict policies about individuals that decided they were going to take matters into their own hands and hire people they wanted to hire, whenever. And, ! think it caught quite a few peoples' attention. City Council Minutes February 1, 2005 12 Councilmember Henderson: Well, certainly 1~ think this would make individuals a little more aware of the fact that they need to be sure that they are conforming to the City's policies and procedures in handling of these contracts. Thank you, Mr. Botley. Mayor Ortiz: ! would apologize to Councilwoman Prince, she was really supposed to De the nex~ speaker, so ! apologize. I'm not a male chauvinist at all so, but it's Councilwoman Prince's turn now. Councilmember Prince: Good Morning, Hr. Botley. Auditor Botley: Good morning, Councilmember Prince: ! am not going to attempt to fight the EDC's battle here in City Council. However, ! do have a couple of comments that ! want to make. if these oroblems have been going on for a few years, we do have on Council two former EDC Board Directors. So those probems were ongoing even then, it's not ike it's exclusive to the current board. The other thing that ! would like to say is, and you say you can't comment on personnel, ! understand and appreciate that; however, ['rn not sure what kind of a bearing it's going to have on the next audit that we nave. In my opinion, some of the problems that went on with the EDC are results of probably, improper legal counseling. Now we have and ! totally disagree with what we've done here, we nave our City Attorney serving as the EDC Attorney. ! honestly believe that we are going to witness conflicts here. Ethical conflicts between the EDC and the City Council with us having appointed our City Attorney as theirs. So !'m not sure how that's going to affect our audit and I'm not going to ask you to respond, but ! have terrible feelings about that. Since we've talked extensively about the legal counseling that the EDC did or did not receive with the prior legal counselor, then we turn around and appoint our City Counselor to serve as an EDC Legal Counselor, T have some issues with that. And again, ! say, you know, if these problems were there three years ago, we've got City Councilmembers who were there three years ago. Mayor Ortiz: Thank you, Councilmember Prince. We have one more light on, Mayor Pro Tem Beard. Mayor Pro Tem Beard: Yes, sir. Thank you. Mr. Botley, maybe even the Finance Director or some other city official, the three grants that we are talking about in question, when did DonShe Pottery come up? Auditor Botley: Again, they're not three grants. DonShe was the only grant. Okay? DonShe came up during the discussion I had with Council. If you recall that discussion that we had, when Council presented some information to me that you guys wanted me to look into. City Council Minutes February 1, 2005 13 Mayor Pro Tern Beard: Okay. But, basically this occurred over what time frame, three, six, eight, twelve months, eighteen months? Auditor Botley: It was in this fiscal year. Mayor Pro Tem Beard: Okay. Which would be 03-04, 04-05 right? Okay. That would be 03-04 fiscal year? Auditor Botley: Yes. Mayor Pro Tern Beard: And, the Bob Brammer contract? Auditor Botley: That was in this fiscal year. Mayor Pro Tern Beard: That's what 03-04? Auditor Botley: Right. Mayor Pro Tern Beard: And, the other contract with Diamond that's in question? Auditor Botley: That was 03-04, as well. Mayor Pro Tem Beard: Let me just state for the recoro, if you will, that I came aboard Council in May of 03. The only other issue there that hasn't Deen approached regarding that is the Port Arthur Redevelopment Initiative ancl the final contract regarding it, Phase III, was done during, T think, the 03-04 fiscal year. But there was one problem that was mentioned, there was a proolem that was mentioned, I think it's 03-04 probably 03. Auditor Botlev: Well, the reason ! hesitated Councilmember, is Phase [II is still ongoing. It's been paid for, but it's ongoing. Mayor Pro Tern Beard: Right, that's right. But to address that as it is ongoing. Go back if you will and tell us what is different or what was different you found in the handling in the Phase liT verses the other Phases. You mentioned something regarding receipts, billings, etc., etc. City Council Minutes February 1, 2005 14 Auditor Botley: Well, again in the Initiative Development Contract, Phase I, Phase lI, Phase III, were handled pretty much similarly. You know, the contract stated that upon the completion of the contract, or upon completion upon each Phase, these expenses...travel expenses and so forth were to be reconciled. Okay. The contract was not finished, you know the EDC and the consultants had an opportunity to go back and reconcile Phase I and Phase II before they finished Phase III. But once we seen all the monies were paid, and no reconciliation had been done. That's when it caught our attention. Mayor Pro Tern Beard: Would you say it's unusual for payments to be made without services having been rendered in this case, as opposed to the prior two phases where there were checkpoints and along those points the payments were made? Auditor Botley: Yes. Mayor Pro Tern Beard: Because, if ! remember correctly...if ! remember correctly, the way we handled it was you did not go into Phase III, or funding was not allocated for another phase until it was met. The reports were given and satisfaction was met with the previous phase and Council undertook to authorize the moving forward of that, not the payment of it, but the moving forward to the next Phase. But was there anything unusual about the way that was done in (Phase) III, verses, Phase ! and (Phase) II, in terms of giving the payments in advance? Auditor BoUey: You ask me to try to recollect? My best recollection is that, that contract stipulated when payments could be made. T also remember something in the contract about recourse being rendered at certain points throughout those phases. Okay. But ! specifically remember that we should not have paid the entire contract until the final report was accepted. Okay. Mayor Pro Tern Beard: Precisely. Precisely. Would you say that it's any fault of this Council or staff, or just what? I mean, would say that it's any real fault of someone that happened? Auditor Botley: Well, you know, Council can not be throughout the city in all places at all times. But, as ! said earlier, the buck stops at the Council. When those things do happen, then you know you have the keys to do what you feel is necessary to prevent those from happening again. City Attorney Sokolow: Mayor, I'm sorry, as to individual details to some of these cases that we may be in litigation, ! prefer we not have conversation getting too much in detail. Obviously, the audit talks about four items and so you have some general discussion. We do have an Executive Session later, so, you know, before we get too much into too many details, you may want to hold off until later in Executive Session. City Council Minutes February 1, 2005 Mayor Ortiz: All right. I'm going to go back to Mayor Pro Tern to see if he can wrap it up. Mayor Pro Tem Beard: That's no problem, Mayor, T was pretty much through with a lot of my questions. realize we are in potential litigation regarding that and ! would not want to do anything materially to affect that. But, T simply wanted to make clear the point that given the time frames of those contracts that we spoke of, those grants/contracts that we spoke of. And, given the inaccuracy of the previous statement that this happened during the watch of several members of Council who were also on the EDC. I want to make it clear that T have not been an EDC member for over three years. So, that would be clear and also let me say and you can also verify this with the City Finance Director that during the tenure that T was there and others, and there is a long list of others including Councilmember Flood. We did not have some of these problems. These problems did not arise on our watch. So let me make that perfectly clear so everybody can understand. Thank You. Mayor Ortiz: Councilman Flood. Councilmember Flood: Thank you. Good morning, Mr. Botley. Auditor Botley: Good Morning. Councilmember Flood: First of ali I'd like to say, you better believe there's enough blame to go around. All you have to do is stand in line. And I'm sure we're all sure to get our portion of it. But, but, I just have a couple a questions. The internal control that was in question three years ago, that did not impact the audit report three years ago, still today it did not impact the audit report. So it's not material enough or the material that is needed to impact an audit report financially? Auditor Botley: Let me say this. Three years ago, the issues were surrounding incentive contracts. Today, we're talking about third-party contracts and one incentive contract. Three years ago, your Finance Department and your Legal Department were heavily involved in issues dealing with these internal control matters. Today those same two departments are heavily involved and they can talk about the time consumption with these internal control related matters. That's part of the internal control system, but they are involved in situations that they are throwing alert calls. Okay. And when that happens, the Auditor's opinion is that Council needs to listen to those alert calls. Councilmember Flood: But that's not material enough to impact the financial statement? Auditor Botley: And that's because of those internal controls that you have. City Council Minutes February 1, 2005 Councilmember Flood: Okay, so it's not material enough to impact the financial statement? Auditor Botley: At this time. At this time. That's correct. Councilmember Flood: Okay. Okay. One other thing is that a couple of months ago, we did or they did, vote to get rid of the EDC Attorney so that we can place the City Attorney there which would maybe help with the internal control. What in the last three months, and T'll ask the attorney or anyone else that can answer the question, have our city attorney did to help with the internal controls? Auditor Botley: I'm not even going to .... Councilmember Flood: T know you probably can't even answer the question, but T iust want to make sure for the record that there should be something looked at also. We as Council made that decision and still today nothing was done to help impact that internal control. Now Mr. Mills' name has been called a couple of times in reference of some of the items are that has been discussed this morning. And T would like to ask him a couple of questions concerning one of these items. Because it's important to know that if his name been called, ! would like to ask him a question so that we can get a clear understanding of why these questions has come up. So, Mr. Mills, if you don't mind, one question is this, the contract being paid in full or the contract been paid before going to the next phase. Did you get anything from the redevelopment initiative group that would cause you to pay...pay this first or second phase of money to this group? EDC Executive Director Mills: Yes. We had gotten basically the invoices and also reports that was also sent on to then it came to the EDC. However, when it first initially started, we all may remember, that there was a lump sum given to them right from the beginning. Before they started either work, because of the previous process they went through before that. Tn terms of the contract itself, T would say that it was probably an oversight, but T would have thought that it would have been caught like some of the other invoices that have been sent through...information that sent in through the Finance Department. ! think, you know, you talked about that. There are internal controls. We can't do anything without the city authorizing it. Cause we can't pay our bills. Mayor Ortiz: NO. [SEVERAL VOICES SPEAKING SIMUL TANEOUSL Y ALL THROUGH THIS EXCHANGE] Mayor Ortiz: Mr. Hills. City Council Minutes February 1, 2005 City Manager Fitzqibbons: Mayor, can I respond, there's some inaccuracies here? Mayor Ortiz: Yes, there are some real inaccuracies here. City Manaqer Fitzqibbons: The first ... the first part of the initiative ... [SEVERAL VOICES SPEAKING SIMUL TANEOUSL Y ALL THROUGH THIS E(CHANGE] Councilmember Flood: Mr. Manager, T still have the floor, you can have it after T get through, Mr. Manager. Mayor Ortiz: Okay, let's let Mr. Flood finish. City Manaqer Fitzqibbons: Well, ne needs...he needs... [SEVERAL VOICES SPEAKING SIMUL TANEOUSL Y ALL THROUGH THIS EXCHANGE] Councilmember Flood: You can ... you can ... City Manaqer Fitzqtbbons: Mr. Mills' comments are incorrect and they need to be corrected at some point. Councilmember Flood: Okay, you can correct it, just wait until ! finish. Another thing, the billing, the consultants being able to send in their bills aha receipts and get paid. Tn the contract, Mr. Botley made reference to that they can send in receipts and bills and get paid? EDC Executive Director Mills: Yes, yes. Well the nvoices that they sent...T think what is in question is, the actually reconciliation of some of those that last amount of money that was actually paid before they done their reconciliation. That's what they're going through now, and T understand that's the on y thing in question right now. Everything else is [monster?] has been resolved. And yes, they are ongoing, but it will not be at the expense of the taxpayers because they're going to be going forward with their commitment to continue to do the redevelopment for the City of Port Arthur. Councilmember Flood: That's my question, sir. Thank you. Mr. Manager. City Council Ninutes February 1, 2005 EDC Executive Director Hills: Let me just also comment while I have the floor. You know there was some concerns you know as the audit was presented last year. Your ... obviously there is some concerns that came out where ... dealing with the management letter. And Mr. Botley himself indicated that part of the city staff actually wrote on his letterhead, I guess the information pertained to the management letter. Now he stated that. So, what that tells me that there's a concerted effort, and I'm going to say this again ... there's a concerted effort, to really ! guess put the EDC in a...in a...in a...awkward position. Because Councilmen nas said it before, there is a concerteo effort by some Councilmembers, staff members, to actually take over the EDC. And if you look at some of this information, you know, T haven't seen the report. We hadn't, we didn't get orivilege to get what you have this morning, so !'m not sure what you're looking at. T would hope since we going to De paying for that, taxpayers going to be paying for that we will at least get that. And T know the bill's going to come to us. Now one of the concerns [ have...is...is...we have brought some things just like the council has...has brought items to...the city...to the auditor for him to rewew .... City Attorney Sokolow: Mayor, Mayor, Mayor ... No .. EDC Executive Director Mills: So...please let me speak. [MILLS CONTINUES SPEAKING INDISTINCTLY WHILE CITY A 7-FORNEY SOKOLOW ALSO CONTINUES] City Attorney Sokolow: Wait, No, wait, no ... This is ... This isn't ... this isn't [MILLS CONTINUES TO SPEAK WHILE C1TY ATFORNEY SOKOLOW ATTEMPTS TO MAKE HIS POINT] Mayor Ortiz: Hr. Mills, Hr. Hills let me just caution you ... City Attorney Sokolow: This is an agenda item for the auditor ... Mayor Ortiz: This is an audit item. EDC Executive Director Mills: I understand but ... [MILLS CONTINUES BUTHIS WORDSARE INAUDIBLE] City Attorney $okolow: And, and ... I think ... Wait, wait ... Mr .... Wait a minute ... Wait ... Ike ... We have some agenda items ... And I don't want ... He's got City Council Minutes February 1, 2005 This is an agenda item for the auditor to present his audit. ! would recommend that as to go to the details as to what is in the audit. Some of this stuff ... we have potential litigation on one. We do have litigation on ... We can talk about in executive session. This whole time is really an opportunity for Mr. Botley to come up and talk to the City Council and present the audit ... as to ... he has made really one ... in his audit he has published one recommendation as these four items. And it ... it's something that ... something that ... certainly T and ! think the Finance Director and the City Secretary and the City Manager can work on in terms of form because it involves the entire city and there's really no fault in anybody. It's a proactive sort of thing. [READTNG]"We recommend Council take the necessary action to ensure contracts are executed according to the terms the approve." That makes sense. "Tf Council makes changes to proposed contracts...." This is probably just going to be dealing with procedures that me and the City Secretary and the Finance Officer and when we process contracts .... !t doesn't deal with just the EDC. Tt deals with all the departments. How we do it. And we may have to come up with forms or something. And we're going to check all the contracts, so we have some consistent basis. The next thing is he's talking about the Council's immediate message to management employees who execute contracts inconsistent with Council's approved resolution. Without Council approval should indicate that they may be held liable for debt incurred. This is citywide. So we're not dealing with any one department or anything, it's maybe a matter of looking at our personnel ... our personnel rules ane .. on that. And they're talking about adding that to the ethics or code of conduct. [SEVERAL VOICES ARISEA T THIS MOMENT] City Attorney Sokolow: I understand but it's recommendations. His recommendations. This is his recommendations. He's not telling the city as to exactly what to do in terms of how to manage the EDC. He's not. Mayor Ortiz: Mark, Mark, let me clear this up. City Attorney Sokolow: I think that we need this forum was for Mr. Botley, and we don't need EDC Executive Director Mills: Yes, but it carries a lot more strength than that .... [THREE VOICES ALL GOING A T ONCE UNTIL MA YOR OR TIZ STRIKES HIS GA VEL] Mayor Ortiz: Mr. Mills, Mr. Mills. I'm the one that's chairing this committee. So you refer your issues to me, not the City Attorney. it's my fault. MILLS SPEAKS AGAIN Mayor Oft!z: .lust a minute. Let me finish. !t's my fault. I should have made it very clear in the very beginning that I was not going to allow anybody from the audience to speak on this because this was strictly a report by Mr. Botley on the audit of the EDC. Now, not reflected on you or anybody eJse. City Council Minutes February 1, 2005 20 EDC Executive Director Mills: Well, T understand that it's the city. Mayor Ortiz: Yes sir, it's an audit of the city. Yes sir, it's an audit of the city. We're not going to vote on anything. So we don't have to recognize anybody from the audience. You or anybody else. EDC Executive Director Mills: [ understand. Mayor Ortiz: But I'm going to be courteous. I'm going to give you about five minutes to make a statement, but please do not get into any of the parts where we're in litigation with any of these organizations like Mr. Diamond and so forth. If you do that. i'm going to cut you off and ask you to sit down. So, I'll give you five minutes, and that's it. EDC Executive Director Mills: As T've indicated earlier. I have some concerns deeply disturbed about what's taken place, z... When we talk about some of these things, like some of the attorney's we had and also when we went in and redone our contracts, as the result of the management letter that was done last year. So we have much tighter contracts. So we tried to directly address what was presented last year... It's not like we haven't been trying to really address the issues that were brought forth. We tried to go in and get a ... a actual CPA to work with us. Obviously, the Council dealt with that. We no longer have a CPA. So, so, we have some concerns about what is really going on here. And ! think that's what the public really needs to know because the information that the information that's been going out here is erroneous, false information. And when we talk about what the influence some of the city staff had on what Mr. Botley's audit. Obviously, it don't take a rocket science to see that it's been actually customized. But yes, the city have problems and I'm glad we clarified that. l~t's not just the EDC audit, it's the city audit which included the EDC. But the city has a lot of problems as well and I think you know that. Councilman Henderson made the comment at one of the other meetings, "Aren't we beating the EDC over the head for the same issues that we're having?" Getting paid for contracts, for contracts that have already been worked. You know that. And if I have to make that ... It's no secret. You got a report that talked about that. In terms of your business and a local contractors. You got a report on that. So, you know, my concern is ... We all in this together and nobody talked about the positive things that we've done. Yes it's easy to be on the negative. We sent information to Mr. Botley that talked about other projects, and our concerns that talked about...issues dealing with contracts in that the city has been debiting our account for. Nobody's talked about that. is that in his audit? I don't know. But clearly that's an issue that ]~'m going to bring forward. So I just wanted to let you know that yes my focus is still the same thing that this EDC was set out to do, which is to go in and provide jobs for the community. Now, you can go and disband it because if this is a situation where people want to utilize this money in another means of what it was set forth, we do need to disband it. Cause I'm not going to be a part of it. So ! just want to make sure City Council Minutes February :~, 2005 2! everybody understand that and Madam Secretary I want this for the record. All of my comments. Mayor Ortiz: It will be Mr. Mills. It's on the tape recorder. Thank you very much. EDC Executive Director Mills: Thank you. Mayor Ortiz: I'm gonna ... One more City Manager. Councilwoman Prince wants to make a statement, then we'll go to you to make the next to final statement. Councilwoman Prince. Councilmember Prince: And this is for the record, also. Mr. Botley when you and Tke were standing up there a short while ago and I made a statement. ! did not reference any contract, because I know that we're in potential legal litigation with some of them. This is for the record. And ! agree with Councilman Flood when he says there's enough blame to go around, and we can stand in line and all ... you know ... probably couldn't bear our share of it. So that was for the record. I did not reference any contract. All T'm trying to say is that the problems with EDC did not start yesterday. They were there ... They've been there several years. And ! know that for a fact, cause !'ve been sitting in those seats where you all are sitting right now watching the progress of it. Okay. So that's for the Record. Mayor Ortiz: City Manager. City Manaqer Fitzqibbons: Couple, three issues. One, when this initiative was first approved, the first part of the initiative was for approximately $111 thousand dollars. That money was budgeted and approved. That week, Mr. Mills made a request to pay the $111 thousand dollars in full. With our procedures of control, the money was there - and Mr. Botley and maybe Ms. Underhill can address this better than I can - but the money was there; the council had approved it. Based generally on our procedures, [vis. Underhill would have approved that request for payment because the Council had approved it, the money was there. There was no contract though. Generally, a contract will say how much you get up front and how much you get at certain percentages of completion. There was nothing like that. !t was just pay the whole $111 thousand right away. So Ms. Underhill held that. We worked out a contract. On the second phase, a question was asked about Second and Third Phases. Second and Third Phases were approved at the same time. There was a question by Councilman Henderson: Do we really need - this is paraphrasing - Do we really need to approve both the second and the third at the same time? Why don't we just Two and later do Three? The response from the consultant was, that would be fine with me, and again paraphrasing, but that will not give the message that we need to get out to the funders. They need to see total commitment, and by your approving the Second and Third Phase, then that is total commitment. So the Council approved the Second and Third Phase and at this point this may be more a question by Ms. Underhill or Mr. Botley, but it gets, ! think, to the heart of the issue and it is control. City Council Minutes February 1, 2005 22 When you have the contract approved and you have the appropriate person certifying that the work has been done in accordance with the contract, generally the finance director will pay it. Tf there is a contract and there is a budget. That's what she does. She does not go out to make sure that the dirt got delivered. She does not go make sure that the fire truck is fixed. She does not do that. The Fire Chief or someone else is going to certifi/that it's done and it's done to standards, and certified for payment. And if the budget is there and the money is there, she'll pay. A minute ago, Mr. Hills made the comment like in April, in April of 2002, he authorized payment for the Redevelopment Initiative, including ail expenditures for expenses which needed to be reconciled before the final payment. So that's been paid. The consultant apparently made the request for payment and Hr. Mills signed a sheet saying that everything is in order and made the payment request. The money was there; the council had approved it; Ms. Underhill did not go out and say, "Are you sure it's done." So I'd Mr. Botley maybe to address this and Hrs. Underhill to address it, because Mr. Hills just made the comment that it's okay because Ms. Underhill should have caught it. Well no, it's not okay. That's not what she catches. And when you sign, whether you're a department head, whether you're me, or anyone else, that we sign that request for payment. And the money is there and the contract is there that it will be paid unless she has some reason not to believe you. But that's not her job to say, "Oh, is it done? is everything in order.?" That's what the department head or in this case Hr. Mills or the City Manager, He. So the comment that she should have caught it and it was her fault is totally inaccurate and gets to the heart of this matter. And, Mr. Botley, I would ask you to address that issue and T'd also like you to address the issue of the city staff helped write your Management Letter, and whether that would be ethical ... whether it's true or whether that would be ethical for you to accept that. Auditor Botley: I'll be happy to address the Management Letter issue, because I was going to do that anyway. I think I'm going to let Ms. Underhill talk about her responsibilities. Finance Director Underhilh I think the City Manager stated it very plainly. I've had several questions ... I've had this question come up before - what responsibility, what's my role, my responsibility is, and what the department head or the city manager or the executive director, what their role is. And ne stated it very clearly. It's the departments' role to confirm to us that they nave received whatever purchase that's has been approved, whatever contract services have peen approved Dy Council. Once the WOrK is done, the police cars have arrive, the dirt has arrived, what have you, that we nave received the goods or services that have been authorized and now your resoonsibility is to make sure that payment is made i~ a timely fashion. We do . I personalty do not verify that every police car, every piece of dirt, that every employee's on the job. That responsibility rests at the eepartment evel. So when that final payment on Phase 3 came across my desk, as far as I was concerned, it was finished. ! had no way of knowing that it wasn't finished. So we processed the payment as we would have for anyone else. Mayor Ortiz: Mr. Botley. City Council Minutes February 1, 2005 23 Auditor Botley: And ... just to comment about my customized or input into the management letter: I am totally independent of the City. I think my participation, communication with Council members throughout the years we've been auditing. ]~ think that if there's any question about my integrity, I've never heard about it from any of the Council members. We write that management letter and we write the audit reoort. That's what being independent is all about. I may refer to comments, I may refer to conversations we have with management and council members in our reports. But let me tell you, my employees can vouch for the number of times they view and edit my reports before you see them. I take pride in doing that. We bill you, I don't snare with anybody. It's our money because we're independent. And so what you see on our letterhead, will always be from us. So we would not be independent if we had someone customizing our report. And let me also say that everything that we find in the audit does not in the management letter. It does not go in the audit report. I think i've told you that before. Uh, some of the concerns that Hr. Hills referred to, Council members if you remember, we talked about those 'n executive session. So some things are addressed there; some things are addressed just through the normal aay. But everything we put in writing, everything we talk about, i have documentation to support everything we did. Ah. some of these take a judgment call on the auditor's part. What management needs to focus on. How material they may be or what potential of materiality is. But, ! just wanted to make sure, make no mistake what's on Gayle Botley & Associates' letterhead comes from Gayle Botley & Associates. That's all. Hayor Ortiz: Thank you, Hr. Botley. Let me close this hearing by making a couple of comments and reading a statement. I'm going to say this without any equivocation. There's nobody i~ this city that loves the City Of Port Arthur as much as [ do. There's no body here that loves the people more than ! do. And ! mean ALL the people of Port Arthur. I believe that when I came into office, God gave me a burden for my people here i~ Port Arthur because T saw wnat it was like 9-10 years ago when this city was almost going under. And almost ready to be taken over by the State of Texas because the finances were so bad. So T dedicated the next few years of my life, I said, to do whatever i could, to contribute whatever ! could. in the last few weeks we've put this book together, all oertaining to the audits that Mr. Botley has done, pertaining to comments made by the editors in the different newspapers in Beaumont and Port Arthur. Different communications that we've had with the EDC board. Every thing that you could possible want is in this booklet concerning the problems that we've had at the EDC board. And what i'm going to read you next, I don't reao it with a ha opy heart. Nor do i read it to be malicious or to be misunderstanding with anybody. But I have a concern just like a lot of our Councilmembers do about what's happening in the City of Port Arthur and the potential for the destruction of our financial status, and right now we're in good shape. We are. We really are. We're probably one of the strongest cities in Jefferson County, maybe even n the state of Texas. Who knows? But you know that could change overnight simply oy doing some things that are not good, and they aren't good practice in accounting. Let me read you what I put on the cover letter for all this information. And as ! said, I thank the staff for a tremendous amount of help ano tremendous amount of work and hours that went through putting this thing together. Cib/Council Hinutes February 1, 2005 24 Councilmembers City Manager, City Attorney, City Secretary From: Mayor Oscar Ortiz Date: .lanuary 31, 2005 RE: Audit and EDC operations. Based on an interim audit report, we know we have a problem with the EDC with backdating contracts, making payments without contracts as required by state law, and for paying contractors amounts above contract authorization. We know that last year Mr. Botley stated he saw some of the same issues concerning the following and monitoring of contract that he had seen two years ago. We know that at the request of the EDC the auditor was paid $9,446 to try to reconcile expense receipts involving the Port Arthur Redevelopment Tnitiative. We know that the auditor identified only $21,238 in expenses properly substantiated even though the EDC had paid the contractor $60,480 for expenses in April, 2003 in violation of the contract. We know, or certainly have strong reason to believe, that this audit, the 2003-2004 audit, is not going to reflect a big improvement in the EDC operations former Chairperson Deborah Kalajabadi told us on August 3, 2004 that she believed we were going To see. We have strong reason to believe that without substantial improvement in the EDC operation we are putting the entire City at serious risk for a qualified audit opimon that could cost the city millions of dollars in federal funds as well as placing substantial additional financia reporting obligation on the city. The last two audit management letters have addressed internal control weaknesses regarding the Internal control environmenT. According to American Institute of Certified Public Accountants (ATCPA), "internal control" is defined as a process "effected by an entity's board of oirectors, management and other personnel designed to provide reasonable assurance regarding the achievement or objectives in the following categories: (a) reliability of financial reporting, (b) effectiveness and efficiency of operations, aha (c) compliance with applicable laws and regulations." The Al[CPA stanaaro of fieldwork goes on to say that "internal control consists of five interrelated components." The first component listed is the control environment. The standard states that: (a) control environment sets the tone of an organization, influencing the control of consciousness of its people. Tt is the foundation of all other internal control, providing discipline and structure. The Other categories listed under internal control are (b) risk assessment (control activities), (d) information and communication systems, and (e) monitoring. There have been discussion regarding 'ncreased control activities for the EDC. The document defines control activities as "policies and procedures that help ensure that management directives are carried out." However, as we have been told by the auditor, adding additional polic'es ancJ procedures for control purposes will not be effective as long as the internal control environment, which is the foundation for all other components of internal control, is effective. ! am attaching a substantial amount of information to this memo, including the transcription of last year's audit presentation by Hr. Botley, information on audit issues and standards, management letters from the last two audits, and other information including articles and editorials. One editorial dated April 2, 2004 stated that "if anything ~s worse than a public agency receiving a scathing audit, it's an agency that received two in a row. City Council Minutes February 1, 2005 25 Regretfully that is the case with the Port Arthur Economic Development Corporation." Well, it appears like this year will make three in a row. Another editorial dated March 31, 2004 states in part "reading the audit report on the Port Arthur Economic Development brings to mind Benjamin Franklin's definition of insanity: 'Doing the same thing over and over and expecting different results."' The editorial goes on to say, "consider this statement from the management letter regarding the o0peration of the EDC. When organizations do not change their method, the organizations tend to receive similar results even when they conduct different activities." Lastly, in an August 3, 2004, presentation to the City Council, former EDC Chairman Deborah Khalajabadi, in referencing EDC performance, based on prior audits, asks, "it can't get worse, can it?" The answer seems to be a clear "YES." With that we will close our hearing on the audit and in the meantime I'm going to ask the Council with their permission we're going to take a five-minute recess. The City Council recessed their meeting at 10:05 a.m. and reconvened at 10:23 a.m. with the following members present: Mayor Ortiz; Hayor Pro Tem Beard; Councilmembers Barker, Henderson, Flood, Thompson, Prince and Sinegal; City Flanager Fitzgibbons; City Secretary Green and City Attorney Sokolow. B. Sneakers Noel Ozen And Maggie Bolden Regarding 3uneteenth Celebrations - NOT PRESENT (2) Caroline Stelly Regarding Port Acres Little League - NOT PRESENT ([3) Thomasene Thomas Regarding Westside Development Progress Report Ms. Thomasene Thomas, 401 Drummond Street, appeared before the City Council to discuss Saint Paul's United Hethodist Church's progress toward Westside Development and to request holding additional committee meetings. (4) Edna Gonzales Regarding Allowing Accessing For The Spanish Speaking Community Mrs. Edna Gonzales,3046 Procter Street, appeared before the City Council to request consideration in providing a building in the Westside area to assist the Spanish speaking community. (5) Deborah Khalajabadi Regarding The City Charter And Sale Of City Property - NOT PRESENT (6) Doris Gill Regarding YAC Sponsored Youth Conference Featuring Marcus Parker Administrative Assistant to the City Manager, Doris Gill, appeared before the City Council to announce that the Youth Advisory Council will be hosting a Youth Conference and Book Signing featuring Author, Marcus Parker, Saturday, February 5, 2005 from Noon to 3:00 p.m. at the Port Arthur Public Library Gallery. (7) .lennifer Walker Regarding The Bays And Peril Report Sierra Club Program Assistant of the Lone Star Chapter, Jennifer Walker, 1202 San Antonio, Austin, Texas, appeared before the City Council to discuss fresh water protection City Council Minutes February 1, 2005 26 needs, salt water intrusion and water rights. Ms. Walker requested consideration in passing a resolution pertaining to freshwater inflows. Mayor Pro Tern Beard left the City Council Chambers at 11:13 a.m. VII. ITEMS REQUIRING INDIVIDUAL ACTION (3) P. R. No. 13012 - A Resolution As It Pertains To Freshwater Inflows. (Requested By Mayor Orr,z) The Mayor introduced the above-mentioned Proposed Resolution. Upon the motion of Councilmember Thompson, seconded by Councilmember Sinegal and unanimously carried, Proposed Resolution No. 13012 was adopted becoming Resolution No. 05-036. Voting Yes: Mayor OFt.z; CouncilmemDers Barker, Henderson, Flood, Thompson, Prince and Sinegal. Voting No: None. The caption of Resolution No, 05-036 reads as follows: RESOLUTION NO. 05-036 A RESOLUTION AS 1-r PERTAINS TO FRESHWATER INFLOWS. (REQUESTED BY MAYOR ORTIZ) C. Correspondence None PUBLIC HEAR/NGS - 9:00AM - None. V. UNFINISHED BUSINESS - None. VI. CONSENT AGEN DA Upon the motion of Councilmember Henderson, seconded by Councilmember Flood and carried unanimously, the following Consent Agenda items were adoptea with the exception of Items B, D, F and Proposed P, esolution No.'s 13009, 13014, 13015 and 13017: Consideration And Approval Of Payment To Mustang Tractor & Equipment Of Beaumont, Texas in The Amount Of $16,294.52 For Emergency Overhaul/Repairs To A 1999 Caterpillar D-6R Dozer (Landfill Equipment #1336) For The Public Works Department (Solid Waste Division). Consideration And Approval Of Awarding A Bid For The Purchase Of Employee Service Awards To 3. Brandt Company, inc. In The Estimated Amount Of $5,856.08. Consideration And Approval Of Awarding Bids For The Purchase Of Fifty-One Additional Commercial Containers Tn The Total Amount Of $33,891 To The Following: Thirty 8-C.Y. Containers From Fuqua Industries Inc. Of Rio Vista, TX in The Amount Of $23,850; Eight 2-C.Y. And Thirteen 4-C.Y. Containers From Waste-Equip - May Fab Of Beeville, TX in The Amount Of $10,041. City Council Minutes February 1, 2005 G. Expense Reports Mayor Oscar G. Ortiz: Attend United States Conference Of Mayor's Winter Meeting In Washington, D. C. .lanuary 1S - 19, 200S $ 2,105.34 Mayor Pro Tem lohn Beard, .lr.: Attend LNG Conference In Houston, Texas September 23 - 24, 200S $ 744.62 City Secretary Evangeline "Van" Green: Attend Election Law Seminar In Austin, Texas 3anuary 18 - 21, 2005 1,114.43 Assistant City Secretary Terri Hanks: Attend Election Law Seminar In Austin, Texas 3anuary 19 - 21, 200S $ 949.09 Resolutions - Consent (1) P. R. No. 12966 - A Resolution Authorizing The Rollover Of Mowing Contracts Between The City Of Port Arthur And M. D. Arena Contractors, P. O. Box 19g, Sour Lake, TX 776S9, Group IV; Sandra 1. Guilbeau Enterprises, 29S1 W. Highway 36S, Port Arthur, TX 77640, Group VII; Prevost & Sons Lawn Management, P. O. Box 2S1, Port Arthur, TX 77641, Groups II, II! W/Options, V; And IX W/Options, Hebert Lawn, 248 Dodge Place, Port Arthur, TX 77642, Group I And VIII; And 3oey's Tractor Service, S991 3ade, P. O. Box 4S, Port Arthur, TX 77640, Group VT And Not To Exceed $86,184. Said Annual Contracts Are For Mowing Various City Properties, Parks And Right-Of-Ways In The City; Estimated Annual Cost $86,184. Proposed Funding: Parks Division FY 2004/200S Budget Account No. 001-1207-S31.31-00. Proposed Resolution No. 12966 was adopted becoming Resolution No. 05-037. (2) P. R. No. 12967 - A Resolution Awarding And Authorizing The Execution Of A Mowing Contract Between The City Of Port Arthur And T.L.C. Construction, DBA Total Lawn Care, P. O. Box 3172, Port Arthur, TX 77642, For Group X Not To Exceed $5,490. Said Annual Contract !s For Mowing Various City Properties, Parks And Right-Of-Ways !n The City; Estimated Annual Cost $5,490. Proposed Funding: Parks Division FY 2005/2006 Budget Account No. 001-1207- 531.31-00. Proposed Resolution No. 12967 was adopted becoming Resolution No. 05-038. (3) P. R. No. 13006 - A Resolution Authorizing The City Manager To Execute A Contract Between The City Of Port Arthur And The Port Arthur Cricket Club For Use Of An Open Space In Adams Park As A Cricket Field. Proposed Resolution No. 13006 was adopted becoming Resolution No. 05-039. (4) P. R. No. 13008 - A Resolution Authorizing Execution Of An Agreement With The City Of El Monte California For The Partial Assignment Of Options For The Purchase Of Ten Propane Powered Transit Buses. City Council Minutes February 1, 2005 28 Proposed ResoLution No. 13008 was aooptea becoming Resolution No. 05-040. (8) P. R, No. 13016 - A Resolution Authorizing The Issuance Of A Purchase Order To National Bus Sales And Leasing For The Purchase Of One Type :[IT Transit Van. Proposed Resolution No. 13016 was adopted becoming Resolution No. 05-041. Mayor Pro Tern Beard returned to the City Council Chambers at 11:20 a.m. VI:[. ITEMS RE(~UZR:[NG INDIV:[DUAL ACTION - NO N-CONSENT Councilmember Thompson left the City Council Chambers at 11:22 a.m. Consent Items B. Consideration And Approval Of Awarding A Bid To Decatur Electronics Inc. Of Decatur, Illinois :In The Amount Of $7,550 For One Traffic Speed Monitoring Trailer For The Police Department. The Mayor introduced the above-mentioned Item. The motion was made by Councilmember Henderson and seconded by Councilmember Flood that Item B be adopted. Police Colonel Mark Blanton appeared before the City Council to report that the Traffic Speed Monitoring Trailer displays the motorist's speed and records the number of speeders for patrolling evaluations. Item B was approved by a unanimous vote. Coundlmember Thompson returned to the City Council Chambers at 11:26 a.m. D. Consideration And Approval Of Awarding A Bid For Carpentry And Plumbing Work To Collins quality Construction Of Port Arthur, Texas In The Amount Of $:1.3,759 For The Renovation Of The Project H.O.P.E. One-Stop Shop Located At 701 West 7th Street. The Mayor introduced the above-mentioned Item. The motion was made by Councilmember Henderson and seconded by Councilmember Sinegal that ]Item D be adopted. The City Manager discussed funding issues for the above-mentioned item. Item D was approved by a unanimous vote. F. Consideration And Approval Of Awarding A Bid For A Radio Read~ Automated Meter Reading System To Rural Pipe & Supply Of 3asper~ TX In The Estimated Amount Of $51,480.00 For The Utility Operations Department. The Mayor introduced the above-mentioned Item. The motion was made by Councilmember Flood and seconded by Councilmember Henderson that Item F be adopted. Utility Operations Director Kelly Eldridge appeared before the City Council to discuss the implementation of remote water meter reading. City Council I~linutes February 1, 2005 Item F was approved by a unanimous vote. The City Council recessed their meeting at 11:30 a.m. and reconvened at 1:17 p.m. with the following members present: Mayor Ortiz; Councilmembers Barker, Henderson, Flood, Thompson, Prince and Sinegal; City Manager Fitzgibbons; City Secretary Green and City Attorney Sokolow. Mayor Pro Tem Beard did not return to the City Council Meeting. Consent - Resolutions (S) P.R. No. 13009 - A Resolution Approving The Relocation Of The "Music Of The Sea" Statuary. (Requested By The City Manager) The Mayor introduced the above-mentioned Proposed Resolution. The motion was made by Councilmember Henderson and seconded by Councilmember Sinegal that Proposed Resolution No. 13009 be adopted. The City Manager reported that the bronze statuary "Music of the Sea" was dedicated to Port Arthur's first Hayor and that Lamar State College is proposing to relocate the statuary at a new campus pedestrian walkway on Stilwell Boulevard. Proposed Resolution No. 13009 was adopted becoming Resolution No. 05-042. Voting Yes: Mayor Ortiz; Councilmembers Barker, Henderson, Flood, Thompson, Prince and Sinegal. Voting No: None. The caption of Resolution No. 05-042 reads as follows: RESOLUTTON NO. 05-042 (6) A RESOLUTION APPROVING THE RELOCATION OF THE "MUSIC OF THE SEA" STATUARY. (REQUESTED BY THE CITY MANAGER) P. R. No. 13014 - A Resolution Amending The City Of Port Arthur Community Development Block Grant Management And Budget Policies. The Amendment Defines The Funding Priorities For Community Development Block Grant Activities. The Mayor introduced the above-mentioned Proposed Resolution. The motion was made by Councilmember Henderson and seconded by Councilmember Sinegal that Proposed Resolution No. 13014 be adopted. Planning and Grants Director Dale Watson appeared before the City Council to discuss federal funding reductions to Community Development Block Grants (CDBG). The motion was made by Councilmember Henderson and seconded by Councilmember Sinegal that Proposed Resolution No. 13014 be amended to include limiting CDBG Priority Three (3) funding activities will be eligible for funding for no more than one (1) year. The motion to amend Proposed Resolution No. 13014 carried by unanimous vote. City Council Minutes February 1, 2005 30 Proposed Resolution No. 13014 was adopted as amended becoming Resolution No. 05-043. Voting Yes: Mayor Ortiz; Councilmembers Barker, Henderson, Flood, Thompson, Prince and Sinegal. Voting No: None. The caption of Resolution No. 05-043 reads as follows: RESOLUTION NO. 05-043 A RESOLUTION AMENDING THE c~rY OF PORT ARTHU RCOMMUNITYDEVELOPM ENT BLOCK GRANT MANAGEMENT AND BUDGET POLICIES. THE AMENDMENT DEFINES THE FUNDING PRIORITIES FOR COMMUNITY DEVELOPMENT BLOCK GRANT ACTIVITIES. (7) P. R. No. 13015 - A Resolution Approving The 2005 City Street Program, (Excluding CDBG Program) In The City Of Port Arthur, With Funding Available In The FY 2005 General Fund Budget, When Approved. The Mayor introduced the above-mentioned Proposed Resolution. The motion was made Dy Councilmember Henderson and seconded Dy CouncJlmember Sinegal that Proposed Resolution No. 13015 be adopted. Public Works Director John Comeaux and Utility Operations Director Kelly EIdridge appeared before the City Council to address street repair inquiries. Proposed Resolution No. 13015 was adopted becoming Resolution No. 05-044, Voting Yes: Mayor Ortiz; Councilmembers Barker, Henderson, Flood, Thompson, Prince and Sinega~. Voting No: None. The ca ption of Resolution No. 05-044 reads as follows: RESOLUTION NO. 05-044 A RESOLUTION APPROVING THE 2005 CITY STREET PROGRAM, (EXCLUDING CDBG PROGRAM) IN THE CITY OF PORT ARTHUR, WITH FUNDING AVAILABLE IN THE FY 200S GENERAL FUND BUDGET, WHEN APPROVED. (9) P. R. No. 13017 - A Resolution Approving Sewer Adjustments To Certain Utility Accounts. The Mayor introducec~ the above-mentioned Proposed Resolution. The motion was made by Councilmember Henderson and seconded by Councilmember Sinegal that Prooosed Resolution No. 13017 be adopted. The City Manager discussed utility account sewer adjustments. Proposed Resolution No. 13017 was adopted becoming Resolution No. 05-045. City Council Minutes February 1, 2005 Voting Yes: Mayor Ortiz; Councilmembers Barker, Henderson, Flood, Thompson, Prince and Sinegal. Voting No: None. The caption of Resolution No. 05-045 reads as follows: RESOLUTION NO. 05-045 A RESOLUTION APPROVING SEWER AD3USTMENTS TO CERTAIN UTILITY ACCOUNTS. VII. ITEHS RE(~UIRING INDIVIDUAL ACTION - NON-CONSENT A. Resolutions (1) P. R. No. 13004 - A Resolution As It Pertains To An Advisory Committee For Downtown Revitalization. (Requested By Councilmember Henderson) The Mayor introduced the above-mentioned Proposed Resolution. The motion was made by Councilmember Henderson and seconded by Councilmember Sinegal that Proposed Resolution No. 13004 be adopted. Councilmember Henderson requested that a proposed resolution be included in a future City Council meeting setting up the functions, duties and responsibilities of the committee, designating a method of appointing committee members and consideration in including members with experience in economic development, engineering and architecture. Councilmember Henderson requested appointing advisory members at a later date. The City Attorney state the following amendment into the record: WHEREAS, the City Council deems it necessary to create an Advisory Committee for Downtown Revitalization, now, therefore be resolved by the City Council of the City of Port Arthur that the facts of this parameter are correct that an Advisory Committee for Downtown Revitalization is herein created and the composition of the committee will be appointed at a later time. The motion was made by Councilmember Henderson and seconded by Councilmember Sinegal that Proposed Resolution No. 13004 be amended as stated by the City Attorney. The motion to amend Proposed Resolution No. 13004 carried by a unanimous vote. Proposed Resolution No. 13004 was adopted as amended becoming Resolution No. 05-046. Voting Yes: Mayor Ortiz; Councilmembers Barker, Henderson, Flood, Thompson, Prince and Sinegal. Voting No: None. The caption of Resolution No. 05-046 reads as follows: RESOLUTION NO, 05-046 A RESOLUTION AS IT PERTAINS TO AN ADVISORY COMMITTEEFOR DOWNTOWN REVITALIZATION. (REQUESTED BY COUNCIL~4EMBER HENDERSON) City Council Minutes February 1, 2005 32 (2) P.R. No. 13007 - A Resolution Approving An Invoice Or Invoices Of The City Of Port Arthur Section 4A Economic Development Corporation. The Mayor introduced the above-mentioned Proposed Resolution. The motion was made by Councilmember Henderson and seconded by Councilmember Sinegal that Proposed Resolution No. 13007 be adopted. The City Attorney stated the following amendment into the record: The deletion of the issuance of a purchase order to Star Graphics pertaining to three computers for a total cost of $2,647.00, Exhibit "G". The motion was made by Councilmember Henderson and seconded by Councilmember Sinegal that Proposed Resolution No. 13007 be amended as stated by the City Attorney. The motion to amend Proposed Resolution No. 13007 carried over the dissenting vote of Councilmember Sinegal. Proposed Resolution No. 13007 was adopted as amended, over the dissenting votes of Councilmembers Prince and Sinegal, becoming Resolution No. 05-047. Voting Yes: Hayor Ortiz; Councilmembers Barker, Henderson, Flood and Thompson. Voting No: Councilmembers Prince and Sinegal. The caption of Resolution No. 05-047 reads as follows: RESOLUTION NO. 05-047 A RESOLUTION APPROVING AN INVOICE OR INVOICES OF THE CITY OF PORT ARTHUR SECTTON 4A ECONOMIC DEVELOPMENT CORPORATION. (4) P.R. No. 13019 - A Resolution Appointing/Reappointing Members To A Wellness Committee. The Mayor introduced the above-mentioned Proposed Resolution. The motion was made by Councilmember Henderson and seconded by Councilmember Sinegal that Proposed Resolution No. 13019 be adopted. Assistant City Hanager/Personnel Director Harvey Robinson appeared before the City Council to discuss the feasibility of using Bishop Byrne's Health and Wellness Center for senior citizens. The following reappointments were made to the Advisory Wellness Committee: Councilmember Craig Hannah Councilmember Felix A. Barker Councilmember Thomas _1. Henderson City Manager Steve Fitzgibbons Dr. Albert Thigpen Health Director Ernestine Wade Proposed Resolution No. 13019 was adopted becoming Resolution No. 05-048. City Council Minutes February 1, 2005 33 Voting Yes: Mayor Ortiz; Councilmembers Barker, Henderson, Flood, Thompson, Prince and Sinegal. Voting No: None. The caption of Resolution No. 05-048 reaos as follows: RESOLUTION NO. 05-048 A RESOLUT?ON APPO?NTI'NG ! REAPPOt'NTI'NG MEMBERS TO A WELLNESS COMMT'I-rEE. (s) P. R. No. 13021 - A Resolution Appointing Negotiating Teams Pursuant To Chapter :~74 Of The Texas Local Government Code Annotated, To Conduct Collective Bargaining With The Bargaining Agents Of I.A.F.F. Local 397 Of The City Of Port Arthur Fire Department And The Port Arthur Police Association Of The City Of Port Arthur Police Department. The Mayor introduced the above-mentioned Proposed Resolution. The motion was made by Councilmember Thompson and seconded by Councilmember Sinegal that Proposed Resolution No. 13021 be adopted. The City Manager discussed the negotiation process. Proposed Resolution No. 13021 was adooteci becoming Resolution No. 05-049. Voting Yes: Mayor Ortiz; Councilmembers Barker, Henderson, Flood, Thompson, Prince and Sinegal. Voting No: None. The caption of Resolution No. 05-049 reaOs as follows: RESOLUTION NO. 05-049 A RESOLUTION APPOINTING NEGOTIATING TEAMS PURSUANT TO CHAPTER 174 OF THE TEXAS LOCAL GOVERNMENT CODE ANNOTATED~ TO CONDUCT COLLECTIVE BARGAINING WITH THE BARGAIN?NG AGENTS OF I.A.F.F. LOCAL 397 OF THE CITY OF PORT ARTHUR FIRE DEPARTMENT AND THE PORT ARTHUR POLICE ASSOCIATION OF THE CITY OFPORT ARTHUR POLICE DEPARTMENT, (6) P.R. No. 13022 - A Resolution As It Pertains To Making Repairs To 3311 12th Street (Account No. 130-~.430-55~..89- oo) The Mayor introduced the above-mentioned Proposed Resolution. Upon the motion of Councilmember Henderson, seconded by Councilmember Sinegal and carried unanimously, Proposed Resolution No. 13022 was adopted becoming Resolution No. 05-050. City Council Minutes February 1, 2005 34 Voting Yes: Mayor Ortiz; Councilmembers Barker, Henderson, Flood, Thompson, Prince and Sinegal. Voting No: None. The caption of Resolution No. 05-050 reads as follows: RESOLUTTON NO. 05-050 A RESOLUTTON AS ZT PERTATNS TO MAKLNG REPAIRS TO 3311 12TM STREET (ACCOUNT NO. 130-1430-551.89-00) B. Ordinances (1) P. O. No. 5488 - An Ordinance Releasing A Portion Of The City's Extraterritorial 3urisdiction And Disannexin9 A Portion Of The City's Land Along Taylor's Bayou That Tt Had Annexed For A Limited Purpose Tn 19:L3; All As Requested By The Taylor's Landing Homeowner's Association. The City Manager introduced the above-mentioned Proposed Ordinance. The motion was made by Councilmember Henderson and seconded by Councilmember Sinegal that Proposed Ordinance No. 5488 be adopted. The City Manager explained the concept of limited annexation and the ability for future development west of Highway 73. Planning and Grants Director Dale Watson appeared before the City Council to discuss options and advantages of forming an independent munici pal utility district. Proposed Ordinance No. 5488 was adopted becoming Ordinance No. 05-07. Voting Yes: Mayor Ortiz; Councilmembers Henderson, Flood, Thompson, Prince and Sinegal. Voting No: Councilmember Barker. The caption of Ordinance No. 05-07 reads as follows: ORDTNANCE NO. 05-07 AN ORDTNANCE RELEASTNG A PORTTON OF THE CZTY'S EXTRATERR_TTORZAL 3URZSDZCTTON AND DTSANNEXTNG A PORTTON OF THE CTTY'S LAND ALONG TAYLOR'S BAYOU THAT TT HAD ANNEXED FOR A LTMITED PURPOSE TN 1913; ALL AS REI~UESTED BY THE TAYLOR'S LANDTNG HOMEOWNER'S ASSOCTATTON. (2) P. O. No. 5490 - An Ordinance Providing For The Conduct Of The May 7 2005 General Election For The Purpose Of Electing Councilmembers From Districts 1,2,3 And 4 Tn The City Of Port Arthur, Texas; And Providing For A 3oint Election With The Port Arthur Tndependent School District, The Sabine Pass Tndependent School District, The Port Of Port Arthur Navigation District And The Sabine Pass Port Authority, Tn Accordance With Chapter 271 Of The Texas Election Code, And Providing For The Publication Of The Election Notice. City Council Ninutes February 1, 2005 35 The City Manager introduced the above-mentioned Proposed Ordinance. Upon the motion of Councilmember Henderson, seconded by Councilmember Sinegal and carried unanimously, Proposed Ordinance No. 5490 was adopted becoming Ordinance No. 05-08. Voting Yes: Mayor Ortiz; Councilmembers Barker, Henderson, Flood, Thompson, Prince and Sinegal. Voting No: None. The caption of Ordinance No. 05-08 reads as follows: ORDTNANCE NO. 05-08 AN ORDTNANCE PROVTDTNG FOR THE CONDUCT OF THE MAY 7 2005 GENERAL ELECT?ON FOR THE PURPOSE OF ELECTTNG COUNCTLMEMBERS FROM DTSTRTCTS 1,2,3 AND 4 i.N THE CTTY OF PORT ARTHUR, TEXAS; AND PROVTDTNG FOR A 30TNT ELECTTON Wi'TH THE PORT ARTHUR TNDEPENDENT SCHOOL DTSTRI'CT, THE SABTNE PASS ?NDEPENDENT SCHOOL DTSTRI'CT~ THE PORT OF PORT ARTHUR NAVTGATTON DTSTRI'CT AND THE SABTNE PASS PORT AUTHORTTY, i.N ACCORDANCE WTTH CHAPTER 271 OF THE TEXAS ELECTTON CODE, AND PROVTDTNG FOR THE PUBLTCATI.ON OF THE ELECTTON NOTI.CE (3) P. O. No. 549:[ - An Ordinance Delineating The Number Of Authorized Funded Police Officer Positions Tn The Police Department. The City Manager introduced the above-mentioned Proposed Ordinance, The motion was made by Councilmember Barker and seconded by Councilmember Henderson that Proposed Ordinance No. 5491 be adopted. Police Colonel Mark Blanton appeared before the City Council to discuss the funding of the proposed police officers and reported that the proposed police officers would be placed on the BEAT Coordinator Program. Proposed Ordinance No. 5491 was adopted becoming Ordinance No. 05-09. Voting Yes: Mayor Ortiz; Councilmembers Barker, Henderson, Flood, Thompson, Prince and Sinegal. Voting No: None. The caption of Ordinance No. 05-09 reads as follows: ORDI'NANCE NO. 05-09 AN ORDI'NANCE DELI'NEATTNG THE NUMBER OF AUTHORTZED FUNDED POLTCE OFFI.CER POSTTTONS TN THE POLTCE DEPARTMENT. City Council Minutes February 1, 2005 (4) P. O. No. 5493 - An Ordinance As It Pertains To ICON Builders, LLC. The above-mentioned item was held after the Executive Session. (5) P. O. No. 5494 - An Ordinance Authorizing The Transfer Of One 1996 Chevrolet/Champion Para-Transit Van To H.O.P.E. (Helping Our People To Excel). The City Manager introduced the above-mentioned Proposed Ordinance. Upon the motion of Councilmember Henderson, seconded by Councilmember Sinegal and carried unanimously, Proposed Ordinance No. 5494 was adopted becoming Ordinance No. 05-10. Voting Yes: Mayor Ortiz; Councilmembers Barker, Henderson, Flood, Thompson, Prince and Sinegal. Voting No: None. The ca ption of Ordinance No. 05-10 reads as follows: ORDZNANCE NO. 05-10 AN ORDINANCE AUTHORIZING THE TRANSFER OF ONE 1996 CHEVROLET/CHAMPION PARA-TRANSIT VAN TO H,O.P.E. (HELPING OUR PEOPLE TO EXCEL). C. *Reoorts And Recommendations - None. VIII. REPORTS OF BOARDS & COMM'r'n'EES - None. IX. *CLOSED MEETING (EXECUTIVE SESSION) Closed Meetino: (1) Section 551.071 Government Code - To Discuss With The City Attorney Potential Litigation As It Pertains TO Tres Caballeros. (2) Section 551.087 Government Code - To Discuss Incentives For Commercial, Residential And Industrial Prospects. (3) Section 551.071 Government Code - To Discuss With The City Attorney Pending And Potential Litigation As To Processes And Procedures As Tt Pertains To The City Of Port Arthur Section 4A Economic Development Corporation. (4) Section 551.071 Government Code - To Discuss With The City Attorney Procedures As To Avoid Litigation As To Electrical Permits. (5) Section 551.071 Government Code - To Discuss With The City Attorney Pending Litigation As It Pertains To SETCDC The City Council recessed their meeting at 2:09 p.m. to meet in Executive Session to consider the above-mentioned topics, and reconveneo their meeting at 4:03 p.m with the following members present: Mayor Ortiz; Councilmembers Barker, Henderson, Flood, Thompson, Prince and Sinegal; City Manager Fitzgibbons; City Secretary Green and City Attorney Sokolow. City Council Minutes February 1, 2005 37 VII. ITEMS REQUIRING INDIVIDUAL ACTION - NON-CONSENT B. Ordinances (4) P.O. No. 5493 - An Ordinance As It Pertains To ICON Builders, LLC. The City Manager introduced the above-mentioned Proposed Ordinance. The motion was made by Councilmember Henderson and seconded by Councilmember Sinega that Proposeo Ordinance No. 5493 be aoopted. The City Attorney stated the following amendment into the record: WHEREAS, if ][CON Builders builds four or more homes within one year, and if [CON purchases or pays the costs of the meters and pays for construction and connections therewith, then Sections 18-39, 110-61, and 110-168 will apply, and a refund will be applicable a to building permit fees, water tap fees and sewer tap fees as to promote this development under Chapter 380 Local Government Code; The motion was made by Councilmember Henderson and seconded by Councilmember Flood that Proposed Ordinance No. 5493 be amended as stated by the City Attorney. The motion to amend Proposed Ordinance No. 5493 carried by a unanimous vote. Proposed Ordinance No. 5493 was adopted as amended becoming Ordinance No. 05-11. Voting Yes: Mayor Ortiz; Counciimembers Barker, Henderson, Flood, Thompson, Prince and Sinegal. Voting No: None. The caption of Ordinance No. 05-11 reads as follows: ORDINANCE NO. 05-11 AN ORDINANCE AS IT PERTAINS TO ICON BUILDES, LLC. X. FUTURE AGENDA ITEMS OR REQUESTED REPORTS Councilmember Prince 1. A report on the rehabilitation of abandoned homes. 2. A request to form a partnership with the Port ,4rthur Chronide, 3. A report on a five-year employee vesting program. 4. A report on limiting personal attacks against Councilmembers. 5. A paper copy of Future Agenda :~tems. Councilmember Sineqal A progress report of Mr. Tom Hanna's investigation. Councilmember Flood An investigation of a dumpster located on West Port Arthur Road and 61st Street. Cib/Council Minutes February 1, 2005 38 Xl'. AD.1OURNMENT OF MEETI'NG Upon the motion of Councilmember Prince, seconded by Councilmember Henderson, and carried unanimously, the City Council adjourned their meeting at 4:10 p.m. An audio-tape of this meeting is on file in the office of the City Secretary and is made a part of the official minutes of this meeting. MAYOR OSCAR G. ORTI'Z Al'rEST: CITY SECRETARY EVANGELINE GREEN END OF REGULAR MEETTNG HELD February 1, 2005. APPROVED: City Council Minutes February 1, 2005 39