[0:09] Don't do that.
[0:12] » But it shows that you
[0:14] » God gave me two of these.
[0:17] » I can tell you there.
[0:20] » Trust me. Those bunches that he gave me,
[0:22] I use.
[0:24] » It is 5:30. I call to order this special
[0:27] city council meeting September 2nd. 125
[0:30] at 5:30. Please note that we do have a
[0:33] quorum present on our agenda tonight.
[0:36] Item number two, first reading,
[0:37] discussion of possible action on an
[0:39] ordinance amending ordinance 2024-10-03
[0:43] to reflect modifying city of commerce
[0:45] water and wastewater rates for FY2026.
[0:48] Mr. Lisby, city manager.
[0:50] » Mayor, council, thank you for the
[0:52] opportunity to present tonight. uh we
[0:54] took what is normally a workshop and and
[0:57] asked for a special council meeting. Uh
[0:59] as part of our annual budget adoption
[1:02] process uh in addition to the the budget
[1:06] adoption, the tax rate adoption, we
[1:09] typically have an additional process to
[1:12] adopt water and wastewater fees um and
[1:15] solid waste or trash collection fees. Um
[1:18] and we do two readings of those
[1:21] ordinances. And so in order to get them
[1:24] uh adopted in September in conjunction
[1:26] with the budget, we needed a first
[1:28] reading at the workshop and the second
[1:30] reading will be uh subsequently in our
[1:33] regular uh September meeting. And so uh
[1:37] in setting up the conversation for the
[1:40] water and wastewater rates, uh I want to
[1:43] take a couple of steps back u revisit
[1:46] some of the material we talked about in
[1:48] our last meeting when we were discussing
[1:50] tax rates. um because tax rates, utility
[1:54] rates um are all part of support of the
[1:57] budget that's being adopted. And if all
[2:00] I did was put the rates in front of you
[2:02] without the context of where it fits in
[2:04] the overall budget, uh that might not be
[2:07] as beneficial for the council or for the
[2:09] public. And so I want to talk just
[2:11] briefly uh about the services that local
[2:15] government provides and then the rates
[2:18] that generate the revenues necessary to
[2:20] cover the cost of those services. Uh it
[2:23] is uh increasingly popular uh in Texas
[2:26] and across the US uh to um to rant and
[2:32] rave about the growth of government uh
[2:35] the waste, fraud, and abuse of the
[2:37] expenditures within government. Uh and
[2:40] I'm typically tend to agree with most of
[2:43] those sentiments. uh and at most levels
[2:47] of government there is a lot of
[2:48] inefficiency
[2:50] uh because it doesn't typically operate
[2:52] exactly like the private sector does. Uh
[2:57] at the local government level which is
[3:00] the closest form of government that
[3:02] you're ever going to reside to. uh there
[3:05] are some services that we provide that
[3:08] it's practically not possible to operate
[3:11] like uh a for-profit business or or like
[3:14] the business world does. And so as we
[3:17] talk about the taxes or the rates and
[3:19] the cost it has on the citizens uh I
[3:22] want to provide some perspective of the
[3:24] value of the services that those rates
[3:27] support and the role that those services
[3:29] play. Uh so on the screen uh you've got
[3:33] a graph that is um the expense budget
[3:36] for the general fund and I know this
[3:38] particular item is talking about water
[3:40] rates. Uh but as you look at each
[3:43] department and each service that is
[3:45] provided to our local community, uh I
[3:48] want to point out that most all of these
[3:52] services are services that the private
[3:55] sector can't or won't provide because
[3:58] there is not a business model that works
[4:01] uh in a typical for-profit environment.
[4:04] So, as an example, fire and emergency
[4:06] services. Uh the capital cost, the
[4:09] barrier cost of entry to have a
[4:12] privatelyun fire department uh in a
[4:14] local community. Uh the capital cost, as
[4:18] we just saw, uh with a ladder truck
[4:20] being $1.9 million, uh engine 3 being
[4:23] $900,000 and change, brush truck being
[4:28] almost $400,000.
[4:30] uh the equipment necessary to provide
[4:32] those services is very costly. Um and
[4:35] there's not a business model in which
[4:38] you can build the people that use the
[4:40] service. Uh and so what typically
[4:43] happens in those public services that
[4:45] are necessary for a healthy community,
[4:48] but there is no business model in which
[4:50] you build the users of that service. uh
[4:54] if the private sector did it then you
[4:56] would have a large number of people
[4:58] taking advantage of the service using
[5:01] the service but not paying anything
[5:03] towards the cost of the service and so
[5:06] it unfairly shifts the burden of those
[5:08] costs to a small group of users where a
[5:12] large group of users get to benefit from
[5:14] those services. Uh and so police, fire,
[5:18] uh parks and recreation, code
[5:20] enforcement, uh municipal court, public
[5:23] library, all of these services are
[5:25] necessary for a healthy and vibrant
[5:27] community. But there's not a method in
[5:30] which you can build the users in a way
[5:33] that makes that cost affordable or makes
[5:35] that service sustainable. And so
[5:37] governments use taxes of one form or
[5:40] another to generate the revenue
[5:42] necessary to provide those services. So
[5:45] a tax is different than a fee and that
[5:48] the purpose of the tax is purely to
[5:50] raise revenue and you need enough
[5:52] revenue to cover the cost of the
[5:54] services and the amount of the tax is
[5:57] not tied to the cost of the service. It
[6:00] just generates revenue necessary to
[6:02] cover the cost of all the services that
[6:04] are provided. Um and so as we look at uh
[6:08] property taxes or taxes that are
[6:10] provided in our community, these are the
[6:13] services. a lot of numbers on this
[6:15] screen. Um, but on the right hand side
[6:18] is a basic summary of our general fund.
[6:21] Um, public safety services, our police,
[6:25] fire, animal control, municipal court,
[6:27] and emergency management. Uh, that
[6:29] totals $4,621,377
[6:34] or 55.9%
[6:36] of the general fund expense budget. Um,
[6:40] property taxes bottom left. Uh this
[6:43] budget anticipates $3,92,395
[6:48] of operating and maintenance property
[6:50] tax revenue. And so the property taxes
[6:53] that we receive don't cover the full
[6:56] cost of public safety. Uh and public
[6:58] safety is the fundamental most basic
[7:00] service that we provide to our
[7:02] community. Uh and so when you look at
[7:05] the revenues generated from these taxes,
[7:08] uh property taxes doesn't even cover the
[7:10] cost of that fundamental public safety
[7:12] component. Uh and so we have a whole
[7:14] list of other services and fees and and
[7:18] charges that we use to try to recover uh
[7:21] the cost of all of the services that are
[7:24] provided. But generally for the general
[7:26] fund, public safety is $4.6 million.
[7:29] Non-public safety is $3.6 6 million for
[7:33] a total of about uh 8.2 $8.3 million of
[7:37] expenditures. Now, within the tax base,
[7:40] it's it's interesting to see um there's
[7:42] going to be a lot of charts and colors
[7:44] here. I'll try to move through them
[7:46] quickly, but if you look at the number
[7:48] of properties or tax accounts that are
[7:52] each classification, uh residential
[7:55] properties uh are roughly 50% of the tax
[8:01] accounts or tracks of land uh that are
[8:04] within our community. Uh 615 of those
[8:07] are vacant land uh which don't have a a
[8:10] land use associated with them. Uh then a
[8:13] and commercial uh make up the the
[8:16] remaining portions. Um so there's just
[8:20] how the land is used shaking it out. Uh
[8:23] how the acres uh so if residential is
[8:26] almost 50% of the accounts uh there are
[8:30] 596.7
[8:33] acres uh of the total acreage of our
[8:35] community. Uh so a land uh is the
[8:39] largest uh amount of land within our
[8:42] community and then the tax exempt is the
[8:45] second largest amount of land within our
[8:48] community. Uh within those categories
[8:50] the new value that was added in this
[8:53] last year almost all over 75% of the new
[8:58] value added our community was
[9:00] residential in nature. uh the rest was
[9:02] commercial uh land use that had new
[9:05] development, new additions. Um now of
[9:09] the total city uh the market value uh
[9:13] right at $1.6 billion of valuation in
[9:16] total. Um residential is at $377 million
[9:21] of valuation. Then you've got a small
[9:24] sliver that's vacant a land. So again,
[9:27] if you look at the number of acres of a
[9:30] land as a huge portion of our community,
[9:33] the value of that land is relatively
[9:35] small uh in terms of market value for
[9:38] our community, but
[9:41] 55% of the value of our community is
[9:45] listed as tax exempt. Um and so the
[9:48] taxable value uh then moves into
[9:52] residential properties are the of or
[9:55] probably 55% of the taxable value of our
[9:58] community are associated with
[10:00] residential properties. That's single
[10:02] family and multif family uses. Um
[10:05] commercial is the next largest and
[10:07] industrial after that. Uh so if you look
[10:10] at the total value of our community,
[10:13] there's a huge chunk of the value of our
[10:15] community that's tax exempt and it comes
[10:17] off the table. So of a $1.6 billion
[10:21] valuation,
[10:23] roughly $660 million of that uh is
[10:26] taxable. And so the majority of the tax
[10:29] value in our community that is taxable
[10:32] falls on the residential customers. And
[10:34] so as we look at the cost of the
[10:36] services that we showed at the beginning
[10:38] and how we distribute the cost of those
[10:41] services, these are all essential
[10:43] services that the community needs to be
[10:45] healthy and vibrant. And unfortunately
[10:47] the residential class property owners in
[10:50] this community have to bear over half of
[10:53] the cost of those services because of
[10:55] how the property is is laid out within
[10:58] our community. Um and so as we saw um in
[11:02] our last meeting uh the no new revenue
[11:05] tax rate which is calculated and given
[11:07] to us um by the state is 82 cents uh and
[11:12] the proposed budget that we have in
[11:14] front of us that bottom line uh proposed
[11:17] rate is 83 cents and some hanging
[11:20] decimals. Uh and so there is a slight
[11:22] tax rate increase uh proposed for that
[11:26] budget. And again, uh, we recognize that
[11:29] there's some impact on the residential
[11:31] side because they have the majority of
[11:34] the taxable property, uh, within our
[11:36] community. Now, what the impact of that
[11:39] residential tax is going to be, uh, the
[11:42] median home value on this chart uh, is
[11:45] kind of in the middle. $184,611
[11:49] is the median value of a residential
[11:51] property uh, in our community. And so
[11:54] with the bottom line, that tax increase
[11:57] is 3 cents and some trailing decimals.
[12:00] Uh for that median home of $184,000,
[12:03] their annual tax bill will go up $58.51
[12:08] or approximately $4.88 a month. Uh is
[12:12] what the additional cost would be of
[12:15] that property tax. Again, we covered
[12:16] this last time, but I want to add that
[12:19] to the conversation as we talk about the
[12:21] impact of water um and sewer rates and
[12:23] what it will have on those residential
[12:25] customers. Now, for that tax rate, um
[12:29] we've looked at um this is the math that
[12:32] the state gives us. Very bottom line, uh
[12:36] you're going to have an additional
[12:38] $196,000
[12:39] of tax revenue uh from this tax rate
[12:42] that's being proposed. 111,000 of that
[12:45] is coming from new construction, mostly
[12:48] residential. Uh and so the tax increase
[12:51] as far as the state uh regulatory
[12:53] language is required is an additional
[12:56] $85,000 approximately of property tax
[12:59] revenue that we're asking for uh from
[13:02] the community and what is the value
[13:04] they're getting for that additional uh
[13:07] tax revenue. Uh we saw these numbers
[13:10] earlier on the public safety side. Uh
[13:13] we've got 10 uh new patrol vehicles uh
[13:16] that are in the budget for a total of
[13:18] $80,000 a year. Uh we've got fire engine
[13:20] number three uh that's $66,000 a year. A
[13:24] new public radio system, $70,000 a year.
[13:28] Uh an improved forensics at $12,000 a
[13:31] year. So just on public safety alone,
[13:34] we're asking for an additional $85,000
[13:37] revenue, but we're improving the level
[13:40] of service or adding new services to
[13:42] public safety uh as you see in those
[13:44] four line items. And then in parks
[13:47] recreation, uh we have the middle school
[13:49] gym uh that we are using as a rec
[13:51] center. Uh and then the significant
[13:54] improvements to the baseball fields at
[13:55] anymore. So there's a lot of
[13:57] improvements to the level of service
[13:59] that is being added uh for the relative
[14:02] cost of a monthly cup of coffee uh for
[14:07] residential uh for the average
[14:08] residents. Uh and so we feel like
[14:11] there's a tremendous amount of value the
[14:13] community is receiving uh for that
[14:15] conversation.
[14:17] uh as we start looking at uh the water
[14:20] utility
[14:22] uh within the water utility system uh
[14:26] 86% of all water utility accounts are
[14:29] residential in nature. Uh we saw on the
[14:32] tax side uh residents for taxable value
[14:36] or about 55% of the community. Uh
[14:39] they're 86% of the accounts uh that we
[14:43] have and commercial is almost 11% of the
[14:46] accounts. Um and then the remainder are
[14:49] all small in terms of the number of
[14:51] accounts. If you look at consumption uh
[14:54] residential consump consumers use 42.7%
[14:57] of the water. Commercial uses 15.7% of
[15:01] the water. Uh institutional uses 13% of
[15:05] the water. Industrial uses 10. And then
[15:08] wholesale is 18.6% of the water that we
[15:11] produce uh goes outside of the community
[15:14] to rural users uh that we have wholesale
[15:16] contracts for. So while residential
[15:19] accounts are 86% of the accounts, they
[15:22] consume 42% of the water. Now on the
[15:26] water side for the revenue right now
[15:29] residential customers both single and
[15:31] multif family provide about 50 to 51% of
[15:35] the revenue. And so over the past
[15:37] several years we've seen that
[15:40] residential customers have typically
[15:42] subsidized commercial customers because
[15:45] they use less water at 42% but they
[15:48] provide more revenue at 50%. And so as
[15:52] we've been adjusting the rate
[15:53] structures, we've been slowly shifting
[15:55] that to par uh so that the class of
[15:58] customers that the revenue they generate
[16:01] should be consistent with the volume of
[16:03] water uh that they uh consume. Um but
[16:08] you'll see on the wholesale side,
[16:10] wholesale uses 18.6% of the water. They
[16:14] provide 9.2% of the revenue. Um and so
[16:18] as we are raising the rates uh that we
[16:20] charge to wholesale customers that is
[16:23] improving that scenario. Um sewer
[16:26] revenue u residential customers provide
[16:29] about 53.5% of the sewer revenue. Uh
[16:32] commercial is 15 institutional is 21 um
[16:36] industrial is 10 and we don't have uh
[16:39] wholesale sewer revenue customers. So,
[16:42] what we're asking for tonight in the
[16:44] ordinance, taking a look at how we're
[16:46] changing uh the water and sewer rates uh
[16:50] for the residential class customers, uh
[16:52] we still have what we call the lifeline
[16:55] rate for residential class customers.
[16:57] And so, that's the first 4,000 gallons
[17:00] of water consumption. That $4 per
[17:03] thousand uh consumption charge is
[17:05] actually below the marginal cost to
[17:08] produce that water. So,
[17:12] in theory, you could say that we're
[17:13] losing money on those 4,000 gallons uh
[17:16] because it cost us more than 4 thou $4
[17:19] a,000 to produce it. Um but it is uh
[17:22] essential for basic life necessity needs
[17:25] and so we protect that first 4,000
[17:28] gallons at a lower uh rate. It also
[17:31] protects uh the large number of our
[17:33] homes that are senior citizens or on
[17:35] fixed income. Um, and we'll see later
[17:38] that about 67% of our customers never
[17:42] get outside of that 4,000 gallons uh
[17:46] consumption range. But then as you use
[17:49] more water from there, the cost
[17:51] escalates. So 5,000 to 15,000 is $6.75.
[17:56] 16 to 50,000 is $7.75.
[18:00] And if a residential account uses more
[18:02] than 50,000 gallons, then it's 875 uh
[18:06] per thousand after that.
[18:08] » Um potentially um multif family as
[18:13] apartment complexes uh they don't have
[18:15] the lifeline rate because you usually
[18:17] have one large meter for multiple units
[18:20] and there's no way for us to calculate
[18:22] that out uh than commercial, industrial,
[18:25] institutional and wholesale water
[18:27] contracts. the contracts that we have
[18:29] with those wholesale customers control
[18:32] how we escalate those rates. And so
[18:34] we've demonstrated that they use more
[18:37] water but provide less revenue. We're
[18:39] slowly working within the contracts we
[18:42] have uh to adjust those rates and bring
[18:44] some some equity there. Um on the sewer
[18:47] side again we have the same lifeline
[18:50] rate on the sewer charge for residential
[18:52] accounts. It is tied to your water
[18:54] consumption. So, the first 4,000 gallons
[18:56] of water consumption will also see a $4
[18:59] per thousand charge. Um, and then for
[19:02] residential accounts, anything above $4,
[19:06] it's that $7.75,
[19:08] but we cap that at 10,000 gallons uh of
[19:11] consumption because studies show that a
[19:15] residential account using more than
[19:17] 10,000 gallons, um, most of that
[19:20] additional water is not going down the
[19:22] sewer line. that's probably a
[19:23] discretionary outside use uh on the yard
[19:26] or in a pool or washing a car. Um if my
[19:29] grandkids are there, they're playing in
[19:31] the sprinkler and so that water is not
[19:33] going down the sewer line. Uh and so the
[19:36] assumption we make there is anything
[19:38] less than 10,000 potentially is going
[19:40] down the line. Um may or may not, but we
[19:43] don't have a way to measure and know for
[19:44] sure. um multif family, commercial,
[19:47] industrial,
[19:49] all of their water consumption uh
[19:51] includes the sewer charge. Um and so um
[19:55] the impact of that, we saw the impact of
[19:58] the tax uh rate that's proposed on
[20:00] customers. So, what this table, again, a
[20:04] lot of numbers and I apologize, but for
[20:06] residential customers that use 4,000
[20:09] gallons or less, uh 67% of our
[20:12] residential customers stay within that
[20:15] 4,000galon a month range. Their current
[20:17] bill is $80. That's both water and sewer
[20:21] for 4,000 gallons. The proposed change
[20:23] is going up to $82. That's a $2 a month
[20:26] increase uh or a 3% adjustment. uh 28%
[20:31] of our customers uh never get above
[20:34] 10,000 gallons a month. Um and so for a
[20:37] customer using 6,000 gallons, their bill
[20:40] will go up $3 a month. Uh and for a
[20:43] customer using 10,000 gallons, their
[20:44] bill will go up $5 a month. So all in uh
[20:49] we saw that the average residential
[20:51] home, the tax is going to be about $4.88
[20:55] a month on the property tax rate. Uh for
[20:58] the utility rate, the average
[20:59] residential customer will see an
[21:01] increase of $2. So you're looking at
[21:03] about a $6 to7 a month impact for the
[21:07] average residential home in our
[21:09] community. And that supports the budget
[21:11] that was presented. On the commercial
[21:14] side, um 58% of the commercial accounts
[21:18] use 4,000 gallons or less. Um but then
[21:21] you've got restaurants and other
[21:23] commercial businesses that use more. And
[21:25] then finally uh on the industrial or
[21:28] institutional side uh they're using a
[21:31] lot larger volumes of water but it's
[21:33] basically a 3% increase across the board
[21:37] uh is what you're seeing for all of
[21:38] those classes of customers. And uh that
[21:42] concludes the presentation and I'll be
[21:44] happy to answer any questions that you
[21:45] have.
[21:47] » Any questions for Mr. Lisby?
[22:03] There being none, may I have a motion?
[22:06] » I move that we uh move forward on the
[22:08] first reading on the ordinance amending
[22:10] the two 24 uh
[22:14] 24103 to reflect modified city of
[22:17] commerce water and wastewater rates for
[22:19] fiscal year 2026.
[22:22] We have a motion and a second. All in
[22:23] favor say I.
[22:25] » I.
[22:25] » Any oppose like sign?
[22:27] » Motion carries. Thank you. Item number
[22:30] three, also a first reading discussion
[22:32] of possible action on an ordinance
[22:35] amending ordinance 2024-10-02
[22:38] to reflect modified city of commerce
[22:40] solid waste fees. Miss Campbell,
[22:42] assistant city manager, financial
[22:44] services.
[22:45] » Good evening, mayor and council. So, um
[22:48] along with the water and wastewater
[22:50] rates, uh we usually bring solid wastes
[22:54] uh rates um for two readings before you
[22:57] guys. Um with the city sanitation
[23:01] contract being reviewed and um
[23:04] negotiated currently, I know you haven't
[23:07] seen that yet. I know it hasn't been a
[23:09] motion yet, but anticipation of that, we
[23:12] wanted to go ahead and get the solid
[23:13] waste fees in front of you that we are
[23:16] proposing to
[23:18] um bill our
[23:21] customers. The residential rate that
[23:24] everybody sees um is not changing.
[23:28] Um, uh, I believe city sanitation has
[23:31] requested a 2 and a.5% increase to their
[23:34] fees, um, and which you guys will
[23:37] negotiate and talk about during that
[23:39] contract. And so what I did was I took
[23:42] that 2.5%
[23:43] on their increase and just uh, pushed
[23:47] forward the typical 5% increase that we
[23:50] do with our um, customer rates. We try
[23:54] not to have a very large margin. Um, we
[23:57] try to keep it at the 5%.
[24:00] And we do the 5% mainly because when we
[24:04] do that large pickup, that fall and
[24:06] spring pickup, we don't bill that to the
[24:09] customers per se on their bill. So, this
[24:12] 5% helps us kind of make sure that we're
[24:14] covering the cost of those large bulk
[24:17] pickups that we do. Um, and so the rates
[24:20] that you have in front of you are in
[24:23] theory 2.5% higher than they were um
[24:27] last year. Uh, with the residential rate
[24:30] of I believe it's $19
[24:34] and some change. I don't have it in
[24:35] front of me, I'm sorry. Uh, that will
[24:37] remain the same.
[24:39] Um and then the only other thing that is
[24:43] dependent is um large pickups that we
[24:48] have to have uh Republic come and do. Um
[24:52] we go based off their rates. It's a pass
[24:56] through rate from city sanitation to us.
[24:58] It's a pass through rate. Um, and
[25:00] typically that is only done on
[25:03] um internal
[25:07] um sludge pickup from the wastewater
[25:10] plant at this time. Um, and so that's
[25:13] the only one that's based on a pass
[25:15] through. Everything else is um 5% higher
[25:20] than city sanitation uh bills us and
[25:23] it's only at 2 and a half% from last
[25:25] year. if you have any questions.
[25:30] Any questions for Miss Campbell?
[25:38] » There being none, may I have a motion?
[25:41] » May I make a motion that we adopt
[25:43] ordinance amending ordinance 24102 to
[25:46] reflect modified city commerce sideways?
[25:50] » Second.
[25:51] » We have a motion and a second. All in
[25:53] favor say I.
[25:54] » I. Any oppose? Like sign. Motion
[25:56] carries. Thank you,
[25:59] council. We have no other items on our
[26:01] agenda for this evening. So, may I have
[26:03] a motion to adjurnn?
[26:04] » Move.
[26:05] » Second.
[26:06] » All in favor say I.
[26:08] » Post like sign. We are journ at 555.
[26:16] » Don't let the door hit you on the wind.
[26:18] » No.
[26:22] Let's see.
[26:24] » She goes, "Oops, I forgot.