[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.

September 2, 2025 - Special City Council Meeting

Transcript