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1974-01-07 CC MinutesCITY OF FARMERS BRANCH CITY COUNCIL MINUTES OF A REGULAR MEETING January 7, 1974 All members of the City Council were present: Mayor George G. Grimmer Mayor Pro Te m W. R. Linn Councilmen: Ray Flaherty Bill McClung Ken Quevreaux Bill Binford Members of the City Administration present were: City Manager Paul M. West City Attorney Doug McCallon City Secretary J. W. Wade Director of Staff Services Glenn Moore Secretary Ruth Ann Parish Mayor Grimmer called the City Council meeting of January 7, 1974 to order at 7:30 P. M. . AGENDA ITEM NO. 1. - INVOCATION. Councilman Ray Flaherty gave the invocation. DECLARING AN EMERGENCY. After some consideration, a motion by Councilman McClung, a second by Councilman Quevreaux, all voting "aye", declared an emergency and placed on the Agenda as Item 2.A. -Discuss Senate Bill No. 2506 - Natural Gas Amendments of 1973. AGENDA ITEM NO. 2. - APPROVAL OF MINUTES - December 17, 1973: After some consideration, a motion by Councilman Binford, a second by Councilman McClung, all voting "aye", approved the minutes of the City Council meeting of December 17, 1973 with the following addition: on Page 772, under Agenda Item No. 7, let the first paragraph read: "Mayor Grim.me r opened the public hearing for change of zoning as described in the above caption. Mayor Grimmer stated that the Planning and Zoning Commission recommends the request be denied." AGENDA ITEM NO. 2.A. - DISCUSS SENATE BILL NO. 2506 - NATURAL GAS AMENDMENTS OF 1973. T1W City Council reviewed some information from the Texas Municipal League requesting support from municipal officials in opposition to Senate Bill No. 2506. After some discussion that this bill would infringe upon free enterprise, a motion by Councilman McClung, a second by Councilman Binford, all voting "aye Page 785. instructed the City Administration to draw up a resolution opposing Senate Bill No. 2506 and copies to be sent to the proper legislators concerned. AGENDA ITEM NO. 3 - CONSIDER ORDINANCE NO. 987 ABANDONING A PORTION OF IRON1 ALE STREET. City Manager Paul West explained that the proposed Ordinance No. 987 is necessary to abandon that portion of lrondale Street that was recently quit claimed to Charles Blaylock and Cowden Henry in order to give Mr. Blaylock and Mr. Henry an insurable title to the west twenty feet of Irondale Street. Mr. West stated that this does not abandon the east twenty feet of Irondale Street. After some discussion, a motion by Councilman Binford, a second by Councilman Quevreaux, all voting "aye", adopted the following captioned ordinance number 987: AN ORDINANCE OF THE CITY OF FARMERS BRANCH, TEXAS ABANDONING PUBLIC RIGHTS OF THE WEST TWENTY (20) FEET OF A PORTION OF IRONDALE STREET, FROM THE NORTH RIGHT-OF-WAY LINE OF CARRICK TO THE SOUTH RIGHT-OF- WAY LINE OF VERBICK, A PUBLIC STREET IN THE CITY OF FARMERS BRANCH, TEXAS; SPECIFICALLY PROVIDING THAT SUCH ABANDONMENT SHALL NOT BE AN ABANDONMENT OF THE EAST TWENTY (20) FEET OF IRONDALE OF SAID PORTION OF SAID STREET; AND DECLARING AN EMERGENCY. AGENDA ITEM NO. 4 - CONSIDER ORDINANCE NO. 988 AMENDING THE ELECTRICAL ORDINANCE. City Manager Pau West explained that the present City Electrical Code provides that the city can only issue permits to master electricians to do electrical work for the City of Farmers Branch, and that any work done without an electrical permit is in violation of the code. Mr. West stated that the City Administration recommends that the code be amended so as to allow city employees to do work on city owned equipment and property only, provided they are licensed Journeyman or Master Electricians. Mr. West stated that all requirements of the electrical code and ordinances must be followed by city employees with the exception that permit fees are not required. After some discussion, a motion by Councilman Flaherty, a second by Councilman Binford, all voting "aye", adopted the following captioned ordinance number 988: AN ORDINANCE OF THE CITY OF FARMERS BRANCH, TEXAS, AMENDING THE CODE OF ORDINANCES OF THE CITY OF FARMERS BRANCH, AS HERETOFORE, AMENDED BY AMENDING SECTION II-79, PUBLIC UTILITY REQUIREMENTS AND EXEMPTIONS, BY ADDING PARAGRAPH (E); PROVIDIN G A PENALTY NOT TO EXCEED THE SUM OF TWO HUNDRED DOLLARS ( $200.00) FOR EACH OFFENSE; AND DECLARING AN EMERGENCY. AGENDA ITEM NO. 5. -CONSIDER ORDINANCE NO. 989 FOR WATER QUALITY CONTROL. City Manager Paul West explained that the Texas Senate Bill 835 and Texas Water Quality Board order 71-1212-25 requires cities to establish water control and abatement programs. Page 786. Mr. West stated that proposed ordinance 989 will allow the city to control diffuse waste sources which exist or will exist in Farmers Branch in the foreseeable future. The ordinance will be a tool to discourage stream water pollution and improve the appearance of natural drainage channels within the city. After some discussion, a motion by Councilman Linn, a second by Councilman Quevreaux, all voting "aye", adopted the following captioned ordinance number 989: AN ORDINANCE OF THE CITY OF FARMERS BRANCH, TEXAS, AMENDING THE CODE OF ORDINANCES AS HERETOFORE AMENDED BY AMENDING CHAPTER 15, "HEALTH AND SANITATION" BY ADDING SECTION 15-4, ENTITLED "ACTS ADVERSELY AFFECTING WATER QUALITY," PROHIBITING CERTAIN ACTS ADVERSELY AFFECTING WATER QUALITY IN THE STORM DRAINAGE SYSTEM, PROVIDING FOR A PENALTY FOR EACH VIOLATION THEREOF; PROVIDING THAT EXCEPTIONS AND EXEMPTIONS NOT REQUIRED TO BE NEGATED; PRO- VIDING A SAVINGS CLAUSE; AND AN EFFECTIVE DATE. AGENDA ITEM NO. 6 -CONSIDER ORDINACE NO. 990 REPEALING CERTAIN SECTIONS OF ORDINANCES CONCERNING SPEED LIMITS. City Manager Paul West explained that the proposed ordinance number 990 repeals Section 4 of Ordinance No. 38 and Section 5 of Ordinance No. 536 and Section 2 of Ordinance No. 597. These three ordinances set speed limits in various parts of the city. The three sections repealed can be interpreted to repeal virtually all of the speeding ordinances of the city. By repealing these three sections, all of the speeding ordinances will be valid and enforceable. After some discussion, a motion by Councilman Quevreaux, a second by Councilman Linn, all voting "aye", adopted the following captioned ordinance number 990: AN ORDINANCE OF THE CITY OF FARMERS BRANCH, TEXAS, REPEALING SECTION 4 OF ORDINANCE NO. 38; REPEALING SECTION 5 OF ORDINANCE NO. 536; REPEALING SECTION 2 OF ORDINANCE NO. 597; PROVIDING THAT ALL PARTS NOT REPEALED SHALL REMAIN IN FULL FORCE: AND DECLARING AN EMERGENCY. AGENDA ITEM NO. 7 - CONSIDER BIDS FOR 4-WHEEL VEHICLE FOR THE PARK DEPARTMENT. City Manager Pau West stated that two bids had been received that met all the specifications for a 4-wheel turf vehicle for the Park Department. The two bids were: Colonial Motors in the amount of $ 3,471.93, and Watson Distributors in the amount of $3,653.75. The City Administration recommends to award the bid to Colonial Motors, the low bidder. After some discussion, a motion by Councilman Linn, a second by Councilman Quevreaux, all voting "aye", authorized the purchase of a four-wheel turf vehicle from Colonial Motors in the low bid amount of $3,471.93. Page 787. MRS. BARBELL AND BOY SCOUTS, MIKE FISHER AND BILL BARLANDO FROM TROUP 581 WERE PRESENT AND INTRODUCED. MAYOR GRIMMER ANNOUNCED THAT ITEMS ON THE AGENDA FOR THE GENERAL SESSION HAVE BEEN CONCLUDED, AND THERE IS AN ITEM FOR DISCUSSION IN EXECUTIVE SESSION. MAYOR GRIMMER EXPLAINED THAT UNDER SECTION 2. G. OF THE NEW OPEN MEETING LAW THAT WENT INTO EFFECT JANUARY 1ST, CERTAIN CONDITIONS SUCH AS LAND ACQUISITIONS AND PERSONNEL MATTERS ARE PRO- VIDED FOR DISCUSSION IN CLOSED SESSIONS. AGENDA ITEM NO. 8. - EXECUTIVE SESSION Discuss Personnel Matter There was discussion concerning Mr. Ray Thacker serving on the Building Board of Appeals and Zoning Board of Adjustments for a 2 year term, subject to his acceptance. This be for the position of Alternate Place 2. THE MEETING WAS OPENED BACK INTO GENERAL SESSION Upon a motion by Councilman Quevreaux, a second by Councilman McClung, all voting "aye", appointed Ray Thacker to serve a term of two years on the Building Board of Appeals and Zoning Board of Adjustments, conditioned upon his acceptance of the appointment, for position Alternate Place 2. AGENDA ITEM NO. 9. - ADJOURNMENT. Upon a motion by Councilman Linn, a second by Councilman Binford, all voting "aye", adjourned the City Council meeting of January 7, 1974 at 7:55 P. M. . Mayor eor G. immer City ~eoetary J. W. Wade Page 788. g 69 000 INTEREST COVERAGE: I have said all these other things in order to say this-a sum total result of increased construction costs, fuel costs, money costs and other costs, is that our interest coverage is sliding downhill. Most of you have encountered the "interest coverage" factor in selling municipal bonds. Arid you know how vital it is for getting the lowest possible interest rates. Interest coverage simply represents the number of times our earnings will cover the interest on our long-term debt. For our Company, it has dropped from eight times earnings to less than five in the past 10 years and will drop below 4 in 1974 without rate relief. Interest coverage is a prime consideration in establishing bond ratings. Our Company must stabilize this decline if we are to maintain our current Triple A bond raying. Assume we need $190 million in new construction money in 1974 and $250 million in 1975--and we must raise 60% of that in outside money. A drop from our Triple A to a Double A bond rating would likely cost us a quarter of one percent at the money market--many millions of dollars of extra interest over the lives of the bonds. Interest is one of our big costs of doing business. INTEREST ON LONG TERRA DEBT (MILLIONS OF DOLLARS) $31.2 * Estimated 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974* INTEREST ON LONG TERM DEBT: The interest on the Company's long term debt amounts to $25,600,000 for 1973 alone. INTEREST RATES AS OF DATES SECURED PERCENT INTEREST 8%% 8%% 73/4% 65/8% 4 Y2 % BE PT. 1970 7 1/8 % 7 Y2, % 7'/2 % FEB. 1970 APR. 1969 FEB. 1972 FEB. 1973 FEB. 1971 JAN. 1963 JAN. 1966 INTEREST COST: Our customer growth and new construction are more than just a matter of kilowatts-they boil down to a matter of dollars and cents. As all of you know, the cost of borrowing money has risen rapidly and substantially during the past few years. When you must raise the millions of dollars of new money which we must have to meet growing customer needs, the cost of interest on that money becomes very important. This chart shows how our interest rates on new debt issue has risen in the past few years. For example, a $30 million bond issue which we sold in 1970 at 8-718% will cost us $2,662,500 per year in interest for 30 years. SOURCE OF INVESTMENT FUNDS MILLIONS OF OOLLARS~ X117 ~i77 7 ~ s s~s;N °:p ~30~ ~ S O 3 ' i~:i $ii4 ~ ~ v'3 ~ _ . a..n,.~ 4 `,w_ ~ ~ 1 yp T - 1 = '';C. k IF7 c "C'3 . ~a h r % yT -yf ? ~9~ ~ ~zn~~ ~Y $8 0 4 'j~jf i .Q ~i~{ ~ ti Oa L ~ ~(1 1 Y 1 ~ f !3 Y n 7/ ~'ry5 ~ _ ~ i „~v _ ~ 0 /R i'~~i 555JJJV ~ X50 ~ ~ ` ` , Y/~~.7 7 cr~`w ~~~i Y ±i r a q~' ~ • ! ~ I~ ~,~t~~ ~ v i7 ~~j t t f/ //11 P ~ f h .3 ; ~ ~ ! 0 ~ ~4 Qk - j~. ~ ~;kip = K ~ / ~ e ~ A ~ s6 ~ I ~ fin( ~ ~ ter} _ r' a ~ ~ ~ i~ ' w n $ 6S~` ~ t~1t 3"t~'~,k{ a '1{ d ~h j 19fi4 1995 19fifi i997 i969 i9R9 1970 i971 1972 1973 1974# i974#* Estimated, without propased rate increase Estimated, with proposed rate increase ~ ~ SOURCE OF FUNDS FOR NEW CONSTRUCTION: The funds to finance this massive new construction comes from two basic sources those funds which we can generate within the Company, and the money we must raise in outside financing from the sale of Bonds, Preferred Stock and Common Stock. A major share of the new construction money, as you can see from this chart, comes from outside financing over 60 percent. The remainder comes from internally generated funds. 2( 180 160 Ldp 140 J O ° 120 LL. 0 (n 100 z _O J 80 J 60 40 20 0 TEXAS POWER & LIGHT COMPANY CONSTRUCTION EXPENDITURES Y { 4~•;1 f Sh ~ ~~ys W r a r a r7 9 wyt~ .mac 7 x..: 1 J t N 1 ~ 7, ~ .w z x Y L~ i asti: ~ c% 4" '41 e. .4 y't 2 y ` Y b a} 3 ~P 3 IH4 lu" 19bb 1967 1969 1969 1970 1971 1972 1973 1974* m * Esti oft CONSTRUCTION EXPENDITURES: Our customers' electrical requirements are continuing to grow at a rate of about 11% a year ...and we must construct new generating plants, new transmission lines, new distribution facilities to meet those needs. The Company's construction expenditures will be about $162 million in 1973, and the chart shows that it will be significantly higher in 1974. As stated earlier, TP&L's construction budget in the next six to seven years will be at least $1 billion, and probably will go to $1.5 billion by 1982. A large portion of this construction money--aver $82 million in 1973--goes for new generating plants, made necessary not only by system growth but also the switch to lignite and nuclear fuels. pw t .Y ~ Zrl Y~~~ ~4 ~R~.L""" ...w~+ t ~rJ ':ry µZ A 1 It ~ !~'~~hA 1 )'i r'f^+ wry t' ~ _ s , i S ~i. '7aN" i`Prt t~t{~,,.ICS{'a'E 'r xtt -~a+f_ 02 y~KzW 77 S ~ ~ 3 1 C F RN -A' ypq qY i„ YN" ~v. #`t s r>i f rJ Y 3 0 iV 1 ~.f'~ ♦ 1 if i4.~ - q .[pYi y M k S i t z c ~ ~.zf r ~ ^ ! +"+m 77 it 5 f, ~i 3 X 7i..~ woomm COD 0-00 %Mum 10 ANNOM& %mawo 47-, t ~ ~ Year - 4 ~ 1 y7 rri sue. cr) co CM -P- cm CD, C ® C~ O C=. C3 G! ~ C= O C= C= p C= S-SVII G 1 LI INVESTMENT PER CUSTOMER: Just as the total TP&L investment in facilities has grown, the Company's investment per customer has also risen. We have an average of about $2,100.00 invested in facilities for each of our 545,659 customers. That's about twice as much as 10 years ago. Our present-day investment to serve a new customer is about $300, or more, per kilowatt of added load. For example: To serve a new window air conditioner which a customer adds, TP&L must invest about $300 in raneration, transmission and distribution equipment. To serve a new home with three tons of air conditioning, TP&L must invest about $2,000 in new facilities. To serve a new hospital with 500 kw load, TP&L must invest at least $150,000. To serve a new factory, which will provide 500 new jobs and have an electric load of 3,000 kw, TP&L must invest about $1,000,000 in new facilities. We must serve thousands of new loads such as these. In order to finance the millions of dollars needed, we must earn an adequate return on investment. We cannot do that on present rates. r°~ TOTAL INVESTMENT I Y F L r;! C PS A- l :t'rv F ht ~J1~ f v h . a • W ~ ~p t ° a.'?.' .u° t-. Mh r+ wad. j '4 3 .d, {~kggxaYX,rS.. ,C ~ 5a ~hy, ~N~~ ~ yhdvt~' m +3. t+ Y h#.5F~44 ~ ?~s~i,";%°r. yam, - b +~Jrya.~ ~5,~~ IN .y~yj n~ggi ..t y '9N7"`P 45B a+~ 3^L4l N'. ? -k'f,Wy '9;`"^;,~,,• a ~~'d1. ~P+i~ t~~~4a ~ h~~tr~ ~r~^r#Y•a.' ~,""c Y4 a'#~k ? t>d ~ t'zs;~° ~ ~ a~ s a. •*'-t dhs'~.',y r6?9 ~ y s a ~f 'a. .n r~ r^ - § . ` .6,~ .~~k@ `sae ~w a ~ ~ ~ ~.;.t' ~ ' .n„ F4 r a p rt..~nr e"an V` t ~yc rx#.m; a"a, Sea J. s•., s... 1400 1200 1000 900 r Vi 600 O (jj ~ foo M (n 200 0 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974* M * Estimated TOTAL INVESTMENT IN FACILITIES: Texas Power & Light Company must spend vast amounts of new money to provide for use of lignite and nuclear fuels and to serve the growing electricity demands of its present and increasing number of customers. The chart tells the story. At the end of 1974, our company will have about one billion, 330 million dollars ($1,330,000,000) invested in the facilities which are necessary to serve its 51-county service area. TP&L's investment has doubled in the past five years, tripled in 10 years. Only NOW 3 ~fi ~ ^ti C4 ~ Fla tit t 'v i44 ; ~ 1v i~ti ~1F~ r 1 a rS M 1 4 r r S~ r r. ALL ITEMIS TRANSPORTATION FOOD U.S. Dept. of Labor, August, 1973 i - ya ~E ~ tJr Y4 .L~ R 1{ ~ t7 i'. t 3 t HOUSING MEDICAL CARE SERVICES NOBODY LIKES RISING COSTS: This chart shows 1973 figures from the United States Department of Labor. The cost of living has increased 44.7% in the last 10 years. Yet the cost of residential electric service used in 1963, compared to 1973, has increased only 5.7%. This is due to increased electricity usage at lower per kwh unit cost and two rate decreases that helped offset the 6% rate increase which you granted to us in 1972. I believe you will agree that electricity remains one of the biggest bargains in the family budget. 5C PRICE PER AVERAGE KWH -RESIDENTIAL 4.15G 3¢ 20 1c 4C Fi. z Minvo- ~ In 3,330 V7 k 2.880 P4 K~ e 2.490 2.390 2.24 2.310 yM1 f 2 180 r t a yi 6 rk ~ M1 Y ~ .y R ~6~{" _ °~.~i P .tl2. ~ *'i ' ~ ~ S ~ &1 ~ L ~ l M M1 _ „ r 4 A-M rrl w•~' ~."'^~~'.tt~€,e5w ~~~-a.a a~. :E'°<<'-,,~Y+- 4,a "ass ~k' r~y~~~~"•,~a ~'Y",r^ ~ww;}'.' . t .k^. Y._ o~.s~sir~w° ~wiw, a:~.' +ra' , w, ai~~p'. 1952 1957 1962 1967 1972 1973 * 1974* 1974 * Estimated, withouI sed rate increase "Estimated, with propaiM:e increase PRICE PER AVERAGE KWH RESIDENTIAL: While the use of electricity has gone up during the past 20 years, our charge per kilowatt hour has declined from 4.15,s in 1952 to 2.88 in 1962 to 2.18 in 1372. This downward trend reflected the economics of increased usage, larger generating plants, relatively low cost fuel, low interest rates and efficient management practices. Now, construction costs, fuel costs and money costs have risen dramatically and it is necessary that we tilt this trend upwards, with our average price per kilowatt hour moving back toward the 1962 level. (Fuel adjustment is included in figures shown.) KILOWATT HOURS Z-11 C." C" co cm cz a o cm o CD o 0 0 0 o a o a o 0 0 ® c~ ca o 0 0 o 0 o a C= o ® o o ca ) t to a Y4~ a tS~.y ti} w~r "F t t x~ r ' ~ f i~ r •Y . } v LI L ~ ' ~4 te•Q ~ ' .Y IYL~ ~ ~ `LS X t { F ~ ti CIO) L h ~ ~ _k k ~x f *v ,n b ,.:....nL_'.,-'. ` - .'.L~2%a+~A-.rY~L-+I:'F w i:~:~' ° ~ Y :•jM7r r£''~/'1 l , 4:: N _~a 1 r+' x.l ~v x ti 1 a ty-r i ANNUAL KWH USE PER RESIDENTIAL CUSTOMER: Not only is the number of electric customers growing in the Texas Power & Light Company service area, but also the kilowatt hour use per customer is increasing. You can see from this chart that the average kwh use per residential customer has more than doubled in the past 10 years. This increase in electricity wasn't brought about just by the addition of more and more electric gadgets--but rather by the improvement of living standards among many of our customers. Residential air conditioning has, of course, been a big factor. In some of our less affluent neighborhoods, kilowatt consumption has risen a staggering 75% in just six years, even though there has been no change in construction or population patterns. The residents of those areas are, for the first time in their lives, enjoying the comforts of air conditioning and other appliances that most of us take for granted. 5 ~hCk - `r r ~ 'per ~ 3 r. v Sf ~ z: r t ^t CM7 l ~ c ~ M1 i !4~ ~ 1 1 k~. vti 11_-~~ - coll Coe) WW4 4 E con rim d saN0 ISO s CUSTOMERS SERVED The number of customers which Texas Power & Light Company serves has grown steadily during the past 10 years--and there is every indication that it will continue to do so. We have gained 154,651 customers in the past 10 years. CONCLUSION I believe it is apparent that this rate increase is not a spur of the moment thing. We have exhausted every possible alternative to avoid it. We have postponed it as long as we can. Let me explain why adequate rates are so vital to both us and our customers---and how our financial well-being is essen- tial if we are to be able to meet the future ellectricity require- ments of our customers and also avoid much higher costs to these customers. Texas Power & Light Company is one of only seven el-ectric utilities in the United States with a Triple A bond rating. That good credit rating makes it possible for us to raise these vast sums of new construction money at the lowest interest rates. And it enables us to compete favorably for funds with all other borrowers. Right now, we are in sound financial condition but our condition is deteriorating. You have only to look at the sharp decline in our interest coverage. The enormous increases in money needed for plant construc- tion costs, higher interest rates on that money, and growing envir- onmental requirements which we are incurring as we switch fuels . . . coupled with the necessity of refinancing maturing low-interest debt at today's high interest rates . are resulting in higher embedded interest cost, in declining interest coverage, and in a declining return on our investment. Frankly; this trend--unless reversed--will erode our bond rating our credit rating. The money we borrow would cost more and consequently, the electricity we produce would in the future cost our customers more than it otherwise would. Simply stated, this means that if we are to continue to serve the electrical requirements for our customers in the future as we have in the past, we must maintain earnings at a satisfactory level to attract the large amounts of new capital required . . . at the most reasonable interest rates available. With this rate increase TP&L's 1974 projected rate of return on its fair value rate base with a full year's effect will be 7.29/. This rate adjustment will cost the average residential customer less than 71~ per day and when approved it will appear on March, billing. Let me say again . . . nobody likes rising costs . . . however, this 10/ rate adjustment we are requesting is the minimum amount necessary at this time to meet the rising cost we face and maintain earnings which our Company must have to continue to provide the electrical requirements of our customers. Texas Power & Light Company will appreciate a favorable decision on this request. -2-