Richardson City Council Work Session August 7th, 2023
OPENING
All councilmembers are present as well as City Manager Don Magner and City Secretary Aimee Nemer.
One public comment card was submitted regarding eco-friendly design for the new city hall. One speaker is present, the President of the Richardson Symphony Orchestra, to announce a photo contest for RSO’s Nov. 4th performance, “Richardson: Then and Now”. Submissions are open to amateur and professional photographers. More information can be found at:
https://richardsonsymphony.org/?page_id=11349
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CORPORATE CHALLENGE
Next is a discussion on the 2023 Corporate Challenge. Corporate Recreation Manager Jonathan Winters presents. The Corporate Challenge is an annual Olympic style competition involving employees, retirees, and spouses of companies throughout the city. This year marks the 25th anniversary of the Corporate Challenge. 43 companies are participating this year, 9 of them participating for the first time. The event also helps sponsor Special Olympics Texas. This year’s event will have 22 events ranging from Texas Hold ‘Em to a 15k bike race. Last year’s event raised $175K for Special Olympics Texas, $13K of which went to a local Special Olympics team, the Richardson Roadrunners. This year’s opening ceremonies will be held this Friday, August 11th at 5:30 p.m. at Huffhines Park.
ATMOS RATE NEGOTIATION
The next item is a discussion on energy rate filings. Asst. Finance Director Todd Gastorf presents. For both Atmos (Natural Gas) and Oncor (Electricity), the city is a member of respective steering committees with approximately 180 other cities. These steering committees use the Lloyd Gosselink Rochelle & Townsend law firm to review the proposed rate increases from Atmos and Oncor and make recommendations for accepting or negotiating the proposed increases. Atmos’ 2023 rate increase request was originally $165M. The steering committee negotiated it down to $142M. Rates are broken out into a fixed base charge and a variable consumption charge. For residential customers, the proposed increase will be approx. 3% for the base rate and approx. 34% for the consumption rate. Proposed commercial increases are approx. 13% for the base rate and approx. 29% for the consumption rate. Based on the expected average use of a customer, the city estimates that residents will see an increase on their total bill of approx. 7% while commercial users are expected to see an increase of approx. 5%.
Councilwoman Justice asks if Atmos has any programs to assist seniors and those on a fixed income with the rate increases. Atmos Public Affairs Manager Jan Rugg answers that they have a Share the Warmth program where customers can choose to round up their bill and pay extra so that Atmos can give contributions to local nonprofits. Richardson’s Network of Community Ministries is one of the nonprofits that receives these funds, but it is not specified how much Network has received. Later in the presentation, Councilman Barrios asks why residential customers are seeing a higher percentage rate increase than commercial customers. The answer is that the residential side of the delivery system is larger than the commercial side, therefore maintenance and capital improvement costs are greater on the residential side.
The city is also in the process of negotiating a new franchise fee agreement with Atmos but that is not yet finalized.
ONCOR RATE NEGOTIATION
Due to a new law (SB 1015), electric companies such as Oncor can now request rate increases twice a year. Oncor filed such a request at the end of June. Their requested increase would add roughly $2.40 to an average residential customer’s monthly bill. The steering committee can enter the same negotiation process for this requested rate increase. That vote needs to take place by August 28th, so we will see more action on this then.
TAX RATE
Next is an update on the proposed tax rate. This was last discussed a couple of weeks ago and I should clarify some details on how the rate is established. A no-new-revenue rate is calculated to determine the rate that would generate the same revenues as the prior year. Currently, cities are allowed a 3.5% increase on top of this rate to establish the voter approval rate. If, over the last three years, a city passes a rate that is lower than the voter approval rate, they can bank the difference as increment to add on top of the 3.5%. The no-new-revenue rate plus the 3.5% increase plus any increment equals the published voter approval rate. Any rate above the published voter approval rate would trigger an election. This typically results in compression of the tax rate. It’s important to note that the tax rate includes the Maintenance & Operations (General Fund) and Debt Service rates combined. Looking at the math, it appears that the 3.5% limit does not apply to the debt service side of things. The debt service rate can be as high as deemed necessary (as far as I can tell) to pay the year’s debts.
Richardson’s difference between the no-new-revenue and published voter approval M&O rate is the limit of 3.5% plus the available increment which is currently an additional 15%. The difference between the no-new-revenue and published voter approval Debt Service rate, however, is approx. 13%. City Manager Don Magner proposes that they use some but not all of the increment to maintain the current tax rate of .56095. The difference between this proposed rate and the no-new-revenue rate is approx. 11%. When you consider the voter approval rate which includes the 3.5% increase for M&O and the apparently necessary 13% for Debt Service, the increment used amounts to an additional 3.4%.
So, about 7% M&O and 13% Debt Service revenue increases from last year with the same tax rate. This would provide the additional pay increases that Council requested at the budget workshops two weeks ago plus 20% increases for streets, facility maintenance, and park maintenance. With the average homestead taxable value being $351K, homeowners should expect a 7% increase ($140) in their property tax bill due to rising property values and no tax rate compression. I’ve thrown a lot of numbers around, so I hope I haven’t completely confused you. The ultimate takeaway is this: No tax rate compression this year. Blame inflation.
Council unanimously votes to hold a public hearing on the tax rate on August 21st.
Council unanimously votes to hold a public hearing on the budget on August 28th.
Council also unanimously votes to approve 2360 Campbell Creek Blvd. as the official temporary city hall location. This is where city notices will be posted.
Council discusses the National Night Out kickoff event, a Dallas Regional Mobility Coalition event, and reminds residents that the animal shelter is full and adoption fees are currently waived.
Meeting adjourned.