ERTY  City Council Special Called Finance Meeting MEETING MINUTES January 4, 2024, at 5:30 PM City Council Chamber/Municipa Court Room 2801 Ranch RD 1869 Liberty Hill, Texas 78642  ow, BI  City Council Present: Liz Branigan Angela Jones Chris Pezold Michael Helbing Crystal Mancilla City Council Absent: Amanda Young City Staff] Present: Paul Brandenburg, City Manager Sidney Smith, Finance Director Sara Werner, Accountant Trey Evans, Water Superintendent Carol Gyergyo, Public Works Administrative Assistant Elaine Simpson, City Secretary Matt Brown, Wastewater Superintendent  1) CALLTOORDER  The City Council Special Finance meeting was called to order by Mayor Branigan at 5:321 PM on Thursday, January 4, 2024, at 2801 Ranch Road 1869, Liberty Hill, Texas. A quorum was established, and all members  were present, except Council Member Amanda Young.  2) PUBLIC COMMENTS  Regarding items not ont this agenda'l Public Comments: Those desiring to. speak on a topic not listed on the agenda, please completea speaker form and present it to the City Secretary before the meeting. Speakers will have three minutes each t0 speak, this time cannot be transfèrred or shared. Council members may not take action during this item and any responses will be limited toj factual Regarding topics listed as an agenda item! During specific agenda item: Council requests that speakers complete as speaker, form, indicate which agenda item they are interestedi ins speaking about, ands submit) form to the City. Secretary before the agenda item is addressed.. Speaker) forms may be emailed to the City Secretary before the meeting ate aimponglherpnlagen.  statements, recitation ofe existing policy, or request for the topic to be placed on aj future agenda.  There were no citizen comments.  City Council Special Called Meeting for Finance Issues January 4, 2024  January 4, 2024    3) A. General Accounting and Finance-S Sidney Smith, Sara Werner  a) Report/Update and explanation of budget egativeyovengsy.efieis and formatting  conventions used in financial reports. (S. Smith, P. Brandenburg)  City Manager Paul Brandenburg introduced the item and presented the staff report. He explained the basics There was a brief discussion of the use of variances, percentages, and actual figures, to interpret the reports.  the basics of the regular budget report format. There was no formal motion.  b)  Update/Report on Fund Balances: General Fund, Water Fund, Wastewater Fund, Sewer Fund.  (S. Smith, P. Brandenburg)  City Manager Paul Brandenburg introduced the item and presented the staff report. He started by noting that it ist most important to read the fund balances. There was a discussion ofterminology that is important for the auditors. The Net Position does include the assents when reading reports on the Enterprise Fund. The Fund Mr. Brandenburg also explained that the summary report included in tonight's budget will be included in future financial statements. He explained that 'working capital"' is what the city actually has to use. The 'Net Director ofl Finance Smith explained the changes that will be instituted in the reports after the audit is done.  Balance does not include assets for the General Fund. Position' will include working capital int the future.  There was no formal action taken.  c)  Update, discussion, and consideration of status of the reconciliation ofall funds. (S. Smith, P.  Brandenburg)  Finance Director Smith introduced the item and gave the background information on this item. City staffhad Under previous administrations, all the revenue was dumped in together for reporting, journal entries were not done reliably, and it has been very time consuming for these last two years to attempted to reconstruct where There was an extended discussion of annual audits and their focus on the *big picture.' The City passed the audits during those years because the auditors were not directed to search for anything specific. There was a discussion of whether the city needs to order a 'forensic audit,' and a request for a 'timeline' ofwhen the city Ms. Smith noted that the financial consultants who have been working with the city for the last two years have gotten the city caught up on the annual audits. This has been a tremendous undertaking. She explained that it would be helpful to keep the extra help because it is difficult to continue working on the municipal court fees, the Liberty Parke PID and accounts receivable and retainage accounts payable accounts backlog  to go back five years to reconcile and correct the city's accounts.  the money came from and should have gone.  staff will have confidence in the numbers and certainty in our reports.  work, while keeping up with the current day to day operations.  City Council Special Called Meeting for Finance Issues January 4, 2024  2  January 4, 2024    There was a discussion of the major project of continuing the reconstruction and establishing a paper trail for City Council members discussed that they would like for the city staff to be able to finish the work that they have been working on for sol long now that the city is on schedule with audits. There was a discussion ofthe desire to be able to establish a financial strategic plan for the city. There was discussion of the hope that the city could possibly be ready to finance water/wastewater projects, possibly using debt financing. There was a discussion of the Statutory Laws that govern when the city must conduct the audit. The audit on the budget year just finished will be presented to the City Council in March. There was a discussion ofthe The City Council requested that city staff prepare a cost estimate for the amount and duration oft the accounting help that will be needed to get the accounting projects finished and all the accounts reconciled, on  the city's funds.  pros and cons ofs soliciting requests for qualifications for a new auditing firm.  a 30 day or 60-day schedule, preferably. There was no formal action taken.  d) Update, discussion, and consideration of status of the reconciliation ofimpact fees to utility City Manager Brandenburg explained that the impact fees need to be reconciled because previous administrations seem to have used general funds on projects when impact fees revenue should have been The council reviewed the agenda cover sheet section regarding 'Financial impacts' and discussed the information of where and how much money would be moved to the correct Impact Fee accounts. Ms. Smith explained the phase ofthis process; how the city staff identified where Impact Fee funds should have gone, for the last five years. She also explained that there were also instances of enterprise funds being There was also a reminder that the Wastewater' System is the Regional Wastewater system which exists outside the city limits. When the term 'Sewer' is used, it refers to sewer system within the city limits, only. Curtis Steger with Steger Bizzell explained that sometimes the difference is a function of when the City took over the plant, and bonding for the plant. The Wastewater and Sewer funds cannot be combined. It was suggested that in the future, the City Council hold a workshop to allow representatives from our bond Ms. Smith explained that there is a detailed listing of all expenditures, and this can be provided to Council.  funds. (S. Smith, P. Brandenburg)  used.  spent on capital projects that should have been paid for through Impact Fees.  counsel to explain the ins and outs oft the bond covenants.  There was no formal action taken.  e) Discussion and consideration of'Indirect Cost Allocations and Policy' also known as Utilities  paying for City Services. (S. Smith, P. Brandenburg)  This policy was discussed and approved by the City Council at their meeting of. June 14, 2023.  City Council Special Called Meeting for Finance Issues January 4, 2024  3  January 4, 2024    During the discussion ofagenda item 3.e. regarding Indirect Cost Allocation, the City Council also began The discussion of the Indirect Cost Allocation started with a comparison to the city's charging of overheadadministrative costs' to the Liberty Hill Economic Development Corporation (LHEDC). The LHEDC pays an agreed amount each year for the administrative services provided by city staffi including the For the Enterprise Fund, Liberty Hill uses a formula similar to other cities, for indirect costs allocation. Itis about 50% General Fund, to 50% Enterprise Fund. Enterprise funds will go down after the numbers are There was a discussion regarding the sustainability ofthis process. The Water Fund is definitely hurt. The other Enterprise Funds can manage this. It was agreed by consensus that on the. January 24, 2024, agenda, there will be an item regarding this topic. On that agenda, the estimates should be presented to the City  discussion of Franchise Fee Transfers from agenda item 3.f.  services provided by the city's Finance Department.  corrected and these transfers are made.  Council showing the cost effects oft the transfers. No transfers should be made yet.  There was no formal action taken on this item.  f) Discussion of City's Franchise Fee Transfers from the Utility to the General Fund Process and The Franchise Fee Transfers was defined as fees that utilities normally pay to a city for use oft the roads and the Rights-Of-Way. The utilities that are not owned by the city (such as the gas company) pay these fees. Due to the concern for impacts to the Water Fund, as discussed in the previous agenda item, the city staff used ai figure of 8%, and did not access this against the Water Fund in the budget; only against the Wastewater and There was a discussion ofs several related considerations including: accessing this fee on accounts receivable instead of on whole costs, determining the city'st true cost of running the utility systems which needs to be recovered, and assigning whether the franchise transfer percentages should be lower for in city, than in out of Motion: Council Member Chris Pezold moved, and Council Member Angela Jones seconded, to table further pursuit ofthe Franchise Fee Transfers' concept until after the Water and Wastewater Master Plans, respectively, are completed and presented to City Council. These plans with contain detailed rate studies for the respective utilities. Vote on the motion: Motion carried unanimously by a vote of4-0.  Policy. (S. Smith, P. Brandenburg)  Sewer Funds, respectively.  city limits?  g) Discussion and consideration of Budget Amendment Policy. (S. Smith, P. Brandenburg) City Manager Paul Brandenburg introduced the item and presented the staff report. City Staff will begin to bring Financial and Budgetary policies to City Council on each Regular Called Council member agenda for The City Council briefly discussed how they would like to see financial policies and projected milestones presented. Some oft the current policies are outdated and obviously need to be updated. The Council requested that staff sign off on Financial policies ifthey are involved with finances. They requested that Budget  review. This will be part of the larger policy review process.  City Council Special Called Meeting for Finance Issues. January 4, 2024  January 4, 2024    Amendments be proposed only when necessary, and not as a result of poor planning. Council members discussed the value ofhaving a timeline to follow to monitor when the milestones are achieved.  There was no formal action on this item.  h) Review, discussion and consideration ofCity's debt capacity for all funds. (S. Smith, P. Finance Director Smith explained that the City has a debt capacity of33 million for the General Fund, and 94 Ms. Smith explained that after the City audit is finished, our financial advisors can provide updated/correct numbers, as well as estimates for the future. She explained that it is important to know the debt capacity over Ms. Smith noted that on the Council's next agenda, there will be two Reimbursement Resolution, to be approved in advance of bonds. This will allow the City, ifany money is spent in advance of the bonds being issued, for costs that are eligible to be paid from the bonds, the City can reimburse itself from the bond There was a continuing discussion of debt capacity, and the goal of keeping the debt load 'stable,' instead of  Brandenburg)  million for the Enterprise Fund, however Smith feels that this figure is too high.  time.  proceeds when this money comes through. having dips and spikes in the amount of debt. There was no formal motion on this item.  4) B. Utility and All Hands-On Deck (AHOD) Funding Discussion - David Thomison, Trey Evans,  James Herrera, Carol Gyergyo questions on various projects.  City Manager Brandenburg explained that this agenda item provided the opportunity for the Council to ask There was a discussion of concerns that the City not 'over bond' the Water Fund for projects. There was a request that the city staff provide the Council with cost benefit/analysis for the projects under There was a brief discussion of the Capital Improvements Plan (CIP), and the Council requested clarification regarding which ones of the projects listed on the agenda tonight are on the CIP. Also, whether the projects being discussed now in the All-Hands-on Deck meetings (AHOD) are included in the CIP. The City Council asked for projection for when each project would 'pay for itself.' There was a brief discussion of two wells to be drilled on the Parkland property.  consideration, in order for the City to get the 'best bang for the buck.'  There was a discussion of how the proposed bonds would be designed to be able to at least fund the first year  of projects.  City Council Special Called Meeting for Finance Issues January 4, 2024  5  January 4, 2024    a) Discussion on water projects. (S. Smith, P. Brandenburg)  a. Water Treatment at Parkland Springs  b. Transmission line at Kaufmann for Parkland Springs c.Chlorinei injection system at County Road 279 d. AHOD #1 well and transmission project e.AHOD #2 well and transmission project f.Gunner well and transmission project g. PEC well and transmission project h. Leander Interconnect East Option  No formal action was taken.  b) Timelines for Wastewater Projects  a. South Fork Wastewater Treatment Plant -SWWTP  b. North Fork Wastewater Treatment Plant -NWWTP Currently, the city staff projects this as a three-year project.  C. West Wastewater Treatment Plant- WWWTP  Currently, the city staffp projects that this project would be a phased project, starting after the  North Fork Plant project, and will take an estimated five years to build out.  There was no formal action taken.  City Council Special Called Meeting for Finance Issues January 4, 2024  6  January 4, 2024    5) EXECUTIVE SESSION  a) Pursuant to Government Code 551.071 (Consultation with Attorney) as well as 551.072 (Discussions regarding Real Property) to discuss exemptions for easements or purchase of property.  (P. Brandenburg) No Executive Session was held.  Noa action was taken during the Executive Session. Any action resulting from the Executive Session:  6) ADJOURNMENT adjourned the meeting at 8:30 PM.  Given there were no further agenda items and hearing no objections from the Council, Mayor Branigan Approved by City Council at their meeting the 14th of February 2024, by a vote of Ayes, ONaysand  OAbstentions, with Amanda Young being absent.  h Mayor Liz Branigan Attest:  Sg  ElaineSimpson City Secretary  Zh  IIIITT OF   City Council Special Called Meeting for Finance Issues January 4, 2024  7  January 4, 2024