CITYOFI PALACIOS, TEXAS REGULAR CITY COUNCIL MEETING MINUTES June 22, 2023 REGULAR CITY COUNCIL MEETING A regular City Council meeting was held by the City Council oft the City ofPalacios on. June 22, 2023, at 6:00 p.m., in Council Chambers located at 311 Henderson, Palacios, Texas 77465. Mayor. Jim Gardner calledi the City Council meeting to order at 6:00PM. CALLTOORDER CERTIFICATION OF A QUORUM Mayor. Jim Gardner certified as quorum) was present. ATTENDANCE) ROLLCALL Mayor, Jim Gardner, Present Councilmember. Place 6, Donnal Schulman, Present Councilmember. Place. 5, Jason Hink, Absent Councilmember, Place 4, Margie Wier, Present Councilmember. Place 3, Chip) Woolf, Present Councilmember, Place 2, Sharon Trainor, Present Councilmember, Place 1, Lary Glemn, Present CITYSTAFF) IN ATTENDANCE: Cynthia Raleigh, City Manager Aleigha Galvan, City Secretary Anne. Marie Odefey, City Attorney Tammy McDonald, HR/ Grant Manager Maria. Ayala, Office/ Finance. Manager Tobie Bias, Palacios. Police Chief Ryan Adams, Public Works Director Manuel Guevara, Public Works Foreman INVOCATION & PLEDGES Palacios. Flags. ANNOUNCEMENTS: Councilmember Trainor led the Council, Staff and Citizens inp prayer and pledges to the U.S., Texas, and Mayor's Announcements - Mayor announced City Hall wills serve as a cooling station for the public during the day. from 12-7pm; Palacios Public Swimming Pool will be open Wednesday through Sunday, from 2-7pm; STP event at Central. Elementary Tilly loves Council Members Amnouncements Councimember Glenn spoke about complaints regarding ditches dug by TxDOT, and blame being placed on the City. Glenn urged the public to come to a Councilmember to discuss the complaints before speaking publicly in Carissa Spradlin with Texas Misfits and Creatures. Animal Rescue and Palacios Pound gave stats forl May fori intake, outtake, adoption, transfers, and euthanasia. Spradlin gave thanks to the Houston Food Bank for donating dog food, and notified Council of their need for TRTL. anegative way. CITIZEN COMMUNICATION FORUM: kittenf food and cat litter tot those who may bei interested in donating. CITY OF PALACIOS REGULAR CITY COUNCIL MEETING MINUTES - JUNE 22, 2023 Leslie Cloper, Vacaville, CA, asked Council what steps they planned to take to revitalize the City. Mayor Gardner and City Attorney, Odefey, notified Cloper that Citizen's Forum was nott to be a discussion with Mayor, Council, and City Manger, but she coulds schedule az meeting) with City Manager, and Mayor to request items be placed on aj future agenda. Cloper stateds she believed the town to be empty and was concerned about property she owns inl Palacios. PRESENTATIONS: City Manager's Update Presented by Cily Manager, Cynthia Raleigh. Raleigh gave several updates on the following items; Water plant upgrades and repairs by Mercer Controls; Bethany Park. Lif Station; University Lif Station; Fire. Hydrant. Project; Burn Site; Infrastructure Funding; Downtown Sidewalks; City Wide Drainage; Downtown Sewer line. Project and Lif Station; Bethany Park. Drainage; Generators at Lif Station; Water Meters- Performance Services; Emergency Management; Airport; Activity Complex; Audit; Budget; TxDOT Update; Crosswalk'stop sign Main and Fifh; and drainage. DISCUSSION. AND ACTION ITEMS: 1. Minutes Discuss and approve the regular council meeting minutes of June 08, 2023. Presented. by Mayor Gardner. Councilmember Schulman: made ai motion to approve minutes as written) from regular council meeting ofJune 8, 2023. Councilmember Wier secondedt the 2. May Financials: and Bills Paid) Discuss and approve financials and bills paid for the month ofMay 2023. Presented by Finance. Manager, Maria. Ayala. Coumcilmember Glenn made a motion to approve the financials and bills paid for the month of May, 2023 as presented. Councilmember. Schulmans seconded the motion. Motion passed unanimously. 3. Approvel Resolution: No. 2023-R-17. Approve aresolution ofthe City Council oft the City of Palacios, Texas authorizing the City to enter into aj performance guarantee contract relating tot the acquisition and installation ofe energy savings improvements, and to enter into aj public property finance act] lease purchase agreement with First Security Finance, Inc. toi financet the costs thereof, and approving certain other documents and actionsi in connection therewithi for the Water Meter Project. Presented by Performance Services, Greg Smith. Smith presented details oft the water meter project and Council discussed. Raleighi negotiatedo al lower interest rate andi total cost to be corrected in the Resolution. Mayor Pro Tem Woolfmade a motion to approve Resolution. No. 2023-R-17 with amendments to interest rate to reflect a total of 4.79496 and a total cost ofs2,378,690. Councilmember Glenn seconded the motion. Motion Public Property Finance Act Lease Purchase Agreement Approve Public Property Finance. Act Lease Agreement dated as of June 29, 2023, between First Security Finance, Inc., as Lessor, and the City of Palacios, Texas, as Lessee for the Water Meter Project. Presented by Performance. Services, Greg Smith. This was approved with item #3. PISD Tower Lease Agreement Approve an agreement with Palacios Independent School District for a communication tower to be installed at the Rorem Elevated Water Tank. Presented by City Manager, Cynthia Raleigh. Councilmember Glenn made a motion to approve the agreement. Mayor Pro Tem Woolf seconded the motion. Motion passed Finall Reading Game] Room Ordinance No. 2023-0-09 Discuss and approve final reading of Ordinance No. 2023-0-09 an ordinance of the City of] Palacios, Texas, placing location requirements: for gamer rooms and amusementi redemption machines; providingapenalty: and providing an effective date. Presented by Police Chief Tobie Bias Councilmember Glenn made ai motion to approve Ordinance. No.. 2023-0-09. Motion dies for lack ofas second. 7. Audit FY: 2021-2022 Discuss and approve audit for FY 2021-2022. Presented by Harrison Waldrop & Uherek L.L.P. Melissa Terry explains results oft the audit to Council and: staff See "Exhibit A"d and "Exhibit B". Mayor Pro Tem Woolfmade ai motion to approve audita as presented. Councilmember Glenns secondedt the motion.. Motion! passed unanimous/y. motion.. Motion passedz unanimous.y. passed 5/1 with Councilmember Trainor voting "Nay". unanimously. CITY OFF PALACIOS REGULAR CITY COUNCIL MEETING MINUTES- JUNE: 22, 2023 ADJOURNMENT Meeting Adjourned. by Mayor Gardner at 7:29PM. Hudi Jim Gardner, MAYOR ATTEST: Phdla Aleigha Galyan, CITY SECRETARY 4S CITY OFF PALACIOSI REGULAR CITY COUNCIL MEETING MINUTES- JUNE: 22, 2023 HARRISON, WALDROP & UHEREK, L.L.P. STEPHENW. VANMANEN, CPA DENNISC. CIHAL, CPA ERICL. CPA CLAYTONP. CPA ROBERTW W.: SCHAAR.CPA MELISSAM.T TERRY.CPA VOICE1361)5733255 FAX:/361,573-9531 HWU CERIFEDPUBLICA 101S.N MAIN. SUIE4 400 VICTORIA, TEXAS 77901-8142 June 22, 2023 Thel Honorable Mayor and Members ofthe City Council City of Palacios, Texas We have audited the accompanying financial statements oft the governmental activities, the business-type activities, the aggregate discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Palacios, Texas (the "City") as of and for the year ended September 30, 2022, and the related notes to the financial statements, which collectively comprise the City's basic financial statements. Professional standards require that we provide you with the following information: about our responsibilities under generally accepted auditing standards, Government Auditing Standards, as well as certain information related tot the planned scope and timing of our audit. We have communicated: suchi information! in ourl letter toy you dated September 8, 2022. Professional standards also requiret that we communicate toy yout thet following information related to our audit. Significant Audit Matters Qualitative Aspects ofA Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used! byt the City are described! in Note 1 tot thei financial statements. No new: accounting policies were: adopted andt the application ofe existing policies wasi not changed duringf fiscal year 2022. We notedi not transactions entered into by the City duringt thef fiscaly yearf for which there isa al lack ofa authoritative Accounting estimates are ani integral part oft the financial statements prépared by management: and are based onr managementsknowldge: ande experience aboutp pasta and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance tot the financials statements and because ofthe possibility thati future events affectingt them may differ significantly from those expected. The most sensitive estimates: affecting the financial statements were management's estimate that there were no contingent liabilities at September 30, 2022 relating to compliance with the rules and regulations off federal and state grants and estimation of various allowance balances as of that date. We evaluated the key factors and assumptions used to develop the contingent liability estimate in determining thati itisr reasonable! in relation tot the financial statements taken as a whole. Asp previously communicated toy you on! March 9, 2023, the completion ofc our audit was delayed because of the issues encountered in the City's ability to provide correct year-end general ledger reports and the guidance or consensus. Difficulties Encountered in Performing the Audit difficulties encountered with they pooled cash bank reconcillations. MEMBERSOF AMERICANI INSITUTEC OF PUBLICA ACCOUNTANTS TEXASS SOCIETY OF CERTIFIEDP PUBLICA ACCOUNTANTS Exhibit A Thel Honorable Mayor and Members oft the City Council City of Palacios, Texas Corrected and Uncorrected Misstatements -2- June 22, 2023 Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none oft the misstatements detected asa result of audit procedures and corrected by management were material, either individually or in the For purposes ofthisl letter, a disagreement with management isaf financial accounting, reporting, ora auditing matter, whether or not resolved to our satisfaction, that could bes significant to the financial statements or the auditor's report. We are pleased to reportt that nos such disagreements arose during the course of our We have requested certain representations from management that are included in the management Ins some cases, management may decidet to consult with other accountants about auditing and accounting matters, similar to obtaining a' second opinion" on certain situations. Ifa consultation involves application ofan accounting principle tot the governmental unit'sf financial statements or a determination oft the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with ust to determine that the consultant has all the relevant facts. To our We generally discuss a variety ofr matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City's auditors. However, these discussions occurred int the normal course of our professional relationship and our responses were nota Wea applied certainl limited procedurest tot ther management's discussion: anda analysis, budgetary comparison information, schedule of changes in net pension liability and related ratios, schedule of changes in total OPEB liability and related ratios, and the schedules of employer contributions, that are required supplementary information (RSI) ands supplement thel basici financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit oft the basic financial statements. We did not audit the We were engaged tor report ont the combining andi individual major andr nonmajor fund financial statements and schedules, which accompany the financial statements but are not RSI. With respect to this supplementaymtomaton, wer made certaini inquiries ofr management: ande evaluated the form, content, and methods ofp preparing thei information to determine thatt thei information complies with accounting principles generally accepted int the Unites States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements ort tot thet financial statements themselves. aggregate, to each opinion unit's financial statements taken as av whole. Disagreements with Management audit. Management Representations representation letter dated. June 14, 2023. Management Consultations with Other Independent Accountants knowledge, therev werer nos such consultations with other accountants. Other Audit Findings orl Issues condition to ourr retention. Other Matters RSI and dor note express an opinion or provide any assurance ont the RSI. Thel Honorable Mayor and Members ofthe City Council City ofF Palacios, Texas Restriction on Use these specified parties. Very trulys yours, -3- June 22, 2023 Thisi information! isi intendeds solelyf fort the use oft thel Mayor, members oft the City Council, andr management oft the City of Palacios, Texas and is noti intended to be, and should not be, used by anyone other than HauuinyWilly uvukue HARRISON, WALDROP & UHEREK, LLP Certified Public Accountants City of Palacios, Texas Summary of Independent Audit Results Fiscal Year Ended September 30, 2022 Financial Audit Results The City received an unmodified opinion on its financial statements. Significant deficiencies and material weaknesses in the City'si internal controls over financial reporting and safeguarding of assets were disclosed. Noi indications of material fraudulent activity were disclosed. Compliance Audit Results Noi instances of noncompliance with state and federal laws that are both applicable and material to the City were disclosed. Summary of Results of Operations The City's fund balance int the General Fundi increased $367,093, or 28.60%, as The General Fund had at total fund balance of $1,650,530 as oft fiscal year end of The General Fund's unassigned fund balance at fiscal year end was $1,642,108 The City's Water and Sewer Fund had a decrease in net position of $241,473, or The Water and Sewer Fund's total net! position was $12,717,157 ofv which ($13,610) was considered unrestricted as ofi fiscaly year end. (Page23) al result of operations. (Page 20) which $8,422 is considered nonspendable fori inventory. (Page1 17) or5 50.57% oft total General Fund expenditures. (Page 17a and20). 1.86%, as ar result of operations. (Page 24) Exhibit B