NOTICE OF MEETING SEALY CITY COUNCIL CITY COUNCIL CHAMBERS 415 MAIN STREET SEALY, TX 77474 SEALY EXAS TUESDAY, APRIL 15, 2025 AESTOET a ECILLENCL APUTIRLOTP PIOSIISS 6:00 P.M. Notice is hereby given of a Meeting of the City Council of Sealy to be held on the abovementioned date, time, and location for the purpose of considering the following agenda items. All agenda items are subject to action. The City Council reserves the right to meet in a closed session on any agenda item should the need arise and if applicable pursuant to authorization by Title 5, Chapter 551, of the Texas Government Code. A. Call to Order B. Invocation and Pledges of Allegiance C. Roll Call and Certification of a Quorum D. Petition(s) and Public Comments Individuals shall have three (3) minutes to speak. E. Discussion and Possible Action to Approve the agenda order or reorder F. Proclamation(s) National Volunteer Week Public Safety Telecommunicator Week G. Consent Agenda (In accordance with Sec. 2-35. (1) of the Code of Ordinances, "Routine matters thought to require little or no deliberation by city council may be placed on a consent agenda, which shall be treated as one agenda item." At any time prior to the call for a vote on the consent agenda, any council member may request that one or more items may be removed from the consent agenda and handled separately in the same manner as a regular agenda item.) April 1, 2025, Regular City Council Minutes H. Presentation(s) BrooksWatson Auditors Gordon Memorial Library I. Business 1. Discussion regarding the Approval of a Resolution to Re-Adopt the City of Sealy's Tax Abatement Guideline and Criteria every two years as per Chapter 312.002 of the Tax Code. 2. Discussion regarding Financial Management Policy. City of Sealy, Texas Council Meeting Agenda April 15, 2025 3. Discussion and Possible Action regarding Strand Change Order for Irene LeBlanc Splash Pad on Concrete. 4. Discussion and Possible Action regarding the Mayor's Appointment of HOT Funds Committee. 5. Discussion and Possible Action regarding an Ordinance Amending Chapter 98 Locations for Placement of Traffic Control Devices. (First of two readings) 6. Discussion and Possible Action regarding Approve a Resolution regarding Acceptance of Improvements and Maintenance Bond for Hunters Crossing Section 2. J. Executive Session: A closed meeting will be held concerning the following item(s): a) Texas Government Code, Section 551.071, Consultation with Attorney: A governmental body may conduct a private consultation with its attorney when the governmental body seeks the advice of its attorney about pending or contemplated litigation; or a settlement offer, or on a matter in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with Chapter 551 of the Texas Government Code. DF R Horton MUD Creation (Austin County Municipal Utility District No. 1 Legislation) Hotel Occupancy Tax Services Agreement 2023-2024 with the Sealy Chamber of Commerce acting in the capacity as the Sealy Convention and Visitors Bureau and Subsequent Release of Liability 7. Reconvene into regular session and consider action, if any, on items discussed in Executive Session. 8. Discussion and Possible Action regarding Invoice to Pay Paramount Promotion on behalf of the Greater Sealy Chamber of Commerce for a 2024 Fantasy Lights Banner to be funded using FY 2024-2025 HOT Funds. 9. Discussion and Possible Action regarding No Objection Letter for Austin County Municipal Utility District No. 1 Legislation. 2 City of Sealy, Texas Council Meeting Agenda April 15, 2025 10. Reports, Announcements, or Requests from Councilmembers. K. Adjourn CERTIFICATION 1, Sandra Vrablec, City Secretary of the City of Sealy, do hereby certify that the above notice of the City of Sealy, Texas, City Council, was, posted in a place convenient to the general public in compliance with Chapter 551, of the Texas Government Code, and remained posted for at least 72 continuous hours preceding the scheduled time of said meeting as well as on required website(s). Clondol Valla Sandra Vrablec, City Secretary 3 F. Proclamation(s) CITY OF SEALY, TEXAS O) SEALÉEKAS AllegeiEabar.AT TatenelPvegras Proclamation WHEREAS, National Volunteer Week is an opportunity to recognize and honor the countless individuals who selflessly invest in the lives of others, especially in the City of Sealy; and WHEREAS, volunteers are: finding unique and innovative ways to spread joy and meet the emotional, physical, and spiritual needs of others through senior and youth activities, and various volunteer services from 4-H, Little League to Meals on Wheels and Master Gardeners and others; and WHEREAS, volunteering one's time, talents, and resources is an integral part of our heritage since the early days of our nation, and it is essential that we continue this tradition of giving and sharing to preserve and improve the quality of] life for all citizens in Sealy and Austin County; and WHEREAS, the receiver is not the only one who benefits from volunteer service - for the giver reaps the rewards of improved skills and widened horizons as well; and WHEREAS, each year a special week is designated in our nation for the dual purpose of recognizing those who give of themselves and of encouraging all citizens to become involved in volunteer work; and it is fitting at this time that we say "thank you" to all individuals, groups, and businesses who have given time, energy, and resources to their communities through volunteer service. NOW, THEREFORE, I, Carolyn Bilski, Mayor of the City of Sealy, do hereby proclaim April 20-26, 2025 as National Volunteer Week in the City of Sealy and Austin County and encourage all citizens to observe this week by celebrating the important work that volunteers do every day throughout our community. Proclaimed this 15th day of April 2025. Danin bohi Carolyn Bilski, Mayor Bygla Varas SBAIÉEKAS p Grodlamation - Guble Oley Pécommankaor CMeeb WHEREAS, each day, thousands of Americans dial 9-1-1 for help in emergencies ranging from house fires and automobile accidents to heart attacks and child poisonings; and WHEREAS, the men and women who answer these calls for help, gathering essential information, and dispatching the appropriate assistance, can often make the difference between life and death for persons in need; and WHEREAS, public safety telecommunicators are more than a calm and reassuring voice at the other end the phone - they are highly trained and knowledgeable individuals who work closely with police, fire, and medical personnel; and WHEREAS, more than 500,000 elecommunications specialists work daily to protect and to promote the public safety; and WHEREAS, because emergencies can strike at any time, we rely on the vigilance and the preparedness of these individuals 24 hours a day, 365 days a year; and NOW, THEREFORE, I, Carolyn Bilski, Mayor of the City of Sealy, do hereby proclaim the week of Sunday through Saturday, April 13-19, 2025, as "PUBLIC SAFETY ELECOMMUNICATOR WEEK" in the City of Sealy and encourage everyone to recognize the role our local and county staff play in our safety. Signed and dated this 15th day of April 2025. Coikp Bibli Carolyn Bilski Mayor, City of Sealy G. Consent Agenda MINUTES SPECIAL SEALY CITY COUNCIL CITY COUNCIL CHAMBERS 415 MAIN STREET SEALY, TX 77474 BEALY hi EXAS TUESDAY, APRIL 1, 2025 AESTUITO Cr EICILENCL ATITIILD ar PICLEESS 6:00 P.M. The City Council of the City of Sealy, Texas, conducted a special meeting scheduled for April 1, 2025, at 6:00 p.m., at the Sealy City Council Chambers located at 415 Main Street, Sealy, Texas, 77474. A. Call to Order Mayor Bilski called the meeting to order at 6:00 p.m. B. Invocation and Pledges of Allegiance Mayor Bilski gave the Invocation and led the Pledges of Allegiance C. Roll Call and Certification of a Quorum Present: Carolyn Bilski Mayor Dee Anne Lerma Councilmember, Place 1, Mayor Pro Tem Chris Noack Councilmember, Place 2 Theadra Curry Councilmember, Place 4 Edward Zapalac Councimember, Place 5 Adam Burttschell Councilmember, Place 6 Absent: Bradley Miller Councilmember, Place 3 A quorum was declared present. Staff Attending: Kimbra Hill, City Manager Sandra Vrablec, City Secretary Tim Kirwin, City Attorney Scott Riske, Police Captain Mike Barrow, Assistant City Manager Patrick Parsons, Public Works Director Bill Atkinson, EDC Director D. Petitions(s) and Public Comments Gladys Sue Hovis signed up to speak on Item F for Child Abuse Prevention Month. E. Discussion and Possible Action to Approve the agenda order or reorder A motion was made by Councilman Zapalac to Approve the agenda order. Councilman Burttschell seconded the motion. Mayor Bilski called for the vote. City of Sealy, Texas City Council Meeting Minutes April 1, 2025 AYES: Bilski, Lerma, Noack, Curry, Zapalac, Burttschell NOES: None The motion carried. F. Proclamation(s) Fair Housing Month Autism Awareness Month Child Abuse Prevention Month G. Consent Agenda (In accordance with Sec. 2-35. (1) of the Code of Ordinances, "Routine matters thought to require little or no deliberation by city council may be placed on a consent agenda, which shall be treated as one agenda item. - At any time prior to the call for a vote on the consent agenda, any council member may request that one or more items may be removed from the consent agenda and handled separately in the same manner as a regular agenda item.) March 18, 2025, Reguiar City Council Minutes March 24, 2025, Special Joint City Council and SEDC Minutes March 24, 2025, Special City Council Minutes Discussion and Possible Action regarding an Ordinance Amending Chapter 28 - Senior Residential Developments. (Second of two readings) A motion was made by Councilwoman Lerma to Approve the Consent Agenda. Counciwoman Curry seconded the motion. Mayor Bilski called for the vote. AYES: Bilski, Lerma, Noack, Curry, Zapalac, Burttschell NOES: None The motion carried. H. Presentation(s) The Process and Procedures from Citation Issuance through the Municipal Court Captain Riske and City Attorney Kirwin gave the presentation. I. Business 1. Discussion and Possible Action regarding an Ordinance Amending the City of Sealy's Budget for Fiscal Year 2024-2025. A motion was made by Councilman Noack to Approve. Councilman Zapalac seconded the motion. Mayor Bilski called for the vote. 2 City of Sealy, Texas City Council Meeting Minutes April 1, 2025 AYES: Bilski, Lerma, Noack, Curry, Zapalac, Burttschell NOES: None The motion carried. 2. Discussion and Possible Action regarding Strand Change Order No.1 for Irene LeBlanc Splash Pad from April 13th to May 28, 2025. A motion was made by Councilman Zapalac to Approve the Strand Change Order No. 1 for Irene LeBlanc Splash Pad. Councilman Burttschell seconded the motion. Mayor Bilski called for the vote. AYES: Bilski, Lerma, Noack, Curry, Zapalac, Burttschell NOES: None The motion carried. 3. Discussion and Possible Action regarding revision to Pay Scale. A motion was made by Counciwoman Lerma to Approve. Counciwoman Curry seconded the motion. Mayor Bilski called for the vote. AYES: Bilski, Lerma, Noack, Curry, Zapalac, Burttschell NOES: None The motion carried. J. Executive Session: A closed meeting will be held concerning the following item(s): a) Texas Government Code, Section 551.071, Consultation with Attorney: A governmental body may conduct a private consultation with its attorney when the governmental body seeks the advice of its attorney about pending or contemplated litigation; or a settlement offer, or on a matter in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with Chapter 551 of the Texas Government Code. Hotel Occupancy Tax Services Agreement 2023-2024 with the Sealy Chamber of Commerce acting in the capacity as the Sealy Convention and Visitors Bureau Town Park Center, LLC V The City of Sealy, Texas (Cause No. 2019V-0062) A motion was made by Councilwoman Lerma to recess into Executive Session. Councilman Zapalac seconded the motion. Mayor Bilski calied for the vote. AYES. Bilski, Lerma, Noack, Curry, Zapalac, Burttschell NOES: None The motion carried. The City Council entered into Executive Session at 6:20 p.m. 3 City of Sealy, Texas City Council Meeting Minutes April 1, 2025 4. Reconvene into regular session and consider action, if any, on items discussed in Executive Session. The City Council reconvened into Open Session at 7:24 p.m. A motion was made by Councilman Burttschell to Reject the Release from the Sealy Chamber of Commerce. Councilwoman Curry seconded the motion. Mayor Bilski called for the vote. AYES: Bilski, Lerma, Noack, Curry, Zapalac, Burttschell NOES: None The motion carried. A motion was made by Councilman Zapalac to Decline the Counteroffer by Town Park Center, LLC. Councilman Noack seconded the motion. Mayor Bilski called for the vote. AYES: Bilski, Lerma, Noack, Curry, Zapalac, Burttschell NOES: None The motion carried. 5. Reports, Announcements, or Requests from Councilmembers. Mayor Bilski About Parking Councilwoman Lerma Purchasing Park Land Councilman Noack About Hill Center Parking Building a Parking Garage Councilman Miller Absent Councilwoman Curry No Councilman Zapalac No Councilman Burttschell No K. Adjourn A motion was made by Councilwoman Lerma to adjourn. Councilwoman Curry seconded the motion. Mayor Bilski called for the vote. AYES: Bilski, Lerma, Noack, Curry, Zapalac, Burttschell NOES: None The motion carried. The City Council meeting adjourned at 7:27 p.m. 4 City of Sealy, Texas City Council Meeting Minutes April 1, 2025 PASSED AND APPROVED this 15th day of April 2025. Carolyn Bilski, Mayor ATTEST: Sandra Vrablec, City Secretary 5 H. Presentation(s) Virgil and Josephine Gordon Memorial Library Community Support, Progress Report, and Accreditation Overview 2023-2024 1. In-House Fundraisers & Community Support The library initiated several internal fundraising efforts to enhance resources and facilities. Funds raised were allocated for the purchase of: Tables Chairs Projector Laminator Additionally, the library benefited from external fundraising support, including contributions from: Sealy Elementary School Sealy Nutrition 2. Community Engagement The library actively participated in the Festival ofl Lights Parade, reinforcing our commitment to involvement and visibility within the community. 3. Donor Recognition To recognize the vital contributions of our supporters, we installed a Donor Tree. This symbolic display includes City and County branches, honoring the partnerships that sustain our mission. 4. Progress & Cost Savings (2023-2024) The library experienced continued growth and notable cost savings, primarily through the E- Rate program, which significantly reduced our internet service expenses. 5. Digital Resource Usage We tracked and reported increased engagement with our digital platforms, including: Boundless (eBooks and audiobooks) Transparent Language (online language learning) These resources continue to provide value to our patrons and expand our educational outreach. 6. Community Achievements The library was awarded a $2,500 grant from the Texas Book Festival. We hosted the annual Gingerbread House Contest, featuring sponsored prizes generously provided by Wolfpack and Dairy Queen (DQ). 7. The Importance of Accreditation Library accreditation is essential for access to statewide programs and resources. Accreditation ensures: Eligibility for TexShare databases Access to E-Rate discounts Participation in Inter-Library Loan (ILL) Free use of digital lending platforms such as Boundless Eligibility for Grants 8. Funding & Minimum Standards Compliance Current Funding Agreement Under the current agreement, the City of Sealy contributes $20,000.00 annually to the library. However, from 2021 through 2025, the amount received has not exceeded $15,000.00 in any calendar year. Minimum Standards According to the Texas State Library and Archives Commission, local funding should align with population growth. With a Legal Service Area (LSA) population of 14,486, the minimum contribution is $32,665.93. Accreditation Risk For the 2026 accreditation: Funding shortfall: $2,665.93 Delayed payment from December 2024 (received in January 2025) contributed to compliance issues. FY 2024 I contacted Nick Hagen, and determined that infrastructure improvements (new water meters and pipes installed in 2024) may fulfill the required value. In light oft this, we respectfully propose a revised city funding agreement of $18,000 annually, effective for the fiscal year October 2025 through September 2026. Accreditation Benefit With Accreditation Without Accreditation TexShare $175/year $4,242/year E-rate $2,200/year $8,500/year Inter-Library Loan (ILL) $0 $4.11-$7.00 per mailing Boundless (eBooks) $0 $40-$70 per title 9. Upcoming Summer Program Planning is underway for a dynamic and engaging Summer Reading Program, featuring age- appropriate activities, reading incentives, and educational entertainment designed to promote literacy and learning for all ages. 10. Educational & Garden Initiatives The library hosted a visiting author event. Our Bluebonnet Gardeners, along with homeschool families, are cultivating a thriving on-site garden. This vibrant space is open to the community and serves as a living classroom for plant science, sustainability, and community building. 11. Volunteers & Community Service We continue to welcome and support volunteers and community service participants. Their contributions are essential to our programming success, daily operations, and special events. 12. Current Projects The library remains actively engaged in the following initiatives: Development of new and expanded programs Submission of grant applications to fund future projects Ongoing improvements to technology and infrastructure Virgil and Josephine Gordon Memorial Library Profit and Loss January - March, 2025 TOTAL Income Donations 48,675.47 Fines and Fees 1,560.98 Total Income $50,236.45 GROSS PROFIT $50,236.45 Expenses Advertising & Marketing 100.00 Bank Charges & Fees 40.00 Biblionix 1,860.00 Book Repair Supplies 208.03 insurance 6,820.00 interest Paid -19.97 Interlibrary Loan 7.99 Newspaper and Magazine Subscriptions 347.85 Office Supplies & Software 2,969.66 Gusto Software Fees 537.27 Total Office Supplies & Software 3,506.93 Payroll 24,995.78 Payroll Taxes 5,335.68 Petty Cash 400.00 Repairs & Maintenance 250.74 Cleaning supplies 148.37 Custodial services 1,170.60 Electric repair services Electric repair services (deleted) 100.00 Total Electric repair services 100.00 Extermination services 85.00 Window washing 225.00 Total Repalrs & Maintenance 1,979.71 Speçials budget 406.56 Summer Program 250.00 Utilities 1,893.16 Electricity 547.92 Internet 307.75 Phone 428.77 Water, Sewer, and Trash 476.87 Total Utilities 3,654.47 Total Expenses $49,893.03 NET INCOME $343.42 Accrual Basis Thursday, April 3, 2025 05:43 PM GMT-05:00 1/1 a e - ) 4 : S - de € 2 A - I E T f -S a - a9 6SS9 69 & O AG0O ( 0 / E 3 A 3 3 Biu E 5 - SIIYS quepodul- e - = Aoeiey! se - & Aew ajdoad 6 3 A # a e B 8 1 B I 1 5 & & I 4 4 S 8 5 € & 3 I # i M B * - B D E / a 6 . a - I. Business Item #1 STAFF REPORT TAX ABATEMENT POLICY ADOPTION REASON FOR PROPOSED ITEM This report presents the City of Sealy's Tax Abatement Guidelines and Criteria for review and potential adoption/eauthorzation by the City Council. State law, specifically Texas Tax Code Sec. 312.002, mandates that tax abatement guidelines adopted by a taxing unit are effective for two years and require reauthorization to continue. Before adopting, amending, or reauthorizing these guidelines, the City Council must hold a public hearing. Furthermore, the current guidelines must be posted on the City's website if one is maintained. This process ensures transparency and compliance with state requirements governing tax abatement programs. DESCRIPTION The City of Sealy utilizes tax abatements as a tool to promote economic development within designated reinvestment zones, consistent with Chapter 312 of the Texas Tax Code. The goal is to encourage commercial and/or industrial improvements, including the development of new facilities, expansion of existing ones, or modernization projects. This policy aims to enhance the city's economic base, diversify its commercial and industrial sectors, and attract further business investment. Per Texas Tax Code Sec. 312.002: Guidelines and criteria adopted by the City Council are effective for two years from the date of adoption. Amendments or repeal of the guidelines within that two-year period require a three-fourths vote of the Council members. Before adoption, amendment, repeal, or reauthorization, a public hearing must be held. Current guidelines must be posted on the City's website. The adoption of these guidelines does not limit the Council's discretion in deciding whether to enter into a specific agreement, delegate review authority to staff, or create any legal right for applicants to receive an abatement. Tax abatements are considered on a case-by-case basis and are not automatically granted. Residential developments are ineligible for this program. ANALYSIS Eligibility and Criteria: Eligible Facilities: Abatements may be considered for various facilities including Corporate Headquarters, Manufacturing, Research, Agriculture, Regional Distribution, Regional Service, Regional EntertainmentTourism, Retail, or Other Basic Industry facilities. Eligible Property: The abatement applies to the value added by new buildings, structures, fixed machinery, equipment, personal property, and related fixed improvements. Land, inventory, moveable property, and certain other assets are ineligible. Minimum Standards: Projects must meet several minimum standards, including positive environmental impact, prioritizing local resources, increasing or retaining local payroll, compliance with city ordinances, and ensuring the cost of city services does not exceed the tax revenue generated (even with abatement). Evaluation Criteria: Projects are evaluated based on fiscal impact (e.g., capital investment, property value added, sales tax generation), employment impact (e.g., number and type of jobs, payroll, wages compared to county average), and community impact (e.g., environmental effects, compatibility with city plans, quality of life contributions). Abatement Structure: Term: Abatements can be granted for up to 10 years. Value: Abatement applies only to the additional tax value created by the new investment. The base year value of existing property remains fully taxable. Levels: Tiered abatement schedules are available for new facilities and expansions/modernizations, offering varying percentages of tax exemption over the abatement term based on factors like capital investment, job creation, average wages relative to the Austin County average, and provision of benefits. Process: Application: Property owners must submit a written application with a fee before construction begins. The application requires detailed project information, financial data, and certification regarding employment practices. Review: The City Manager and an Application Evaluation Committee review applications and make a recommendation to the City Council. Approval: Requires designating a reinvestment zone (if not already done) via a public hearing. The City Council must find that the project meets the policy guidelines and will not negatively impact city services or safety before approving an agreement. Agreement: A formal contract outlines all terms, including abatement details, project specifics, default conditions, and reporting requirements. Annual reporting by the recipient is mandatory. Recapture: Provisions exist to terminate the agreement and recapture abated taxes if the facility ceases production or fails to meet obligations. FINANCIAL IMPACT Tax abatements represent a temporary reduction in ad valorem tax revenue for the City (and potentially other participating taxing jurisdictions) on the new value created by an approved project. The base value of the property remains taxable, ensuring continued revenue. The policy aims for a positive long-term fiscal impact by attracting significant new investment, increasing the overall tax base after the abatement period, generating sales tax revenue, and creating jobs, which can lead to broader economic benefits. A key evaluation criterion is the return on public investment, comparing the cost of city services to the tax revenue generated, even with the abatement. The application fee ($1,500.00) helps offset administrative costs. RECOMMENDATION Staff recommends the City Council hold the required public hearing and subsequently consider the adopton/eauthortzation of the presented Tax Abatement Guidelines and Criteria to ensure compliance with Texas Tax Code Sec. 312.002. Adopting these guidelines provides a structured framework for evaluating tax incentive requests to attract desirable commercial and industrial projects aligned with the City's economic development goals. Adherence to the policy's evaluation criteria, application process, and state requirements is crucial for ensuring transparency, accountability, and positive outcomes for the City of Sealy. Approval of the guidelines does not obligate the Council to approve any specific future abatement request. City of Sealy, Texas Tax Abatement Policy Table of Contents . Introduction II. Key Terms II. Standards and Criteria A. Minimum Standards B. Evaluation Criteria C. Abatement Options 1. New Facilities 2. Eapanson/Modemzation IV. Abatement Details A. Eligible Facilities B. Eligible Property C. Ineligible Property D. Leased Facilities E. Abatement Term F. Modernization Projects G. Taxability V. Application Process VI. Approval Process VII. Agreement Details VIII. Recapture Page 1 of 10 I. Introduction The City of Sealy is committed to promoting development and enhancing the quality of life for its citizens. To achieve these goals, the City may offer tax abatements within designated reinvestment zones to stimulate economic development, in accordance with Chapter 312 of the Texas Tax Code. Tax abatement is not guaranteed and will be considered on a case-by-case basis for commercial and/or industrial improvements, including new facilities, expansions, and modernizations. Residential developments are not eligible. Projects considered for abatement should enhance the City's industrial or commercial diversity and/or attract further business development. II. Key Terms Term Definition Abatement Full or partial exemption from ad valorem taxes on new improvements in a reinvestment zone. Agreement Contract between the City and a property owner/lessee for tax abatement. Agriculture Facility Facility for processing, refining, packaging, and distributing food/fiber products. Base Year Value Assessed value of eligible property on January 1 preceding the agreement, plus the value of improvements made after January 1 but before the agreement. Corporate Headquarters Facility Facility where corporate staff handle financial, personnel, legal, planning, or other headquarters functions. Deferred Maintenance improvements for continued operation that do not increase productivity or alter technology. Economic Life Expected service life of a property improvement, not exceeding the U.S. Internal Revenue Code depreciation allowance. Page 2 of 10 Effective Date of Abatement January 15 immediately following the agreement execution date. Eligible Jurisdiction City of Sealy, Austin County, emergency services district, and any relevant school or college district. Term Definition Expansion Addition of buildings, structures, machinery, equipment, and/or personal property to increase capacity. Facility Completed or in-process property improvements comprising an integral whole. Housing New single- or multi-family housing projects or apartments (excluding hotels/motels). Manufacturing Facility Facility for manufacturing tangible goods or materials or processing them by physical or chemical change. Modernization Upgrading existing facilities to increase productivity, update technology, or lower unit costs, but not for reconditioning, refurbishing, or repairing. New Facility Previously undeveloped property placed into service. New Machinery and Equipment Tangible machinery, equipment, or personal property securely placed in a building or permanently residing in Sealy. Other Basic Industry Facility Facility for producing products/services primarily serving a market outside Sealy, creating new jobs and bringing new wealth. Real Property The land on which a facility is located. Reinvestment Zone Designated area where tax abatement can be granted, as per Chapter 312 of the Texas Tax Code. Regional Distribution Facility Facility to receive, store, service, or distribute goods, with a majority of revenues from outside Sealy. Regional Facility providing entertainmenttourism services, with a EnterlainmentTourism Facility majority of revenues from outside Sealy. Regional Service Facility Facility providing a service, with a majority of revenues from outside Sealy. Research Facility Facility for research or experimentation to improve or develop new tangible goods/materials or production Page 3 of 10 processes. Retail Facility Space for conducting business and selling goods directly to consumers. III. Standards and Criteria A. Minimum Standards The project must not have negative environmental impacts. Companies must prioritize using local resources. The project should increase or retain payroll in Sealy. Abatement is only for the additional tax value resulting from new construction, expansion, or modernization. The project should not primarily transfer employment within the city. Development must comply with city ordinances. The cost of city services for the development should not exceed the taxes generated with abatement. The City may require participation in the Direct Tax Pay Permit program. Investments must be in financially viable companies in good legal standing. The project should make a unique contribution to Sealy's development. Projects requesting ordinance variances may not be considered. Page 4 of 10 B. Evaluation Criteria The City will evaluate projects based on their impact in three key areas: Fiscal Impact Employment Impact Community Impact Capital investment value Number of jobs Pollutants created created/retained Real/personal property Types of jobs created Operational, visual, or other value added to tax rolls negative impacts Direct sales tax generated Contribution to Sealy's Compatibility with workforce comprehensive plan goals Infrastructure requirements Total annual payroll Support for quality-of-life and costs standards Burden on city utilities Average annual salary Visibility and aesthetic appeal Business travel impact Quality of life benefits LEED Certification offered Return on public investment Company's community support Capital impact and other fees Impact on local suppliers/contractors Competition with existing businesses Other effects on existing businesses Page 5 of 10 C. Abatement Options The City of Sealy may grant abatements for up to 10 years, with the specific amount determined at its discretion. 1. New Facilities defined as previously undeveloped property placed into service. Tier Investment & Year Year Year Year Year Year Year Jobs 1 2 3 4 5 6 7 1 Capital 100% 400% 90% 80% 70% 60% 50% Investment: 100% 90% 80% 70% 60% 50% 40% $25M+; Jobs: Exceeds 2 per $1M; Average Wage: 125% of Austin County average wage Local Hire: Will conduct local workforce resources for hiring events. Benefits: Employer- paid health benefits and retirement plan 2 Capital Investment: 90% 80% 70% 60% 50% 40% 30% $5 mm - $20M; Jobs: Minimum 2 per $1M; Average Wage: 110% of Austin County average wage Local Hire: Will conduct local workforce resources for hiring events. Benefits: Employer- paid health benefits and retirement plan Page 6 of 10 3 Non-A/Non-B; 75% 65% 55% 45% 35% 25% 15% Provides a Significant Contribution 2. Eapansion/Modemization is defined as upgrading existing facilities to increase productivity, update technology, or lower unit costs, but not for reconditioning, refurbishing, or repairing. Tier Investment Year Year Year Year Year Year Year & Jobs 1 2 3 4 5 6 7 1 Capital 100% 90% 80% 70% 60% 50% 40% Investment: $5M+; Jobs: Exceeds 5 per first $2M, 2 per additional $1M 2 Capital 90% 80% 70% 60% 50% 40% 30% Investment: $2 M+; Jobs: Minimum 5 per first $2M, 2 per additional $1M 3 Does not meet 75% 65% 55% 45% 35% 25% 15% Tiers 1 or 2 seen to make a significant contribution to the development of the community. Page 7 of 10 IV. Abatement Details A. Eligible Facilities: Corporate Headquarters, Manufacturing, Research, Agriculture, Regional Distribution, Regional Service, Regional EntertainmentTourism, Retail, or Other Basic Industry. B. Eligible Property: Buildings, structures, fixed machinery, equipment, personal property, and related fixed improvements. C. Ineligible Property: Land, speculative buildings, inventories, supplies, tools, furnishings, moveable personal property, vehicles, vessels, aircraft, housing, deferred maintenance investments, and property owned/used by the State of Texas or its subdivisions, or by City Council, Planning Commission, or EDC members. D. Leased Facilities: Agreements must be with both lessor and lessee. E. Abatement Term: Begins January 1 following agreement execution, up to 10 years. F. Modernization Projects: Abated value is the value of the new property less the replaced property. G. Taxability: Ineligible property and the base year value of existing eligible property are always taxable. The additional value of new eligible property becomes fully taxable after the abatement period. V. Application Process Any property owner can apply for tax abatement by submitting a written application to the City Manager. Applications must be filed before any construction, alteration, or installation begins, and include a non-refundable $1,500.00 fee. The application must include: General project description List of requested improvements Type, number, and location of proposed improvements Estimated inventory value and storage location Projected new/retained employees and salaries Estimated annual sales subject to sales tax Site map and property description Page 8 of 10 Project timeline Reasons for needing abatement For modernization, the assessed value of real and personal property for the prior tax year Other financial information as required by the City Council Applicants must certify that they do not and will not employ undocumented workers. The City may request additional information. The City Manager and the Application Evaluation Committee will review the application and provide a recommendation to the City Council. The City Council cannot approve an abatement if the application was filed after construction began or if false information was provided. VI. Approval Process AI public hearing is required before the governing body can designate an area as a reinvestment zone. The City Council must find that the agreement meets the guidelines and will not adversely affect City services or public safety. VII. Agreement Details The tax abatement agreement will include: Abated value and base year value Percentage of value abated each year Abatement commencement and end dates Facility use, construction details, and timeline Default conditions and obligations Proof of investment and job creation/retention Requirement for an annual report by March 1st, including employee counts and certification of jobs created or retained. The City Council may add other necessary conditions. VIII. Recapture If a facility stops producing for one year (except due to casualty or natural disaster), the agreement terminates, and abated taxes for that year are due to the City within 60 days. Page 9 of 10 Page 10 of 10 Item #2 TEXAS AESTANC er EICALOCE BEAL ATten PIBSEISS AGENDA ITEM NO: Discussion regarding the Financial Management Policy. SUBMITTED BY: Jennifer Matura, Director of Finance MEETING DATE: April 15, 2025 STAFF REPORT SUMMARY The City's Financial Management Policy states that the document shall be reviewed annually and updated or revised, as necessary and that updates and changes to the policies contained within shall be presented to City Council for approval. A copy of the city's most recent Financial Management Policy adopted by Resolution 2022-27 is included behind the staff report for your review. The purpose of this discussion is to review potential policy revisions, identify areas for improvement, and seek City Council's input on proposed modifications. Feedback from Council will help guide the preparation of a revised policy for future consideration and adoption. ANALYSIS: Fund Balance The City has established a target level of unassigned fund balance to alleviate revenue shortfalls and/or unanticipated expenditures to ensure the orderly and continued provision of services. The City strives to maintain an unassigned fund balance in the general fund equal to at least 25%, or 90 days, of normal recurring operating costs, based on the current year's budgeted operating expenditures. The current policy states that unassigned fund balance shall be used only for emergencies, non-recurring expendlilures/expenses: or major capital purchases that become necessary but cannot be accommodated through current year revenues. Guidelines from the Government Finance Officers Association (GFOA) suggest maintaining, at a minimum, an unrestricted budgetary fund balance of no less than two months of regular general fund operating revenues, or regular general fund operating expenditures. Many cities set their reserve requirements between 90 and 120 days to ensure fiscal stability during revenue disruptions or unforeseen emergencies. There ongoing has been discussion on the management of unencumbered fund balance amounts that exceed the minimum. To strengthen financial planning and transparency, staff proposes that Council discuss adopting a structured framework for allocating excess reserves. Options could include: Transferring excess funds to one-time capital projects. i.e. upgrade or replace outdated equipment Contribute to the city's emergency reserve fund to prepare for economic downturns, natural disasters, or emergencies Reducing outstanding debt early and save on future interest Pre-fund obligations to reduce long-term liabilities Formalizing the policy would ensure that excess resources are used in a deliberate and strategic manner that supports the City's long-term financial sustainability while also providing flexibility to address emerging opportunities and needs. Continuing Financial Disclosure The policy states that in compliance with SEC Rule 15c2-12, the City is obligated to provide (1) certain updated financial information and operating data annually and (2) timely notice of specified material events to the MSRB in an electronic format as prescribed by MSRB. The financial disclosure must be filed by March 31 of each year. This annual reporting requirement is completed by the City's financial advisor on behalf of the City upon receipt of our Annual Comprehensive Financial Report. Upon upload of the required documentation, we are provided with filing confirmation for our records. Due to the complexity of the City's financial structure and benefits that come from a history and knowledge of the City, the City maintains an ongoing relationship with our Financial Advisor for continuity. Since the policy does not address which party conducts the reporting, staff suggests adding language to the policy clarifying that the city's financial advisor completes the reporting on our behalf. Internal Controls The auditor's management letter has identified a deficiency in our internal controls in relation to ACH theft. Upon receipt of a request to change banking information from one of our established vendors, it is our unwritten policy to call our designated contact to confirm that the details provided in the email are not fraudulent prior making any changes to the vendor's payment profile. Staff suggests adding an item to the internal controls section of the Financial Management Policy to establish this policy in writing. We have requested sample policy suggestions from our auditors to present to council at a later date. Recordkeeping The policy states that the City Secretary shall review and approve (sign) all manual journal entries. Due to ongoing staffing shortages, staff suggests adding language to include the City Secretary's "designee" to satisfy this requirement. STAFF RECOMMENDATION: No formal action from Council is requested at this time. City of Sealy Financial Management Policy Adopted November 1, 2022 5) 1 SEAL Winil CEXAS A HISTORY OF EXCELLENCE. A FUTURE OF PROGRESS CITY OF SEALY FINANCIAL MANAGEMENT POLICY ADOPTED BY CITY COUNCIL ON NOVEMBER 1, 2022; RESOLUTION NO. 2022-21 1 City ofs Sealy Fimancial Management Policy Adopted November 1, 2022 Table of Contents Summary. 3 I. Accounting, Auditing, and Financial Reporting 0 II. Financial Consultants 8 III. Budgeting and Long-range Financial Planning 11 IV. Revenues. . 14 V. Operating Expenditures 17 VI. Fund. Balance/Working Capital.. 19 VII. Capital Expenditures and Improvements 22 VIII. Debt Management 25 IX. Cash Management and Investments. 29 X. Grants. 31 XI. Intergovermmental Relations 34 XII. Internal Controls. 35 XIII. Economic Development 36 2 City of Sealy Financial Management Policy Adopted November 1, 2022 Summary The City of Sealy (City) is responsible for safeguarding and prudently managing public funds, which includes planning for and providing adequate funding and resources to deliver the needed and desired municipal services to the community. To establish and document a policy framework for effective fiscal decision-making, planning, and management, the City shall establish and maintain a comprehensive Financial Management Policy. This policy shall incorporate sound fihancial management practices and shall demonstrate compliance with the associated federal, state, and local statutes and other legal documents and mandates. The Financial Management Policy shall bei reviewed annually and updated or revised, as necessary. Updates and changes to the policies contained herein shall be presented to City Council for approval. This Financial Management Policy shall apply to all funds maintained by the City, unless otherwise specified herein. These funds include: Governmental Fund Types General Fund - The general fund is the City's primary operating fund and shall be used to account for and report all financial resources not accounted for and reported in another fund. The general fund shall be used to finance the basic operations of the City. Special Revenue Funds - The City shall maintain special revenue funds to account for and report the proceeds of specific revenue sources that are restricted or committed for specified purposes other than debt service or capital projects. Debt Service Fund - The debt service fund shall be used to account for and report the accumulation of resources that are restricted, committed, or assigned for payment of principal and interest on the City's general long-term debt. Capital Projects Funds - The City shall maintain capital projects funds to account for and report financial resources that are restricted, committed, or assigned for capital outlay (e.g., bond funds). 3 City of Sealy Financial Management Policy Adopted November 1, 2022 Proprietary Fund Types Enterprise Fund - The City shall maintain separate utility funds to account for and report the operations of water and sewer services, gas services, and solid waste (refuse) collection services within the City, including the annual funding ofenterprise fund debt service requirements. Internal Service Fund - The City shall maintain a self-insurance fund to account for and report the operations of the City employees' medical insurance program. The purpose of these policies is to ensure that financial resources are available to meet the present and future needs of the City and its citizens. Specifically, the policy framework contained herein mandates the pursuit ofthe following fiscal objectives: I. Accounting, Auditing, and Financial Reporting: The City shall implement and maintain accounting practices that conform to generally accepted accounting principles and comply with prevailing federal, state, and local statutes and regulations. The City shall present regular reports that analyze, evaluate, and forecast the City's financial performance and economic condition. The City shall issue an Annual Comprehensive Financial Report no later than six months following the end of the fiscal year. II. Financial Consultants: The City shall employ the assistance of qualified financial advisors and consultants, as needed, to assist in the administration and management oft the City's financial affairs, including audit services, debt administration, delinquent tax collections, and financial modeling. III. Budgeting and Long-range Financial Planning: The City shall establish budgeting guidelines and shall employ a prudent fiscal strategy to provide forthe short-term and long- term needs of the City through strategic management and preservation of its financial resources. IV. Reyenues: The City shall establish, manage, and maintain a revenue system to assure a reliable, equitable, and sufficient cash flowi to support the desired level ofCity services and fund balance. V. Operating Expenditures: The City shall identify and prioritize services, determine appropriate service levels, and monitor the expenditure of available resources to ensure fiscal stability and the effective and efficient delivery of services. VI. Fund Balance/Working Capital: The City shall maintain the fund balance and working capital (retained earnings) of all operating funds at levels sufficient to protect the City's creditworthiness as well as its financial position during emergencies or economic fluctuations. VII. Capital Expenditures and Improvements: The City shall annually review and monitor the state of the City's capital assets, setting priorities for the addition, replacement, and 4 City of Sealy Financial Management Policy Adopted November 1, 2022 renovation of these assets based on needs, funding alternatives, and availability of esources. VIII. Debt Management: The City shall establish guidelines for debt financing to provide needed land, long-term capital additions, and infrastructure improvements while minimizing the impact of debt payments on current and future revenues. IX. Cash Management and Investments: The City shall invest idle operating cash SO as to ensure the absolute safety of principal, to meet the liquidity needs of the City, and to achieve the highest possible yield in accordance with state statute and the City'sInvestment Policy. X. Grants: The City shall seek, apply for, and effectively administer federal, state, and local grants which support the City's current and future priorities and policy objectives. XI. Intergovermmental Relations: The City shall coordinate efforts with other governmental agencies to achieve common policy objectives, share the cost of providing government services on an equitable basis, and support favorable legislation at the state and federal levels. XII. Internal Controls: The City shall establish and maintain a system of internal controls designed to safeguard City assets, ensure the accuracy and reliability of accounting and financial records, promote operational efficiency, and adhere to prescribed policies in compliance with federal and state regulations and City ordinances and policies. XIII. Economic Development: The City shall initiate, encourage, and participate in economic development efforts to create job opportunities and strengthen the local economy and tax base. The City shall account for all financial commitments made in connection with economic incentives granted to developers. 5 City of Sealy Financial Management Policy Adopted November 1, 2022 I. Accounting, Auditing, and Financial Reporting The City shall implement and maintain accounting practices that conform to generally accepted accounting principles and comply with prevailing federal, state, and local statutes and regulations. The City shall present regular reports that analyze, evaluate and forecast the City's financial performance and economic condition. The City shall issue an Annual Comprehensive Financial Report no later than six months following the end oft the fiscal year. A. Accounting Practices and Principles The City shall implement and maintain accounting practices that conform to Generally Accepted Accounting Principles (GAAP) as set forth by the Governmental Accounting Standards Board (GASB), the authoritative standard-setting body for state and local governments. All City financial reports, including the annual comprehensive financial report, official statements, and continuing disclosure reports shall comply with these standards. All governmental funds shall use the modified accrual basis of accounting, which means that revenues are recognized in the accounting period in which they become available and measurable, while expenditures are recognized in the accounting period in which they are incurred. Because the appropriated budget is used as the basis for control and comparison ofbudgeted and actual amounts, the basis for preparing the budget is the same as the basis of accounting. Exceptions under the modified accrual basis of accounting include: Grants, which are considered revenue when awarded, not received Principal and interest on long-term debt, which are recognized when paid The City's proprietary funds, which include the enterprise funds, are accounted and budgeted using the fiul accrual basis of accounting. Under this method, revenues are recognized when they are earned and measurable, while expenses are recognized when they are incurred, regardless of timing or related cash flows. The basis for preparing the budget is the same as the basis of accounting, except for principal payments on long-term debt and capital outlay expenses, which are treated as budgeted expenses. B. Financial Reports and Fiscal Monitoring Monthly financial reports shall be prepared and distributed to the City Council, City Manager, and department directors. These financial reports shall be useful for analyzing, evaluating, and forecasting the City's tinancial performance and economic position. Additionally, the reports shall be used to evaluate key areas of performance and to develop any remedial actions necessary to maintain the City's financial position. C. Annual Audit 6 City ofSealy Fimancial Management Policy Adopted November 1, 2022 Pursuant to state statute, the City shall have its records and accounts audited annually and shall prepare an annual financial statement and report. The audit shall be performed by a certified public accounting (CPA) fim licensed to practice in the State of Texas. The annual financial statement and report, including the auditor's opinion, shall be part of an official Annual Comprehensive Financial Report (ACFR) which shall be filed within 180 days after the last day of the City's fiscal year. The audit firm shall provide a management letter to the City prior to the filing ofthe audit. The audit firm shall also provide a Single Audit of federal and state grants, when necessary. The Director of Finance shall be responsible for establishing a process to ensure timely resolution of audit recommendations. D. Annual rinancial Disclosure As required by the Securities and Exchange Commission (SEC) Rule 15c2-12, the City, with the support of the financial advisor, shall annually provide certain financial information and operating data to information repositories. This disclosure requirement also applies to the filing of any periodic material event notices in compliance with Rule 15c2-12. E. Escheating Checks As required by state law, the City shall file the necessary reports on an annual basis to turn over to the State Comptroller any checks in excess of$100 that have been outstanding for more than the applicable abandonment period. This property is considered abandoned and shall be delivered to the State Comptroller on or before July 1 of each year. 7 City of Sealy financial Management Policy Adopted November 1, 2022 II. Financial Consultants The City shall employ qualified financial advisors and consultants, as needed, to assist in the administration and management of the City's financial affairs, including, but not limited to, audit services, debt administration, delinquent tax collections, and financial impact modeling. The principal factors in the selection ofthese advisors and consultants shall include technical expertise, experience, ability to perform the services, and references. A. Selection of Auditors The City Council shall select an independent firm of certified public accountants to perform an annual audit ofthe City's accounts and records and to render an opinion on the financial statements of the City. It is the City's preference to rotate audit firms to ensure that the City's financial statements are reviewed and audited from an objective, impartial, and unbiased point of view. At least every five years, the City shall request proposals from qualified firms and either affirm the current audit firm or select a new firm. It is prudent that the current firm rotate the audit partner and lead auditor at least every two years. Annually, the independent auditor will provide a letter of engagement to the City Council for the fiscal year to be audited. B. Arbitrage The City is responsible for the arbitrage rebate calculation on each bond issue. The City shall provide the necessary information and records to a qualified firm for completing these calculations and preparing the required report filings. The City shall make timely payments of any rebate amount owed to the federal government. Requests for qualifications shall be solicited at least every five years from firms qualified to prepare arbitrage rebate calculations and reports, C. Delinquent Tax Collection Attorney Due to the specialized nature of these services, the City shall hire an experienced attorney to collect delinquent property taxes. These services shall also include the filing of bankruptcy claims, foreclosures on real property, and seizures of personal property. The attorney shall provide legal representation for the City in court cases and property sales. D. Bond Counsel Bond counsel to the City shall provide an objective legal opinion concerning the issuance of bonds and other debt instruments. Generally, bonds are not marketable without the 8 City of Sealy Financial Management Policy Adopted November 1, 2022 opinion ofbond counsel indicating the bonds are valid and binding obligations ofthe City and exempt from federal and state income taxes. Due to the complexity of the City's financial structure and the benefits that come from a history and knowledge of the City, the City maintains an ongoing relationship with the bond counsel for continuity. The engagement letter with bond counsel may be terminated at any time upon written notice by either party. E. Financial. Advisory Services The City issues various types of securities to finance its capital improvement program and shall employ a financial advisor for these services. Debt issuance and restructuring requires a comprehensive list of services associated with municipal transactions, including, but not limited to, analysis of market conditions, size and structure of the issue, method of sale, preparation of disclosure documents, evaluation of and advice on the pricing of securities, facilitation of rating agency relations, and calculation of debt service schedules. The financial advisor shall provide other financial advice and expertise, as needed, Due to the complexity of the City's financial structure and the benefits that come from a history and knowledge of the City, the City maintains an ongoing relationship with the financial advisor for continuity. The City's agreement with the financial advisor is for a five-year term and automatically renews on the fifth anniversary for an additional five years. Either party may terminate the agreement at any time with thirty days written notice. F. Depository Bank Pursuant to state statute, the City may approve a depository services contract for a term up to five years. The City typically establishes the contract for depository services for an initial term of three years with the option to renew annually in each of the remaining two years. The City shall select a depository through a formal bid process in order to provide the City with the most comprehensive, flexible, and cost-effective banking services available. G. Investment. Advisory Services The City Council may from time to time employ qualified individuals or firms as an Investment Advisor to assist the investment officer(s) in carrying out the investment program and complying with the requirements of the City's Investment Policy and the Public Funds Investment Act. H. OPEB The City is required to comply with the requirements of GASB Statement No. 43, Financial Reporting. for Postemployment Benefit Plans Other Than Pension Plans, and GASB Statement No. 45, Accounting and Financial Reporting by Employers for g City of Sealy Financial Management Policy Adopted November 1, 2022 Postemployment Benefits Other Than Pensions, to measure and report the liabilities associated with other (than pension) postemployment benefits (OPEB). The City currently participates in the cost sharing multiple-employer defined benefit group- term life insurance plan operated by the Texas Municipal Retirement System (TMRS) known as the Supplemental Death Benefits Fund (SDBF). This plan provides group-term life insurance coverage to both current and retired employees. The City contributes to the SDBF at a contractually required rate as determined by an annual actuarial valuation. To comply with GASB reporting requirements, TMRS shall provide the City with the information necessary to complete the notes to the financial statements and the required supplementary information included in the ACFR. 10 City of Sealy Financial Management Policy Adopted November 1, 2022 III. Budgeting and Long-range Financial Planning The City shall establish budgeting guidelines and shall employ a prudent fiscal strategy to provide for the short-term and long-term needs ofthe City through strategic management ànd preservation ofits financial resources. A. Balanced. Budget Budgeting is an essential element of the financial planning, control, and evaluation process of the City. The operating budget represents the City's annual financial operating plan. It includes all operating departments of the City. Annually, the City Manager shall file an operating budget for the ensuing fiscal year in accordance with state and local statutes. This budget shall adhere to the City's fund balance policies. A structurally balanced budget is defined as recurring revenues funding recurring expenditures and adherence to fund balance policies. Therefore, the operating budget should be balanced with current revenues, exclusive ofbeginning balances, greater than or equal to current expendiftureslexpenses. Excess balances may be used for capital outlay or other non-recurring expenditures. A structurally imbalanced budget shall be accompanied by aj plan to return the budget to structural balance, including a five-year financial forecast that reflects steps to be taken to return the budget to structural balance. Short-term loans shall be avoided as budget balancing techniques. B. Current Funding Basis The City shall budget and operate on a current funding basis with expenditures budgeted and controlled SO as not to exceed projected current revenues. Recurring expenditures shall be funded exclusively with recurring revenues to facilitate operations on a current funding basis. C. Use ofNon-recurring Revenues Non-recurring revenue sources, such as one-time revenue remittances of fund balance in excess of policy, can only be budgeted and used to fund non-recurring expenditures, such as capital purchases or capital improvement projects. This will ensure that recurring expenditures are not funded by non-recurring sources. D. Ad Valorem Tax Rate The City Manager shall recommend an ad valorem (property) tax rate to enable the City to operate the general fund efficiently and to fund the required annual debt service payments. 11 City ofSealy Financial Management Policy Adopted November 1, 2022 E. Revenue Estimating. for Budgeting To protect the City from revenue shortfalls and to maintain a constant level ofservices, the City shall use a conservative, objective, and analytical approach when preparing revenue estimates. The process shall include an analysis of probable economic changes and the estimated impact on revenues in conjunction with a review ofhistorical revenue collection rates and trends. This approach should reduce the likelihood of revenue shortfalls and should help to avoid decreased service levels during the year. Sales tax is used to fund recurring operations, but sales tax reyenue fluctuates with changes in economic conditions. To mitigate the overall effects of these revenue fluctuations, the City shall limit discretionary spending, exercise budget control, and generate conservative revenue forecasts. The water and wastewater, natural gas, and solid waste revenues of the enterprise (utility) funds shall be budgeted using an analysis of prior service levels, historical trends in water and natural gas consumption and usage, and projected new service requirements. Whenever possible, the City will seek outside sources of revenue, such as federal, state, and local grants, in order to leverage local dollars. F. Budget Management The City Manager shall administer the budget after it is formally adopted by City Council. Department directors shall be responsible to manage spending SO as not exceed the department' S total budget allocation. G. Budget Amendment or Adjustment Emergency situations, unforeseen circumstances, and revised cost estimates may require amending the original budget. At the request of the City Manager, the City Council may by ordinance transfer unencumbered appropriation balance from one department to another or increase total appropriations with the identified funding source, Administratively, the City Manager may adjust the budget to reallocate existing unencumbered appropriations among items of expenditure within a department. No City Council action is necessary for these adjustments, as they do not change the budget total. H. Operating Deficits The City shall take immediate corrective actions if at any time during the fiscal year expenditure and revenue forecasts are such that an operating deficit is projected at year end. Corrective actions may include any or all oft the following: Deferral of capital purchases Expenditure reductions 12 City of Sealy Financial Management Policy Adopted November 1, 2022 Hiring and/or salary freezes Reduction or elimination of wage increases Use of fund balance Increased service and usage fees Staff reductions Short-term loans shall be avoided as a means to balance the budget. With City Council approval, excess fund balance, as a one-time revenue source, may be used to cover an annual operating deficit. 13 City of Sealy Financial Management Policy Adopted November 1, 2022 IV. Revenues The City shall establish, manage, and maintain a revenue system to assure a reliable, equitable, and sufficient cash flow to support the desired level of City services and fund balance. A. Balance and Diversification in Revenue Sources The City shall strive to maintain a stable and diversified revenue system to protect the City from fluctuations in any single revenue source due to changes in local economic conditions, for example, which may adversely impact the revenue source (e.g., sales tax revenue). The City shall maintain balance in its revenue structure to ensure fairness and neutrality as it relates to cost of service and willingness and ability to pay. B. User Fees General Fund For services that benefit specific users, the City shall establish and collect fees to recover the costs ofthese services. The City shall determine the appropriate level of cost recovery and establish a fee schedule accordingly. Each fee shall be set and classified by the City Council. The City shall identify and evaluate direct and indirect costs to determine what is applicable in calculating cost of service. The following may also be considerations when setting user fees: current economic conditions, demand for services, impact on users, and competitive pricing in the private sector, if applicable. While the City shall seek to recover full direct and indirect costs, in some cases the City may deem it appropriate to set user fees at a level that will result in partial or minimal cost recovery. The City shall review user fees on an annual basis to calculate the level of cost recovery and determine if adjustments are necessary or appropriate. C. User Fees Enterprise Funds Utility rates and user fees shall be set at levels sufficient to fully cover direct and indirect operating costs, meet debt obligations and all legal restrictions of applicable bond covenants (e.g., debt service coverage), allow for planned pay-as-you-go funding for capital improvements, and provide an adequate level of working capital. Indirect costs shall include costs for overhead services provided and funded by the general fund, such as administration, finance, legal, information technology services, and other costs as appropriate. These costs will be assessed to each utility based on a percentage of sales revenues (gross receipts) as a payment in lieu of franchise fees. The percentage(s) will be reviewed and set annually during the City's budget preparation process. 14 City ofSealy financial Management Policy Adopted November 1, 2022 Revenues collected for water and wastewater services, natural gas services, and solid waste collection services shall remain in the respective enterprise funds. The City shall monitor monthly utility revenues to project any revenue surplus or shortfall for the year. The City shall not use general funds to subsidize enterprise funds. D. User Fees Municipal Drainage Utility Fund The City shall separately establish a drainage utility fee structure to comply with federal and state regulations to reduce storm water pollution and prevent flooding. Fees are assessed according to the potential impact a property could have on the public drainage system. These funds may only be used to cover costs related to the City's drainage system, which may include a reserve/contingency fund to cover unexpected regulatory costs. Revenues collected for the public drainage system shall remain in the fund. The City shall monitor monthly utility revenues to project any revenue surplus or shortfall for the year. E. Impact Fees The City will impose impact fees as allowable under state law for both water and wastewater services. These fees will be calculated in accordance with applicable statutes and reviewed and updated at least every five years. All fees collected will fund projects identified within the fee study and as required by state laws. F. Sales Tax Voters in Sealy may, by referendum, adopt special option sales taxes (e.g., special districts, street maintenance). These special tax revenues shall be allocated accordingly upon receipt. The City shall monitor monthly sales tax revenues to project any revenue surplus or shortfall for the year. G. Revenue Collections The City shall enact collection policies that ensure revenues will materialize as budgeted/forecast, The City shall follow an aggressive, consistent, yet reasonable approach for revenue collection by pursuing delinquent and overdue accounts to the fullest extent allowed by law. The City shall levy a charge against any person making a payment to the City by check, credit card, or any automated or electronic means when such payment is returned to the City and not paid. This charge shall apply to payments of any kind, including, but not limited to, taxes, permits, fees, and utilities. The City shall establish this charge based on the associated direct and indirect costs incurred by the City to recover and process the monies owed to the City. The charge shall not exceed the maximum allowed by state law. 15 City of Sealy Financial Management Policy Adopted November 1, 2022 H. hle-afo/Uhcalectble Receivables - Utility and Other Accounts The City may elect to turn any delinquent account over to a collection agency for further attempts to collect the past due amount(s). The City shall write off utility accounts where collection efforts have been exhausted or are no longer feasible or cost effective. Aged receivables shall be considered for write-off when mail has been returned and all attempts to acquire a valid forwarding address have failed or after accounts have been outstanding for six months or more and all attempts to collect the past due amount(s) have been exhausted. The City shall consider any write-off of uncollected accounts as an accounting entry only and does not release the debtor from any debt owed to the City. If an account becomes collectible after having been written-off, the accounts receivable balance shall be reinstated and payments applied to that balance. The Director of Finance shall review the write-off of delinquent utility and other accounts. I. Non-recurring Revenues One-time or non-recurring revenues shall not be used to finance current ongoing operations. Non-recurring revenue sources, such as a one-time revenue remittance, may only be used to fund non-recurring expenditures, such as capital purchases or capital improvement projects. Non-recurring revenues shall not be used to balance the budget. 16 City of Sealy Financial Management Policy Adopted November 1, 2022 V. Operating Expenditures The City shall identify and prioritize services, determine appropriate service levels, and monitor the expenditure of available resources to ensure fiscal stability and the effective and efficient delivery of services. A. Current Funding Basis The City shall budget and operate on a current funding basis with expenditures budgeted and controlled SO as not to exceed projected current reyenues and/or planned use of fund balance accumulated through prior year savings. Recurring expenditures shall be funded exclusively with recurring revenues to facilitate operations on a current funding basis. Any use of fund balance for expenditures shall be in accordance with the City's fund balance policy incorporated in this Financial Management Policy. B. Maintenance ofCapital Assets Within the resources available each fiscal year, the City shall maintain capital assets and infrastructure at a sufficient level to protect the City's investment, to minimize future replacement and maintenance costs, and to maintain service levels. C. Review ofPrograms and Services The City shall conduct periodic reviews of programs and services to evaluate demand, efficiency, and effectiveness. Programs and services determined to be inefficient and/or ineffective shall be recommended through the annual budget process to be reduced in scope or eliminated. Privatization and contracting with other governmental agencies or private entities may be considered as alternative approaches to service delivery. D. Purchasing The City shall conduct its purchasing and procurement activities efficiently and effectively and in compliance with all applicable state laws. The City shall strive to maximize discounts and capitalize on savings through the use of competitive bidding, or when competitive bidding is not required, shall seek to obtain the most favorable terms and pricing. Recommendations ofbids, proposals, and contracts in excess of$50,000 shall be presented to City Council for formal approval. In accordance with state law, change orders are limited to 25% ofthe total contract amount. Change orders greater than $50,000 require the same Council approvals as the original contracts. 17 City ofs Sealy Financial Management Policy Adopted November 1, 2022 The City utilizes several major purchasing cooperatives. The membership of these cooperatives is comprised ofcities, schools, counties, universities, and other governmental entities. The purpose of cooperative purchasing groups is to obtain the benefits and efficiencies that can accrue to members, comply with State bidding requirements, and identify qualified vendors of commodities, goods, and services. The City may also use another government's awarded contracts if they have an interlocal contract between them. Once the interlocal contract is signed by both governing boards, the City may make purchases under the contracts awarded by the other entity. The City has also implemented a procurement card program to provide an efficient and cost-effective alternative to the traditional purchasing process for materials, supplies, and travel. Program details are contained in a separate Procurement Card Policy and Procedures document adopted by City Council. Use of a procurement card does not replace or override the City's purchasing guidelines or state law. Misuse of a procurement card may be considered misappropriation of City funds and may result in revocation oft the card with or without prior notice. The monthly statement of charges shall be reviewed by cardholders and their respective assigned reconciler'approyers and monitored by the Finance Department for policy compliance. All invoices approved for payment by the proper City authorities shall be paid within thirty (30) calendar days of receipt of goods or services or the invoice date, whichever is later, in accordance with state law. 18 City of Sealy Financial Management Policy Adopted November 1, 2022 VI. Fund Balance/Working Capital The City shall maintain the fund balance and working capital of its operating funds at levels sufficient to protect the Citvy'scredlitworhiness as well as its financial position during emergencies or economic fluctuations. Unassigned fund balance is an important measure of economic stability. It is essential that the City maintain adequate levels of unassigned fund balance to mitigate financial risk that can occur from unforeseen revenue fluctuations, unanticipated expenditures, and similar circumstances. A. Definitions Fund equity is generally the difference between a fund's assets and its liabilities. Fund balance is the fund equity ofag governmental fund for which an accounting distinction is made between the portions that are spendable and nonspendable. In accordance with GASB Statement No. 54, fund balance is classified into five categories based on the following distinctions, which depict the relative strength ofthe spending constraints placed on the purposes for which the funds may be used: Nonspendable fund balance includes the portion of net resources that cannot be spent because of their form (e.g., inventory, long-term loans, or prepaids) or because they must remain intact, such as the principal of an endowment. Restricted fund balance includes the portion of net resources on which limitations are imposed by creditors, grantors, contributors, or by laws or regulations of other governments (i.e., externally imposed limitations). Amounts can bes spent only for the specific purposes stipulated by external resource providers or as allowed by law through constitutional provisions or enabling legislation. Examples include impact fees and bond proceeds. Committed fund balance includes the portion of net resources upon which the City Council has imposed limitations on use. Amounts can be used only for the specific purposes determined by a formal action of the Council. Commitments may be changed or lifted only by the Council taking the same formal action that originally imposed the constraint. The formal action must be approved before the end of the fiscal year in which the commitment will be reflected on the financial statements. Assigned fund balance includes the portion of net resources for which an intended use has been established by the City Council or a City official authorized to do SO by the City Council. Assignments of fund balance are much less formal than commitments and do not require formal action for their imposition or removal. In governmental funds other than the general fund, assigned fund balance represents the 19 City of Sealy Financial Management Policy Adopted November 1, 2022 amount that is not restricted or committed, which indicates that resources are, at a minimum, intended to be used for the purpose of that fund. Unassigned, fund balance includes the amounts in the general fund in excess ofwhat can properly be classified in one of the other four categories of fund balance. It is the residual classification of the general fund and includes all amounts not contained in other classifications. Unassigned amounts are technically available for any purpose. Negative residual amounts for all other governmental funds are reported in this classification. B. Committed Fund Balance The City Council is the City's highest level of decision-making authority and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the City Council at a public meeting. The resolution must either be approved or rescinded, as applicable, prior to the last day of the fiscal year for which the commitment is made. The amount subject to the constraint may be determined in the subsequent period (i.e., the Council may approve the calculation or formula for determining the amount to be committed). C. Assigned Fund Balance The City Council authorizes the City Manager or his designee as the City official responsible for the assignment of fund balance to a specific purpose as approved by this fund balance policy. D. Minimum Unassigned Fund Balance The City has established a target level of unassigned fund balance to alleviate revenue shortfalls and/or unanticipated expenditures to ensure the orderly and continued provision of serviçes. The City shall strive to maintain an unassigned fund balance in the general fund equal to at least 25%, or 90 days, of normal recurring operating costs, based on the current year's budgeted operating expenditures. E. Replenishment ofMinimm Unassigned Fund Balance Reserves Ifunassigned fund balance unintentionally falls below 25% or ifit is anticipated that at the completion of any fiscal year the projected unassigned fund balance will be less than the minimum requirement, the City Manager shall prepare and submit a plan to restore the minimum required level as soon as economic conditions allow. The plan shall detail the steps necessary for the replenishment of fund balance as well as an estimated timeline for achieving such. These steps may include, but are not limited to: Identifying new, nonrecurring, or alternative sources of revenue; 20 City of Sealy Financial Management Policy Adopted November 1, 2022 Increasing existing revenues, charges, and/or fees; Use ofyear end surpluses; and/or Enacting cost-saving measures, such as holding capital purchases, reducing departmental operating budgets, freezing vacant positions, and/or reducing the workforce. The replenishment of fund balance to the minimum level shall be accomplished within a three-year period. Ifrestoration ofthe reserve cannot be accomplished within such a period without severe hardship to the City, then the Council shall establish an extended timeline for attaining the minimum balance. F. Order of Expenditure of Funds When multiple categories of fund balance are available for expenditure (e.g., a construction project is being funded partly by a grant, funds set aside by the Council, and unassigned fund balance), the City will first spend the most restricted funds before moving down to the next most restrictive category with available funds. G. Working Capital of Enterprise Operating Funds In enterprise operating funds, the City shall maintain working capital sufficient to provide reserves for emergencies and revenue shortfalls, specifically in the utility funds (water and sewer, gas, and solid waste). A cash operating reserve shall be established and maintained at a minimum of25% ofthe current year's budget appropriation for operating expenses. H. Appropriation ofUnassigned Fund Balance and Working Capital Reserves Unassigned fund balance and working capital reserves shall be used only for emergencies, non-recurring expenditures/expenses, or major capital purchases that become necessary but cannot be accommodated through current year revenues. Should such use reduce balances below the established target levels, the City Manager shall provide restoration recommendations that accompany the decision and request to utilize said balances within the guidelines established in this policy. I. Monitoring and Reporting The Director ofFinance shall be responsible for monitoring and reporting the City's reserve balances. The City Manager is directed to make recommendations to the Council on the use of reserve funds, both as an element of the annual operating budget submission and from time to time throughout the fiscal year as needs may arise. Compliance with the provisions of the policy shall be reviewed as a part of the annual operating budget adoption process, and subsequent review will be included in the annual audit and financial statement preparation process. 21 City of Sealy Financial Management Policy Adopted November 1, 2022 VII. Capital Expenditures and Improvements The City shall annually review and monitor the state of the City's capital assets, setting priorities for the addition, replacement, and renovation of these assets based on needs, funding alternatives, and availability of resources. This review shall be done during the annual budget process. A. Capilalization Thresholdj for Capital Assets Capital items should be capitalized only if they: Are owned by the City; Have an estimated useful life of at least one year following the date of acquisition or significantly extend the useful life oft the existing asset; Cannot be consumed, unduly altered, or materially reduced in value immediately by use; and Have a cost of not less than $5,000 for any individual item. The capitalization threshold of $5,000 will be applied to individual items rather than to a group ofs similar items acquired as a single lot (e.g., desks, chairs, etc.). All costs associated with bringing an asset into working order will be capitalized as part of the asset cost. This includes start-up costs, engineering, or consultant type fees that are incurred once the decision to purchase the asset is made. The cost ofland acquired includes all related costs associated with its purchase. Improvements will be capitalized when they extend the original life of an asset or when they make the asset more valuable than it was originally. The replacement of asset components will normally be expensed unless they are of a significant nature and meet all oft the capitalization criteria. An item shall not to be considered a capital asset ifit requires regular replacement because of rapid wear, a one-time use of the item will destroy it, or maintenance on an existing capital asset merely returns the item to a functioning product, such as equipment repairs and clearing of underground water and sewer lines. B. Capital Improvement Plan As part of the annual budget process, the City shall prepare a capital improvement plan (CIP) based on the needs for capital improvements and equipment, including replaçement and renovation and potential new projects. Annual capital spending needs shall be 22 City of Sealy Fimancial Management Policy Adopted November 1, 2022 considered within the scope of the long-range capital improvement plan, taking into consideration pay-as-you-go financing, debt requirements, operating costs, etc. Capital expenditures are generally defined as those to purchase and/or construct land, buildings, improvements other than buildings, and infrastructure, including roads, sidewalks, bridges, utility lines, etc., in orderto provide services over a considerable period oft time. Capital costs typically consist of preliminary and final engineering and design and construction, but may also include the acquisition of land or easements. For each project identified in the plan, a project scope and justification shall be provided for review and consideration and shall include cost estimates, funding sources, and projected annual operation and maintenance costs. Capital projects shall become part of the City's asset inventory. The Capital Improvement Plan shall be reviewed along with the annual budget. Appropriations are for the life of the capital project. At fiscal year-end, projects shall be reviewed and, if complete, shall be closed. Following completion of a project, any remaining funds shall be re-appropriated as part of the next year's capital budget. Funds remaining from bond proceeds may only be used in accordance with the legal use of those funds. C. Infrastructure Evaluation and eplacemenlchallaion Water, wastewater, drainage, street lighting, streets and sidewalks, municipal facilities, and other infrastructure are fundamental and essential for public health and safety, environmental protections, and the economic well-being of the City. The City's CIP shall be focused on ensuring that infrastructure is replaced as needed to protect the City's investment, to minimize future replacement and maintenance costs, to maintain existing levels of service, and to accommodate growth. Infrastructure will be replaced, if feasible, at the end ofi its useable service life. Ifupgrades are warranted to meet current design standards, a cost/benefit analysis shall be done and presented to City Council for review and consideration. D. Capital Expenditure Financing The City utilizes several basic methods of financing its capital needs: pay-as-you-go from current revenues, fund balance/working capital, and debt. Capital projects shall not commence prior to the necessary funds being appropriated. When cash funding is available, the City may elect to pay for all or part of its capital improvements from the appropriate fund rather than through the issuance of debt. The anticipated benefit of pay-as-you-go financing is a reduced or minimized impact on the property tax rate and utility rates. The use of pay-as-you-go financing may not reduce fund balance below target levels. 23 City of Sealy Financial Management Policy Adopted November 1, 2022 Debt financing may include general obligation bonds, revenue bonds, certificates of obligation, lease/purchase agreements, and other obligations permitted by state law. Capital improvement projects may not be debt-financed for periods longer than the projected useful life ofthe project or improvement. E. Monitoring To track the existence, condition, and retirement or disposal of capital assets, the Finance Department shall utilize various methods to monitor the City's capital assets. A capital asset listing shall be sent to each department head for review near the end of each fiscal year in order to determine ift the asset is still in service, impaired, or obsolete. The Finance Department shall perform a periodic review of capital assets to verify the asset is still functional and in use, At least every two years, the City shall complete a physical inventory of capital assets and a reconciliation to the capital asset listing. Capital asset records shall be retained by the Finance Department in accordance with the City's records retention schedule. F. Reporting A summary and status report on capital projects and expenditures shall be included in the monthly financial report presented to City Council. 24 City of Sealy Financial Management Policy Adopted November 1, 2022 VIII. Debt Management The City shall establish guidelines for debt financing to provide needed land, long-term capital additions, and infrastructure improvements while minimizing the impact of debt payments on current and future revenues. A. Use of Debt Financing Debt financing, including general obligation bonds, revenue bonds, certificates of obligation, lease/purchase agreements, and other obligations permitted by state law, shall only be used to purchase capital assets that cannot be acquired from current revenues or fund balance/working capital. Debt financing may be used to fund infrastructure improvements and additions. B. Debt Financing The City shall not assume more tax-supported general purpose debt than it retires each year without conducting an objective analysis regarding the City's ability to assume and support additional debt service. This analysis shall include an examination ofthe costs and benefits of the proposed capital spending and the anticipated impact on the property tax rate. The decision to issue new debt shall be based on this analysis, a review of the current and projected conditions ofthe municipal bond market, and the City's ability to service the new debt. General obligation bonds (GOs) require voter approval and shall be issued to accomplish projects identified in the bond referendum. General obligation bonds shall be used to fund capital assets of the City and shall not be used to fund current operating expenditures. Certificates ofc obligation (COs) may be issued without voter approval to finance any public works project or capital improvement, as permitted by state law. The City may issue certificates of obligation in the event it is more economical than issuing revenue bonds. Revenue bonds are secured by the revenues of an enterprise fund and require adequate projected revenues to cover anticipated future payments over the life of the bonds. Ift the City determines it is feasible to issue revenue bonds, it may also be necessary to make adjustments to the City's utility rate structure to maintain required coverage. Coverage requirements, and the need for and level of reserve funds to provide additional security in support of the bonds, are subject to rating agency review and market standards. Tax notes are issued in anticipation of tax collections, grant proceeds, bond proceeds, or any other lawful purpose. Tax notes are short-term, usually not more than seven years, and are intended to boost cash flows in anticipation of future receipts of funds. The asset(s) to 25 City of Sealy Financial Management Policy Adopted November 1, 2022 be purchased with tax notes may at times be later incorporated into an issuance ofa GO or CO on a similar or related issue. C. Debt Structure The term of any debt issuance may not exceed the useful life of the asset funded by the debt. Relative to the issuance of revenue bonds, the term of the debt shall also be consistent with the revenue-generating capacity of the asset. The maximum term of any debt issue shall not exceed 30 years. The structure of any debt issuance shall be designed to achieve the best possible results for the City given current market conditions, etc. Consideration shall be given to the term, amortization schedule, interest rates, yield, pricing, and call provisions. To achieve a more favorable interest rate, the City shall strive to issue bonds in amounts such that the issue is bank-qualified. However, if the City needs to issue debt that is non- bank-qualified, the fact that the issue is SO designated will not be a consideration ifall other factors support the issuance. D. Debt Refiunding The City's financial advisor shall monitor the municipal bond market for opportunities to obtain interest savings by refunding outstanding debt. The City may issue an advance refunding if the difference between when the new bonds are issued and the outstanding bonds being refunded are called or paid at maturity is greater than 90 days. Ifthat difference is less than 90 days, the City may issue a current refunding. Pursuant to federal tax law, the City may advance refund bonds only once on a tax-exempt basis. There is no limit on the number of times the City may current refund bonds. As a general rule, the net present value savings of an advance refunding should exceed three percent (3%) of the refunded maturities (including cost of issuance), unless a debt restructuring is necessary. General obligation refunding bonds do not require voter approval. E. Bond Elections General obligation bond elections shall be determined and set by the City Council based upon recommendations ofthe City's financial advisor, bond counsel, and underwriters. An analysis showing the impact ofthe new debt on the City's tax rate and total debt capacity will be included with each proposal to issue new general obligation bonds. 26 City of Sealy Financial Management Policy Adopted November 1, 2022 F. Method ofSale The City shall use a competitive bidding process for the sale of debt unless the nature of the issue warrants a negotiated sale. The City may utilize a negotiated sale when the debt issuance is, or contains, a refinancing that is dependent on market timing. G. Underwriting Syndicates As part oft the debt issuance process, the City shall partner with qualified and experienced firms. The City shall be actively involved in the debt issuance process and shall work with the financial advisor, bond counsel, and underwriter(s) to develop and recommend the most appropriate debt financing to meet the City's needs. For any given bond issue, the City may elect to work with a single underwriter or with an underwriting syndicate, which includes several firms and a designated lead underwriter. H. Rating Agency Presentations Full disclosure of operations and open lines of communication shall be maintained with the rating agencies. The City shall work with the tinancial advisor to prepare the necessary materials and presentation to the rating agencies. Credit ratings will be sought from one or more of the nationally recognized municipal bond rating agencies, currently Moody's Investor Service, Standard & Poor's Ratings Services, and Fitch Ratings, based on the recommendation of the financial advisor. I. Bond Ratings The City shall prudently manage the general and enterprise funds in order to maintain or improve the City's bond rating. J. Lease/Purchase Agreements The City may consider lease/purchase agreements for short-term financing needs when it is the most cost-effective option. K. Interest Earnings on Debt Proceeds Interest earnings on debt proceeds in governmental funds shall be transferred to the debt service fund. Interest earnings on water and wastewater fund and gas fund debt proceeds shall remain in the respective enterprise fund. L. Continuing Financial Disclosure The City shall comply with all requirements for continuing financial disclosure prescribed by state and federal regulations and City bond ordinances. In order to meet these requirements, the City must annually provide certain updated financial information and operating data to the Municipal Securities Rulemaking Board. 27 City of Sealy Financial Management Policy Adopted November 1, 2022 In compliance with SEC Rule 15c2-12, the City is obligated to provide (1) certain updated financial information and operating data annually and (2) timely notice of specified material events to the Municipal Securities Rulemaking Board (MSRB) in an electronic format as prescribed by MSRB. This information is available free of charge via the Electronic Municipal Market Access (EMMA) system at www.emmamsb.org. The information to be provided includes quantitative financial information and operating data as well as audited financial statements. This financial disclosure must be filed by March 31 of each year. A material event notice must be filed within ten business days of the occurrence of any of the following: Principal and interest payment delinquencies Non-payment related defaults associated with outstanding bonds, if material Unscheduled draws on debt service reserves reflecting financial difficulties Unscheduled draws on credit enhancements reflecting financial difficulties Substitution of credit or liquidity providers, or their failure to perform Adverse tax opinions affecting the tax-exempt status ofthe City's bonds Modifications to the rights of bondholders, if material Bond calls, if material, and tender offers Defeasances Release, substitution, or sale of property securing repayment of the City's bonds, if material Changes to the City's credit ratings Bankruptcy, insolvency, receivership, or similar event of the City Merger, consolidation, or acquisition involving the City, including the sale of all, or substantially all, City assets Appointment of a successor paying agent/registrar or, if material, a change in the name ofthe paying agent/registrar M. Posl-issuance Compliance The City shall adopt a separate post-issuance compliance policy and procedures to address the requirements ofthe' Tax Code relative to its debt issuances. These requirements include restrictions on the use of proceeds, arbitrage yield restrictions, and the arbitrage rebate requirement. In general, these requirements are applicable throughout the period the debt issuance remains outstanding. 28 City of Sealy Financial Management Policy Adopted November 1, 2022 IX. Cash Management and Investments The City shall invest idle operating cash in such a manner SO as to ensure the absolute safety of principal, to meet the liquidity needs of the City, and to achieve the highest possible yield in accordance with state statutes and the City's Investment Policy. A. Investment Management All aspects of cash and investment management shall be designed to first ensure the safety of the City's financial assets. Cash and investment management activities shall be conducted in full compliance with prevailing state statutes and the City's Investment Policy. The City shall only do business with financial institutions and broker/dealers approved by City Council and who have executed a written certification of their review and understanding ofthe City's Investment Policy. The City shall design and establish policies relative to a variety of cash and investment management issues as set forth in the City's Investment Policy. Investments ofCity funds shall be made with the exercise ofjudgment and care which persons of prudence, discretion, and intelligence exercise in the management of their own affairs. Safety of the investment principal and liquidity needs of the City must be taken into account before yield may become a consideration in the investment process. Speculative investments are prohibited. B. Investment Strategy The City shall implement an investment strategy to achieve safety of principal, to maintain adequate liquidity to meet operating requirements, and to achieve a reasonable yield commensurate with the preservation of principal and liquidity. The City shall seek to diversify the investment portfolio in terms ofinvestment type and maturity. C. Interest Income The City consolidates (pools) a portion of its funds for investment. Interest earned from these investments shall be allocated to the funds from which the funds were provided. D. Arbitrage Investments and Reporting The investment ofbond proceeds shall be made in accordance with the same priority order of safety, liquidity, and yield. Bond proceeds shall be invested in separate instruments o1 accounts and not commingled with other investment purchases. Arbitrage rebate 29 City of Sealy Financial Management Policy Adopted November 1, 2022 calculations shall be done for each bond issue, as required, and funds shall be set aside for any positive arbitrage. Arbitrage shall be rebated to the Federal government when due. E. Collateralization of Deposits Pledged collateral on the City's deposits shall be held at an independent third-party institution and evidenced by a written receipt. The type and amount of collateral shall comply with the City's Investment Policy. Currently, all deposits shall be collateralized at a minimum level of 102 percent of par value. Substitutions of collateral shall comply with the City's Investment Policy. Collateral shall not be released until the replacement collateral has been received into the City's account. F. Reporting A quarterly investment report shall be prepared and presented to City Council in accordance with state law and the City's Investment Policy. 30 City of Sealy Financial Management Policy Adopted November 1, 2022 X. Grants The City shall seek, apply for, and effectively administer federal, state, and local grants, which support the City's current and future priorities and policy objectives. A. Grant Guidelines The City shall seek and apply for all appropriate grants consistent with the objectives and priority needs identified by the City or City Council. The City shall recover indirect costs to the maximum amount permitted by the grant. The City may waive or reduce indirect costs if doing SO will significantly increase the effectiveness of the grant. Grant funding may be considered to leverage City funds; however, inconsistent and/or fluctuating grants should not be relied upon to fund ongoing programs. The potential to incur ongoing costs shall be considered prior to applying for a grant. B. Grant Review and Approval All grant submittals shall be reviewed for their cash match requirements, their potential impact on the operating budget, and the extent to which they meet the City's goals and policy objectives. If there is a cash match requirement, the source of funding for the matching funds shall be identified prior to submitting the grant application. All grant submittals shall also be reviewed for any "in-kind" grant match being considered in lieu of a cash match. Since an "in-kind" match requires the use of force account labor, the requesting department shall confirm this will not negatively impact existing service levels. All grant submissions must include an explanation of the need for the grant, the terms of the grant, including reporting requirements, and an analysis of the ongoing maintenance and operations costs that will be incurred by the City upon acceptance of the grant. The department shall designate a Grant Administrator for each grant. The Grant Administrator shall coordinate all grant submissions with the City Manager prior to consideration by the City Manager. Once a grant is approved, the Grant Administrator shall establish and maintain a shared folder accessible by the City Manager and the Director of Finance. A new subfolder shall be added for each approved grant submission and shall include a copy of the grant application and all grant-related correspondence, documentation, and reports. The City Manager shall approve all grant submissions. The City Council must approve all grant applications. If a department has a narrow window to pursue a grant opportunity less than $25,000 (e.g., grant funds unexpectedly become available on a compressed timeline), the grant application may be ratified at the City Council meeting immediately following the submission of the grant application. Ifthe grant opportunity is identified during the budget process, it shall be included in the appropriate revenue and expenditure accounts. If the grant is accepted after completion of 31 City of Sealy Financial Management Policy Adopted November 1, 2022 the budget process, the department applying for the grant funding shall work with the Finance Department to prepare the associated budget amendment. C. Grant Administration The Grant Administrator shall provide a copy ofthe approved grant submission (via email or hard copy) to the City Manager and the Director of Finance, Once a grant agreement is signed, the Grant Administrator shall provide a copy ofthe executed agreement to the City Secretary. The Grant Administrator shall then initiate a meeting with the City Manager, the Director of Finance, and any other department members participating in the grant-funded program/expenditure. At that meeting, the roles and responsibilities related to the administration of and reporting for the grant shall be established and the appropriate fund and account number(s) shall be assigned. D. Grant Management The Grant Administrator shall be responsible for all operational aspects of grant management and shall maintain detailed records to ensure maximum reimbursement of grant funds and full compliance with the grant requirements and the Single Audit Act. The Grant Administrator shall notify the City Manager and the Director of Finance when any correspondence, documentation, or reports have been added to the shared folder for the specific grant. The expenditure of grant funds shall follow all applicable City policies and procedures, including purchasing and bid policies. The Grant Administrator shall verify that any vendors selected for the grant-funded program/expenditure are not debarred or excluded from providing goods and services under state or federal award programs. The list of vendors debarred from doing business with the State of Texas is available at the website of the Texas Comptroller of Public Accounts (Debarred Vendor List) at: htpsy/comptrolereexasgovpurchsinnepogramslvendor-performance- meknplelamereésnp The Grant Administrator shall utilize the Official U.S. Government System for Award Management (SAM) to verify that a potential vendor/contractor has not been excluded or debarred before contracting with that vendor on a federally-funded grant. SAM contains an electronic roster of debarred companies excluded from Federal Procurement and non-procurement programs throughout the U.S. Government (unless otherwise noted) and from receiving Federal contracts or certain subcontracts and from certain types of Federal financial and nonfinancial assistance and benefits. Instructions on how to access SAM may be found at: htp/www.do.govlofepieéomplamseaselpreaward.tehatlst.htm. E. Grant Termination and/or Reduced Grant Funding In the event of reduced grant funding, City resources shall be substituted only after all program priorities and alternatives have been considered during the budget process, unless 32 City of Sealy Financial Management Policy Adopted November 1, 2022 the City is obligated, through the terms ofthe grant, to maintain the program or associated positions. The City shall terminate grant-funded programs and associated positions when grant funds are no longer available and it is determined that the program no longer supports City goals and policy objectives or is no longer in the best interest ofthe City. The City shall complete any outstanding obligations following the termination of any grant funding. F. Reporting While individual departments are responsible for grant applications and program administration and reporting, it is necessary to prepare and maintain an annual report of expenditures related to all outstanding grants. To accommodate the annual audit requirements, the Finance Department shall prepare an annual report on the status of all outstanding grants. Prior to its finalization, a draft of the report shall be reviewed and discussed at a director's (staff) meeting. To accommodate this reporting requirement, the Finance Department shall reference the following: Copy of signed grant ppicationagreement, Copy of cancelled checks and invoices for all expenditures funded by the grant; Copy of any program reports submitted to the granting authority; Copy of any correspondence related to the grant; Copy of any other pertinent information related to the grant. The Finance Department shall prepare and furnish financial reports to granting authorities as required. Each individual department shall be responsible for program administration and related program reporting. Copies of all program reports shall be added to the shared folder for the specific grant. These reports shall be made available as documentation for the annual grant report provided to the auditors. 33 City of Sealy Financial Management Policy Adopted November 1, 2022 XI. Intergovernmental Relations The City shall coordinate efforts with other governmental agencies to achieve common policy objectives, share the cost of providing government services on an equitable basis, and support favorable legislation at the state and federal levels. A. Interlocal Cooperation in Delivery ofServices In order to promote the efficient and effective delivery of services, the City shall actively seek to work with other local jurisdictions to share, on an equitable basis, the costs of services, to share facilities, and to developj joint programs to improve service to its citizens. B. Legislative Program The City shall cooperate with other jurisdictions to actively oppose any state or federal regulation or proposal that mandates additional City programs or services but does not provide the funding to implement them. 34 City of Sealy Financial Management Policy Adopted November 1, 2022 XII. Internal Controls The City shall establish and maintain a system of internal controls designed to safeguard City assets, ensure the accuracy and reliability ofaccounting and financial records, promote operational efficiency, and adhere to prescribed policies in compliance with federal and state regulations and City ordinances and policies. A. Written Procedures Wherever possible, written procedures will be established and maintained by the Finance Department for all functions involving cash handling and accounting throughout the City. These procedures will embrace the general concepts of fiscal responsibility set forth in this policy statement. B. Segregation of Duties The City shall strive to maintain appropriate segregation of duties in the conduct of City business in order to reduce the opportunities for any person to perpetrate and conceal errors or irregularities in the normal course of assigned duties. C. Training The City shall ensure that all employees responsible for cash handling and/or financial transactions are familiar with and understand the applicable City policies and procedures associated with these responsibilities. Employees shall be properly trained and supervised in the exercise of these duties. D. Fiscal Authority The City shall: implement appropriate levels offiscal authority and shall design, implement, and maintain procedures to ensure financial transactions and activities are properly reviewed and authorized. E. Signature ofChecks All checks shall require two signatures. Eight persons shall be authorized to sign checks drawn on City of Sealy bank accounts: the City Manager (and Interim City Manager, as appropriate), Director of Finance, Administrative Services Manager, City Secretary (and Interim City Secretary, as appropriate), Police Chief, Mayor Carolyn Bilski, Mayor Pro Tem Dee Anne Lerma and Human Resources Administrator. The City Manager (and Interim City Manager, as appropriate), Director of Finance, Administrative Services Manager, City Secretary (and Interim City Secretary, as appropriate), Police Chief, and Human Resources Administrator shall be Authorized Agents. Persons authorized to sign 35 City of Sealy Fimancial Management Policy Adopted November 1, 2022 checks drawn on Sealy Economic Development Corporation bank accounts shall be authorized by the Bylaws of the Corporation, as may be altered, amended, or repealed by its Board of Directors with the consent and approval of the City Council of the City of Sealy and evidenced by resolution with the Bylaws attached. Signatures shall be affixed on all checks via facsimile signature with a secure laser check printing system or by manual signature. F. Electronic Payment Vouchers The City makes payments electronically to those vendors who enroll for the service. All electronic payments shall require two manual signatures. Any two of the following six persons shall be authorized to sign electronic payment confirmations: the City Manager (and Interim City Manager, as appropriate), Director of Finance, Administrative Services Manager, City Secretary (and Interim City Secretary, as appropriate), Police Chief and Human Resources Administrator. The Administrative Services Manager shall receive, reconcile, and initial the monthly bank and investment statements. The completed bank and investment statement reconciliations shall be reviewed and approved by the Director ofl Finance. The Director of Finance shall then perform a final review of the bank reconciliation application in the City's financial software system to check for unusual activity and to ensure there were no modifications made to the banking activity. To mitigate the City's exposure to the inherent risks of limited segregation of duties, the employee who completes the bank reconciliations shall not handle cash or prepare related cash or adjusting entries. H. Recordkeeping The City shall design, implement, and maintain procedures to ensure tinancial transactions and events are properly recorded such that all financial reports are current, accurate, and up-to-date. Manual journal entries shall be prepared by the Director of Finance and posted by the Administrative Services Manager. The City Secretary shall review and approve (sign) all manual journal entries. I. Safeguarding Assets and Financial Records The City shall design, implement, and maintain procedures to ensure appropriate and adequate safeguards exist over the access to and use of financial assets and records. These measures shall be designed to protect the City's assets from unauthorized access, fraud or theft. J. Internal Audits 36 City ofSealy Financial Management Policy Adopted November 1, 2022 The City shall conduct internal audits to ensure compliance with established procedures and proper valuation of recorded amounts. During the year, the Finance Department shall conduct at least one surprise audit of each petty and working cash fund. Other programs subject to audit include City credit card accounts and travel expense reports. All finance directives and any recommendations resulting from either an internal audit or from an external independent audit should be reviewed, addressed, and implemented by the department director as quickly as possible. K. Annual Review The City shall conduct an annual review of the system ofinternal controls and shall make any appropriate changes or modifications to improve the controls. 37 City of Sealy Financial Management Policy Adopted November 1, 2022 XIII. Economic Development The City shall initiate, encourage, and participate in economic development efforts to create job opportunities and strengthen the local economy and tax base. The City shall account for all financial commitments made in connection with economic incentives granted to developers. A. Commitment to Expansion and Diversification The City shall encourage and participate in economic development efforts to expand Sealy's economy and tax base, to increase local employment, and to invest when there is a defined specific long-term return. These efforts shall not only focus on new areas but on redevelopment of older areas, the Historic Downtown District, and other established sections of Sealy where development can generate additional jobs and other economic benefits. B. Tax Abatements The City shall follow its established tax abatement policy to encourage commercial and/or industrial growth and development throughout Sealy. The City shall balance the long-term benefits of tax abatements with the short-term loss of tax revenues prior to the granting of the abatement. Factors considered in evaluating proposed abatements for development include the location of the project, its size, the number of temporary and permanent jobs created, the costs and benefits for the City, and the impact on Sealy's economy and other factors specified in the City's Tax Abatement Guidelines Summary. C. Increase Non-residential Share ofTax Base The City's economic development program shall seek to expand the non-residential share of the tax base to decrease the tax burden on residential homeowners. D. Coordinate Efforts with Other Jurisdictions The City's economic development program shall encourage close cooperation with other local jurisdictions to promote the economic well-being oft this area. E. Use ofOther Incentives In accordance with its established policies, the City shall use tax increment reinvestment zones and economic development grants/loans as allowed by law and shall seek new sources to encourage business expansion. The City shall also coordinate with state and federal agencies on offering any incentive programs they may provide for potential economic expansion. 38 Item #3 a. EXAS ABSTENTE CE EICnLct ATTIRLE ar SEAW PIISEESS AGENDA ITEM NO: SUBMITTED BY: Patrick Parsons, Public Works Director MEETING DATE: April 15, 2025 STAFF REPORT DESCRIPTION Discussion and Possible Action regarding Strand Change Order for LeBlanc Splash Pad on Concrete. ANALYSIS On 4/10/25 we have not received word back from Adventure Playground if they will execute this Change Order. However, in anticipation that they will execute the Change Order by the time of the City Council Meeting, we have placed this on the agenda. See supporting material(email attached. If we hear back from them by the council meeting day then you can consider it. If we do not hear back from them by the council meeting day, you can still agree to approve the Change Order subject to them agreeing. RECOMMENDATION Staff Recommends to approve the zero cost Change Order if the City of Sealy and Adventure Playground agree to this. FINANCIAL IMPACT N/A Sandra Vrablec From: Engelke, Jared aredinyeleentandcom: Sent: Monday, March 31, 2025 9:59 AM To: Chris Contreras CPSI; James Contreras Cc: Kimbra Hill; Patrick Parsons; Michael Barrow; Sandra Vrablec; Stephen Bozich Subject: Sealy Splash Pad Site Visit Hi Chris and James, It was nice to see you both last week. As discussed, the 3-inch water service location is shown on Exhibit 1 on page 274 of the project manual and on MEP1.01 on page 312. The approximate route of the 3-inch water line is shown on L1.01 on page 289, Additionally, Section 13 00 00 - 3.02B, which asked the Contractor to provide the recommended system water pressure to run all water features concurrently. Based on our conversation it sounds as though a 4-inch water line is necessaryto provide adequate water pressure to run all water features concurrently. APS requested the use of 3,000 psi concrete and for the coping debris to remain in the pool. The Contract documents require 4,000 psi concrete and fort the coping to be hauled off site. The City requested that the concrete area formerly under the slide (this is anticipated to be approximately 10' x10' after cleaned up/saw cut again) be filled in by APS. The City also requested the fabrication and installation of a new splash pad sign over the entrance to the splash pad. The City of Sealy is willing to install approximately 50 linear feet of water main, including a 4-inch valve at their cost. The City is also willing to reduce the concrete strength to 3,000 psi and allowfor the coping debris to remain as fill material. To offset these concessions the City is requesting APS provide the entrance sign and place rebar and concrete in the area formerly occupied by the slide. Please let us know if this is acceptable. Thank you! Jared Jared Engelke, P.E. Strand Associates, Inc. o (F-8405) 979.836.7937 ext. 6203 STRAND atedengeke@standcom I www.strand.com ASSOCIATES P.E. (TX, WI) Excellence in EngineeringsM Item #4 SEAL EXAS ane ELNCE Inmun hasuis AGENDA ITEM NO: Discussion and possible action regarding the Mayor's Appointment of HOT Funds Committee. SUBMITTED BY: Kimbra Hill, City Manager MEETING DATE: April 15, 2025 STAFF REPORT DESCRIPTION In accordance with the City of Sealy HOT Funds Policy, the following schedule and responsibilities have been established for the 2025 Hotel Occupancy Tax (HOT) Funds review process: HOT Funds Committee Appointment - Beginning in April, the Mayor will appoint members to the City of Sealy HOT Funds Committee. This committee is tasked with: Reviewing the current HOT Funds Policy. Evaluating any changes to Texas state law, specifically Texas Tax Code Chapter 351. Reviewing prior years' expenditures and program outcomes to make recommendations for improvements. Ensuring that all HOT Fund expenditures remain in compliance with state-mandated category allocations and required funding ceiling and floor limits. Committee Member Requirement: Before participating, all committee members are required to amiliarize themselves with: The latest version of Texas Tax Code Chapter 351 https/statutes.copio.lexas.goV/Docs/IK/ntm/IX.351.htm The current City of Sealy HOT Funds Policy Included in packet) This preparation ensures the proper execution and integrity of the HOT Funds Program. Committee Workshop A HOT Funds Committee Workshop will be held on: 31 Tuesday, May 6th 4:30 PM = 5:30 PM D City Council Chambers Committee members should come prepared, naving reviewed the current HOT Funds Policy and drafted any proposed changes. These will be discussed during the workshop and subsequently reviewed by City Council. Policy Recommendation & Approval Timeline 31 Tuesday, May 20th: Deadline for final policy approval. Monday, June 2nd: New HOT Funds Policy and Application will be published on the City's website, in compliance with program deadlines. SEALY EXAS A HISTORY OF EXCELLENCE. A FUTURE OF PROGRESS City of Sealy Hotel Occupancy Tax Funding Policy and Procedures VERSION 2.3 Approved / Revised by City Council 5.21.2024 City of Sealy, Texas HOT Funds Policy and Procedures Introduction & Goals The intent of this document is to provide requirements, procedures, guidance, and criteria to organizations that wish to apply for funding from the City of Sealy Hotel Occupancy Tax (HOT) Funds Program. Municipal hotel occupancy taxes are governed by Chapter 351 of the Texas Tax Code. Additional HOT Funds policies and procedures are established by the City of Sealy. The City wishes to make (HOT) funds available to qualified events/projects/activttes/faclites in accordance with the State's Tax Code and the City's policy and procedures. The City of Sealy currently collects a Hotel Occupancy Tax. Contrary to property and sales tax revenues which are commonly used for public purposes, local hotel occupancy tax (HOT) revenues are statutorily dedicated to directly promote and develop Sealy's tourism, convention and hotel industry. Sealy Hotel occupancy tax (HOT) revenue is awarded in the form of one-time event/project grants and annual programs. The goal of the program is to provide grants to organizations that directly promote: tourism, the convention & hotel industry, and produce overnight visitors, while acting in the best interests of the City of Sealy within its city limits. HOT funding is meant to assist and support qualified events. City Council grants (HOT) Funds as deemed appropriate on a case-by-case basis. The policies and procedures herein define the terms of distribution of revenues from Sealy's Hotel Occupancy Tax (HOT). The information has been divided into these sections: Table of Contents HOT Funds Annual Cycle. 3 HOT Program Information, 4 HOT Program Facts and Myths 7 HOT Fund's Eligibility. 8 The (HOT) Application Information 13 Notification of Funding Decision 14 Event Insurance, Permits & Licenses 15 Hotel Occupancy Tax Application for Funding 17 Acknowledgement Form. 24 Post Event Form 25 2IPage Approved / Revised by City Council 5.21.2024 HOT Funds Annual Cycle All Applicants are encouraged to meet with the City's Director of Finance as needed throughout the annual cycle to ensure the organization's expenses are in compliance with the terms of the program. The fiscal year starts October 1st and ends September 30th. The annual cycle is as follows: A N 1) For upcoming events, the City of Sealy's City-Wide Event Notification Form must be completed and N submitted in compliance with the City-Wide Planning Guide. This application requires approval from the Chief of Police followed by City Council approval. The City of Sealy may require procuring and A maintaining event insurance for the duration of the event. 2) Beginning in the month of April: The mayor appoints a City of Sealy HOT Funds Committee that is tasked with reviewing the current HOT Funds Policy and any changes to state law. The committee may also review prior years' experiences to make recommendations for improvements to the policy. A Y key responsibility of the committee is to ensure HOT Fund expenditures comply with state mandated category allocations and mandated funding ceiling and floor limits. Before participating, committee members will be required to familiarize themselves with the latest version of the Texas Tax Code Chapter 351 and the City of Sealy approved HOT Funds Policy to ensure proper execution of the program. 3) No later than the last City Council meeting in May: The HOT Funds Committee will present recommendations to City Council regarding the HOT Funds Policy and/or HOT Funds Application. 4) The First (1*) Business Day in June: Applications are available to organizations that wish to participate in the City of Sealy HOT Funds Program. Incomplete applications will not be accepted for review. 5) The Second (2nd) Monday in July: Deadline to submit the City HOT Funds Application form. All applications shall be completed and submitted via the below three options: > By Mail: City of Sealy- Attn. Director of Finance, PO Box 517, Sealy, TX 77474 > In person: City Hall - 415 Main Street, Sealy, TX 77474 > By Email: hotfund@dsealy.txus To ask questions, please call 979-885-3511 and ask for the Director of Finance. The HOT Funds Committee is tasked with reviewing and making recommendations to City Council regarding budget and allocation of HOT Funds. The HOT Funds Committee meets and reviews applications and past performance of each event, conducts interviews, validates final numbers, and writes a report that makes funding recommendations to City Council. 6) As part of the Budget Process: City Council approves or denies HOT funding requests from Applicants, awards HOT funding amounts, and approves the method of HOT payment for the next fiscal year's event. 7) During the month of October, upon City Council approval: City Staff sends award/decline letters to applicants; as well as any other required forms, agreements or contracts needed to comply with the program. 8) Throughout the year: HOT Funds recipients conduct their approved event/project. Each event incurs expense and the hosting organization is responsible to reconcile any HOT funding received by that organization in the method approved by City Council. The city's preferred method of HOT Funds payments to recipients is reimbursement of actual expenditures. 9) Within 60 days after the conclusion of the approved Event: HOT fund recipients shall complete the Post Event Form. However, If the event/project period covers more than 90 days, recipients must submit Quarterly Reports to the Director of Finance within 30 days from the last date of the quarter. 3Page Approved / Revised by City Council 5.21.2024 (HOT) Program Information 1) By law of the State of Texas, the City of Sealy collects Hotel Occupancy Tax (HOT) from hotels, bed & P breakfast, inns, and any other lodging properties that collect hotel occupancy tax. Overnight stays in R recreational vehicles/RV parks are not subject to city HOT; therefore, these stays should not be included as "overnight stays" in an event's Application or Post Event reporting. R 2) The City of Sealy will accept applications from groups, non-profits and businesses whose programs or A events qualifyfor use of hotel occupancyt tax revenue funds. Applicants that have outstanding financial M obligations to the City, or have an ongoing lawsuit against the City of Sealy are not eligible for HOT Funds. N 3) Events will be considered fori funding if the event takes place within the Sealy City limits. In order to be 1 eligible for funding, the activity must directly promote tourism and the convention and hotel industry within Sealy City limits. A new event may not be eligible for HOT Funds. R 4) The Authorized Representative of the organization receiving HOT funding must have been M authorized by all necessary corporate proceedings and actions to act on behalf of the organization. A The Authorized Representative is responsible for all communication between the city and the T organization. Notice to the Authorized Representative is notice to the organization. 5) Expenditure of HOT Funds does not authorize, endorse, or otherwise imply approval by the City of N Sealy for items such as permitting or any Planning Department requirements, etc. The organization shall maintain all licenses, permits, as necessary, and the City of Sealy may require a certificate of insurance with specific coverage on events. Please inquire with the Director of Finance regarding licenses, permits, and event insurance. Also see page 14 for more details regarding insurance, permits, and licenses for alcohol, fireworks, RV or Circus event, and road closures etc. 6) Ift the HOT funded event is canceled, the organization's Authorized Representative must notify the city within 10 days of the cancelation, and return unspent or ineligible HOT Funds to the City of Sealy. Recipient may request permission from City Council in a public meeting to repurpose the money for another previously approved event taking place within the same fiscal year. Please email: hottund@cisealy.txus or address letter to City of Sealy- Attn: Director of Finance, PO Box 517, Sealy, TX 77474. 7) Organization agrees to collect and report to the City of Sealy, the Names and Tax ID numbers from each vendor authorized to conduct sales on the event premises and to notify the vendor that this information will be reported to the City of Sealy, Texas. Event vendors are expected to post a sales tax permit in a manner that is visible to the public, as well as and comply with State of Texas laws regarding collection and reporting of sales tax. 8) Organization shall make efforts to minimize event parking and traffic impact, especially with regard to business parking lots and patronage. Such efforts may include arranging to transport hotel guest and others via shuttle from satellite parking locations to the event drop off/pickup points. (*Note) Category H: signage funds (if approved) can be used to help fund signs that direct shuttle traffic. Organizations should demonstrate to City Council their ability to coordinate with existing businesses to minimize impact to their business property. 4IPage Approved / Revised by City Council 5.21.2024 9) The Post Event Form: Must be completed and submitted within 60 days from the conclusion of the event. A Post Event Form is required for each funded event/project. The report will be reviewed by the City to determine how well the entity met its goals, and will be used in consideration of future hotel occupancy tax funding requests. If the event/project period covers more than 90 days, organizations must submit periodic and post event information in Quarterly Reports instead of the Post Event Form. Failure to complete said requirements will prohibit your organization from receiving HOT funds the following year. 10) Projects lasting more than 90 days shall report to City Council quarterly. These quarterly reports must be in a register-type format (i.e., spreadsheet), for both post event and periodic reporting, to account for the HOT funds, and in order to be eligible for future HOT funds. For each expenditure, the following information must be included with the report: Transaction Date, Check/EFT Number, Payee Name, Purpose of Expenditure, Dollar Amount Paid, if the payment has cleared or is outstanding, Applicable HOT Fund Category (A1 through H). Ifan organization receives advance funding, they are required to set up a separate HOT Funds checking account. 11) No person is authorized to act on behalf of the City to verbally override or modify the policies and procedures other than a vote of City Council. Budgetary Items 12) Any unclaimed or unused grant money will be forfeited post event. HOT Funds that were paid upfront and were not used, or used for ineligible expenses shall be returned to the City of Sealy within 10 days of the event. Once an Event has concluded, the organization has 60 days to complete their request for funding. Any uncleared checks expire in 180 days, will not be reissued. However, the organization may make a written request to the City of Sealy to utilize the unexpended funds for another pre-approved HOT Fund related event within that same funding cycle. The request to City Council must then be approved by the City Council at a public meeting. 13) In case of cancelations/discounts/overbilling, any money refunded to the organization which originated as HOT funds shall be reported and returned to the City of Sealy. If a recipient has received advanced HOT funding, they are required to return funds to their HOT checking account. 14) Organization agrees to provide the following metrics about your event as required for post event reporting, including but not limited to: Event attendance numbers Number of hotel rooms reserved Number of hotel rooms actually booked Event ticket prices (if fee was charged) Event profit: Calculation formula: Total sales/income - total event/project expenses = PROFIT. 15) The organization must designate someone with the ability to maintain a checkbook register to track and retain paid invoices/receipts, expenses and reimbursements for your events. All paperwork shall be retained by the organization for a period of three years. The City reserves the right to ask for additional documentation and audit your HOT fund expense and reimbursement records. Upon the City's request, the organization shall make HOT fund expenditure-related records, including checks and invoices, available for inspection and review by City Council or any other authorized representative of the City. 16) A portion of event profits (if a profit was generated) must be channeled into the future costs of operating that same event or the continued operation of the project. At least 25% profit shall be channeled into costs of conducting next year's event. 5IPage Approved / Revised by City Council 5.21.2024 17) All event expenses are always subject to approval from the City of Sealy and are dispersed on a case- by-case basis. Details for funding eligibility can be reviewed on page 7. 18) Expenditures for tokens of appreciation, volunteer recognition, and thank you cards/gifts do not qualify for project/event HOT Fund expenses. 19) Any mishandling of funds by the organization or the authorized representative will be presented to City Council for determination of cure, or possible termination, of event funding. 20) In the case of an emergency disaster declaration by the State Governor or President of the United States in which they call for the suspension of the Hotel Tax collections the City Council reserves the right to make changes to the funding or application process in compliance with State law. 21) Funding Priority Funding priority will be given to those events and organizations based upon their documented ability to directly promote tourism and the convention and hotel industry in the City of Sealy. The following guidelines are provided to make applicants aware of the City's priorities when reviewing and evaluating the HOT Funds Application AND Post Event Form. Ability to provide a record of increased hotel or tourism and visitor's activity. Applicants should provide a record of the number of rooms nights used during previous years of the same vent/activty/faclty. Ability to provide projected and actual size of room blocks reserved at area hotels to accommodate overnight guests attending the funded event/activiy/laclity, room block must be differentiated between rooms for artist and room blocks for event attendees. Provide the projected and actual number of guests at hotels or other lodging facilities that attend the funded event/project/faelity. (Information can be found through surveys, guest directories, or other sources) Ability to quantify the projected and actual number of overnight stays at Sealy hotels to be generated by the event. Provide examples of planned and actual marketing or programs and activities likely to generate or encourage overnight visitors to local lodging properties. Ability to display that a portion of the revenues from the event/project receiving funding from HOT funds was channeled back into the future costs of operating that same event or the continued operation of the project. Applicants are encouraged to utilize local businesses for materials, food, printing, etc. The City will prioritize funds to newer events which need seed money. 6Page Approved / Revised by City Council 5.21.2024 (HOT) Program Facts and Myths P R HOT Fund Facts: 3 FACT: This is tax revenue. R FACT: The HOT Funds are designed to benefit HOTELS and tourism. - FACT: The Legislature created approved funding categories. M FACT: Every tax dollar awarded must be categorized-no LUMP Sums. F FACT: Events and Projects are funded-NOT Organizations. FACT: The Legislature set the grant system up to favor CVB funding. A FACT: The City has to distribute at least 14% to Advertising that promotes hotels. FACT: In 1977, the legislature started allowing up to 15% to go to the ARTS. FACT: In 2023, the legislature changed the maximum percentage to 15% for historical category. FAÇT: The City is required to report to the Texas Comptroller's office an annual report showing & to which categories the funding was distributed. M Y HOT Fund Misconceptions: H > MYTH: The City can distribute HOT Funds however it wants. MYTH: This is a grant program. MYTH: HOT Funds are designed to support charitable causes. MYTH: HOT Funds are designed to support community organizations. MYTH: HOT Funds are designed to provide scholarships & education. MYTH: Every applicant qualifies for HOT Funds. MYTH: The city has to spend all the money. MYTH: You can't really spend it on anything other than events. MYTH: Organizations are awarded one lump sum. MYTH: HOT Funds are designed to fully fund events/projects. 7IPage Approved / Revised by City Council 5.21.2024 HOT Fund's Eligibility All HOT Fund expenditures must comply with Federal, State, and local laws, including, but not limited to, the Hotel Occupancy Statute, copyright laws, licensing requirements, and City Policy. You should make yourself aware of the following criteria, restrictions and requirements. Authorized Uses: Eligible HOT Fund expenditures must meet the two requirements: Requirement #1: The State of Texas Tax Code Chapter 351 governs municipalities' Hotel Occupancy Taxes. This tax code grant is not intended to help charities or noble causes. The authorized use of these funds is to Directly promote tourism AND the convention and hotel industry. Both aspects must be met. Remember: "Heads in Beds" The use of HOT Funds must meet Requirement #1 before being evaluated against Requirement #2. Requirement #2: The Legislature has defined specific categories & criteria for qualified funding. The law requires the grant money to be allocated based on specific categories. The Categories include: A. Convention Centers and Visitor Information Centers B. Convention Registrants C. Advertising and Promotions D. Promotions oft the Arts E. Historical Uses F. Sports Facilities G. Funding Tourist Transportation/ Shuttles to Area Attractions H. Signage When in doubt, you should consult with the City of Sealy's Director of Finance to ensure the event's expenditures meet the qualifications. The City's determination of eligible expenditures will be final. Ifthe event is awarded HOT Funds, all funding will be allocated into the following categories based on information reviewed in the organization's application, post event reporting, media placements, and any follow-up questions/nterviews, Criteria for Each Category: The list below provides detailed information of funding criteria, restrictions and requirements. This list is not exhaustive for your event/project/act/activity/faciity. CATEGORY A: Convention Centers and Visitor Information Centers: the acquisition of sites for and the construction, improvement, enlarging, equipping, repairing operation and maintenance of convention center facilities or visitor information centers, or both. CATEGORY A funds the establishment, improvement, or maintenance of a convention center or visitor information center. The Sealy Convention & Visitors Bureau is a visitor information center. This category includes salary for staffing the visitors center. If the staff performs both tourism functions, HOT should only be used proportionate to the percentage of time spent on tourism. The term "convention center" is defined to include civic centers, auditoriums, exhibition halls, and coliseums that are owned by the city or another governmental entity or that are managed in whole or in part by the city. 8Page Approved / Revised by City Council 5.21.2024 To be eligible for HOT as a "convention center", - more than 50 percent of the bookings for the facility must have been to host conventions or meetings that directly promote tourism and the hotel and convention industry. A venue booked for weddings at least 50% of the year will bring in guests from out of town-thus it would qualify for HOT funds. Simply naming a facility a convention center or visitor information center does not automatically qualify the facility as a "convention center. I General civic buildings such as the city hall, local senior citizen centers or activity centers would not qualify as convention centers that could be funded by hotel tax. CATEGORY B: Registration of Convention Delegates: the furnishing of facilities, personnel, and materials for the registration of convention delegates or registrants; Category B funds expenditures for administrative costs that are actually incurred for assisting in the registration of convention delegates or attendees. This is generally an expenditure for larger cities that hold large conventions, and includes covering the personnel costs and costs of materials for the registration of convention delegates or attendees. CATEGORY C: Advertising, Solicitations and Promotions that Directly Promote Tourism and the Hotel and Convention Industry: advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity; Category Cfunds advertising and conducting solicitations and promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity. The marketing must directly promote the hotel & convention industry. This requirement includes all advertising formats. Event advertising must include promotion of hotel stay to be to be considered an eligible HOT Fund expense. Use of hotel chain logos will help tourists have an awareness of where they can stay. Hotel logos must be a reasonable size that the average person can notice and view. (No fine print) Suggestions to meet this requirement include: ensuring that area hotels are listed on tourism websites, radio ads which should include some phrasing such as: "When the event is over, plan to stay with us. Make your reservation now at one of Sealy's hotels.' - / paid "news coverage'stories should include something like: "The event organizer tells us that you'll definitely want to make a full day ofit and get reservations to stay at one of Sealy's hotels. 1 - posters, flyers and billboards should include logos (contact Convention & Visitor's Bureau if needed) and promotion of hotel stay such as the following (be sure to verify as current any contact info you use): @utwyptdal Holidaglnn Express Supe AMERICAN &Suffes - WYNDHAM INN 979-885-7407 979-877-0700 979-885-2121 bug 979-885-3707 Countrysideinnsealy.us HIExpress.com Super8.com Newspaper ads must include promotion of hotel stay as noted above-unless the ad is SO small that logos wouldn't fit (1"x1")-in which case the ad can simply say something like "Book your hotel stay now". 9IPage Approved / Revised by City Council 5.21.2024 CATEGORY D: Promotions of the Arts that Directly Promote Tourism and the Hotel and Convention Industry: Category D funds the encouragement, promotion, improvement, and application of the arts that can be shown to have some direct impact on tourism and the hotel/convention industry. The impact may be that the art facility or event can show hotel nights that are booked due to their events or that guests at hotels attend the arts event. Eligible forms of art include: instrumental and vocal music, dance, drama, folk art, creative writing, architecture, design and allied fields, painting, sculpture photography, graphic and craft arts, motion picture, radio, television, tape and sound recording, and other arts related to the presentation, performance, execution, and exhibition of these major art forms. Qualified funding includes but is not limited to: Contract to book an entertainer/artist Hotel accommodation costs for artist and/or crew The creation of an arts building would not qualify. CATEGORY E: Historical Restoration and Preservation Activities that Directly Promote Tourism and the Hotel and Convention Industry: historical restoration and preservation projects or activities or advertising and conducting solicitation and promotional programs to encourage tourists and convention delegates to visit preserved historic sites or museums. Category Et funds enhance historical restoration and preservation projects or activities, or advertising and conducting solicitations and promotional programs to encourage tourists* and convention delegates to visit preserved historic sites or museums that are likely to attract tourists' * and hotel guests. Iti is not enough that a project or activity event merely be historical in nature; Texas law requires that the historical related expenditure also directly promote tourism and the hotel and convention industry. A project such as historical placards that describe historical objects/building qualifies as al historical preservation effort. CATEGORY F: Sporting Event Expenses that Substantially Increase Economic Activity at Hotels: Category F funds expenses include promotional expenses, directly related to a sporting event in which: The majority of participants are tourists* (see page 10 for definition). The total athletes and number of tourist athletes participating should be submitted based on registration data collected. The event must substantially increase economic activity at hotels within the city or its vicinity. RV park stays are not hotel stays CATEGORY F funding reimbursement may vary depending on the number of sporting event participants who show up. For this reason, some funds may remain unclaimed. CATEGORY Ffunding cannot be used for local sporting activity such as Little League, intramural sports, etc., except in the case of regional, state or national tournaments. CATEGORY FI has very specific criteria and does NOT include infrastructure items such as fencing, scoreboards, etc. In general, the types of game-related items covered only exist during your event: Examples include: Umpire Fees, Tournament Software and Coordinator Fees, Sanction Fees, Award Expenses 10/Page Approved / Revised by City Council 5.21.2024 CATEGORY G: Funding transportation of tourists* from hotels to attractions: Originally enacted in 2007 and amended in 2023, the Texas Legislature authorized the use of city hotel occupancy tax revenue for any sized city to cover the costs for transporting tourists* from hotels to and near the city to any of the following destinations: the commercial center of the city a convention center in the city other hotels in or near the city or tourist attractions in or near the city The law specifically prohibits the use of the local hotel tax to cover the costs for general city transit costs to transport the general public. In 2023 the Texas Legislature repealed Sec. 351.110(b) which had required that the transportation system that transports tourists be owned and operated by the municipality. Applicants can now request funds in Category G for the transport of hotel guests to and from an attraction. This would include a shuttle circuit that includes numerous hotel stops and only one (1) attraction stop. The transportation system must be primarily used by tourists*. The statute language describes travel from hotel to destination and does not describe variations such as: transporting event attendees from satellite parking lot to an event as shuttle circuit for event attendees that stops at multiple attractions and includes a hotel stop CATEGORY H: Funds signage directing tourists to sights and attractions that are visited frequently by hotel guests in the municipality. Examples of signs that qualify include: Those that would be placed at Sealy hotels to direct guest to a shuttle pickup point Those that would be placed at shuttle pickup/drop-off points at the event Those that would direct hotel guest where parking is allowed and not allowed Those that would help tourists navigate event locations- such as numbers or letters for booths that correlate to an event site map Yard signs made of coroplast with wire stakes, such as those used for political campaigns are acceptable Apermanent highway sign along IH-10 which says "State Historic Museum, 1 mile" External signs directing tourists, such as those near the street, should be made of weatherproof material, and use mounting mechanisms that are weather resistant. If possible, use generic verbiage SO that signs could be used again for future events. For example: Avoid using specific dates, years, or pricing: "ArtFest Parking $20.00" "ArtFest 2016: Shuttle Pickup" Examples of signs that would NOT qualify include: Signage directing vendors, volunteers, delivery trucks or back-stage participants Signs showing the price of event admission or products Do not use poster board and permanent marker and put the sign in a bucket with bricks * Tourist is defined as "an individual who travels from the individual's residence to a different municipality, county, state, or country. for business, pleasure, recreation, education, or culture". 11Page Approved / Revised by City Council 5.21.2024 The table below demonstrates how an event's HOT Funds may be distributed by City Council and presented in the funding approval letter. Funds may. not be commingled with other categories or other events. Category Summary Description Grant Amount A Funding the establishment, improvement, or $ maintenance of a convention center or visitor information center. B Paying the administrative costs for facilitating $ convention registration. C Paying for advertising, solicitations, and promotions $ that attract tourists* and convention delegates to the city or its vicinity. Expenditures that promote a variety of $ art-related programs that also promote tourism and local hotel and convention activity. E Enhance historical restoration and preservation $ projects or activities, or advertising and conducting solicitations and promotional programs to encourage tourists* and convention delegates to visit preserved historic sites or museums that are likely to attract tourists* and hotel guests. F Funding sporting events that substantially increase $ economic activity at hotels including promotional expenses, directly related to a sporting event in which the majority of participants are tourists*. - Funding transportation of tourists' * from hotels to $ attractions via transportation system H Signage directing tourists* to sights and attractions $ that are visited frequently by hotel guests in the municipality. If in doubt, contact the City of Sealy's Director of Finance before making the expenditure. If you have any questions about this grant, please do not hesitate to contact us at hottundedsealIkus or by phone at 979-885-3511. 12IPage Approved / Revised by City Council 5.21.2024 The (HOT) Application Information 1) Applications are available from the City of Sealy on the first business day in June. Applications must be A submitted no later than the second (2nd) Monday in July. Please request and submit applications: P By Mail: City of Sealy- Attn: Director of Finance, PO Box 517, Sealy, TX 77474 In person: City Hall 415 Main, Street Sealy, TX 77474 Email: hotfund@disealy.txus A 2) The City considers applications for events, projects, activities, or facilities which meet the State of Texas T Statute regarding HOT Funds, which includes: the necessary Requirement #1 of Directly promoting tourism AND the convention and hotel industry, as well as the Requirement #2 of fitting into one or more of the listed categories (on page 7) N 3) The consideration of HOT Funds requests will take place once a year through a formal process. During the evaluation process, applicants may be asked to present information and answer questions from the N HOT Committee and/or City Council. Ifthe organization's attendance is requested, the authorized representative will be notified one week prior to the meeting when practicable. Please ensure completeness of the Application and include all required documentation as listed. R M 4) The ven/poec/Acwly/aly shall abide by the City of Sealy's HOT Funds Policy and Procedures and A meet the General Eligibility requirements identified in the section: Eligibility (page 7). If an event will not T generate any meaningful hotel night activity, it is not eligible for receipt of hotel occupancy tax funds. Keep a copy of the application, it will be a reference when reporting post event information. Please return completed application with necessary attachments and signature to the City of Sealy by the application deadline. If you have any application questions, please contact the Director of Finance at hotfund@dsealyikus or 979-885-3511. 13Page Approved / Revised by City Council 5.21.2024 Notification of Funding Decision 1) Applicants receive notification of event funding after City Council makes determinations. City Staff will present applicants with a letter of approval or denial. The letter of approval specifies the event's method of payment and the awarded dollar amounts per category that may be expended. A letter of denial will outline the reason(s) HOT Funds were not awarded. All HOT expenditures must meet Requirements #1 and #2: Please see page 7 for more information. Approval Letter 2) The approved Event's grant money must be spent according to the terms specified by the State Statute, the City of Sealy, and City Council. When in doubt, you should consult with the City of Sealy's Director of Finance with questions to ensure your expenditures qualify. The City's determination will be final. The law requires the grant money to be allocated based on specific categories. Your approved funding was allocated into categories based on information you provided in your Application, Post Event Report and follow-up questions/nterviews. 3) Recipients who received an Approval of Funding Letter will also receive the Request for Funding Form and the Post Event Form. Recipients shall submit one Request for Funding Form per invoice. The Request for Funding Form is used for the reconciliation of qualified HOT Funds expenses. All entities that are approved for HOT Funds must complete and submit the Post Event/Report Form within 60 days of the conclusion for each funded event/project. The report will be reviewed by the City to determine how well the entity met its goals and will be used in consideration of future hotel occupancy tax funding requests. Ifthe event/project period covers more than 90 days, projects must submit periodic and post event information in Quarterly Reports instead of the Post Event Form. 4) During Event progression please keep financial records available as outlined in the Sealy HOT Policy and Procedures (page 5) Budget Items 5) Approvals for HOT Funds are by EVENT-not ORGANIZATION. If approved for more than one event, you cannot commingle expenses or funding between events. 6) Due to category caps, funding shall be expended as directed by City Council (found in the Notification of Funding document), and cannot be shifted from one category to another. For any questions/concerns please contact email: hottund@cisealyIkus or by phone 979-885-3511. 14IPage Approved / Revised by City Council 5.21.2024 Event Insurance, Permits & Licenses N 0 Event Insurance The City of Sealy may require event insurance. Please check with the City of Sealy's Director of Finance R regarding insurance coverage for all events, projects, and activities. A N Permits & Licenses Please contact the City Secretary Department for details regarding road closures permits and licenses A and such as: Alcohol, Fireworks, Overnight RV Stays in City Parks, Circus and Event Permits. There may N be additional fees for these items. hottund@disealyIkus PHONE: 979-885-3511 P E R M T 15Page Approved / Revised by City Council 5.21.2024 City ofSealy Hotel Occupancy Tax Policy and Procedures Version 2.3 Statement of Agreement Thave read, understand, and agree to fully comply with the information provided to me within the City of Sealy HOT Funds Policy and Procedures. agree to accept that the City's decision and interpretation of the (HOT) statute regarding what qualifies for HOT Funds expenditure/ reimbursement is final. intend to use the funding for the event/project to directly promote tourism and support the convention and hotel industry by attracting visitors and overnight guests for the economic enhancement fori the City of Sealy. In situations including where an event is canceled or an amount is refunded that has already been reimbursed by the City, - agree to notify the City within 10 days and refund HOT funds where appropriate. acknowledge that am not able to rollover or otherwise take funding from one year and apply it to a prior or future event's expenses. This policy replaces all previous policies adopted by the City regarding the disbursement of city HOT funds except as specifically noted in this policy. Authorized Representative Signature Date Printed Name Title and Organization 16/Page Approved / Revised by City Council 5.21.2024 EXAS ARSTOIT Cr EICILENCE ATCTUIE er BEAW PAOSAISS Hotel Occupancy Tax Application for Funding Please fill out Application clearly and completely; submit to the City of Sealy by the second (2nd) Monday in July. Be sure to keep a copy for your records. Based on the application, previous year's Post Event Report, and any other information given to the City from questions and interviews, the HOT Funds Committee will make a recommendation regarding funding to the City Council. The Sealy City Council will make the final decision on your request. Event Information Name of Event or Project: Date of Event or Project: Primary Location of Event or Project: Amount Requested: $ Total projected cost of event $ What is the total projected amount of funds that will be rolled over to fund next year's event? It must be at least 25% of the profit from the event. $ If the event is awarded funds, how will the funds be used? What types of costs will be covered? Primary Purpose of Funded Actiwty/athty/Proect: 17IPage Approved / Revised by City Council 5.21.2024 Organization Information Name of Organization: Address: City, State, Zip: Contact Name: Contact Phone Number: Web Site Address for Event or Sponsoring Entity: Non-Profit or For-Profit status*: Tax ID #: Entity's Creation Date: Purpose of your organization: * Non-Profit applicants must provide proof of current IRS 990 filing. 18/Page Approved / Revised by City Council 5.21.2024 Which Category or Categories Apply to Funding Request, and Amount Requested Under Each Category: Please also refer to the HOT Funds Policy and Procedures for further detail on each category below. A) Convention Center or Visitor Information Center: construction, improvement, equipping, repairing, operation, and maintenance of convention center facilities or visitor information centers, or both. Amount requested under this category: $ B) Registration of Convention Delegates: furnishing of facilities, personnel, and materials for the registration of convention delegates or registrants. Amount requested under this category: $ C) Advertising, Solicitations, Promotional programs to attract tourists and convention delegates or registrants to the municipality or its vicinity, Amount requested under this category:$ D) Promotion of the Arts that Directly Enhance Tourism and the Hotel & Convention Industry: the encouragement, promotion, improvement, and application of the arts that can be shown to have some direct impact on tourism and the hotel/convention industry. The impact may be that the art facility or event can show hotel nights that are booked due to their events or that guests at hotels attend the arts event. Eligible forms of art include instrumental and vocal music, dance, drama, folk art, creative writing, architecture, design and allied fields, painting, sculpture photography, graphic and craft arts, motion picture, radio, television, tape and sound recording, and other arts related to the presentation, performance, execution, and exhibition of these major art forms. Amount requested under this category: $ E) Historical restoration and preservation projects or activities or advertising and conducting solicitation and promotional programs to encourage tourists and convention delegates to visit preserved historic sites or museums. Amount requested under this category: $ F) Expenses including promotional expenses, directly related to a sporting event in which the majority of participants are tourists. The event must substantially increase economic activity at hotels within the city or its vicinity. Amount requested under this category: $ How many individuals are expected to participate in the sporting related event? How many of the participants at the sporting related event are expected to be from another city or county? Quantify how the sporting related event will substantially increase economic activity at hotels within the city or its vicinity? 19/Page Approved / Revised by City Council 5.21.2024 G) Funding transportation systems for transporting tourists from hotels to and near the city to any of the following destinations: 1) the commercial center of the city; 2) a convention center in the city; 3) other hotels in or near the city; and 4) tourist attractions in or near the city. Amount requested under this category: $ What sites or attractions will tourists be taken to by this transportation? Will members of the general public (non-tourists) be riding on this transportation? What percentage of the ridership will be local citizens? H) Signage directing tourists to sights and attractions that are visited frequently by hotel guests in the municipality. Amount requested under this category: $ What tourist attractions will be the subject of the signs? Questions for All Funding Request Categories: *It should be noted that overnight stays within Recreational Vehicles and RV Parks are not counted as HOT. 1. How many years have you held this Event or Project? 2. Number of days of Event Timing for each day: 3. Expected Event Attendance: 4. How many people attending the Event or Project are anticipated to use Sealy hotels? 5. Total number of room nights attendees are anticipated to stay in Sealy hotels: 6. Do you reserve a room block for event attendees, (not artist/performers) at an area hotel? YES NO 7. Ifs so, for how many rooms and at which hotels (Event attendees only)? 20/Page Approved / Revised by City Council 5.21.2024 8. Differentiate the numbers of hotel night stays between rooms for artists/performers and room blocks for event attendees. Number of hotel nights for artists/performers Number of hotel nights for event attendees 9. Project the percentage of those in event attendance that are staying at area hotels/lodging facilities? The percentage shall not include RV night stays. 10. List, over the last three years of the event's history, the financial amount of assistance given from HOT Funds from the City of Sealy and the number of hotel room nights generated: Month/Year Held Assistance Amount Total Number of Hotel Nights Generated 11. Will you negotiate a special rate or hotel/event package to attract overnight stays? YES NO 12. How will you measure the impact of your event on area hotel activity (e.g.; room block usage information, survey of hoteliers, attendee survey, etc.)? 13. Please list other organizations, government entities, and grants that have offered financial support to your project: 21Pag e Approved / Revised by City Council 5,21.2024 14. Will the event charge admission? YES NO 15. Do you anticipate a net profit from the event? YES NO 16. Ifthere is a net profit, what is the anticipated amount $ 17. What is the anticipated use of the net profit from the event? 18. If the Event is applying for funds from Category C, please list all promotion efforts your organization is coordinating for this year's event and the amount financially committed to each media outlet. Newspaper: $ Radio: $ TV: $ Other Paid Advertising: $ Number of Press Releases to Media: Number Direct Mailings to out-of-town recipients: Other Promotions 19. What marketing initiatives will you utilize to promote hotel and convention activity for this event? 20. What geographic areas does your advertising and promotion reach? 21. Will you include a link to the Convention and Visitor's Bureau or other source on your promotional handouts and in your website for booking hotel nights during this event? htps/dscoversealy.com YES NO Any other sources? Revised Council 5.21.2024 22]Pag e Approved / by City 22. How many individuals will your proposed marketing reach who are located in another city or county (most media offerings can provide this information? 23. If the funding requested is related to a permanent facility (e.g. museum, visitor center): Expected Attendance Monthly/Annually: Monthly Annually Percentage of those in attendance that are staying at area hotels/lodging facilities (number shall not include RV night stays): % 24. Supplemental Information Required with Application: Community Event Form Proposed Marketing Plan for Funded Event Schedule of Activities or Events Relating to the Funded Project Submit a list ofthe event's agenda with all pricing documentation Please Submit Application no later than the first Monday in June to: CITY OF SEALY ATTN: DIRECTOR OF FINANCE PO BOX 517 415 MAIN STREET SEALY, TEXAS 77474 hottund@dsealyIkus PHONE: 979-885-3511 23Page Approved / Revised by City Council 5.21.2024 TEXAS Irnuct ATETIILE ur) BEAM AESTUE PIGEISS CITY OF SEALY HOTEL OCCUPANCY TAX FUNDING Acknowledgement Form City ofSealy Hotel Occupancy Tax Policy and Procedures Statement of Agreement 1. Ifully understand and agree with the Hotel Occupancy Tax Use Policy and Procedures, and HOT Fund's application process established by the City of Sealy; and acknowledge receipt of the Current Policy. 2. intend to use the funds for the aforementioned event/project/faclity to advance the efforts of the City of Sealy in directly enhancing and promoting tourism and the convention and hotel industry by attracting visitors and hotel guests from outside the area. 3. If the event reflects a profit, 25% of the profit must be retained as seed money fori future events. 4. have been provided the opportunity for training from the City of Sealy's Director of Finance regarding the HOT Funds policy and process. 5. lunderstand I must provide a designated point of contact person for the City of Sealy's Director of Finance to reach out to with any questions or financial information requests. 6. understand that if awarded the reimbursement method, will not receive any funding until the Post Event Form and all required paperwork are submitted. acknowledge that the information provided in this application is true and correct. Authorized Signature Date Printed Name Title and Organization 24Page Approved / Revised by City Council 5.21.2024 SEAL EXAS A AESTIND Etnuct ATeTute er PISEISS CITY OF SEALY HOTEL OCCUPANCY TAX FUNDING Post Event Form All entities that are approved for HOT Funds must submit a Post Event Form within 60 days of the conclusion of each funded event. The report will be reviewed by the SEALY CITY COUNCIL to determine how well the entity met its goals and be used in consideration of future hotel occupancy tax funding requests. Date: Event Information Name of Event or Project: Date(s) of Event or Project: (length of event) Primary Location of Event or Project: Event Contact Name: Event Contact Phone Number: Amount of HOT Funds Requested: $ Amount Received: $ Amount of HOT Funds expended for event: $ How were the funds used? What types of costs were covered? How many years have you held this Event or Project? 25/Page Approved / Revised by City Council 5.21.2024 Organization Information Name of Organization: Address: City, State, Zip: Contact Name: Contact Phone Number: Web-site address for event or organization Event Funding Information 1. What was the total cost ofthe event? $ 2. How much revenue came in from the event? $ 3. Did the event charge admission? YES NO 4. Ift the event charged admission, what is the breakdown of the varying admission cost for the event, and how may admitted in each variation? Cost $ Type of admission Total number of sales Cost $ Type of admission Total number of sales Cost $ Type of admission Total number of sales Cost $ Type of admission Total number of sales Cost $ Type of admission Total number of sales 5. Was there a net profit from the event? YES NO To be calculated as Total sales/income - total event/project expenses = PROFIT). 6. Ifthere was a net profit, what was the amount and how is it being used? Net Profit $ 26/Page Approved / Revised by City Council 5.21.2024 Dollar amount channeled into next year's event, must be at least 25% of profits How will the remaining net profit be used? 7. Actual percentage of funded event costs covered by hotel occupancy tax: 8. Actual percentage of facility costs covered by hotel occupancy tax (if applicable): 9. Actual percentage of staff costs covered by hotel occupancy tax (if applicable): 10. If staff costs were covered, estimate of actual hours staff spent on funded event: Total number of Staff Total number of hours put toward tourism Event Attendance Information (If applicable) 1. How many people did you predict would attend this event? (number submitted in application): 2. What would you estimate as the actual attendance at the event? 3. How many room nights were generated at Sealy hotels by attendees of this event (not including artist or performers)? Total Room nights generated X $150.00 per night = HOT Funds generated $ What hotels/motels were the room nights generated by event attendees (not artist/performers)? 4. How many nights did event attendees stay? 27IPage Approved / Revised by City Council 5.21.2024 5. What method did you use to determine the number of people who booked rooms at Sealy hotels (e.g.; room block usage information, survey of hoteliers, attendee survey, etc.)? 6. Was a room block established for this Event at an area hotel (hotels), and if sO, didi the room block fill? 7. If the room block did not fill, how many rooms were picked up? 8. Did you negotiate a special rate or hotel/event package to attract overnight stays? YES NO 9. If this Event has been funded by hotel occupancy tax in the last three years, how many room nights were, generated at Sealy hotels by attendees of this Event or Project? Last Year Two Years Ago Three Years Ago Event Promotion Information 1. Please document all efforts your organization actually used to promote this Event by indicating how much was actually spent in each media outiet: Newspaper: $ Radio: $ TV: $ Other Paid Advertising: $ Number of Press Releases Number Direct Mailings to out-of-town recipients Other Promotions 28/Page Approved / Revised by City Council 5.21.2024 2. Did you include a link to the Convention and Visitor's Bureau or other source on your promotional handouts and in your website for booking hotel nights during this event? 3. What new marketing initiatives did you utilize to promote hotel and convention activity for this Event? Additional Event Information 1. Did your event require vendors to turn in a tax identification number? YES NO 2. Did the Vendors who participated in the event collect sales tax? YES NO 3. What Sealy businesses did you utilize for food, supplies, materials, printing, etc.? Sporting Related Events 1. If the Event funded by hotel occupancy tax was a sporting-related function/facility, how many individuals actually participated in this event? 2. Ift the event was a sporting-related function/facility, how many of the participants were from another city or county? 3. Attach data collected from the sports event criteria: a count of the registered players from out of town, and cities they traveled from. 4. If the event was a sporting-related function/facility, quantify how the activity substantially increased economic activity at hotels within the city or its vicinity? 29 IPage Approved / Revised by City Council 5.21.2024 Please attach the following to this form: Ensure that unused or ineligible HOT Funds were submitted by check to the City of Sealy 10 days after the conclusion of the event. If the organization wishes to utilize the unexpended funds for another HOT Fund related event/project that has already been approved for funding in the current fiscal year (Sept. 30 - Oct. 1) provide a written, signed request to the City of Sealy for City Council consideration. Attach data collected from the sports event criteria: a count of the registered players from out of town, and cities they traveled from. Please attach samples of documents showing how Sealy, Sealy hotels, and the Convention and Visitor's Bureau was recognized in your advertsing/promotional campaign. Please attach samples of all forms of advertsing/promoting used in your campaign. If the sample itself does not indicate the medium (radio, TV, print, or mail) used or where the advertising took place (e.g., a city's newspaper, or a radio spot that does not indicate the city where the spot was played), please include other information that would show location of the advertising and medium utilized. lacknowledge that the information provided in this form and on the attachment(s) is true and correct. Authorized Signature Date Printed Name Title and Organization This must be submitted no later than 60 days after the conclusion of event or project to: CITY OF SEALY ATTENTION: DIRECTOR OF FINANCE PO BOX 517 415 MAIN STREET SEALY, TEXAS 77474 hottund@dsealy.Ikus PHONE: 979-885-3511 30 IPage Approved / Revised by City Council 5.21.2024 Item #5 BEAL EXAS Bsman ITE AGENDA ITEM NO: Discussion and possible action regarding an Ordinance Amending Chapter 98 = Locations for Placement of Traffic Control Devices. (First of two readings) SUBMITTED BY: Kimbra Hill, City Manager MEETING DATE: April 15, 2025 STAFF REPORT DESCRIPTION Following the completion of the Engineer's traffic study and subsequent Council discussion regarding traffic control improvements on Main Street, City Council approved the installation of stop signs on Main Street at the intersections of Hardeman Street and Loescher Street. These measures are part of a broader initiative to improve intersection safety, manage traffic flow, and respond to resident concerns about vehicle speeds along Main Street. As the Public Works Department prepared for the installation of the approved stop signs, further consultation was conducted with Captain Riske and Captain Hudson, with the concurrence of Chief Reeves. Based on this collaborative review, it was recommended that the existing yield sign on Loescher Street at Main Street be replaced with a stop sign. This modification would establish a three-way (all-way) stop at the intersection of Main Street and Loescher Street. Chapter 98 Traffic and Vehicles, Article II. Official Traffic Control Devices, Section 98-42 states: (a) The city manager shall have the general responsibility and authority to determine the installation and proper timing and maintenance of official traffic control devices, to conduct engineering analyses of traffic accidents and to devise remedial measures, to conduct engineering investigations of traffic conditions, to plan the operation of traffic on the streets and highways of this city, and to cooperate with other officials in the development of ways and means to improve traffic conditions, and to carry out the additional powers and duties imposed by other ordinances of the city. (b) The city manager is empowered to make regulations necessary to make effective the provisions of this section and other traffic ordinances of the city and to make and enforce temporary or experimental regulations to cover emergencies or special conditions. No such temporary or experimental regulation shall remain in effect for more than 90 days. The city manager may test official traffic control devices under actual conditions of traffic. (c) Wherever in this section the authority is given to the city manager to do acts as he deems or, in his opinion, are advisable, necessary or desirable, such acts shall be based on his observations and studies, according to generally used and accepted traffic control principles or techniques. Traffic innovations and experiments, however, are not to be inhibited by this section. (d) Every official traffic control device, signal, sign, marker or marking erected under the direction of the city manager shall be presumed to have been installed pursuant to his observations and studies, based on generally used and accepted official traffic control principles or techniques. Kimbra Hill From: Jay Reeves Sent: Wednesday, April 2, 2025 3:54 PM To: Kimbra Hill Subject: Re: Stop Signs on Main @ Loescher Sorry for the delay, I'm in training Yes, - concur it needs to be a stop sign. Thank you for your consideration on this matter. If you need anything else let me know. Sent from my iPhone On Apr 2, 2025, at 3:34 PM, Kimbra Hill wrote: Good afternoon, Chief Reeves, Patrick and I consulted with Captain Riske, Captain Hudson, and Officer McCullough yesterday regarding the placement of traffic control devices on Main Street at the intersections of Hardeman and Loescher. While the current ordinance under Chapter 98 (Official Traffic Control Devices) permits a yield sign on Loescher at its intersection with Main Street, the officers and public works director recommend replacing it with a stop sign. This change would create a three-way/all-way stop, improving traffic management, enhancing traffic flow, and increasing public safety. Although the engineer's traffic study did not initially warrant a three-way stop, Sec. 98-42 = Installation; Responsibilities of the City Manager authorizes me to determine the installation and proper timing of official traffic control devices. In this matter, - defer to the expertise of the Police Department's team. With your approval, we will proceed with replacing the yield sign with a stop sign in conjunction with the installation of new stop signs on Main Street this Friday. This change will require ratification by City Council to amend Chapter 98, supported by your recommendation. Please confirm your concurrence or denial at your earliest convenience. Thank you, Kimbra Hill City Manager City of Sealy 415 Main Street Sealy, Texas 77474 Office 979-885-3511 Mobile 979-398-0814 Khill@cisealy.Ix.us ATTENTION PUBLI IC OFFICIALS: A Reply to All" of this e-mail could lead to violations of the Texas Open Meetings Act. A "Forward" of this e-mail to another public official could also leadi to violations of the Texas Open Meetings Act if a quorum is eventually involved. Please reply only to the sender.